NEW GENERATION BIOFUELS HOLDINGS, INC. WARRANT TO PURCHASE COMMON STOCK
THIS
WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
AS TO
THESE SECURITIES OR (2) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
WARRANT
TO
PURCHASE COMMON STOCK
Issue
Date: ____________,
2008
THIS
WARRANT IS TO CERTIFY THAT,
_________________ (the “Purchaser”), is entitled to purchase from New Generation
Biofuels Holdings, Inc., a Florida corporation (the “Company”), ________________
shares of the Company’s common stock, par value $.001 per share (the
“Common
Stock”),
at
the Exercise Price (as defined below).
Section
1. Certain
Definitions.
As
used
in this Warrant, unless the context otherwise requires:
“Exercise
Price”
shall
mean $6.25 per share, as adjusted from time to time pursuant to Section
3
hereof.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Warrant”
shall
mean this Warrant and all additional or new warrants issued upon division or
combination of, or in substitution for, this Warrant. All such additional or
new
warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Warrant Stock for which they may be
exercised.
“Warrantholder”
shall
mean the Purchaser, as the initial holder of this Warrant, and its nominees,
successors or assigns, including any subsequent holder of this Warrant to whom
it has been legally transferred.
“Warrant
Stock”
shall
mean the shares of the Company’s Common Stock purchasable by the holder of this
Warrant upon the exercise of this Warrant.
Section
2. Exercise
of Warrant.
(a) At
any
time after the six month anniversary of the Issue Date but prior to the fifth
anniversary of the Issue Date (the “Expiration
Date”),
the
Purchaser may at any time and from time to time exercise this Warrant, in whole
or in part.
(b) (i) The
Warrantholder shall exercise this Warrant by means of delivering to the Company
at its office identified in Section
14
hereof
(i) a written notice of exercise, including the number of shares of Warrant
Stock to be delivered pursuant to such exercise, (ii) this Warrant and (iii)
payment equal to the Exercise Price in accordance with Section
2(b)(ii).
In the
event that any exercise shall not be for all shares of Warrant Stock purchasable
hereunder, a new Warrant registered in the name of the Warrantholder, of like
tenor to this Warrant and for the remaining shares of Warrant Stock purchasable
hereunder, shall be delivered to the Warrantholder within ten (10) days after
any such exercise. Such notice of exercise shall be in the Subscription Form
set
out at the end of this Warrant.
(ii) The
Warrantholder shall pay the Exercise Price to the Company either by cash,
certified check to the order of the Company or wire transfer to an account
specified by the Company. At any time following the six month anniversary of
the
Issue Date and provided that the Warrant Stock is not then registered for resale
pursuant to an effective registration statement under the Securities Act, then,
in addition to the method of payment set forth in the immediately preceding
sentence and in lieu of any cash payment required thereby, this Warrant may
also
be exercised at such time by means of a “cashless exercise” in which the
Warrantholder shall be entitled to receive a certificate for the number of
shares of Warrant Stock computed using the following formula:
X
=
Y
(A-B)
A
|
Where
|
(X)
=
|
the
number of shares of Warrant Stock to be issued to the
Warrantholder;
|
|
(Y)
=
|
the
number of shares of Warrant Stock issuable upon exercise of this
Warrant
in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise;
|
(A)
=
the
Market Price (as defined below); and
|
(B)
=
|
the
Exercise Price of this Warrant, as adjusted from time to
time.
|
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Solely
for the purposes of this paragraph, Market Price shall be calculated as of
the
Trading Day (defined for this purpose as any day on which the equity securities
markets are generally open for trading) immediately preceding the date which
the
subscription form attached hereto is deemed to have been sent to the Company
pursuant to Section
14
hereof
(such preceding date, the “Valuation
Date”).
