EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made as of the
14th day of December 2007, by and among BLUEFIRE ETHANOL FUELS, INC., a Nevada
corporation (the "COMPANY") and Quercus Trust, a ___________ (the "INVESTOR").
WHEREAS, the Company, the Investor, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ SEP
▇▇▇ (the "NEW INVESTORS") entered into a single private placement financing to
be funded in two tranches (collectively, the "FINANCING"), whereby the New
Investors agreed to purchase from the Company and the Company agreed to issue to
the New Investors shares of common stock and warrants in the Company for an
aggregate purchase price of $15,500,000;
WHEREAS, the first tranche in the amount of $1,000,000 was funded on
December 3, 2007;
WHEREAS, the Company and the Investor desire to fund the second tranche on
the date hereof in the amount of $14,500,000.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for such other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Purchase and Sale of the Shares.
1.1 SALE OF SHARES. Subject to the terms and conditions of this
Agreement, at the Closing (as hereafter defined), the Company will issue,
sell and deliver to the Investor, and the Investor will purchase from the
Company 5,370,370 shares of the Company's common stock (the "SHARES") at a
purchase price of $2.70 per share (the "PURCHASE PRICE").
1.2 ISSUANCE OF WARRANTS. Concurrently with the sale of the Shares
by the Company and the purchase of the Shares by the Investor, the
Investor will receive a warrant (the "WARRANT") to purchase 5,370,370
Shares of common stock of the Company (the "WARRANT SHARES") at a purchase
price of $2.90 per share. The Warrants shall have a term of five (5)
years.
1.3 CLOSING. The closing of the purchase and sale of the Shares
and Warrants (the "CLOSING") will take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
at 10:00 am, New York time on the date hereof or on such other date or at
such other place as the parties hereto shall mutually agree (the date of
the Closing is hereinafter referred to as the "CLOSING DATE"). At the
Closing or promptly thereafter, the Company will deliver to the Investor a
stock certificate or certificates dated the Closing Date for the number of
Shares the Investor has agreed to purchase and registered in such name and
in such denominations as the Investor requests and a Warrant on the terms
set forth in Section 1.2 above, and the Investor will pay to the Company
the Purchase Price by certified check or wire transfer of immediately
available funds.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants and covenants to the Investor that:
2.1 CORPORATE EXISTENCE. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Nevada and has all requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now
being conducted.
2.2 SUBSIDIARIES. Each Subsidiary of the Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
its jurisdiction of organization and has the requisite corporate power to
own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. For the purposes of this Agreement,
"SUBSIDIARY" shall mean any corporation or other entity of which at least
a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or
other Persons performing similar functions are at the time owned directly
or indirectly by the Company and/or any of its other Subsidiaries.
2.3 CORPORATE POWER. The Company has the requisite legal and
corporate power and authority to enter into, issue and perform this
Agreement and the Warrants in accordance with the terms hereof and
thereof. The execution, delivery and performance of this Agreement and the
Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all necessary corporate action. When executed and delivered by the
Company, this Agreement and the Warrants shall constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application
2.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Company of the transactions
contemplated hereby, do not and will not (i) violate or conflict with any
provision of the Company's certificate of incorporation or bylaws, each as
amended to date, or any Subsidiary's comparable charter documents, (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries' respective properties or assets are bound, or (iii) result
in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries are bound or affected.
2.5 NO CONSENTS. Neither the Company nor any Subsidiary is
required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it
to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof, except
for those consents, authorizations, orders, filings and registrations
previously made or obtained and those filings which are required to be
made under federal or state securities laws that, pursuant to such laws,
may be made after the date hereof.
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2.6 TITLE TO PROPERTIES. Except as set forth in the Public
Filings, each of the Company and the Subsidiaries has good and valid title
to all of its real and personal property, free and clear of any mortgages,
pledges, charges, liens, security interests or other encumbrances. Any
leases of the Company and each of its Subsidiaries are valid and
subsisting and in full force and effect.
2.7 INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect.
2.8 LEGAL PROCEEDINGS. Except as set forth in the Public Filings,
(i) there is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or other proceeding pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary
which questions the validity of this Agreement or any of the transactions
contemplated hereby or any action taken or to be taken pursuant hereto,
(ii) there is no material action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or other proceeding pending or, to
the knowledge of the Company, threatened against or involving the Company,
any Subsidiary or any of their respective properties or assets and (iii)
there are no material outstanding orders, judgments, injunctions, awards
or decrees of any court, arbitrator or governmental or regulatory body
against the Company or any Subsidiary or any officers or directors of the
Company or Subsidiary in their capacities as such.
