EXHIBIT 4.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE SOLD,
OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS
REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY, IS OBTAINED STATING THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
August __, 2007 No. ____ __
BLUEFIRE ETHANOL FUELS, INC.
(Organized under the laws of the State of Nevada)
"A" WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
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FOR VALUE RECEIVED, BLUEFIRE ETHANOL FUELS, INC., a corporation
organized under the laws of the State of Nevada (the "Company"), hereby
certifies that __________________, its successors and assigns (the "Holder"), is
the owner of this "A" warrant (the "Warrant") which initially entitles the
Holder, subject to the provisions hereof, to purchase from the Company at any
time and from time to time on and after the date hereof (the "Original Issue
Date") until 5:00 p.m. California local time on the Expiration Date (as defined
in Section 3 herein), up to _________ duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock (as defined below) at the
Exercise Price (as defined in Section 2 herein) per share of Common Stock on the
terms and conditions hereinafter set forth. This warrant is issued in connection
with a senior secured convertible promissory note dated August __, 2007 executed
by the Company in favor of the Holder in an aggregate principal amount of
$__________ (the "Note").
The term "Common Stock" means the Common Stock, par value $0.001 per
share, of the Company as constituted on the Original Issue Date. The number of
shares of Common Stock to be received upon the exercise of this Warrant shall be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter referred to as "Warrant Shares." The term "Company" means and
includes the corporation named above as well as any successor corporation. The
term "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized by law to close.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held subject to, all of the conditions,
limitations and provisions set forth herein.
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1. NUMBER OF WARRANT SHARES. This Warrant Entitles the Holder to
purchase up to _________ duly authorized, validly issued, fully paid and
nonassessable shares of the Company's Common Stock, as such amount may be
adjusted under Section 10 hereof.
2. EXERCISE PRICE. The Exercise Price shall be $________ per share
subject to adjustment pursuant to Section 10 hereof (originally and as adjusted,
the "Exercise Price").
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part, at any time, or from time to time during the period commencing on the
Original Issue Date and expiring on August 21, 2010, or if such date is not a
Business Day, then on the next succeeding day which shall be a Business Day (the
"Expiration Date").
4. NOTICE OF EXERCISE. (a) The purchase rights represented by this
Warrant may be exercised by presentation and surrender of this Warrant to the
Company at its principal office, at the office of its stock transfer agent or at
any other warrant agent designated by the Company (the "Warrant Agent") if any,
with the Warrant Exercise Form, a form of which is attached hereto as EXHIBIT A,
duly executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form and instruments of transfer, if
appropriate, duly executed by the Holder or its duly authorized attorney.
(b) Notwithstanding any provisions herein to the contrary, if
(i) the fair market value of one share of the Company's Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below) and (ii)
any portion of the Warrant Shares issuable upon exercise of this Warrant are not
covered by an effective registration statement under the Securities Act, then in
lieu of exercising this Warrant by payment of cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the principal
office of the Company or the Warrant Agent together with an executed Cashless
Exercise Form in the Form attached hereto as EXHIBIT B in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
X = Y (A-B)
--------
A
Where X = the number of shares of Common Stock to be
issued to the Holder
Y = the number of shares of Common
Stock issuable under the Warrant or,
if only a portion of the Warrant
Certificate is being exercised, the
portion of the Warrant Certificate
being exercised (at the date of such
calculation)
A = the fair market value of one share
of the Company's Common Stock (at
the date of such calculation)
B = Exercise Price (as adjusted to the
date of such calculation)
For purposes of the above calculation, the fair market value of one
share of Common Stock shall be determined by taking the average of the closing
prices of the sales of any shares of Common Stock on all securities exchanges on
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which the Common Stock is listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day the Common Stock is
not so listed, the average of the representative bid and asked prices quoted in
the OTC Bulletin Board as of 4:00 p.m., New York time, or, if on any day any
Common Stock is not quoted on the OTC Bulletin Board, the average of the highest
bid and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the fair market value is being determined and
the 20 consecutive Business Days prior to such day. If at any time the Common
Stock is not listed on any securities exchange or quoted in the OTC Bulletin
Board or the over-the-counter market, the fair market value of one share of
Common Stock shall be the amount determined in good faith by the Company's Board
of Directors.
