AMERICAN ETHANOL, INC. WARRANT TO PURCHASE COMMON STOCK
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
OR EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
LAWS
OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
AMERICAN
ETHANOL, INC.
WARRANT
TO PURCHASE COMMON STOCK
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Warrant
Holder:
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or
its assigns
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Warrant
Shares:
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Shares
of the Company’s Common Stock
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Number
of Shares:
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subject
to adjustment as provided herein
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Warrant
Exercise Price:
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per
share of Common Stock, subject to adjustment as provided
herein
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Issue
Date:
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Expiration
Date:
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THIS
WARRANT CERTIFIES THAT, for value received, the receipt and adequacy of which
is
hereby acknowledged, ______________ or its assignees (the “Holder”), is entitled
to subscribe for and purchase, subject to the provisions and upon the terms
and
conditions hereinafter set forth, the number of fully paid and nonassessable
shares of Common Stock, $.001 par value (subject to adjustments from time to
time as specified in Section 4 hereof, the “Warrant Stock”) of American Ethanol,
Inc., a Nevada corporation (the “Company”), at the initial exercise price per
share of Warrant Stock (subject to adjustments from time to time, as specified
in Section 4 hereof) (the “Warrant Exercise Price”) all as set forth above.
1. Term
and Expiration.
The
purchase right represented by this Warrant is exercisable, in whole or in part,
at any time and from time to time from the Issue Date through the Expiration
Date.
2. Method
of Exercise; Cash Payment; Issuance of New Warrant.
Subject
to Section 1, the purchase right represented by this Warrant may be exercised
by
the Holder hereof, in whole or in part and from time to time, at the election
of
the Holder hereof, by:
(a) the
surrender of this Warrant (with the notice of exercise substantially in the
form
attached hereto as Exhibit A
(the
“Notice of Exercise”) duly completed and executed) at the principal executive
offices of the Company and accompanied by payment to the Company, by (i)
certified or bank check acceptable to the Company, or (ii) by wire transfer
to
an account designated by the Company, or any combination of (i) and (ii), of
an
amount equal to the then applicable Warrant Exercise Price multiplied by the
number of shares of Warrant Stock then being purchased,
(b) or
exercise of the right provided for in Section 10 hereof, together with the
surrender of this Warrant (with the Notice of Exercise duly completed and
executed) at the principal executive offices of the Company.
(c) The
Warrant Stock so purchased shall be deemed to be issued to the Holder as of
the
close of business on the date on which this Warrant shall have been surrendered
(or evidence of loss, theft or destruction thereof and security or indemnity
satisfactory to the Company), the Warrant Exercise Price shall have been paid
and the completed Notice of Exercise shall have been delivered. At such time
the
person or persons in whose name or names any certificate for Warrant Stock
shall
be issuable upon such exercise shall be deemed to have become the Holder or
holders or record thereof. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Warrant Stock so
purchased shall be delivered to the Holder hereof (or, subject to Section 8(e),
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct) as soon as possible and in any event within ten (10) business days
after such exercise and, unless this Warrant has been fully exercised or
expired, a new warrant having the same terms as this Warrant and representing
the remaining portion of such shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the Holder hereof
(or, subject to Section 8(e), as such Holder (upon payment by such Holder of
any
applicable transfer taxes) may direct) as soon as possible and in any event
within such 10-day period.
(d) The
issuance of certificates for shares of Warrant Stock upon exercise of this
Warrant shall be made without charge to the Holder with respect to any issuance
tax or other cost incurred by the Company in connection with such exercise
and
the related issuance of shares of Warrant Stock. Each share of Warrant Stock
issuable upon exercise of this Warrant shall, upon payment of the Warrant
Exercise Price therefor, be duly authorized, validly issued, fully paid and
nonassessable and free from all liens and charges with respect to the issuance
thereof.
(e) The
Company shall not close its books against the transfer of this Warrant or of
any
share of Warrant Stock issued or issuable upon the exercise of this Warrant
in
any manner which interferes with the timely exercise of this Warrant.
