THIS WARRANT
HAS BEEN, AND THE UNITS WHICH MAY BE RECEIVED PURSUANT TO THE
EXERCISE OF THIS WARRANT WILL BE, ACQUIRED SOLELY FOR INVESTMENT
AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR SUCH UNITS HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY REGISTRATION OR
QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE SECURITIES
LAWS.
WARRANT TO PURCHASE UNITS OF
ADVANCED BIOENERGY, LLC
This Warrant to
Purchase Units (this “ Warrant ”)
certifies that, for good and valuable consideration, PJC CAPITAL
LLC , a Delaware limited liability company (along with its
permitted assignees, the “ Holder ” ) is
entitled to purchase from ADVANCED BIOENERGY, LLC , a
Delaware limited liability company (the “ Company
” ), SEVEN HUNDRED FORTY-TWO THOUSAND FIVE HUNDRED
NINETY-EIGHT (742,598) fully paid and nonassessable Units (as
defined in the Company’s Third Amended and Restated Operating
Agreement dated February 1, 2006 (the “LLC
Agreement” )) (the “Units”
) of the Company, as adjusted pursuant to Section 3
hereof (the “Warrant Units ” ), at an
exercise price per Unit equal to $1.50 (as adjusted pursuant to
Section 3 hereof) (the “Exercise
Price” ), subject to the provisions and upon the
terms and conditions hereinafter set forth. This Warrant is issued
in connection with the Amended and Restated Secured Term Loan Note
made by the Company in favor of the initial Holder dated as of the
date hereof (the “ Note ”). Unless
otherwise defined in this Warrant, capitalized terms defined in the
Note are used in this Warrant as defined in the Note.
This Warrant
replaces and is being delivered in exchange for the Warrant to
Purchase Units of Advanced BioEnergy, LLC, dated October 17,
2007 and numbered No. 1 issued by the Company to the Holder
(the “Prior Warrant” ), and as of the
date hereof the Prior Warrant shall be terminated and have no
further force and effect. The Holder shall surrender the Prior
Warrant in exchange for this Warrant.
(a)
Exercise Period . This Warrant may be exercised in whole or
part by the Holder during the term (as set forth in
Section 11 ) and in compliance with the provisions of
this Warrant at any time after the date of issuance set forth above
(the “Warrant Date” ), by the surrender
of this Warrant (with the notice of exercise form attached hereto
as Exhibit A (the “Notice of
Exercise” ) duly executed) at the principal office of
the Company. If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or
certificates representing Warrant Units, deliver to the Holder a
new Warrant evidencing the rights of the
Holder to
purchase the unpurchased Warrant Units, which new Warrant shall in
all other respects be identical with this Warrant, or at the
request of the Holder, appropriate notation may be made on this
Warrant and the same returned to the Holder.
(b)
Cash Exercise . Upon exercise of this Warrant, the Holder
shall pay the Company an amount equal to the product of
(x) the Exercise Price multiplied by (y) the total number
of Warrant Units purchased pursuant to the Exercise of this
Warrant, by wire transfer or check payable to the order of the
Company. The Holder shall be deemed to have become the holder of
record of, and shall be treated for all purposes as the record
holder of, the Warrant Units represented by such exercise (and such
Warrant Units shall be deemed to have been issued) immediately
prior to the close of business on the date upon which this Warrant
is exercised.
