Document:

AMENDMENT
NO. 2

     

    TO

     

    PLEDGE
AND COLLATERAL AGENCY AGREEMENT

    

    This
AMENDMENT NO. 2 TO PLEDGE AND COLLATERAL AGENCY AGREEMENT (this “Amendment”) is
entered into as of November 30, 2010 by and among Colombia Clean Power &
Fuels, Inc., a Nevada corporation (“Colombia”), Colombia CPF LLC, Delaware
limited liability company (“CPF,” and together with Colombia, the “Pledgors”),
and Law Debenture Trust Company of New York, a New York banking corporation, as
collateral agent (the “Collateral Agent”).

    

    RECITALS:

     

    WHEREAS,
Pledgors and the Collateral Agent entered into that certain Pledge and
Collateral Agency Agreement, dated as of August 26, 2010 (the “Agency
Agreement”);

     

    WHEREAS,
on October 29, 2010, pursuant to Amendment No. 1 to the Agency Agreement, the
Pledgors and the Collateral Agent amended the Agency Agreement to reflect the
increase in the aggregate principal amount of Colombia’s 10% secured convertible
promissory notes due June 30, 2012 (the “Notes”) that is secured by the security
interest in the Pledgors’ membership interests in Energia from $2,500,000 to
$4,000,000;

     

    WHEREAS,
the Pledgors and the Collateral Agent desire to further amend the Agency
Agreement to reflect an additional  increase in the aggregate
principal amount of the Notes from $4,000,000 to $8,000,000.

     

    NOW,
THEREFORE, in consideration of the foregoing premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Amendment, each intending to be legally bound,
hereby agree as follows:

     

    1.           Definitions.  Capitalized
terms used but not defined in this Amendment shall have the respective meanings
ascribed to them in the Agency Agreement.

     

    2.           Amendments to Agency
Agreement.

     

    A.           The
second recital of the Agency Agreement is hereby deleted in its entirety and
replaced with the following:

     

    “WHEREAS,
Colombia intends to issue from time to time up to $8,000,000 aggregate principal
amount of its 10% secured convertible promissory notes due June 30, 2012 (the
“Notes”);”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    B.           Sections
1, 2(a), 4(a), 6, 7(b), 14(c) and 15(b) of the Agency Agreement are hereby
amended by replacing all references to “Noteholders holding a majority in
aggregate principal amount of the Notes” with “Noteholders holding at least 67%
in aggregate principal amount of the then outstanding Notes.”

    

    C.           The
Agency Agreement is hereby amended by adding the following new Section
25:

    

    “25.           Amendments.  No
amendment, modification, supplement or waiver of any provision of this Agreement
nor consent to departure by the Pledgors therefrom shall be effective unless the
same shall be in writing and signed by the Collateral Agent, the Pledgors and
Noteholders holding at least 67% in aggregate principal amount of the then
outstanding Notes, and any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.”

    

    3.           Full Force and
Effect.  Except as expressly modified by this Amendment, all of
the terms, covenants, agreements, conditions and other provisions of the Agency
Agreement shall remain in full force and effect in accordance with their
respective terms.  As used in the Agency Agreement, the terms “this
Agreement”, herein, hereinafter, hereunder, hereto and words of similar import
shall mean and refer to, from and after the date hereof, unless the context
otherwise requires, the Agency Agreement as amended by this
Amendment.

     

    Counterparts.  This
Amendment may be executed in a number of counterparts, by facsimile, each of
which shall be deemed to be an original as of those whose signature appears
thereon, and all of which shall together constitute one and the same
instrument.  This Amendment shall become binding when one or more of
the counterparts hereof, individually or taken together, are signed by all the
parties.

     

    [Remainder
of the page intentionally left blank; signature page follows]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have executed this Amendment No. 2 to Pledge And
Collateral Agency Agreement as of the date first written above.

    

    
      
        	 
      	
                LAW
      DEBENTURE TRUST COMPANY OF

              
	 
      	
                NEW
      YORK, as Collateral Agent

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Michael A. Smith

              
	 
      	 
      	
                     Michael
      A. Smith

              
	 
      	 
      	
                     Vice
      President

              
	 
      	 
      
	 
      	
                COLOMBIA
      CLEAN POWER & FUELS,

              
	 
      	
                INC.,
      as Pledgor

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Edward P. Mooney

              
	 
      	 
      	
                     Edward
      P. Mooney

              
	 
      	 
      	
                     President
      and Chief Executive Officer

              
	 
      	 
      
	 
      	
                COLOMBIA
      CPF LLC., as Pledgor

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Edward P. Mooney

              
	 
      	 
      	
                     Edward
      P. Mooney

              
	 
      	 
      	
                     Chief
      Executive OfficerColombia
      Clean Power & Fuels,
inc

                

        

      

    

     

    December
3, 2010

     

    Steelhead
Partners, LLC

    333 –
108th Avenue
NE

    Suite
2010

    Bellevue,
WA  98004

    Attn:   J.D. Kritser

     

    Dear
J.D.:

     

    This
letter (the “Letter”) supplements the Subscription Agreement dated December 3,
2010 (the “Agreement”) by and between Colombia Clean Power & Fuels, Inc.
(the “Issuer”) and Steelhead Navigator Master,
L.P. (“Steelhead”), subject to the terms and conditions set forth
herein.  Capitalized terms herein shall have the same meaning as the
Agreement.