(c) Payment of the aggregate Exercise Price shall be made at
the Holder's election (i) by wire transfer in cash or by certified check or
cashier's check, payable to the order of the Company in accordance with the
provisions of Section 4(a), (ii) by "cashless exercise" in accordance with the
provisions of Section 4(b), or (iii) by a combination of the foregoing methods
of exercise selected by the Holder. If this Warrant should be exercised in part
only, the Company shall, within five (5) Business Days of the surrender of this
Warrant, execute and deliver a new warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares issuable hereunder.
(d) Upon receipt by the Company of this Warrant, together with
the Warrant Exercise Form and/or the Cashless Exercise Form, as the case may be,
and the Exercise Price at its office, or by the Warrant Agent at its office, in
each case in the proper form for exercise, the Holder shall immediately be
deemed to be the Holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares of Common Stock on exercise of this
Warrant, but in no event shall the Company be responsible or liable for income
taxes or transfer taxes upon the issuance or transfer of the Warrant or the
Warrant Shares.
(e) Notwithstanding anything to the contrary contained in this
Warrant, this Warrant shall not be exercisable by the Holder hereof to the
extent (but only to the extent) that, if exercisable by the Holder, the Holder
or any of its Affiliates would beneficially own in excess of 4.99% (the "Maximum
Percentage") of the outstanding Common Shares. To the extent the above
limitation applies, the determination of whether this Warrant shall be
exercisable (vis-a-vis other convertible, exercisable or exchangeable securities
owned by the Holder) and of which warrants shall be exercisable (as among all
warrants owned by the Holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to the Company
for conversion, exercise or exchange (as the case may be). No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this paragraph, beneficial
ownership and all determinations and calculations (including, without
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limitation, with respect to calculations of percentage ownership) shall be
determined by the Holder in accordance with Section 13(d) of the Securities
Exchange Act of 1934 Act (the "Exchange Act") and the rules and regulations
promulgated thereunder. The provisions of this paragraph shall be implemented in
a manner otherwise than in strict conformity with the terms of this paragraph to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Maximum Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such Maximum Percentage limitation. The
limitations contained in this paragraph shall apply to a successor Holder of
this Warrant. For purposes of this Warrant, in determining the number of
outstanding Common Shares, the Holder may rely on the number of outstanding
Common Shares as reflected in (1) the Company's most recent Form 10-KSB, Form
10-QSB, Current Report on Form 8-K or other public filing with the SEC (as the
case may be), (2) a more recent public announcement by the Company or (3) any
other notice by the Company setting forth the number of Common Shares
outstanding. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one (1) Business Day confirm orally and in
writing to the Holder the number of Common Shares then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Shares, including, without limitation, pursuant to this
Warrant or securities issued pursuant to the Note. By written notice to the
Company, the Holder may increase or decrease the Maximum Percentage to any other
percentage specified in such notice, provided that (i) any such increase will
not be effective until the sixty-first (61st) day after such notice is delivered
to the Company, and (ii) any such increase or decrease will apply only to the
Holder and not to any other holder of Warrants.
