Document:

ex41.htm

    

    Exhibit
4.1

    THE
REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL
NOT SELL, TRANSFER OR ASSIGN

    THIS
WARRANT EXCEPT AS HEREIN PROVIDED.

    

    VOID
AFTER 5:00 P.M. EASTERN TIME, OCTOBER __, 2016

    

    COMMON
STOCK PURCHASE WARRANT

    

    For
the Purchase of

    

    ________
Shares of Common Stock

    

    of

    

    FLEX
FUELS ENERGY, INC.

    

    

    1.           Warrant.

    

    THIS
CERTIFIES THAT, _____ ("Holder"), or such Holder’s legal assigns, is entitled,
at any time or from time to time, upon vesting of this Warrant (the
"Commencement Date"), and at or before 5:00 p.m., Eastern Time on OCTOBER __,
2016 ("Expiration Date"), but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to _____ shares of common stock (”Common
Stock”) of Flex Fuels Energy, Inc. (the “Company”) at an exercise price of $0.07
per share.  Notwithstanding the foregoing, if during the term of this
Warrant the Holder shall cease, for any reason, to be an employee, officer or
director of the Company (the “Triggering Event”), as the case may be, including
by reason of death, the Warrant shall immediately expire to the extent not
vested at the time of or by reason of the Triggering Event.  If the
Expiration Date is a day on which banking institutions are authorized by law to
close, then this Warrant may be exercised on the next succeeding day which is
not such a day in accordance with the terms herein. This Warrant is initially
exercisable at the above stated prices per share of Common Stock purchased;
provided, however, that upon the occurrence of any of the events specified in
Section 6 hereof, the rights granted by this Warrant, including the exercise
prices and the number of shares of Common Stock to be received upon such
exercise, shall be adjusted as therein specified.  The term "Exercise
Price" shall mean the either collectively or singly, as the context requires,
the initial exercise price stated above or the adjusted exercise price, also
depending on the context, of a share of Common Stock.  The term
"Securities" shall mean the shares of Common Stock issuable upon exercise of
this Warrant.

    

    2.           Exercise.

    

    2.1           Exercise
Form.  In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased.  If the subscription rights represented
hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the
Expiration Date, this Warrant shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.

    

    2.2           Legend.  Each
certificate for Securities purchased under this Warrant shall bear a legend as
follows, unless such Securities have been registered under the Securities Act of
1933, as amended ("Act"):

     

    
      
        
        

      

      
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    "The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended ("Act") or applicable state law. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act and applicable state
law."

    

    2.3           Cashless
Exercise.

    

    2.3.1           Determination of
Amount.  In lieu of the payment of the Exercise Price in cash,
the Holder shall have the right (but not the obligation) to convert this
Warrant, in whole or in part, into Common Stock ("Conversion Right"), as
follows: upon exercise of the Conversion Right, the Company shall deliver to the
Holder (without payment by the Holder of any of the Exercise Price) that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the
"Value" (as defined below) of the portion of the Warrant being converted at the
time the Conversion Right is exercised by (y) the Market Price.  The
"Value" of the portion of the Warrant being converted shall equal the remainder
derived from subtracting (a) the Exercise Price multiplied by the number of
shares of Common Stock being converted from (b) the Market Price of the Common
Stock multiplied by the number of shares of Common Stock being
converted.  As used herein, the term "Market Price" at any date shall
be deemed to be the last reported sale price of the Common Stock on such date,
or, in case no such reported sale takes place on such day, the average of the
last reported sale prices for the immediately preceding three trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or if any
such exchange on which the Common Stock is listed is not its principal trading
market, the last reported sale price as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the Nasdaq Stock Market system, or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets, or similar organization, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.

    

    2.3.2           Exercise of Conversion
Right.  The Conversion Right may be exercised by the Holder on
any business day on or after the Commencement Date and not later than the
Expiration Date by delivering the Warrant with a duly executed exercise form
attached hereto with the conversion section completed to the Company, exercising
the Conversion Right and specifying the total number of shares of Common Stock
the Holder will purchase pursuant to such conversion.

    

    3.           Vesting.

    

    3.1           This
Warrant shall vest as follows:

    

    
      	
              (i)  

            	
              25%
      upon issuance;

            

    

    
      	
              (ii)  

            	
              25%
      on December 31, 2009;

            

    

    
      	
              (iii)  

            	
              25%
      on December 31, 2010; and

            

    

    
      	
              (iv)  

            	
              25%
      on December 31, 2011.

            

    

    

    Notwithstanding
the foregoing, this Warrant shall vest, in full, immediately upon a change in
control of the Company.  Further, to the extent a Triggering Event
takes place prior to December 31, 2011, the non-vested Warrants vesting on
December 31 in the year of the Triggering Event, shall be deemed to have vested
as at the time of the Triggering Event, on a proportionate basis which takes
into account the number of Warrants vesting on December 31 in the year of the
Triggering Event and the number of days which have passed in the year of the
Triggering Event at the time of the Triggering Event.  By way of
example, a Holder holding 100,000 Warrants subject to vesting on December 31 in
the year in which a Triggering Event occurs, would have 25,000 of such Warrants
be deemed vested as at the time of the Triggering Event when the Triggering
Event takes place three months into such year and 75,000 of such Warrants would
be deemed to have expired as at the time of the Triggering Event.