(f) The
Company shall take all such actions as may be reasonably necessary to insure
that all such shares of Warrant Stock may be so issued without violation of
any
applicable law or governmental regulation.
3. Reservation
of Shares.
During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose
of
the issuance upon exercise of the purchase rights evidenced by this Warrant
a
sufficient number of shares of its capital stock to provide for the exercise
of
the rights represented by this Warrant. If the shares of Warrant Stock issuable
by reason of exercise of this Warrant are convertible into or exchangeable
for
any other stock or securities of the Company, the Company shall, at the Holder's
option and upon surrender of this Warrant by such holder as provided above,
together with any notice, statement or payment required to effect such
conversion or exchange of Warrant Stock, deliver to such holder (or such other
Person specified by such holder) a certificate or certificates representing
the
stock or securities into which the shares of Warrant Stock issuable by reason
of
such conversion are convertible or exchangeable, registered in such name or
names and in such denomination or denominations as such holder has
specified.
2
4. Adjustment
of Warrant Exercise Price and Warrant Stock.
The
number and kind of securities purchasable upon the exercise of this Warrant
and
the Warrant Exercise Price shall be subject to adjustment to the nearest whole
share (one-half and greater being rounded upward) and nearest cent (one-half
cent and greater being rounded upward) from time to time upon the occurrence
of
certain events, as follows. Each of the adjustments provided by the
subsections below shall be deemed separate adjustments and any adjustment
of this Warrant pursuant to one subsection of this Section 4 shall
preclude additional adjustments for the same event or transaction by the
remaining subsections.
(a) Reorganization,
Consolidation, Merger, etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof, at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Warrant Stock
issuable on such exercise prior to such consummation or such effective date,
the
stock and other securities and property (including cash) to which such Holder
would have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in this Section 4.
(b) Reclassification.
In case
of any reclassification or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to
no par value, or from no par value to par value, or as a result of a subdivision
or combination) into the same or a different number or class of securities,
the
Company shall duly execute and deliver to the holder of this Warrant a new
warrant (in form and substance reasonably satisfactory to the Holder of this
Warrant), so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, at a total purchase price not to exceed
that payable upon the exercise of the unexercised portion of this Warrant,
and
in lieu of the shares of Warrant Stock theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification or change by a holder of
the
number of shares then purchasable under this Warrant. The Company or the
surviving entity shall deliver such new warrant as soon as possible and in
any
event within ten (10) business days after such reclassification or change.
Such
new warrant shall provide for adjustments that shall be as nearly equivalent
as
may be practicable to the adjustments provided for in this Section 4. The
provisions of this subparagraph (a) shall similarly apply to successive
reclassifications or changes.
(c) Stock
Splits or Combination of Shares.
If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide (by stock split) or combine (by reverse stock split) its outstanding
shares of capital stock into which this Warrant is then exercisable, the Warrant
Exercise Price shall be proportionately adjusted in the case of a subdivision
or
a combination, effective at the close of business on the date the subdivision
or
combination becomes effective and the number of shares of Warrant Stock issuable
upon exercise of this Warrant shall be proportionately adjusted in the case
of a
subdivision or a combination, and in each case to the nearest whole share,
effective at the close of business on the date the subdivision or combination
becomes effective. The provisions of this subparagraph (b) shall similarly
apply
to successive subdivisions or combinations of outstanding shares of capital
stock into which this Warrant is exercisable.
3
(d) Stock
Dividends and Other Distributions.
