Colombia Clean Power & Fuels, inc
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Colombia
Clean Power & Fuels,
inc
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December
3, 2010
Steelhead
Partners, LLC
000 –
000xx Xxxxxx
NE
Suite
2010
Bellevue,
WA 98004
Attn: X.X. Xxxxxxx
Dear
X.X.:
This
letter (the “Letter”) supplements the Subscription Agreement dated December 3,
2010 (the “Agreement”) by and between Colombia Clean Power & Fuels, Inc.
(the “Issuer”) and Steelhead Navigator Master,
L.P. (“Steelhead”), subject to the terms and conditions set forth
herein. Capitalized terms herein shall have the same meaning as the
Agreement.
1. Right of First
Refusal. The Issuer hereby grants to Steelhead, together with its affiliates and other
funds or entities under common management, the right of first refusal to
purchase up to (i) 50% of any offering of New Securities (defined herein)
comprising Preferred Securities or Debt Securities (each as defined herein) and
(ii) 25% of any offering of New Securities consisting of Common Stock (defined
herein), subject to the limitations, terms and conditions set forth
herein.
a. Subject
to the limitations set forth in Section 1.b., “New Securities” shall mean any
Preferred Securities, Debt Securities or Common Stock (each as defined herein)
issued by the Issuer after the date of the Agreement.
(i) “Preferred
Securities” shall mean any preferred stock of the Issuer, and rights,
convertible securities, options or warrants to purchase such preferred
stock;
(ii) “Debt
Securities” shall mean any convertible or non-convertible indebtedness of the
Issuer, whether accompanied by warrants or otherwise, and rights, convertible
securities, options or warrants to purchase such indebtedness; and
(iii) “Common
Stock” shall mean any shares of common stock of the Issuer, and rights, convertible securities, options or
warrants to purchase such Common Stock.
b. The
term “New Securities” shall not include:
(i) the
Notes and the Investor Warrants;
(ii) the
Common Stock or the Preferred Stock (as such term is defined in the Notes)
issuable upon conversion of the Notes or exercise of the Investor Warrants, as
applicable;
(iii) securities
issued or issuable to officers, employees, directors, consultants, placement
agents, and other service providers of the Issuer (or any subsidiary) pursuant
to stock grants, option plans, purchase plans, agreements or other employee
stock incentive programs or arrangements approved by the Board of Directors of
the Issuer;
(iv) securities
issued pursuant to the conversion or exercise of any convertible or exercisable
securities outstanding as of the date of this Agreement;
(v) securities
offered pursuant to a bona fide, firmly underwritten public offering pursuant to
a registration statement filed under the Securities Act;
(vi) securities
issued or issuable pursuant to the acquisition of another corporation by the
Issuer by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture agreement, provided, that such issuances
are approved by the Board of Directors of the Issuer;
(vii) securities
issued or issuable to banks, equipment lessors or other financial lending
institutions pursuant to a commercial leasing or debt financing transaction
approved by the Board of Directors of the Issuer; and
(viii) any
right, option or warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to subsections (i)
through (vii) above.
c. If
the Issuer proposes to issue New Securities, it shall give the Subscriber
written notice of its intention, describing the type of New Securities, their
price and the general terms upon which the Issuer proposes to issue the New
Securities. The Subscriber shall have fifteen (15) days after any
such notice is mailed or delivered to agree to purchase up to the applicable
percentage of such New Securities for the price and upon the terms specified in
the notice by giving written notice to the Issuer and stating therein the
quantity of New Securities to be purchased.
d. If
the Subscriber fails to exercise fully the right of first refusal within such
fifteen (15) day period (the “Election Period”), the Issuer shall have one
hundred and twenty (120) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within one hundred and twenty (120) days from the date of such
agreement) to sell that portion of the New Securities with respect to which the
Subscriber’s right of first refusal option set forth herein was not exercised,
at a price and upon terms no more favorable to the purchasers thereof than
specified in the Issuer’s notice delivered pursuant to this
Letter. If the Issuer has not sold within such one hundred and twenty
(120) day period following the Election Period, or such one hundred and twenty
(120) day period following the date of such agreement, the Issuer shall not
thereafter issue or sell any New Securities without again offering such
securities to the Subscriber as provided in this Letter.
e. The
Right of First Refusal granted herein shall expire on the earlier of: (i) the final closing of an offering of New
Securities with minimum gross proceeds of ten million dollars ($10,000,000), or (ii) the second anniversary of
the date of the Agreement.
Page 3 of
3
If the
foregoing is in accordance with your understanding, please sign two copies and
return one to me, whereupon this letter shall constitute a binding agreement
between the Issuer and Steelhead.
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Sincerely
yours,
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COLOMBIA
CLEAN POWER & FUELS, INC.
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By:
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/s/ Xxxxxx X. Xxxxxx
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Name:
Xxxxxx X. Xxxxxx
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Title: Chief
Executive Officer
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Confirmed
and agreed to this 3rd day of December, 2010
STEELHEAD NAVIGATOR MASTER, L.P.
By Its General Partner:
STEELHEAD OFFSHORE PARTNERS, LLC
By Its Sole Member:
STEELHEAD
PARTNERS, LLC
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By:
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/s/ X. Xxxxxxx Xxxxxxx
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Name:
X. Xxxxxxx Xxxxxxx
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Title: Managing Member, Steelhead Partners,
LLC
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