5. COMPANY'S FAILURE TO TIMELY DELIVER SECURITIES. The Company
shall promptly (but in no event later than three Business Days after the Date of
Exercise (as defined below)) issue and deliver to the Holder, a certificate for
the Warrant Shares issuable upon such exercise, which, unless otherwise required
by applicable law, shall be free of restrictive legends. The Company shall, upon
request of the Holder and subsequent to the date on which a registration
statement covering the resale of the Warrant Shares has been declared effective
by the Commission, use its reasonable best efforts to deliver Warrant Shares
following the Date of Exercise electronically through the Depository Trust
Corporation (the "DTC") or another established clearing corporation performing
similar functions, if available, PROVIDED, that, the Company may, but will not
be required to change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the DTC. If the Company shall
fail, for any reason or for no reason, to issue to the Holder within three (3)
Business Days of receipt of the Warrant Exercise Form or the Cashless Exercise
Form, a certificate for the number of Common Shares to which the Holder is
entitled and register such Common Shares on the Company's share register or to
credit the Holder's balance account with DTC for such number of Common Shares to
which the Holder is entitled upon the Holder's exercise of this Warrant (as the
case may be), then, in addition to all other remedies available to the Holder,
the Company shall pay in cash or Common Stock, at the option the Company, to the
Holder on each day after such third (3rd) Business Day that the issuance of such
Common Shares is not timely effected an amount equal to 1.5% of the product of
(A) the sum of the number of Common Shares not issued to the Holder on a timely
basis and to which the Holder is entitled and (B) the volume weighted average
closing price of the Common Shares for the five (5) Business Day period
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immediately preceding the last possible date which the Company could have timely
issued such Common Shares to the Holder. A "Date of Exercise" means the date on
which the Holder shall have delivered to the Corporation: (i) the Warrant
Exercise Form or the Cashless Exercise Form, appropriately completed and duly
signed and (ii) if such Holder is not utilizing the cashless exercise provisions
set forth in this Warrant, payment of the Exercise Price for the number of
Warrant Shares so indicated by the Holder to be purchased.
If by the third Business Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to this Section, then the Holder will have the right to
rescind such exercise.
If by the third Business Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to this Section, and if after such third Business Day and
prior to the receipt of such Warrant Shares, the Holder or the Holder's broker
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company
shall (1) pay in cash or stock to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue by (B) the
closing bid price of the Common Stock on the Date of Exercise and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations
hereunder. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
The Company's obligations to issue and deliver Warrant Shares
in accordance with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any judgment
against any person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder's right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver the required Warrant Shares
in the manner required pursuant to this Section upon exercise of the Warrant as
required pursuant to the terms hereof.
6. RESERVATION OF SHARES. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and other securities) from time
to time receivable upon exercise of this Warrant. All such shares (and other
securities) shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and non-assessable and free of all encumbrances.
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7. FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of the Warrant, but the
Company shall pay within ten (10) Business Days the Holder in cash an amount
equal to the fair market value of such fractional share of Common Stock in lieu
of each fraction of a share otherwise called for upon any exercise of the
Warrant, as determined in good faith by the Board of Directors of the Company.
8. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its Warrant Agent, if
any, for other warrants of different denominations, entitling the Holder to
purchase in the aggregate the same number of shares of Common Stock issusable
hereunder. Upon surrender of this Warrant to the Company or at the office of its
Warrant Agent, if any, with an appropriate form of assignment duly executed and
funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other warrants that carry the same
rights (including registration rights) upon presentation hereof at the office of
the Company or at the office of its Warrant Agent, if any, together with a
written notice specifying the names and denominations in which new warrants are
to be issued and signed by the Holder hereof.
9. RIGHTS OF THE HOLDER. Prior to exercise of the Warrant, the Holder,
in its capacity hereunder, shall not, by virtue hereof, be entitled to any
rights as a shareholder of the Company, either at law or in equity, and the
rights of the Holder, in its capacity hereunder, are limited to those expressed
in this Warrant.
10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
The number of Warrant Shares issuable upon the exercise of this Warrant
Certificate and the Exercise Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
10.1 MERGER. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the Holder shall thereafter be entitled
to receive upon exercise of rights herein granted, during the period specified
herein and upon payment of the aggregate Exercise Price, if any, the number of
shares of stock or other securities or property of the successor corporation
resulting from such merger or consolidation, to which a holder of the stock
deliverable upon exercise of the rights granted in this Warrant would have been
entitled in such merger or consolidation if such rights had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the merger or
consolidation. The Company will not effect any such merger or consolidation
unless, prior to the consummation thereof, the successor corporation shall
assume, by written instrument reasonably satisfactory in form and substance to
the Holder, the obligations of the Company under this Warrant.
