SHARE EXCHANGE AGREEMENT
Exhibit
2.2
THIS
SHARE EXCHANGE AGREEMENT (this “Agreement”),
dated
as of this 7th
day of
September, 2007 (the “Effective
Date”),
by
and among Medical Discoveries, Inc., a Utah corporation (the “Company”),
Xxxxxxx Xxxxxx, an individual (“Xxxxxx”),
and
Mobius Risk Group LLC, a Texas limited liability company (“Mobius”).
Xxxxxx and Mobius are each referred to in this Agreement as a “Seller”
and
collectively, “Sellers”.
The
Company and Sellers are collectively referred to herein as the “Parties”.
WWITNESSETH:
WHEREAS,
Global Clean Energy Holdings, LLC, a Delaware limited liability company
(“Global”),
exclusively owns and controls certain proprietary rights, intellectual property,
know-how, business plans, financial projections, contracts, term sheets,
business relationships, and other information relating to the cultivation and
production of seed oil from the seed of the Jatropha plant, for the purpose
of
providing feedstock oil intended for the production of methyl ester, otherwise
known as bio-diesel; and
WHEREAS,
Sellers are the owners of all of the issued and outstanding membership units
of
Global (the “LLC
Units”);
and
WHEREAS,
the Company desires to purchase from Sellers, and Sellers desire to sell to
the
Company, all of the LLC Units in exchange (the “Exchange”)
for
the issuance by the Company to the Sellers of 63,945,257 shares of the Company’s
common stock, no par value (the “Common
Stock”).
NOW,
THEREFORE, in consideration of the premises and of the mutual representations,
warranties and agreements set forth herein, the Parties agree to the effect
the
Exchange subject to the following terms and conditions:
ARTICLE
I
THE
EXCHANGE
1.1 The
Exchange.
The
Parties hereby agree as follows:
(a) Concurrently
with the execution of this Agreement, and subject to the terms hereof,
including, without limitation, Article V of this Agreement, the Company is
issuing to Sellers stock certificates representing an aggregate of 63,945,257
shares of the Common Stock (the “Exchange
Shares”).
The
Exchange Shares are being issued in the following denominations and are being
delivered concurrently with the execution of this Agreement as
follows:
(i)
Stock
certificates evidencing an aggregate of 36,540,146 shares of the Common Stock
(the “Unrestricted
Exchange Shares”)
are
being issued and delivered, free and clear of all mortgages, pledges, claims,
liens and other rights and encumbrances. The Company is hereby delivering to
Mobius a stock certificate representing 31,320,125 Unrestricted Exchange Shares,
and a stock certificate representing 5,220,021 Unrestricted Exchange Shares
to
Xxxxxx; and
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(ii) Stock
certificates evidencing an aggregate of 27,405,111 shares of the Common Stock,
representing the Operational Milestone Shares and the Market Capitalization
Milestone Shares (as such terms are defined in Article V hereof) (collectively,
the “Restricted
Exchange Shares”),
are
being registered and issued in the names of the Sellers as follows: 23,490,095
Restricted Exchange Shares are being issued to Mobius, and 3,915,016 Restricted
Exchange Shares are being issued to Xxxxxx. The Restricted Exchange Shares
have
been delivered to the Company and will be released by the Company to the Sellers
in such denominations as set forth in Article V if and when the conditions
of
Article V are met. In the event that some or all of the conditions set forth
in
Article V are not met, the Restricted Exchanges Shares will be cancelled as
set
forth in Article V. Notwithstanding the delivery of the Restricted Exchange
Shares to the Company, unless and until such shares are cancelled in accordance
with Article V, the Restricted Exchange Shares shall entitle Sellers, as the
holders thereof, to all of the rights accorded to a holder of Common Stock,
including, without limitation, the right to vote such Restricted Exchange Shares
and any dividends distributed in connection therewith.
(b) Concurrently
with the execution of this Agreement, Sellers are delivering to the Company
(i)
irrevocable membership interest powers executed by Mobius and by Xxxxxx for
the
transfer to the Company of LLC Units representing 100% of the issued and
outstanding membership units of Global, and (ii) the Amended and Restated
Limited Liability Company Agreement of Global that evidences the transfer by
the
Sellers of the LLC Units, the withdrawal of the Sellers from Global, and the
admission of the Company as the sole member of Global. The LLC Units are free
and clear of all liens, mortgages, pledges, claims, encumbrances or other rights
whatsoever, and the Company is receiving good and merchantable title to the
LLC
Units.
1.2 Closing
Deliveries.
Concurrently with the execution and delivery of this Agreement, the parties
are
delivering the documents and instruments set forth in Article VI.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES REGARDING GLOBAL
The
Sellers, jointly and severally, represent and warrant to the Company as follows
(except with respect to the representations contained in Sections 2.2 and
representations made to the knowledge of any Seller, which representations
are
made severally by each Seller); provided, however, that anything disclosed
in
any schedule referred to below shall be deemed to be included in all other
schedules:
2.1 Due
Organization and Qualification.
Global
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full limited liability
company power and authority to own and operate its business (including, without
limitation, the Jatropha Business (as defined in Section 2.7 hereof)), and
to
carry on its business in the places and in the manner as presently conducted
or
proposed to be conducted. Global is in good standing in each jurisdiction in
which the properties owned, leased or operated, or the business conducted,
by it
requires such qualification except where the failure to so qualify is not likely
to have a material adverse effect on the business, assets or operations of
Global.
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2.2 Subsidiaries.
