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Exhibit 10.1 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: September 2, 2008 $287,500 SENIOR SECURED CONVERTIBLE
PROMISSORY NOTE
DUE
December 31, 2009 FOR VALUE RECEIVED, BioGold Fuels
Corporation, a Nevada corporation (the "Company") promises to pay
to Heritage Opportunity Fund, LLC, a California limited liability
company or its registered assigns (the "Holder"), the outstanding
principal sum of up to $287,500 on or before December 31, 2009
as set forth below (the "Maturity Date"). This Senior Secured
Convertible Promissory Note (the "Note") is issued pursuant to the
Securities 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 7. "Maturity Date" shall have the
meaning set forth in Section 5 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 $287,500. "Parties" means BioGold Fuels
Corporation and Heritage Opportunity Fund, 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. 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.
Conversion . (a) Conversion Right. The Holder shall
have the right from time to time, and at any time on or prior to
the Maturity Date, to convert all or any part of the outstanding
and unpaid principal amount and interest of this Note into fully
paid and non-assessable shares of the Company’s common stock
(the "Stock") at the conversion price (the "Conversion Price")
determined as provided herein (a "Conversion"). The number of
shares of Stock to be issued upon conversion of this Note shall be
determined by dividing the Conversion Amount (as defined below) by
the applicable Conversion Price then in effect on the date
specified in the notice of conversion, in the form attached hereto
as Exhibit B (the "Notice of Conversion"), delivered to the
Company by the Holder in accordance with Section 3(d) below;
provided that the Notice of Conversion is submitted by facsimile
(or by other means resulting in, or reasonably expected to result
in, notice) to the Company before 5:00 p.m. California Time on such
conversion date (the "Conversion Date"). The term "Conversion
Amount" means, with respect to any conversion of this Note, the sum
of (i) the principal amount of this Note to be converted in
such conversion plus (ii) accrued and unpaid interest.
(b) Conversion Price. Subject to adjustment as provided for in
Section 3(f), the initial conversion price in effect on any
Conversion Date shall be the lesser of (i) $0.10 per share of
common stock or (ii) the price per share of common stock sold
by the Company in any equity financing (not including stock sales
or issuances to employees, consultants, directors or strategic
partners).
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(c) Authorized Shares. The Company covenants that during
the period the conversion right exists, the Company will reserve
from its authorized and unissued Stock a sufficient number of
shares, free from preemptive rights, to provide for the issuance of
Stock upon the full conversion of this Note. The Company represents
that such shares, upon issuance, will be duly and validly issued,
fully paid and non-assessable. In addition, if the Company shall
issue any securities or make any change to its capital structure
which would change the number of shares of Stock into which the
Note shall be convertible at the then current Conversion Price, the
Company shall at the same time make proper provision so that
thereafter there shall be a sufficient number of shares of Stock
authorized and reserved, free from preemptive rights, for
conversion of the outstanding Note. The Company
(i) acknowledges that it will irrevocably instruct its
transfer agent to issue certificates for the Stock issuable upon
conversion of this Note, and (ii) agrees that its issuance of
this Note shall constitute full authority to its officers and
agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
shares of Stock in accordance with the terms and conditions of this
Note. (d) Method of Conversion. (i) Mechanics of
Conversion. This Note may be converted by the Holder in whole or in
part at any time from time to time by (A) submitting to the
Company a Notice of Conversion (by facsimile or other reasonable
means of communication dispatched on the Conversion Date prior to
5:00 p.m. California Time) and (B) subject to
Section 3(d)(ii), surrendering this Note at the principal
office of the Company. (ii) Surrender of Note Upon Conversion.
Notwithstanding anything to the contrary set forth herein, upon
conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to
the Company unless the entire unpaid principal amount of this Note
is so converted. The Holder and the Company shall maintain records
showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory
to the Holder and the Company, so as not to require physical
surrender of this Note upon each such conversion. In the event of
any dispute or discrepancy, such records of the Company shall be
controlling and determinative in the absence of manifest error;
provided that the Holder shall provide the Company with all such
records and related calculations and documents for review by the
Company. Notwithstanding the foregoing, if any portion of this Note
is converted as aforesaid, the Holder may not transfer this Note
unless the Holder first physically surrenders this Note to the
Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note of like tenor, registered
as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the
remaining unpaid principal amount of this Note. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion
of a portion of this Note, the unpaid and unconverted principal
amount of this Note represented by this Note may be less than the
amount stated on the face hereof. (iii) Payment of Taxes. The
Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of
shares of Stock or other securities or property on conversion of
this Note in a name other than that of the Holder (or in street
name), and the Company shall not be required to issue or deliver
any such shares or other securities or property unless and until
the person or persons (other than the Holder or the custodian in
whose street name such shares are to be held for the Holder’s
account) requesting the issuance thereof, or the transferee or
transferees of such transfer, shall have paid to the Company the
amount of any such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
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(iv) Delivery of Stock Upon Conversion. Upon receipt by the
Company from the Holder of a facsimile transmission (or other
reasonable means of communication) of a Notice of Conversion
meeting the requirements for conversion as provided in this
Section 3(d), the Company shall issued and deliver to the
Holder certificates for the Stock issuable upon such conversion
within five (5) business days after such receipt (and, solely in
the case of conversion of the entire unpaid principal amount
hereof, surrender of this Note) in accordance with the terms
hereof. (v) Obligation of Company to Cause Delivery of Stock.
Upon receipt by the Company of a Notice of Conversion in accordance
with this Section 3(d), the Holder shall be deemed to be the
holder of record of the Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on this Note shall be reduced to reflect such conversion,
and, unless the Company defaults on its obligations under this
Section 3, all rights with respect to the portion of this Note
being so converted shall forthwith terminate except the right to
receive the Stock or other securities, cash or other assets, as
herein provided, on such conversion. If the Holder shall have given
a Notice of Conversion as provided herein, the Company’s
obligation to issue and deliver the certificates for Stock shall be
absolute and unconditional, irrespective of the absence of any
action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment
against any person or any action to enforce the same, any failure
or delay in the enforcement of any other obligation of the Company
to the holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Company, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the
Conversion Date so long as the Notice of Conversion is received by
the Company before 5:00 p.m. California Time, on such date.
(e) Concerning the Shares. The shares of Stock issuable upon
conversion of this Note may not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration
statement under the Act or (ii) the Company or its transfer
agent shall have been furnished with an opinion of counsel (which
opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that
the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such
shares are sold or transferred pursuant to Rule 144 under the
Act (or a successor rule) ("Rule 144") or (iv) such
shares are transferred to an "affiliate" (as defined in
Rule 144) of the Company who agrees to sell or otherwise
transfer the shares only in accordance with this Section 3(e) and
who is an accredited investor. Until such time as the shares of
Stock issuable upon conversion of this Note have been registered
under the Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the public sale of such securities,
each certificate for shares of Stock issuable upon conversion of
this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an
effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the
following form, as appropriate: "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SE
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