SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of October
25, 2006, by and among GS AGRIFUELS CORPORATION, a Delaware corporation (the
"Company"), and the Buyers listed on Schedule I attached hereto (individually, a
"Buyer" or collectively "Buyers").
WITNESSETH
WHEREAS, the Company and the Buyers are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyers, as
provided herein, and the Buyers shall purchase up to Thirteen Million Dollars
($13,000,000) of secured convertible debentures (the "Convertible Debentures"),
which shall be convertible into shares of the Company's common stock, par value
$0.001 (the "Common Stock") (as converted, the "Conversion Shares") which shall
be funded within five (5) business day following the date hereof (the "Closing")
(individually referred to as a "Closing" collectively referred to as the
"Closings"), for a total purchase price of Thirteen Million Dollars
($13,000,000), (the "Purchase Price") in the respective amounts set forth
opposite each Buyer(s) name on Schedule I (the "Subscription Amount"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "Registration Rights Agreement") pursuant to which the Company
has agreed to provide certain registration rights under the Securities Act and
the rules and regulations promulgated there under, and applicable state
securities laws; and
WHEREAS, the Convertible Debentures will be secured by a security interest
in all of the assets of the Company, the stock and assets of each of the
Company's subsidiaries, and certain shares of common stock owned by Xxxxx
Xxxxxxxx (the "Pledged Shares") as evidenced by the security agreement of even
date herewith (the "Security Agreement"), the pledge and escrow agreement of
even date herewith (the "Pledge Agreement") and the guaranty of even date
herewith (the "Guaranty," and together with the Pledge Agreement and the
Security Agreement, collectively the "Security Documents"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "Irrevocable Transfer Agent Instructions"); and
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s) hereby agree
as follows:
1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
(a) Purchase of Convertible Debentures. Subject to the satisfaction (or
waiver) of the terms and conditions of this Agreement, each Buyer
agrees, severally and not jointly, to purchase at each Closing and the
Company agrees to sell and issue to each Buyer, severally and not
jointly, at each Closing, Convertible Debentures in amounts
corresponding with the Subscription Amount set forth opposite each
Buyer's name on Schedule I hereto.
(b) Closing Date. The Closing of the purchase and sale of the Convertible
Debentures shall take place at 10:00 a.m. Eastern Standard Time on the
fifth (5th) business day following the date hereof, subject to
notification of satisfaction of the conditions to the Closing set
forth herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the "Closing
Date"). The Closing shall occur on the Closing Date at the offices of
Yorkville Advisors, LLC, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx,
Xxx Xxxxxx 00000 (or such other place as is mutually agreed to by the
Company and the Buyer(s)).
(c) Form of Payment. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date, (i) the Buyers
shall deliver to the Company such aggregate proceeds for the
Convertible Debentures to be issued and sold to such Buyer(s), minus
the fees to be paid directly from the proceeds of the Closings as set
forth herein, and (ii) the Company shall deliver to each Buyer,
Convertible Debentures which such Buyer(s) is purchasing in amounts
indicated opposite such Buyer's name on Schedule I, duly executed on
behalf of the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants, severally and not jointly, that:
(a) Investment Purpose. Each Buyer is acquiring the Convertible Debentures
and, upon conversion of Convertible Debentures, the Buyer will acquire
the Conversion Shares then issuable, for its own account for
investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act;
provided, however, that by making the representations herein, such
Buyer reserves the right to dispose of the Conversion Shares at any
time in accordance with or pursuant to an effective registration
statement covering such Conversion Shares or an available exemption
under the Securities Act.
(b) Accredited Investor Status. Each Buyer is an "Accredited Investor" as
that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. Each Buyer understands that the Convertible
Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
(d) Information. Each Buyer and its advisors (and his or, its counsel), if
any, have been furnished with all materials relating to the business,
finances and operations of the Company and information he deemed
material to making an informed investment decision regarding his
purchase of the Convertible Debentures and the Conversion Shares,
which have been requested by such Buyer. Each Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the
Company and its management. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties
contained in Section 3 below. Each Buyer understands that its
investment in the Convertible Debentures and the Conversion Shares
involves a high degree of risk. Each Buyer is in a position regarding
the Company, which, based upon employment, family relationship or
economic bargaining power, enabled and enables such Buyer to obtain
information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and
tax advice, as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Convertible
Debentures and the Conversion Shares.