     

    
      
        
        

      

      
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    4.           Transfer.

    

    4.1           General
Restrictions.  The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone, except with the written consent of the
Company, except upon compliance with, or pursuant to exemptions from, applicable
securities laws and except to the extent that this Warrant has
vested.  In order to make any permitted assignment, the Holder must
deliver to the Company the assignment form attached hereto duly executed and
completed, together with this Warrant and payment of all transfer taxes, if any,
payable in connection therewith. The Company shall immediately transfer this
Warrant on the books of the Company, once it has approved the transfer, and
shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment. The Company generally will
consent to the transfer of this Warrant to (i) executors, administrators or
beneficiaries of the estates of deceased Holders who have been employees of or
consultants to the Company, guardians or members of a committee for incompetent
former employees and consultants, or similar persons duly authorized by law to
administer the estate or assets of former employees and consultants, and (ii) to
family members of employees and consultants who have acquired the Warrant from
the employee or consultant through a gift or a domestic relations order. For
purposes of this Warrant, “family member” includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee’s or consultant’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the employee or
consultant) control the management of assets, and any other entity in which
these persons (or the employee or consultant) own more than fifty percent of the
voting interests.

    

    4.2           Restrictions Imposed by the
Securities Act.  This Warrant and the Securities underlying
this Warrant shall not be transferred unless and until (i) the Company has
received the opinion of counsel for the Holder that such securities may be sold
pursuant to an exemption from registration under the Act, and applicable state
law, the availability of which is established to the reasonable satisfaction of
the Company, or (ii) a registration statement relating to such Securities has
been filed by the Company and declared effective by the Securities and Exchange
Commission and compliance with applicable state law.

    

    5.           New Warrants to be
Issued.

    

    5.1           Partial Exercise or
Transfer.  Subject to the restrictions in Section 3 hereof,
this Warrant may be exercised or assigned in whole or in part.  In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds (or conversion equivalent) sufficient to pay any Exercise Price
and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the
Holder evidencing the right of the Holder to purchase the aggregate number of
shares of Common Stock and Warrants purchasable hereunder as to which this
Warrant has not been exercised or assigned.

    

    5.2           Lost
Certificate.  Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the
Company.

     

    
      
        
        

      

      
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    6.           Registration
Rights.

    

    6.1           "Piggy-Back"
Registration.

    

    6.1.1           Grant of
Right.  The Holders of this Warrant shall have the right during
the exercise period to include all or any of the shares of Common Stock
underlying this Warrant (collectively, the "Registrable Securities") as part of
any registration of securities filed by the Company, to the extent permitted
(other than in connection with a transaction contemplated by Rule 145(a)
promulgated under the Act or any equivalent form); provided, however, that if,
in the written opinion of the Company's managing underwriter or underwriters, if
any, for such offering (the "Underwriter"), the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the
selling stockholder(s), will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without materially and adversely affecting the
entire offering, the Company shall nevertheless register all or any portion of
the Registrable Securities required to be so registered but such Registrable
Securities shall not be sold by the Holders until 90 days after the registration
statement for such offering has become effective; and provided further that, if
any securities are registered for sale on behalf of other stockholders in such
offering and such stockholders have not agreed to defer such sale until the
expiration of such 90 day period, the number of securities to be sold by all
stockholders in such public offering during such 90 day period shall be
apportioned pro rata
among all such selling stockholders, including all holders of the
Registrable Securities, according to the total amount of securities of the
Company proposed to be sold by said selling stockholders, including all holders
of the Registrable Securities.

    

    6.1.2           Terms.  The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including any filing fees payable to FINRA, but the
Holders shall pay any and all underwriting commissions and the expenses of any
legal counsel selected by the Holders to represent them in connection with the
sale of the Registrable Securities.  In the event of such a proposed
regis­tration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than thirty days written notice prior to
the proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by
the Holder.  The holders of the Registrable Securities shall exercise
the "piggy-back" rights provided for herein by giving written notice, within
twenty days of the receipt of the Company's notice of its intention to file a
registration statement.  The Company shall cause any registration
statement filed pursuant to the above "piggyback" rights to remain effective
until the earlier of (i) all Registrable Securities thereunder have been sold,
or are freely saleable as to amount, without restriction, under an exemption
from the registration requirements or (ii) two years from the date of
effectiveness of such registration statement. Nothing contained in this Warrant
shall be construed as requiring any Holder to exercise this Warrant or any part
thereof prior to the initial filing of any registration statement or the
effectiveness thereof.

    

    6.2           General
Terms

    

    6.2.1           Indemnification.

    

    (a)           The
Company shall indemnify the Holder(s) of the Registrable Securities to be sold
pursuant to any registration statement hereunder and any underwriter or person
deemed to be an underwriter under the Act and each person, if any, who controls
such Holders or underwriters or persons deemed to be underwriters within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement.  The
Holder(s) of the Registrable Securities to be sold pursuant to such registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify the Company, against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, in writing, for
specific inclusion in such registration statement, provided, however,
that in no event shall the aggregate amount payable by a Holder exceed
the profit, if any, earned by such Holder as a result of the exercise by him of
the Warrants and the sale by him of the underlying shares of Common
Stock.