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10.2 RECLASSIFICATION, ETC. If the Company at any time shall,
by combination or reclassification of securities or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such combination, reclassification or other change.
10.3 STOCK DIVIDENDS, SPLITS, SUBDIVISIONS OR COMBINATION OF
SHARES. If the Company at any time shall pay a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, split or subdivide its Common Stock, the
Exercise Price shall be proportionately decreased and the number of Warrant
Shares issuable pursuant to this Warrant shall be proportionately increased. If
the Company at any time shall combine or reverse split its Common Stock, the
Exercise Price shall be proportionately increased and the number of Warrant
Shares issuable pursuant to this Warrant shall be proportionately decreased.
10.4 ANTI-DILUTION PROTECTION. This Warrant is subject to
"full-ratchet" anti-dilution protection in relation to the issuance by the
Company of any additional shares of stock, options, warrants or any securities
exchangeable into any of the foregoing, excluding any Common Stock issued as
compensation or options issued in connection with an employee incentive plan
that has been approved by the Board (the "ADDITIONAL SHARES"). If the Company
issues any Additional Shares in exchange for consideration in an amount per
Additional Share less than the Exercise Price in effect immediately prior to
such issuance or sale of such Additional Share, then the Exercise Price shall be
adjusted to equal the consideration paid per Additional Share.
10.5 OTHER CHANGES. If any other event occurs as to which the
other provisions of this Section 10 are not strictly applicable or if strictly
applicable, would not fairly protect the rights of the Holder in accordance with
such provisions, then the Company shall make an adjustment in the number of and
class of shares available under this Warrant, the Exercise Price or the
application of such provisions, so as to protect such rights as aforesaid. The
adjustment shall be such as will give the Holder upon exercise for the same
aggregate Exercise Price the total number, class and kind of shares as the
Holder would have owned had this Warrant been exercised prior to the event and
had the Holder continued to hold such shares until after the event requiring
adjustment.
10.6 NOTICE OF ADJUSTMENTS; NOTICES. Whenever the Exercise
Price or number of shares hereunder shall be adjusted, the Company shall issue a
certificate signed by its President, Chief Executive Officer or Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares hereunder after giving effect to
such adjustment, and shall cause a copy of such certificate to be mailed (by
first class mail, postage prepaid) to the Holder. The Company shall give written
notice to the Holder at least 20 days prior to the date on which the Company
closes its books or takes a record for determining rights to receive any
dividends or distributions.
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10.7 NOTICES OF CORPORATE EVENTS. If the Company (i) shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation granting
any rights or warrants to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities, or to receive any other
right; (ii) authorizes or approves any (a) capital reorganization of the
Company, (b) any reclassification of the capital stock of the Company, (c) any
consolidation or merger of the Company with or into another corporation, (d) any
sale of all or substantially all of its assets in one or a series of related
transactions or (e) any tender offer or exchange offer pursuant to which holders
of the Common Stock are permitted to tender or exchange their shares for other
securities, cash or property or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the Company, then the Company shall mail or cause
to be mailed to each Holder a notice describing the material terms and
conditions of such transaction at least 20 calendar days prior to the applicable
record or effective date on which a person would need to hold Common Stock in
order to participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure that the
Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; PROVIDED,
HOWEVER, that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice.
11. TRANSFER TO COMPLY WITH THE SECURITIES ACT. The Warrant and any
Warrant Shares may not be sold, transferred, pledged, hypothecated or otherwise
disposed of unless registered under the Securities Act or pursuant to an
available exemption from such registration, provided that the transferor
delivers to the Company an opinion of counsel reasonably satisfactory to the
Company confirming the availability of such exemption.
12. REQUIRED RIGHTS; LIQUIDATED DAMAGES.
(a) The Company shall prepare, and, as soon as practicable but
in no event later than one hundred twenty (120) calendar days from the date
hereof (the "Filing Deadline"), file with the Securities and Exchange Commission
(the "Commission") a Registration Statement or Registration Statements (the
"Registration Statement(s)") (as is necessary from time to time) on Form SB-2
(or, if such form is unavailable for such a registration, on such other form as
is available for such a registration), covering the resale of all of the Initial
Registrable Securities, which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the Securities Act, such Registration
Statement(s) also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon stock splits, stock dividends or
similar transactions.