If the
Company at any time while this Warrant is outstanding and unexpired shall (i)
pay a dividend with respect to Warrant Stock payable in Warrant Stock, then
(A)
the Warrant Exercise Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution
(the “Record Date”), to that price determined by multiplying the Warrant
Exercise Price in effect immediately prior to such date of determination by
a
fraction (1) the numerator of which shall be the total number of shares of
Warrant Stock outstanding immediately prior to such dividend or distribution,
and (2) the denominator of which shall be the total number of shares of Warrant
Stock outstanding immediately after such dividend or distribution and (B) the
number of shares of Warrant Stock issuable upon exercise of this Warrant shall
be proportionately adjusted, to the nearest whole share, from and after the
Record Date by multiplying the number of shares of Warrant Stock purchasable
hereunder immediately prior to such Record Date by a fraction (1) the numerator
of which shall be the total number of shares of Warrant Stock outstanding
immediately after such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Warrant Stock outstanding
immediately prior to such dividend or distribution; or (ii) make any other
dividend or distribution with respect to Warrant Stock (except any distribution
specifically provided for in Sections 4(a) and 4(b) above), then, in each such
case, provision shall to this Warrant be made by the Company such that the
Holder of this Warrant shall receive upon exercise of this Warrant (in addition
to the number of shares of stock receivable upon exercise of this Warrant)
a
proportionate share of any such dividend or distribution (without payment of
any
additional consideration therefor) as though it were the holder of all share
of
Warrant Stock remaining issuable upon exercise of this Warrant as of the Record
Date fixed for the determination of the stockholders of the Company entitled
to
receive such dividend or distribution. The provisions of this subparagraph
(c)
shall similarly apply to successive stock dividends and other distributions
by
the Company. If the Company shall take a record of the holders of its Warrant
Stock for the purpose of entitling them to receive a dividend or other
distribution (which results in an adjustment to the shares of Warrant Stock
under the terms of this Warrant) and shall, thereafter, and before such dividend
or distribution is paid or delivered to shareholders entitled thereto, legally
abandon its plan to pay or deliver such dividend or distribution, then any
adjustment made to the shares of Warrant Stock by reason of the taking of such
record shall be reversed, and any subsequent adjustments, based thereon, shall
be recomputed.
(e) Sale
of Property, Liquidation, Etc.
If the
Company at any time while this Warrant remains outstanding and unexpired shall
sell all or substantially all of its property or dissolve, liquidate, or wind
up
its affairs, lawful provision shall be made as part of the terms of any such
sale, dissolution, liquidation or winding up, so that the holder of this Warrant
may thereafter receive upon exercise hereof in lieu of each Warrant Share that
it would have been entitled to receive, the same kind and amount of any
securities or assets as may be issuable, distributable or payable upon any
such
sale, dissolution, liquidation or winding up with respect to each share of
Common Stock of the Company.
(f) Number
of Warrant Shares.
Simultaneously with any adjustment to the Warrant Price pursuant to this Section
4, the number of Warrant Shares that may be purchased upon exercise of this
Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Warrant Price payable hereunder for the adjusted number
of Warrant Shares shall be the same as the aggregate Warrant Price in effect
immediately prior to such adjustment.
4
5. No
Impairment.
The
Company will not, by amendment of its articles of incorporation or through
any
consolidation, merger, reorganization, transfer of assets, 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 of this Warrant, but will at
all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment. Without limiting the generality
of
the foregoing, the Company (a) shall not permit the par value of any shares
of
stock receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock, free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges on the exercise of the
Warrants from time to time outstanding, other than any restrictions on transfer
contained in this Warrant, and under applicable state and federal securities
laws, (c) will not take any action which results in any adjustment of the number
of Warrant Shares if the total number of shares of Warrant Stock or other
securities issuable after the action upon the exercise of all of the Warrants
would exceed the total number of shares of Warrant Stock or other securities
then authorized by the Company's articles of incorporation and available for
the
purpose of issue upon such exercise and (d) will at all times in good faith
assist in the carrying out of all the provisions herein and in the taking of
all
such action as may be necessary or appropriate in order to protect the
adjustment rights of the Holder against impairment.
6. Notice
of Adjustments.