Global
does not own, directly or indirectly, any capital stock, equity or interest
in
any corporation, firm, partnership, joint venture or other entity. Prior to
the
execution and delivery of this Agreement, Global owned a one percent (1%)
general partnership interest in Global Clean Energy, L.P., a Texas limited
partnership, which one percent (1%) general partnership interest it transferred
for no consideration to Mobius. Global Clean Energy, L.P. did not own any rights
or assets related to the Jatropha Business or the Jatropha Assets. The transfer
of the 1% interest in Global Clean Energy, L.P. prior to the transactions
effected by this Agreement did not, and will not (i) adversely affect the
ability of Global to conduct its operations as proposed to be conducted and
(ii)
result in any adverse tax consequences to Global.
2.3 No
Conflicts or Defaults.
The
execution and delivery of this Agreement by the Sellers and the consummation
of
the transactions contemplated hereby do not and shall not (a) contravene any
organizational or charter documents of Global, including, without limitation,
the Certificate
of Formation of Global, dated as of January 11, 2007, and the Amended and
Restated Limited Liability Company Agreement of Global, dated as of May 17,
2007,
or (b)
with or without the giving of notice or the passage of time, (i) violate,
conflict with, or result in a breach of, or a default or loss of rights under,
any material covenant, agreement, mortgage, indenture, lease, instrument, permit
or license to which Global is a party or by which Global or any of its assets
are bound, or any judgment, order or decree known to the Sellers, or any law,
rule or regulation to which Global’s assets are subject, (ii) result in the
creation of, or give any party the right to create, any lien, charge,
encumbrance or any other right or adverse interest (“Liens”)
upon
any of the assets of Global, (iii) terminate or give any party the right to
terminate, amend, abandon or refuse to perform any material agreement,
arrangement or commitment to which Global is a party or by which Global or
any
of its assets are bound, or (iv) accelerate or modify, or give any party the
right to accelerate or modify, the time within which, or the terms under which
Global is to perform any duties or obligations or receive any rights or benefits
under any material agreement, arrangement or commitment to which it is a party.
Except as set forth on Schedule 2.3 hereto, no consent or approval of any third
party, or order, authorization, declaration or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a “Governmental
Authority”),
is
required by or with respect to Global in connection with the Exchange or the
consummation of the transactions contemplated in this Agreement.
2.4 Capitalization.
The
LLC
Units are
collectively owned by Sellers in the amounts set forth on Schedule
2.4
hereto,
which LLC Units represent
all of
the issued
and outstanding membership units of Global. The
LLC
Units when transferred to the Company pursuant to the Exchange, and in
accordance with the terms hereof, will be duly authorized, validly issued,
fully
paid and nonassessable, and have not been or will not be issued in violation
of
the preemptive right of any current or prior member of Global, including any
preemptive rights of Sellers. Except as set forth on Schedule 2.4 hereto, there
is no outstanding voting trust agreement or other contract, agreement,
arrangement, option, warrant, call, commitment or other right of any character
obligating or entitling Global to issue, sell, redeem or repurchase any of
its
securities, and there is no outstanding security of any kind convertible into
or
exchangeable for the membership units or other ownership interests of Global.
Except as set forth on Schedule 2.4 hereto, Global has not granted any
registration rights to any person.
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2.5 Financial
Statements.
Global
has provided the Company with copies of the unaudited balance sheet of Global
as
of the Effective Date, and the unaudited income statements for the period then
ended (collectively, the “Global
Financial Statements”).
The
Global Financial Statements present fairly the financial position of Global
as
of the dates and for the periods indicated therein. Notwithstanding the
foregoing, the Global Financial Statements are based upon Global’s good faith
estimate, and the Company acknowledges that the Seller shall bear no liability
with respect to such estimate being inaccurate unless the estimate is
established not to be rendered in good faith.
2.6 Indebtedness.
As of
the Effective Date, Global has no liabilities, indebtedness or other
obligations, whether absolute, accrued, contingent or otherwise that have not
been fully reserved and reflected on the Global Financial Statements. After
the
Effective Date, neither Global nor the Company shall become liable for any
liabilities or indebtedness (whether absolute, accrued, contingent or otherwise)
that may have arisen or been incurred by Global prior to the Effective Date
or
that may arise in connection with the Exchange or the transactions contemplated
hereby, unless a reserve has been established for such liability or
indebtedness.
2.7 Licenses,
Permits; Jatropha Business.
Global
owns and controls certain proprietary rights, intellectual property, know-how,
business plans, financial projections, contracts, agreements, understandings,
term sheets, business relationships, and other information regarding the
production of seed oil from the seed of the Jatropha plant (all species) for
the
purpose of providing feedstock oil intended for the cultivation and production
of methyl ester, otherwise known as bio-diesel, as more fully set forth in
Schedule 2.7 hereto (collectively, the “Jatropha
Business”),
and
Global has not conveyed any of its ownership in the Jatropha Business and the
Jatropha Assets to any third party. Any and all rights that either of the
Sellers previously owned in the Jatropha Business and the Jatropha Assets have
been assigned and transferred to Global, and such rights are now solely owned
by
Global. Neither the execution nor delivery of this Agreement by Global nor
consummation of the transactions contemplated herein will require any notice
or
consent under, or have any material adverse effect upon any such existing
authorization, license or permit applicable to the Jatropha Business.
2.8 Compliance
with Law.
Global
has conducted its business in material compliance with all applicable U.S.
or
foreign laws, ordinances, rules, regulations, court or administrative order,
decree or process of any U.S. or foreign governmental entity (“Applicable
Law”).
Global has not received any notice of violation or claimed violation of any
Applicable Law. As currently contemplated, if conducted in accordance with
the
business plan of Global, the Jatropha Business will not violate any Applicable
Law.
