Re: Letter of Intent for the Share Exchange Agreement between Better Biodiesel, Inc., and GeoAlgae Technology, Inc.
[
Letterhead of Better Biodiesel, Inc]
December
17, 2007
Via
email:
GeoAlgae
Technology, Inc.
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Re:
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Letter
of Intent for the Share Exchange Agreement between Better Biodiesel,
Inc.,
and GeoAlgae Technology,
Inc.
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Dear
▇▇.
▇▇▇▇▇:
This
letter of intent (the “LOI”) dated December 17, 2007 will confirm the
general terms upon which Better Biodiesel, Inc., a Colorado corporation
(“Better Biodiesel”), and GeoAlgae Technology, Inc., a Wyoming
corporation (“GAT”), will enter into a share exchange agreement (the
“Agreement” or “Share Exchange”) whereby 3,300,000 shares of
common stock of Better Biodiesel and Better Biodiesel’s best efforts commitment
to facilitate capital financing (to be definitively stated in the Agreement)
shall be exchanged for 100% of the common stock of GAT (the “GAT
Shares”). Upon the development, execution and closing of a definitive
Share Exchange, which shall occur on or prior to December 27, 2007, GAT will
exist as a wholly owned subsidiary of Better Biodiesel (the
“Closing”), in the manner described below.
We
propose that the Agreement be negotiated and executed by our respective Boards
of Directors and Managers and that the Agreement contains the following general
terms and conditions.
A. The
Exchange.
(i)
GAT, at Closing, shall deliver the GAT Shares, subject to customary due
diligence, in exchange for the consideration (the “Consideration”)(to be
definitively stated in the Agreement):
(a) 3,300,000
shares of common stock of Better Biodiesel (the collectively the “Better
Biodiesel Shares”). Any and all Better Biodiesel common stock issued
pursuant to the Agreement shall be restricted for a period of up to two years,
pursuant to Rule 144 of the Securities Act of 1933. The Better
Biodiesel Shares shall have “piggy-back” registration rights to be
included on the next registration statement, excepting registrations on Form
S-4
or Form S-8 or on any subject to the right, however, of Better Biodiesel and
its
underwriters to reduce the number of shares proposed to be registered pro rata
in view of market conditions or legal considerations, pursuant to Rule 415
of
the Securities Act, which may limit the total number of shares included on
a
Registration Statement to 30% of the then issued and outstanding common stock
of
the Company;
(b) Better
Biodiesel’s commitment to make 6,700,000 shares available as additional
compensation, issuable subject to following performance based criteria (“BBDS
Performance Shares”):
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(1)
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80%
of GAT’s contribution to Better Biodiesel’s EBITDA arising from GAT’s
algae biofuel technology-for feedstock growth and/or fuel production
based
revenue shall be paid in BBDS Performance Shares at a value of $1.00
per
share (i.e.> a $1,200,000 contribution to Better Biodiesel’s EBIDTA
would result in the issuance of 960,000 BBDS Performance Shares”);
and
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(2)
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20%
of GAT's contribution to Better Biodiesel's EBITDA arising from GAT’s
acquisition of existing oil and fuel distributor based revenue shall
be paid in BBDS Performance Shares at a value of $1.00 per share
(i.e.>
a $1,200,000 contribution to Better Biodiesel’s EBIDTA would result in the
issuance of 240,000 BBDS Performance
Shares”);
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(c) Better
Biodiesel's best efforts commitment to facilitate capital financing the
continuing development of GAT's geo-energy and feedstock - biofuel
technology during the 12 months following the Closing of the Share Exchange
based on GAT's business plan (the disbursement of which funds shall be detailed
in the Share Exchange based upon GAT's business plan, and recommendation and
approval of the Board of Directors);
(d) Better
Biodiesel’s best efforts commitment to facilitate capital financing of the
continuing development of GAT’s biofuel fuel production and distribution
business during the 12 months following the Closing of the Share Exchange (the
disbursement of which funds shall be detailed in the Share Exchange based upon
GAT’s business plan, the recommendation of Better Biodiesel’s management, and
subject to the approval of Better Biodiesel’s Board of Directors);
and
(e) Better
Biodiesel’s agreement to appoint the Chief Executive Officer of GAT as the Chief
Executive Officer of Better Biodiesel and to enter into an employment contract
with such Chief Executive Officer providing:
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(1)
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an
annual salary of $100,000 for the 12 months following the Closing
of the
Share Exchange, to be distributed as designated in Better Biodiesel’s
employment contract with the Chief Executive
Officer;
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(2)
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performance
based bonuses of common stock or common stock equivalents of Better
Biodiesel as a portion of the shares distributed under the terms
in
A(i)(a)(b) as per his agreement with GAT;
and
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(3)
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A
defined expense budget to provide for Company related phone,
accommodation, and travel expenses;
and
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(ii) The
Share Exchange is intended to be a tax-free reorganization under Section 368
of
the Internal Revenue Code and the parties hereto shall use their best efforts
in
the structuring and carrying forth of the Share Exchange in order to maintain
tax free treatment of the transaction.
