Exhibit 10.1
YA GLOBAL INVESTMENTS, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
July 15, 2008
Global Energy, Inc.
▇▇▇▇▇▇ Aviv
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
Israel
Attention: Asi ▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
This
letter shall set forth our understanding regarding certain financing arrangements between
Global Energy, Inc. (the “Company”) and YA Global Investments, L.P. (the
“Buyer”). In connection with the Securities Purchase Agreement dated July
6, 2007 (the “Securities Purchase Agreement”) between the Company and the
Buyer, the Company has issued, and the Buyer holds, the following secured convertible
debentures (collectively, the “Debentures”):
Issuance Date
|
Outstanding Principal Amount
|
Accrued and Unpaid
Interest
( as of June 30, 2008)
|
| |
|
|
|
|
|
|
|
|
|
|
|
| July 6, 2007 |
|
|
$ | 500,000 |
|
$ | 49,315.07 |
|
| October 23, 2007 | | |
$ | 1,500,000 |
|
$ | 103,150.68 |
|
| December 7, 2007 | | |
$ | 1,000,000 |
|
$ | 56,438.36 |
|
| March 20, 2008 | | |
$ | 500,000 |
|
$ | 13,972.60 |
|
| May 13, 2008 | | |
$ | 500,000 |
|
$ | 10,684.93 |
|
| TOTAL | | |
$ | 4,000,000 |
|
$ | 233,561.64 |
|
All capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Debentures or the Securities
Purchase Agreement as applicable.
The
Company is seeking to raise additional financing by selling units consisting of common
stock and warrants (the “Offering”) pursuant to the terms of the private
placement memorandum dated July 16, 2008 and attached hereto as Exhibit A (the
“Private Placement Memorandum”). The Buyer hereby consents to the Company
conducting and closing on the Offering in accordance with the terms set forth in the
Private Placement Memorandum, provided that (i) the gross proceeds of the Offering are at
least $3,000,000 (“Minimum Offering Amount”), and (ii) the Company closes
on the Minimum Offering Amount on or before September 30, 2008, unless extended in writing
by the Buyer (the “Closing Deadline”).
| I. |
Agreements
Effective On Execution. The Buyer and the Company agree to the following,
which shall be effective as of the date of execution of this letter agreement: |
| |
1. |
The
Buyer hereby defers the payment of Interest that was or will be due on the
January 31, 2008, April 30, 2008, and July 31, 2008 Interest Payment Dates
until the earlier of (i) September 30, 2008, or (ii) the closings of the
Offering for the Minimum Offering Amount. For purposes of clarity, the total
Interest amount that will be accrued on the Debentures as of July 31, 2008 will
be $267,534.25. |
| |
2. |
The
Buyer hereby defers the payment of Installment Amounts that will be due on the
July 31, 2008 and August 31, 2008 Installment Dates until September 30, 2008,
provided however, in the event that the Minimum Offering Amount is successfully
raised on or before September 30, 2008, then such Installment Amounts shall be
further deferred in accordance with Section II.2. below. |
| |
3. |
In
consideration of the Buyer’s accommodations herein, the Company shall
issue the Buyer 200,000 restricted shares of the Company’s common stock. |
| II. |
Agreements
Effective upon Effective Date. The Buyer and the Company hereby agree to
the following, provided however, that the agreements contained in this section
shall only become effective if and when the Company successfully raises the
Minimum Offering Amount by the Closing Deadline (if accomplished, such date of
accomplishment being referred to as the “Effective Date”): |
| |
1. |
The
Company shall pay the Buyer the deferred accrued and unpaid Interest of
$267,534.25, in cash, on the business day after the Effective Date. Thereafter,
the Company shall make monthly payments of accrued and unpaid interest
beginning on November 1, 2008, and continuing on the first Business Day of each
successive calendar month thereafter. |
| |
2. |
The
Buyer shall defer the start of the Installment payments until February 2, 2009.