2.9 Litigation.
There
is
no material claim, dispute, action, suit, proceeding or investigation pending
or, to the knowledge of Global or the Sellers, threatened against Global or
the
Sellers, or challenging (i) the validity or propriety of the transactions
contemplated by this Agreement, or (ii) Global’s Jatropha Business, at law or in
equity or before any federal, state, local, foreign or other governmental
authority, board, agency, commission or instrumentality, nor to the knowledge
of
Global or the Sellers, has any such claim, dispute, action, suit, proceeding
or
investigation been pending or threatened, during the thirty-six month period
immediately preceding the date hereof. There is no outstanding judgment, order,
writ, ruling, injunction, stipulation or decree of any court, arbitrator or
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, against Global or the Sellers that would
materially interfere with the obligations of Sellers under this Agreement or
Global’s Jatropha Business. Neither Global nor any of the Sellers has received
any written or verbal inquiry from any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality concerning
the possible violation of any Applicable Law.
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2.10 Taxes.
All
tax
returns and reports relating to Global that were required to be filed on or
prior to the date hereof in respect of all income, withholding, franchise,
payroll, excise, property, sales, use, value-added or other taxes or levies,
imposts, duties, license and registration fees, charges, assessments or
withholdings of any nature whatsoever (collectively, “Taxes”)
have
been filed, and Global has paid all Taxes (and any related penalties, fines
and
interest) which have become due pursuant to such returns or reports or pursuant
to any assessment which has become payable, or, to the extent its liability
for
any Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records (including, without limitation, the Global Financial Statements)
of
Global and adequate reserves therefore have been established.
2.11 Finder’s
Fees.
Global
is not obligated to pay any person any finder’s or broker’s fees in connection
with the transactions contemplated herein.
2.12 Undisclosed
Liabilities.
Global
has no obligation or liability, whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to Global, whether due or to
become due and regardless of when or by whom asserted, arising out of any
transaction entered at or prior to the Effective Date, or any action or inaction
at or prior to the Effective Date, or any state of facts existing at or prior
to
the date hereof.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Each
Seller severally represents and warrants to the Company as follows:
3.1 Title
to LLC Units.
Seller
is the legal and beneficial owner of the LLC Units set forth opposite such
Seller’s name on Schedule 2.4, and upon consummation of the Exchange
contemplated herein, the Company will acquire from Seller good and marketable
title to the LLC Units listed as owned by such Seller, and such LLC Units shall
be free and clear of all liens excepting only such restrictions upon transfer,
if any, as may be necessary for compliance with the Securities
Act of 1933, as amended (the “Act”).
3.2 Due
Authorization.
Each
Seller represents that it has all requisite power and authority to execute
and
deliver this Agreement, and to consummate the transactions contemplated hereby.
Mobius has taken all limited liability company action necessary for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as may be affected by
bankruptcy, insolvency, moratoria or other similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification
that
the availability of equitable remedies is subject to the discretion of the
court
before which any proceeding therefore may be brought.
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3.3 No
Conflicts or Defaults.
The
execution and delivery of this Agreement by Seller and the consummation of
the
transactions contemplated hereby do not and shall not (a) with or without the
giving of notice or the passage of time, (i) violate, conflict with, or result
in a breach of, or a default or loss of rights under, any material covenant,
agreement, mortgage, indenture, lease, instrument, permit or license to which
Seller is a party and by which Seller’s LLC Units are bound, or any judgment,
order or decree, or any law, rule or regulation to which the Seller’s LLC Units
are subject, (ii) result in the creation of, or give any party the right to
create, any Liens upon Seller’s LLC Units, or (iii) terminate or give any party
the right to terminate, amend, abandon or refuse to perform any material
agreement, arrangement or commitment to which Seller is a party and by which
Seller’s LLC Units are bound. No consent or approval of any third party, or
order, authorization, declaration or filing with any Governmental Authority,
is
required by or with respect to Seller in connection with the Exchange or the
consummation of the transactions contemplated in this Agreement.
3.4 Litigation.
There
is
no material claim, dispute, action, suit, proceeding or investigation pending
or, to the knowledge of Seller, threatened, against Seller with respect to
the
LLC Units, or challenging the validity or propriety of the transactions
contemplated by this Agreement, at law or in equity or admiralty or before
any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, nor to the knowledge of Seller, has any such
claim, dispute, action, suit, proceeding or investigation been pending or
threatened, during the twelve month period preceding the date hereof. There
is
no outstanding judgment, order, writ, ruling, injunction, stipulation or decree
of any federal, state, local, foreign court or arbitrator or any Governmental
Authority against Seller with respect to the LLC Units. Seller has not received
any written or verbal inquiry from any federal, state, local, foreign court
or
any Governmental Authority concerning the possible violation of any Applicable
Law with respect to the LLC Units.
3.5 Taxes.
Seller
has filed all tax returns and reports which were required to be filed on or
prior to the date hereof in respect of the LLC Units, and has paid all Taxes
in
respect of the LLC Units (and any related penalties, fines and interest) that
have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable.
Notwithstanding anything to the contrary herein, the Company shall not assume
any obligation relating to, and in no event shall the Company be liable for
any,
Taxes in respect of the LLC Units arising prior to the Effective
Date.
3.6 Purchase
for Investment; Accredited Investor.
(a) Seller
is
an “accredited investor” as defined in Rule 501 of Regulation D under the Act
and is acquiring the Exchange Shares for investment for Seller's own account
and
not as a nominee or agent, and not with a view to the resale or distribution
of
any part thereof.
(b) Seller
understands that the Exchange Shares are not registered under the Act on the
ground that the sale and the issuance of securities hereunder is exempt from
registration under the Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on such Seller's
representations set forth herein.
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3.7 Investment
Experience.