2.9 SECURITIES LAW. In reliance on the investment representations
made by the Investor, the offer, issuance, sale and delivery of the Shares
and Warrants, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and all applicable state securities laws.
2.10 INTELLECTUAL PROPERTY. The Company and the Subsidiaries own or
possess adequate rights or licenses to use all trademarks, service marks,
and all applications and registrations therefor, trade names, patents,
patent rights, copyrights, original works of authorship, inventions,
licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights, (collectively "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their respective businesses as now
conducted. Except as disclosed in the Public Filings, none of the
Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate, within two years from the date of this
Agreement. The Company does not have any knowledge, after reasonable
inquiry, of any material infringement by the Company or its Subsidiaries
of Intellectual Property Rights of others. There is no material claim,
action or proceeding pending, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its
Intellectual Property Rights. The Company is unaware of any material facts
or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their material Intellectual
Property Rights.
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2.11 REPORTS; FINANCIAL STATEMENTS. The Company's Annual Report on
Form 10-KSB for the year ended December 31, 2006 and Quarterly Reports on
Form 10-QSB for the quarters ended March 31, 2007, June 30, 2007 and
September 30, 2007 (the "REPORTS") have been filed with the Securities and
Exchange Commission (the "SEC") and the Reports complied in all material
respects with the rules of the SEC applicable to such Reports on the date
filed with the SEC, and to the Company's best knowledge, the Reports did
not contain, on the date of filing with the SEC, any untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not materially misleading. All of the consolidated financial statements
included in the Reports (the "COMPANY FINANCIAL STATEMENTS"): (a) have
been prepared from and on the basis of, and are in accordance with, the
books and records of the Company and with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior accounting
periods; (b) fairly and accurately present in all material respects the
consolidated financial condition of the Company as of the date of each
such Company Financial Statement and the results of its operations for the
periods therein specified; and (c) in the case of the annual financial
statements, are accompanied by the audit opinion of the Company's
independent public accountants. Except as set forth in the Company
Financial Statements, as of the date hereof, Company has no liabilities
other than (x) liabilities which are reflected or reserved against in the
Company Financial Statements and which remain outstanding and undischarged
as of the date hereof, (y) liabilities arising in the ordinary course of
business of the Company since September 30, 2007, or (z) which were not
required by generally accepted accounting principles to be reflected or
reserved on the Company Financial Statements. Since September 30, 2007,
there has not been any event or change which has had a Material Adverse
Effect (as hereinafter defined) and Company has no actual knowledge of any
event or circumstance that would reasonably be expected to result in such
a Material Adverse Effect. As used herein, "MATERIAL ADVERSE EFFECT" shall
mean a material adverse effect on (i) the Company, (ii) its consolidated
results of operations, assets, or financial condition, (iii) its ability
to perform its obligations under this Agreement or (iv) the Shares or the
Warrant Shares, PROVIDED HOWEVER, that a Material Adverse Effect shall not
include facts, circumstances, events, changes, effects or occurrences (i)
affecting the United States or global economy or capital or financial
markets or the ethanol market generally which do not materially
disproportionately affect the Company, (ii) resulting from changes in
laws, regulations or GAAP, or in the authoritative interpretations thereof
or in regulatory or interpretive guidance related thereto which do not
materially disproportionately affect the Company, (iii) resulting from
earthquakes or similar catastrophes, or acts of war, sabotage, terrorism,
military action or any escalation or worsening thereof which do not
materially disproportionately affect the Company, or (iv) resulting from
this Agreement, the announcement thereof and the transactions contemplated
hereby.
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2.12 THE SHARES. The Shares, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein,
will be duly and validly issued, fully paid and nonassessable and free and
clear of all liens, security interests, options, charges, pledges and
encumbrances.
2.13 THE WARRANTS. The Warrants when issued and delivered will be
duly and validly issued and will be free of all liens and restrictions on
transfer other than under applicable securities laws..
2.14 THE WARRANT SHARES. The Warrant Shares have been duly reserved
for issuance by the Company in sufficient number to cover the exercise of
all of the Warrants. The issuance of the Warrant Shares upon exercise of
the Warrants has been duly authorized by the Company and the Warrant
Shares when delivered in accordance with the Warrant, will be validly
issued, fully paid and non-assessable, and free of all liens and
restrictions on transfer other than under applicable securities laws.