(e) No Governmental Review. Each Buyer understands that no United States
federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the
Convertible Debentures or the Conversion Shares, or the fairness or
suitability of the investment in the Convertible Debentures or the
Conversion Shares, nor have such authorities passed upon or endorsed
the merits of the offering of the Convertible Debentures or the
Conversion Shares.
(f) Transfer or Resale. Each Buyer understands that except as provided in
the Registration Rights Agreement: (i) the Convertible Debentures have
not been and are not being registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, or (B)
such Buyer shall have delivered to the Company an opinion of counsel,
in a generally acceptable form, to the effect that such securities to
be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration requirements; (ii) any
sale of such securities made in reliance on Rule 144 under the
Securities Act (or a successor rule thereto) ("Rule 144") may be made
only in accordance with the terms of Rule 144 and further, if Rule 144
is not applicable, any resale of such securities under circumstances
in which the seller (or the person through whom the sale is made) may
be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption under
the Securities Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any
obligation to register such securities under the Securities Act or any
state securities laws or to comply with the terms and conditions of
any exemption thereunder. The Company reserves the right to place stop
transfer instructions against the shares and certificates for the
Conversion Shares.
(g) Legends. Each Buyer understands that the certificates or other
instruments representing the Convertible Debentures and or the
Conversion Shares shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against
transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS.
The legend set forth above shall be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder
of the Conversion Shares upon which it is stamped, if, unless otherwise
required by state securities laws, (i) in connection with a sale
transaction, provided the Conversion Shares are registered under the
Securities Act or (ii) in connection with a sale transaction, after such
holder provides the Company with an opinion of counsel, which opinion shall
be in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale, assignment or
transfer of the Conversion Shares may be made without registration under
the Securities Act.
(h) Authorization, Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance
with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(i) Receipt of Documents. Each Buyer and his or its counsel has received
and read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein and the
Transaction Documents (as defined herein); (ii) all due diligence and
other information necessary to verify the accuracy and completeness of
such representations, warranties and covenants; (iii) the Company's
Form 10-KSB for the fiscal year ended December 31, 2005; (iv) the
Company's Form 10-QSB for the fiscal quarter ended June 30, 2006 and
(v) answers to all questions each Buyer submitted to the Company
regarding an investment in the Company; and each Buyer has relied on
the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
(j) Due Formation of Corporate and Other Buyers. If the Buyer(s) is a
corporation, trust, partnership or other entity that is not an
individual person, it has been formed and validly exists and has not
been organized for the specific purpose of purchasing the Convertible
Debentures and is not prohibited from doing so.
(k) No Legal Advice From the Company. Each Buyer acknowledges, that it had
the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and
investment and tax advisors. Each Buyer is relying solely on such
counsel and advisors and not on any statements or representations of
the Company or any of its representatives or agents for legal, tax or
investment advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as of the date hereof to each of the
Buyers that, except as set forth in the SEC Documents (as defined herein) or in
the Disclosure Schedule attached hereto (the "Disclosure Schedule"):
(a) Organization and Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the Company
and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Security Agreement, the Registration
Rights Agreement, the Irrevocable Transfer Agent Agreement, the Pledge
Agreement, the Guaranty, and any related agreements (collectively the
"Transaction Documents") and to issue the Convertible Debentures and
the Conversion Shares in accordance with the terms hereof and thereof,
(ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the
Convertible Debentures the Conversion Shares and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization
is required by the Company, its Board of Directors or its
stockholders, (iii) the Transaction Documents have been duly executed
and delivered by the Company, (iv) the Transaction Documents
constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies. The authorized officer
of the Company executing the Transaction Documents knows of no reason
why the Company cannot file the registration statement as required
under the Registration Rights Agreement or perform any of the
Company's other obligations under such documents.
