Draft 11/12/2007
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made on November
__, 2007 between Evolution Master Fund Ltd. SPC, Segregated Portfolio M
("SELLER") and Castlerigg Master Investments Ltd. ("BUYER").
WHEREAS, pursuant to the Securities Purchase Agreement (the " SECURITIES
PURCHASE AGREEMENT"), dated as of July 24, 2006, by and among Earth Biofuels,
Inc., a Delaware corporation, with its corporate headquarters located at 0000
Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "BORROWER") and the investors
listed on the Schedule of Buyers attached thereto (individually, a "BUYER" and
collectively, the "BUYERS"), Seller (as a Buyer) purchased, and the Borrower
sold, upon the terms and conditions stated in the Securities Purchase Agreement,
(i) a senior convertible note in aggregate principal amount of Eleven Million,
Five Hundred Thousand Dollars ($11,500,000) (the "NOTE"), in substantially the
form attached to the Securities Purchase Agreement as EXHIBIT A, (ii) a warrant,
in substantially the form attached to the Securities Purchase Agreement as
EXHIBIT B-1 (the "SERIES A WARRANT"), to acquire up to 1,982,759 shares of
Common Stock (the "SERIES A WARRANT SHARES") and (iii) a warrant, in
substantially the form attached to the Securities Purchase Agreement as EXHIBIT
B-2 (the "SERIES B WARRANT," and together with the Original Series A Warrant,
the "WARRANTS") to acquire up to 1,982,759 shares of Common Stock (the "SERIES B
WARRANT SHARES," and together with the Original Bridge Warrant Shares and the
Original Series A Warrant Shares, the "WARRANT SHARES").
WHEREAS, Borrower agreed to provide certain registration rights with
respect to the Registrable Securities (as defined in the Registration Rights
Agreement (as defined below)), under the Securities Act of 1933, as amended (the
"1933 ACT") and the rules and regulations promulgated thereunder, and applicable
state securities laws pursuant to the Registration Rights Agreement, dated as of
July 24, 2006, by and among the Borrower and Buyers (the "REGISTRATION RIGHTS
AGREEMENT").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the Note and the Warrants on the basis of the representations, warranties
and agreements contained in this Agreement, and upon the terms but subject to
the conditions set forth herein.
WHEREAS, Seller desires to assign to Buyer and Buyer desires to assume from
Seller, its rights as a holder of the Note and the Warrants under (a) the
Securities Purchase Agreement and (b) the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1 . PURCHASE OF NOTE AND WARRANTS
(a) PURCHASE AND SALE. Seller hereby agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, the Note and the Warrants. The aggregate
purchase price for the Note and the Warrants shall be the greater of $2,875,000
or (ii) the amount paid by Buyer or any of its affiliates on, before or within
one hundred eighty (180) days after the Closing Date to holders of similar Notes
to acquire such Notes, expressed as a percentage of the principal amount of such
Notes, multiplied by the principal amount of Seller's Note (the "PURCHASE
PRICE"). If by application of the immediately preceding clause (a)(ii), Buyer is
required to pay to Seller an amount greater than the amount actually paid by
Buyer on the Closing Date to Seller for the Note and the Warrants, then Buyer
shall promptly pay such greater amount to Seller.
(b) CLOSING. Closing on this Agreement shall be conducted no later than the
second business day after satisfaction (or waiver) of the conditions to the
closing set forth in Section 2 (the "CLOSING DATE") at 10:00 a.m., New York City
time, (or such other time as the parties may agree) at the office of Xxxxxxx
Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(c) FORM OF PAYMENT. On the Closing Date, Buyer shall pay the Purchase
Price to Seller for the Note and the Warrants by wire transfer of immediately
available funds in accordance with Seller's written wire instructions.
SECTION 2 . CLOSING CONDITIONS.
(a) BUYER CLOSING CONDITIONS. The obligation of Buyer to pay for the Note
and the Warrants as provided herein on the Closing Date is subject to the
following conditions (the "BUYER CLOSING CONDITIONS"), PROVIDED that these
conditions are for Buyer's sole benefit and may be waived by Buyer at any time
in its sole discretion by providing Seller with prior written consent thereof.
(i) On the Closing Date, Seller shall have delivered to Buyer
certificates representing the Note and the Warrants (in such denominations
and registered in such names as Buyer shall request).
(ii) The representations and warranties of Seller shall be true and
correct in all material respects (except for those representations and
warranties that are qualified by materiality, which shall be true and
correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of
such specified date), and Seller shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Seller at or prior to the Closing Date.
