WARRANT EXCHANGE AGREEMENT
Exhibit
10.1
WARRANT
EXCHANGE AGREEMENT, dated as of August 5, 2008 (this “Agreement”), by and
between PURE BIOFUELS CORP., a Nevada corporation (the “Company”), and
PLAINFIELD PERU II LLC, a Delaware limited liability company (“LLCII”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in the Securities Purchase Agreement, dated as of
September 12, 2007, as amended by an amendment executed on March 26, 2008 (the
“Purchase Agreement”), by and between the Company, LLCII and PLAINFIELD PERU I
LLC (“LLCI”), a Delaware limited liability company (together with LLCII, the
“Purchaser”) or the Loan Agreement (as defined in the Purchase Agreement) if
such capitalized term is not defined in the Purchase Agreement.
WITNESSETH:
WHEREAS,
(A) LLCII is a holder of warrants to purchase (i) 59,104,912 shares of Common
Stock at an exercise price of $0.30 and (ii) 122,605 shares of Common Stock
at
an exercise price of $0.01; and (B) LLCII has the rights to acquire warrants
to
purchase 57,823,130 shares of Common Stock at an exercise price to be determined
but not greater than $0.30 (the “Warrant Rights” and together with the warrants
described in subclause (A) above, the “Warrants”);
WHEREAS,
LLCII desires, for valid business reasons, to consummate an exchange of the
Warrants pursuant to the terms hereof;
WHEREAS,
the Company has determined that it is in its best interest to recapitalize
its
capital structure through the exchange of the Warrants pursuant to the terms
hereof as a plan of reorganization; and
WHEREAS,
for Federal income tax purposes, it is intended that this Agreement shall
qualify as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the “Code”).
NOW,
THEREFORE, in consideration of the foregoing premises and of the
representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Agreement
to Exchange.
LLCII
and the Company agree that LLCII shall exchange all of the Warrants for
78,033,765
shares
of
Common Stock (the “Exchange Shares”). Upon issuance of the Exchange Shares to
LLCII, the Warrants will be null and void and of no further force or effect.
The
parties agree to issue the Exchange Shares in the name of PLAINFIELD PERU II
LLC.
2. Surrender
of Warrant Certificates.
Concurrently with the execution of this Agreement and the issuance of the
Exchange Shares, LLCII shall surrender the Warrants it holds in certificated
form (which do not include the uncertificated Warrant Rights) to the Company,
upon which surrender LLCII shall be deemed to be the holder of record of the
Exchange Shares.
3. Issuance
of Exchange Shares.
Upon
surrender by LLCII of the Warrants it holds in certificated form (which do
not
include the uncertificated Warrant Rights) pursuant to Section 2 hereof, the
Company agrees to adopt this plan of reorganization and shall issue and deliver
to LLCII the Exchange Shares issuable to LLCII pursuant to this Agreement,
registered in the name of LLCII with the Transfer Agent.
4. Registration
Rights. The
Company and LLCII agree that the Exchange Shares shall constitute “Registrable
Securities” under the Registration Rights Agreement.
5. Representations
and Warranties of the Company.
In
order to induce LLCII to enter into this Agreement, the Company hereby
represents and warrants to and agrees with LLCII that:
(i) All
Exchange Shares shall, when issued in exchange for the Warrants, be duly
authorized, validly issued, fully paid and non-assessable, and free of any
liens, encumbrances and preemptive or similar rights, and shall not be in
violation of the Company’s Articles of Incorporation or Bylaws or any Applicable
Law.
(ii) The
Company has the corporate power and authority to execute, deliver and perform
the terms and provisions of this Agreement and has taken all necessary corporate
action to authorize the execution, delivery and performance by it of this
Agreement. The Company has duly executed and delivered this Agreement, and
this
Agreement constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(iii) No
order,
consent, approval, license, authorization or validation of, or filing, recording
or registration with, or exemption by, any Governmental Authority is required
to
be obtained or made by, or on behalf of, the Company to authorize, or is
required to be obtained or made by, or on behalf of, the Company in connection
with (a) the execution, delivery and performance of this Agreement, (b) the
legality, validity, binding effect or enforceability of this Agreement, or
(c)
the issuance of the Exchange Shares to LLCII and the registration of the
Exchange Shares with the Transfer Agent.