(c)
Net Exercise . The Exercise Price also may be paid at the
Holder’s election by surrender of all or a portion of the
Warrant for Units to be exercised under this Warrant (
“Net Exercise” ). If the Holder elects
the Net Exercise method, the Company will issue Warrant Units in
accordance with the following formula:
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X
=
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the
number of Warrant Units to be issued upon exercise of the
Warrant
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Y
=
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the
number of Warrant Units requested to be exercised
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A
=
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the
fair market value of 1 Unit on the date of exercise of this
Warrant
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B
=
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the
Exercise Price
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For purposes of
the above calculation, the fair market value of a Unit shall
mean:
(i) if at any time the Units are not listed on any
securities exchange or traded in the over-the-counter market, the
fair market value of the Units shall be the highest price per Unit
which the Company could obtain from a willing buyer (other than an
employee, director or “Affiliate” of the Company, as
such term is defined in Rule 405 under the Securities Act of
1933, as amended (the “ Securities Act ”)
for Units sold by the Company, as determined in good faith by its
Directors (as defined in the LLC Agreement);
(ii) if the exercise is in connection with the conversion of
the Units to common stock of the Company ( “Common
Stock”) in order to facilitate a public offering of
such Common Stock, and if the Company’s Registration
Statement relating to such initial public offering has been
declared effective by the SEC, then the fair market value per Unit
shall be the initial “Price to Public” of the Common
Stock specified in the final prospectus with respect to
the
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offering,
giving effect to the conversion mechanism with respect to such
conversion of the Units to Common Stock;
(iii) if the exercise is not in connection with a public
offering, and:
(A) if the Units (or the Common Stock, if the Units
have been converted to Common Stock) are traded on a securities
exchange, the fair market value shall be deemed to be the average
of the closing prices over a 5 day period ending 3 days
before the day the fair market value of the Units or the Common
Stock, as applicable, is being determined; or
(B) if the Units (or the Common Stock, if the Units
have been converted to Common Stock) are traded over-the-counter,
the fair market value shall be deemed to be the average of the
closing bid and asked prices quoted on the principal market on
which or through which the Units or the Common Stock, as
applicable, are traded over the 5 day period ending
3 days before the day the fair market value of the Units or
the Common Stock, as applicable, is being determined;
(iv) if property or securities in addition to or in
substitution for Units shall be issuable upon exercise of the
Warrant, the fair market value of such property (to the extent such
property does not include a security which is listed on any
securities exchange or traded in the over-the-counter market, in
which fair market value shall be calculated as provided in
Section 1(c)(i) — (iii) above) shall be
determined in good faith by the Company’s Directors (as
defined in the LLC Agreement).
(d)
Exercise Prior to Expiration . To the extent this Warrant
has not been previously exercised as to any Warrant Units issuable
hereunder, and if the fair market value of one Warrant Unit
immediately before expiration of the Warrant is greater than the
Exercise Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to the Net Exercise provisions in
Section 1(c) (even if not surrendered) immediately
before its expiration. In such event, the fair market value of one
Warrant Unit shall be determined pursuant to Section 1(c) .
To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 1(d) ,
the Company agrees to promptly notify the Holder of the number of
Units, if any, and any other property, which the Holder is entitled
to receive by reason of such automatic exercise.
(e)
Unit Certificates . In the event of the exercise of this
Warrant, certificates for the Warrant Units so purchased shall be
delivered to the Holder within a reasonable time after exercise, to
the extent that the Units are certificated.
2. Units
Fully Paid; Reservation of Units. All of the Units issuable upon the exercise of
this Warrant, upon issuance and receipt by the Company of the
Exercise Price therefor (or upon Net Exercise thereof, as provided
in Section 1(c) ), shall be fully paid and
nonassessable, and free from all preemptive rights, rights of first
refusal or first offer, taxes, liens and charges with respect to
the issuance thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company shall at
all times have authorized and reserved for issuance a sufficient
number of Units to provide for the exercise of this
Warrant.
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3.
Adjustment of Exercise Price and Number of Units.
