Contract
Exhibit 10.4
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS WARRANT NOR
ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION
OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN
COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.
| Right to Purchase | ||
| 1,437,500 Shares of | ||
| Common Stock |
WARRANT
THIS CERTIFIES THAT, for value received, Heritage Opportunity Fund, LLC, or its registered
assigns, is entitled to purchase from BioGold Fuels Corporation, a Nevada corporation (the
“Company”), at any time or from time to time during the period specified in Section 2 hereof, One
Million Four Hundred Thirty Seven Thousand Five Hundred (1,437,500) fully paid and nonassessable
shares of the Company’s Common Stock (the “Common Stock”), at an exercise price per share equal to
$0.23 (the “Exercise Price”). The term “Warrant Shares,” as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price are subject to
adjustment as provided in Section 4 hereof. The term “Warrants” means this Warrant and any
additional warrants issuable pursuant to Section 4 hereof. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase Agreement”), dated September 2, 2008, between the Company and the holder.
This Warrant is subject to the following terms, provisions, and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
(a) Subject to the provisions hereof, this Warrant may be exercised by the holder hereof, in
whole or in part, by the surrender of this Warrant, together with a completed exercise agreement in
the form attached hereto (the “Exercise Agreement”), to the Company during normal business hours on
any business day at the Company’s principal executive offices (or such other office or agency of
the Company as it may designate by notice to the holder hereof), and upon payment to the Company in
cash, by certified or official bank check or by wire transfer for the account of the Company of the
Exercise Price for the Warrant Shares specified in the Exercise Agreement. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding fourteen
(14) business days, after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder hereof and shall be registered in
the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised.
(b) In lieu of the payment set forth above, this Warrant may also be exercised by means of a
net cashless exercise, in which the holder shall be entitled to receive the number of Warrant
Shares equal to the quotient obtained by dividing X (A-B) by A, where X equals the number of
Warrant Shares first set forth above, B equals the Exercise Price, and A equals (i) the volume
weighted average price over the five trading days immediately preceding the date of such exercise,
if the Common Stock is then publicly traded or quoted, or (ii) the fair market value on the
exercise date as reasonably determined by the Company’s board of directors.
2. Period of Exercise. This Warrant is exercisable at any time or from time to time on
or after the date on which this Warrant is issued and delivered and before 5:00 p.m. Pacific
Standard Time on the seventh (7th) anniversary of the date of issuance.
3. Certain Agreements of the Company. The Company hereby covenants and agrees as
follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance
with the terms of this Warrant, be validly issued, fully paid, and nonassessable and free from all
taxes, liens, and charges with respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period, the Company shall at all times
have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of this Warrant.
(c) Certain Actions Prohibited. The Company will not, by amendment of its charter or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(d) Successors and Assigns. This Warrant will not be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or substantially all the
Company’s assets.
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4. Antidilution Provisions. During the Exercise Period, the Exercise Price and the number
of Warrant Shares shall be subject to adjustment from time to time as provided in this Section 4.
(a) Subdivision or Combination of Common Stock. If the Company at any time subdivides
(by any stock split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then,
after the date of record for effecting such subdivision, the number of shares purchased under this
Warrant will be proportionately increased and the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company at any time combines (by reverse
stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common
Stock acquirable hereunder into a smaller number of shares, then, after the date of record for
effecting such combination, the number of shares purchased under this Warrant will be
proportionately increased and the Exercise Price in effect immediately prior to such combination
will be proportionately increased.
(b) Distribution of Assets. In case the Company shall declare or make any
distribution of its assets (including cash) to holders of Common Stock as a partial liquidating
dividend, by way of return of capital or otherwise, then, after the date of record for determining
stockholders entitled to such distribution, but prior to the date of distribution, the holder of
this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, to receive the amount of such assets which would have been
payable to the holder had such holder been the holder of such shares of Common Stock on the record
date for the determination of stockholders entitled to such distribution.
(c) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment of the Exercise Price, then, and in each such case, the Company shall give notice
thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting from
such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Such calculation shall be certified by the Chief Financial
Officer of the Company.
(d) Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall
be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.
(e) No Fractional Shares. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable.
(f) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of
any class or make any other distribution (including dividends or distributions payable in cash out
of retained earnings) to the holders of the Common Stock;
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(ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any
additional shares of stock of any class or other rights; or
(iii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;
then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the
date on which the books of the Company shall close or a record shall be taken for determining the
holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights
or for determining the holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up. Such notice shall also specify the date on which the holders of Common Stock shall be
entitled to receive such dividend, distribution, or subscription rights or to exchange their Common
Stock for stock or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case
may be. Such notice shall be given at least thirty (30) days prior to the record date or the date
on which the Company’s books are closed in respect thereto. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii),
(iii) and (iv) above.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder of this Warrant or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Stockholder. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company. No provision of
this Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall
give rise to any liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of the Company.
