EXHIBIT 2.4
AMENDMENT NO. 2 TO SHARE EXCHANGE AGREEMENT
THIS AMENDMENT NO. 2 TO SHARE EXCHANGE AGREEMENT (this "AMENDMENT") is
made and entered into as of October 1, 2004, by and among Accessity Corp., a New
York corporation ("ACCESSITY"); Pacific Ethanol, Inc., a California corporation
("PEI"); Kinergy Marketing, LLC, an Oregon limited liability company
("KINERGY"); ReEnergy, LLC, a California limited liability company ("REENERGY,"
and together with PEI and Kinergy, the "ACQUIRED COMPANIES"); each of the
shareholders of PEI (collectively, the "PEI SHAREHOLDERS"); each of the holders
of options or warrants to acquire shares of common stock of PEI (collectively,
the "PEI WARRANTHOLDERS"); each of the limited liability company members of
Kinergy identified on the signature pages hereof (collectively, the "KINERGY
MEMBERS"); each of the limited liability company members of ReEnergy identified
on the signature pages hereof (collectively, the "REENERGY MEMBERS").
WHEREAS, Accessity, PEI, Kinergy, and ReEnergy have executed a Share
Exchange Agreement dated as of May 14, 2004, as amended by that certain
Amendment No. 1 to Share Exchange Agreement dated as of July 29, 2004 (as so
amended, the "EXCHANGE AGREEMENT"); and
WHEREAS, Accessity, PEI, Kinergy and ReEnergy desire to amend certain
provisions of the Share Exchange Agreement.
NOW THEREFORE, in consideration of the foregoing premises and the
respective promises and agreements of the parties set forth herein, the parties
hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed thereto in the Exchange
Agreement.
2. AMENDMENTS.
(a) Section 2.3 of the Exchange Agreement is hereby amended by
replacing the reference to "1,875,000 Accessity Exchange Shares" with "3,875,000
Accessity Exchange Shares."
(b) Section 2.4 of the Exchange Agreement is hereby amended by
replacing the reference to "21,250 Accessity Exchange Shares" with "1,250
Accessity Exchange Shares."
(c) Section 3.2(d) of the Exchange Agreement is hereby amended
by deleting said Section 3.2(d) in its entirety and inserting in its place the
following new Section 3.2(d) which shall read in its entirety as follows:
"(d) the written resignations of each of the current directors
of Accessity other than Kenneth J. Friedman (Barry Siegel and Bruce S.
Udell), dated as of the Closing Date, in form and substance reasonably
acceptable to each of PEI, Kinergy and ReEnergy (and Kenneth J.
Friedman shall thereafter remain as a Class II director (thereby
holding such board seat until the annual meeting of Accessity
shareholders to be held in the fourth calendar quarter of 2005) and
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shall confirm said resignations and appoint Neil M. Koehler and William
Lyles as Class I directors of Accessity, John Pimentel as a Class II
director of Accessity and Ryan Turner and Frank P. Greinke as Class III
directors of Accessity to fill the vacant director positions and serve
as directors of Accessity upon and after the Closing);"
(d) Section 4.2 of the Exchange Agreement is hereby amended by deleting
the number "12,252,200" appearing in the fourth line of said section and
inserting in its place the number "13,332,200."
(e) Clause (xi) of Section 11.4(a) of the Exchange Agreement is hereby
amended by adding the following additional language at the end of clause (xi) as
so modified:
",PROVIDED, HOWEVER, that PEI may issue shares of its common
stock in a private placement transaction provided that in connection
with such private placement transaction all but $500,000 of the
offering proceeds must be held in an escrow account and not released
until on or after the Closing Date;"
(f) Section 11.5 of the Exchange Agreement is hereby amended by
deleting said Section 11.5 in its entirety and inserting in its place the
following new Section 11.5 which shall read in its entirety as follows:
"11.5 ACCESSITY ANNUAL SHAREHOLDERS' MEETING. Accessity shall,
in accordance with its articles of incorporation and bylaws and the
applicable requirements of New York law, call and hold an annual
meeting of its shareholders as promptly as practicable for the purpose
of permitting them to consider and to vote upon and approve the Share
Exchange and the transactions contemplated by this Agreement, the
reincorporation of Accessity in the State of Delaware referred to in
SECTION 13.6 below, the Subsidiary Transfer and the Subsidiary Sale
referred to in SECTION 13.11 below, and the adoption of a new stock
option plan referred to in SECTION 13.16 below, in form and substance
reasonably acceptable to the Acquired Companies) (the "ACCESSITY ANNUAL
SHAREHOLDERS' MEETING"). As soon as permissible under all applicable
Legal Requirements, Accessity shall cause a copy of the Proxy Statement
(as defined in SECTION 11.6 below) to be delivered to each shareholder
of Accessity who is entitled to vote on such matter under its articles
of incorporation and bylaws and the applicable requirements of New York
law."
