REIMBURSEMENT AGREEMENT
Exhibit
10.2
This
Reimbursement Agreement (the “Agreement”) is made
and entered into as of April 30, 2010 by NEW GENERATION BIOFUELS HOLDINGS, INC.,
a Florida corporation (the “Company”), in favor
of 2020 Energy, LLC, an Arizona limited liability company (“2020
Energy”).
Preliminary
Statements
A. The
Company is conducting an offering to “accredited investors” under the Securities
Act of 1933, as amended (the “Securities Act”) of
Secured Convertible Promissory Notes (the “Notes”) and warrants
to purchase shares of the Company’s common stock, as described in the Note and
Warrant Purchase Agreement (as amended, modified, supplemented and extended from
time to time, the “Purchase Agreement”),
dated as of the date hereof, between the Company and the purchasers of the Notes
the “Purchasers”).
B.
In order to secure the obligations of the Company to repay the Notes
and to induce the Purchasers to purchase the Notes, 2020 Energy executed and
delivered a Pledge Agreement dated as of the date hereof, between 2020 Energy
and the Secured Parties, as Purchasers (the “Pledge
Agreement”).
C.
If the Secured Parties exercise their rights under the
Pledge Agreement after a default on the Notes by the Company, resulting in a
loss by 2020 Energy of all or any portion the Pledged Shares, the Company is
willing to reimburse 2020 Energy by issuing new shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”) to
2020 Energy to replace the Pledged Shares.
D. In
order to induce 2020 Energy to execute and deliver the Pledge Agreement, the
Company has agreed to execute and deliver this Agreement in favor of 2020 Energy
pursuant to which the Company will reimburse 2020 Energy for the Pledged Shares
in accordance with the provisions set forth below.
E.
Capitalized terms used and not otherwise defined herein shall
have the meanings provided in the Purchase Agreement, the Notes or the Pledge
Agreement, as the case may be.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and 2020 Energy hereby agree as follows:
Section
1. Reimbursement
Obligation. After
(i) the occurrence of an Event of Default on the Notes that remains uncured by
the Company beyond any cure period provided in the Notes and (ii) a transfer of
the Pledged Shares to the Secured Parties pursuant to the Pledge Agreement, the
Company hereby agrees to reimburse 2020 Energy for the Pledged Shares by issuing
to 2020 Energy a number of shares of Common Stock (the “Reimbursed Shares”)
equal to the number of Pledged Shares so transferred, to the extent permitted by
the rules of the Nasdaq Stock Market. The Company will issue the
Reimbursed Shares within two (2) business days after 2020 Energy notifies the
Company in writing that the Pledged Shares have been transferred to the Secured
Parties.
Section
2. Indemnification. (a)
The Company hereby agrees to indemnify, defend and hold 2020 Energy harmless
from and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including without limitation,
interest, penalties and reasonable attorneys’ fees and expenses (collectively
“Damages”)
asserted against, resulting to, imposed upon or incurred directly or indirectly
by 2020 Energy by reason of or resulting from action by the Secured Parties
under the Pledge Agreement.
(b)
The Company agrees to indemnify 2020 Energy for any capital gains or other taxes
directly related to forfeiture of the Pledged Shares or the issuance of the
Reimbursed Shares that 2020 Energy incurs as a result of actions taken by the
Secured Parties under the Pledge Agreement, subject to the following conditions:
for the purpose of calculating any capital gain, 2020 Energy must use the
following methodology to determine the cost basis of the Pledged Shares, the
first 62,500 shares pledged @ $4.00/share and the remaining balance of up to
1,937,500 shares @ $0.80/share for a minimum weighted average cost basis of
$0.90 per share (the actual cost will be based on the final number of Pledged
Shares).
(c) The
Company will reimburse 2020 Energy for any legal fees and SEC XXXXX filing fees
incurred as a result of entering into this Agreement.
(d) The
Company agrees to indemnify 2020 Energy against any claims, actions, losses,
liabilities, costs and expenses (including legal fees) resulting from any
violations of the provisions of Section 16(b) under the Securities Exchange Act
of 1934, as amended regarding “short-swing profits” that may arise from the
forfeiture of the Pledged Shares and the issuance of the Reimbursement
Shares.
Section
3. Representations
and Warranties of the Company. The
Company represents and warrants to 2020 Energy as follows:
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3.1
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Organization and
Authorization. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Florida. The Company has all requisite
corporate power and authority to execute, deliver and perform this
Agreement, including, without limitation, to issue the Reimbursed
Shares.
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3.2
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Binding
Obligation. This Agreement and all other instruments and
agreements contemplated herein constitute the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms
(except as limited by applicable bankruptcy, moratorium, insolvency or
other similar laws affecting generally the rights of creditors or by
principles of equity), and the execution, delivery and performance of this
Agreement and such other agreements by the Company does not and will not:
(i) conflict with, or violate any provision of, statute, law, rule,
regulation, order, judgment, injunction, decree or award of any arbitrator
or governmental authority having applicability to the Company or its
business, assets, or properties, or any provision of its certificate of
incorporation, bylaws or similar governing instruments or
(ii) conflict with, violate, or result in any breach of, or
constitute a default under, any agreement or instrument to which the
Company is now a party or by which the Company or any of its properties or
assets may be bound or
affected.