(b) If the Company shall not have filed a Registration
Statement with respect to the Initial Registrable Securities by the Filing
Deadline then the Company shall pay as liquidated damages and not as a penalty
to the Noteholder, at the Company's option (i) a cash payment equal to three
percent (3%) of the Face Amount or (ii) additional shares of Common Stock (the
"Filing Liquidated Damages Shares") equal to three percent (3%) of the Face
Amount divided by the Market Price for such Common Stock.
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(c) The Company shall use its best efforts to have the
Registration Statement(s) declared effective by the SEC within ninety (90)
calendar days after the filing thereof.
(d) If the Registration Statement shall not have been declared
effective by the Commission within ninety (90) calendar days after the Filing
Deadline (the "Effective Deadline"), then the Company shall pay as liquidated
damages and not as a penalty to the Noteholder, at the Company's option (i) a
cash payment equal to two percent (2%) of the Face Amount or (ii) additional
shares of Common Stock (the "Effectiveness Liquidated Damages Shares") in an
amount equal to two percent (2%) of the Face Amount for each month after the
Effective Deadline that the Registration Statement has not been declared
effective by the Commission (which amount shall be prorated on a daily basis for
any period of less than one month). Notwithstanding the foregoing, if all of the
Initial Registrable Securities to be included in a Registration Statement filed
hereunder cannot be so included due to Commission Comments then the liquidated
damages set forth in this paragraph (d) shall not be applicable to the amount
not permitted to be included in such Registration Statement.
(e) If the Company does not consummate a Qualified Financing
within 120 days after the Closing Date than the Company shall pay to the
Noteholder at the Company's option (i) a cash payment to the Noteholder in an
amount equal to one percent (1%) of the Face Amount or (ii) additional shares of
Common Stock (the "Second Round Damages Shares") equal to one percent (1%) of
the Face Amount divided by the Market Price for such Common Stock per month
until a Qualified Financing has been consummated (which amount shall be prorated
on a daily basis for any period of less than one month).
(f) If all of the Registrable Securities to be included in a
Registration Statement filed hereunder cannot be so included due to Commission
Comments, then the Company shall prepare and file as soon as practicable but in
no event later than thirty (30) calendar days from the date Commission Comments
are received by the Company (the "Subsequent Filing Deadline") for such
Registration Statement(s) as may be necessary in order to ensure all Registrable
Securities are covered by an existing and effective Registration Statement. Any
Registration Statements to be filed under this Section 6 shall be for an
offering to be made on Form SB-2 (or on such other form appropriate for such
purpose). The Company shall cause such Registration Statement to be declared
effective under the Securities Act as soon as possible but in no event later
than ninety (90) calendar days from the Subsequent Filing Deadline (the
"Subsequent Effective Deadline"), and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act during
the entire Effectiveness Period.
(g) If (i) the Company shall not have filed a Registration
Statement with respect to any Registrable Securities by the Subsequent Filing
Deadline or (ii) the Registration Statement shall not have been declared
effective by the Commission by the Subsequent Effective Deadline as set forth in
paragraph (f) above, then the Company shall pay liquidated damages in the
amounts as set forth in paragraphs (b) and (d) respectively related to such
registration and effectiveness of any Registration Statement under paragraph
(f).
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(h) Notwithstanding anything to the contrary contained in this
Section 6, the maximum aggregate amount of all Liquidated Damages payable by the
Company to the Noteholder shall not exceed fifteen percent (15%) of the Face
Amount. In addition the parties agree that the Company will not be liable for
any Liquidated Damages hereunder in respect of the Warrants.