The number and kind of Warrant Units
purchasable upon the exercise of this Warrant and the Exercise
Price payable therefor shall be subject to adjustment from time to
time upon the occurrence of certain events, as follows:
(a)
Unit Distributions, Subdivisions, Combinations . If the
Company shall (i) make a distribution in respect of the Units
in additional Units (or securities convertible into, exchangeable
for or otherwise entitling the registered holder to receive Units),
(ii) subdivide the outstanding Units into a greater number of
Units or (iii) combine the outstanding Units into a smaller
number of Units, the number of Units purchasable upon exercise of
this Warrant immediately prior to the record date applicable to
such event shall be adjusted so that the Holder shall thereafter be
entitled to receive that kind and number of Units or other
securities of the Company that the Holder would have owned or have
been entitled to receive after the happening of any of the events
described above, had the Warrant been exercised immediately prior
to the happening of such event or any record date with respect
thereto. The Exercise Price per Warrant Unit purchasable upon
exercise of any Warrant shall be subject to adjustment from time to
time such that upon each adjustment of the number of Warrant Units
purchasable pursuant to this Section 3(a) , the
Exercise Price shall be reduced or increased, as the case may be,
to a price determined by dividing the aggregate Exercise Price of
all Warrant Units in effect prior to such adjustment by the total
maximum number of Warrant Units purchasable upon the exercise of
all Warrants immediately after such adjustment.
(b)
Reorganization or Reclassification . In case of any capital
reorganization or reclassification of the equity interests of the
Company, or the conversion of the Company into a corporation
(whether pursuant to a merger, consolidation, statutory conversion
or otherwise), each Warrant shall thereafter be exercisable from
the number of Units or other securities or property receivable upon
such capital reorganization, reclassification or conversion, as the
case may be, by a holder of the number of Units into which the
Warrant was exercisable immediately prior to such capital
reorganization, reclassification or conversion; and, in any such
case, appropriate adjustment shall be made in the application of
the provisions herein set forth with respect to the rights and
interests thereafter of the Holder of the Warrant to the end that
the provisions set forth herein shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or
other securities or property thereafter deliverable upon the
exercise of the Warrant.
(c)
Issuance of Securities Under Certain Circumstances
.
(i) If the Company shall issue or sell (or, in accordance
with clause (ii) below, shall be deemed to have issued or
sold) any Units (other than Excluded Units, as defined below)
without consideration or for a consideration per unit that is less
than the Exercise Price in effect immediately prior to such
issuance or sale, as adjusted for any unit splits, combinations,
unit dividends or similar transactions after the date hereof, then,
effective immediately upon such issuance or sale, (a) this
Warrant shall immediately become exercisable for such additional
Warrant Units as are necessary to maintain the percentage ownership
interest in the Company’s Units (calculated on an
as-converted, fully diluted basis assuming the issuance of all
outstanding options and warrants other than this Warrant) held by
the Holder immediately prior to such issuance and (b) the
Exercise Price in effect immediately prior to such issuance or sale
shall be reduced, concurrently with such issuance or sale, to the
consideration per Unit received by the
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Company for
such issuance, sale or deemed issuance of such additional Units;
provided that if such issuance, sale or deemed issuance was
without consideration, then the Company shall be deemed to have
received an aggregate of $0.01 of consideration for all such
additional Units issued, sold or deemed to be issued. Adjustments
shall be made successively whenever such an issuance or sale is
made.
(ii) For the purpose of determining the adjusted Exercise
Price under Section 3(c) , the following shall be
applicable:
(A) If the Company in any manner issues or grants any
Option Rights or Convertible Securities (each as defined below) and
the price per unit for which Units are issuable upon the exercise
of such Option Rights or upon conversion or exchange of such
Convertible Securities is less than the Exercise Price, then the
total maximum number of Units issuable upon the exercise of such
Option Rights or upon conversion or exchange of the total maximum
amount of such Convertible Securities (or any Convertible
Securities issuable upon the exercise of such Option Rights) shall
be deemed to be outstanding and to have been issued and sold by the
Company for such lesser price per unit. For purposes of this
paragraph, the price per unit for which a Unit is issuable upon
exercise of Option Rights or upon conversion or exchange of
Convertible Securities (or any Convertible Securities issuable upon
exercise of Option Rights) shall be determined by dividing
(x) the total amount, if any, received or receivable by the
Company as consideration for the issuing or granting of such Option
Rights or Convertible Securities, plus the minimum aggregate amount
of additional consideration payable to the Company upon the
exercise of all such Option Rights or the exchange or conversion of
all such Convertible Securities (plus in the case of su
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