Seller
acknowledges that Seller can bear the economic risk of its investment, and
has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment in the Exchange
Shares.
3.8 Information.
Seller
has carefully reviewed such information as Seller deemed necessary to evaluate
an investment in the Exchange Shares. To the full satisfaction of Seller, Seller
has been furnished all materials that Seller has requested relating to the
Company and the issuance of the Exchange Shares hereunder, and Seller has been
afforded the opportunity to ask questions of representatives of the Company
to
obtain any information necessary to verify the accuracy of any representations
or information made or given to Seller. Seller understands and agrees that
the
reports filed by the Company with the Securities and Exchange Commission are
not
complete and current, and that, accordingly, Seller has not solely relied on
such filings in making its investment decision. Seller has had the opportunity
to consider the Company’s dispositions of its principal bio-pharmaceutical
technologies, the Company’s new secured loan transactions, and the settlement of
outstanding issues with its existing officers. Notwithstanding
the foregoing, nothing herein shall derogate from or otherwise modify the
representations and warranties of the Company set forth in this Agreement on
which the Seller has relied in making an exchange of the LLC Units for the
Exchange Shares.
3.9 Restricted
Securities.
Seller
understands and agrees that the Exchange Shares may not be sold, transferred,
or
otherwise disposed of without registration under the Act or an exemption from
such registration requirements, and that in the absence of an effective
registration statement covering the Exchange Shares or an available exemption
from registration under the Act, the Exchange Shares must be held indefinitely.
Seller is aware that the Exchange Shares may not be sold pursuant to Rule 144
promulgated under the Act unless all of the conditions of that Rule are met.
3.10 Jatropha
Business Representation.
Seller
represents and warrants to the Company that Sellers have transferred to Global,
and Global now exclusively owns and controls, all of Sellers’ right, title and
interest in any and all proprietary rights, intellectual property, know-how,
business plans, contracts, agreements, understandings, term sheets, business
relationships, and any other information relating to the cultivation and
production of Jatropha plant seed oil for the purpose of providing feedstock
oil
intended for the production of methyl ester (bio-diesel), or any information
otherwise relating to the Jatropha Business (the “Jatropha
Assets”).
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Sellers as follows:
4.1 Due
Organization and Qualification.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Utah, with full corporate power and
authority to own, lease and operate its business and properties and to carry
on
its business in the places and in the manner as presently conducted. The Company
is in good standing in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
where the failure to so qualify is not likely to have a material adverse effect
on the business of the Company.
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(b) The
Company does not own, directly or indirectly, any capital stock, equity or
interest in any corporation, firm, partnership, joint venture or other entity,
other than its investment in MDI
Oncology, Inc., a Delaware corporation (“MDI”).
The
Company owns all of the issued and outstanding capital stock of
MDI.
4.2 Due
Authorization.
The
Company has all requisite power and authority to execute and deliver this
Agreement, and to consummate the transactions contemplated hereby and thereby.
The Company has taken all corporate action necessary for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and this Agreement constitutes the valid and binding obligation of
the
Company, enforceable against the Company in accordance with its terms, except
as
may be affected by bankruptcy, insolvency, moratoria or other similar laws
affecting the enforcement of creditors' rights generally and subject to the
qualification that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefore may be
brought.
4.3 No
Conflicts or Defaults.
The
execution and delivery of this Agreement by the Company and the consummation
of
the transactions contemplated hereby do not and shall not (a) contravene any
organizational or charter documents of the Company, including, without
limitation, the Amended and Restated Articles
of Incorporation of the Company, and the Amended Bylaws of the Company,
or
(b)
with or without the giving of notice or the passage of time, (i) violate,
conflict with, or result in a breach of, or a default or loss of rights under,
any material covenant, agreement, mortgage, indenture, lease, instrument, permit
or license to which the Company is a party or by which the Company or any of
its
assets are bound, or any judgment, order or decree, or any law, rule or
regulation to which the Company’s assets are subject, (ii) result in the
creation of, or give any party the right to create, any Liens upon any of the
assets of the Company, (iii) terminate or give any party the right to terminate,
amend, abandon or refuse to perform any material agreement, arrangement or
commitment to which the Company is a party or by which the Company or any of
its
assets are bound, or (iv) accelerate or modify, or give any party the right
to
accelerate or modify, the time within which, or the terms under which the
Company is to perform any duties or obligations or receive any rights or
benefits under any material agreement, arrangement or commitment to which it
is
a party. Except as set forth on Schedule 4.3 hereto, no consent or approval
of
any third party, or order, authorization, declaration or filing with any
Governmental Authority, is required by or with respect to Global in connection
with the Exchange or the consummation of the transactions contemplated in this
Agreement.
4.4 Capitalization.
The
authorized capital stock of the Company immediately prior to giving effect
to
the transactions contemplated hereby consists
of 250,000,000 shares of Common Stock, of which 118,755,481 shares of Common
Stock are outstanding, and 50,000,000 shares of Preferred Stock, no par value,
of which 34,420 shares of Series A Convertible Preferred Stock are
outstanding. All
of
the outstanding shares of capital stock of the Company are, and the Exchange
Shares when issued in accordance with the terms hereof will be duly authorized,
validly issued, fully paid and nonassessable, and have not been or, with respect
to Exchange Shares, will not be issued in violation of preemptive right of
shareholders. Except as set forth on Schedule 4.4 hereto, there is no
outstanding voting trust agreement or other contract, agreement, arrangement,
option, warrant, call, commitment or other right of any character obligating
or
entitling the Company to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into
or
exchangeable for the capital stock of the Company. Except as set forth on
Schedule
4.4
hereto,
the Company has not granted any registration rights to any person.
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4.5 Compliance
with Law.