The first Installment Date therefore shall be February 2, 2009, and subsequent
Installment Dates shall continue on the first Business Day of each subsequent
calendar month thereafter. Furthermore, the Buyer shall reduce the Installment
Amount due on the first eleven Installment Dates (i.e, the February 2, 2009
Installment Date through and including the December 1, 2009 Installment Date)
to a Principal amount of $100,000. After the December 1, 2009 Installment Date,
the remaining Installment Dates shall be the first Business day on or after
January 31, 2010, April 30, 2010, July 31, 2010, and October 31, 2010
(collectively, the “Remaining Installment Dates”). The
Installment Amount with respect to the Remaining Installment Dates shall be
equal to the Principal amount of $725,000. For the purposes of this section,
all payment amounts are amounts to be paid in total among all of the Debentures
and not per Debenture. The Buyer shall apply payments received to particular
Debentures in its sole discretion and notify the Company promptly of such
application. The Company shall have the option to make all payments described
in this section in cash without any premiums as set forth in the Debentures |
| |
3. |
The
Installment Amount on any Installment Date shall be reduced by the Principal
amount of any conversions made by the Buyer prior to such Installment Date. For
example, if the Buyer converted $200,000 of outstanding Principal of the
Debentures prior to the February 2, 2009 Installment Date, the Company’s
payment of the $100,000 Installment Amount pursuant to the February 2, 2009 and
the March 1, 2009 Installment Dates would automatically be deferred. |
| |
4. |
Pursuant
to Section 5 of the Debentures, the Conversion Price shall be reduced as a
result of the issuance of shares in connection with the Offering. For example,
if the shares are issued at a price of $0.35 per share, then the Conversion
Price shall be reduced to $0.35. |
| |
5. |
Pursuant
to Section 8 of the Warrants issued to the Buyer pursuant to the Securities
Purchase Agreement, the exercise price of the Warrants and the number of shares
underlying the Warrants shall be adjusted based on the exercise price of the
warrants issued in connection with the Offering. For example, if the exercise
price of the warrants is set at $0.50 per share, then, the exercise price of
the Buyer’s warrants shall be reduced to $0.50 and the total number of
shares underlying the Buyer’s warrants shall be increased from 600,000 to
1,500,000 shares. |
| |
6. |
In
the event that the Company raises net proceeds from the Offering of at least
$7,000,000, then on the date that such amount is raised, the following
additional amendments shall be made: |
| |
a. |
The
anti-dilution provisions of Section 5(a) of the Debentures and Section 8(a) of
the Buyer’s warrants or other provisions which provide for reductions of
conversion/exercise price based on the issuance of securities at a price less
then current conversion/exercise price shall be deleted and no longer in effect
(provided that no subsequent anti-dilution provisions are added, or adjustments
for dilution made, to the shares or warrants issued in the Offering) and
thereafter if the Company issues shares of its common stock at prices below the
Conversion Price of below the exercise price, no further adjustment to such
price shall be made. |
| |
b. |
The
Interest Rate shall be increased from 10% to 12% from that point forward. |
| |
7. |
In
connection with the Registration Rights Agreement (“Registration Rights
Agreement”) on July 6, 2007 between the Buyer and the Company, the
Company has filed and obtained effectiveness of the registration statement (the
“Registration Statement”) originally filed with the Securities
and Exchange Commission (File number 333-150559) on May 1, 2008 to register the
resale by the Buyer of up to 6,600,000 shares of common stock underlying the
Debentures and Warrants. In connection with the Registration Statement and the
Registration Rights Agreement, the Company and Buyer agree as follows: |
| |
a. |
The
Company shall take all necessary step to maintain the effectiveness of the
Registration Statement at all times until all shares registered have been
resold, including, without limitation, filing, as soon as practicable within 20
Business Days of the Effective Date, any and all supplements and amendments to
the Registration Statement to update the Registration Statement to reflect the
changes to the Debentures and Warrants set forth herein, and to file, in a
timely matter, all supplements and amendments to keep current the financial
information contained in the Registration Statement in accordance with the
rules and regulations of the SEC. |
| |
b. |
The
Buyer agrees that Company shall not be required to file any additional
registration statements on behalf of the Buyer, or register the resale of any
additional shares on behalf of the Buyer. |
| |
c. |
The
Company represents, warrants, and agrees that after the Effective Date, for the
purposes of Rule 144, the holding period for each of the Debentures shall
commence on the respective date that the Buyer fully paid for such Debenture,
which are the dates referenced next to each of the Debentures in the table
above. |
| III. |
Representations,
Warranties, and Covenants or General Effect. |
| |
1. |
The
Company hereby acknowledges, confirms and agrees that as of the date hereof,
Company is indebted to the Buyer under the Debentures in the outstanding
principal amount set forth in the table above, plus accrued and unpaid interest
thereon, and any other fees, costs, expenses and other charges now or hereafter
payable (collectively, the “Obligations”) and such Obligations
are unconditionally owed by Company to the Buyer, without offset, defense or
counterclaim of any kind, nature or description whatsoever. |
| |
2. |
The
Company hereby acknowledges, confirms and agrees that the Buyer has and shall
continue to have valid, enforceable and perfected first-priority liens upon and
security interests in the pledged property heretofore granted to the Buyer
pursuant to the Security Agreement dated July 6, 2007 between the Company and
the Buyer (the “Security Agreement”) or otherwise granted to
or held by the Buyer. |
| |
3. |
The
Buyer acknowledges that the Company has approved a 12 for 1 reverse stock split
of its common stock, and should it proceed, the conversion price of the
Debentures, the exercise price of the Warrants and the number of Warrants will
be adjusted on the same ratio as the reverse stock split. |
| |
4. |
Effect
of this Agreement. Except as modified pursuant hereto, no other changes or
modifications to the Debentures, Securities Purchase Agreement, or other
related transaction documents are intended or implied and in all other respects
such documents are hereby specifically ratified, restated and confirmed by all
parties hereto as of the effective date hereof. |
| |
5. |
Each
party shall pay all its own costs and expenses regarding the entering of this
Agreement. There are no other fees, charges or expenses other than as set out
herein and in the Debentures and ancillary documents. |
[SIGNATURE
PAGE IMMEDIATELY TO FOLLOW]
IN
WITNESS WHEREOF, this letter agreement is executed and delivered as of the day and
year first above written.
|
|
GLOBAL ENERGY, INC.
By: /s/ Asi ▇▇▇▇▇▇
——————————————
Asi ▇▇▇▇▇▇
Chief Executive Officer |
|
|
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager |
|
|
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
——————————————
▇▇▇▇▇▇ ▇▇▇▇▇
Managing Member |