(iii) Buyer shall have received this Agreement and the Notice and
Acknowledgment and Joinder Agreement attached hereto as EXHIBIT A (the
"NOTICE AND ACKNOWLEDGMENT OF TRANSFER ") duly executed by all parties
thereto.
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(iv) Buyer shall have received the Interim Restructuring Agreement
duly executed by the Borrower in favor of each of the holders of the Notes,
substantially in the form attached hereto as EXHIBIT B.
(v) Buyer shall have received the Mutual Release attached as EXHIBIT C
(the "RELEASE") hereto duly executed by Seller in favor of Borrower.
(vi) An order of the United States Bankruptcy Court for the District
of Delaware shall have been entered on the docket and shall have become
final and non-appealable dismissing the case under the Bankruptcy Code
pending before the Bankruptcy Court in which Borrower is a debtor, In re
Earth Biofuels, Inc., No. 07-10928 (CSS).
(b) SELLER CLOSING CONDITIONS. The obligation of Seller to sell the Note
and the Warrants as provided herein on the Closing Date is subject to the
following conditions (the "SELLER CLOSING CONDITIONS"), PROVIDED that these
conditions are for Seller's sole benefit and may be waived by Seller at any time
in its sole discretion by providing Buyer with prior written consent thereof.
(i) The representations and warranties of Buyer shall be true and
correct in all material respects (except for those representations and
warranties that are qualified by materiality, which shall be true and
correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of
such specified date), and Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Buyer at or prior to the Closing Date.
(ii) Seller shall have received this Agreement and the Notice and
Acknowledgment and Joinder Agreement attached hereto as EXHIBIT A (the
"NOTICE AND ACKNOWLEDGMENT OF TRANSFER ") duly executed by all parties
thereto.
(iii) Seller shall have received the Release executed by the Borrower
in favor of the Seller.
(iv) Buyer shall have delivered to Seller the Purchase Price for the
Note and the related Warrants being purchased by Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by Seller.
(c) TERMINATION. In the event that any of the Buyer Closing Conditions or
the Seller Closing Conditions are not satisfied by December 21, 2007, either
party to this Agreement may terminate this Agreement immediately upon notice to
the other party, at which time each party's obligations under this Agreement and
the Release shall terminate and be null, void and of no further force and
effect. In the event of a termination, all original documents transmitted to any
party or otherwise held in escrow shall be returned to the executing party.
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SECTION 3 . SELLER REPRESENTATIONS AND WARRANTIES. Seller hereby
represents, warrants and covenants to Buyer as follows as of the date hereof:
(a) This Agreement has been duly authorized, executed and delivered by
Seller and constitutes a valid and legally binding agreement of Seller
enforceable against Seller in accordance with its terms, except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, or (b) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
(b) All government and other consents that are required to have been
obtained by Seller with respect to this Agreement have been obtained and are in
full force and effect and all conditions of any such consents have been complied
with.
(c) Seller has good and valid title to the Note and the Warrants free and
clear of any lien, mortgage, security interest, pledge, charge or encumbrance of
any kind ("LIENS"). Delivery of the Note and the Warrants to Buyer will pass to
Buyer good and valid title to the Note and the Warrants, free and clear of any
Liens.
(d) The execution and delivery by Seller of this Agreement, the purchase by
Seller of the Note and the Warrants and the performance by Seller of its
obligations under this Agreement do not and will not violate or conflict with
any law applicable to Seller, any order or judgment of any court or other agency
of government applicable to Seller or any of Seller's assets or any material
contractual restriction binding on or affecting Seller or any of Seller's
assets.
(e) There is no action, suit, proceeding, judgment, claim or investigation
pending, or to the knowledge of Seller, threatened against Seller which could
reasonably be expected in any manner to challenge or seek to prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
(f) No authorization, consent, approval or other order of, or declaration
to or filing with, any governmental agency or body or other person is required
for the valid authorization, execution, delivery and performance by Seller of
this Agreement and the consummation of the transactions contemplated thereby.
(g) Seller is acting solely for Seller's own account, and has made Seller's
own independent decision to enter into this Agreement and as to whether this
Agreement is appropriate or proper for Seller based upon Seller's own judgment
and upon advice of such advisors as Seller deems necessary. Seller acknowledges
and agrees that Seller is not relying, and has not relied, upon any
communication (written or oral) of Buyer or any affiliate, employee or agent of
Buyer with respect to the legal, accounting, tax or other implications of this
Agreement and that Seller has conducted Seller's own analyses of the legal,
accounting, tax and other implications hereof and thereof; it being understood
that information and explanations related to the terms and conditions of this
Agreement shall not be considered investment advice or a recommendation to enter
into this Agreement. Seller acknowledges that neither Buyer nor
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any affiliate, employee or agent of Buyer is acting as a fiduciary for or an
advisor to Seller in respect of this Agreement.