(g) Section 12.9 of the Exchange Agreement is hereby amended by
deleting said Section 12.9 in its entirety and inserting in its place the
following new Section 12.9 which shall read in its entirety as follows:
"12.9 CONSULTING AND NONCOMPETITION AGREEMENTS. Accessity shall
have entered into a consulting and noncompetition agreement with Barry
Siegel in regard to advisory services to be rendered by Mr. Siegel, in
form and substance mutually acceptable to the Acquired Companies,
Accessity and Barry Siegel (the "SIEGEL CONSULTING AND NONCOMPETITION
AGREEMENT"). The Siegel Consulting and Noncompetition Agreement shall
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include payment to Barry Siegel on the Closing Date of compensation (a)
in the form of the number of shares of Common Stock of Accessity equal
to the excess, if any, of 400,000 shares of the Common Stock of
Accessity over the number of shares of Siegel Common Stock determined
in accordance with Section 13.11 of this Agreement and (b) allocated
between compensation for consulting services and a covenant not to
compete, each in such amounts as shall be mutually acceptable to the
Acquired Companies, Accessity and Barry Siegel. Accessity shall also
have entered into a consulting and noncompetition agreement with Philip
Kart in regard to advisory services to be rendered by Mr. Kart, in form
and substance mutually acceptable to the Acquired Companies, Accessity
and Philip Kart (the "KART CONSULTING AND NONCOMPETITION AGREEMENT").
The Kart Consulting and Noncompetition Agreement shall include payment
to Philip Kart on the Closing Date of compensation (a) in the amount of
200,000 shares of the Common Stock of Accessity and (b) allocated
between compensation for consulting services and a covenant not to
compete, in such amounts as shall be mutually acceptable to the
Acquired Companies, Accessity and Philip Kart."
(h) Section 12.13 of the Exchange Agreement is hereby amended by
deleting said Section 12.13 in its entirety and inserting in its place the
following new Section 12.13 which shall read in its entirety as follows: :
"12.13 APPROVAL BY ACCESSITY SHAREHOLDERS. The shareholders of
Accessity shall have approved the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the reincorporation of Accessity
in the State of Delaware referred to in SECTION 13.6 below, the
Subsidiary Transfer and the Subsidiary Sale referred to in SECTION
13.11 below, and the adoption of a new stock option plan referred to in
SECTION 13.16 below, in form and substance reasonably acceptable to the
Acquired Companies)). "
(i) Section 12.14 of the Exchange Agreement is hereby amended by
deleting the number "18,800,000" appearing in the fourth line of said section
and inserting in its place the number "21,700,000."
(j) Section 12.16 of the Exchange Agreement is hereby amended by
deleting said Section 12.16 in its entirety and inserting in its place the
following new Section 12.16 which shall read in its entirety as follows: :
"12.16 FAIRNESS OPINION. Accessity shall have received a
fairness opinion regarding the Subsidiary Transfer referred to in
SECTION 13.11 below. "
(k) Article XII of the Exchange Agreement is hereby amended by adding
at the end thereof a new Section 12.17 which shall read in its entirety as
follows:
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"12.17 RECEIPT OF ADDITIONAL EQUITY CAPITAL BY PEI. PEI shall
have raised an additional $7.0 million in equity capital pursuant to
the private placement of securities of PEI between October 1, 2004 and
the Closing Date (which securities shall also be exchanged for
securities of Accessity pursuant to the Share Exchange, subject to the
other terms and conditions set forth in this Agreement)."
(l) Article XII of the Exchange Agreement is hereby amended by adding
at the end thereof a new Section 12.18 which shall read in its entirety as
follows:
"12.18 NONCOMPETITION AND NONSOLICITATION AGREEMENTS. Each of
Neil M. Koehler, William Jones, Andrea Jones, Ryan Turner and Tom
Koehler shall have entered into a Noncompetition and Nonsolicitation
Agreement with Accessity in a form mutually agreeable to the parties."