(c) Capitalization. The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, 400,000 shares of Series A
Convertible Preferred Stock, par value $0.0001 and 10,000,000 shares
of Series C Convertible Preferred Stock, par value $0.0001
(collectively, the "Preferred Stock"), of which 2,225,192 shares of
Common Stock, 37,350 shares of Series A Convertible Preferred Stock
and 1,000,000 shares of Series C Convertible Preferred Stock,
respectively, are issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and nonassessable.
No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or
permitted by the Company. As of the date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii)
there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of their
securities under the Securities Act (except pursuant to the
Registration Rights Agreement) and (iv) there are no outstanding
registration statements and there are no outstanding comment letters
from the SEC or any other regulatory agency. There are no securities
or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Convertible Debentures as
described in this Agreement. The Company has furnished to the Buyer
true and correct copies of the Company's Articles of Incorporation, as
amended and as in effect on the date hereof (the "Articles of
Incorporation"), and the Company's By-laws, as in effect on the date
hereof (the "By-laws"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto other than stock options issued to
employees and consultants.
(d) Issuance of Securities. The Convertible Debentures are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens
and charges with respect to the issue thereof. The Conversion Shares
issuable upon conversion of the Convertible Debentures have been duly
authorized and reserved for issuance. Upon conversion or exercise in
accordance with the Convertible Debentures the Conversion Shares will
be duly issued, fully paid and nonassessable.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby will not (i) result in
a violation of the Articles of Incorporation, any certificate of
designations of any outstanding series of preferred stock of the
Company or the By-laws or (ii) conflict with or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of The National Association
of Securities Dealers Inc.'s OTC Bulletin Board on which the Common
Stock is quoted) applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. Neither the Company nor its
subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter
or by-laws, respectively, or any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or
its subsidiaries. The business of the Company and its subsidiaries is
not being conducted, and shall not be conducted in violation of any
material law, ordinance, or regulation of any governmental entity.
Except as specifically contemplated by this Agreement and as required
under the Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement or the
Registration Rights Agreement in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the
date hereof. The Company and its subsidiaries are unaware of any facts
or circumstance, which might give rise to any of the foregoing.
(f) SEC Documents: Financial Statements. Since January 1, 2004, the
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (all of the
foregoing filed prior to the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC Documents"). The Company has
delivered to the Buyers or their representatives, or made available
through the SEC's website at xxxx://xxx.xxx.xxx., true and complete
copies of the SEC Documents. As of their respective dates, the
financial statements of the Company disclosed in the SEC Documents
(the "Financial Statements") complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such Financial
Statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and, fairly present in all material
respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on
behalf of the Company to the Buyer which is not included in the SEC
Documents, including, without limitation, information referred to in
this Agreement, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(g) 10(b)-5. The SEC Documents do not include any untrue statements of
material fact, nor do they omit to state any material fact required to
be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.
(h) Absence of Litigation. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or any of the Company's
subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a material adverse effect on the transactions contemplated
hereby (ii) adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under,
this Agreement or any of the documents contemplated herein, or (iii)
have a material adverse effect on the business, operations,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole.
(i) Acknowledgment Regarding Buyer's Purchase of the Convertible
Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm's length purchaser with
respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that the Buyer(s) is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer(s) or any of
their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely
incidental to such Buyer's purchase of the Convertible Debentures or
the Conversion Shares. The Company further represents to the Buyer
that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the Convertible Debentures or the Conversion
Shares.
(k) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Convertible Debentures or the Conversion Shares
under the Securities Act or cause this offering of the Convertible
Debentures or the Conversion Shares to be integrated with prior
offerings by the Company for purposes of the Securities Act.
(l) Employee Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or
any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and
the Company and its subsidiaries believe that their relations with
their employees are good.
(m) Intellectual Property Rights. The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade
names, service marks, service xxxx registrations, service names,
patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. The Company and
its subsidiaries do not have any knowledge of any infringement by the
Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company there
is no claim, action or proceeding being made or brought against, or to
the Company's knowledge, being threatened against, the Company or its
subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service
xxxx registrations, trade secret or other infringement; and the
Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
(n) Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.
