Exhibit 10.1

 
WARRANT EXCHANGE AGREEMENT

WARRANT EXCHANGE AGREEMENT, dated as of August 5, 2008 (this “Agreement”), by
and between PURE BIOFUELS CORP., a Nevada corporation (the “Company”), and
PLAINFIELD PERU II LLC, a Delaware limited liability company (“LLCII”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in the Securities Purchase Agreement, dated as of
September 12, 2007, as amended by an amendment executed on March 26, 2008 (the
“Purchase Agreement”), by and between the Company, LLCII and PLAINFIELD PERU I
LLC (“LLCI”), a Delaware limited liability company (together with LLCII, the
“Purchaser”) or the Loan Agreement (as defined in the Purchase Agreement) if
such capitalized term is not defined in the Purchase Agreement.

WITNESSETH:

WHEREAS, (A) LLCII is a holder of warrants to purchase (i) 59,104,912 shares of
Common Stock at an exercise price of $0.30 and (ii) 122,605 shares of Common
Stock at an exercise price of $0.01; and (B) LLCII has the rights to acquire
warrants to purchase 57,823,130 shares of Common Stock at an exercise price to
be determined but not greater than $0.30 (the “Warrant Rights” and together with
the warrants described in subclause (A) above, the “Warrants”);

WHEREAS, LLCII desires, for valid business reasons, to consummate an exchange of
the Warrants pursuant to the terms hereof;

WHEREAS, the Company has determined that it is in its best interest to
recapitalize its capital structure through the exchange of the Warrants pursuant
to the terms hereof as a plan of reorganization; and

WHEREAS, for Federal income tax purposes, it is intended that this Agreement
shall qualify as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the “Code”).

NOW, THEREFORE, in consideration of the foregoing premises and of the
representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Agreement to Exchange. LLCII and the Company agree that LLCII shall exchange
all of the Warrants for 78,033,765 shares of Common Stock (the “Exchange
Shares”). Upon issuance of the Exchange Shares to LLCII, the Warrants will be
null and void and of no further force or effect. The parties agree to issue the
Exchange Shares in the name of PLAINFIELD PERU II LLC.

2. Surrender of Warrant Certificates. Concurrently with the execution of this
Agreement and the issuance of the Exchange Shares, LLCII shall surrender the
Warrants it holds in certificated form (which do not include the uncertificated
Warrant Rights) to the Company, upon which surrender LLCII shall be deemed to be
the holder of record of the Exchange Shares.

 
 

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3. Issuance of Exchange Shares. Upon surrender by LLCII of the Warrants it holds
in certificated form (which do not include the uncertificated Warrant Rights)
pursuant to Section 2 hereof, the Company agrees to adopt this plan of
reorganization and shall issue and deliver to LLCII the Exchange Shares issuable
to LLCII pursuant to this Agreement, registered in the name of LLCII with the
Transfer Agent.
 
4. Registration Rights. The Company and LLCII agree that the Exchange Shares
shall constitute “Registrable Securities” under the Registration Rights
Agreement.

5. Representations and Warranties of the Company. In order to induce LLCII to
enter into this Agreement, the Company hereby represents and warrants to and
agrees with LLCII that:

(i) All Exchange Shares shall, when issued in exchange for the Warrants, be duly
authorized, validly issued, fully paid and non-assessable, and free of any
liens, encumbrances and preemptive or similar rights, and shall not be in
violation of the Company’s Articles of Incorporation or Bylaws or any Applicable
Law.

(ii) The Company has the corporate power and authority to execute, deliver and
perform the terms and provisions of this Agreement and has taken all necessary
corporate action to authorize the execution, delivery and performance by it of
this Agreement. The Company has duly executed and delivered this Agreement, and
this Agreement constitutes its legal, valid and binding obligation enforceable
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors’ rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).

(iii) No order, consent, approval, license, authorization or validation of, or
filing, recording or registration with, or exemption by, any Governmental
Authority is required to be obtained or made by, or on behalf of, the Company to
authorize, or is required to be obtained or made by, or on behalf of, the
Company in connection with (a) the execution, delivery and performance of this
Agreement, (b) the legality, validity, binding effect or enforceability of this
Agreement, or (c) the issuance of the Exchange Shares to LLCII and the
registration of the Exchange Shares with the Transfer Agent.