The
Company has conducted its business in material compliance with all Applicable
Law. The Company has not received any notice of violation or claimed violation
of any Applicable Law.
The
Company has not filed all periodic and other reports that it is required to
file
with the Securities and Exchange Commission since December 31,
2006.
4.6 Litigation. Except
as
set forth on Schedule
4.6
hereto,
there
is
no material claim, dispute, action, suit, proceeding or investigation pending
or, to the knowledge of the Company, threatened, against the Company, or
challenging the validity or propriety of the transactions contemplated by this
Agreement, at law or in equity or admiralty or before any federal, state, local,
foreign or other governmental authority, board, agency, commission or
instrumentality, nor to the knowledge of the Company, has any such claim,
dispute, action, suit, proceeding or investigation been pending or threatened,
during the twelve month period preceding the date hereof. There is no
outstanding judgment, order, writ, ruling, injunction, stipulation or decree
of
any court, arbitrator or federal, state, local, foreign or other governmental
authority, board, agency, commission or instrumentality, against the Company.
The Company has not received any written or verbal inquiry from any federal,
state, local, foreign court or any Governmental Authority concerning the
possible violation of any Applicable Law.
4.7 Purchase
for Investment.
The
Company is acquiring the LLC
Units
for investment for its own account and not as a nominee or agent, and not with
a
view to the resale or distribution of any part thereof. The
Company understands that the LLC Units are not and will not be registered under
the Act on the ground that the sale and the issuance of securities hereunder
is
exempt from registration under the Act pursuant to Section 4(2) thereof. The
Company is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D under the Act.
4.8 Investment
Experience.
The
Company acknowledges that it can bear the economic risk of its investment,
and
has such knowledge and experience in financial and business matters that he
is
capable of evaluating the merits and risks of the investment in the LLC
Units.
4.9 Information.
The
Company has carefully reviewed such information, as the Company deemed necessary
to evaluate an investment in the LLC Units. To the full satisfaction of the
Company, the Company has been furnished all materials requested relating to
Global and the LLC Units, and it has been afforded the opportunity to ask
questions of representatives of Global to obtain any information necessary
to
verify the accuracy of any representations or information made or given to
the
Company. Notwithstanding the foregoing, nothing herein shall derogate from
or
otherwise modify the representations and warranties of Sellers set forth in
this
Agreement on which the Company has relied in making an exchange of the LLC
Units
for the Exchange Shares.
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4.10 Restricted
Securities.
The
Company understands and
agrees that the LLC
Units
may not
be sold, transferred, or otherwise disposed of without registration under the
Act or an exemption from such registration requirements, and that in the absence
of an effective registration statement covering the LLC
Units
or
an
available exemption from registration under the Act, the LLC
Units
must
be
held indefinitely. The Company is aware that the LLC
Units
may
not
be sold pursuant to Rule 144 promulgated under the Act unless all of the
conditions of that Rule are met.
4.11 Finder’s
Fees.
The
Company is not obligated to pay any person any finder’s or broker’s fees in
connection with the transactions contemplated herein.
4.12 Financial
Statements.
The
Company has provided Seller with copies of the balance sheet of the Company
as
of September 30, 2006, and the income statements for the period then ended
(collectively, the “Company
Financial Statements”).
The
Company Financial Statements present fairly the financial position of the
Company as of the dates and for the periods indicated therein. The books of
account and other financial records of the Company have been maintained in
accordance with good business practices.
4.13 Undisclosed
Liabilities.
Except
as set forth on the attached Schedule
4.13,
the
Company has no obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company, whether due
or
to become due and regardless of when or by whom asserted, arising out of any
transaction entered at or prior to the Effective Date, or any action or inaction
at or prior to the Effective Date, or any state of facts existing at or prior
to
the date hereof, other than (a) liabilities reflected on the Company Financial
Statements, or (b) liabilities and obligations which have arisen after the
date
of the Company Financial Statements in the ordinary course of business.
4.14 Shell
Status.
The
Company is not, and since December 31, 2006 has not been, a shell company within
the meaning of Rule 12b-2 under the Securities Exchange Act of
1934.
ARTICLE
V
COVENANTS
5.1 Delivery,
Release and Cancellation of Restricted Exchange Shares.
The
27,405,111 Restricted Exchange Shares will be held by the Company and released
to the Sellers, or cancelled, in accordance with Sections 5.2 and 5.3. The
Restricted Exchange Shares shall be divided into 13,702,556 “Operational
Milestone Shares,” and 13,702,555 “Market Capitalization Milestone Shares.”
5.2 Operational
Milestone Shares.
(a) The
Parties hereby agree and acknowledge that an aggregate of 13,702,556 shares
of
the Exchange Shares shall be deemed “Operational
Milestone Shares.”
The
stock certificates evidencing all of the Operational Milestone Shares shall
be
held in the Company in escrow, and shall be released and delivered to the
Sellers if and when both
of the
following conditions have been fully satisfied (collectively, the “Operational
Milestones”):
10
(i) The
Company, Global, or any of their respective subsidiaries, shall have executed
land lease agreements covering at least two thousand (2,000) hectares of land
suitable for the planting and cultivation of Jatropha
Curcas,
which
such land shall be located in any geographic area, including, without
limitation, Mexico, the Dominican Republic or the State of Texas;
and
(ii) The
Company, Global, or any of their respective subsidiaries, shall have executed
land and operations management agreements with one or more third-party land
and
operations management companies with respect to the management of at least
two
thousand (2,000) hectares of land suitable for the planting and cultivation
of
Jatropha
Curcas,
which
such land shall be located in any geographic area, including, without
limitation, Mexico, the Dominican Republic or the State of Texas.
