EXHIBIT 99.2
Southview, Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
000.000.0000 Tel 000.000.0000 Fax
February 7, 2001
Xx. Xxxx X. Xxxxx, Chairman
Bion Environmental Technologies, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Dear Xxxx:
This letter memorializes Southview, Inc.'s ("Southview's") understanding of
the terms of an oral agreement of January 8, 2001 between Southview and Bion
Environmental Technologies, Inc. ("Bion")(subject to change in form upon
review by legal and tax advisors to the parties). The material terms of the
agreement are set forth below:
1. Southview shall purchase 6.5 million warrants for the sum of $500,000
cash payable on or before February 16, 2001.
2. The basic terms of the warrants shall be as follows:
a) 3,250,000 warrants exercisable, in whole or in part, at $1.00 per
share from February 16, 2001 until February 16, 2006 (in the basic
form set forth at Exhibit A hereto);
b) 3,250,000 warrants (in the basic form set forth at Exhibit B
hereto) exercisable from February 16, 2001 until February 16, 2006,
the exercise price of which shall be:
i) $1.00 per share in the event that the common stock of Bion
trades with a closing price greater than $4.00 per share
(equitably adjusted for splits, etc.) for 20 consecutive trading
days prior to exercise;
ii) $1.50 per share in the event that the common stock of Bion
trades with a closing price between $3.00 and $4.00 per share
(equitably adjusted for splits, etc.) for 20 consecutive trading
days prior to exercise;
iii) in any other case $2.00 per share; and,
c) in the event of a Change of Control of the Company the exercise
period shall commence immediately;
3. Southview and Bion shall treat this purchase transaction on a
consistent basis for tax purposes. Southview shall obtain an independent
investment banking valuation of the warrants (at Southview's expense),
which, subject to review by Bion's legal and tax advisors, shall be
utilized by Bion and Southview.
4. Southview shall make a loan to Bion of $500,000 (such loan amount
advanced against the promissory note of Bion in the basic form set forth
at Exhibit C hereto) for use as operating capital on or before February
12, 2001
If the above reflects your understanding, please sign below and return to me.
SOUTHVIEW, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
President
Bion Environmental Technologies, Inc.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx
Chairman
EXHIBIT A
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
Warrant
Warrant to Subscribe February __, 2001
for ___________ shares
Void After February __, 2006
THIS CERTIFIES that, for value received, Southview Inc., a Delaware
corporation, or its registered assigns ("Southview Inc."), is entitled to
subscribe for and purchase from Bion Environmental Technologies, Inc., a
Colorado corporation (hereinafter called the "Company"), at the price of $1.00
per share (such price as from time to time adjusted as hereinafter provided
being hereinafter called the "Warrant Price"), from February __, 2002 until
February __, 2006 (the "Warrant Expiration Date")(provided, however, that the
exercise period shall immediately commence upon a Change of Control of the
Company), up to _________ (subject to adjustment as hereinafter provided)
fully paid and nonassessable shares of Common Stock, no par value per share,
of the Company (hereinafter called the "Common Stock"), subject, however, to
the provisions and upon the terms and conditions hereinafter set forth. This
Warrant was sold by the Company and purchased by Southview Inc. for its fair
market value pursuant to an agreement effective January 8, 2001 between the
Company and Southview Inc., was not issued as compensation for services and
neither Southview Inc. nor the Company shall take any position on their
respective income tax returns inconsistent with the foregoing. This Warrant
and any warrant or warrants subsequently issued upon exchange or transfer
thereof are hereinafter collectively called the "Warrants." "Registered
Holder" shall mean, as to any Warrant and as of any particular date the person
in whose name the certificate representing the Warrant shall be registered on
that date on the books maintained by the Company pursuant to Section 3(b). A
"Change of Control" shall be deemed to occur upon any person or persons, not
equity holders on the date hereof, acquiring the ability to elect a majority
of the Board of Directors of the Company.
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this Warrant
may be exercised by the holder hereof, in whole at any time or from time to
time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) at the office of the Company as
it may designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Company, and as further provided
below in this Section 1 by payment to the Company of the Warrant Price in cash
or by certified or official bank check, for each share being purchased.