As
used herein, the phrase “Market
Price”
shall
mean (i) if the Warrant Stock is listed or admitted for trading on a national
securities exchange, an automated quotation system or the Over the Counter
Bulletin Board, the last reported sale price per share of the Warrant Stock
on
the Valuation Date, or, in case no such reported sale takes place on such day
or
is reported, then the average of the last reported per share bid and ask prices
for shares of the Warrant Stock on such date (or if such bid and ask prices
are
not available on such date, the most recent preceding date), in either case
as
officially reported by such securities exchange, quotation system or Bulletin
Board on which the Common Stock is listed or admitted to trading, (ii) if not
so
listed or admitted for trading, the fair market value of a share of the Warrant
Stock as determined by the Company’s board of directors in good faith, or (iii)
if such exercise is in connection with a merger or consolidation of the Company
in which the Company is not the survivor or in which the Warrant Stock is
exchanged for cash or other securities or a sale of all or substantially all
of
the assets of the Company (collectively, a “Sale”),
the
implied price per share of the Warrant Stock resulting from such
Sale.
(c) Upon
exercise of this Warrant and delivery of the Subscription Form with proper
payment relating thereto, the Company shall cause to be executed and delivered
to the Warrantholder a certificate or certificates representing the aggregate
number of fully-paid and nonassessable shares of Warrant Stock issuable upon
such exercise.
(d) The
stock
certificate or certificates for Warrant Stock to be delivered in accordance
with
this Section
2
shall be
in such denominations as may be specified in said notice of exercise and shall
be registered in the name of the Warrantholder or such other name or names
as
shall be designated in said notice. Such certificate or certificates shall
be
deemed to have been issued and the Warrantholder or any other person so
designated to be named therein shall be deemed to have become the holder of
record of such shares, including to the extent permitted by law the right to
vote such shares or to consent or to receive notice as stockholders, as of
the
time said notice is delivered to the Company as aforesaid.
(e) The
Company shall pay all expenses payable in connection with the preparation,
issue
and delivery of stock certificates under this Section
2;
provided,
however,
that
the Warrantholder shall be responsible for all transfer taxes resulting from
the
fact that any certificate issued in respect of Warrant Stock is not in the
name
of the Warrantholder.
(f) All
shares of Warrant Stock issuable upon the exercise of this Warrant in accordance
with the terms hereof shall be validly issued, fully paid and nonassessable,
and
free from all liens and other encumbrances thereon, other than liens or other
encumbrances created by the Warrantholder or restrictions upon transfer under
federal or state securities laws.
(g) In
no
event shall any fractional share of Warrant Stock of the Company be issued
upon
any exercise of this Warrant. If, upon any exercise of this Warrant, the
Warrantholder would, except as provided in this paragraph, be entitled to
receive a fractional share of Warrant Stock, then the Company shall either
(a)
deliver in cash to such holder an amount equal to such fractional interest,
or
(b) issue a full share in lieu of such fractional share.
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Section
3. Adjustment
of Exercise Price and Warrant Stock.
(a) If,
at
any time prior to the Expiration Date, the number of outstanding shares of
Common Stock is (i) increased by a stock dividend payable in shares of Warrant
Stock or by a subdivision or split-up of shares of Common Stock, or (ii)
decreased by a combination of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
the benefits of such stock dividend, subdivision, split-up, or combination,
the
Exercise Price shall be adjusted to a new amount equal to the product of (A)
the
Exercise Price in effect on such record date, and (B) the quotient obtained
by
dividing (x) the number of shares of Warrant Stock into which this Warrant
would
be exercisable on such record date (without giving effect to the event referred
to in the foregoing clause (i) or (ii)), by (y) the number of shares of Warrant
Stock which would be outstanding immediately after the event referred to in
the
foregoing clause (i) or (ii), if this Warrant had been exercised immediately
prior to such record date.
(b) Upon
each
adjustment of the Exercise Price as provided in Section
3(a),
the
Warrantholder shall thereafter be entitled to subscribe for and purchase, at
the
Exercise Price resulting from such adjustment, the number of shares of Warrant
Stock equal to the product of (i) the number of shares of Warrant Stock into
which this Warrant would be exercisable prior to such adjustment and (ii) the
quotient obtained by dividing (A) the Exercise Price existing prior to such
adjustment by (B) the new Exercise Price resulting from such
adjustment.