(iv)
Neither the execution, delivery or performance by the Company of this Agreement,
nor compliance by it with the terms and provisions thereof, (a) will contravene
any provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or Governmental Authority, (b) will conflict
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Encumbrance, upon
any
of the property or assets of the Company or any of its Subsidiaries pursuant
to
the terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other agreement, contract or instrument, in each case to
which
Company or any of its Subsidiaries is a party or by which it or any of the
Company or any of its Subsidiaries or property or assets is bound or to which
the Company or any of its Subsidiaries may be subject, except for any violation
of the terms of the applicable provisions of the Purchase Agreement, the Notes,
the Loan Agreement and the Loan Documents that are being waived pursuant to
Section 7 of this Agreement or on the signature pages hereto, or (c) will
violate any provision of the certificate or articles of incorporation,
certificate of formation, limited liability company agreement or by-laws (or
equivalent organizational documents), as applicable, of the Company or any
of
its Subsidiaries.
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(v) (a)
Upon
issuance of the Exchange Shares, the authorized Capital Stock of the Company
will consist solely of 250,000,000 shares of Common Stock and 1,000,000 shares
of preferred stock, of which 155,721,636
shares
of Common Stock (assuming no additional exercises of existing stock options
described in Schedule 4.7 to this Agreement) and no shares of preferred stock
will be issued and outstanding, no shares are held in treasury and 71,153,414
shares
of Common Stock (such amount does not include any shares,
warrants
or
other
convertible or exchangeable securities that
may
be issued pursuant to the Agreement
and Plan of Merger, dated as of December 4, 2007, by and among the Company,
Pure
Biofuels del Peru S.A.C., Interpacific Oil S.A.C. and certain Target
Stockholders identified therein, as amended on January 23, 2008 (the “Merger
Agreement”),
Section
3.6(m) of the Purchase Agreement,
or the
Notes as PIK Interest (as defined in the Notes))
will be
reserved for issuance upon the exercise of outstanding warrants, options and
other convertible or exchangeable securities (other than the Exchange Shares).
Schedule 4.7 to this Agreement sets forth the capitalization of the Company
as
of the issuance of the Exchange Shares.
(b)
Except
as
set forth on Schedule 4.7 to this Agreement, as of the date of this Agreement,
there are and upon issuance of the Exchange Shares there will be (i) no
outstanding options, warrants, agreements, conversion rights, exchange rights,
preemptive rights or other rights (whether contingent or not) to subscribe
for,
purchase or acquire any issued or unissued shares of Capital Stock of the
Company or any Subsidiary, and (ii) no restrictions upon, or Contracts or
understandings of the Company or any Subsidiary, or, to the knowledge of the
Company, Contracts or understandings of any other Person, with respect to,
the
voting or transfer of any shares of Capital Stock of the Company or any
Subsidiary.
(vi)
No
agent, broker, Person or firm acting on behalf of the Company or its Affiliates
is, or will be, entitled to any fee, commission or broker’s or finder’s fees
from any of the parties hereto, or from any Person controlling, controlled
by,
or under common control with any of the parties hereto, in connection with
this
Agreement or any of the transactions contemplated hereby.
6. Representations
and Warranties of LLCII.
LLCII
represents and warrants to the Company that:
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(i) LLCII
has
the power to execute, deliver and perform its obligations under this Agreement
and has taken all action necessary to authorize the execution, delivery and
performance by it of this Agreement and to consummate the transactions
contemplated hereby. No other proceedings on the part of LLCII are necessary
for
such authorization, execution, delivery and consummation. LLCII has duly
executed and delivered this Agreement. This Agreement constitutes a legal,
valid
and binding obligation of LLCII, enforceable against LLCII in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors’ rights generally or
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The
execution, delivery and performance by LLCII of this Agreement does not and
will
not (a) violate any organizational document of LLCII, (b) contravene any
material Applicable Law, (c) require any consent of any Governmental Authority
or other Person, except where the failure to obtain such consent would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of LLCII to perform its obligations under this
Agreement, or (d) constitute a default under any Contract binding upon LLCII,
except for any such defaults that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of
LLCII
to perform its obligations under this Agreement.
(iii) LLCII
has
not engaged any brokers, finders or agents, and neither the Company has, nor
will, incur, directly or indirectly, as a result of any action taken by LLCII,
any liability for brokerage or finders’ fees or agents’ commissions or any
similar charges under this Agreement or the transactions contemplated
hereby.
7. Waiver
of the Purchase Agreement and the Notes.
