EXCHANGE AGREEMENT
This
Exchange Agreement (the “Agreement”) is entered into as of this 18th day of
April, 2008 by and among Global Clean Energy Holdings, Inc., a Utah
corporation (the "Company"), and Mercator Momentum Fund, L.P., Mercator Momentum
Fund III, L.P., and Monarch Pointe Fund, Ltd. (each, a “Holder” and
collectively, the “Holders”).
WHEREAS:
A. The
Company currently has issued and outstanding a total of 28,927 shares of Series
A Convertible Preferred Stock (“Series A Preferred Stock”).
B. All
of
the shares of the Series A Preferred Stock are owned by the Holders. The number
of shares of Series A Preferred Stock held by each Holder is set forth on the
signature page of this Agreement under each Holder’s signature.
C. The
Company has requested that the Holders convert all of their shares of Series
A
Preferred Stock into shares of its no par value common stock (the “Common
Stock”), and the Holders are willing to convert all shares of Series A Preferred
Stock into shares of Company.
D. The
Certificate of Designations of Preferences and Rights of Series A Convertible
Preferred (the “Certificate”) limits the number of shares that the Holders can,
collectively, own to 9.99% of the Company’s Common Stock outstanding, which
limitation prevents the conversion of all shares of Series A Preferred
Stock.
E. Instead
of converting the shares of Series A Preferred Stock, the Company and the
Holders are willing to exchange all of the outstanding shares of Series A
Preferred Stock for newly issued shares, all on the terms and conditions set
forth in this Agreement.
F. As
of the
date of this Agreement, the Market Price, as defined in the Certificate, of
the
Company’s Common Stock is $0.07925, and the Conversion Price of the shares of
Series A Preferred Stock therefore is $0.067 (85% of the Market Price).
Notwithstanding the lower conversion price, the Holders are willing to exchange
their shares of Series A Preferred Stock at $0.10 per share.
NOW
THEREFORE, for and in consideration of the premises, covenants and obligations
contained herein, and for other good and valuable consideration, the receipt
and
sufficiency of which is hereby acknowledged, the Company and the Holders hereby
agree as follows:
| 1. |
EXCHANGE
AND CANCELLATION OF SERIES A PREFERRED STOCK FOR COMMON
STOCK.
|
(a) Exchange
of Series A Preferred Stock for Common Stock.
Each
Holder hereby agrees to exchange all of its shares of Series A Preferred Stock
for shares of newly issued shares of Common Stock, and the Company hereby agrees
to issue to the Holders shares of Common Stock in exchange for the shares of
Series A Preferred Stock. The number of shares of Common Stock to be issued
for
each share of Series A Preferred Stock shall be determined by dividing the
“Series A Purchase Price” (as defined in the Certificate, which price is
$100.00) by $0.10. Accordingly, each share of Series A Preferred Stock is hereby
exchanged for 1,000 shares of Common Stock.
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(b) Cancellation
of Series A Preferred Stock.
In
order to effect the exchange of all of the 28,927 outstanding shares of Series
A
Preferred Stock for a total of 28,927,000 new shares of Common Stock,
concurrently with the execution of this Agreement, Holders have delivered to
the
Company for cancellation the stock certificates representing all of the 28,927
outstanding shares of Series A Preferred Stock owned by the Holders. The
foregoing Series A Preferred Stock stock certificates have been duly endorsed
for cancellation by each of the Holders in a manner satisfactory to the Company.
The Company hereby acknowledges receipt of the foregoing stock certificates
and
agrees to cancel all of the shares of Series A Preferred Stock represented
by
the stock certificates.
(c) Issuance
of Common Stock.
Concurrently with the execution of this Agreement, and in exchange for the
shares of Series A Preferred Stock delivered by the Holders to the Company
for
cancellation, the Company is delivering to each Holder a new stock certificates
representing the number of shares of Common Stock set forth on the signature
page of this Agreement (a total of 28,927,000 shares of Common Stock). The
shares of Common Stock delivered to the Holders hereunder are registered in
the
name of the Holders, and each Holder shall be deemed to be a holder of the
shares of Common Stock for all purposes effective as of the date of this
Agreement.
| 2. |
HOLDER’S
REPRESENTATIONS AND WARRANTIES.
|
Each
Holder hereby represents and warrants that:
(a) Investment
Purpose.
The
Holder is acquiring the shares of Common Stock for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered
or
exempted under the Securities Act of 1933, as amended (the "1933
Act").
(b) Accredited
Holder Status.
The
Holder is an "accredited investor" as that term is defined in Rule 501(a)(3)
of
Regulation D.
(c) Title
to the Shares of Series A Preferred Stock.