     

    
      
        
        

      

      
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    (b)           If
any action is brought against a party hereto, ("Indemnified Party") in respect
of which indemnity may be sought against the other party ("Indemnifying Party"),
such Indemnified Party shall promptly notify Indemnifying Party in writing of
the institution of such action and Indemnifying Party shall assume the defense
of such action, including the employment and fees of counsel reasonably
satisfactory to the Indemnified Party.  Such Indemnified Party shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment of such counsel shall have been authorized in writing
by Indemnifying Party in connection with the defense of such action, or (ii)
Indemnifying Party shall not have employed counsel to defend such action, or
(iii) such Indemnified Party shall have been advised by counsel that there may
be one or more legal defenses available to it which may result in a conflict
between the Indemnified Party and Indemnifying Party (in which case Indemnifying
Party shall not have the right to direct the defense of such action on behalf of
the Indemnified Party), in any of which events, the reasonable fees and expenses
of not more than one additional firm of attorneys designated in writing by the
Indemnified Party shall be borne by Indemnifying
Party.  Notwithstanding anything to the contrary contained herein, if
Indemnified Party shall assume the defense of such action as provided above,
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent.

    

    (c)           If
the indemnification or reimbursement provided for hereunder is finally
judicially determined by a court of competent jurisdiction to be unavailable to
an Indemnified Party (other than as a consequence of a final judicial
determination of willful misconduct, bad faith or gross negligence of such
Indemnified Party), then Indemnifying Party agrees, in lieu of indemnifying such
Indemnified Party, to contribute to the amount paid or payable by such
Indemnified Party (i) in such proportion as is appropriate to reflect the
relative benefits received, or sought to be received, by Indemnifying Party on
the one hand and by such Indemnified Party on the other or (ii) if (but only if)
the allocation provided in clause (i) of this sentence is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in such clause (i) but also the relative fault of
Indemnifying Party and of such Indemnified Party; provided, however,
that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.

    

    (d)           The
rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise.

    

    6.2.2           Exercise of
Warrants.  Nothing contained in this Warrant shall be construed
as requiring the Holder(s) to exercise their Warrants prior to or after the
initial filing of any registration statement or the effectiveness
thereof.

     

    
      
        
        

      

      
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    6.2.3           Documents Delivered to
Holders.  The Company shall furnish to each Holder
participating in any of the foregoing offerings and to each Underwriter of any
such offering, if any, a signed counterpart, addressed to such Holder or
Underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a "cold comfort" letter dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the date of the closing
under the underwriting agreement) signed by the independent public accountants
who have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.  The
Company shall also deliver promptly to each Holder participating in the offering
requesting the correspondence and memoranda described below and to the managing
underwriter copies of all correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD.  Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and inde­pendent
auditors, all to such reasonable extent and at such reasonable times and as
often as any such Holder shall reasonably request.

    

    7.           Adjustments

    

    7.1           Adjustments to Exercise
Price and Number of Securities.  The Exercise Price and the
number of shares of Common Stock underlying this Warrant shall be subject to
adjustment from time to time as hereinafter set forth:

    

    7.1.1           Stock Dividends -
Recapitalization, Reclassification, Split-Ups.  If, after the
date hereof, and subject to the provisions of Section 7.2 below, the number of
outstanding shares of Common Stock is increased by a stock dividend on the
Common Stock payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.

    

    7.1.2           Aggregation of
Shares.  If after the date hereof, and subject to the
provisions of Section 7.2, the number of outstanding shares of Common Stock is
decreased by a consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective date thereof, the
number of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.

    

    7.1.3           Adjustments in Exercise
Price.  Whenever the number of shares of Common Stock
purchasable upon the exercise of this Warrant is adjusted, as provided in this
Section 7.1, the Exercise Price shall be adjusted (to the nearest cent) by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.

     

    
      
        
        

      

      
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    7.1.4           Replacement of Securities
upon Reorganization, etc.  In case of any reclassification or
reorganization of the outstanding shares of Common Stock other than a change
covered by Section 7.1.1 hereof or which solely affects the par value of such
shares of Common Stock, or in the case of any merger or consolidation of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing corporation and which does not result in
any reclassification or reorganization of the outstanding shares of Common
Stock), or in the case of any sale or conveyance to another corporation or
entity of the property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the Holder of this
Warrant shall have the right thereafter (until the expiration of the right of
exercise of this Warrant) to receive upon the exercise hereof, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or
consolidation, or upon a dissolution following any such sale or other transfer,
by a Holder of the number of shares of Common Stock of the Company obtainable
upon exercise of this Warrant immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered by
Sections 7.1.1 or 7.1.2, then such adjustment shall be made pursuant to Sections
7.1.1, 7.1.2, 7.1.3 and this Section 7.1.4. The provisions of this Section 7.1.4
shall similarly apply to successive reclassifications, reorganizations, mergers
or consolidations, sales or other transfers.

    

    7.1.5           Changes in Form of
Warrant.  This form of Warrant need not be changed because of
any change pursuant to this Section, and Warrants issued after such change may
state the same Exercise Price and the same number of shares of Common Stock and
Warrants as are stated in the Warrants initially issued pursuant to this
Agreement.  The acceptance by any Holder of the issuance of new
Warrants reflecting a required or permissive change shall not be deemed to waive
any rights to a prior adjustment or the computation thereof.