2.15 BROKERS' OR FINDERS' FEES. Except for Ardour Capital
Investment, LLC ("ARDOUR"), no broker, finder or similar agent has been
employed by or on behalf of the Company, and no Person or entity with
which the Company has had any dealings or communications of any kind is
entitled to any brokerage commission, finder's fee or any similar
compensation, in connection with this Agreement or the transactions
contemplated hereby.
2.16 NO OTHER REPRESENTATIONS. Except as and to the extent set
forth in this Section 2, the Company makes no representations or
warranties whatsoever to the Investor and hereby disclaims all liability
and responsibility for any representation, warranty, statement, or
information not included herein that was made, communicated, or furnished
(orally or in writing) to the Investor or its representatives (including
any opinion, information, projection, or advice that may have been or may
be provided to the Investor by any director, officer, employee, agent,
consultant, or representative of the Company or any of is Subsidiaries).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE Investor. The Investor
hereby represents and warrants that:
3.1 CORPORATE EXISTENCE. The Investor is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all requisite corporate or other power to own, lease
and operate its properties and assets and to conduct its business as it is
now being conducted..
3.2 CORPORATE POWER. The Investor has the requisite legal,
corporate or other power and authority to enter into, issue and perform
this Agreement in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Investor and the
consummation by it of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate or other action. When
executed and delivered by the Investor, this Agreement shall constitute
valid and binding obligations of the Investor enforceable against the
Investor in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or
by other equitable principles of general application.
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3.3 SECURITIES LAW. The Investor is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act and has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the transactions
contemplated under this Agreement. The Investor is acquiring the Shares
and Warrants solely for investment purposes, with no intention of
distributing or reselling any of the Shares or Warrants or any interest
therein. The Investor's financial condition is such that it is able to
bear all economic risks of investment in the Shares and Warrants,
including a complete loss of its investment. The Company has provided the
Investor with adequate access to financial and other information
concerning the Company as requested and the Investor has had the
opportunity to ask questions of and receive answers from the Company
concerning the transactions contemplated by this Agreement and to obtain
therefrom any additional information necessary to make an informed
decision regarding an investment in the Company. The Investor is aware
that the Shares are not registered under the Securities Act and will be
endorsed with transfer restriction legends, and that neither the Shares
nor any interest therein may be sold, pledged, or otherwise transferred
unless the Shares are registered under the Securities Act or qualify for
an exemption under the Securities Act.
3.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by the Investor of the transactions
contemplated hereby, do not and will not (i) violate or conflict with any
provision of any Investor's organizational documents, each as amended to
date, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, any material agreement, mortgage, deed of trust, indenture, note,
bond, license, lease agreement, instrument or obligation to which any
Investor is a party or by which any of its respective properties or assets
are bound, or (iii) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to the
Investor or by which any property or asset of the Investor are bound or
affected.
3.5 BROKERS' OR FINDERS' FEES. No broker, finder or similar agent
has been employed by or on behalf of the Investor, and no Person or entity
with which the Investor has had any dealings or communications of any kind
is entitled to any brokerage commission, finder's fee or any similar
compensation, in connection with this Agreement or the transactions
contemplated hereby.
3.6 CERTAIN TRADING ACTIVITIES. The Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Investor, engaged in any transactions in the
securities of the Company (including, without limitations, any short sales
involving the Company's securities) since the time that such Investor was
first contacted by the Company or Ardour regarding the investment in the
Company contemplated by this Agreement. The Investor covenants that
neither it nor any Person acting on its behalf or pursuant to any
understanding with it will engage in any transactions in the securities of
the Company (including short sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed by the
Company. The Investor has maintained, and covenants that until such time
as the transactions contemplated by this Agreement are publicly disclosed
by the Company the Investor will maintain, the confidentiality of any
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).
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3.7 LIMITED OWNERSHIP. The purchase by the Investor of the
securities issuable to it at the Closing will not result in the Investor
(individually or together with any other Person with whom the Investor has
identified, or will have identified, itself as part of a "group" in a
public filing made with the SEC involving the Company's securities)
acquiring, or obtaining the right to acquire, beneficial ownership in
excess of 19.999% of the outstanding shares of common stock or the voting
power of the Company on a post transaction basis that assumes that the
Closing shall have occurred. The Investor does not presently intend to,
alone or together with others, make a public filing with the SEC to
disclose that it has (or that it together with such other Persons have)
acquired, or obtained the right to acquire, as a result of the Closing
(when added to any other securities of the Company that it or they then
own or have the right to acquire), beneficial ownership in excess of
19.999% of the outstanding shares of common stock or the voting power of
the Company on a post transaction basis that assumes that the Closing
shall have occurred.