(c) If,
at
any time prior to the first to occur of (i) the first anniversary of the
Registration Date or (ii) 18 months after the Series B Issue Date, the Company
issues any Additional Warrants with an Additional Warrant Exercise Price or
Options with an Option Exercise Price less than the Exercise Price of this
Warrant on the date of and immediately prior to such issuance, then the Exercise
Price of this Warrant shall be reduced, concurrently with the issuance of such
Additional Warrants or Options, to the Additional Warrant Exercise Price at
which such Additional Warrants have been issued or the Option Exercise Price
at
which such Options have been issued, as the case may be; provided,
however,
that
the Exercise Price of this Warrant shall not be reduced below $3.00 per share
based on the adjustments contained in this Section 3(c), whether a single
adjustment or multiple adjustments. This provision shall not apply to Additional
Warrants or Options issued or issuable for Shares Acquired from
Affiliate/Partner.
The
following definitions shall apply to this section:
“Additional
Warrant Exercise Price”
shall
mean, for any Additional Warrants, the price per share at which Common Stock
is
issuable upon exercise of such Additional Warrants, determined by dividing
(i) the aggregate amount of consideration payable to the Company upon the
exercise of such Additional Warrants, plus the total amount, if any, received
or
receivable by the Company as consideration for granting such Additional
Warrants, plus, in the case of Additional Warrants which relate to Convertible
Securities, the aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the conversion
or
exchange thereof into Common Stock, by (ii) the total number of shares of
Common Stock issuable upon the exercise of such Additional Warrants or upon
the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Additional Warrants (and in the case where more than one
security is issued for a specified aggregate consideration, the consideration
allocable to the Additional Warrants shall be reasonably determined by the
Board
of Directors of the Company).
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4 -
“Additional
Warrants”
shall
mean warrants to subscribe for, purchase or otherwise acquire Common Stock
or
Convertible Securities, which warrants are issued by the Company in a Financing
Transaction.
“Convertible
Securities”
shall
mean evidence of indebtedness, preferred stock or other securities directly
or
indirectly convertible into or exchangeable for Common Stock.
“Employee
Awards”
shall
mean the grant of shares of Common Stock or Convertible Securities (either
restricted or unrestricted), options to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, or other equity or equity-like
rights granted or issued by the Company to employees, officers or directors
of,
or consultants or advisors to, the Company or any subsidiary pursuant to a
plan
or other arrangement adopted by the Board of Directors of the Company,
contemplating (in the case of grants with an exercise price) that such grants
generally would be made with exercise prices at least equal to fair market
value
as determined by the Board of Directors of the Company or the compensation
or
other committee thereof.
“Financing
Transaction”
shall
mean a transaction commenced after the Series B Issue Date which provides
financing to the Company in the amount of $1,000,000 or more in cash, excluding
transactions in which (i) the only investors have, or following such transaction
will have, substantive business relationships with the Company other than the
ownership of securities of the Company or its subsidiaries, and (ii) the
consideration received by the Company does not consist solely of cash. For
the
avoidance of doubt, transactions such as joint ventures, arrangements with
customers or suppliers, acquisitions of property, loan transactions with
commercial lenders and the like where raising financing is not the primary
purpose of the transaction (as evidenced by a reasonable determination of the
Board of Directors of the Company) shall not be considered Financing
Transactions.
“Option
Exercise Price”
shall
mean, for any Options, the price per share for which Common Stock is issuable
upon exercise of such Options, determined by dividing (i) the aggregate
amount of consideration payable to the Company upon the exercise of such
Options, plus the total amount, if any, received or receivable by the Company
as
consideration for the granting of such Options, plus, in the case of Options
which relate to Convertible Securities, the aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof into Common Stock, by
(ii) the total number of shares of Common Stock issuable upon the exercise
of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options (and in the case where
more than one security is issued for a specified aggregate consideration, the
consideration allocable to the Options shall be reasonably determined by the
Board of Directors of the Company).
-
5 -
“Options”
shall
mean shall mean options to subscribe for, purchase or otherwise acquire Common
Stock or Convertible Securities granted or issued by the Company in a Financing
Transaction, but excluding Employee Awards.
“Registration
Date”
shall
mean the first date on which a registration statement that registers the resale
of the Warrant Stock is declared effective by the Securities and Exchange
Commission under the Securities Act.
“Series
B Issue Date”
shall
mean the issue date on which shares of the Series B Non-Redeemable Convertible
Preferred Stock of the Company is first issued.