The
Holder owns, of record and beneficially, all of the shares of Series A Preferred
Stock listed under its name on the signature page of this Agreement, free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature. No individual, corporation,
entity or person has any claim or interest in, to, or against any of the shares
of Series A Preferred Stock owned by the Holder.
(d) Reliance
on Exemptions.
The
Holder understands that the shares of Common Stock are being issued in reliance
on specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and the Holder's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
the Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of the Holder to acquire the shares.
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(e) Information
and Investigation.
The
Holder has been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the shares which have
been requested by the Holder. The Holder is familiar with the business,
operations, and financial condition of the Company. The Holder understands
that
an investment in the shares of Common Stock involves a high degree of risk.
The
Holder has sought such accounting, legal and tax advice as it deemed necessary
to make an informed investment decision with respect to the exchange of its
Series A Preferred Stock for shares of Common Stock.
(f) No
Governmental Review.
The
Holder understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the shares or the fairness of the exchange of the shares of
Series A Preferred Stock for Common Stock, nor have such authorities passed
upon
or endorsed the merits of the exchange.
(g) Transfer
or Resale.
The
Holder understands that the shares issued hereunder have not been and will
not
be registered under the 1933 Act or any state securities laws, and may not
be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Holder shall have delivered to the Company an
opinion of counsel to the effect that such securities to be sold, assigned
or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) the Holder provides the Company with reasonable
assurance that such securities can be sold, assigned or transferred in
compliance with an exemption from registration under the 1933 Act or the rules
and regulations of the SEC thereunder, and any state securities
laws.
(h) Authorization;
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Holder and is a valid and binding agreement of the Holder enforceable
in
accordance with its terms.
| 3. |
REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY.
|
The
Company represents and warrants to the Holder that:
(a) Organization
and Qualification.
The
Company is a corporation duly organized and validly existing in good standing
under the laws of the State of Utah, and has the requisite corporate power
to
own its properties and to carry on its business as now being
conducted.
(b) Authorization;
Enforcement; Compliance with Other Laws.
(i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue the 28,927,000 shares of Common Stock in
accordance with the terms of this Agreement; (ii) the execution and delivery
of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby, including without limitation the issuance of the new
shares, has been duly authorized by the Company's Board of Directors; (iii)
this
Agreement has been duly executed and delivered by the Company; and (iv) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with their terms.
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| 4. |
MISCELLANEOUS.
|
(a) Further
Assurances.
At any
time, and from time to time, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm the exchange of securities hereunder or otherwise to carry out the
intent and purposes of this Agreement.
(b) Amendment.
This
Agreement may be amended only in writing as agreed to by all parties
hereto.
(c) Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(d) Binding
Effect.
This
Agreement shall be binding upon the parties hereto and inure to the benefit
of
the parties, their respective heirs, administrators, executors, successors
and
assigns.
(e) Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties covering everything
agreed upon or understood in the transaction. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof.
(f) Severability.
If any
part of this Agreement is deemed to be unenforceable, the balance of the
Agreement shall remain in full force and effect.
(g) Applicable
Law.
This
Agreement shall be construed and governed by the laws of the State of
California.
IN
WITNESS WHEREOF, the Holder and the Company have caused this Agreement to be
duly executed as of the date first written above.
| THE COMPANY: | ||
| GLOBAL CLEAN ENERGY HOLDINGS, INC. | ||
| |
|
|
| By: | /s/ XXXXXXX XXXXXX | |
|
Name: Xxxxxxx Xxxxxx |
||
|
Its:
Chief Executive Officer
|
||
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| THE HOLDERS: | |||
| MERCATOR MOMENTUM FUND, L.P. | MERCATOR MOMENTUM FUND III, L.P. | ||
| By: M.A.G. CAPITAL, LLC, its general partner | By: M.A.G. CAPITAL, LLC, its general partner | ||
|
By: /s/
XXXXX XXXXXXXXX
|
By: /s/
XXXXX XXXXXXXXX
|
||
|
Xxxxx
Xxxxxxxxx, Managing Partner
|
Xxxxx
Xxxxxxxxx, Managing Partner
|
||
|
Shares
of Series A Preferred Stock: 8,715
Common
Stock to be received: 8,715,000
|
Shares
of Series A Preferred Stock: 10,295
Common
Stock to be received: 10,295,000
|
||
| MONARCH POINTE FUND, LTD. | |||
| By: M.A.G. CAPITAL, LLC, its investment advisor | |||
|
By: /s/
XXXXX XXXXXXXXX
|
|||
|
Xxxxx
Xxxxxxxxx, Managing Partner
|
|||
| Shares
of Series A Preferred Stock: 9,917
Common
Stock to be received: 9,917,000
|
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