Whenever the Warrant Exercise Price or the number of shares of Warrant Stock
purchasable hereunder shall be adjusted pursuant to Section 4 above, the Company
shall issue a certificate signed by its 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 Warrant
Exercise Price and the number and kind of shares of Warrant Stock purchasable
hereunder after giving effect to such adjustment, and shall cause copies of
such
certificate to be delivered to the Holder of this Warrant within five (5)
business days after the occurrence of the event resulting in such adjustment
at
such Holder’s last known address in accordance with Section 12
hereof.
7. Fractional
Shares.
No
fractional shares will be issued in connection with any exercise hereunder,
but
in lieu of such fractional shares the Company shall pay the Holder in cash
or by
check the amount determined by multiplying such fractional share by the fair
market value of one share of Warrant Stock as determined in accordance with
Section 10(c) below.
8. Ownership;
Transfer of Warrant or Warrant Stock.
(a) Register;
Registered Holder.
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. The Company may treat the person in whose
name any Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this
Warrant.
(b) Registration
Rights.
The
Company is obligated to register the shares of Warrant Stock for resale under
the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the
substantially the same piggyback registration rights as found in Section 4
of
the Amended and Restated Registration Rights Agreement, dated as of February
2007,, by and among the Company and the holders of the Company’s Series A and
Series B Preferred Stock (as amended or otherwise modified from time to time,
the “Registration Rights Agreement”) and the Holder of this Warrant (and certain
assignees thereof) is entitled to the registration rights in respect of the
shares of Warrant Stock as set forth in the Registration Rights Agreement.
Each
holder of this Warrant shall be entitled to all of the benefits afforded to
a
holder of any such Registrable Securities (as defined in the Registration Rights
Agreement) under the Registration Rights Agreement and such holder, by its
acceptance of this Warrant, agrees to be bound by and to comply with the terms
and conditions of the Registration Rights Agreement applicable to such holder
as
a holder of such Registrable Securities.
5
(c) Compliance
with Securities Act of 1933.
The
Holder of this Warrant, by acceptance hereof, agrees that this Warrant, and
the
shares of Warrant Stock to be issued upon exercise hereof are being acquired
for
investment and that such holder will not offer, sell, transfer or otherwise
dispose of this Warrant, or any such shares except under circumstances which
will not result in a violation of the Securities Act and any applicable state
securities laws. Upon exercise of this Warrant, unless the shares being acquired
are registered under the Securities Act and any applicable state securities
laws
or an exemption from such registration is available, the Holder hereof shall
confirm in writing that the shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of
the
Securities Act and shall confirm such other matters related thereto as may
be
reasonably requested by the Company. The shares of Warrant Stock issued upon
exercise of this Warrant (unless registered under the Securities Act and any
applicable state securities laws) shall be stamped or imprinted with a legend
in
substantially the following form:
“NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
OR EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
LAWS
OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”
Said
legend shall be removed by the Company, upon the request of a Holder, at such
time as the restrictions on the transfer of the applicable security shall have
terminated.
(d) Transferability
of the Warrant.
Subject
to compliance with Section 8(e) below, which provisions are intended to ensure
compliance with applicable federal and states securities laws, this Warrant
and
the shares of Warrant Stock issuable upon exercise of this Warrant may be
transferred by the Holder hereof, in whole or in part and from time to
time.
(e) Method
of Transfer.
With
respect to any offer, sale, transfer or other disposition of this Warrant or
any
shares of Warrant Stock acquired pursuant to the exercise of this Warrant prior
to registration of such Warrant or shares, the Holder hereof shall prior to
such
offer, sale, transfer or other disposition:
6
(i) surrender
this Warrant at the principal executive offices of the Company or provide
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of this Warrant and an indemnity agreement reasonable satisfactory
to the Company,
(ii) pay
any
applicable transfer taxes or establishing
to the satisfaction of the Company that such taxes have been paid,
(iii) deliver
a
written assignment to the Company in substantially the form attached hereto
as
Exhibit
B
duly
completed and executed prior to transfer, describing briefly the manner thereof,
and
(iv) deliver
a
written opinion of such ▇▇▇▇▇▇’s counsel, or other evidence, if reasonably
requested by the Company, each in a form reasonably satisfactory to the Company,
to the effect that such offer, sale, transfer or other disposition may be
effected without registration or qualification (under the Securities Act as
then
in effect and any applicable state securities law then in effect) of this
Warrant or the shares of Warrant Stock.