“Shares
Acquired from Affiliate/Partner”
means
(i) shares which were acquired from any affiliate of the Corporation
(which for this purpose shall include any holder of 10% or more of the Common
Stock or other voting stock of the Corporation) or any strategic partner of
the
Corporation, or (ii) an equivalent number of shares of Common Stock issued
or reserved for issuance where either all or part of the proceeds of such shares
are used to acquire shares from any affiliate or any strategic partner of the
Corporation or an equivalent number of treasury shares acquired from any
affiliate or any strategic partner of the Corporation are retired substantially
concurrently with or as an offset to such issuance or reservation of Common
Stock.
Section
4. Division
and Combination.
This
Warrant may be divided or combined with other Warrants upon presentation at
the
aforesaid office of the Company, together with a written notice specifying
the
names and denominations in which new Warrants are to be issued, signed by the
Warrantholder or its agent or attorney. The Company shall pay all expenses
in
connection with the preparation, issue and delivery of Warrants under this
Section
4.
The
Company agrees to maintain at its aforesaid office books for the registration
of
the Warrants.
Section
5. Reclassification,
Etc.
In
case
of any reclassification or change of the outstanding Warrant Stock of the
Company (other than as a result of a subdivision, combination or stock
dividend), or in case of any consolidation of the Company with, or merger of
the
Company into, another corporation or other business organization (other than
a
consolidation or merger in which the Company is the continuing corporation
and
which does not result in any reclassification or change of the outstanding
Common Stock of the Company) at any time prior to the Expiration Date, then,
as
a condition of such reclassification, reorganization, change, consolidation
or
merger, lawful provision shall be made, and duly executed documents evidencing
the same from the Company or its successor shall be delivered to the
Warrantholder, so that the Warrantholder shall have the right prior to the
Expiration Date to purchase, at a total price not to exceed that payable upon
the exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization,
change, consolidation or merger by a holder of the number of shares of Warrant
Stock of the Company which might have been purchased by the Warrantholder
immediately prior to such reclassification, reorganization, change,
consolidation or merger, and in any such case appropriate provisions shall
be
made with respect to the rights and interest of the Warrantholder to the end
that the provisions hereof (including provisions for the adjustment of the
Exercise Price and of the number of shares purchasable upon exercise of this
Warrant) shall thereafter be applicable in relation to any shares of stock
and
other securities and property thereafter deliverable upon exercise
hereof.
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6 -
Section
6. Reservation
and Authorization of Capital Stock.
The
Company shall, at all times on and after the date hereof, reserve and keep
available for issuance such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants.
Section
7. Rights
of Stockholders.
Nothing
contained herein shall be construed to confer upon the holder of this Warrant,
as such, any of the rights of a stockholder of the Company or any right to
vote
for the election of directors or upon any matter submitted to stockholders
at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant shall
have been exercised and the certificates representing the Warrant Stock shall
have been issued, as provided herein.
Section
8. Stock
and Warrant Books.
The
Company will not at any time, except upon dissolution, liquidation or winding
up, close its stock books or warrant books so as to result in preventing or
delaying the exercise of any Warrant.
Section
9. Limitation
of Liability.
No
provisions hereof, in the absence of affirmative action by the Warrantholder
to
purchase Warrant Stock hereunder, shall give rise to any liability of the
Warrantholder to pay the Exercise Price or as a stockholder of the Company
(whether such liability is asserted by the Company or creditors of the
Company).
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7 -
Section
10. Transfer
This
Warrant may be transferred only upon the written consent of the Company, which
approval shall not be unreasonably withheld or delayed. Any Warrants issued
upon
the transfer of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat
the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable
or
other claim to, or interest in, such Warrant on the part of any other person,
and shall not be liable for any registration of transfer of Warrants that are
registered or to be registered in the name of a fiduciary or the nominee of
a
fiduciary unless made with the actual knowledge that a fiduciary or nominee
is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to
bad
faith. This Warrant shall be transferable only on the books of the Company
upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations,
of
like tenor and representing in the aggregate a like amount, upon surrender
to
the Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act and the rules and
regulations thereunder.