(o) Title. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
(p) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to
be prudent and customary in the businesses in which the Company and
its subsidiaries are engaged. Neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
(q) Regulatory Permits. The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization
or permit.
(r) Internal Accounting Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, and (iii) the
recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(s) No Material Adverse Breaches, etc. Neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which
in the judgment of the Company's officers has or is expected in the
future to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of
the Company or its subsidiaries. Neither the Company nor any of its
subsidiaries is in breach of any contract or agreement which breach,
in the judgment of the Company's officers, has or is expected to have
a material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company
or its subsidiaries.
(t) Tax Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject
and (unless and only to the extent that the Company and each of its
subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
(u) Certain Transactions. Except for arm's length transactions pursuant to
which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third
parties and other than the grant of stock options disclosed in the SEC
Documents, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(v) Acquisition of NextGen Fuel, Inc. The Stock Purchase Agreement (the
"NextGen SPA") dated as of October 3, 2006 among NextGen Acquisition,
Inc., NextGen Fuel, Inc., Golden Technology Management, LLC, Xxxxxx
Xxxxxxx, Xxxx XxXxxxx, Xxxxxxxx University, Goshen Capital and Xxx
Xxxxxxx and the schedules thereto in the form delivered to the Buyer
is true and correct and has not been modified, revised, amended or
otherwise changed. The Company believes that the representations and
warranties contained in the NextGen SPA are true and correct and has
not received notice or waived any material violations or breaches to
such representations or warranties. The only material condition to
closing the transactions contemplated in the NextGen SPA is the
payment of the purchase price.
(w) Fees and Rights of First Refusal. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal
basis or otherwise to any third parties including, but not limited to,
current or former shareholders of the Company, underwriters, brokers,
agents or other third parties.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts to timely satisfy
each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) Form D. The Company agrees to file a Form D with respect to the
Conversion Shares as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Conversion Shares, or
obtain an exemption for the Conversion Shares for sale to the Buyers
at the Closing pursuant to this Agreement under applicable securities
or "Blue Sky" laws of the states of the United States, and shall
provide evidence of any such action so taken to the Buyers on or prior
to the Closing Date.
(c) Reporting Status. Until the earlier of (i) the date as of which the
Buyer(s) may sell all of the Conversion Shares without restriction
pursuant to Rule 144(k) promulgated under the Securities Act (or
successor thereto), or (ii) the date on which (A) the Buyer(s) shall
have sold all the Conversion Shares and (B) none of the Convertible
Debentures are outstanding (the "Registration Period"), the Company
shall file in a timely manner all reports required to be filed with
the SEC pursuant to the Exchange Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise
permit such termination.
(d) Use of Proceeds. The Company will use the proceeds to be received
hereunder exclusively for the acquisition of NextGen Fuel, Inc.
(e) Reservation of Shares. Within sixty (60) days of the date hereof, the
Company shall reserve for issuance to the Buyers 22,000,000 shares for
issuance upon conversions of the Convertible Dentures and 540,000
shares for issuance upon exercise of the Warrants (collectively, the
"Share Reserve"). The Company represents that it has sufficient
authorized and unissued shares of Common Stock available to create the
Share Reserve after considering all other commitments that may require
the issuance of Common Stock. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for
the purpose of issuance, such number of shares of Common Stock as
shall be necessary to effect the full conversion of the Convertible
Debentures and the full exercise of the Warrants. If at any time the
Share Reserve is insufficient to effect the full conversion of the
Convertible Debentures or the full exercise of the Warrants, the
Company shall increase the Share Reserve accordingly. If the Company
does not have sufficient authorized and unissued shares of Common
Stock available to increase the Share Reserve, the Company shall call
and hold a special meeting of the shareholders within thirty (30) days
of such occurrence, for the sole purpose of increasing the number of
shares authorized. The Company's management shall recommend to the
shareholders to vote in favor of increasing the number of shares of
Common Stock authorized. Management shall also vote all of its shares
in favor of increasing the number of authorized shares of Common
Stock.
