Contract
Exhibit
4.2
THIS
NOTE IS NONNEGOTIABLE AND, AS SUCH, IS NON-TRANSFERABLE. IT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES LAWS OF THE UNITED STATES OF AMERICA OR ANY
STATE THEREOF. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND,
EVEN IF SUBSEQUENTLY AMENDED TO BE NEGOTIABLE, NO INTEREST IN THIS NOTE MAY
BE
OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF REGISTRATION AND QUALIFICATION OF THIS NOTE
UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OF THE
PAYEE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
FORM
OF
NON-NEGOTIABLE 12.5% PROMISSORY NOTE
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$_______________
($850
per Purchased Unit)
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Houston,
Texas
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(
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June
30, 2007
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FOR
VALUE
RECEIVED, the undersigned, Biofuels Power Corporation, a Texas corporation
(the
“Company”), having its executive office and principal place of business at
Waterway Plaza, 00000 Xxxxxxxx Xxxxxx Xx., Xxxxx 000, Xxx Xxxxxxxxx, Xxxxx
00000, promises to pay to the order of ______________________ (‘‘Payee’’)
at __________________________, (address), or such other address as the Payee
may
designate from time to time by notice in writing to the Company, an amount
equal
to ____________(the “Principal Sum”), which is the product obtained by
multiplying (a) the sum of Eight Hundred and Fifty Dollars and no cents
($850.00) by (b) the number of Units of Limited Partner Interest in Texoga
Biofuels 2006-1, Ltd., a Texas limited partnership, heretofore held by Payee
and
purchased by the Company from Payee effective of even date herewith (the
“Purchased Units”), in lawful money of the United States of America, or,
if accepted by Payee pursuant to a Payment Notice delivered by Company
hereunder, in shares of common stock of Company, all in accordance with the
terms and conditions hereinafter set forth:
A. Payment
Terms. The Principal Sum shall be due and payable, together with all accrued
but unpaid interest then outstanding under the Note, to the Payee at or before
the close of business on June 30, 2011 (the “Maturity Date”. The
Principal Sum shall bear interest as stated herein. The Payee must surrender
this Note to the Company to collect any payment due on the Maturity Date or
to
receive a final payment of amounts due under the Note.
B. Interest.
Interest on this Note shall be payable at the rate of twelve and one-half
percent (12.5%) per year on the unpaid principal amount hereof, compounded
quarterly and payable on the last day of each September, December, March and
June from the date of issuance until this Note is paid in full. In the event
of
default hereunder, interest shall accrue at the rate of the lesser of (a)
eighteen percent (18.0%) per annum or (b) the highest rate allowed by applicable
law until the default is cured or this Note is paid in full.
C.
Prepayments. All or any portion of the Principal Sum may be prepaid in
whole or in part at any time, provided the Company shall provide the Payee
with
a Payment Notice at least four (4) days prior to prepayment, and prepayments
shall be made at the rate of one hundred and ten percent (110%) of the principal
to be repaid. (i.e., the Company will repay $110 for each $100 of principal
made
the subject of a prepayment. Additional sums paid in connection with a
prepayment in excess of the principal being retired shall represent a prepayment
penalty.
D.
Security. This Note, and the Principal Sum, is unsecured.
E. Method
of Payment. At least four (4) days prior to the date of any proposed payment
or repayment of principal hereunder, the Company will deliver a written notice
(a “Notice of Payment”) to Payee. The Notice of Payment will (a) state
the Company’s intent to pay or prepay principal, (b) state the amount of any
accrued interest to be paid via the proposed payment, (c) set out any prepayment
penalty applicable to such proposed payment, and (d) set out the conversion
rate
at which the Company is prepared to issue shares of its common stock (“Common
Shares”) as a method of such payment. Upon receipt of the Notice of Payment,
Payee may in Xxxxx’s sole discretion elect
to
receive the proposed payment either in cash or in Common Shares. The Payee
shall
respond to the Notice of Payment in writing within two (2) business days of
Xxxxx’s receipt of such notice, and inform the Company of Payee’s election to
accept payment in cash or Common Shares (such response is referred to herein
as
the “Payee’s Response”). The Company will then cause the proposed payment to be
made to the Payee in Xxxxx’s chosen form of payment within two (2) business days
following Company’s receipt of Payee’s Response.
F.
Securities Law Issues. Notwithstanding the foregoing, in the event the
Company reasonably believes that it may not issue Common Shares to the Payee
without violating applicable state or federal securities laws, Company may
in
reliance upon such belief state the ground for such belief in a Notice of
Payment, and in such circumstances Company may pay any proposed payment solely
in cash.
G.
Nonnegotiable Note. This Note is nonnegotiable, and as such, is
non-transferable.
H. Events
of Default. If
any of the following conditions, events or acts shall occur:
1. The
dissolution of the Company or any successful vote in favor thereof by the
Board of Directors and shareholders of the Company; or
2. The
Company's insolvency, assignment for the benefit of creditors, application
for or appointment of a receiver, filing of a voluntary petition under any
provision of the Federal Bankruptcy Code or amendments thereto or any other
federal or state statute affording relief to debtors; or there shall be
commenced against the Company any such proceeding or filed against the
Company any such application or petition which proceeding, application or
petition is not dismissed or withdrawn within sixty (60) days of commencement
or
filing as the case may be; or
3. The
failure by the Company to make any payment of any amount of principal on,
or accrued interest under this Note, as and when the same shall become due
and payable and the continuance of such failure for a period of thirty (30)
days after written notice thereof is given to Company; or
4. The
sale by the Company of all or substantially all of its assets; or the
merger or consolidation by the Company with or into another corporation
which results in any change in the ownership of the shares of the resulting
entity when compared to that of the Company immediately prior to such merger
or
consolidation.
then,
in
any such event and at any time thereafter while such event is continuing,
the Payee shall have the right to declare an event of default hereunder
("Event of Default"), and the indebtedness
evidenced by this Note shall immediately upon such declaration become due
and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, notwithstanding anything contained herein to
the contrary.