Section
11. Investment
Representations; Restrictions on Warrant Stock.
The
Warrantholder, by accepting this Warrant, covenants and agrees that, at the
time
of exercise hereof, and at the time of any proposed transfer of Warrant Stock
acquired upon exercise hereof, unless a current registration statement under
the
Securities Act shall be in effect with respect to the Warrant Stock to be issued
upon exercise of this Warrant, such Warrantholder will deliver to the Company
a
written statement that the securities acquired by the Warrantholder upon
exercise hereof are for the account of the Warrantholder or are being held
by
the Warrantholder as trustee, investment manager, investment advisor or as
any
other fiduciary for the account of the beneficial owner or owners for investment
and are not acquired with a view to, or for sale in connection with, any
distribution thereof (or any portion thereof) and with no present intention
(at
any such time) of offering and distributing such securities (or any portion
thereof). The Warrantholder agrees that certificates representing Warrant Stock
may bear a legend substantially as follows:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT IS
IN
EFFECT AS TO THESE SECURITIES OR (2) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
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8 -
The
Company agrees to include the Warrant Stock in the Company’s registration
statement to be filed with the Securities and Exchange Commission pursuant
to,
and subject to the terms and conditions of, the Registration Rights Agreement
dated March 26, 2008, among the Company, Purchaser and the other stockholders
of
the Company named therein (the “Registration
Rights Agreement”).
Section
12. Loss,
Destruction of Warrant Certificates.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity and/or security satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of
Warrant Stock.
Section
13. Amendments.
The
terms
of this Warrant may be amended, and the observance of any term herein may be
waived, but only with the written consent of the Company and the
Warrantholder.
Section
14. Notices
Generally.
Any
notice, request, consent, other communication or delivery pursuant to the
provisions hereof shall be in writing and shall be sent by one of the following
means: (i) by registered or certified first class mail, postage prepaid, return
receipt requested; (ii) by facsimile transmission with confirmation of receipt;
(iii) by overnight courier service; or (iv) by personal delivery, and shall
be
properly addressed to the Warrantholder at the last known address or facsimile
number appearing on the books of the Company, or, except as herein otherwise
expressly provided, to the Company at its principal executive office at New
Generation Biofuels Holdings, Inc., 00000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000, (Fax: (000) 000-0000), Attention: Xxxxx X. Xxxxxxxxx, Chief
Executive Officer, or such other address or facsimile number as shall have
been
furnished to the party giving or making such notice, demand or
delivery.
Section
15. Successors
and Assigns.
This
Warrant shall bind and inure to the benefit of and be enforceable by the parties
hereto and their respective permitted successors and assigns.
Section
16. Governing
Law.
In
all
respects, including all matters of construction, validity and performance,
this
Warrant and the obligations arising hereunder shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida
applicable to contracts made and performed in such State.
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9 -
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed in its name by its duly authorized
officer as of the date first written above.
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10 -
SUBSCRIPTION
FORM
(to
be
executed only upon exercise of Warrant)
00000
Xxxx Xxxxxxx, Xxxxx 000
Houston,
Texas 77079
Attn:
Xxxxx X. Xxxxxxxxx, Chief Executive Officer
or
such
other address notified by the Company to the Holder.
(1)
The
undersigned hereby elects to purchase _______ shares of Warrant Stock of the
Company pursuant to the terms of the attached Warrant, and tenders herewith
payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Payment shall take the form of (check applicable box):
o in
lawful money of the
United States; or
o
the cancellation of such number of
shares of Warrant Stock as is necessary, in accordance with the formula set
forth in subsection 2(b), to exercise this Warrant with respect to the shares
of
Warrant Stock set forth above pursuant to the cashless exercise procedure set
forth in subsection 2(b).
(3)
Please issue a certificate or certificates representing said shares of Warrant
Stock in the name of the undersigned or in such other name as is specified
below:
The
shares of Warrant Stock shall be delivered to the following:
(4)
Accredited
Investor.
The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
SIGNATURE
OF HOLDER
Name
of
Investing Entity:
Signature of Authorized Signatory of Investing Entity:
Name of Authorized Signatory:
Title
of
Authorized Signatory:
|
Date:
|
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