    

    7.2           Elimination of Fractional
Interests.  The Company shall not be required to issue
certificates representing fractions of shares of Common Stock upon the exercise
of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
any fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or other securities, properties or
rights.

    

    7.3           Surrender of
Warrant.  The Board of Directors of the Company may, in the
event of an acquisition of substantially all of the Company’s assets or at least
65% of the combined voting power of the Company’s then outstanding securities in
one or more transactions (including by way of merger or reorganization) which
has been approved by the Company’s Board of Directors, require a Holder to
relinquish this Warrant and all of its rights to the Company upon the tender by
the Company to Holder of cash in an amount equal to the Value of the
Warrant.  The Holder of the Warrant agrees to surrender this Warrant
and its rights on the tender of the Value, and no formal consent or agreement
shall be required of the Holder to extinguish this Warrant upon payment of the
Value.  Holder has no right to reject the tender of the Value of the
Warrant.

    

    8.           Reservation and
Listing.  The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof.  The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefore, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights of
any stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon exercise
of the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges (or, if applicable on Nasdaq or the Over-the-Counter
Bulletin Board) on which the Common Stock is then listed and/or
quoted.

     

    
      
        
        

      

      
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    9.           Certain Notice
Requirements.

    

    9.1           Holder's Right to Receive
Notice.  Nothing herein shall be construed as conferring upon
the Holders the right to vote or consent or to receive notice as a stockholder
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company.  If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 9.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale.  Such
notice shall specify such record date or the date of the closing of the transfer
books, as the case may be.

    

    9.2           Events Requiring
Notice.  The Company shall be required to give the notice
described in this Section 9 upon one or more of the following
events:  (i) if the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution, or (ii) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any Warrant, right or Warrant to subscribe therefore, or (iii) a merger or
reorganization in which the Company is not the surviving party, or (iv) a
dissolution, liquidation or winding up of the Company (other than in connection
with a consolidation or merger) or a sale of all or substantially all of its
property, assets and business shall be proposed.

    

    9.3           Notice of Change in Exercise
Price.  The Company shall, promptly after an event requiring a
change in the Exercise Price pursuant to Section 7 hereof, send notice to the
Holders of such event and change ("Price Notice").  The Price Notice
shall describe the event causing the change and the method of calculating same
and shall be certified as being true and accurate by the Company's President and
Chief Financial Officer.

    

    9.4           Transmittal of
Notices.  All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows:  (i) if
to the registered Holder of this Warrant, to the address of such Holder as shown
on the books of the Company, or (ii) if to the Company, to its principal
executive office.

    

    10.           Miscellaneous.

    

    10.1           Headings.  The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Warrant.

    

    10.2           Entire
Agreement.  This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof.

    

    10.3           Binding
Effect.  This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein
contained.

     

    
      
        
        

      

      
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    10.4           Governing Law; Submission to
Jurisdiction.  This Warrant shall be governed by and construed
and enforced in accordance with the law of the State of New York, without giving
effect to conflict of laws.  The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way to
this Warrant shall be brought and enforced in the courts of the State of New
York or of the United States of America in a district court located in the State
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive.  The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient
forum.  Any process or summons to be served upon the Company may be
served by transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in
Section 8 hereof.  Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or
claim.  The Company agrees that the prevailing party(ies) in any such
action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys' fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefore.

    

    10.5           Waiver,
Etc.  The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of the ____ day of October, 2009.

    

    Flex
Fuels Energy Inc.

    

    

    

    By:__________________________________

          Name:

          Title:  Chief
Executive Officer

     

    
      
        
        

      

      
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    Form to
be used to exercise Warrant:

    

    (Fill in
address and name of company)

    

    

    __________________________

    __________________________

    __________________________

    

    Date:  _____________________,
20___

    

    The
undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase ________ shares of Common Stock of _________________________ and hereby
makes payment of $____________ (at the rate of $_________ per share of Common
Stock) in payment of the Exercise Price pursuant thereto.  Please
issue the Common Stock as to which this Warrant is exercised in accordance with
the instructions given below.

    

    or

    

    The
undersigned hereby elects irrevocably to convert its right to purchase
____________ shares of Common Stock purchasable under the within Warrant into
__________ shares of Common Stock of __________________________________________
(based on a "Market Price" of $________ per share of Common
Stock).  Please issue the Common Stock in accordance with the
instructions given below.

    

    

    ______________________________________

    Signature

    

    ___________________________

    Signature
Guaranteed

    

    NOTICE:  The
signature to this form must correspond with the name as written upon the face of
the within Warrant in every particular without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank, other than a savings bank,
or by a trust company or by a firm having membership on a registered national
securities exchange.

    

    INSTRUCTIONS FOR REGISTRATION OF
SECURITIES

    

    

    Name                      ________________________________________________________

    (Print in
Block Letters)

    

    

    
      	
              Address

            	
              ________________________________________________________

            

    

     

    
      
        
        

      

      
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    Form to
be used to assign Warrant:

    

    ASSIGNMENT

    (To be
executed by the registered Holder to effect a transfer of the within
Warrant):

    

    FOR VALUE
RECEIVED, ________________________________ does hereby sell, assign and transfer
unto _________________________________ the right to purchase
_____________________ shares of Common Stock of
_________________________________ ("Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.