(b) In
the
event that the Operational Milestones have not fully been satisfied by the
end
of the first anniversary of the Effective Date, then all of the Operational
Milestone Shares shall automatically be forfeited and reconveyed to the Company
without the necessity for any payment by the Company and shall be cancelled
on
the Company’s share record books, and the Sellers shall immediately and
automatically cease to have any ownership right in any and all Operational
Milestone Shares.
5.3 Market
Capitalization Milestone Shares.
(a) The
Parties agree that an aggregate of 13,702,555 shares of the Exchange Shares
shall be deemed “Market
Capitalization Milestone Shares.”
The
stock certificates and stock assignments evidencing the Market Capitalization
Milestone Shares shall be held in the Company in escrow, and shall be released
and delivered to the Sellers, from time to time, as follows (collectively,
the
“Market
Capitalization Milestones”):
(i) At
such
time as when (i) the Company’s Market Capitalization reaches $6,000,000,
and
(ii) the
average daily trading volume of the Common Stock on the Trading Market reaches
or exceeds 75,000 shares
of
Common Stock for a period of at least 60 consecutive Trading Days, then
4,567,518 shares of the Market Capitalization Milestone Shares shall be released
and delivered to the Sellers (pro rata in accordance with their ownership of
the
Market Capitalization Milestone Shares);
(ii) At
such
time as when (i) the Company’s Market Capitalization reaches $12,000,000,
and
(ii) the
average daily trading volume of the Common Stock on the Trading Market reaches
or exceeds 100,000 shares of Common Stock for a period of at least 60
consecutive Trading Days, 4,567,518 shares of the Market Capitalization
Milestone Shares shall and be released and delivered to the Sellers (pro rata
in
accordance with their ownership of the Market Capitalization Milestone Shares);
and
(iii) At
such
time as when (i) the Company’s Market Capitalization reaches $20,000,000,
and
(ii) the
average daily trading volume of the Common Stock on the Trading Market reaches
or exceeds 125,000 shares of Common Stock for a period of at least 60
consecutive Trading Days, 4,567,519 shares of the Market Capitalization
Milestone Shares shall be released and delivered to the Sellers (pro rata in
accordance with their ownership of the Market Capitalization Milestone
Shares).
11
For
purposes of this Section 5.3, “Market
Capitalization”
shall
mean the product of the (x) the number of shares of Common Stock issued and
outstanding at the time Market Capitalization is calculated (including any
Market Capitalization Milestone Shares then outstanding notwithstanding that
such shares are held in escrow pursuant to this Section 5.3), multiplied by
(y)
the average closing price of the Common Stock for the 60 consecutive Trading
Days prior to the date of calculation of Market Capitalization, as reported
on
the Trading Market; “Trading
Market”
shall
mean the principal securities trading system on which the Common Stock is then
listed or admitted for trading, including the Pink Sheets, the NASDAQ Stock
Market, the OTC Bulletin Board, or any other applicable stock exchange; and
“Trading
Day”
shall
mean any day on which such Trading Market is open for trading. On any Trading
Day in which there are no transactions in the Common Stock, the Common Stock
shall be deemed to have been traded at the price and volume of the last previous
Trading Day on which there was a transaction.
(b) In
the
event that one or more of the Market Capitalization Milestones have not been
fully satisfied by the end of the second anniversary of the Effective Date
hereof, then, at such time, the portion of the Market Capitalization Milestone
Shares that have not been distributed to the Sellers shall automatically be
forfeited and reconveyed to the Company without the necessity for any payment
by
the Company and shall be cancelled on the Company’s share record books, and the
Sellers shall immediately and automatically cease to have any ownership right
in
such cancelled Market Capitalization Milestone Shares.
5.4 Non-Competition.
For the
period beginning with the Effective Date hereof and ending five years thereafter
(the “Non-Competition
Period”),
except pursuant to the prior written consent of the Board of Directors of the
Company (the “Board”),
neither Seller shall, directly or indirectly, either as employer, consultant,
advisor, agent, investor, principal, partner, stockholder (except as the holder
of less than 1% of the issued and outstanding stock of a publicly held
corporation), or in any other individual or representative capacity, engage
or
participate in any business (i) involving the cultivation or processing of
any
species of Jatropha plant as a feed stock for the production of fuels, or (ii)
that directly competes with the Jatropha Business. Notwithstanding the
foregoing, Mobius shall be permitted to provide consulting services to the
Company regarding the Jatropha Business, and Xxxxxx shall be permitted to be
engaged in the Jatropha Business in his capacity as an executive officer of
the
Company. Notwithstanding the foregoing, in the event that the Company ceases
doing business or files a petition in bankruptcy, or a petition in bankruptcy
is
filed against the Company which is not dismissed within thirty (30) days after
such filing, then the provisions of this Section 5.4 shall immediately
terminate.
5.5 Board
of Directors.
Immediately after consummation of the transactions contemplated hereby, Xxxx
X.
Xxxxxx will be appointed as a director to the Board (the “Mobius
Director”),
to
serve consistent with the provisions of the Bylaws and Articles of Incorporation
of the Company, as amended and in effect from time to time, until the next
annual meeting of the Company’s shareholders. The Mobius Director shall be
entitled to receive coverage for services rendered to the Company (and its
subsidiaries if and when directed by the Board) while the Mobius Director is
a
director of the Company under any director and officer liability insurance
policy(s) maintained by the Company from time to time.
12
5.6 Tax
Treatment of Exchange.