I.
Suits
for Enforcement and
Remedies. If any one or more defaults shall occur and be continuing,
the Payee may proceed to protect and enforce Payee's rights either by suit
in equity or by action at law, or both, whether for the specific performance
of
any covenant, condition or agreement contained in this Note or in any
applicable agreement or document referred to herein or in aid of the
exercise of any power granted in this Note or in any agreement or document
referred to herein, or proceed to enforce the payment of this Note or to
enforce any other legal or equitable right of the holder of this Note.
No right or remedy herein or in any other agreement or instrument conferred
upon the holder of this Note is intended to be exclusive of any other right
or remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to every other right and remedy given hereunder or now
or hereafter existing at law or in equity or by statute or
otherwise.
J. Investment
Representations. In connection with Xxxxx’s election to
receive this Note as consideration for Xxxxx’s sale of the Purchased Units to
the Company, Payee represents to the Company as follows:
1. The
Payee has been provided with access to all information deemed to be
relevant by the Company in connection with Company’s acceptance of this Note as
consideration for the Company’s purchase of the Purchased Units and concerning
the Company and the proposed operations of the Company for the purpose of making
an informed investment decision as to the acceptance of the
Note.
2. The
Payee is an accredited investor as defined in Rule 501(a) of Regulation D
of the Securities Act of 1933 (the "Act").
3. The
Payee acknowledges that the offer and sale of the Note is being made
without the use of a Private Placement Memorandum. The Payee understands
and has evaluated the merits and risks of an investment in the Company and
the
acceptance of the Note. The Payee acknowledges that (i) the Note is a
speculative investment and involves a high degree of risk; (ii) no Federal
or
State agency has made any finding or determination as to the fairness of
such investment or any recommendation or endorsement of it; (iii) there is
not
and will not be in the foreseeable future a market for the sale of the Note
by the Payee, and (iv) the operations of the Company are dependent on the
Company's ability to generate substantial income or to secure
additional financing, and there can be no assurance that such income will
be generated and there are no existing arrangements with respect to
such financing being available and no assurance that it will
become available.
4. The
Payee is able to bear the economic risk of an investment in the Payee and
the ownership of the Note in that, among other factors, such Payee can
afford to hold Note for an indefinite period and can afford a complete loss
of the sums represented by the Note.
5. The
Payee is relying solely on the financial and tax advice of his own
advisor(s) with respect to an investment in the Payee and the purchase of the
Note.
6. The
Payee is acquiring the Note for his own account as principal and not with a
view to resale or distribution.
7. All
documents, records and books pertaining to the issuance of the Note or the
existing or projected operations of the Company have been made available
for inspection to the Payee, and the books and records of the Company will
be available upon reasonable notice, for inspection by Payee during
reasonable business hours at its principal place of business.
8. The
Payee has not authorized any broker, dealer, agent or finder to act on his
behalf, nor has any knowledge of any broker, dealer, agent or finder
purporting to act on his behalf, with respect to this
transaction.
K. Miscellaneous.
1.
No delay or failure on the part of the Payee of this Note to exercise any power
or right hereunder, shall operate as a waiver thereof, and no right or remedy
of
the Payee of this Note shall be deemed abridged or modified by any course of
conduct.
2.
This Note shall be governed by and construed in accordance with the laws of
the
State of Texas applicable to agreements made and to be performed in Texas
without giving effect to applicable conflicts of law principles.
3.
This Note cannot be changed or terminated orally, but only by a writing signed
by the Company and the Payee.
4.
By executing this Note the individual signing below represents and warrants
that
he has the power and authority to act for and bind the Company and that the
Company has duly authorized
the execution and delivery of this Note, and such individual agrees that the
Payee is entitled to rely upon such representation and
warranty.
5.
The Payee, without prejudice to any other rights, is authorized to proceed
against the Company to enforce its rights under this Note. The powers and
remedies of the Payee under this Note shall not be exclusive of any other
powers, rights or remedies available to the Payee.
6.
Any and all notices or other communications required or permitted under this
Note shall be in writing and shall be deemed given upon (a) personal delivery,
(b) upon the next business day if sent by overnight courier service, or (c)
upon
the third business day next following the mailing of such notice by certified
or
registered mail, return receipt requested, to the respective addresses of the
Company and the Payee or to such other address as the Company or the Payee
may
specify by written notice given as aforesaid.
7. Each
party hereto (a) agrees that any legal suit, action or proceeding arising
out of or relating to this Note will be instituted exclusively in the
courts of Xxxxxxxxxx County, Texas, or in the United States District Court
for
the Southern District of Texas, each and any of which shall apply Texas
law, (b) waives any objection which the party may have now or hereafter to
the venue of any such suit, action or proceeding, and (c) irrevocably
consents to the jurisdiction of the said Courts in any such suit, action or
proceeding. Each party further agrees to accept and
acknowledge service of any and an process which may be served in any such
suit, action or proceeding in the said Courts and agrees that service of
process upon such party mailed by certified mail to the party’s address
will be deemed in every respect effective service of process upon such
party , in any such suit, action or proceeding.
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COMPANY:
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BIOFUELS
POWER CORPORATION
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a
Texas corporation
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By:
/S/ Xxxxxx X. XxXxxxx
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Xxxxxx
X. XxXxxxx, President
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