    

    

    Dated:____________________,
20___

    

    

    

    ______________________________________

    Signature

    
 

    NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Warrant in every particular without alteration or enlargement
or any change whatsoever, and must be guaranteed by a bank, other than a savings
bank, or by a trust company or by a firm having membership on a registered
national securities exchange.

     

    11ex42.htm

     

    Exhibit
4.2

    THE
REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL
NOT SELL, TRANSFER OR ASSIGN

    THIS
WARRANT EXCEPT AS HEREIN PROVIDED.

    

    VOID
AFTER 5:00 P.M. EASTERN TIME, OCTOBER __, 2016

    

    COMMON
STOCK PURCHASE WARRANT

    

    For
the Purchase of

    

    ________
Shares of Common Stock

    

    of

    

    FLEX
FUELS ENERGY, INC.

    

    

    1.           Warrant.

    

    THIS
CERTIFIES THAT, _____ ("Holder"), or such Holder’s legal assigns, is entitled,
at any time or from time to time, upon vesting of this Warrant (the
"Commencement Date"), and at or before 5:00 p.m., Eastern Time on OCTOBER __,
2016 ("Expiration Date"), but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to _____ shares of common stock (”Common
Stock”) of Flex Fuels Energy, Inc. (the “Company”) at an exercise price of $0.07
per share.  Notwithstanding the foregoing, if during the term of this
Warrant the Holder shall cease, for any reason, to be an employee, officer or
director of the Company (the “Triggering Event”), as the case may be, including
by reason of death, the Warrant shall immediately expire to the extent not
vested at the time of the Triggering Event.  If the Expiration Date is
a day on which banking institutions are authorized by law to close, then this
Warrant may be exercised on the next succeeding day which is not such a day in
accordance with the terms herein. This Warrant is initially exercisable at the
above stated prices per share of Common Stock purchased; provided, however, that
upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Warrant, including the exercise prices and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified.  The term "Exercise Price" shall mean the either
collectively or singly, as the context requires, the initial exercise price
stated above or the adjusted exercise price, also depending on the context, of a
share of Common Stock.  The term "Securities" shall mean the shares of
Common Stock issuable upon exercise of this Warrant.

    

    2.           Exercise.

    

    2.1           Exercise
Form.  In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased.  If the subscription rights represented
hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the
Expiration Date, this Warrant shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.

    

    2.2           Legend.  Each
certificate for Securities purchased under this Warrant shall bear a legend as
follows, unless such Securities have been registered under the Securities Act of
1933, as amended ("Act"):

    

    "The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended ("Act") or applicable state law. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act and applicable state
law."

     

    
      
        
        

      

      
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    2.3           Cashless
Exercise.

    

    2.3.1           Determination of
Amount.  In lieu of the payment of the Exercise Price in cash,
the Holder shall have the right (but not the obligation) to convert this
Warrant, in whole or in part, into Common Stock ("Conversion Right"), as
follows: upon exercise of the Conversion Right, the Company shall deliver to the
Holder (without payment by the Holder of any of the Exercise Price) that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the
"Value" (as defined below) of the portion of the Warrant being converted at the
time the Conversion Right is exercised by (y) the Market Price.  The
"Value" of the portion of the Warrant being converted shall equal the remainder
derived from subtracting (a) the Exercise Price multiplied by the number of
shares of Common Stock being converted from (b) the Market Price of the Common
Stock multiplied by the number of shares of Common Stock being
converted.  As used herein, the term "Market Price" at any date shall
be deemed to be the last reported sale price of the Common Stock on such date,
or, in case no such reported sale takes place on such day, the average of the
last reported sale prices for the immediately preceding three trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or if any
such exchange on which the Common Stock is listed is not its principal trading
market, the last reported sale price as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the Nasdaq Stock Market system, or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets, or similar organization, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.

    

    2.3.2           Exercise of Conversion
Right.  The Conversion Right may be exercised by the Holder on
any business day on or after the Commencement Date and not later than the
Expiration Date by delivering the Warrant with a duly executed exercise form
attached hereto with the conversion section completed to the Company, exercising
the Conversion Right and specifying the total number of shares of Common Stock
the Holder will purchase pursuant to such conversion.

    

    3.           Vesting.

    

    3.1           This
Warrant shall vest as follows:

    

    
      	
              (i)  

            	
              50%
      upon the Company achieving an average closing price for the Company’s
      Common Stock of at least $0.45 per share over a period of twenty
      consecutive trading days on or prior to October 21, 2012;
    and

            

    

    
      	
              (ii)  

            	
              50%
      upon the Company achieving an average closing price for the Company’s
      Common Stock of at least $1.00 per share over a period of twenty
      consecutive trading days on or prior to October 21,
  2012.

            

    

    

    Notwithstanding
the foregoing, this Warrant shall vest, in full, immediately upon a change in
control of the Company.

     

    
      
        
        

      

      
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    4.           Transfer.