SECTION 4. CONDITIONS TO CLOSING. The following are conditions to Closing
which shall be deemed satisfied upon delivery by the Company of the certificates
representing the Shares and the Warrants and delivery by the Investor of the
Purchase Price:
4.1 TERMINATION OF SECURITY INTERESTS/UCC FILINGS. Aurarian
Capital Partners II, L.P. ("AURARIAN CAPITAL") and Aurarian Offshore Ltd.
("AURARIAN OFFSHORE") shall have agreed to release any security interests
they have in the assets of the Company and its Subsidiaries and the
Company shall have filed UCC termination statements extinguishing any
security interests.
4.2 CONVERSION OPTION. Each of Aurarian Capital and Aurarian
Offshore shall have fully converted their respective Senior Secured
Convertible Promissory Notes with an aggregate principle amount of
$2,000,000 at a conversion price of $2.90 into common stock of the Company
(the "AURARIAN FINANCING").
SECTION 5. COVENANTS.
5.1 PARTICIPATIONS. Until the second anniversary from the Closing
Date, the Company covenants to grant the Investor the right to purchase
its pro rata share of any shares of future offerings (other than Excluded
Issuances) of equity securities (or warrants or securities convertible
into equity securities) of the Company that will enable it to maintain its
fully diluted percentage ownership of the Company at the offering price or
the price being paid by a third party, as applicable. "EXCLUDED ISSUANCES"
shall mean any equity securities (or warrants or securities convertible
into equity securities) issued (i) to employees, officers, directors,
contractors, consultants or advisers approved by the Board of Directors of
the Company (the "BOARD"), (ii) to parties that are strategic partners
investing in connection with a commercial relationship, or providing the
Company with equipment leases, real property leases, loans, credit lines,
guaranties or similar transactions approved by the Board, (iii) in
connection with a merger or acquisition or in connection with a joint
venture or other strategic or commercial relationship approved by the
Board, (iv) upon the exercise of currently outstanding convertible
securities, options and warrants, and (v) in connection with any public
offering.
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5.2 OPTION RESTRICTIONS. Until all of the Shares are subject to an
effective registration statement, the Company shall not issue shares,
warrants or options to any Affiliates such that after giving effect to
such issuance, the number of shares held by such Affiliates have increased
by greater than ten percent (10%) over the number of outstanding shares of
the Company held by Affiliates, in each case on a fully diluted basis, as
of Closing Date.
SECTION 6. REGISTRATION RIGHTS.
6.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) within 45 days of the Closing Date (the "FILING DEADLINE"),
prepare and file with the SEC a Registration Statement (the "INITIAL
REGISTRATION STATEMENT") relating to the resale of the sum (the "REQUIRED
REGISTRATION AMOUNT") of (i) the number of Shares and Warrant Shares issued to
the New Investors and (ii) the number of shares of common stock and warrant
shares of the Company issued to Aurarian pursuant to the Aurarian Financing
(collectively, the "REGISTRABLE SECURITIES"). The Initial Registration Statement
shall be on Form SB-2 (or on another appropriate form). Notwithstanding anything
herein to the contrary, if the SEC prevents the Company from including the
Required Registration Amount of Registrable Securities on the Initial
Registration Statement due to limitations on the use of Rule 415 of the
Securities Act or otherwise for the resale of the Registrable Securities by the
New Investors and Aurarian (the Registrable Securities not included on such
Registration Statement, the "CUTBACK SHARES"), the Initial Registration
Statement shall register the resale of a number of Registrable Securities which
is equal to the maximum number of shares as is permitted by the SEC. In such
event, the number of Registrable Securities to be registered for the New
Investors and Aurarian in the Initial Registration Statement shall be reduced
PRO RATA among all New Investors and Aurarian. With respect to the Cutback
Shares, the Company shall file additional registration statements (each an
"ADDITIONAL REGISTRATION STATEMENT" and with the Initial Registration Statement,
the "REGISTRATION STATEMENT") successively trying to register the maximum number
of remaining Cutback Shares until all of the Required Registration Amount of
Registrable Securities have been registered with the SEC.;
(b) use its reasonable commercial efforts, subject to receipt of
necessary information from the New Investors and Aurarian, to cause the SEC to
declare the Initial Registration Statement effective within 150 days after the
Closing Date (or ten business days after receipt of notice of no review by the
SEC) (the "EFFECTIVE DEADLINE");
