Unassociated Document


     

    THIS
      HAS
      NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

     

    Original
      Issue Date: March 3, 2008

     

    $550,000

     

    SENIOR
      SECURED PROMISSORY NOTE

    DUE
      

    December
      31, 2008

     

        FOR
      VALUE
      RECEIVED, BioGold Fuels Corporation, a Nevada corporation (the “Company”)
      promises to pay to Heritage Holding Group, LLC, a California limited liability
      company or its registered assigns (the “Holder”), the outstanding principal sum
      of up to $550,000 on or before December 31, 2008 as set forth below (the
“Maturity Date”). This Note is issued pursuant to the Senior Secured Note
      Purchase Agreement, dated the date hereof, and is subject to the following
      additional provisions:

     

        Section
      1. Definitions.
      For the
      purposes hereof, the following terms shall have the following
      meanings:

     

        “Business
      Day” means any day except Saturday, Sunday and any day which shall be a federal
      legal holiday in the United States or a day on which banking institutions in
      the
      State of California are authorized or required by law or other government action
      to close.

     

    “Event
      of
      Default” shall have the meaning set forth in Section 6.

     

    “Maturity
      Date” shall have the meaning set forth in Section 4 of this Note.

     

    “Original
      Issue Date” shall mean the date of the first issuance of this Note regardless of
      the number of transfers of this Note and regardless of the number of instruments
      which may be issued to evidence this Note.


    
      
        
        

      

      
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    “Principal”
      shall mean the following:

     

    
      	 	
              a)

            	
              $110,000
                as of the Original Issue Date;

            


    

     

    
      	 	
              b)

            	
              $375,000
                upon the Second Closing through the Third Closing as defined in the
                Senior
                Secured Note Purchase Agreement; or

            


    

     

    
      	 	
              c)

            	
              $550,000
                upon and after the Third Closing as defined in the Senior Secured
                Note
                Purchase Agreement.

            


    

     

    “Parties”
      means BioGold Fuels Corporation and Heritage Holding Group, LLC.

     

    “Person”
      means a corporation, an association, a partnership, organization, a business,
      an
      individual, a government or political subdivision thereof or a governmental
      agency.

     

    “Trading
      Day” means a day on which the Common Stock is traded on a Trading
      Market.

     

    “Trading
      Market” means the following markets or exchanges on which the Common Stock is
      listed or quoted for trading on the date in question: the Nasdaq SmallCap
      Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq
      National Market or the OTC Bulletin Board.


    
      
        
        

      

      
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    Section
      2. Interest.  

     

    (a)
      Payment of Interest. The Company shall pay interest to the Holder on the
      aggregate outstanding Principal amount of this Note at the annual rate of 15%,
      payable upon the Maturity Date (except that, if any such date is not a Business
      Day, then such payment shall be due on the next succeeding Business Day) (each
      such date, an "Interest Payment Date"). 

     

    (b)
      Interest Calculations. Interest shall be calculated on the basis of a 360-day
      year and shall accrue daily commencing on the Original Issue Date based upon
      the
      Principal outstanding until payment in full of the Principal sum, together
      with
      all accrued and unpaid interest has been made. 

     

    Section
      3. Origination
      Fee. 

     

    As
      additional consideration beyond interest, Holder shall be entitled to withhold
      10% of all Principal payments to Company as an origination fee for the
      origination of this Note.

     

    Section
      4. Maturity.
      

     

    On
      December 31, 2008 (the “Maturity Date”), the entire outstanding Principal
      balance of this Note shall mature and be due and payable to the Holder by the
      Company. 

     

    Section
      5. Prepayment.
      

     

    The
      Company may prepay this Note at any time without prior consent of the Holder
      and
      all obligations of the Company under this Note of shall terminate at such time.
      Notwithstanding the above, prepayment shall not affect the Parties’ ongoing
      rights and obligations under the Senior Secured Note of even date
      herewith.

     

    Section
      6. Events
      of Default.
      