(i) If at any time after the Filing Deadline there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the Commission a
Registration Statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(excluding a statement filed on form S-8), then the Company shall send to the
Noteholder written notice of such determination and, if within fifteen days
after receipt of such notice, Noteholder shall so request in writing, the
Company shall include in the Registration Statement all or any part of such
Registrable Securities Noteholder requests to be registered; provided, that, the
Company shall not be required to register any Registrable Securities pursuant to
this paragraph (i) that are eligible for resale pursuant to Rule 144(k)
promulgated under the Securities Act or that are the subject of a then effective
Registration Statement.
(j) DEFINITIONS.
"Commission Comments" means written comments which are received by the Company
from the Commission, and a copy of which shall have been provided by the Company
to the Noteholder, to a filed Registration Statement which limit the amount of
shares of Common Stock which may be included therein to a number of shares which
is less than such amount sought to be included thereon as filed with the
Commission.
"Effectiveness Period" means, as to any Registration Statement required to be
filed pursuant to this Note, the period commencing on the Effective Date or
Subsequent Effective Date, as the case may be, of such Registration Statement
and ending on the earliest to occur of (a) the second anniversary of such
Effective Date or Subsequent Effective Date, (b) such time as all of the
Registrable Securities covered by such Registration Statement have been publicly
sold by the Noteholders of the Registrable Securities included therein, or (iii)
such time as all of the Registrable Securities covered by such Registration
Statement may be sold by the Noteholders pursuant to Rule 144(k) as determined
by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company's transfer agent and the
affected Noteholders.
"Face Amount" means the face amount of this Note on the Closing Date.
"Initial Registrable Securities" means the Conversion Shares and the Warrant
Shares.
"Other Registrable Securities" means the Interest Shares, the Filing Liquidated
Damages Shares, Effectiveness Liquidated Damages Shares and the Second Round
Damages Shares.
"Registrable Securities" means collectively the Initial Registrable Securities
and the Other Registrable Securities.
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"Liquidated Damages" means all amounts of cash and Common Stock paid to the
Noteholder as liquidated damages under sections (b), (d), (f) and (h) hereof.
13. INDEMNIFICATION.
(a) The Company will indemnify the Holder, each of its
officers, directors, partners, members, managers, legal counsel, and accountants
and each person controlling the Holder within the meaning of Section 15 of the
Securities Act, and each underwriter, if any, and each person who controls
within the meaning of Section 15 of the Securities Act any underwriter, against
all expenses, claims, losses, damages, and liabilities (or actions, proceedings,
or settlements in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular, or other document (including any related
registration statement, notification, or the like), incident to any such
registration, qualification, or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification, or compliance, and will
reimburse the Holder, each of its officers, directors, partners, members,
managers, legal counsel, and accountants and each person controlling the Holder,
each such underwriter, and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability, or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by the Holder and stated to be specifically for use
therein. It is agreed that the indemnity agreement contained in this Section
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld).
(b) The Holder will, if Warrant Shares held by it are included
in the securities as to which such registration, qualification, or compliance is
being effected, indemnify the Company, each of its directors, officers,
partners, legal counsel, and accountants and each of its directors, officers,
partners, legal counsel, and accountants and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, each of its directors, officers, partners, legal counsel, and
accountants, persons, underwriters, or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action, in each case to the extent,
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but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by the Holder and
stated to be specifically for use therein provided, however, that the
obligations of the Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld), and provided that in
no event shall any indemnity under this Section exceed the net proceeds from the
offering received by the Holder.
14. LEGEND. Unless the Warrant Shares have been registered under the
Securities Act, upon exercise of the Warrant and the issuance of any of the
Warrant Shares, all certificates representing such securities shall bear on the
face thereof substantially the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless registered
pursuant to the provisions of the Act or unless an opinion of
counsel reasonably acceptable to the Company is obtained
stating that such disposition is in compliance with an
available exemption from such registration."
15. WARRANT AGENT. The Company shall initially serve as Warrant Agent
under this Warrant. Upon 10 days' prior written notice to the Holder, the
Company may appoint a new Warrant Agent. Any corporation into which the Company
or any new Warrant Agent may be merged or any corporation resulting from any
consolidation to which the Company or any new Warrant Agent shall be a party or
any corporation to which the Company or any new Warrant Agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor Warrant Agent under this Warrant without any further act. Any
such successor Warrant Agent shall promptly cause notice of its succession as
Warrant Agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Company's books.
