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