(f) No Payment on Affiliated Loans. Without the Buyer's prior written
consent, the Company shall not pay, prepay or repay any interest,
principal or other amounts owing to any affiliated entity (including,
without limitation, any amounts owed to Greenshift Corporation made
before or after the date hereof) so long as any amounts are owed to
the Buyer, including, without limitation, under this Agreement or
under the Convertible Debenture dated as of June 2006 in the original
principal amount of $5,500,000.
(g) Listings or Quotation. The Company's Common Stock shall be listed or
quoted for trading on any of (a) the American Stock Exchange, (b) New
York Stock Exchange, (c) the Nasdaq National Market, (d) the Nasdaq
Capital Market, or (e) the Nasdaq OTC Bulletin Board ("OTC") (each, a
"Primary Market") and the Company shall promptly secure the listing or
quotation of the Conversion Shares and Warrant Shares for trading on
the same Primary Market upon which the shares of Common Stock are then
listed or quoted.
(g) Fees and Expenses.
(i) Each of the Company and the Buyer(s) shall pay all costs and
expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery
of the Transaction Documents. The Company shall pay Yorkville
Advisors LLC a fee equal to ten percent (10%) of the Purchase
Price which shall be paid pro rata directly from the proceeds of
each Closing.
(ii) The Company shall pay a structuring fee to Yorkville Advisors LLC
of Fifty Thousand Dollars ($50,000) which shall be paid directly
from the proceeds of the Closing.
(h) Corporate Existence. So long as any of the Convertible Debentures
remain outstanding, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, reverse stock
split consolidation, sale of all or substantially all of the Company's
assets or any similar transaction or related transactions (each such
transaction, an "Organizational Change") unless, prior to the
consummation an Organizational Change, the Company obtains the written
consent of each Buyer. In any such case, the Company will make
appropriate provision with respect to such holders' rights and
interests to insure that the provisions of this Section 4(h) will
thereafter be applicable to the Convertible Debentures.
(i) Transactions With Affiliates. So long as any Convertible Debentures
are outstanding, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or
permit any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or
any subsidiary's officers, directors, person who were officers or
directors at any time during the previous two (2) years, stockholders
who beneficially own five percent (5%) or more of the Common Stock, or
Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in
which any such entity or individual owns a five percent (5%) or more
beneficial interest (each a "Related Party"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b)
any investment in an Affiliate of the Company, (c) any agreement,
transaction, commitment, or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable
from a person other than such Related Party, (d) any agreement,
transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company; for purposes
hereof, any director who is also an officer of the Company or any
subsidiary of the Company shall not be a disinterested director with
respect to any such agreement, transaction, commitment, or
arrangement. "Affiliate" for purposes hereof means, with respect to
any person or entity, another person or entity that, directly or
indirectly, (i) has a ten percent (10%) or more equity interest in
that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity.
"Control" or "controls" for purposes hereof means that a person or
entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
(j) Transfer Agent. The Company covenants and agrees that, in the event
that the Company's agency relationship with the transfer agent should
be terminated for any reason prior to a date which is two (2) years
after the Closing Date, the Company shall immediately appoint a new
transfer agent and shall require that the new transfer agent execute
and agree to be bound by the terms of the Irrevocable Transfer Agent
Instructions (as defined herein).
(k) Restriction on Issuance of the Capital Stock. So long as any
Convertible Debentures are outstanding, the Company shall not, without
the prior written consent of the Buyer(s), (i) issue or sell shares of
Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common Stock
determined immediately prior to its issuance, (ii) issue any preferred
stock, warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common
Stock without consideration or for a consideration less than such
Common Stock's bid price determined immediately prior to it's
issuance, (iii) enter into any security instrument granting the holder
a security interest in any and all assets of the Company, or (iv) file
any registration statement on Form S-8.
(l) Neither the Buyer(s) nor any of its affiliates have an open short
position in the Common Stock of the Company, and the Buyer(s) agrees
that it shall not, and that it will cause its affiliates not to,
engage in any short sales of or hedging transactions with respect to
the Common Stock as long as any Convertible Debentures shall remain
outstanding.