    

    4.1           General
Restrictions.  The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone, except with the written consent of the
Company, except upon compliance with, or pursuant to exemptions from, applicable
securities laws and except to the extent that this Warrant has
vested.  In order to make any permitted assignment, the Holder must
deliver to the Company the assignment form attached hereto duly executed and
completed, together with this Warrant and payment of all transfer taxes, if any,
payable in connection therewith. The Company shall immediately transfer this
Warrant on the books of the Company, once it has approved the transfer, and
shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment. The Company generally
will consent to the transfer of this Warrant to (i) executors, administrators or
beneficiaries of the estates of deceased Holders who have been employees of or
consultants to the Company, guardians or members of a committee for incompetent
former employees and consultants, or similar persons duly authorized by law to
administer the estate or assets of former employees and consultants, and (ii) to
family members of employees and consultants who have acquired the Warrant from
the employee or consultant through a gift or a domestic relations order. For
purposes of this Warrant, “family member” includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee’s or consultant’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the employee or
consultant) control the management of assets, and any other entity in which
these persons (or the employee or consultant) own more than fifty percent of the
voting interests.

    

    4.2           Restrictions Imposed by the
Securities Act.  This Warrant and the Securities underlying
this Warrant shall not be transferred unless and until (i) the Company has
received the opinion of counsel for the Holder that such securities may be sold
pursuant to an exemption from registration under the Act, and applicable state
law, the availability of which is established to the reasonable satisfaction of
the Company, or (ii) a registration statement relating to such Securities has
been filed by the Company and declared effective by the Securities and Exchange
Commission and compliance with applicable state law.

    

    5.           New Warrants to be
Issued.

    

    5.1           Partial Exercise or
Transfer.  Subject to the restrictions in Section 3 hereof,
this Warrant may be exercised or assigned in whole or in part.  In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds (or conversion equivalent) sufficient to pay any Exercise Price
and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the
Holder evidencing the right of the Holder to purchase the aggregate number of
shares of Common Stock and Warrants purchasable hereunder as to which this
Warrant has not been exercised or assigned.

    

    5.2           Lost
Certificate.  Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the
Company.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    6.           Registration
Rights.

    

    6.1           "Piggy-Back"
Registration.

    

    6.1.1           Grant of
Right.  The Holders of this Warrant shall have the right during
the exercise period to include all or any of the shares of Common Stock
underlying this Warrant (collectively, the "Registrable Securities") as part of
any registration of securities filed by the Company, to the extent permitted
(other than in connection with a transaction contemplated by Rule 145(a)
promulgated under the Act or any equivalent form); provided, however, that if,
in the written opinion of the Company's managing underwriter or underwriters, if
any, for such offering (the "Underwriter"), the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the
selling stockholder(s), will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without materially and adversely affecting the
entire offering, the Company shall nevertheless register all or any portion of
the Registrable Securities required to be so registered but such Registrable
Securities shall not be sold by the Holders until 90 days after the registration
statement for such offering has become effective; and provided further that, if
any securities are registered for sale on behalf of other stockholders in such
offering and such stockholders have not agreed to defer such sale until the
expiration of such 90 day period, the number of securities to be sold by all
stockholders in such public offering during such 90 day period shall be
apportioned pro rata
among all such selling stockholders, including all holders of the
Registrable Securities, according to the total amount of securities of the
Company proposed to be sold by said selling stockholders, including all holders
of the Registrable Securities.

    

    6.1.2           Terms.  The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including any filing fees payable to FINRA, but the
Holders shall pay any and all underwriting commissions and the expenses of any
legal counsel selected by the Holders to represent them in connection with the
sale of the Registrable Securities.  In the event of such a proposed
regis­tration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than thirty days written notice prior to
the proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by
the Holder.  The holders of the Registrable Securities shall exercise
the "piggy-back" rights provided for herein by giving written notice, within
twenty days of the receipt of the Company's notice of its intention to file a
registration statement.  The Company shall cause any registration
statement filed pursuant to the above "piggyback" rights to remain effective
until the earlier of (i) all Registrable Securities thereunder have been sold,
or are freely saleable as to amount, without restriction, under an exemption
from the registration requirements or (ii) two years from the date of
effectiveness of such registration statement. Nothing contained in this Warrant
shall be construed as requiring any Holder to exercise this Warrant or any part
thereof prior to the initial filing of any registration statement or the
effectiveness thereof.

    

    6.2           General
Terms

    

    6.2.1           Indemnification.

    

    (a)           The
Company shall indemnify the Holder(s) of the Registrable Securities to be sold
pursuant to any registration statement hereunder and any underwriter or person
deemed to be an underwriter under the Act and each person, if any, who controls
such Holders or underwriters or persons deemed to be underwriters within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement.  The
Holder(s) of the Registrable Securities to be sold pursuant to such registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify the Company, against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, in writing, for
specific inclusion in such registration statement, provided, however,
that in no event shall the aggregate amount payable by a Holder exceed
the profit, if any, earned by such Holder as a result of the exercise by him of
the Warrants and the sale by him of the underlying shares of Common
Stock.

