ex4-2.htm


    Exhibit
      4.2

     

     

    THIS
      NOTE IS NONNEGOTIABLE AND, AS SUCH, IS NON-TRANSFERABLE. IT HAS NOT BEEN
      REGISTERED UNDER THE SECURITIES LAWS OF THE UNITED STATES OF AMERICA OR ANY
      STATE THEREOF. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND,
      EVEN IF SUBSEQUENTLY AMENDED TO BE NEGOTIABLE, NO INTEREST IN THIS NOTE MAY
      BE
      OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR
      HYPOTHECATED IN THE ABSENCE OF REGISTRATION AND QUALIFICATION OF THIS NOTE
      UNDER
      APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OF THE
      PAYEE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND
      QUALIFICATION ARE NOT REQUIRED.

    


     

    FORM
      OF
      NON-NEGOTIABLE 12.5% PROMISSORY NOTE

     

    
      	
              $_______________

              ($850
                per Purchased Unit)

            	
              Houston,
                Texas

            
	
               (

            	
              June
                30, 2007

            


    

     

     

    FOR
      VALUE
      RECEIVED, the undersigned, Biofuels Power Corporation, a Texas corporation
      (the
“Company”), having its executive office and principal place of business at
      Waterway Plaza, 10003 Woodloch Forest Dr., Suite 900, The Woodlands, Texas
      77380, promises to pay to the order of ______________________ (‘‘Payee’’)
      at __________________________, (address), or such other address as the Payee
      may
      designate from time to time by notice in writing to the Company, an amount
      equal
      to ____________(the “Principal Sum”), which is the product obtained by
      multiplying (a) the sum of Eight Hundred and Fifty Dollars and no cents
      ($850.00) by (b) the number of Units of Limited Partner Interest in Texoga
      Biofuels 2006-1, Ltd., a Texas limited partnership, heretofore held by Payee
      and
      purchased by the Company from Payee effective of even date herewith (the
“Purchased Units”), in lawful money of the United States of America, or,
      if accepted by Payee pursuant to a Payment Notice delivered by Company
      hereunder, in shares of common stock of Company, all in accordance with the
      terms and conditions hereinafter set forth:

     

    A. Payment
      Terms. The Principal Sum shall be due and payable, together with all accrued
      but unpaid interest then outstanding under the Note, to the Payee at or before
      the close of business on June 30, 2011 (the “Maturity Date”. The
      Principal Sum shall bear interest as stated herein. The Payee must surrender
      this Note to the Company to collect any payment due on the Maturity Date or
      to
      receive a final payment of amounts due under the Note.

     

    B. Interest.
      Interest on this Note shall be payable at the rate of twelve and one-half
      percent (12.5%) per year on the unpaid principal amount hereof, compounded
      quarterly and payable on the last day of each September, December, March and
      June from the date of issuance until this Note is paid in full. In the event
      of
      default hereunder, interest shall accrue at the rate of the lesser of (a)
      eighteen percent (18.0%) per annum or (b) the highest rate allowed by applicable
      law until the default is cured or this Note is paid in full.

     

    C.
      Prepayments. All or any portion of the Principal Sum may be prepaid in
      whole or in part at any time, provided the Company shall provide the Payee
      with
      a Payment Notice at least four (4) days prior to prepayment, and prepayments
      shall be made at the rate of one hundred and ten percent (110%) of the principal
      to be repaid. (i.e., the Company will repay $110 for each $100 of principal
      made
      the subject of a prepayment. Additional sums paid in connection with a
      prepayment in excess of the principal being retired shall represent a prepayment
      penalty.

     

    D.
      Security. This Note, and the Principal Sum, is unsecured.

     