(m) Rights of First Refusal. So long as any portion of Convertible
Debentures are outstanding, if the Company intends to raise additional
capital by the issuance or sale of capital stock of the Company,
including without limitation shares of any class of common stock, any
class of preferred stock, options, warrants or any other securities
convertible or exercisable into shares of common stock (whether the
offering is conducted by the Company, underwriter, placement agent or
any third party) the Company shall be obligated to offer to the Buyers
such issuance or sale of capital stock, by providing in writing the
principal amount of capital it intends to raise and outline of the
material terms of such capital raise, prior to the offering such
issuance or sale of capital stock to any third parties including, but
not limited to, current or former officers or directors, current or
former shareholders and/or investors of the obligor, underwriters,
brokers, agents or other third parties. The Buyers shall have ten (10)
business days from receipt of such notice of the sale or issuance of
capital stock to accept or reject all or a portion of such capital
raising offer.
(n) Lock Up Agreements. On the date hereof, the Company shall obtain from
each officer and director a lock up agreement in the form attached
hereto as Exhibit A.
(o) Changes to Capital Structure. The Company shall, within 60 days of the
date hereof, effectuate changes to the Company's capital structure to
mirror that set forth in Exhibit "A" hereto. The Company shall not
materially deviate from the capital structure set forth in Exhibit "A"
without the prior written consent of the Buyer.
(p) Intercreditor Agreement. Buyer shall enter into an intercreditor
agreement with any lender financing a portion of the purchase price of
NextGen Fuel, Inc., which such agreement shall be in a form acceptable
to the Buyer in its discretion.
5. TRANSFER AGENT INSTRUCTIONS.
(a) The Company shall issue the Irrevocable Transfer Agent Instructions to
its transfer agent irrevocably appointing Xxxxx Xxxxxxxx, Esq. as the
Company's agent for purpose of having certificates issued, registered
in the name of the Buyer(s) or its respective nominee(s), for the
Conversion Shares representing such amounts of Convertible Debentures
as specified from time to time by the Buyer(s) to the Company upon
conversion of the Convertible Debentures, for interest owed pursuant
to the Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Registration Rights Agreement). Xxxxx
Xxxxxxxx, Esq. shall be paid a cash fee of Fifty Dollars ($50) for
every occasion they act pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without
the express written consent of the Buyer(s), which may be withheld by
the Buyer(s) in its sole discretion. Prior to registration of the
Conversion Shares under the Securities Act, all such certificates
shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5,
and stop transfer instructions to give effect to Section 2(g) hereof
(in the case of the Conversion Shares prior to registration of such
shares under the Securities Act) will be given by the Company to its
transfer agent and that the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to
the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section 5 shall affect in any way the
Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of Conversion Shares. If the Buyer(s)
provides the Company with an opinion of counsel, in form, scope and
substance customary for opinions of counsel in comparable transactions
to the effect that registration of a resale by the Buyer(s) of any of
the Conversion Shares is not required under the Securities Act, the
Company shall within two (2) business days instruct its transfer agent
to issue one or more certificates in such name and in such
denominations as specified by the Buyer. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable
harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5,
that the Buyer(s) shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) Each Buyer shall have executed the Transaction Documents and delivered
them to the Company.
(b) The Buyer(s) shall have delivered to the Company the Purchase Price
for Convertible Debentures in respective amounts as set forth next to
each Buyer as outlined on Schedule I attached hereto, minus any fees
to be paid directly from the proceeds the Closings as set forth
herein, by wire transfer of immediately available U.S. funds pursuant
to the wire instructions provided by the Company.
(c) The representations and warranties of the Buyer(s) shall be true and
correct in all material 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), and
the Buyer(s) 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 the Buyer(s) at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
(a) The obligation of the Buyer(s) hereunder to purchase the Convertible
Debentures at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions:
(i) The Company shall have executed the Transaction Documents and
delivered the same to the Buyer(s).
(ii) The Common Stock shall be authorized for quotation or trading on
the Primary Market, trading in the Common Stock shall not have
been suspended for any reason, and all the Conversion Shares
issuable upon the conversion of the Convertible Debentures shall
be approved for listing or trading on the Primary Market.
