On November 7, 2007, Abengoa Bioenergy New Technologies, Inc. (f/k/a Abengoa Bioenergy R&D, Inc.) ("Abengoa") filed a complaint in the Circuit Court of the 15th Judicial Circuit of Florida, in Palm Beach County, Florida (Case No. 2007CA019997), naming the Company and Mark A. Emalfarb, a director of the Company, as defendants. The lawsuit relates to that certain Securities Purchase Agreement dated as of October 26, 2006 (the "Securities Purchase Agreement") by and between the Company and Abengoa pursuant to which the Company sold 2,136,752 shares of the Company's common stock for an aggregate purchase price of $10.0 million, which transaction closed on November 8, 2006.
The lawsuit claims that one or both defendants, among other things, defrauded Abengoa, violated Delaware securities laws, breached the covenant of good faith and fair dealing, and breached the Securities Purchase Agreement by making various false and misleading representations that Abengoa relied upon in entering into and closing its purchase of Company shares. The complaint seeks indemnification under the Securities Purchase Agreement, monetary damages of at least $10 million, and the costs and expenses incurred in prosecuting the action, among other things. Although the Company has not yet been served with a summons and complaint in this action, the Company intends to vigorously contest and defend the allegations under the complaint, but no assurances can be given as to the costs to defend or the ultimate outcome of this matter.
Also on November 7, 2007, the Company was served with a third summons and complaint filed in the United States District Court for the Southern District of Florida on October 29, 2007 (Case No. 07-61544), purporting to be a class action. The complaint names the Company, Wayne Moor, a director and Chief Executive Officer and President of the Company, the Company’s other current directors, Mark A. Emalfarb, Stephen J. Warner, Harry Z. Rozengart, and Richard J. Berman, and former directors, Robert B. Shapiro and Glenn E. Nedwin, as defendants. The lawsuit claims that all or some of the defendants, among other things, violated federal securities laws by issuing various materially false and misleading statements that had the effect of artificially inflating the market price of the Company’s securities and causing class members to overpay for securities purchased during the period from November 10, 2006 through April 23, 2007. The complaint, among other things, seeks unspecified monetary damages and the costs and expenses incurred in prosecuting the action. The Company intends to vigorously contest and defend the allegations under the complaint, but no assurances can be given as to the costs to defend or the ultimate outcome of this matter.
On November 9, 2007, a fourth complaint was filed in the United States District Court for the Southern District of Florida (Case No. 07-81068), purporting to be a class action. The complaint names the Company, Wayne Moor, a director and Chief Executive Officer and President of the Company, and Mark A. Emalfarb, a director, as defendants. The lawsuit claims that all or some of the defendants, among other things, violated federal securities laws by issuing various materially false and misleading statements that had the effect of artificially inflating the market price of the Company’s securities and causing class members to overpay for securities purchased during the period from March 30, 2006 through April 23, 2007. The complaint seeks, among other things, unspecified monetary damages and the costs and expenses incurred in prosecuting the action. Although the Company has not yet been served with a summons and complaint in this action, the Company intends to vigorously contest and defend the allegations under the complaint, but no assurances can be given as to the costs to defend or the ultimate outcome of this matter.
On November 14, 2007, Mark A. Emalfarb, in his capacity as trustee of the Mark A. Emalfarb Trust U/A/D October 1, 1987, a stockholder in the Company, filed a petition in the Court of Chancery of the State of Delaware pursuant to Section 211 of the General Corporation Law of the State of Delaware (the "211 Action") seeking an order of the court directing the Company to call and hold an annual meeting of its stockholders for the election of directors. [The Company held its last annual meeting of stockholders on June 12, 2006. Under the Company's Certificate of Incorporation, the Company has a staggered board of directors divided into three classes, with approximately one-third of its board members elected each year to serve a three-year term. The Company has been unable to call, notice and hold an annual stockholders' meeting for the election of directors in 2007 because of its inability to comply with the Securities and Exchange Commission's proxy rules in connection with any such meeting (which proxy rules require that the related proxy or information statement be accompanied or preceded by an annual report to stockholders that includes audited financial statements and meets the other applicable requirements of the proxy rules). As the Company reported in its Current Reports on Form 8-K filed on April 25, 2007, May 22, 2007 and September 29, 2007, the Company's financial statements, including those contained in its Annual Reports on Form 10-KSB and Quarterly Reports on Form 10-QSB, as previously filed with the Securities and Exchange Commission, should no longer be relied upon.] The Company, which desires to notice, convene and hold an annual meeting of stockholders if and when legally permitted to do so, is currently evaluating its position regarding the 211 Action with the assistance of counsel and will respond in due course.
As previously disclosed in the Company's Current Report on Form 8-K (filed on October 24, 2007), on October 23, 2007, the Company engaged Gordian Group, LLC, to serve as the Company’s investment banker and financial adviser, to assist the Company in evaluating, exploring and, if deemed appropriate, pursuing and implementing certain strategic and financial options that may be available to the Company, including a possible sale, merger, restructuring, recapitalization, reorganization or other strategic or financial transaction. Since that time, the Company has commenced evaluating its available options, is preparing to implement a process of soliciting indications of interest from qualified third parties, and anticipates that by year-end 2007 it will have reached conclusions on one or more specific courses of action and will have commenced taking steps to implement its decisions. Notwithstanding this, no conclusion as to any specific option or transaction has been reached, nor has any specific timetable been fixed for accomplishing this effort, and there can be no assurance that any strategic, financial or other option or transaction will be presented, implemented or consummated.
On November 19, 2007, the Company issued a press release regarding the matters described in this Form 8-K Report and other matters. The complete text of the press release is attached hereto as Exhibit 99.1