(h) Seller has taken no action that would give rise to any claim by any
person for brokerage commissions, finder's fees or similar payments relating to
this Agreement or the transactions contemplated hereby.
(i) Seller is not selling the Note and the Warrants as a result of any
advertisement, article, notice or other communication regarding the Note and the
Warrants published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(j) Neither the Seller nor any affiliate of the Seller (i) has any
relationship with the Company or any of its subsidiaries other than its
ownership of the Securities and other warrants of the Company issued to the
Seller on May 26, 2006 and July 26, 2006; (ii) directly or indirectly controls
the Company or any of its subsidiaries; or (iii) is a director or officer of the
Company or any of its subsidiaries.
(k) Seller acknowledges that (i) Buyer currently may have, and later may
come into possession of, information with respect to Borrower that is not known
to Seller and that may be material to a decision to sell the Note and the
Warrants for the Purchase Price ("SELLER EXCLUDED INFORMATION"), (ii) Seller has
determined to sell the Note and the Warrants notwithstanding its lack of
knowledge of Seller Excluded Information, if any, and (iii) Buyer shall have no
liability to Seller, and Seller waives and releases any claims that it might
have against Buyer, whether under applicable securities laws or otherwise, with
respect to the nondisclosure of Seller Excluded Information, if any, in
connection with Seller's sale of the Note and the Warrants for the Purchase
Price in accordance herewith; provided, however, that Seller Excluded
Information, if any, shall not and does not affect the truth or accuracy of the
representations or warranties of Buyer in this Agreement and provided further,
that all written material concerning the Borrower that was provided by Buyer to
Seller from the date the offer to purchase Seller's Note and Warrants was made
by Buyer to Seller through and including the Closing Date was delivered to
Seller in the same form that Buyer received it from the Borrower..
SECTION 4 . BUYER REPRESENTATIONS AND WARRANTIES. Buyer hereby represents
and warrants to Seller as follows:
(a) Buyer understands that, except as provided in the Registration Rights
Agreement, the Note and the Warrants have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be offered for
sale, sold, assigned or transferred unless subsequently registered thereunder or
an exemption from such registration is available.
(b) Buyer has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of Buyer and shall
constitute the legal, valid and binding obligation of Buyer enforceable against
it in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any
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other laws of general application affecting enforcement of creditors' rights
generally, or (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(c) The execution and delivery by Buyer of this Agreement, the purchase by
Buyer of the Note and the Warrants and the performance by Buyer of its
obligations under this Agreement do not and will not violate or conflict with
any law applicable to Buyer, any order or judgment of any court or other agency
of government applicable to Buyer or any of Buyer's assets or any material
contractual restriction binding on or affecting Buyer or any of Buyer's assets.
(d) There is no action, suit, proceeding, judgment, claim or investigation
pending, or to the knowledge of Buyer, threatened against Buyer which could
reasonably be expected in any manner to challenge or seek to prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
(e) No authorization, consent, approval or other order of, or declaration
to or filing with, any governmental agency or body or other person is required
for the valid authorization, execution, delivery and performance by Buyer of
this Agreement and the consummation of the transactions contemplated thereby.
(f) Buyer (i) is a sophisticated person with respect to the purchase of the
Notes and the Warrants; (ii) has adequate information concerning the business
and financial condition of the Borrower to make an informed decision regarding
the purchase of the Note and the Warrants; and (iii) has independently and
without reliance upon Seller, and based on such information as Buyer has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that Buyer has relied upon Seller's express representations, warranties
and covenants in this Agreement. Buyer acknowledges that Seller has not given
Buyer any investment advice, credit information or opinion on whether the
purchase of the Note and the Warrants is prudent.
(g) Buyer is purchasing the Note and the Warrants solely for its own
account and not with a view to the distribution or resale of the Note and the
Warrants or its rights thereunder except pursuant to a registration statement
declared effective under, or an exemption from the registration requirements of,
the Securities Act.
(h) Buyer is an "accredited investor" (as defined in Regulation D under the
Securities Act) and has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the transaction
contemplated herein, and it is able to bear the economic risk of such purchase.
(i) Buyer understands that the Note and the Warrants are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws.