(b) Delivery of Certificates. Etc. In the event of any exercise
of the rights represented by this Warrant, a certificate or certificates for
the shares of Common Stock so purchased, registered in the name of the holder,
shall be delivered to the holder hereof within a reasonable time, not
exceeding ten days, after the rights represented by this Warrant shall have
been so exercised; and, unless this Warrant has expired, a new Warrant
representing the number of shares (except a remaining fractional share), if
any, with respect to which this Warrant shall not then have been exercised
shall also be issued to the holder hereof within such time. The person in
whose name any certificate for shares of Common Stock is issued upon exercise
of this Warrant shall for all purposes be deemed to have become the holder of
record of such shares on the date on which the Warrant was surrendered and
payment of the Warrant Price and any applicable taxes was made, except that,
if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
2. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose
of issue upon exercise of this Warrant, such number of shares of Common Stock
as shall then be issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Common Stock which shall be issuable upon
exercise of this Warrant shall, at the time of delivery (assuming full payment
of the purchase price thereof), be duly and validly issued, fully paid,
nonassessable and free from all issuance taxes, liens and charges with respect
to the issue thereof including, without limitation, adverse claims whatsoever
(with the exception of claims arising through the acts of the Registered
Holders themselves and except as arising from applicable Federal and state
securities laws), that the Company shall have paid all taxes, if any, in
respect of the original issuance thereof and that upon issuance such shares,
to the extent applicable, shall be listed on, or included in, the Stock
Market. As used herein, "Stock Market" shall mean the principal national
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, shall mean NASDAQ or, if the Common Stock is not quoted
on Nasdaq, shall mean the OTC Bulletin Board or, if the Common Stock is not
quoted on the OTC Bulletin Board, shall mean the over-the-counter market as
furnished by any NASD member firm selected from time to time by the Company
for that purpose.
(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of this Warrant hereunder require registration
with, or the approval of, any governmental authority under any federal
securities law before such securities may be validly issued or delivered upon
such exercise, then the Company will in good faith and as expeditiously as
reasonably possible, endeavor to secure such registration or approval. The
Company will use reasonable efforts to obtain appropriate approvals or
registrations under state "blue sky" securities laws; provided, that the
Company shall not be required to qualify as a foreign corporation or file a
general or limited consent to service of process in any such jurisdictions or
make any changes in its capital structure or any other aspects of its business
or enter into any agreements with blue sky commissions, including any
agreement to escrow shares of its capital stock. With respect to any such
securities, however, Warrants may not be exercised by, or shares of Common
Stock issued to, any Registered Holder in any state in which such exercise
would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other similar governmental charges that may be imposed with respect
to the issuance of this Warrant, or the issuance or delivery of any shares
upon exercise of this Warrant; provided, however, that if the shares of Common
Stock are to be delivered in a name other than the name of the Registered
Holder on any Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Company the amount of
transfer taxes or charges incident thereto, if any.
3. Exchange and Registration of Transfer.
(a) This Warrant may be exchanged for another Warrant
representing an equal aggregate number of Warrants of the same class or may be
transferred in whole or in part, by surrendering it to the Company at its
corporate office. Upon satisfaction of the terms and provisions hereof, the
Company shall execute, and the Company shall sign, issue and deliver in
exchange therefore, such new Warrant or Warrants that the Registered Holder
making the exchange shall be entitled to receive.
(b) The Company shall keep at its office books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrants
and any transfers thereof in accordance with its regular practice. Upon due
presentment for registration of transfer of any Warrant at such office, the
Company shall execute and the Company shall issue and deliver to the
transferee or transferees a new Warrant or Warrants representing an equal
aggregate number of Warrants.
(c) With respect to all Warrants presented for registration or
transfer, or for exchange or exercise, the subscription form attached hereto
shall be duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the Company,
duly executed by the Registered Holder or his attorney-in-fact duly authorized
in writing.
(d) Prior to due presentment for registration of transfer
thereof, the Company may deem and treat the Registered Holder of any Warrant
as the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary.
4. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant and (in case of loss, theft or destruction) of
indemnity satisfactory to it, and (in the case of mutilation) upon surrender
and cancellation thereof, the Company shall execute, sign and deliver to the
Registered Holder in lieu thereof a new Warrant of like tenor representing an
equal aggregate number of Warrants.
5. Adjustment of Warrant Price and Number of Shares of Common Stock or
Warrants. Upon each adjustment of the Warrant Price pursuant to this Section
5, the total number of shares of Common Stock purchasable upon the exercise of
each Warrant shall (subject to the provisions contained in Subsection 5(c)) be
such number of shares (calculated to the nearest tenth) purchasable at the
Warrant Price in effect immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Warrant Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price in effect immediately after such adjustment.