16. NOTICES. All notices required hereunder shall be in writing and
shall be deemed given when sent by facsimile, delivered personally or within two
days after mailing when mailed by certified or registered mail, return receipt
requested, to the Company at its principal office, or to the Holder at the
address set forth on the record books of the Company, or at such other address
of which the Company or the Holder has been advised by notice hereunder.
17. GENERAL PROVISIONS.
(a) SUCCESSORS AND ASSIGNORS. All the covenants and provisions
of this Warrant shall bind and inure to the benefit of the respective executors,
administrators, successors and assigns of the Holder and the Company.
(b) AMENDMENT. This Warrant may only be modified or amended by
a writing signed by the Company and the Holder.
(c) APPLICABLE LAW. THE WARRANT IS ISSUED UNDER AND SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, PERFORMANCE,
AND ENFORCEMENT WITHOUT GIVING EFFECT TO THE CHOICE OF LAW RULES THEREOF.
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(d) ENTIRE AGREEMENT. Except as provided herein, this Warrant,
including exhibits, contains the entire agreement of the parties, and supersedes
all existing negotiations, representations or agreements and other oral,
written, or other communications between them concerning the subject matter of
this Warrant.
(e) SEVERABILITY. If any provision of this Warrant is
unenforceable, invalid, or violates applicable law, such provision shall be
deemed stricken and shall not affect the enforceability of any other provisions
of this Warrant.
(f) CAPTIONS. The captions in this Warrant are inserted only
as a matter of convenience and for reference and shall not be deemed to define,
limit, enlarge, or describe the scope of this Warrant or the relationship of the
parties, and shall not affect this Warrant or the construction of any provisions
herein.
(g) LOST WARRANT. The Company covenants to the Holder that
upon receipt by the Company of documentation reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new warrant certificate of like tenor and date in lieu of
this Warrant. Any such new warrant certificate executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
(h) FURTHER ASSURANCES. The Company shall not, by amendment of
its articles of incorporation (or other organizational documents) 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
hereunder by the Company, but shall 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 be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental authority or
any other person, and otherwise fulfilling, or causing the fulfillment of, the
various obligations made herein, as may be reasonably required or desirable to
carry out or to perform the provisions of this Warrant and to consummate and
make effective as promptly as possible the transactions contemplated by this
Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
BLUEFIRE ETHANOL FUELSINC., a corporation
organized under the laws of the State of the
Nevada
By: ________________________________________
Name:
Title
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EXHIBIT A
---------
WARRANT EXERCISE FORM
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To BlueFire Ethanol Fuels, Inc.:
In accordance with the Warrant enclosed with this Warrant Exercise
Form, the undersigned hereby irrevocably elects to purchase________ shares of
Common Stock, $0.001 par value per share ("Common Stock"), of BlueFire Ethanol
Fuels Inc. and, encloses herewith $__________ in cash, certified or official
bank check or checks or wire transfer, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Warrant Exercise Form relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of:
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
______________________________________
________________________________________________________________________________
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock that the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a new warrant evidencing the right to purchase the shares of Common Stock
not issuable pursuant to the exercise evidenced hereby be issued in the name of
and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________________ __________________________________________
(Print name of holder)
By:_______________________________________
Name:_____________________________________
Title:____________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
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EXHIBIT B
---------
CASHLESS EXERCISE FORM
The undersigned hereby elects, pursuant to the exercise provisions of
Section 4(b) of the Warrant, to exchange the Warrant for such number of Warrant
Shares as set forth on the calculation attached hereto.
Please issue a certificate or certificates for such Warrant Shares in
the name of:
Name: ________________________________________________
(Please Print Name, Address and SSN or EIN of
Shareholder above)
Address: ________________________________________________
________________________________________________
________________________________________________
SSN or EIN: ___________________________
Signature: ______________________________________
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