     

    (a) “Event
      of
      Default”, wherever used herein, means any one of the following events (whatever
      the reason and whether it shall be voluntary or involuntary or effected by
      operation of law or pursuant to any judgment, decree or order of any court,
      or
      any order, rule or regulation of any administrative or governmental
      body):

     

    (i) any
      default in the payment of the principal amount of this Note, as and when the
      same shall become due and payable (whether on the Maturity Date or by
      acceleration or otherwise) which default is not cured, within 5 Trading
      Days;

     

    (ii) the
      Company shall fail to observe or perform any other covenant or agreement
      contained in this Note which failure is not cured, if possible to cure, within
      5
      Trading Days after notice of such default sent by the Holder;

     

    (iii) any
      representation or warranty made herein shall be untrue or incorrect in any
      material respect as of the date when made or deemed made;


    
      
        
        

      

      
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    (iv) (i) the
      Company shall commence, or there shall be commenced against the Company, a
      case
      under any applicable bankruptcy or insolvency laws as now or hereafter in effect
      or any successor thereto, or the Company commences any other proceeding under
      any reorganization, arrangement, adjustment of debt, relief of debtors,
      dissolution, insolvency or liquidation or similar law of any jurisdiction
      whether now or hereafter in effect relating to the Company or (ii) there is
      commenced against the Company any such bankruptcy, insolvency or other
      proceeding which remains undismissed for a period of 60 days; or (iii) the
      Company is adjudicated by a court of competent jurisdiction insolvent or
      bankrupt; or any order of relief or other order approving any such case or
      proceeding is entered; or (iv) the Company suffers any appointment of any
      custodian or the like for it or any substantial part of its property which
      continues undischarged or unstayed for a period of 60 days; or (v) the
      Company makes a general assignment for the benefit of creditors; or
      (vi) the Company shall state that it is unable to pay, or shall be unable
      to pay, its debts generally as they become due; or (vii) the Company shall
      call a meeting of its creditors with a view to arranging a composition,
      adjustment or restructuring of its debts; or (viii) the Company shall by
      any act or failure to act expressly indicate its consent to, approval of or
      acquiescence in any of the foregoing; or (ix) any corporate or other action
      is taken by the Company for the purpose of effecting any of the foregoing;
      or

     

    (v) except
      with respect to those liabilities set forth on Schedule 6(a)(v), attached
      hereto, the Company shall default in any of its obligations under any mortgage,
      credit agreement or other facility, indenture agreement, factoring agreement
      or
      other instrument under which there may be issued, or by which there may be
      secured or evidenced any indebtedness for borrowed money or money due under
      any
      long term leasing or factoring arrangement of the Company in an amount exceeding
      $100,000, whether such indebtedness now exists or shall hereafter be created
      and
      such default shall result in such indebtedness becoming or being declared due
      and payable prior to the date on which it would otherwise become due and
      payable. 

     

    (b) Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the full principal amount of this Note to the date
      of
      acceleration shall become, at the Holder’s election, immediately due and payable
      in full. The Holder need not provide and the Company hereby waives any
      presentment, demand, protest or other notice of any kind (with the exception
      of
      the notice and opportunity to cure provided in Section 6(a)(ii) above), and
      the
      Holder may immediately and without expiration of any grace period enforce any
      and all of its rights and remedies hereunder and all other remedies available
      to
      it under applicable law. Such declaration may be rescinded and annulled by
      the
      Holder at any time prior to payment hereunder and the Holder shall have all
      rights as a Note holder until such time, if any, as the full payment under
      this
      Section shall have been received by it. No such rescission or annulment shall
      affect any subsequent Event of Default or impair any right consequent
      thereon.

     

    
      
        
        

      

      
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    Section
      7. Miscellaneous.

     

    (a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder by facsimile, sent by a nationally recognized overnight courier
      service, addressed to the Company, at BioGold Fuels Corporation, 1800 Century
      Park East, Suite 600, Los Angeles, CA 90067, facsimile number, (310) 564-7611,
      Attn: CEO and CFO, or such other address or facsimile number as the Company
      may
      specify for such purposes by notice to the Holder delivered in accordance with
      this Section. Any and all notices or other communications or deliveries to
      be
      provided by the Company hereunder shall be in writing and delivered personally,
      by facsimile, sent by a nationally recognized overnight courier service
      addressed to the Holder at the facsimile telephone number or address of such
      Holder appearing on the books of the Company, or if no such facsimile telephone
      number or address appears, at the principal place of business of the Holder.
      Any
      notice or other communication or deliveries hereunder shall be deemed given
      and
      effective on the earliest of (i) the date of transmission, if such notice
      or communication is delivered via facsimile at the facsimile telephone number
      specified in this Section prior to 5:30 p.m. (local time in Los Angeles,
      California), (ii) the date after the date of transmission, if such notice
      or communication is delivered via facsimile at the facsimile telephone number
      specified in this Section later than 5:30 p.m. (local time in Los Angeles,
      California) on any date and earlier than 11:59 p.m. (local time in Los Angeles,
      California) on such date, (iii) the second Business Day following the date
      of mailing, if sent by nationally recognized overnight courier service, or
      (iv) upon actual receipt by the party to whom such notice is required to be
      given. 