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2
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3.3
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Issuance of Reimbursed
Shares. The Company has taken all corporate action
necessary for the authorization, execution, delivery and performance of
this Agreement by the Company and the performance of the Company’s
obligations hereunder, including adoption of a Board resolution reserving
a sufficient number of shares for issuance and delivery of the Reimbursed
Shares. Upon issuance of the Reimbursed Shares in accordance with this
Agreement, the Reimbursed Shares will be validly issued, fully paid and
non-assessable and free of any liens or encumbrances other than those
imposed by federal and state securities
laws.
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3.4
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Consents. No
authorization, consent or approval of, or filing or registration with, any
governmental or regulatory body or authority, or any other third party, is
necessary for the Company’s execution, delivery and performance of this
Agreement, except filings required pursuant to applicable federal and
state securities laws and blue sky
laws.
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Section
4. Representations and
Warranties of 2020 Energy.
4.1 Authorization. 2020
Energy has full power and authority to enter into this Agreement, the execution
and delivery of which has been duly authorized, if applicable, and this
Agreement constitutes a valid and legally binding obligation of 2020
Energy.
4.2 Securities
Exemption. 2020 Energy acknowledges its understanding that the
issuance of the Reimbursed Shares is intended to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D promulgated thereunder. In furtherance
thereof, 2020 Energy represents and warrants to the Company as
follows:
(a) 2020
Energy would acquire any Reimbursed Shares solely for 2020 Energy’s own
beneficial account, for investment purposes, and not with view to, or resale in
connection with, any distribution of the Reimbursed Shares. 2020
Energy is an “accredited investor” as such term is defined in Rule 501 under the
Securities Act.
(b) 2020
Energy will not sell or otherwise transfer any Reimbursed Shares without
registration under the Securities Act or an exemption therefrom, and understands
that the Reimbursed Shares have not been registered under the Securities Act or
under the securities laws of any state and, therefore, cannot be resold,
pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act and under the applicable securities laws of
such states, or an exemption from such registration is
available. 2020 Energy understands that all certificates evidencing
any Reimbursed Shares shall bear a legend to such effect. 2020 Energy
is aware that the Reimbursed Shares are “restricted securities,” as such term is
defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they
may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144
are met. 2020 Energy also understands that the Company is under no
obligation to register the Reimbursed Shares on its behalf or to assist in
complying with any exemption from registration under the Securities Act or
applicable state securities laws.
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Section
5. Termination. This
Agreement shall terminate upon termination or expiration of the Pledge Agreement
or release or expiration of 2020 Energy’s obligations thereunder (for example,
upon full payment or conversion of the Notes); except that in no event shall the
Agreement terminate if 2020 Energy is due the Reimbursed Shares
hereunder.
Section
6. Notices. All
notices and other communications permitted or required pursuant to this
Agreement shall be in writing and shall be deemed given when delivered in
person, by overnight courier, or five (5) days after being deposited in the
United States mail, postage prepaid, as certified mail, return receipt
requested, properly addressed to the party for whom intended at the addresses
set forth below, or to such other address as any party hereto may designate for
itself by notice in accordance herewith to the others:
If to the Company:
0000 Xxxxxxxx Xxxx, Xxxxx
000
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx
If to
2020 Energy:
2020 Energy, LLC
c/o Xxxxxxx Xxxxxx
00-00 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx,
XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxxx Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Phone: (000) 000-0000
Fax: (000)
000-0000
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Section
7. Miscellaneous. The
headings of the sections and subsections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement. No amendment or waiver of any provision
of this Agreement shall be effective unless it is in writing and signed by the
Company and 2020 Energy, and any such waiver shall be effective only in the
specific instance and for the specific purpose for which given. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Any assignment of the Note by
the Maker shall not affect the rights of 2020 Energy or the obligations of the
Company under this Agreement. In the event of a breach by either
party of the covenants or agreements set forth in this Agreement, the party
entitled to the benefit of such covenants or agreements may proceed to enforce
their rights either by suit in equity and/or an action for specific
performance. No delay or omission of 2020 Energy to exercise any
right, remedy or power hereunder shall impair the same or be construed to be a
waiver thereof. No waiver of any right, remedy or power hereunder
shall extend to or affect any other right, remedy or power, and no single or
partial exercise of any right, remedy or power shall preclude any other or
further exercise thereof by 2020 Energy. Any provision of this
Agreement that is legally determined to be unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the
unenforceability only without invalidating the remaining provisions hereof, but
no unenforceability in any jurisdiction shall invalidate or render unenforceable
the same or any other provision in any other jurisdiction. This
Agreement and the Pledge Agreement constitute the entire agreement of the
parties hereto with respect to the matters referred to herein and supersedes any
and all other understandings, negotiations, or agreements among the parties with
respect to the subject matter hereof. This Agreement may be executed
in counterparts which together constitute one instrument and may be executed by
delivery of an original executed counterpart signature page by facsimile
transmission.
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IN
WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the date first written above.
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By:
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/s/ Xxxx X. Xxxxxxxxx
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Name:
Xxxx X. Xxxxxxxxx
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Title:
Chief Executive Officer
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2020
ENERGY, LLC
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By:
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Xxxxxxx
Xxxxxx, its Sole Member
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/s/ Xxxxxxx
Xxxxxx
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