If the
Sellers request in writing that the Company report the Exchange as a tax-free
reorganization under Section 368(A)(1)(b) of the Internal Revenue Code (the
“Code”),
then
at such time, the Sellers shall deliver to the Company legal opinion of Sellers’
counsel, satisfactory to the Company, to the effect that the Company may
properly, and in compliance with the Code, report the Exchange as a tax-free
transaction. The Company makes no representation or warranty as to the
applicability or availability of the tax-free reorganization provisions of
Section 368(A)(1)(b) of the Code to the Exchange, and the availability of such
provisions is not a condition to the consummation of the Exchange or any other
transaction contemplated or effected hereby.
5.7 Further
Assurances.
Each of
the Parties shall use its reasonable commercial efforts to proceed promptly
with
the transactions contemplated herein, to fulfill the conditions precedent for
such party’s benefit or to cause the same to be fulfilled and to execute such
further documents and other papers and perform such further acts as may be
reasonably required or desirable to carry out the provisions of this Agreement
and to consummate the transactions contemplated herein.
5.8 Form
D
Filing.
Company
agrees to file a true and correct Form D with the SEC relating to the Exchange
Shares within 15 calendar days after the Effective Date.
5.9 Financial
Statements.
Promptly following the Effective Date, the Company shall engage an independent
certified public accounting firm designated by the Company (the “Firm”) to audit
Global’s books and records at the Company’s sole cost and expense, the Sellers
shall provide the Firm access to all of Mobius’ and Global’s books and records
as may be reasonably necessary so that the Firm can produce within 30 days
after
being engaged, an audited balance sheet as of the Effective Date and income
statement for the period then ended as of the Effective Date, which audited
statements shall be in a form required for filing with the SEC.
ARTICLE
VI
DELIVERABLES
6.1 Items
delivered to Sellers by the Company.
(a) Officers’
Certificate, certifying the Company’s minutes and resolutions of Board in
respect of the Exchange;
(b) Services
Agreement between the Company and Mobius, duly executed by the Company;
(c) Employment
Agreement between Xxxxxx and the Company, duly executed by the Company;
and
(d) Stock
certificates representing the Exchange Shares issued to Sellers.
6.2 Items
delivered to the Company by Sellers.
(a) Third
Amended and Restated Limited Liability Company Agreement of Global;
(b) Irrevocable
Membership Interest Powers executed by Xxxxxx and Mobius;
13
(c) Services
Agreement between the Company and Mobius, duly executed by Mobius;
(d) Employment
Agreement between Xxxxxx and the Company, duly executed by Xxxxxx;
and
(e) Any
other
document reasonably requested by the Company that it deems necessary for the
consummation of the transactions contemplated hereby.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnity
of the Company.
The
Company agrees to defend, indemnify and hold harmless Sellers from and against,
and to reimburse Sellers with respect to, all liabilities, losses, costs and
expenses, including, without limitation, reasonable attorneys’ fees and
disbursements (collectively the “Losses”)
asserted against or incurred by Sellers by reason of, arising out of, or in
connection with any breach of any representation, warranty or covenant contained
in this Agreement made by the Company or in any document or certificate
delivered by the Company pursuant to the provisions of this Agreement or in
connection with the transactions contemplated thereby.
7.2 Indemnity
of Seller.
Each
Seller, as to itself or himself, but not as to the other Seller, agrees to
defend, indemnify and hold harmless the Company from and against, and to
reimburse the Company with respect to, all Losses asserted against or incurred
by the Company by reason of, arising out of, or in connection with any breach
of
any representation, warranty or covenant contained in this Agreement and made
by
such Seller or in any document or certificate delivered by Seller pursuant
to
the provisions of this Agreement or in connection with the transactions
contemplated thereby.
7.3 Indemnification
Procedure.
A party
(an “Indemnified
Party”)
seeking indemnification shall give prompt notice to the other party (the
“Indemnifying
Party”)
of any
claim for indemnification arising under this Article VIII. The Indemnifying
Party shall have the right to assume and to control the defense of any such
claim with counsel reasonably acceptable to such Indemnified Party, at the
Indemnifying Party’s own cost and expense, including the cost and expense of
reasonable attorneys’ fees and disbursements in connection with such defense, in
which event the Indemnifying Party shall not be obligated to pay the fees and
disbursements of separate counsel for such Indemnified Party in such action.
In
the event, however, that such Indemnified Party’s legal counsel shall determine
that defenses may be available to such Indemnified Party that are different
from
or in addition to those available to the Indemnifying Party, or that there
could
reasonably be expected to be a conflict of interest if such Indemnifying Party
and the Indemnified Party have common counsel in any such proceeding, or if
the
Indemnifying Party has not assumed the defense of the action or proceedings,
then such Indemnified Party may employ separate counsel to represent or defend
such Indemnified Party, and the Indemnifying Party shall pay the reasonable
fees
and disbursements of counsel for such Indemnified Party. No settlement of any
such claim or payment in connection with any such settlement shall be made
without the prior consent of the Indemnifying Party which consent shall not
be
unreasonably withheld.
14
ARTICLE
VIII
MISCELLANEOUS
8.1 Survival
of Representations, Warranties and Agreements.
All
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Effective Date for the period of two years. Each of the Parties
hereto is executing and carrying out the provisions of this agreement in
reliance upon the representations, warranties and covenants and agreements
contained in this agreement or at the closing of the transactions herein
provided for and not upon any investigation which it might have made or any
representations, warranty, agreement, promise or information, written or oral,
made by the other Party or any other person other than as specifically set
forth
herein.
8.2 Confidentiality
of Books and Records.
During
the course of this transaction through the Effective Date, the Company has
made
available to the Sellers for their inspection certain corporate books, records
and assets, and otherwise has afforded to the Sellers and their respective
representatives, access to all documentation and other information concerning
the business, financial and legal conditions of the Company for the purpose
of
conducting a due diligence investigation thereof. The Sellers agree to keep
confidential and not use for their own benefit, except in accordance with this
Agreement, any information or documentation obtained in connection with any
such
investigation.