(iii) The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified
as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) 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)
and the Company 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 the Company at or prior to the Closing Date
(iv) The Company shall have executed and delivered to the Buyer(s) the
Convertible Debentures in the respective amounts set forth
opposite each Buyer(s) name on Schedule I attached hereto.
(v) The Buyer(s) shall have received an opinion of counsel from
counsel to the Company in a form satisfactory to the Buyer(s).
(vi) The Company shall have provided to the Buyer(s) a certificate of
good standing from the secretary of state from the state in which
the company is incorporated.
(vii) The Company or the Buyers shall have filed a form UCC-1 or such
other forms as may be required to perfect the Buyer's security
interest created under the Security Documents and provided proof
of such filing to the Buyer(s).
(viii) The Company and Xxxxx Xxxxxxxx shall have delivered the Pledged
Shares as well as executed and medallion guaranteed stock powers
as required pursuant to the Pledge Agreement.
(ix) The Company shall have provided to the Buyer an acknowledgement,
to the satisfaction of the Buyer, from the Company's independent
certified public accountants as to its ability to provide all
consents required in order to file a registration statement in
connection with this transaction.
(x) The Company shall have reserved out of its authorized and
unissued Common Stock, solely for the purpose of effecting the
conversion of the Convertible Debentures, shares of Common Stock
to effect the conversion of all of the Conversion Shares then
outstanding.
(xi) The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to
and acknowledged in writing by the Company's transfer agent.
(xii) The Company shall have acquired NextGen Fuel, Inc.
8. INDEMNIFICATION.
(a) In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Convertible Debentures and the Conversion
Shares hereunder, and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Buyer(s) and each other holder of the
Convertible Debentures and the Conversion Shares, and all of their
officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Buyer
Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether
any such Buyer Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by the Buyer Indemnitees or any of them as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of
any representation or warranty made by the Company in this Agreement,
the Convertible Debentures or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation of
the Company contained in this Agreement, or the Registration Rights
Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or
claim brought or made against such Indemnitee and arising out of or
resulting from the execution, delivery, performance or enforcement of
this Agreement or any other instrument, document or agreement executed
pursuant hereto by any of the parties hereto, any transaction financed
or to be financed in whole or in part, directly or indirectly, with
the proceeds of the issuance of the Convertible Debentures or the
status of the Buyer or holder of the Convertible Debentures the
Conversion Shares, as a Buyer of Convertible Debentures in the
Company. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
(b) In consideration of the Company's execution and delivery of this
Agreement, and in addition to all of the Buyer's other obligations
under this Agreement, the Buyer shall defend, protect, indemnify and
hold harmless the Company and all of its officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "Company Indemnitees") from and against any and all
Indemnified Liabilities incurred by the Indemnitees or any of them as
a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by
the Buyer(s) in this Agreement, instrument or document contemplated
hereby or thereby executed by the Buyer, (b) any breach of any
covenant, agreement or obligation of the Buyer(s) contained in this
Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the
Buyer, or (c) any cause of action, suit or claim brought or made
against such Company Indemnitee based on material misrepresentations
or due to a material breach and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement, the
Registration Rights Agreement or any other instrument, document or
agreement executed pursuant hereto by any of the parties hereto. To
the extent that the foregoing undertaking by each Buyer may be
unenforceable for any reason, each Buyer shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without regard to
the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Xxxxxx County, New Jersey, and
expressly consent to the jurisdiction and venue of the Superior Court
of New Jersey, sitting in Xxxxxx County and the United States District
Court for the District of New Jersey sitting in Newark, New Jersey for
the adjudication of any civil action asserted pursuant to this
Paragraph.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event
any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of,
this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of
this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement, Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyer(s), the Company,
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 the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by the party
to be charged with enforcement.
(f) Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon confirmation of receipt,
when sent by facsimile; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company, to: GS Agrifuels Corporation
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile:
With a copy to: Sonageri & Fallon
000 Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Buyer(s), to its address and facsimile number on Schedule I,
with copies to the Buyer's counsel as set forth on Schedule I. Each
party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number.