(c) promptly prepare and file with the SEC such amendments and
supplements to any Registration Statement filed pursuant to this Section 6.1 and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective until the earliest of (i) such time as all of
the Registrable Securities have been sold pursuant to the Registration
Statement, (ii) two years or (iii) such time all of the Registrable Securities
become eligible for resale without volume limitations pursuant to Rule 144
(including for purposes of this Agreement, any successor rule that may be
adopted following the date hereof) under the Securities Act or any other rule of
similar effect (the "EFFECTIVENESS PERIOD");
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(d) furnish to the New Investors and Aurarian with respect to the
Registrable Securities registered under any Registration Statement (and to each
underwriter, if any, of such Registrable Securities) such number of copies of
prospectuses and such other documents as the New Investors may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Registrable Securities by the New Investors and Auraruan;
(e) bear all expenses in connection with the procedures in
paragraphs (a) through (f) of this Section 6.1 and the registration of the
Registrable Securities pursuant to any Registration Statement, other than fees
and expenses, if any, of counsel or other advisers to the New Investors and
Aurarian or underwriting discounts, brokerage fees and commissions incurred by
the New Investors or Aurarian, if any in connection with the offering of the
shares pursuant to any Registration Statement;
(f) in order to enable the New Investors to sell the Registrable
Securities under Rule 144 to the Securities Act ("RULE 144"), for a period of
two years from the Closing Date, use its commercially reasonable efforts to
comply with the requirements of Rule 144, including without limitation, use its
commercially reasonable efforts to comply with the requirements of Rule 144 with
respect to public information about the Company and timely file all reports
required to be filed by the Company under the Exchange Act;
6.2 DELAY IN FILING OR EFFECTIVENESS OF REGISTRATION STATEMENT.
(a) If (i) the Initial Registration Statement is not filed by the Company with
the SEC on or prior to the Filing Deadline, then for each day following the
Filing Deadline, until but excluding the date the Initial Registration Statement
is filed, the Company shall pay the New Investors with respect to any such
failure, as liquidated damages and not as a penalty, an amount per 30-day period
equal to 1.0% of the purchase price paid by such New Investors for its Shares
pursuant to this Agreement (on a daily basis over such period) (the "FILING
LIQUIDATED DAMAGES") or (ii) if the Initial Registration Statement is not
declared effective by the SEC by the Effective Deadline, then for each day
following the Effective Deadline, until but excluding the date that is the
earlier of the date the SEC declares the Initial Registration Statement
effective or the 30th day after the Effective Deadline, the Company shall pay
the New Investors with respect to any such failure, as liquidated damages and
not as a penalty, an amount for such period equal to 0.50% of the purchase price
paid by such New Investors for its Shares pursuant to this Agreement (pro rata)
(the "150 DAY LIQUIDATED DAMAGES") or (iii) if the Initial Registration
Statement is not declared effective by the SEC by the 180 Day Effective
Deadline, then for each day following the 180 Day Effective Deadline, until but
excluding the date the SEC declares the Initial Registration Statement
effective, the Company shall pay the New Investors with respect to any such
failure, as liquidated damages and not as a penalty, an amount per 30-day period
equal to 1.0% of the purchase price paid by such New Investors for its Shares
pursuant to this Agreement (pro rata on a 30 day basis) (the "180 Day LIQUIDATED
DAMAGES," and together with the Filing Liquidated Damages and the 150 Day
Liquidated Damages, the "Liquidated Damages"). Notwithstanding the foregoing
provisions, in no event shall the Company be obligated to pay any Liquidated
Damages pursuant to this Section 6.2 (i) to more than one New Investor in
respect of the same Shares or Warrants for the same period of time, (ii) with
respect to any Cutback Shares, (iii) with respect to the Warrants or any Warrant
Shares, (iv) in respect of any Shares that are eligible to be sold by any New
Investor pursuant to Rule 144 and (v) of more than 5.0% of the Purchase Price,
in the aggregate.
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(g) Notwithstanding anything herein to the contrary, the Company
in its sole discretion may pay any Liquidated Damages in either (i) cash or (ii)
additional shares of common stock. Such additional shares shall be valued by the
average VWAP five (5) trading days prior to when such Liquidated Damages shall
be paid.
SECTION 7. DEFINITIONS.