     

    
      
        
        

      

      
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    (b)           If
any action is brought against a party hereto, ("Indemnified Party") in respect
of which indemnity may be sought against the other party ("Indemnifying Party"),
such Indemnified Party shall promptly notify Indemnifying Party in writing of
the institution of such action and Indemnifying Party shall assume the defense
of such action, including the employment and fees of counsel reasonably
satisfactory to the Indemnified Party.  Such Indemnified Party shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment of such counsel shall have been authorized in writing
by Indemnifying Party in connection with the defense of such action, or (ii)
Indemnifying Party shall not have employed counsel to defend such action, or
(iii) such Indemnified Party shall have been advised by counsel that there may
be one or more legal defenses available to it which may result in a conflict
between the Indemnified Party and Indemnifying Party (in which case Indemnifying
Party shall not have the right to direct the defense of such action on behalf of
the Indemnified Party), in any of which events, the reasonable fees and expenses
of not more than one additional firm of attorneys designated in writing by the
Indemnified Party shall be borne by Indemnifying
Party.  Notwithstanding anything to the contrary contained herein, if
Indemnified Party shall assume the defense of such action as provided above,
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent.

    

    (c)           If
the indemnification or reimbursement provided for hereunder is finally
judicially determined by a court of competent jurisdiction to be unavailable to
an Indemnified Party (other than as a consequence of a final judicial
determination of willful misconduct, bad faith or gross negligence of such
Indemnified Party), then Indemnifying Party agrees, in lieu of indemnifying such
Indemnified Party, to contribute to the amount paid or payable by such
Indemnified Party (i) in such proportion as is appropriate to reflect the
relative benefits received, or sought to be received, by Indemnifying Party on
the one hand and by such Indemnified Party on the other or (ii) if (but only if)
the allocation provided in clause (i) of this sentence is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in such clause (i) but also the relative fault of
Indemnifying Party and of such Indemnified Party; provided, however,
that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.

    

    (d)           The
rights accorded to Indemnified Parties hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise.

    

    6.2.2           Exercise of
Warrants.  Nothing contained in this Warrant shall be construed
as requiring the Holder(s) to exercise their Warrants prior to or after the
initial filing of any registration statement or the effectiveness
thereof.

    

    6.2.3           Documents Delivered to
Holders.  The Company shall furnish to each Holder
participating in any of the foregoing offerings and to each Underwriter of any
such offering, if any, a signed counterpart, addressed to such Holder or
Underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a "cold comfort" letter dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the date of the closing
under the underwriting agreement) signed by the independent public accountants
who have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.  The
Company shall also deliver promptly to each Holder participating in the offering
requesting the correspondence and memoranda described below and to the managing
underwriter copies of all correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD.  Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and inde­pendent
auditors, all to such reasonable extent and at such reasonable times and as
often as any such Holder shall reasonably request.

     

    
      
        
        

      

      
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    7.           Adjustments

    

    7.1           Adjustments to Exercise
Price and Number of Securities.  The Exercise Price and the
number of shares of Common Stock underlying this Warrant shall be subject to
adjustment from time to time as hereinafter set forth:

    

    7.1.1           Stock Dividends -
Recapitalization, Reclassification, Split-Ups.  If, after the
date hereof, and subject to the provisions of Section 7.2 below, the number of
outstanding shares of Common Stock is increased by a stock dividend on the
Common Stock payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common Stock
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares.

    

    7.1.2           Aggregation of
Shares.  If after the date hereof, and subject to the
provisions of Section 7.2, the number of outstanding shares of Common Stock is
decreased by a consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective date thereof, the
number of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.

    

    7.1.3           Adjustments in Exercise
Price.  Whenever the number of shares of Common Stock
purchasable upon the exercise of this Warrant is adjusted, as provided in this
Section 7.1, the Exercise Price shall be adjusted (to the nearest cent) by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.

    

    7.1.4           Replacement of Securities
upon Reorganization, etc.  In case of any reclassification or
reorganization of the outstanding shares of Common Stock other than a change
covered by Section 7.1.1 hereof or which solely affects the par value of such
shares of Common Stock, or in the case of any merger or consolidation of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing corporation and which does not result in
any reclassification or reorganization of the outstanding shares of Common
Stock), or in the case of any sale or conveyance to another corporation or
entity of the property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the Holder of this
Warrant shall have the right thereafter (until the expiration of the right of
exercise of this Warrant) to receive upon the exercise hereof, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or
consolidation, or upon a dissolution following any such sale or other transfer,
by a Holder of the number of shares of Common Stock of the Company obtainable
upon exercise of this Warrant immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered by
Sections 7.1.1 or 7.1.2, then such adjustment shall be made pursuant to Sections
7.1.1, 7.1.2, 7.1.3 and this Section 7.1.4. The provisions of this Section 7.1.4
shall similarly apply to successive reclassifications, reorganizations, mergers
or consolidations, sales or other transfers.

     

    
      
        
        

      

      
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    7.1.5           Changes in Form of
Warrant.  This form of Warrant need not be changed because of
any change pursuant to this Section, and Warrants issued after such change may
state the same Exercise Price and the same number of shares of Common Stock and
Warrants as are stated in the Warrants initially issued pursuant to this
Agreement.  The acceptance by any Holder of the issuance of new
Warrants reflecting a required or permissive change shall not be deemed to waive
any rights to a prior adjustment or the computation thereof.

    

    7.2           Elimination of Fractional
Interests.  The Company shall not be required to issue
certificates representing fractions of shares of Common Stock upon the exercise
of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
any fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or other securities, properties or
rights.