7. Transfer, Exchange, and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights granted to the holder hereof
are transferable, in whole or in part, to any ancestor, descendant or spouse of the holder or a
trust for the benefit of such persons, upon surrender of this Warrant, together with a properly
executed assignment in the form attached hereto, at the office or agency of the Company referred to
in Section 7(e) below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Section 7(f) hereof and to the applicable provisions of the
Purchase Agreement. Until due presentment for registration of transfer on the books of the
Company, the Company may treat the registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the contrary.
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(b) Warrant Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the holder hereof at the office or agency of the Company referred to
in Section 7(e) below, for new Warrants of like tenor representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be designated by the
holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this Section 7, this Warrant
shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the holder
or transferees) and charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 7.
(e) Register. The Company shall maintain, at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and address of the person in
whose name this Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the surrender of
this Warrant in connection with any exercise, transfer, or exchange of this Warrant, this Warrant
(or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not be registered
under the Securities Act of 1933, as amended (the “Securities Act”) and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing such exercise,
transfer, or exchange, (i) that the holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel, which opinion and counsel are acceptable to
the Company, to the effect that such exercise, transfer, or exchange may be made without
registration under said Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in
Rule 501(a) promulgated under the Securities Act; provided that no such opinion, letter or status
as an “accredited investor” shall be required in connection with a transfer pursuant to Rule 144
under the Securities Act. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant for investment and
not with a view to the distribution thereof.
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8. Notices. All notices, requests, and other communications required or permitted to be
given or delivered hereunder to the holder of this Warrant shall be in writing, and shall be
personally delivered, or shall be sent by certified or registered mail or by recognized
overnight mail courier, postage prepaid and addressed, to such holder at the address shown for
such holder on the books of the Company, or at such other address as shall have been furnished
to the Company by notice from such holder. All notices, requests, and other communications
required or permitted to be given or delivered hereunder to the Company shall be in writing,
and shall be personally delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to the office of the Company
at BioGold Fuels Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000,
facsimile number, (000) 000-0000, Attn: CEO and CFO, or at such other address as shall have
been furnished to the holder of this Warrant by notice from the Company. Any such notice,
request, or other communication may be sent by facsimile, but shall in such case be
subsequently confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above. All notices, requests, and
other communications shall be deemed to have been given either at the time of the receipt
thereof by the person entitled to receive such notice at the address of such person for
purposes of this Section 8, or, if mailed by registered or certified mail or with a recognized
overnight mail courier upon deposit with the United States Post Office or such overnight mail
courier, if postage is prepaid and the mailing is properly addressed, as the case may be.
9. Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in accordance with
the internal laws of the State of California, without regard to the principles of conflicts of
law thereof.
10. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only be amended by an
instrument in writing signed by the Company and the holder hereof.
(b) Descriptive Headings. The descriptive headings of the several paragraphs of this
Warrant are inserted for purposes of reference only, and shall not affect the meaning or
construction of any of the provisions hereof.
(c) Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Warrant, that the holder shall
be entitled, in addition to all other available remedies at law or in equity, and in addition to
the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Warrant and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without any bond or other security
being required.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by it’s duly authorized
officer.
Dated as of September 2, 2008
| BIOGOLD FUELS CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
FORM OF EXERCISE AGREEMENT
Dated: _____, 200 ___
To:
The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to
purchase shares of Common Stock covered by such Warrant, and makes payment herewith in
full therefor at the price per share provided by such Warrant in cash or by certified or official
bank check in the amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the Securities Act of
1933, as amended, by surrender of securities issued by the Company (including a portion of the
Warrant) having a market value equal to $ . Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional share to:
| Name: | ||||
| Signature: | ||||
| Address: | ||||
| Note: | The above signature should correspond exactly with the name on the face of the within Warrant, if applicable. |
and, if said number of shares of Common Stock shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned covering the balance
of the shares purchasable thereunder less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, to:
| Name of Assignee | Address | No of Shares | ||
, and hereby irrevocably constitutes and appoints
as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with full
power of substitution in the premises.
Dated: ____, ________
In the
presence of:
| Name: | ||||||||
| Signature: | ||||||||
| Title of Signing Officer or Agent (if any): | ||||||||
| Address: |
|
|||||||
| Note: | The above signature should correspond exactly with the name on the face of the within Warrant, if applicable. | |||||||