(a) Except as otherwise provided herein, in the event the
Company shall, at any time or from time to time after the date hereof, (i)
sell or issue any shares of Common Stock for a consideration per share less
than the Warrant Price in effect on the date of such sale or issuance, (ii)
issue any shares of Common Stock as a stock dividend to the holders of Common
Stock, or (iii) subdivide or combine the outstanding shares of Common Stock
into a greater or fewer number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Warrant Price in effect immediately
prior to such Change of Shares shall be changed to a price (rounded to the
nearest cent) determined by multiplying the Warrant Price in effect
immediately prior thereto by a fraction, the numerator of which shall be (x)
the sum of (A) the number of shares of Common Stock outstanding immediately
prior to the sale or issuance of such additional shares or such subdivision or
combination plus (B) the number of shares of Common Stock that the aggregate
consideration received (determined as provided in Paragraph 5(g)(v)) for the
issuance of such additional shares would purchase at the Warrant Price in
effect on the date of such issuance and the denominator of which shall be (y)
the number of shares of Common Stock outstanding immediately after the sale or
issuance of such additional shares or such subdivision or combination. Such
adjustment shall be made successively whenever any such issuance is made.
(b) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another entity (other than
a consolidation or merger in which the Company is the continuing entity and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock other than the number thereof),
or in case of any sale or conveyance to another entity of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, upon the terms and
conditions specified in the Warrant and in lieu of the shares of Common Stock
immediately theretofore purchasable upon exercise of the Warrant, to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased upon exercise
of such Warrant immediately prior to such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance.
Any such provision shall include provision for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Section 5. The Company shall not effect any such consolidation, merger
or sale unless prior to, or simultaneously with, the consummation thereof the
successor (if other than the Company) resulting from such consolidation or
merger or the entity purchasing assets or other appropriate entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of each Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase and the other obligations under this
Warrant. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
(c) If, at any time or from time to time, the Company shall
issue or distribute to the holders of shares of Common Stock evidence of its
indebtedness, any other securities of the Company or any cash, property or
other assets (excluding an issuance or distribution governed by one of the
preceding Subsections of this Section 5 and also excluding cash dividends or
cash distributions paid out of net profits legally available therefore in the
full amount thereof (any such non-excluded event being herein called a
"Special Dividend")), then in each case the Registered Holders of the Warrants
shall be entitled to a proportionate share of any such Special Dividend as
though they were the holders of the number of shares of Common Stock of the
Company for which their Warrants are exercisable as of the record date fixed
for the determination of the holders of Common Stock of the Company entitled
to receive such Special Dividend.
(d) The Company may elect, upon any adjustment of the Warrant
Price hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such adjustment
of the number of Warrants shall become that number of Warrants (calculated to
the nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Warrant Price in effect immediately prior to
such adjustment and the denominator of which shall be the Warrant Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Section 5, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrants on
the date of such adjustment Warrants evidencing, subject to Section 6, the
number of additional Warrants to which such Holder shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrants
held by him prior to the date of adjustment (and upon surrender thereof, if
required by the Company) new Warrants evidencing the number of Warrants to
which such Holder shall be entitled after such adjustment.
(e) Irrespective of any adjustments or changes in the Warrant
Price or the number of shares of Common Stock purchasable upon exercise of
this Warrant, the Warrants theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrants pursuant to Subsection
3(a), continue to express the same Warrant Price per share, number of shares
purchasable thereunder and Redemption Price therefore as when the same were
originally issued.
(f) After each adjustment of the Warrant Price pursuant to this
Section 5, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Warrant Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants pursuant to
Subsection 5(d), the number of Warrants to which the registered holder of each
Warrant shall then be entitled, and the adjustment in Redemption Price
resulting there from, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will cause a brief summary thereof to be sent by
ordinary first class mail to each Registered Holder of Warrants at his or her
last address as it shall appear on the registry books. No failure to mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of such adjustment. The affidavit the Secretary or an Assistant
Secretary of the Company that such notice has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(g) For purposes of Subsections 5(a) and 5(d), the following
provisions (i) to (v) shall also be applicable:
(i) the number of shares of Common Stock deemed
outstanding at any given time shall include all shares of capital stock
convertible into, or exchangeable for, Common Stock (on an as converted basis)
as well as all shares of Common Stock issuable upon the exercise of (x) any
convertible debt, (y) warrants outstanding on the date hereof and (z) options
outstanding on the date hereof.