B. Agreement.
The
Agreement shall include, contain or provide the following:
(i) Representations
and Warranties. The Agreement shall contain the customary and usual
representations and warranties by the parties. The principal
executive officer of each of the parties shall certify these representations
and
warranties “to the best of his personal knowledge and information.”
(ii) Financial
and Other Information.
(a) The
examination and
inspection of the books and records of each of the parties prior to Closing;
the
delivery no later than at Closing of customary schedules listing GAT’s material
contracts; real and personal property; pending, threatened and contemplated
legal proceedings; employees; assets and liabilities, including contingencies
and commitments; and other information reasonably requested;
(b) Not
later
than December 30, 2007 Better Biodiesel shall provide financial statements
to
GAT at least as complete and comprehensive as financial statements to be
provided by GAT under (ii)(c)(I) and (ii)(c)(II). GAT acknowledges
that Better Biodiesel’s Form 10-KSB for the fiscal year ended September 30,
2007, will be filed not later than December 31, 2007, unless otherwise extended,
pursuant to Rule 12(b)-25(b) of the 1934 Exchange Act, to January 14,
2008;
(c) GAT
shall
provide financial statements consisting of a balance sheet and a related
statements of income and cash flow for (I) the prior two (2) fiscal years,
(II)
for the quarters subsequent to the most recent fiscal year and (III) for the
period subsequent to the most recent quarter if material changes have occurred
(the “Financial Statements”), which fairly represent the financial
condition of GAT as of the respective dates and for the periods involved,
and
such
statements shall be prepared in accordance with generally accepted accounting
principles consistently applied, on Closing, for such period or for such periods
as shall be set forth in the Agreement. In the event that GAT does
not have these Financial Statements readily available at Closing, GAT shall
provide a written representation of GAT’s ability to produce the Financial
Statements in auditable form within forty-five (45) days following the Closing;
and
(d) The
Financial
Statements of GAT shall state zero dollars (-$0-) of debt-related
liabilities.
(iii)
Expenses. Better Biodiesel and GAT shall bear their own expenses
prior to the Closing.
(iv)
Conduct of Business prior to Closing. Until consummation or termination of
an
Agreement, GAT will conduct business only in the ordinary course and the assets
of GAT shall not be sold or disposed of except in the ordinary course of
business.
(v)
Appointment of Managers. Immediately upon Closing, Better Biodiesel
shall appoint GAT’s designated management team.
(vi)
Appointment to the Board of
Directors. Better Biodiesel shall appoint two (2) GAT designees to
the board of directors, the first upon Closing, and the second within 90 days
of
Closing (but in no event earlier than 45 days following Closing, pursuant to
Rule 14(f) of the 1934 Exchange Act;
(vii) Prior
to December 30, 2007, Better Biodiesel shall obtain shareholder approval and
effect the necessary regulatory filings for the corporate name change of Better
Biodiesel to a corporate name to be agreed to by Better Biodiesel and
GAT
(viii) Miscellaneous
Provisions.
(a) Better
Biodiesel and
GAT shall have received all permits, authorizations, regulatory approvals and
third party consents necessary for the consummation of the change of domicile
and/or the Closing of the Agreement, and all applicable legal requirements
shall
have been satisfied.
(b) The
Agreement shall
be negotiated and executed as soon as the parties have arrived at and acceptable
definitive Agreement, and Better Biodiesel shall instruct its legal counsel
to
immediately prepare all necessary documentation to facilitate negotiations
upon
the execution of this LOI.
(c) The
Board of
Directors of Better Biodiesel and the managers of GAT and the requisite majority
of the stock holders and members required under applicable law shall have
approved the Agreement.
