BIOGOLD FUELS CORPORATION SENIOR SECURED NOTE PURCHASE AGREEMENT
BIOGOLD
FUELS CORPORATION
SENIOR
SECURED NOTE
PURCHASE
AGREEMENT
This
Senior Secured Note Purchase Agreement (the “Agreement”)
is
made as of the 3rd
day of
March, 2008, by and between BioGold Fuels Corporation, a Nevada corporation
(the “Company”),
and
Heritage Holding Group, LLC, a California limited liability company (the
“Purchaser”).
RECITALS
The
Company desires to issue and sell, and the Purchaser desires to purchase (i)
a
senior secured promissory
note in substantially the form attached as Exhibit
A
(the
“Note”
or
“Securities”). Any capitalized term not defined herein shall have the meaning
ascribed to it in the Note, or the Security Agreement (taken together, the
“Ancillary
Agreements”).
This
Agreement and the Ancillary Agreements shall be referred to collectively as
the
“Transaction
Documents”.
AGREEMENT
In
consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
to
this Agreement agree as follows:
1. Purchase
and Sale of Note.
(a) Sale
and Issuance of Note.
Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase
at the Closing (as defined below) and the Company agrees to sell and issue
to
the Purchaser the Note in the principal amount of $550,000.
(b) Closing;
Delivery.
(i) The purchase
and sale of the Note shall take place at the offices of BioGold Fuels
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, on March
3,
2008, or at such other time and place as the Company and the Purchaser mutually
agree upon, orally or in writing, in three separate Closings (which time and
place are designated as the “Closing”).
(ii) Subject
to the satisfactory completion of the Closing Conditions at each Closing, the
Company shall deliver to Purchaser the executed Note along with signed copies
of
the Ancillary Agreements against (1) payment of the Purchase Price in three
separate installations (as defined herein) as applicable to the specific
Closing, therefor by check payable to the Company or by wire transfer to a
bank
designated by the Company, and (2) delivery of counterpart signature pages
to
this Agreement and the Ancillary Agreements.
(iii) The
total
aggregate “Purchase
Price”
shall
equal $550,000 minus the Loan Arrangement Fee. The “Loan
Arrangement Fee”
shall
equal 10% of the Principal amount of the Note funded ($50,000 for Aggregate
Purchase Price). The parties hereto agree that the “Loan Arrangement Fee” has
been fully earned by Purchaser and is non-refundable. Purchaser, in its sole
discretion, may off-set the Loan Arrangement Fee from any amounts provided
under
the Note. The Purchase Price shall be delivered in three separate installation
in accordance with the terms and conditions contained herein and in the
following amounts: (x) the “First Closing Amount”
shall
equal $110,000 minus the Loan Arrangement Fee of 10% of the Principal amount
of
the Note funded ($10,000 for First Closing Amount”); (y) the “Second Closing
Amount”
shall
equal $165,000 minus the Loan Arrangement Fee of 10% of the Principal amount
of
the Note funded ($15,000 for Second Closing Amount”); (z) and the “Third Closing
Amount”
shall
equal $275,000 minus the Loan Arrangement Fee of 10% of the Principal amount
of
the Note funded ($25,000 for Third Closing Amount”).
2. Security
Interest.
The
indebtedness represented by the Note shall be secured by Collateral of the
Company in accordance with the provisions of a Security Agreement between the
Company and the Purchaser in the form attached to this Agreement as Exhibit
B
(the
“Security
Agreement”).
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to each Purchaser that:
(a) Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power
and
authority to carry on its business as now conducted and as proposed to be
conducted (the “Business”).
The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its Business or properties.
(b) Authorization.
All
corporate action required on the part of the Company, its officers, directors
and stockholders necessary for the authorization, execution and delivery of
this
Agreement and the Ancillary Agreements and the authorization, sale, issuance
and
delivery of the Note, and the performance of all obligations of the Company
hereunder and under the Ancillary Agreements has been taken or will be taken
prior to the Closing. All
corporate action required to authorize the issuance of the Securities will
be
taken prior to the issuance thereof. The Agreement, and each of the Ancillary
Agreements, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their respective terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
and
other laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
2
(c) Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens.
(d) Litigation.
