UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 23, 2006
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation)
000-50154 | | | | 84-1169517 |
| (Commission File Number) | | | | (IRS Employer Identification No.) |
1185 Avenue of the Americas New York, New York | | | | 10036 |
| (Address of Principal Executive Offices) | | | | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| | o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 1 REGISTRANT’S BUSINESS AND OPERATIONS
ITEM 1.01. Entry into a Material Definitive Agreement.
On June 23, 2006, Xethanol Corporation (“Xethanol”) entered into an Organizational Agreement (the “Organizational Agreement”) with Global Energy and Management LLC, a Connecticut limited liability company (“Global”), pursuant to which they organized a Delaware limited liability company known as NewEnglandXethanol, LLC (“NewEnglandXethanol”). On the same date, Xethanol and Global entered into an Operating Agreement (the “Operating Agreement”) that relates to the operation and management of NewEnglandXethanol. Xethanol and Global organized NewEnglandXethanol to develop and operate facilities for the production of ethanol in the States of Connecticut, Massachusetts, Rhode Island, New Hampshire, Vermont and Maine. Xethanol has granted NewEnglandXethanol and each Special LLC (as defined below) the non-exclusive right to use all Xethanol technology that may be useful for the development and operation of such facilities in the geographic areas in which NewEnglandXethanol intends to construct its facilities. Xethanol and Global each own a 50% membership interest in NewEnglandXethanol. NewEnglandXethanol will be managed by a Board of Managers, which will initially consist of four members. Xethanol and Global will each have the right to designate two of the members of the board.
Significant provisions in the Organizational Agreement include:
Special Purpose Limited Liability Companies. Each of NewEnglandXethanol’s facilities will be constructed and operated by a special purpose limited liability company (a “Special LLC”). The manager of each Special LLC will be Lee A. Tyrol (a member of Global) or, if Mr. Tyrol is unable to serve, Global or its designee. Xethanol and Global will provide each Special LLC with certain services that are set forth in the Organizational Agreement in consideration of which each Special LLC will pay management fees to Xethanol and Global, also as set forth in the Organizational Agreement. Each Special LLC will also pay Xethanol a technology access fee as set forth in the Operating Agreement in consideration of Xethanol’s license of its technologies to the Special LLC.
Capitalization. Global has agreed to contribute an aggregate of $1,500,000 to the capital of NewEnglandXethanol in three installments. The initial installment of $250,000 was paid upon the execution of the Organizational and Operating Agreements; the second installment of $250,000 is payable within 90 days thereafter; and the final installment of $1,000,000 is payable upon approval by Xethanol and Global of the construction of the first facility to be developed by NewEnglandXethanol.
Warrants to Purchase Xethanol Common Stock. Xethanol has issued to Global a warrant to purchase 20,000 shares of Xethanol’s common stock, par value $.001 per share (“Common Stock”), at a purchase price of $6.85 per share that is first exercisable on June 23, 2007 (subject to a right of immediate exercise upon a Change of Control Event (as defined in the Organizational Agreement)) and is exercisable until June 23, 2010. Xethanol has granted Global certain registration rights with respect to the shares underlying the warrant.
Exchange of Global Interests. Upon a Change of Control Event, Global will have the right to exchange its interest in NewEnglandXethanol for shares of Common Stock, at an exchange rate to be agreed upon by Xethanol and Global or, if they cannot agree, at a rate based upon the appraised value of Global’s interest in NewEnglandXethanol and 95% of the market price of the Common Stock for the 15 days preceding the completion of the valuation of Global’s interest in NewEnglandXethanol.
Xethanol has agreed to permit Global to require Xethanol to exchange Global’s interest in NewEnglandXethanol for shares of Common Stock at any time beginning June 23, 2007. The interests will be exchanged at a rate to be agreed upon by Xethanol and Global or, if they cannot agree, at a rate based upon the appraised value of Global’s interest in NewEnglandXethanol and 90% of the market price of the Common Stock for the 15 days preceding the completion of the valuation of Global’s interest in NewEnglandXethanol.
Reference is made to Exhibits 1.1 and 1.2 to this Current Report on Form 8-K for the complete terms of the Organizational Agreement and the Operating Agreement. A press release announcing the organization of NewEnglandXethanol was issued by Xethanol on June 27, 2006 and is attached hereto as Exhibit 99.1.
SECTION 3 - SECURITES AND TRADING MARKETS
ITEM 3.02. Unregistered Sales of Equity Securities
On June 23, 2006, Xethanol issued to Global a warrant (the “Warrant”) to purchase 20,000 shares of Common Stock at an exercise price of $6.85 per share. The Warrant is first exercisable on June 23, 2007 (subject to a right of immediate exercise upon a Change of Control Event) and is exercisable until June 23, 2010. The Warrant was issued in connection with and pursuant to the Organizational Agreement without consideration for the Warrant other than the obligations of Global under the Organizational Agreement. Xethanol did not receive any cash in connection with the issuance of the Warrant. No commissions were paid or payable with respect to the issuance of the Warrant.
Exemption from registration of the Warrant specified in the preceding subparagraph (a) is claimed under Section 4(2) of the Securities Act of 1933, as amended (the “Act”) because the transaction did not involve a public offering and was therefore exempt from the registration requirements of Section 5 of the Act.
The Warrant is attached to this Current Report on Form 8-K as Exhibit 3.1.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. Exhibits
Following is the Index of Exhibits furnished in accordance with Item 601 of Regulation S-K, filed as part of this Current Report on Form 8-K or incorporated by reference herewith:
| 1.1 | Organizational Agreement, dated as of June 23, 2006, by and between Xethanol Corporation and Global Energy and Management LLC. |
| 1.2 | Operating Agreement dated as of June 23, 2006, by and between Xethanol Corporation and Global Energy and Management LLC. |
| 3.1 | Warrant dated as of June 23, 2006, issued by Xethanol Corporation to Global Energy and Management LLC. |
| 99.1 | Press release issued by Xethanol Corporation on June 27, 2006. |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | Xethanol Corporation |
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| Date: June 27, 2006 | By: | /s/ Lawrence S. Bellone |
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Lawrence S. Bellone |
| | Chief Financial Officer |