(m) Section 13.4 of the Exchange Agreement is hereby amended by
deleting said Section 13.4 in its entirety and inserting in its place the
following new Section 13.4 which shall read in its entirety as follows:
"13.4 APPROVAL BY ACCESSITY SHAREHOLDERS. The shareholders of
Accessity shall have approved the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the reincorporation of Accessity
in the State of Delaware referred to in SECTION 13.6 below, the
Subsidiary Transfer and the Subsidiary Sale referred to in SECTION
13.11 below, and the adoption of a new stock option plan referred to in
SECTION 13.16 below, in form and substance reasonably acceptable to the
Acquired Companies)). "
(n) Section 13.10 of the Exchange Agreement is hereby amended by
deleting said Section 13.10 in its entirety and inserting in its place the
following new Section 13.10 which shall read in its entirety as follows: :
"13.10 LIMITATION OF OUTSTANDING CAPITAL STOCK. As of the
Closing Date, without giving effect to the transactions contemplated
hereby, Accessity shall have no more than 2,800,000 of capital stock
issued and outstanding on a fully-diluted basis (including shares of
capital stock issuable upon exercise of any and all options, calls,
warrants, claims and any other rights to acquire shares of capital
stock of Accessity, whether accrued or contingent, other than an
aggregate of 600,000 shares of common stock of Accessity to be issued
and beneficially owned by Barry Siegel and Philip Kart)."
(o) Section 13.11 of the Exchange Agreement is hereby amended by
deleting said Section 13.11 in its entirety and inserting in its place the
following new Section 13.11 which shall read in its entirety as follows: :
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"13.11 SUBSIDIARY TRANSFER, SUBSIDIARY SALE AND WAIVER OF
CHANGE OF CONTROL PROVISIONS BY BARRY SIEGEL AND PHILIP KART.. Prior to
Closing, Accessity shall have (a) transferred its subsidiary
DriverShield CRM Corp., a Delaware corporation, to Barry Siegel
pursuant to a written agreement between Accessity and Barry Siegel, in
form and substance reasonably satisfactory to PEI, Kinergy and ReEnergy
(the "SUBSIDIARY TRANSFER"), and sold its other subsidiary, Sentaur
Corp., a Florida corporation, to Barry Siegel pursuant to a written
agreement between Accessity and Barry Siegel, in form and substance
reasonably satisfactory to PEI, Kinergy and ReEnergy (the "SUBSIDIARY
SALE"), and (b) issued a certain number of shares of Common Stock of
Accessity (the "SIEGEL COMMON STOCK"), not to exceed 400,000 shares, in
consideration of the waiver by Barry Siegel of the change in control
provisions set forth in the employment agreement between Accessity and
Barry Siegel that expires on December 31, 2004, as the same would be
applicable to the consummation of the transactions contemplated by this
Agreement (including, but not limited to, the provisions that require
Accessity to pay to Barry Siegel (i) a severance payment of 300% of his
average annual salary for the past five years, less $100; (ii) the cash
value of his outstanding but unexercised stock options; and (iii) for
any and all other perquisites in the event that he is terminated for
various reasons specified in such agreement following a change of
control (as defined in such agreement)). The number of shares of Siegel
Common Stock to be issued shall be such number, which shall not exceed
400,000 shares of Common Stock of Accessity, as shall be equal to a
fraction, the numerator of which is the excess of the value of the
waived severance payment over the fair market value of DriverShield CRM
Corp. determined as of the Closing Date, and the denominator of which
is the closing price per share of the Common Stock of Accessity on the
business day before the Closing Date. Without in any way limiting the
foregoing, as part of the Subsidiary Sale, until the landlord of the
present Accessity headquarters in Coral Springs, Florida sells the
building, Mr. Siegel or an entity owned or controlled by Mr. Siegel
(which may include Sentaur) with the consent of the lessor under the
existing lease agreement for such facilities, on terms and conditions
reasonably satisfactory to the Acquired Companies, will contribute the
sum of $3,500 toward the monthly rent obligation; PROVIDED, HOWEVER,
that once the Acquired Companies have made lease payments of $50,000
under the lease, Mr. Siegel shall make all lease payment until the
building is sold. The parties acknowledge and agree that the personal
property at the facilities of Accessity located in Coral Springs,
Florida shall also be transferred to Barry Siegel or an entity owned or
controlled by Barry Siegel (which may be Sentaur Corp.) and Accessity
shall pay Barry Siegel or Sentaur Corp. $20,000 for moving expenses.