(g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and
assigns. Neither the Company nor any Buyer shall assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the other party hereto.
(h) 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.
(i) Survival. Unless this Agreement is terminated under Section 9(l), the
representations and warranties of the Company and the Buyer(s)
contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, and the indemnification provisions set forth
in Section 8, shall survive the Closing for a period of two (2) years
following the date on which the Convertible Debentures are converted
in full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity. The Company and the Buyer(s) shall have the right to
approve, before issuance any press release or any other public
statement with respect to the transactions contemplated hereby made by
any party; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer(s), to issue any press release
or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Company
shall use its best efforts to consult the Buyer(s) in connection with
any such press release or other public disclosure prior to its release
and Buyer(s) shall be provided with a copy thereof upon release
thereof).
(k) Further Assurances. Each party shall 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 the 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.
(l) Termination. In the event that the Closing shall not have occurred
with respect to the Buyers on or before five (5) business days from
the date hereof due to the Company's or the Buyer's failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the
non-breaching party's failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other
party; provided, however, that if this Agreement is terminated by the
Company pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the Buyer(s) for the fees and expenses of
Yorkville Advisors LLC described in Section 4(g) above.
(m) Brokerage. The Company represents that no broker, agent, finder or
other party has been retained by it in connection with the
transactions contemplated hereby and that no other fee or commission
has been agreed by the Company to be paid for or on account of the
transactions contemplated hereby.
(n) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
10. WARRANTS
(a) On the date hereof, the Company shall issue to the Buyer warrants to
purchase 540,000 shares of the Company's common stock at an exercise
price of $0.001 per share.
(b) The shares of Common Stock issuable upon exercise of the Warrants
shall be referred to as the "Warrant Shares" and shall have
"piggy-back" and demand registration rights.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
GS AGRIFUELS CORPORATION
By:/s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
BUYER:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Its: Portfolio Manager
SCHEDULE I
SCHEDULE OF BUYER
---------------------------------- ----------------- ----------------- --------------------------------
(1) (2) (3) (4)
---------------------------------- -----------------------------------
Buyer Subscription Amount
---------------------------------- ----------------- ----------------- --------------------------------
Closing Legal Representative's Address
and Facsimile Number
---------------------------------- ----------------- ----------------- --------------------------------
Cornell Capital Partners, LP $13,000,000 Xxxx Xxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 0000
000 Xxxxxx Xxxxxx, Xxxxx 0000 Xxxxxx Xxxx, Xxx Xxxxxx 07302
Xxxxxx Xxxx, XX 00000 Telephone: (000) 000-0000
Attention: Xxxx Xxxxxx Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Residence: Delaware
---------------------------------- ----------------- ----------------- --------------------------------
EXHIBIT A
LOCK UP AGREEMENT
The undersigned hereby agrees that for a period commencing on October 25,
2006 and expiring on the date thirty (30) days after the date that all amounts
owed to Cornell Capital Partners, LP (the "Buyer"), under the Secured
Convertible Debentures issued to the Investor pursuant to the Securities
Purchase Agreement between GS Agrifuels Corporation (the "Company") and the
Buyer dated October 25, 2006 have been paid (the "Lock-up Period"), he, she or
it will not, directly or indirectly, without the prior written consent of the
Investor, issue, offer, agree or offer to sell, sell, grant an option for the
purchase or sale of, transfer, pledge, assign, hypothecate, distribute or
otherwise encumber or dispose of any securities of the Company, including common
stock or options, rights, warrants or other securities underlying, convertible
into, exchangeable or exercisable for or evidencing any right to purchase or
subscribe for any common stock (whether or not beneficially owned by the
undersigned), or any beneficial interest therein (collectively, the
"Securities") except in accordance with the volume limitations set forth in Rule
144(e) of the General Rules and Regulations under the Securities Act of 1933, as
amended.
In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Company's securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned's investment in
the Company.
Dated: _______________, 2006
Signature
Name:
Address:
City, State, Zip Code:
----------------------------------------
Print Social Security Number
or Taxpayer I.D. Number