(iv) Neither the execution, delivery or performance by the Company of this
Agreement, nor compliance by it with the terms and provisions thereof, (a) will
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or Governmental Authority, (b) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Encumbrance, upon any
of the property or assets of the Company or any of its Subsidiaries pursuant to
the terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other agreement, contract or instrument, in each case to which
Company or any of its Subsidiaries is a party or by which it or any of the
Company or any of its Subsidiaries or property or assets is bound or to which
the Company or any of its Subsidiaries may be subject, except for any violation
of the terms of the applicable provisions of the Purchase Agreement, the Notes,
the Loan Agreement and the Loan Documents that are being waived pursuant to
Section 7 of this Agreement or on the signature pages hereto, or (c) will
violate any provision of the certificate or articles of incorporation,
certificate of formation, limited liability company agreement or by-laws (or
equivalent organizational documents), as applicable, of the Company or any of
its Subsidiaries.
 
 
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(v) (a) Upon issuance of the Exchange Shares, the authorized Capital Stock of
the Company will consist solely of 250,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, of which 155,721,636 shares of Common Stock
(assuming no additional exercises of existing stock options described in
Schedule 4.7 to this Agreement) and no shares of preferred stock will be issued
and outstanding, no shares are held in treasury and 71,153,414 shares of Common
Stock (such amount does not include any shares, warrants or other convertible or
exchangeable securities that may be issued pursuant to the Agreement and Plan of
Merger, dated as of December 4, 2007, by and among the Company, Pure Biofuels
del Peru S.A.C., Interpacific Oil S.A.C. and certain Target Stockholders
identified therein, as amended on January 23, 2008 (the “Merger Agreement”),
Section 3.6(m) of the Purchase Agreement, or the Notes as PIK Interest (as
defined in the Notes)) will be reserved for issuance upon the exercise of
outstanding warrants, options and other convertible or exchangeable securities
(other than the Exchange Shares). Schedule 4.7 to this Agreement sets forth the
capitalization of the Company as of the issuance of the Exchange Shares.

(b)  Except as set forth on Schedule 4.7 to this Agreement, as of the date of
this Agreement, there are and upon issuance of the Exchange Shares there will be
(i) no outstanding options, warrants, agreements, conversion rights, exchange
rights, preemptive rights or other rights (whether contingent or not) to
subscribe for, purchase or acquire any issued or unissued shares of Capital
Stock of the Company or any Subsidiary, and (ii) no restrictions upon, or
Contracts or understandings of the Company or any Subsidiary, or, to the
knowledge of the Company, Contracts or understandings of any other Person, with
respect to, the voting or transfer of any shares of Capital Stock of the Company
or any Subsidiary.

(vi) No agent, broker, Person or firm acting on behalf of the Company or its
Affiliates is, or will be, entitled to any fee, commission or broker’s or
finder’s fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated hereby.

6. Representations and Warranties of LLCII. LLCII represents and warrants to the
Company that:

 
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(i) LLCII has the power to execute, deliver and perform its obligations under
this Agreement and has taken all action necessary to authorize the execution,
delivery and performance by it of this Agreement and to consummate the
transactions contemplated hereby. No other proceedings on the part of LLCII are
necessary for such authorization, execution, delivery and consummation. LLCII
has duly executed and delivered this Agreement. This Agreement constitutes a
legal, valid and binding obligation of LLCII, enforceable against LLCII in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the enforcement of creditors’ rights generally or
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

(ii) The execution, delivery and performance by LLCII of this Agreement does not
and will not (a) violate any organizational document of LLCII, (b) contravene
any material Applicable Law, (c) require any consent of any Governmental
Authority or other Person, except where the failure to obtain such consent would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of LLCII to perform its obligations under this
Agreement, or (d) constitute a default under any Contract binding upon LLCII,
except for any such defaults that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of LLCII
to perform its obligations under this Agreement.

(iii) LLCII has not engaged any brokers, finders or agents, and neither the
Company has, nor will, incur, directly or indirectly, as a result of any action
taken by LLCII, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges under this Agreement or the transactions
contemplated hereby.

7. Waiver of the Purchase Agreement and the Notes. Notwithstanding anything to
the contrary contained in the Purchase Agreement and the Notes, the Purchaser
waives compliance by the Company of its applicable obligations contained in the
applicable provisions of the Purchase Agreement only with respect to this
Agreement, the Purchaser acknowledges and agrees that as a result of such waiver
the execution of this Agreement by the Company and performance of its
obligations hereunder will not violate the terms of the applicable provisions of
the Purchase Agreement or the Notes and the issuance of the Exchange Shares
shall not cause any adjustment to the Conversion Price of the Notes. LLCI is
executing this Agreement only with respect to this Section 7.