8.3 Further
Assurances.
If, at
any time after the Effective Date, the Parties shall consider or be advised
that
any further deeds, assignments or assurances in law or that any other things
are
necessary, desirable or proper to complete the merger in accordance with the
terms of this agreement or to vest, perfect or confirm, of record or otherwise,
the title to any property or rights of the parties hereto, the Parties agree
that their proper officers and directors shall execute and deliver all such
proper deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or rights
and otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors the parties are fully authorized to take any and all
such
action.
8.4 Notice.
All
communications, notices, requests, consents or demands given or required under
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered to, or received by prepaid registered or certified mail or
recognized overnight courier addressed to, or upon receipt of a facsimile sent
to, the party for whom intended, as follows, or to such other address or
facsimile number as may be furnished by such party by notice in the manner
provided herein:
15
|
Attention:
|
|
If
to Sellers:
Mobius
Risk Group, LLC
Xxxxx
Xxxxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxxx, CEO
Telecopy
No.: (000) 000-0000
|
|
With
a copy to:
Xxxxxxxx
Xxxxx, Esq.
Xxxxxxxx,
Xxxxxxxx & Xxxxx, P.C.
0000
XxXxxxxx, 00xx Xxxxx
Xxxxxxx,
Xxxxx 00000
Telecopy
No.: (000) 000-0000
|
|
Xxxxxxx
Xxxxxx
Mobius
Risk Group, LLC
0000
Xxxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000
Telecopy
No.: (000) 000-0000
|
|
With
a copy to:
Xxxxxx
Xxxxxxx, Esq.
Xxxxxx
Xxxxxxx Law Offices
0000
Xxxxxxxx Xxxx, 0xx Xxxxx
Xxx
Xxxxxxx, XX 00000
Tele:000-000-0000
Fax:
000-000-0000
|
|
If
to the Company:
Medical
Discoveries, Inc.
c/o
Sunhaven Farms
00000
Xxxx Xxxxx Xxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxx, Chairman
|
|
With
a copy to:
Xxxx
& Xxxxx
0000
Xxxxxxx Xxxx Xxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx Xxxxx, Esq.
Telecopy
No.: (000) 000-0000
|
16
8.5 Entire
Agreement.
This
Agreement, the Schedules hereto and any instruments and agreements to be
executed pursuant to this Agreement, set forth the entire understanding of
the
parties hereto with respect to its subject matter, merge and supersede all
prior
and contemporaneous understandings with respect to its subject matter.
8.6 Amendments
and Waivers.
No
amendment, in whole or in part, of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the Parties
hereto. No waiver of any provision of this Agreement in any instance shall
be
deemed to be a waiver of the same or any other provision in any other instance.
Failure of any Party to enforce any provision of this Agreement shall not be
construed as a waiver of its rights under such provision.
8.7 Successors
and Assigns.
This
Agreement shall be binding upon, enforceable against and inure to the benefit
of, the parties hereto and their respective heirs, administrators, executors,
personal representatives, successors and assigns, and nothing herein is intended
to confer any right, remedy or benefit upon any other person. This Agreement
may
not be assigned by any party hereto except with the prior written consent of
the
other parties, which consent shall not be unreasonably withheld.
8.8 Governing
Law.
This
Agreement shall in all respects be governed by and construed in accordance
with
the laws of the State of California without giving effect to conflicts of law
principles.
8.9 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same
instrument.
8.10 Construction.
Headings contained in this Agreement are for convenience only and shall not
be
used in the interpretation of this Agreement. References herein to Articles,
Sections and Exhibits are to the articles, sections and exhibits, respectively,
of this Agreement. The Schedules are hereby incorporated herein by reference
and
made a part of this Agreement. As used herein, the singular includes the plural,
and the masculine, feminine and neuter gender each includes the others where
the
context so indicates.
8.11 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable by a court
of
competent jurisdiction, this Agreement shall be interpreted and enforceable
as
if such provision were severed or limited, but only to the extent necessary
to
render such provision and this Agreement enforceable and to carry out the
intentions of the parties.
8.12 Expenses.
Except
as otherwise expressly provided in this Agreement, all legal, accounting,
auditing, communications, due diligence and other fees, costs and other expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such fees, costs and
expenses.
8.13 Announcements.
Unless
both the Company and Sellers agree in writing or as otherwise provided in this
Section 8.13, neither the Company nor Sellers shall make a public announcement
or disclosure regarding the this Agreement or the transactions contemplated
hereby. Any public announcement shall be made upon the mutual agreement and
written consent of the Parties; provided,
however,
that if
any Party is required under federal securities law to either (i) file any
document with the Securities and Exchange Commission that discloses the
transactions contemplated hereby, or (ii) to make a public announcement
regarding the transactions contemplated hereby, the disclosing Party shall
provide the other Party with a copy of the proposed disclosure no less than
48
hours before such disclosure is made and shall incorporate into such disclosure
any reasonable comments or changes that the other Party may
request.
17
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement as
of
the date first set forth above.
|
MEDICAL
DISCOVERIES, INC.,
a
Utah corporation
|
||
| By: |
|
|
|
Xxxxx
X. Xxxxxx
|
||
| Chairman of the Board | ||
| SELLERS: | ||
|
MOBIUS
RISK GROUP, LLC, a Texas limited
liability
company
|
||
| By: | ||
|
Xxxx
X. Xxxxxx
|
||
|
Chief
Executive Officer
|
||
|
XXXXXXX
XXXXXX
|
||
18