(ii) No adjustment of the Warrant Price shall be made
unless such adjustment would require an increase or decrease of at least $.01
in such price; provided that any adjustments which by reason of this Paragraph
(ii) are not required to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment which, together
with adjustments so carried forward, shall require an increase or decrease of
at least $.01 in the Warrant Price then in effect hereunder.
(iii) In case of (1) the sale by the Company (including
as a component of a unit) of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or any securities
convertible into or exchangeable for Common Stock (such securities
convertible, exercisable or exchangeable into Common Stock being herein
called "Convertible Securities"), or (2) the issuance by the Company, without
the receipt by the Company of any consideration therefore, of any rights or
warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, whether or not such rights, warrants
or options, or the right to convert or exchange such Convertible Securities,
are immediately exercisable, and the consideration per share for which Common
Stock is issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities (determined by
dividing (x) the minimum aggregate consideration, as set forth in the
instrument relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount,
payable to the Company upon the exercise of such rights, warrants or options,
plus the consideration received by the Company for the issuance or sale of
such rights, warrants or options, plus, in the case of such Convertible
Securities, the minimum aggregate amount, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of additional
consideration, if any, other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total maximum number, as set
forth in the instrument relating thereto without regard to any antidilution or
similar provisions contained therein for a subsequent adjustment of such
amount, of shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights, warrants or options) is
less than the Warrant Price of the Common Stock as of the date of the issuance
or sale of such rights, warrants or options, then such total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities (as
of the date of the issuance or sale of such rights, warrants or options) shall
be deemed to be "Common Stock" for purposes of Subsections 5(a) and 5(d) and
shall be deemed to have been sold for an amount equal to such consideration
per share and shall cause an adjustment to be made in accordance with
Subsections 5(a) and 5(d).
(iv) In case of the sale or other issuance by the
Company of any Convertible Securities, whether or not the right of conversion
or exchange thereunder is immediately exercisable, and the price per share for
which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount of
consideration received by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of additional
consideration, if any, other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total maximum number, as set
forth in the instrument relating thereto without regard to any antidilution or
similar provisions contained therein for a subsequent adjustment of such
amount, of shares of Common Stock issuable upon the conversion or exchange of
such Convertible Securities) is less than the Warrant Price of the Common
Stock as of the date of the sale of such Convertible Securities, then such
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be "Common Stock" for purposes of
Subsections 5(a) and 5(d) and shall be deemed to have been sold for an amount
equal to such consideration per share and shall cause an adjustment to be made
in accordance with Subsections 5(a) and 5(d).
(v) In case the Company shall modify the rights of
conversion, exchange or exercise of any of the securities referred to in
Paragraphs (iii) or (iv) of this Subsection 5(g) or any other securities of
the Company convertible, exchangeable or exercisable for shares of Common
Stock, for any reason other than an event that would require adjustment to
prevent dilution, so that the consideration per share received by the Company
after such modification is less than the Warrant Price as of the date prior to
such modification, then such securities, to the extent not theretofore
exercised, converted or exchanged, shall be deemed to have expired or
terminated immediately prior to the date of such modification and the Company
shall be deemed, for purposes of calculating any adjustments pursuant to this
Section 5, to have issued such new securities upon such new terms on the date
of modification. Such adjustment shall become effective as of the date upon
which such modification shall take effect. On the expiration or cancellation
of any such right, warrant or option or the termination or cancellation of any
such right to convert or exchange any such Convertible Securities, the Warrant
Price then in effect hereunder shall forthwith be readjusted to such Warrant
Price as would have obtained (a) had the adjustments made upon the issuance or
sale of such rights, warrants, options or Convertible Securities been made
upon the basis of the issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total consideration received
therefore) upon the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities and (b) had adjustments
been made on the basis of the Warrant Price as adjusted under clause (a) of
this sentence for all transactions (which would have affected such adjusted
Warrant Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(vi) In case of the sale of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefore shall be
deemed to be the gross sales price therefore without deducting there from any
expense paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in connection
therewith. In the event that any securities shall be issued in connection
with any other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated among the
securities, then each of such securities shall be deemed to have been issued
for such consideration as the Board of Directors of the Company determines in
good faith; provided, however that if holders of more than of 10% of the then
outstanding Warrants disagree with such determination, the Company shall
retain an independent investment banking firm for the purpose of obtaining an
appraisal.