(j) Buyer understands that the Note, the Series A Warrant and the Series B
Warrant shall bear the legends set forth in Section 2(g) of the Securities
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Purchase Agreement and such legends shall not be removed except in accordance
with Sections 2(g) of the Securities Purchase Agreement.
(k) Buyer is not purchasing the Note and the Warrants as a result of any
advertisement, article, notice or other communication regarding the Note and the
Warrants published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(l) Buyer has taken no action that would give rise to any claim by any
person for brokerage commissions, finder's fees or similar payments relating to
this Agreement or the transactions contemplated hereby.
(m) Buyer has not, and to its knowledge no one acting on its behalf has,
taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Borrower.
(n) Buyer acknowledges that (i) Seller currently may have, and later may
come into possession of, information with respect to Borrower that is not known
to Buyer and that may be material to a decision to purchase the Note and the
Warrants for the Purchase Price ("BUYER EXCLUDED INFORMATION"), (ii) Buyer has
determined to purchase the Note and the Warrants notwithstanding its lack of
knowledge of Buyer Excluded Information, if any, and (iii) Seller shall have no
liability to Buyer, and Buyer waives and releases any claims that it might have
against Seller, whether under applicable securities laws or otherwise, with
respect to the nondisclosure of Buyer Excluded Information, if any, in
connection with Buyer's purchase of the Note and the Warrants for the Purchase
Price in accordance herewith; provided, however, that Buyer Excluded
Information, if any, shall not and does affect the truth or accuracy of the
representations or warranties of Seller in this Agreement
SECTION 5 . PAYMENT OF EXPENSES. Each party hereto shall be liable for its
own costs and expenses in connection with the transactions contemplated hereby.
SECTION 6 . COVENANTS.
(a) Seller, for good and valuable consideration, effective as of the
Closing Date, hereby assigns, transfers, conveys and delivers to Buyer all of
its right, title and interest in and to the Note and the Warrants, and with
respect to such Note and the Warrants, to the Securities Purchase Agreement and
the Registration Rights Agreement.
(b) Buyer, for good and valuable consideration, effective as of the Closing
Date, hereby agrees to be bound by the terms of the Securities Purchase
Agreement and the Registration Rights Agreement with respect to the Note and the
Warrants. In addition, Buyer shall execute and deliver to Seller and the
Borrower the Notice and Acknowledgment agreeing to be bound by all of the
provisions contained therein.
SECTION 7 . NOTICES. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
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If to Buyer:
Castlerigg Master Investments Ltd.
c/o Sandell Asset Management
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Cem Hacioglu
Xxxxxxx Xxxxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to Seller:
Evolution Master Fund Ltd. SPC, Segregated Portfolio M
c/o Evolution Capital Management, LLC
0000 Xxxxxxx Xxxx.
Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
General Counsel and Chief Compliance Officer
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 8 . GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY AGREES THAT ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT
SHALL BE BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT JURISDICTION
SITTING IN THE COUNTY, CITY, AND STATE OF NEW YORK. EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF SUCH COURT AND
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN
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INCONVENIENT FORUM OR A LACK OF PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY
ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE
PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY HERETO. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
SECTION 9 . ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements among Buyer, Seller, their affiliates and
Persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither Seller
nor Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
SECTION 10 . SEVERABILITY. If any provision of this Agreement is prohibited
by law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Agreement so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
SECTION 11 . NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
SECTION 12 FURTHER ASSURANCES. Each party shall use its reasonable best
efforts to do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 13 CONFIDENTIALITY. Each party agrees that, except as otherwise
compelled by law, court order or by a competent regulator, it will not issue any
reports, statements or releases, in each case relating to this Agreement or the
transactions contemplated hereby, without the prior
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written consent of the other party hereto. Notwithstanding anything to the
contrary set forth herein, any party and each representative of such party may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement,
and all materials of any kind (including opinions or other tax analyses) related
to such tax treatment and tax structure.
SECTION 14 SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of the Note and the Warrants.
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IN WITNESS WHEREOF, Buyer and Seller have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
EVOLUTION MASTER FUND LTD. SPC, SEGREGATED PORTFOLIO M
By:
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Name:
Title:
CASTLERIGG MASTER INVESTEMENTS LTD.
By:
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Name:
Title:
EXHIBIT A
NOTICE AND ACKNOWLEDGEMENT AND JOINDER AGREEMENT
This Notice and Acknowledgement and Joinder Agreement (the "NOTICE AND
ACKNOWLEDGEMENT") dated as of November __, 2007 between Earth Biofuels, Inc., a
Delaware corporation, with its corporate headquarters located at 0000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "BORROWER") and Castlerigg Master
Investments Ltd. (the "ASSIGNEE").
