ITEM
1.01 ENTRY INTO A
MATERIAL AGREEMENT.
On March
16, 2010, Global Clean Energy Holdings, Inc. (the “Company”) entered
into a securities purchase agreement (“Securities Purchase
Agreement”) with two accredited investors (“Investors”) pursuant
to which the Company issued senior unsecured convertible promissory notes in the
original aggregate principal amount of $567,000 (the “Convertible Notes”),
and warrants to acquire an aggregate of 1,890,000 shares of the Company’s common
stock (“Warrants”). For
a description of significant terms of Convertible Notes, see the discussion
under Item 2.03 below, which is incorporated herein by reference.
Securities
Purchase Agreement
Pursuant
to the Securities Purchase Agreement, the Company issued the Convertible Notes
and the Warrants to the Investors on March 16, 2010. The Securities
Purchase Agreement includes customary representations and warranties for
transactions of this nature.
Warrants
In
connection with the transactions contemplated by the Securities Purchase
Agreement, the Company issued to the Investors Warrants to purchase an aggregate
of 1,890,000 shares of the Company’s common stock at an exercise price of
$0.03. The exercise price of the Warrants may be adjusted in
connection with stock splits, stock dividends and similar events affecting the
Company’s capital stock. The Warrants expire on March 16,
2013.
Use
of Proceeds
The
Company used substantially all of the proceeds received from the sale of the
Convertible Notes to repay, in full, an outstanding promissory note that was
secured by a first priority security interest on all of the Company’s
assets.
ITEM
2.03 CREATION OF A
DIRECT FINANCIAL OBLIGATION.
Convertible
Notes
On March
16, 2010, the Company issued $567,000 of Convertible Notes to the two
Investors. The Convertible Notes mature on the earlier of (i)
March 16, 2012, and (ii) upon written demand of payment by the Investors
following the Company’s default thereunder. The maturity date of the Convertible
Notes may be extended by written notice made by the Investors at any time prior
to March 16, 2012. Interest accrues on the Convertible Notes at a
rate of 5.97% per annum, and is payable quarterly in cash, in arrears, on each
three-month anniversary of the issuance of the Convertible Notes. The
Company may at its option, in lieu of paying interest in cash, pay interest by
delivering a number of unregistered shares of its common stock equal to the
quotient obtained by dividing the amount of such interest by the arithmetic
average of the volume weighted average price (VWAP) for each of the five
consecutive trading days immediately preceding the interest payment
date.
At any
time following the first anniversary of the issuance of the Convertible Notes,
at the option of the Investors, the outstanding balance thereof (including
accrued and unpaid interest thereon) may be converted into shares of the
Company’s common stock at a conversion price equal to $0.03. The
conversion price may be adjusted in connection with stock splits, stock
dividends and similar events affecting the Company’s capital
stock.
As of
March 16, 2010, the Convertible Notes rank senior to all other indebtedness of
the Company, and thereafter will remain senior or pari passu with all accounts
payable and other similar liabilities incurred by the Company in the ordinary
course of business. The Company may not prepay the Convertible Notes without the
prior consent of the Investors.
ITEM
3.02 UNREGISTERED
SALES OF SECURITIES.
As
described in Items 1.01 and 2.03 above, on March 16, 2010, the Company entered
into the Securities Purchase Agreement with the two Investors. In connection
with the Securities Purchase Agreement, the Company issued to the two Investors
the Convertible Notes, in the aggregate principal amount of $567,000, which are
convertible into shares of the Company’s common stock at a price equal to
$0.03. The Convertible Notes were not registered under the Securities
Act of 1933, as amended (the “Act”) and were issued
and sold in reliance upon the exemption from registration contained in
Section 4(2) of the Act and Regulation D promulgated
thereunder.
On the
same date, the Company also issued to the Investors the Warrants to acquire an
aggregate of 1,890,000 shares of the Company’s common stock at an exercise price
of $0.03 per share. The Warrants expire three years from the date of
issuance, i.e., March 16, 2013. The Warrants were issued in reliance
upon the exemption from registration contained in Section 4(2) of the Act
and Regulation D promulgated thereunder.
ITEM
5.02 DEPARTURE OF
DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS, COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On March
16, 2010, the Company and Richard Palmer, the Company’s Chief Executive Officer,
entered into an amendment (the “Amendment”) to that
certain employment agreement (the “Employment
Agreement”), effective as of September 7, 2007, between the Company and
Mr. Palmer.
Pursuant
to the Amendment, the Company extended the term of Mr. Palmer’s employment as
the Company’s President, Chief Executive Officer and Chief Operating Officer for
an additional two years, i.e., through September 30,
2012. Thereafter, the term of employment shall automatically renew
for successive one-year periods unless otherwise terminated by either party 90
days before the renewal period.
In
connection with the Amendment, the Company granted Mr. Palmer an option (“Option”) to purchase
up to 12,000,000 shares of the Company’s common stock at an exercise price of
$0.02, subject to the Company’s achievement of certain market capitalization
goals. Under the Option, Mr. Palmer can exercise the Option to
purchase up to 6,000,000 shares when the Company’s market capitalization first
reaches $30 million, and another 6,000,000 shares when the Company’s market
capitalization first reaches $60 million. The Option expires after
ten (10) years.
Other
than as reported herein, the original terms of the Employment Agreement remain
in effect.