(h) Notwithstanding any other provision hereof, no adjustment to
the Warrant Price of the Warrants or to the number of shares of Common Stock
purchasable upon the exercise of each Warrant will be made:
(i) upon the exercise of any of the options outstanding
on the date hereof under the Company's existing stock option plans; or
(ii) upon the issuance or exercise of options which may
hereafter be granted with the approval of the Board of Directors, or
exercised, under any employee benefit plan of the Company to officers,
directors, consultants or employees, but only with respect to such options as
are exercisable at prices no lower than the Closing Bid Price (or, if the
price referenced in the definition of Closing Bid Price cannot be determined,
the Fair Market Value (as defined below)) of the Common Stock as of the date
of grant thereof; or
(iii) upon the issuance or exercise of any options or
warrants that are granted to or held by Southview Inc. or any of its
successors, assigns, affiliates and or agents; or
(iv) upon the issuance or sale of Common Stock or
convertible securities for a consideration to the Company that is not less
than the bid price of the Company's Common Stock on the date of issuance (as
determined by quotations on the Stock Market); or
(v) upon the issuance or sale of Common Stock or
Convertible Securities pursuant to the exercise of any rights, options or
warrants to receive, subscribe for or purchase, or any options for the
purchase of, Common Stock or Convertible Securities, whether or not such
rights, warrants or options were outstanding on the date of the original sale
of the Warrants or were thereafter issued or sold, provided that an adjustment
was either made or not required to be made in accordance with Subsections 5(a)
and 5(d) in connection with the issuance or sale of such securities or any
modification of the terms thereof; or
(vi) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, provided that any
adjustments required to be made upon the issuance or sale of such Convertible
Securities or any modification of the terms thereof were so made, and whether
or not such Convertible Securities were outstanding on the date of the
original sale of the Warrants or were thereafter issued or sold.
Paragraph 5(g)(v) shall nevertheless apply to any modification of the rights
of conversion, exchange or exercise of any of the securities referred to in
Paragraphs (i), (ii) and (iii) of this Subsection 5(h). For purposes hereof,
"Fair Market Value" shall mean the average Closing Bid Price for twenty (20)
consecutive trading days, ending with the trading day prior to the date as of
which the Fair Market Value is being determined, (with appropriate adjustments
for subdivisions or combinations of shares effected during such period)
provided that if the prices referred to in the definition of Closing Bid Price
cannot be determined for such period, "Fair Market Value" shall be the fair
market value as determined by the Board of Directors in good faith.
(i) As used in this Section 5, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the date of the
original issue of the Warrants and shall also include any capital stock of any
class of the Company thereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Company; provided, however, that
the shares issuable upon exercise of the Warrants shall include only shares of
such class designated in the Company's Certificate of Incorporation, as
amended, as Common Stock on the date of the original issue of the Warrants or
(i), in the case of any reclassification, change, consolidation, merger, sale
or conveyance of the character referred to in Subsection 5(c), the stock,
securities or property provided for in such section or (ii), in the case of
any reclassification or change in the outstanding shares of Common Stock
issuable upon exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no
par value, or from no par value to par value, such shares of Common Stock as
so reclassified or changed.
(j) Any determination as to whether an adjustment in the Warrant
Price in effect hereunder is required pursuant to Section 5, or as to the
amount of any such adjustment, if required, shall be binding upon the holders
of the Warrants and the Company if made in good faith by the Board of
Directors of the Company.
(k) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into
or exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company may at its option elect concurrently therewith to grant to
each Registered Holder as of the record date for such transaction of the
Warrants then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date used to
determine the shareholders entitled to the rights, warrants or options being
granted by the Company, the Registered Holder were the holder of record of the
number of whole shares of Common Stock then issuable upon exercise of his or
her Warrant. If the Company shall so elect under this Subsection 5(k), then
such grant by the Company to the holders of the Warrants shall be in lieu of
any adjustment which otherwise might be called for pursuant to this Section 5.
6. Fractional Warrants and Fractional Shares. If the number of shares
of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 5, the Company nevertheless shall not be required to issue
fractions of shares, upon exercise of the Warrant or otherwise, nor to
distribute certificates that evidence fractional shares. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Registered Holder an amount in cash equal to such fraction multiplied
by the Fair Market Value of one share of Common Stock as of the date of
exercise.