Promptly
as practicable and no later than five (5) days after receiving the items set
forth above, the Company shall notify the Holder that it may sell, transfer
or
otherwise dispose of this Warrant or such shares, all in accordance with the
terms of the notice delivered to the Company. If a determination has been made
pursuant to this Section 8(e) that the opinion of counsel for the Holder or
other evidence is not satisfactory to the Company, the Company shall so notify
the Holder promptly with details of such determination. Notwithstanding the
foregoing, this Warrant or such shares may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 under the
Securities Act, provided that the Holder shall furnish such information as
the
Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 have been satisfied. Each certificate representing
this Warrant or such shares thus transferred (except a transfer pursuant to
Rule
144 or an effective registration statement) shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
applicable federal and state securities laws, unless in the aforesaid opinion
of
counsel for the Holder, such legend is not required in order to ensure
compliance with such laws. Upon
any
partial transfer of this Warrant, the Company will issue and deliver to such
new
holder a new
warrant (in form and substance similar to this Warrant) with
respect to the portion transferred and will issue and deliver to the Holder
a
new
warrant (in form and substance similar to this Warrant) with
respect to the portion not transferred as
soon
as possible and in any event within ten (10) business days after such
transfer.
9. No
Rights as Shareholders; Information.
No
holder of this Warrant, as such, prior to exercise hereof shall be entitled
to
vote or receive dividends or be deemed the holder of shares, nor shall anything
contained herein be construed to confer upon the Holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent for any corporate action. for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights
or
otherwise until this Warrant shall have been exercised and the shares of Warrant
Stock purchasable upon the exercise hereof shall have become deliverable, as
provided herein. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such holder to purchase any securities
or as a stockholder of the Company, whether such liabilities are asserted by
the
Company or by creditors of the Company.
7
10. Right
to Convert Warrant into Stock; Non-Cash Net Exercise.
(a) Right
to Convert.
In
addition to and without limiting the rights of the Holder under the terms of
this Warrant, the Holder shall have the right to convert this Warrant or any
portion thereof, (the “Net Exercise Right”) into shares of Warrant Stock as
provided in this Section 10 at any time or from time to time during the term
of
this Warrant. Upon exercise of the Net Exercise Right with respect to a
particular number of shares of Warrant Stock subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the Holder (without
payment by the Holder of any exercise price or any cash or other consideration)
(X) that number of fully paid and nonassessable shares of Warrant Stock equal
to
the (Y) Converted Warrant Shares multiplied by the quotient obtained by dividing
the result of (B) fair market value of one share of Warrant Stock less (A)
the
Warrant Exercise Price per share by (B) the fair market value of one share
of
Warrant Stock all on the Conversion Date (as herein defined).
Expressed
as a formula such conversion shall be computed as follows:
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X
=
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(B-A)
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Y
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B
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Where: X
= the
number of shares of Warrant Stock that may
be
issued
to holder
Y
= the
number of shares of Warrant Stock that are being surrendered pursuant to this
Net Exercise Right (i.e., the Converted Warrant Shares)
A
= the
Warrant Exercise Price per share
B
= the
fair market value of one share of Warrant Stock
No
fractional shares shall be issuable upon exercise of the Net Exercise Right,
and, if the number of shares of Warrant Stock issued or to be issued determined
in accordance with the foregoing formula is other than a whole number, the
Company shall pay to the Holder an amount in cash equal to the fair market
value
of the resulting fractional share on the Conversion Date (as hereinafter
defined). For purposes of this Section 10, shares issued pursuant to the Net
Exercise Right shall be treated as if they were issued upon the exercise of
this
Warrant.
(b) Method
of Exercise.