Notwithstanding anything to the contrary contained in the Purchase Agreement
and
the Notes, the Purchaser waives compliance by the Company of its applicable
obligations contained in the applicable provisions of the Purchase Agreement
only with respect to this Agreement, the Purchaser acknowledges and agrees
that
as a result of such waiver the execution of this Agreement by the Company and
performance of its obligations hereunder will not violate the terms of the
applicable provisions of the Purchase Agreement or the Notes and the issuance
of
the Exchange Shares shall not cause any adjustment to the Conversion Price
of
the Notes. LLCI is executing this Agreement only with respect to this Section
7.
8. Purchase
Agreement and Transaction Documents.
The
waiver
in
Section 7 above is
limited
as specified and shall not constitute a modification, acceptance or waiver
of
any other provision of the Purchase Agreement, or the other Transaction
Documents. Except as set forth in Section 7 above,
the
Purchase Agreement and the other Transaction Documents shall continue in full
force and effect in accordance with their terms.
9. Certain
Taxes.
The
Company shall pay any and all documentary, stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of the Exchange
Shares.
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10. Incorporation
of Provisions from the Purchase Agreement.
The
provisions of Sections 13.2 and 13.3 of the Purchase Agreement are incorporated
by reference herein (as if set forth in full in this section) so that this
Agreement shall be subject to the terms and provisions of such sections of
the
Purchase Agreement.
11. Waiver;
Exercise of Rights and Remedies.
Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed by LLCII and the Company (and
in
the case of any amendment of Section 7 only, LLCI). No failure or delay by
any
party in exercising any right, power or privilege hereunder shall operate as
a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power
or
privilege. The rights and remedies herein provided shall be cumulative and
not
exclusive of any rights or remedies provided by law.
12. Counterparts.
This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of counterparts shall
be
lodged with each of the parties hereto.
13. Reorganization.
The
Company, LLCI and LLCII intend, and shall take the position, that the exchange
of the Warrants pursuant to this Agreement should be characterized as a
reorganization within the meaning of Section 368(a) of the Code and shall not
take any position on any United States tax filing that is inconsistent with
such
characterization.
[Remainder
of page intentionally left blank.]
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IN
WITNESS WHEREOF, LLCII, LLCI and the Company have each duly caused this
Agreement to be executed on the day and year first written above.
By:
/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
CEO
PLAINFIELD
PERU II LLC
By:
/s/
Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Authorized Individual
PLAINFIELD
PERU I LLC (only with respect to Section 7 of this Agreement)
By:
/s/
Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Authorized Individual
Notwithstanding
anything to the contrary contained in the Loan Agreement and the Loan Documents,
the Lender and the Administrative Agent waive compliance by the Company, the
Borrowers and the Subsidiary Guarantors of their applicable obligations
contained in the applicable provisions of the Loan Agreement and the Loan
Documents only with respect to this Agreement and the transactions contemplated
hereby and the Lender and the Administrative Agent acknowledge and agree that
the execution of this Agreement by the Company and performance of its
obligations hereunder will not violate the terms of the applicable provisions
of
the Loan Agreement and the Loan Documents. The waiver in this paragraph is
limited as specified and shall not constitute a modification, acceptance or
waiver of any other provision of the Loan Agreement or the other Loan Documents.
Except as set forth in this paragraph, the Loan Agreement and other Loan
Documents shall continue in full force and effect in accordance with their
terms. Each of the Company and the Subsidiary Guarantor hereby ratifies and
confirms its Guaranty.
PLAINFIELD
SPECIAL SITUATIONS MASTER FUND LIMITED
By:
/s/
Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Authorized Individual
By:
/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
CEO
PURE
BIOFUELS DEL PERU S.A.C.
By:
/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Apoderado
PALMA
INDUSTRIAL S.A.C.
By:
/s/
Xxxx
Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Apoderado
ACEITE
PUCALLPA S.A.C.
By: /s/
Xxxxxxx
Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
General Manager
PALMAS
TROPICALES S.A.C.
By:
/s/
Xxxxxxx
Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
General Manager
PUCAPALMA
S.A.C.
By:
/s/
Xxxxxxx
Xxxxxx
Name: Xxxxxxx
Xxxxxx
Title:
General Manager
ECOPALMA
S.A.C.
By:
/s/
Xxxxxxx
Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
General Manager
PALMAS
DE
ORIENTE S.A.C.
By:
/s/
Xxxxxxx
Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
General Manager