8. Purchase Agreement and Transaction Documents. The waiver in Section 7 above
is limited as specified and shall not constitute a modification, acceptance or
waiver of any other provision of the Purchase Agreement, or the other
Transaction Documents. Except as set forth in Section 7 above, the Purchase
Agreement and the other Transaction Documents shall continue in full force and
effect in accordance with their terms.
 
9. Certain Taxes. The Company shall pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
the Exchange Shares.

 
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10. Incorporation of Provisions from the Purchase Agreement. The provisions of
Sections 13.2 and 13.3 of the Purchase Agreement are incorporated by reference
herein (as if set forth in full in this section) so that this Agreement shall be
subject to the terms and provisions of such sections of the Purchase Agreement.

11. Waiver; Exercise of Rights and Remedies. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed by LLCII and the Company (and in the case of any amendment of Section 7
only, LLCI). No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

12. Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with each of the parties hereto.

13. Reorganization. The Company, LLCI and LLCII intend, and shall take the
position, that the exchange of the Warrants pursuant to this Agreement should be
characterized as a reorganization within the meaning of Section 368(a) of the
Code and shall not take any position on any United States tax filing that is
inconsistent with such characterization.

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IN WITNESS WHEREOF, LLCII, LLCI and the Company have each duly caused this
Agreement to be executed on the day and year first written above.

PURE BIOFUELS CORP.

By: /s/ Luis Goyzueta                     
Name: Luis Goyzueta
Title:   CEO
 
PLAINFIELD PERU II LLC
 
By: /s/ Steven Segaloff                   
Name: Steven Segaloff
Title:   Authorized Individual
 
PLAINFIELD PERU I LLC (only with respect to Section 7 of this Agreement)
 
By: /s/ Steven Segaloff                  
Name: Steven Segaloff
Title:   Authorized Individual

Notwithstanding anything to the contrary contained in the Loan Agreement and the
Loan Documents, the Lender and the Administrative Agent waive compliance by the
Company, the Borrowers and the Subsidiary Guarantors of their applicable
obligations contained in the applicable provisions of the Loan Agreement and the
Loan Documents only with respect to this Agreement and the transactions
contemplated hereby and the Lender and the Administrative Agent acknowledge and
agree that the execution of this Agreement by the Company and performance of its
obligations hereunder will not violate the terms of the applicable provisions of
the Loan Agreement and the Loan Documents. The waiver in this paragraph is
limited as specified and shall not constitute a modification, acceptance or
waiver of any other provision of the Loan Agreement or the other Loan Documents.
Except as set forth in this paragraph, the Loan Agreement and other Loan
Documents shall continue in full force and effect in accordance with their
terms. Each of the Company and the Subsidiary Guarantor hereby ratifies and
confirms its Guaranty.

 
PLAINFIELD SPECIAL SITUATIONS MASTER FUND LIMITED
 
By: /s/ Steven Segaloff                   
Name: Steven Segaloff
Title:   Authorized Individual
 
 
 

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PURE BIOFUELS CORP.
 
By: /s/ Luis Goyzueta                     
Name: Luis Goyzueta
Title:   CEO

PURE BIOFUELS DEL PERU S.A.C.

By: /s/ Luis Goyzueta                     
Name: Luis Goyzueta
Title:   Apoderado

PALMA INDUSTRIAL S.A.C.

By: /s/ Luis Goyzueta                     
Name: Luis Goyzueta
Title:   Apoderado

ACEITE PUCALLPA S.A.C.

By: /s/ Gonzalo Campos                 
Name: Gonzalo Campos
Title:   General Manager

PALMAS TROPICALES S.A.C.

By: /s/ Gonzalo Campos                 
Name: Gonzalo Campos
Title:   General Manager

PUCAPALMA S.A.C.

By: /s/ Gonzalo Campos                 
Name: Gonzalo Campos
Title:   General Manager

ECOPALMA S.A.C.

By: /s/ Gonzalo Campos                 
Name: Gonzalo Campos
Title:   General Manager

PALMAS DE ORIENTE S.A.C.

By: /s/ Gonzalo Campos                 
Name: Gonzalo Campos
Title:   General Manager