The Net
Exercise Right may be exercised by the Holder by the surrender of this Warrant
at the principal office of the Company together with the notice of exercise
substantially in the form attached hereto as Exhibit A duly completed and
executed, specifying that the Holder thereby intends to exercise the Net
Exercise Right and indicating the number of shares subject to this Warrant
which
are being surrendered (referred to in Section 10(a) hereof as the Converted
Warrant Shares) in exercise of the Net Exercise Right. Such conversion shall
be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein
(the
“Conversion Date”).
(c) Determination
of Fair Market Value.
For
purposes of this Section 10, “fair market value” of one share of Warrant Stock
shall be: (i) if the Common Stock is then listed on a national stock exchange,
the closing sale price of one share of Common Stock on such exchange on the
last
trading day prior to the Conversion Date; (ii) if the Common Stock is then
quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the National Association of
Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such
similar exchange or association, the closing sale price of one share of Common
Stock on Nasdaq, the Bulletin Board or such other exchange or association on
the
last trading day prior to the Conversion Date or, if no such closing sale price
is available, the average of the high bid and the low asked price quoted thereon
on the last trading day prior to the Conversion Date; or (c) if the Common
Stock
is not then listed on a national stock exchange or quoted on Nasdaq, the
Bulletin Board or such other exchange or association, the fair market value
of
one share of Common Stock as of the Conversion Date, shall be determined in
good
faith by the Board of Directors of the Company and the Holder. If the Common
Stock is not then listed on a national securities exchange, the Bulletin Board
or such other exchange or association, the Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the Holder prior to the
exercise hereunder as to the fair market value of a share of Common Stock as
determined by the Board of Directors of the Company. In the event that the
Board
of Directors of the Company and the Holder are unable to agree upon the fair
market value in respect of subpart (c) hereof, the Company and the Holder shall
jointly select an appraiser, who is experienced in such matters. The decision
of
such appraiser shall be final and conclusive, and the cost of such appraiser
shall be borne by the Company.
8
11. Modification
and Waiver; Effect of Amendment or Waiver.
This
Warrant and any provision hereof may be modified, amended, waived, discharged
or
terminated only by an instrument in writing, designated as an amendment to
this
Warrant and executed by a duly authorized officer of the Company and the Holder
of this Warrant. Any waiver or amendment effected in accordance with this
Section 11 shall be binding upon the Holder, each future holder of this
Warrant or of any shares purchased under this Warrant (including securities
into
which such shares have been converted) and the Company.
12. Notices.
Any
notice, request, communication or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered by
personal delivery, or shall be sent by certified United States mail, first-class
postage prepaid or by overnight delivery using a nationally recognized courier
service, to each such holder at its address as shown on the books of the Company
or to the Company at the address indicated on the signature page of this
Warrant. All such notices, request, communications or other documents shall
be
deemed to have been received by the recipient (i) in the case of personal
delivery, on the date of such delivery, (ii) in the case of delivery by a
nationally recognized courier service, on the next business day subsequent
to
deposit with the courier and (iii) in the case of mailing, on the fourth
business day following the date of deposit in the United States mails,
first-class postage prepaid.
13. Successors.
The
obligations of the Company relating to the shares of Warrant Stock issuable
upon
the exercise of this Warrant shall inure to the benefit of the successors and
assigns of the Holder hereof and shall be binding upon any successor entity
whether upon a Change of Control or sale of all or substantially all of the
assets of the Company. Upon such event, the successor entity shall assume the
obligations of this Warrant, and this Warrant (or any substitute warrant as
provided hereinbefore) shall be exercisable for the securities, cash and
property of the successor entity on the terms provided herein. As used in this
Warrant, “Change of Control” shall mean a merger or consolidation of the Company
with or into any other corporation or business entity, other than in the case
of
a merger or consolidation, where the holders of the Company’s voting securities
as constituted immediately prior thereto continue to hold after such merger
or
consolidation at least fifty percent (50%) of the voting securities of the
Company or surviving entity, as applicable, immediately after such merger or
consolidation, including the anticipated public company merger.