    E. Method
      of Payment. At least four (4) days prior to the date of any proposed payment
      or repayment of principal hereunder, the Company will deliver a written notice
      (a “Notice of Payment”) to Payee. The Notice of Payment will (a) state
      the Company’s intent to pay or prepay principal, (b) state the amount of any
      accrued interest to be paid via the proposed payment, (c) set out any prepayment
      penalty applicable to such proposed payment, and (d) set out the conversion
      rate
      at which the Company is prepared to issue shares of its common stock (“Common
      Shares”) as a method of such payment. Upon receipt of the Notice of Payment,
      Payee may in Payee’s sole discretion elect
      to
      receive the proposed payment either in cash or in Common Shares. The Payee
      shall
      respond to the Notice of Payment in writing within two (2) business days of
      Payee’s receipt of such notice, and inform the Company of Payee’s election to
      accept payment in cash or Common Shares (such response is referred to herein
      as
      the “Payee’s Response”). The Company will then cause the proposed payment to be
      made to the Payee in Payee’s chosen form of payment within two (2) business days
      following Company’s receipt of Payee’s Response.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    F.
      Securities Law Issues. Notwithstanding the foregoing, in the event the
      Company reasonably believes that it may not issue Common Shares to the Payee
      without violating applicable state or federal securities laws, Company may
      in
      reliance upon such belief state the ground for such belief in a Notice of
      Payment, and in such circumstances Company may pay any proposed payment solely
      in cash.

     

    G.
      Nonnegotiable Note. This Note is nonnegotiable, and as such, is
      non-transferable.

     

    H. Events
      of Default. If
      any of the following conditions, events or acts shall occur:

    


    1.  The
      dissolution of the Company or any successful vote in favor thereof by the
      Board of Directors and shareholders of the Company; or

    


    2.  The
      Company's insolvency, assignment for the benefit of creditors, application
      for or appointment of a receiver, filing of a voluntary petition under any
      provision of the Federal Bankruptcy Code or amendments thereto or any other
      federal or state statute affording relief to debtors; or there shall be
      commenced against the Company any such proceeding or filed against the
      Company any such application or petition which proceeding, application or
      petition is not dismissed or withdrawn within sixty (60) days of commencement
      or
      filing as the case may be; or

    


    3.  The
      failure by the Company to make any payment of any amount of principal on,
      or accrued interest under this Note, as and when the same shall become due
      and payable and the continuance of such failure for a period of thirty (30)
      days after written notice thereof is given to Company; or

    


    4.  The
      sale by the Company of all or substantially all of its assets; or the
      merger or consolidation by the Company with or into another corporation
      which results in any change in the ownership of the shares of the resulting
      entity when compared to that of the Company immediately prior to such merger
      or
      consolidation.

    


    then,
      in
      any such event and at any time thereafter while such event is continuing,
      the Payee shall have the right to declare an event of default hereunder
      ("Event of Default"), and the indebtedness
      evidenced by this Note shall immediately upon such declaration become due
      and payable, both as to principal and interest, without
      presentment, demand, protest or other notice of any kind, all of which are
      hereby expressly waived, notwithstanding anything contained herein to
      the contrary.

    


    I.
Suits
      for Enforcement and
      Remedies. If any one or more defaults shall occur and be continuing,
      the Payee may proceed to protect and enforce Payee's rights either by suit
      in equity or by action at law, or both, whether for the specific performance
      of
      any covenant, condition or agreement contained in this Note or in any
      applicable agreement or document referred to herein or in aid of the
      exercise of any power granted in this Note or in any agreement or document
      referred to herein, or proceed to enforce the payment of this Note or to
      enforce any other legal or equitable right of the holder of this Note.
      No right or remedy herein or in any other agreement or instrument conferred
      upon the holder of this Note is intended to be exclusive of any other right
      or remedy, and each and every such right or remedy shall be cumulative and
      shall be in addition to every other right and remedy given hereunder or now
      or hereafter existing at law or in equity or by statute or
      otherwise.

    


    J. Investment
      Representations.   In connection with Payee’s election to
      receive this Note as consideration for Payee’s sale of the Purchased Units to
      the Company, Payee represents to the Company as follows:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    1.  The
      Payee has been provided with access to all information deemed to be
      relevant by the Company in connection with Company’s acceptance of this Note as
      consideration for the Company’s purchase of the Purchased Units and concerning
      the Company and the proposed operations of the Company for the purpose of making
      an informed investment decision as to the acceptance of the
      Note.

    


    2.  The
      Payee is an accredited investor as defined in Rule 501(a) of Regulation D
      of the Securities Act of 1933 (the "Act").