     

    1.      Right of First
Refusal.  The Issuer hereby grants to Steelhead, together with its affiliates and other
funds or entities under common management, the right of first refusal to
purchase up to (i) 50% of any offering of New Securities (defined herein)
comprising Preferred Securities or Debt Securities (each as defined herein) and
(ii) 25% of any offering of New Securities consisting of Common Stock (defined
herein), subject to the limitations, terms and conditions set forth
herein.

     

    a.      Subject
to the limitations set forth in Section 1.b., “New Securities” shall mean any
Preferred Securities, Debt Securities or Common Stock (each as defined herein)
issued by the Issuer after the date of the Agreement.

     

    (i)         “Preferred
Securities” shall mean any preferred stock of the Issuer, and rights,
convertible securities, options or warrants to purchase such preferred
stock;

     

    (ii)        “Debt
Securities” shall mean any convertible or non-convertible indebtedness of the
Issuer, whether accompanied by warrants or otherwise, and rights, convertible
securities, options or warrants to purchase such indebtedness; and

     

    (iii)        “Common
Stock” shall mean any shares of common stock of the Issuer, and rights, convertible securities, options or
warrants to purchase such Common Stock.

     

    b.      The
term “New Securities” shall not include:

     

    (i)         the
Notes and the Investor Warrants;

     

    (ii)        the
Common Stock or the Preferred Stock (as such term is defined in the Notes)
issuable upon conversion of the Notes or exercise of the Investor Warrants, as
applicable;

     

    (iii)       securities
issued or issuable to officers, employees, directors, consultants, placement
agents, and other service providers of the Issuer (or any subsidiary) pursuant
to stock grants, option plans, purchase plans, agreements or other employee
stock incentive programs or arrangements approved by the Board of Directors of
the Issuer;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iv)         securities
issued pursuant to the conversion or exercise of any convertible or exercisable
securities outstanding as of the date of this Agreement;

     

    (v)         securities
offered pursuant to a bona fide, firmly underwritten public offering pursuant to
a registration statement filed under the Securities Act;

     

    (vi)        securities
issued or issuable pursuant to the acquisition of another corporation by the
Issuer by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture agreement, provided, that such issuances
are approved by the Board of Directors of the Issuer;

     

    (vii)         securities
issued or issuable to banks, equipment lessors or other financial lending
institutions pursuant to a commercial leasing or debt financing transaction
approved by the Board of Directors of the Issuer; and

     

    (viii)         any
right, option or warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to subsections (i)
through (vii) above.

     

    c.      If
the Issuer proposes to issue New Securities, it shall give the Subscriber
written notice of its intention, describing the type of New Securities, their
price and the general terms upon which the Issuer proposes to issue the New
Securities.  The Subscriber shall have fifteen (15) days after any
such notice is mailed or delivered to agree to purchase up to the applicable
percentage of such New Securities for the price and upon the terms specified in
the notice by giving written notice to the Issuer and stating therein the
quantity of New Securities to be purchased.

     

    d.      If
the Subscriber fails to exercise fully the right of first refusal within such
fifteen (15) day period (the “Election Period”), the Issuer shall have one
hundred and twenty (120) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within one hundred and twenty (120) days from the date of such
agreement) to sell that portion of the New Securities with respect to which the
Subscriber’s right of first refusal option set forth herein was not exercised,
at a price and upon terms no more favorable to the purchasers thereof than
specified in the Issuer’s notice delivered pursuant to this
Letter.  If the Issuer has not sold within such one hundred and twenty
(120) day period following the Election Period, or such one hundred and twenty
(120) day period following the date of such agreement, the Issuer shall not
thereafter issue or sell any New Securities without again offering such
securities to the Subscriber as provided in this Letter.

     

    e.      The
Right of First Refusal granted herein shall expire on the earlier of: (i) the final closing of an offering of New
Securities with minimum gross proceeds of ten million dollars ($10,000,000), or (ii) the second anniversary of
the date of the Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Page 3 of
3

     

    If the
foregoing is in accordance with your understanding, please sign two copies and
return one to me, whereupon this letter shall constitute a binding agreement
between the Issuer and Steelhead.

     

    
      
        	 
      	
                Sincerely
      yours,

              
	 
      	 
      
	 
      	
                COLOMBIA
      CLEAN POWER & FUELS, INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Edward P. Mooney

              
	 
      	
                Name:
      Edward P. Mooney

              
	 
      	
                Title:   Chief
      Executive Officer

              

      

    

    

    Confirmed
and agreed to this 3rd day of December, 2010

    

    STEELHEAD NAVIGATOR MASTER, L.P.

    

    By Its General Partner:

    STEELHEAD OFFSHORE PARTNERS, LLC

    

    By Its Sole Member:

    STEELHEAD
PARTNERS, LLC

    

    
      
        
          
            	
                    By:

                  	
                    /s/ J. Michael Johnson

                  	 
      
	
                    Name:
      J. Michael Johnson

                  	 
      
	
                    Title:   Managing Member, Steelhead Partners,
      LLC

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