9
14. Lost
Warrants or Stock Certificates.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in
the
case of any such loss, theft or destruction, upon receipt of a security or
an
indemnity agreement satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Company will issue and deliver a new warrant (containing the
same terms as this Warrant) or stock certificate, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
15. Descriptive
Headings.
The
descriptive headings of the several paragraphs of this Warrant are inserted
for
convenience only and do not constitute a part of this Warrant. The language
in
this Warrant shall be construed as to its fair meaning without regard to which
party drafted this Warrant.
16. Governing
Law.
This
Warrant shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of California, without
reference to principles governing choice or conflicts of laws.
17. Severability.
In the
event that any one or more of the provisions contained in this Warrant shall
for
any reason be held to be invalid, illegal or unenforceable in any respect,
such
provision(s) shall be ineffective only to the extent of such invalidity,
illegality or unenforceability, without invalidating the remainder of such
provision or the remaining provisions of this Warrant and such invalidity,
illegality or unenforceability shall not affect any other provision of this
Warrant, which shall remain in full force and effect.
18. Counterparts.
This
Warrant may be executed in two or more counterparts, each of which shall be
an
original, and all of which together shall constitute one
instrument.
19. Attorney's
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Warrant, the prevailing party in such dispute shall be entitled to collect
its reasonable attorneys’ fees, costs and disbursements in addition to any other
relief to which it may be entitled.
10
IN
WITNESS WHEREOF,
the
parties hereto have caused this Warrant to be duly executed as of the issue
date
of this Warrant by its duly authorized officers.
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AMERICAN
ETHANOL, INC.
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A
Nevada corporation
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By:
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Name:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
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Title:
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Chief
Financial Officer
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Address:
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▇▇▇▇▇
▇. ▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
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| Cupertino, CA 95014 | |
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Accepted
and Agreed:
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[INVESTOR]
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By:
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Name:
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Title:
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Address:
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11
EXHIBIT
A
NOTICE
OF EXERCISE
To:
American Ethanol, Inc. (the “Company”)
1. The
undersigned hereby:
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elects
to purchase __________ shares of Warrant Stock (as defined in the
Warrant)
of the Company pursuant to the terms of the attached Warrant, and
tenders
herewith payment of the purchase price of such shares in full;
or
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elects
to exercise its net issuance rights pursuant to Section 11 of the
attached
Warrant with respect to __________ shares Warrant
Stock.
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2. Please
issue a certificate or certificates representing said shares in the name of
the
undersigned or in such other name or names as are specified below:
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(Name)
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(Address)
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(City,
State)
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3. The
undersigned represents that the aforesaid shares being acquired for the account
of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.
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(Date)
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(Signature)
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Signature
must be guaranteed by a commercial bank or trust company or a member
firm
of a major stock exchange if shares of Warrant Stock are to be
issued, or
securities are to be delivered, other than to or in the name of
the
registered holder of this
Warrant.
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NOTICE:
Signature must correspond in all respects with the name as written upon the
face
of the Warrant in every particular without alteration or any change
whatever.
EXHIBIT
B
FORM
OF ASSIGNMENT
FOR
VALUE
RECEIVED, the undersigned holder of the attached Warrant hereby sells, assigns
and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by American Ethanol, Inc., a Nevada corporation (the “Company”)
to purchase _______ shares of the Company’s stock, and does hereby irrevocably
constitute and appoint __________________________ attorney to transfer said
Warrant on the books of the Company with full power of substitution in the
premises.
In
connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:
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such
sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act of 1933 as then in effect
and
any applicable state securities law then in effect) of this Warrant
or the
securities issuable thereunder and has attached hereto a written
opinion
of such ▇▇▇▇▇▇’s counsel to that effect;
or
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such
sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified
under
all applicable state securities
laws.
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(Date)
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(Signature)
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Signature
must correspond in all respects with the name as written upon
the face of
the Warrant in every particular without alteration or any change
whatever.
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