     

    (b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Note shall alter or impair
      the obligation of the Company, which is absolute and unconditional, to pay
      the
      principal of this Note at the time, place, and rate, and in the coin or
      currency, herein prescribed. This Note is a direct debt obligation of the
      Company. 

     

    (c) Lost
      or Mutilated Note.
      If this
      Note shall be mutilated, lost, stolen or destroyed, the Company shall execute
      and deliver, in exchange and substitution for and upon cancellation of a
      mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
      Note, a new Note for the principal amount of this Note so mutilated, lost,
      stolen or destroyed but only upon receipt of evidence of such loss, theft or
      destruction of such Note, and of the ownership hereof, and indemnity, if
      requested, all reasonably satisfactory to the Company.

     

    (d) Security
      Interest.
      This
      Note is a direct debt obligation of the Company and is secured by a first
      priority perfected security interest in all of the assets of the Company for
      the
      benefit of the Holder. The Holder and the Company have agreed to and more fully
      provided the Holder’s Security Interest in that certain Security Agreement, by
      and among the Parties hereto, of even date herewith, attached hereto as Exhibit
      A (the “Security Agreement”). The Security Agreement is incorporated by
      reference herein in its entirety.

     

    (e) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Note shall be governed by and construed and enforced in accordance
      with
      the internal laws of the State of California, without regard to the principles
      of conflicts of law thereof. 

     

    (f) Waiver.
      Any
      waiver by the Company or the Holder of a breach of any provision of this Note
      shall not operate as or be construed to be a waiver of any other breach of
      such
      provision or of any breach of any other provision of this Note. The failure
      of
      the Company or the Holder to insist upon strict adherence to any term of this
      Note on one or more occasions shall not be considered a waiver or deprive that
      party of the right thereafter to insist upon strict adherence to that term
      or
      any other term of this Note. Any waiver must be in writing.

     

    
      
        
        

      

      
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    (g) Severability.
      If any
      provision of this Note is invalid, illegal or unenforceable, the balance of
      this
      Note shall remain in effect, and if any provision is inapplicable to any Person
      or circumstance, it shall nevertheless remain applicable to all other Persons
      and circumstances. If it shall be found that any interest or other amount deemed
      interest due hereunder violates applicable laws governing usury, the applicable
      rate of interest due hereunder shall automatically be lowered to equal the
      maximum permitted rate of interest. The Company covenants (to the extent that
      it
      may lawfully do so) that it shall not at any time insist upon, plead, or in
      any
      manner whatsoever claim or take the benefit or advantage of, any stay, extension
      or usury law or other law which would prohibit or forgive the Company from
      paying all or any portion of the principal of or interest on this Note as
      contemplated herein, wherever enacted, now or at any time hereafter in force,
      or
      which may affect the covenants or the performance of this Note, and the Company
      (to the extent it may lawfully do so) hereby expressly waives all benefits
      or
      advantage of any such law, and covenants that it will not, by resort to any
      such
      law, hinder, delay or impede the execution of any power herein granted to the
      Holder.

     

    (h) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

     

    (i) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Note and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    (j) Seniority.
      This Note is senior in right of payment to any and all other indebtedness of
      the
      Company.

     

    *********************


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
      duly
      authorized officer as of the date first above indicated.

     

    
      	 	
              BIOGOLD
                FUELS CORPORATION

               

               

              By:                    

              Name: ________________________ 
                

              Title:   
                Chief
                Financial Officer

               

            


    

     

     

    AGREED
      AND ACKNOWLEDGED

    


    HERITAGE
      HOLDING GROUP, LLC

    


    By:
      

     

                           

    Name:                     

    Title:       

     

    
      
        
        

      

      
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    EXHIBIT
      A

    


    Security
      Agreement

     

     


    
      
        
        

      

      
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    Schedule
      6(a)(v)

     

     


    
      
        
        

      

      
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