7.1 DEFINED TERMS USED IN THIS AGREEMENT. In addition to the terms
defined above, the following terms used in this Agreement shall be
construed to have the meanings set forth or referenced below:
"AFFILIATE" means, with respect to any Person (i) a director,
officer or shareholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
"150 DAY LIQUIDATED DAMAGES" has the meaning set forth in Section
6.2.
"180 DAY EFFECTIVE DEADLINE" shall mean the day that is 180 days
after the Closing Date.
"180 DAY LIQUIDATED DAMAGES" has the meaning set forth in Section
6.2.
"ADDITIONAL REGISTRATION STATEMENT" has the meaning set forth in
Section 6.1(a).
"AGREEMENT" has the meaning set forth in the preamble.
"AURARIAN" means Aurarian Capital and Aurarian Offshore.
"AURARIAN CAPITAL" has the meaning set forth in Section 4.1.
"AURARIAN FINANCING" has the meaning set forth in Section 4.2.
"AURARIAN OFFSHORE" has the meaning set forth in Section 4.1.
"BOARD" has the meaning set forth in Section 5.1.
"CLOSING" has the meaning set forth in Section 1.3.
"CLOSING DATE" has the meaning set forth in Section 1.3.
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"COMPANY" has the meaning set forth in the preamble.
"COMPANY FINANCIAL STATEMENTS" has the meaning set forth in Section
2.11.
"CUTBACK SHARES" has the meaning set forth in Section 6.1(a).
"EFFECTIVE DEADLINE" has the meaning set forth in Section 6.1(b).
"EFFECTIVENESS PERIOD" has the meaning set forth in Section 6.1(c).
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder.
"EXCLUDED ISSUANCES" has the meaning set forth in Section 5.1.
"FILING DEADLINE" has the meaning set forth in Section 6.1(a).
"FILING LIQUIDATED DAMAGES" has the meaning set forth in Section
6.2.
"FINANCING" has the meaning set forth in the first recital.
"GAAP" has the meaning set forth in Section 2.11.
"INITIAL REGISTRATION AMOUNT" has the meaning set forth in Section
6.1(a).
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
2.10.
"INVESTOR" has the meaning set forth in the preamble.
"LIQUIDATED DAMAGES" has the meaning set forth in Section 6.2.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 2.11.
"NEW INVESTORS" has the meaning set forth in the first recital.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or any other
company or entity or a government or agency or political subdivision thereof.
"PUBLIC FILING" means all forms, Reports, schedules, statements,
exhibits and other documents or information filed with the SEC pursuant to the
Exchange Act or the Securities Act.
"PURCHASE PRICE" has the meaning set forth in Section 1.1.
"REGISTRABLE SECURITIES" has the meaning set forth in Section
6.1(a).
"REGISTRATION STATEMENT" has the meaning set forth in Section
6.1(a).
"REPORTS" has the meaning set forth in Section 2.11.
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"REQUIRED REGISTRATION AMOUNT" has the meaning set forth in Section
6.1(a).
"RULE 144" has the meaning set forth in Section 6.1(f).
"SEC" has the meaning set forth in Section 2.11.
"SECURITIES ACT" has the meaning set forth in Section 2.9.
"SENIOR SECURED CONVERTIBLE PROMISSORY NOTES" means the Senior
Secured Convertible Promissory Notes, dated August 21, 2007, issued by the
Company to each of Aurarian Capital and Aurarian Offshore.
"SHARES" has the meaning set forth in the third recital.
"SUBSIDIARY" has the meaning set forth in Section 2.2.
"WARRANTS" has the meaning set forth in Section 1.2.
"WARRANT SHARES" has the meaning set forth in Section 1.2.
SECTION 8. MISCELLANEOUS.
8.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
8.2 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements, written
or oral, with respect thereto.
8.3 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
8.4 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION
OF REMEDIES. This Agreement may be amended, superseded, cancelled, renewed
or extended, and the terms hereof may be waived, only by a written
instrument signed by all of the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of such party of any such
right, power or privilege, or any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
8.5 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of New York without regard to choice
of law principles.
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8.6 FURTHER ASSURANCES. Each party shall, at the request of
another party, at any time and from time to time following the Closing
promptly execute and deliver, or cause to be executed and delivered, all
such further instruments and take all such further action as each party
may reasonably request to confirm or carry out the provisions and intent
of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
BLUEFIRE ETHANOL FUELS, INC.
By: _______________________________
Name:
Title:
INVESTOR
QUERCUS TRUST
By: _______________________________
Name:
Title:
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