(d) All
notices or other
information deemed required or necessary to be given to any of the parties
shall
be given at the following addresses:
Better
Biodiesel
c/o
The ▇▇▇▇ Law
Group, PLLC
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
Seattle,
WA
98101
GAT
Attn:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇
______________________
______________________
______________________
With
a copy
to:
_____________________
_____________________
_____________________
_____________________
(e) Any
finder’s
fee or similar payment with respect to the Agreement shall be paid by the party
or parties agreeing to such fee or payment.
(f) An
Agreement
shall contain customary and usual indemnification and hold harmless
provisions.
(g) The
transactions which are contemplated herein, to the extent permitted, shall
be
governed by and construed in accordance with the laws of the State of
California. This provision shall not and does not, in any manner,
control or imply any issues that may arise regarding venue of a court of
law.
(h) Each
party
and its agents, attorneys and representatives shall have full and free access
to
the property, books and records of the other party (the confidentiality of
which
the investigating party agrees to retain) for purposes of conducting due
diligence.
(i) The
substance
of any public announcement with respect to the exchange, other than notices
required by law, shall be approved in advance by all parties or their duly
authorized representatives.
(j) Until
the
earlier of the Closing or the termination of negotiations pursuant to this
LOI,
▇▇▇ agrees that it will not, nor will it permit any of its respective
representatives or agents to, directly or indirectly, solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, or provide
any information to, any third persons or parties relating to any transaction
the
completion of which would likely make the negotiation and execution of a
Definitive Agreement or any related transaction impractical to
complete.
C. Counterparts.
This
LOI
may be executed in any number of counterparts and each such counterpart shall
be
deemed to be an original instrument, but all of such counterparts together
shall
constitute one agreement.
D. Confidentiality.
As
used
in this LOI, “Confidential Information” means all nonpublic information
disclosed by the one party or its agents to the other that is designated as
confidential or that, given the nature of the information or the circumstances
surrounding its disclosure, reasonably should be considered as
confidential. Confidential Information includes, without limitation
(i) nonpublic information relating to the party’s technology, customers,
business plans, promotional and marketing activities, finances and other
business affairs, and (ii) third-party information that the party is
obligated to keep confidential.
The
parties may use Confidential Information only in connection with its business
relationship with the other party. Except as expressly provided in
this LOI, the parties hereto agree not to disclose Confidential Information
to
anyone without the other party’s prior written consent. Each party
will take all reasonable measures to avoid disclosure, dissemination or
unauthorized use of Confidential Information, including, at a minimum, those
measures it takes to protect its own confidential information of a similar
nature.
E. Non-solicitation,
Non-circumvention, Exclusivity.
GAT
agrees not to solicit or otherwise seek other persons or entities for the
purpose of entering into a corporate transaction or joint venture that would
likely make the negotiation and execution of the Share Exchange or any related
transaction impractical to complete for the period commencing upon mutual
execution of this LOI and ending upon the earlier of December 30, 2007 or the
good faith termination of this LOI (the “Exclusivity
Period”). During the Exclusive Period, ▇▇▇ also agrees not to
solicit or participate in any discussions or negotiations for any merger or
other form of business combination or other type of investment other than the
Share Exchange contemplated by this LOI. If GAT receives an
unsolicited offer on more favorable terms, GAT will immediately notify
Better Biodiesel and the GAT board of directors may consider the offer in
accordance with their fiduciary duties to shareholders.
F. Nature
of this Letter of Intent.
This
Letter of Intent merely evidences the intention of the parties hereto to use
their best efforts to negotiate in good faith and enter into a binding Share
Exchange Agreement, which shall be the controlling agreement
thereafter. If the parties, despite their best efforts and good
faith, are unable to negotiate and enter a binding Share Exchange Agreement,
Section D, above, shall survive the termination of this LOI, and each of the
parties agrees to hold the others harmless for any attorney’s fees, accountant’s
fees, expenses or other damages which may be incurred by their good faith
failure to consummate the Share Exchange Agreement.
If
the
foregoing correctly sets forth the substance of the understanding of the
parties, please execute this LOI in duplicate. Retain one copy for your records
and return one to ▇▇▇▇▇ ▇. ▇▇▇▇, The ▇▇▇▇ Law Group, PLLC, ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
▇▇▇▇▇▇
and accepted as of the date first written above.
/s/
▇▇▇▇▇
▇▇▇▇
By: ▇▇▇▇▇
▇. ▇▇▇▇
Its: Director
GeoAlgae
Technology, Inc.
/s/
▇▇▇▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇▇▇
▇. ▇▇▇▇▇
Its: Chairman
of the Board of Directors