    


    3.  The
      Payee acknowledges that the offer and sale of the Note is being made
      without the use of a Private Placement Memorandum. The Payee understands
      and has evaluated the merits and risks of an investment in the Company and
      the
      acceptance of the Note. The Payee acknowledges that (i) the Note is a
      speculative investment and involves a high degree of risk; (ii) no Federal
      or
      State agency has made any finding or determination as to the fairness of
      such investment or any recommendation or endorsement of it; (iii) there is
      not
      and will not be in the foreseeable future a market for the sale of the Note
      by the Payee, and (iv) the operations of the Company are dependent on the
      Company's ability to generate substantial income or to secure
      additional financing, and there can be no assurance that such income will
      be generated and there are no existing arrangements with respect to
      such financing being available and no assurance that it will
      become available.

    


    4.  The
      Payee is able to bear the economic risk of an investment in the Payee and
      the ownership of the Note in that, among other factors, such Payee can
      afford to hold Note for an indefinite period and can afford a complete loss
      of the sums represented by the Note.

    


    5.  The
      Payee is relying solely on the financial and tax advice of his own
      advisor(s) with respect to an investment in the Payee and the purchase of the
      Note.

    


    6.  The
      Payee is acquiring the Note for his own account as principal and not with a
      view to resale or distribution.

    


    7.  All
      documents, records and books pertaining to the issuance of the Note or the
      existing or projected operations of the Company have been made available
      for inspection to the Payee, and the books and records of the Company will
      be available upon reasonable notice, for inspection by Payee during
      reasonable business hours at its principal place of business.

    


    8.  The
      Payee has not authorized any broker, dealer, agent or finder to act on his
      behalf, nor has any knowledge of any broker, dealer, agent or finder
      purporting to act on his behalf, with respect to this
      transaction.

    


    K. Miscellaneous.

    


    1. 
      No delay or failure on the part of the Payee of this Note to exercise any power
      or right hereunder, shall operate as a waiver thereof, and no right or remedy
      of
      the Payee of this Note shall be deemed abridged or modified by any course of
      conduct.

     

    2. 
      This Note shall be governed by and construed in accordance with the laws of
      the
      State of Texas applicable to agreements made and to be performed in Texas
      without giving effect to applicable conflicts of law principles.

     

    3. 
      This Note cannot be changed or terminated orally, but only by a writing signed
      by the Company and the Payee.

     

    4. 
      By executing this Note the individual signing below represents and warrants
      that
      he has the power and authority to act for and bind the Company and that the
      Company has duly authorized
      the execution and delivery of this Note, and such individual agrees that the
      Payee is entitled to rely upon such representation and
      warranty.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    5. 
      The Payee, without prejudice to any other rights, is authorized to proceed
      against the Company to enforce its rights under this Note. The powers and
      remedies of the Payee under this Note shall not be exclusive of any other
      powers, rights or remedies available to the Payee.

     

    6. 
      Any and all notices or other communications required or permitted under this
      Note shall be in writing and shall be deemed given upon (a) personal delivery,
      (b) upon the next business day if sent by overnight courier service, or (c)
      upon
      the third business day next following the mailing of such notice by certified
      or
      registered mail, return receipt requested, to the respective addresses of the
      Company and the Payee or to such other address as the Company or the Payee
      may
      specify by written notice given as aforesaid.

     

    7.  Each
      party hereto (a) agrees that any legal suit, action or proceeding arising
      out of or relating to this Note will be instituted exclusively in the
      courts of Montgomery County, Texas, or in the United States District Court
      for
      the Southern District of Texas, each and any of which shall apply Texas
      law, (b) waives any objection which the party may have now or hereafter to
      the venue of any such suit, action or proceeding, and (c) irrevocably
      consents to the jurisdiction of the said Courts in any such suit, action or
      proceeding.  Each party further agrees to accept and
      acknowledge service of any and an process which may be served in any such
      suit, action or proceeding in the said Courts and agrees that service of
      process upon such party mailed by certified mail to the party’s address
      will be deemed in every respect effective service of process upon such
      party , in any such suit, action or proceeding.

    


     

    
      	 	
              COMPANY:

            
	 	
              BIOFUELS
                POWER CORPORATION

            
	 	
              a
                Texas corporation

            
	 	 
	 	 
	 	 
	 	 
	 	
              By:
                /S/ Steven S. McGuire

            
	 	
               Steven
                S. McGuire, President