Exhibit
10.1
WARRANT EXCHANGE
AGREEMENT
WARRANT EXCHANGE AGREEMENT, dated as of August
5, 2008 (this “Agreement”), by and between PURE
BIOFUELS CORP., a Nevada corporation (the “Company”),
and PLAINFIELD PERU II LLC, a Delaware limited liability company
(“LLCII”). Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in
the Securities Purchase Agreement, dated as of September 12, 2007,
as amended by an amendment executed on March 26, 2008 (the
“Purchase Agreement”), by and between the Company,
LLCII and PLAINFIELD PERU I LLC (“LLCI”), a Delaware
limited liability company (together with LLCII, the
“Purchaser”) or the Loan Agreement (as defined in the
Purchase Agreement) if such capitalized term is not defined in the
Purchase Agreement.
WITNESSET
H
:
WHEREAS, (A) LLCII is a holder of warrants to
purchase (i) 59,104,912 shares of Common Stock at an exercise price
of $0.30 and (ii) 122,605 shares of Common Stock at an exercise
price of $0.01; and (B) LLCII has the rights to acquire warrants to
purchase 57,823,130 shares of Common Stock at an exercise price to
be determined but not greater than $0.30 (the “Warrant
Rights” and together with the warrants described in subclause
(A) above, the “Warrants”);
WHEREAS, LLCII desires, for valid business
reasons, to consummate an exchange of the Warrants pursuant to the
terms hereof;
WHEREAS, the Company has determined that it is
in its best interest to recapitalize its capital structure through
the exchange of the Warrants pursuant to the terms hereof as a plan
of reorganization; and
WHEREAS, for Federal income tax purposes, it is
intended that this Agreement shall qualify as a
“reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (the
“Code”).
NOW, THEREFORE, in consideration of the
foregoing premises and of the representations, warranties,
covenants and agreements contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
1.
Agreement to
Exchange . LLCII
and the Company agree that LLCII shall exchange all of the Warrants
for 78,033,765 shares of Common Stock (the “Exchange
Shares”). Upon issuance of the Exchange Shares to LLCII, the
Warrants will be null and void and of no further force or effect.
The parties agree to issue the Exchange Shares in the name of
PLAINFIELD PERU II LLC.
2.
Surrender of Warrant
Certificates .
Concurrently with the execution of this Agreement and the issuance
of the Exchange Shares, LLCII shall surrender the Warrants it holds
in certificated form (which do not include the uncertificated
Warrant Rights) to the Company, upon which surrender LLCII shall be
deemed to be the holder of record of the Exchange
Shares.
3.
Issuance of Exchange
Shares . Upon
surrender by LLCII of the Warrants it holds in certificated form
(which do not include the uncertificated Warrant Rights) pursuant
to Section 2 hereof, the Company agrees to adopt this plan of
reorganization and shall issue and deliver to LLCII the Exchange
Shares issuable to LLCII pursuant to this Agreement, registered in
the name of LLCII with the Transfer Agent.
4.
Registration
Rights .
The Company and LLCII agree that the
Exchange Shares shall constitute “Registrable
Securities” under the Registration Rights
Agreement.
5.
Representations and
Warranties of the Company . In order to induce LLCII to enter into this
Agreement, the Company hereby represents and warrants to and agrees
with LLCII that:
(i) All Exchange Shares shall, when issued in
exchange for the Warrants, be duly authorized, validly issued,
fully paid and non-assessable, and free of any liens, encumbrances
and preemptive or similar rights, and shall not be in violation of
the Company’s Articles of Incorporation or Bylaws or any
Applicable Law.
(ii) The Company has the corporate power and
authority to execute, deliver and perform the terms and provisions
of this Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of this
Agreement. The Company has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors’ rights and
by equitable principles (regardless of whether enforcement is
sought in equity or at law).
(iii) No order, consent, approval, license,
authorization or validation of, or filing, recording or
registration with, or exemption by, any Governmental Authority is
required to be obtained or made by, or on behalf of, the Company to
authorize, or is required to be obtained or made by, or on behalf
of, the Company in connection with (a) the execution, delivery and
performance of this Agreement, (b) the legality, validity, binding
effect or enforceability of this Agreement, or (c) the issuance of
the Exchange Shares to LLCII and the registration of the Exchange
Shares with the Transfer Agent.
(iv) Neither the execution, delivery or
performance by the Company of this Agreement, nor compliance by it
with the terms and provisions thereof, (a) will contravene any
provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or Governmental Authority,
(b) will conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose) any Encumbrance, upon any of the
property or assets of the Company or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other agreement,
contract or instrument, in each case to which Company or any of its
Subsidiaries is a party or by which it or any of the Company or any
of its Subsidiaries or property or assets is bound or to which the
Company or any of its Subsidiaries may be subject, except for any
violation of the terms of the applicable provisions of the Purchase
Agreement, the Notes, the Loan Agreement and the Loan Documents
that are being waived pursuant to Section 7 of this Agreement or on
the signature pages hereto, or (c) will violate any provision of
the certificate or articles of incorporation, certificate of
formation, limited li
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