Reference is made to (a) the Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT"), dated as of July 24, 2006, by and among the
Borrower and the investors listed on the Schedule of Buyers attached thereto
(individually, a "BUYER" and collectively, the "BUYERS"), whereby the Assignor
(as a Buyer) purchased, and the Borrower sold, upon the terms and conditions
stated in the Securities Purchase Agreement, (i) a senior convertible note in
aggregate principal amount of Eleven Million, Five Hundred Thousand Dollars
($11,500,000) (the "NOTE"), (ii) a warrant, in substantially the form attached
to the Securities Purchase Agreement as EXHIBIT B-1 (the "SERIES A WARRANT"), to
acquire up to 1,982,759 shares of Common Stock (the "SERIES A WARRANT SHARES")
and (iii) a warrant, in substantially the form attached to the Securities
Purchase Agreement as EXHIBIT B-2 (the "SERIES B WARRANT," and together with the
Series A Warrant, the "WARRANTS") to acquire up to 1,982,759 shares of Common
Stock (the "SERIES B WARRANT SHARES," and together with the Series A Warrant
Shares, the "WARRANT Shares"), (b) the Registration Rights Agreement, dated as
of July 24, 2006, by and among the Borrower and Buyers (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Borrower has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement), under the Securities Act of 1933, as amended
(the "1933 ACT") and the rules and regulations promulgated thereunder, and
applicable state securities laws, and (c) the Securities Purchase Agreement (the
"ASSIGNMENT AGREEMENT"), dated as of November __, 2007, by and between the
Assignor and the Assignee, whereby the Assignor (i) sold to the Assignee the
Note and the Warrants, and (ii) assigned to Assignee its rights as a holder of
the Note and the Warrants pursuant to (x) the Securities Purchase Agreement and
(y) the Registration Rights Agreement (collectively, the "SALE AND ASSIGNMENT").
The Borrower and the Assignee hereby agree as follows:
1. The Borrower hereby acknowledges that it has received notice of the Sale
and Assignment in accordance with the Assignment Agreement as of the date
first above written.
2. The Assignee (i) agrees that it will perform in accordance with their terms
all of the agreements and obligations which by the terms of the Securities
Purchase Agreement and the Registration Rights Agreement are required to be
performed by it as a "Buyer" and, as of the Effective Date, the terms of
the Securities Purchase Agreement and the Registration Rights Agreement
shall be the binding obligations of the Assignee; (ii) represents and
warrants that the representations and warranties of the "Buyer" contained
in the Securities Purchase Agreement are true and correct as if made by the
Assignee on the date hereof; and (iii) agrees that it shall execute and
deliver such additional documents assuming the obligations of the Assignor
and perform all tasks reasonably requested by the Borrower to effect the
assignment contemplated hereby.
3. This agreement shall become effective on such date (the "EFFECTIVE DATE")
as the Borrower, the Assignee and the Assignor have executed and delivered
this Notice and Acknowledgement.
4. The Borrower and the Assignee agree that as of the Effective Date the
Assignee shall be a party to the Securities Purchase Agreement and the
Registration Rights Agreement and, to the extent provided in this Notice
and Acknowledgement, have the rights and obligations under the Securities
Purchase Agreement and the Registration Rights Agreement of the Assignor
with respect to the Note and the Warrants.
5. Each of the parties represents and warrants that it is duly authorized to
enter into this Notice and Acknowledgement. This Notice and Acknowledgement
shall be binding on each party's successors and permitted assigns. This
Notice and Acknowledgement is personal to the parties and may not be
assigned or transferred by any party without the prior written consent of
the other parties.
6. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES. EACH PARTY AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT IN A U.S. FEDERAL
OR STATE COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY, CITY, AND
STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE JURISDICTION OF SUCH COURT AND HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM OR A LACK OF
PERSONAL JURISDICTION TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND
ANY RIGHT OF JURISDICTION OR VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR
DOMICILE OF ANY PARTY HERETO. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Notice and
Acknowledgement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
EARTH BIOFUELS, INC.
By:
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Name:
Title
CASTLERIGG MASTER INVESTMENTS LTD.
By:
---------------------------------------
Name:
Title
Agreed and accepted,
this ___ day of November, 2007
EVOLUTION MASTER FUND LTD. SPC, SEGREGATED PORTFOLIO M
By:
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Name:
Title