Prior to Closing, Accessity shall also have obtained from Philip Kart,
in consideration for the execution and delivery by Accessity of the
Kart Consulting and Non-Competition Agreement described in Section 12.9
of this Agreement, the waiver by Philip Kart of the change in control
provisions set forth in the employment agreement between Accessity and
Philip Kart that expires on December 31, 2004, as the same would be
applicable to the consummation of the transactions contemplated by this
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Agreement (including, but not limited to, the provisions that require
Accessity to pay to Philip Kart (i) a severance payment of 100% of his
annual salary on a date specified in such agreement; (ii) the cash
value of his outstanding but unexercised stock options; and (iii) for
any and all other perquisites in the event that he is terminated for
various reasons specified in such agreement following a change of
control (as defined in such agreement)). Immediately prior to the
Closing, Accessity shall file with the SEC a Form S-8 covering the
Siegel Common Stock and the 200,000 shares of the Common Stock of
Accessity issuable to Philip Kart pursuant to Section 12.9."
(p) Section 13.17 of the Exchange Agreement is hereby amended by
deleting said Section 13.17 in its entirety and inserting in its place the
following: "[Intentionally omitted]."
(q) Section 14.6 of the Exchange Agreement is hereby amended by
deleting said Section 14.6 in its entirety and inserting in its place the
following: "[Intentionally omitted]."
(r) Subsection (b) of Section 14.7 of the Exchange Agreement is hereby
amended by deleting said subsection (b) in its entirety and inserting in its
place the following: "(b) [Intentionally omitted]."
(s) Subsections (c) and (d) of Section 16.1 of the Exchange Agreement
are hereby amended by deleting said subsections in their entirety and inserting
in their place the following new subsections (c) and (d), which shall read in
their entirety as follows:
"(c) by either Accessity or the Acquired Companies if the
Closing has not occurred on or before January 7, 2005 (the "FINAL
DATE");
(d) by Accessity, upon written notice, if the shareholders of
Accessity shall not have approved the Agreement and the consummation of
the transactions contemplated hereby (including, without limitation,
with respect to the approval by the shareholders of Accessity, the
appointment of the individuals identified in subsection (d) of SECTION
3.2 above to the Board of Directors of Accessity, the reincorporation
of Accessity in the State of Delaware referred to in SECTION 13.6
above, the Subsidiary Transfer and the Subsidiary Sale referred to in
SECTION 13.11 above, the adoption of a new stock option plan as
referred to in SECTION 13.16 above, in form and substance reasonably
acceptable to the Acquired Companies) prior to the Closing Date;"
(t) The Exchange Agreement is hereby amended to replace all references
to "Reenergy" with "ReEnergy."
(u) Exhibit A to the Exchange Agreement is hereby amended by deleting
each reference to "18,750" and "21,250" and replacing each with "38,750" and
"1,250," respectively.