    

    7.3           Surrender of
Warrant.  The Board of Directors of the Company may, in the
event of an acquisition of substantially all of the Company’s assets or at least
65% of the combined voting power of the Company’s then outstanding securities in
one or more transactions (including by way of merger or reorganization) which
has been approved by the Company’s Board of Directors, require a Holder to
relinquish this Warrant and all of its rights to the Company upon the tender by
the Company to Holder of cash in an amount equal to the Value of the
Warrant.  The Holder of the Warrant agrees to surrender this Warrant
and its rights on the tender of the Value, and no formal consent or agreement
shall be required of the Holder to extinguish this Warrant upon payment of the
Value.  Holder has no right to reject the tender of the Value of the
Warrant.

    

    8.           Reservation and
Listing.  The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof.  The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefore, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights of
any stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon exercise
of the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges (or, if applicable on Nasdaq or the Over-the-Counter
Bulletin Board) on which the Common Stock is then listed and/or
quoted.

    

    9.           Certain Notice
Requirements.

    

    9.1           Holder's Right to Receive
Notice.  Nothing herein shall be construed as conferring upon
the Holders the right to vote or consent or to receive notice as a stockholder
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company.  If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 9.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale.  Such
notice shall specify such record date or the date of the closing of the transfer
books, as the case may be.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    9.2           Events Requiring
Notice.  The Company shall be required to give the notice
described in this Section 9 upon one or more of the following
events:  (i) if the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution, or (ii) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any Warrant, right or Warrant to subscribe therefore, or (iii) a merger or
reorganization in which the Company is not the surviving party, or (iv) a
dissolution, liquidation or winding up of the Company (other than in connection
with a consolidation or merger) or a sale of all or substantially all of its
property, assets and business shall be proposed.

    

    9.3           Notice of Change in Exercise
Price.  The Company shall, promptly after an event requiring a
change in the Exercise Price pursuant to Section 7 hereof, send notice to the
Holders of such event and change ("Price Notice").  The Price Notice
shall describe the event causing the change and the method of calculating same
and shall be certified as being true and accurate by the Company's President and
Chief Financial Officer.

    

    9.4           Transmittal of
Notices.  All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows:  (i) if
to the registered Holder of this Warrant, to the address of such Holder as shown
on the books of the Company, or (ii) if to the Company, to its principal
executive office.

    

    10.           Miscellaneous.

    

    10.1           Headings.  The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Warrant.

    

    10.2           Entire
Agreement.  This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof.

    

    10.3           Binding
Effect.  This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein
contained.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    10.4           Governing Law; Submission to
Jurisdiction.  This Warrant shall be governed by and construed
and enforced in accordance with the law of the State of New York, without giving
effect to conflict of laws.  The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way to
this Warrant shall be brought and enforced in the courts of the State of New
York or of the United States of America in a district court located in the State
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive.  The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient
forum.  Any process or summons to be served upon the Company may be
served by transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in
Section 8 hereof.  Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or
claim.  The Company agrees that the prevailing party(ies) in any such
action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys' fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefore.

    

    10.5           Waiver,
Etc.  The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of the ____ day of October, 2009.

    

    Flex
Fuels Energy Inc.

    

    

    

    By:__________________________________

          Name:

          Title:  Chief
Executive Officer

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Form to
be used to exercise Warrant:

    

    (Fill in
address and name of company)

    

    

    __________________________

    __________________________

    __________________________

    

    Date:  _____________________,
20___

    

    The
undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase ________ shares of Common Stock of _________________________ and hereby
makes payment of $____________ (at the rate of $_________ per share of Common
Stock) in payment of the Exercise Price pursuant thereto.  Please
issue the Common Stock as to which this Warrant is exercised in accordance with
the instructions given below.

    

    or

    

    The
undersigned hereby elects irrevocably to convert its right to purchase
____________ shares of Common Stock purchasable under the within Warrant into
__________ shares of Common Stock of __________________________________________
(based on a "Market Price" of $________ per share of Common
Stock).  Please issue the Common Stock in accordance with the
instructions given below.

    

    

    ______________________________________

    Signature

    

    ___________________________

    Signature
Guaranteed

    

    NOTICE:  The
signature to this form must correspond with the name as written upon the face of
the within Warrant in every particular without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank, other than a savings bank,
or by a trust company or by a firm having membership on a registered national
securities exchange.

    

    INSTRUCTIONS FOR REGISTRATION OF
SECURITIES

    

    

    Name                      ________________________________________________________

    (Print in
Block Letters)

    

    

    
      	
              Address

            	
              ________________________________________________________

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Form to
be used to assign Warrant:

    

    ASSIGNMENT

     

    (To be
executed by the registered Holder to effect a transfer of the within
Warrant):

    

    FOR VALUE
RECEIVED, ________________________________ does hereby sell, assign and transfer
unto _________________________________ the right to purchase
_____________________ shares of Common Stock of
_________________________________ ("Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.

    

    

    Dated:____________________,
20___

    

    

    

    ______________________________________

    Signature

    

     

    NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Warrant in every particular without alteration or enlargement
or any change whatsoever, and must be guaranteed by a bank, other than a savings
bank, or by a trust company or by a firm having membership on a registered
national securities exchange.

    

    

    
11

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