Except
as set forth on Schedule 3.(d), attached hereto, there is no claim, action,
suit, proceeding, arbitration, complaint, charge or investigation pending with
respect to which the Company has been notified or is aware, to the Company’s
knowledge, currently threatened against the Company that, if successful, would
reasonably be expected to have, either individually or in the aggregate, a
material adverse effect on its Business or properties, or any change in the
current equity ownership of the Company, nor is the Company aware that there
is
any basis for the foregoing.
(e) SEC
Reports; Financial Statements.
To the
best of its knowledge, the Company has filed all material reports required
to be
filed by it under the Securities Act and the Exchange Act for the two years
preceding (collectively, the “SEC
Reports”)
on a
timely basis. As of their respective dates, to the Company’s knowledge, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4. Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Company that:
(a) Authorization.
The
Purchaser has full power and authority to enter into this Agreement. This
Agreement, when executed and delivered by the Purchaser, will constitute a
valid
and legally binding obligation of the Purchaser, enforceable in accordance
with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies.
(b) Purchase
Entirely for Own Account.
This
Agreement is made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Securities to be acquired
by
the Purchaser will be acquired for investment for the Purchaser’s own account,
not as a nominee or agent, and not with a view to the resale or distribution
of
any part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Securities.
3
(c) Knowledge.
The
Purchaser is aware of the Company’s business affairs and financial condition and
has acquired sufficient information about the Company to reach an informed
and
knowledgeable decision to acquire the Securities. The Purchaser has had the
opportunity to request and review any business materials, marketing
documentation, financial statements, corporate books and records, and accounting
records that it deems necessary to acquire sufficient information about the
Company to be knowledgeable about the Securities and the Company.
(d) Restricted
Securities.
The
Purchaser understands that the Securities have not been, and will not be,
registered under the Securities Act of 1933, as amended (the “Securities
Act”),
by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of
the investment intent and the accuracy of the Purchaser’s representations as
expressed herein. The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale.
The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company which are
outside of the Purchaser’s control, and which the Company is under no obligation
and may not be able to satisfy.
(e) Legends.
The
Purchaser understands that the Securities may bear one or all of the following
legends:
(i) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933.”
(ii) Any
other
legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.
(f) Accredited
Investor.
The
Purchaser is an accredited investor as defined in Rule 501(a) of Regulation
D
promulgated under the Securities Act.
4
5. Conditions
of the Purchasers’ Obligations at Closing.
The
obligations of each Purchaser to the Company under this Agreement are subject
to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) Representations
and Warranties.
The
representations and warranties of the Company contained in Section 3 shall
be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
(b) Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Notes pursuant to this
Agreement shall be obtained and effective as of the Closing.
(c) Security
Agreement.
The
Company and the Purchaser shall have executed the Security Agreement.
(d)
Conditions of the Purchasers’ Obligations to fund First Closing
Amount.
The
Company shall have successfully completed certain mutually agreeable milestones
on or before March 3, 2008.
(e)
Conditions of the Purchasers’ Obligations to fund Second Closing
Amount.
The
Company shall have successfully completed certain mutually agreeable milestones
on or before March 18, 2008.
(f)
Conditions of the Purchasers’ Obligations to fund Third Closing
Amount.
The
Company shall have successfully completed certain mutually agreeable milestones
on or before April 1, 2008.
6. Conditions
of the Company’s Obligations at Closing.
The
obligations of the Company to each Purchaser under this Agreement are subject
to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) Representations
and Warranties.
The
representations and warranties of the Purchaser contained in Section 4
shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing.
(b) Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Note and Warrant pursuant
to
this Agreement shall be obtained and effective as of the Closing.
(c) Ancillary
Agreements.
The
Company and the Purchaser, and the other parties thereto, if any, shall have
executed all of the Ancillary Agreements.
5
7. Additional
Agreements
(a) Indemnification
of Purchaser.
The
Company hereby indemnifies and holds the Purchaser and its managers, members,
affiliates and agents (each, a “Purchaser
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”)
that
any such Purchaser Party may suffer or incur as a result of or relating to
(a)
any misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in
this
Agreement or in the other Transaction Documents; or (b) any cause of action,
suit or claim brought or made against such Purchaser Party and solely arising
out of or solely resulting from the execution, delivery, performance or
enforcement of this Agreement or any of the other Transaction Documents.