(v) Exhibit B to the Exchange Agreement is hereby amended by deleting
the row of the table entitled "PEI SHAREHOLDERS AND ACCESSITY EXCHANGE SHARES TO
BE RECEIVED" on Exhibit B that reads:
"Lyles Diversified, Inc. 1,000,000 1,000,000"
and inserting in its place the following
new information:
"Lyles Diversified, Inc. 1,160,000 1,160,000"
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(w) Exhibit B to the Exchange Agreement is hereby amended by deleting
the last row of the table entitled "PEI SHAREHOLDERS AND ACCESSITY EXCHANGE
SHARES TO BE RECEIVED" on Exhibit B that reads: "TOTAL 12,252,200 12,252,200"
========== ==========
and inserting in its place the following new information:
"Liviakis Financial Communications, Inc. 920,000 920,000
TOTAL 13,332,200 13,332,200"
========== ===========
(x) Exhibit B to the Exchange Agreement is hereby further amended by
deleting the table entitled name "PEI WARRANTHOLDERS AND WARRANTS TO ACQUIRE
ACCESSITY COMMON STOCK" in its entirety and replacing said table with the
following new table which shall read in its entirety as follows:
PEI WARRANTHOLDERS AND WARRANTS TO ACQUIRE ACCESSITY COMMON STOCK
-----------------------------------------------------------------
No. of Shares Subject to
Name of Pe Warrantholder Accessity Replacement Warrants Exercise Price Per Share
------------------------ ------------------------------ ------------------------
Cagan-McAfee Capital Partners 14,167 $ 1.50
Prima Capital Group, Inc. 28,320 $ 1.50
Frank Siefert 1,000 $ 1.50
Cagan-McAfee Capital Partners 50,000 $ 2.00
Jeffrey Manternach 25,000 $ 0.01
Liviakis Financial Communications 230,000 $0.0001
------- ------
TOTAL 348,487 $0.0001- $2.00
======= =======--=====
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(y) Exhibit B to the Exchange Agreement is hereby further amended by
deleting the table entitled name "CONVERTIBLE DEBT" in its entirety and
replacing said table with the following new table which shall read in its
entirety as follows:
"CONVERTIBLE DEBT
-----------------
"Lyles Diversified, Inc. 840,000* 840,000*
------- -------
----------
* Lyles Diversified, Inc. ("LDI") may receive up to 840,000 shares of
PEI Stock pursuant to the conversion of a portion of the currently
outstanding debt owed by PEI to LDI, which conversion is at the option
of LDI. Accordingly, the number of Accessity Exchange Shares to be
received by LDI shall be equal to the product of (i) the number of
shares of PEI Stock received upon conversion (at a conversion rate of
$1.50 per share) of such portion of such debt, multiplied by (ii) the
PEI Exchange Ratio. The parties acknowledge and agree that Accessity
Exchange Shares will be directly issued to LDI (without any preceding
issuance of shares of PEI Stock) if such conversion occurs after the
Closing Date."
(z) Exhibit C to the Exchange Agreement is hereby amended by deleting
the reference to "1,875,000" and replacing it with "3,875,000."
(aa) Exhibit D to the Exchange Agreement is hereby amended by deleting
the references to "499,375" and "626,875" and replacing each with "29,375" and
"36,875," respectively.
3. MISCELLANEOUS. Except as modified and amended pursuant to this
Amendment, the Exchange Agreement shall remain in full force and effect. This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument. This Amendment will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
"ACCESSITY": ACCESSITY CORP.
---------
By: /S/ BARRY SIEGEL
-------------------------------------
Barry Siegel, Chairman and CEO
"ACQUIRED COMPANIES": PACIFIC ETHANOL, INC.
------------------
By: /S/ RYAN TURNER
-------------------------------------
Ryan Turner, Director and COO
KINERGY MARKETING, LLC
By: /S/ NEIL M. KOEHLER
-------------------------------------
Neil M. Koehler, President
REENERGY, LLC
By: /S/ FRANK R. LINDBLOOM
-------------------------------------
Frank R. Lindbloom, Member/Owner
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PEI SHAREHOLDER AND PEI WARRANTHOLDER
SIGNATURE PAGE
TO
AMENDMENT NO. 2 TO
SHARE EXCHANGE AGREEMENT
Pursuant to the authority granted to the undersigned in Section 17.2 of
the Exchange Agreement, by execution of this Amendment below by the undersigned,
the PEI Shareholders and PEI Warrantholders have executed this Amendment as of
the day and year first above written.
By: /S/ RYAN TURNER
----------------------------------
Ryan Turner,
Attorney-in-Fact
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KINERGY MEMBER
SIGNATURE PAGE
TO
AMENDMENT NO. 2 TO
SHARE EXCHANGE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
/S/ NEIL M. KOEHLER
-------------------------------------
Neil M. Koehler
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REENERGY MEMBER
SIGNATURE PAGE
TO
AMENDMENT NO. 2 TO
SHARE EXCHANGE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
KINERGY RESOURCES, LLC
By: /S/ NEIL M. KOEHLER
-----------------------------------
Neil M. Koehler, Member
FLIN-MAC, INC.
By: /S/ FRANK R. LINDBLOOM
------------------------------------
Frank R. Lindbloom, President
/S/ KENT KAULFUSS
---------------------------------------
Kent Kaulfuss
/S/ TOM KOEHLER
---------------------------------------
Tom Koehler
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