Notwithstanding the above, the Company shall not be liable in any such case
for
any loss, liability, obligation, claim, contingency, damage, cost or expense
to
the extent that it arises out of or is based written information furnished,
or
any other act or omission, by any such Purchaser Party. The Company will
reimburse such Purchaser for its reasonable legal and other expenses incurred
in
connection therewith, as such expenses are incurred. The Purchaser Party may
not, without the prior written consent of the Company, agree to any settlement
of any claim or action with respect to which the Company is required to
indemnify the Purchaser Party pursuant to this Section 7(a). The obligations
of
the Company under this Section 7(a) shall survive the payment and performance
of
the Company’s obligations under the Transaction Documents.
(b) Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
(c) Release.
The
Company, its subsidiaries, officers, directors, managers, employees,
shareholders, creditors, agents, heirs, representatives and any permitted
successors, and assigns (each a “Company
Releasing Party”)
hereby
fully, finally, completely, and forever releases, discharges, acquits, and
relinquishes the Purchaser, its managers, members and agents and the affiliates
of each of the foregoing(the “Purchaser
Released Parties”)
from
and against all loss, cost, damage, claim, liability, or expense, including
reasonable attorneys’ fees and costs , in any way arising from or related to the
sale and issuance of the Note and Warrant and the entering into by the parties
of the remaining Ancillary Agreements. The Company (for and on behalf of each
Company Releasing Party) hereby agrees (a) not to file any lawsuit or pursue
any
other action with respect to any of the foregoing matters and (b) to indemnify
and hold harmless, jointly and severally, any and all of the Company Released
Parties from any and all injuries, harm, damages, costs, losses, expenses and/or
liability, including reasonable attorneys’ fees and court costs, as incurred and
when incurred as a result of the filing of any such lawsuit or the pursuit
of
any other action with respect to any of the foregoing matters. The agreement
and
obligations of the Company under this Section 7(c) shall survive the payment
and
performance of the Company’s obligations under the Transaction
Documents.
6
8. Miscellaneous.
(a) Assignment;
Successors and Assigns.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing
in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(b) [reserved]
(c) Governing
Law.
This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the State of California, without giving effect
to
principles of conflicts of law.
(d) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one
instrument.
(e) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(f) Notices.
Any
notice required or permitted by this Agreement shall be in writing and shall
be
deemed sufficient upon receipt, when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or 48 hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid,
if such notice is addressed to the party to be notified at such party’s address
or facsimile number as
set
forth below or as subsequently modified by written notice.
(g) Finder’s
Fee.
Each
party represents that it neither is nor will be obligated for any finder’s fee
or commission in connection with this transaction. Each Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder’s fee (and the costs and expenses
of defending against such liability or asserted liability) for which each
Purchaser or any of its officers, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Purchaser from any
liability for any commission or compensation in the nature of a finder’s
fee (and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
(h) Amendments
and Waivers.
Any term
of this Agreement may only be amended or waived with the written consent of
the
Company and the holders of at least a majority in interest of the Notes. Any
amendment or waiver effected in accordance with this Section 8(h) shall be
binding upon each Purchaser and each transferee of the Securities, each future
holder of all such Securities, and the Company.
7
(i) Severability.
If one
or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith, in order to maintain the economic position enjoyed by each party as
close
as possible to that under the provision rendered unenforceable. In the event
that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of the Agreement shall be interpreted as if
such provision were so excluded and (iii) the balance of the Agreement
shall be enforceable in accordance with its terms.
(j) Entire
Agreement.
This
Agreement, and the documents and agreements referred to herein constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly canceled.
[Signature
Pages Follow]
8
The
parties
have executed this Senior Secured Note Purchase Agreement as of the date first
written above.
COMPANY
BIOGOLD
FUELS CORPORATION
By:
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER:
HERITAGE
HOLDING GROUP, LLC
By:
_______________________________
Name:
Title:
Address:
EXHIBITS
Exhibit A- Form
of
Senior Secured Promissory Note
Exhibit
B- Form
of
Security Agreement
EXHIBIT
A
FORM
OF SENIOR SECURED PROMISSORY NOTE
EXHIBIT
B
FORM
OF SECURITY AGREEMENT
12
Schedule
3(d)