7. Warrant Holders Not Deemed Shareholders. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
8. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the holder of any
other Warrant, may, in his own behalf and for his own benefit, enforce against
the Company his right to exercise his Warrant for the purchase of shares of
Common Stock in the manner provided herein.
9. Agreement of Warrant Holders. Every holder of any Warrant, by his
acceptance thereof, consents and agrees with the Company and every other
holder of any Warrant that:
(i) The Warrants are transferable only on the registry
books of the Company by the Registered Holder thereof in person or by his or
her attorney duly authorized in writing and only if such Warrants are
surrendered at the office of the Company, duly endorsed or accompanied by a
proper instrument of transfer satisfactory to the Company, in its sole
discretion, together with payment of any applicable transfer taxes; and
(ii) The Company may deem and treat the person in whose
name the Warrant is registered as the holder and as the absolute, true and
lawful owner thereof for all purposes, and the Company shall not be affected
by any notice or knowledge to the contrary, except as otherwise expressly
provided in Section 3.
10. Investment Representation and Legend. The holder, by acceptance of
the Warrants, represents and warrants to the Company that it is acquiring the
Warrants and the shares of Common Stock (or other securities) issuable upon
the exercise hereof for investment purposes only and not with a view towards
the resale or other distribution thereof and agrees that the Company may affix
upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the representation of
the holder that it has been acquired for investment purposes and not
with a view towards the resale or other distribution thereof. Neither
this Warrant nor the shares issuable upon the exercise of this Warrant
have been registered under the Securities Act of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that the Company may
affix the following legend to certificates for shares of Common Stock issued
upon exercise of this Warrant:
"The securities represented by this certificate have been issued in
reliance upon the representation of the holder that they have been
acquired for investment and not with a view toward the resale or other
distribution thereof, and have not been registered under the Securities
Act of 1933, as amended. Neither the securities evidenced hereby, nor any
interest therein, may be offered, sold, transferred, encumbered or
otherwise disposed of unless either (i) there is an effective
registration statement under said Act relating thereto or (ii) the
Company has received an opinion of counsel, reasonably satisfactory in
form and substance to the Company, stating that such registration is not
required."
11. Cancellation of Warrants. If the Company shall purchase or acquire
any Warrant or Warrants, by redemption or otherwise, each such Warrant shall
thereupon be and canceled by it and retired. The Company shall also cancel
the Warrant or Warrants following exercise of any or all thereof or delivered
to it for transfer, split up, combination or exchange.
12. Modification of Warrant. The terms of the Warrants shall not be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders representing at least a majority of the
Warrants then outstanding; provided, that, no change in the number or nature
of the securities purchasable upon the exercise of any Warrant, or the Warrant
Price therefore, or the acceleration of the Warrant Expiration Date, shall be
made without the consent in writing of the Registered Holder of the Warrant,
and in compliance with applicable law.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed by means of first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant, at the
address of such holder as shown on the registry books maintained by the
Company; if to the Company, at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, or at such other address as may have been furnished to the Registered
Holder in writing by the Company.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without reference to
principles of conflict of laws.
15. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company, the Registered Holder and their respective
successors and assigns, and the holders from time to time of the Warrants.
Nothing in this Warrant is intended nor shall be construed to confer upon any
other person any right, remedy or claim, in equity or at law, or to impose
upon any other person any duty, liability or obligation.
16. Registration Rights. Registration of Common Stock.
16.1. Registration. Not later than six months following the
first date on which this Warrant may be exercised, the Company will file a
registration statement (the "Registration Statement") with respect to the
resale of the Registrable Securities with the Securities and Exchange
Commission. The Company will use commercially reasonable efforts to effect
the registrations, qualifications or compliances (including, without
limitation, the execution of any required undertaking to file post-effective
amendments, appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with applicable securities
laws, requirements or regulations) as may be reasonably requested and as would
permit or facilitate that sale and distribution of all Registrable Securities
until the distribution thereof is complete.
16.2 Registration Procedures. In connection with the
registration of any Registrable Securities under the Securities Act as
provided in this Section 16, the Company will use its best efforts, as
expeditiously as possible to:
(a) Prepare and file with the Securities and Exchange Commission
the Registration Statement with respect to such Registrable Securities and use
its best efforts to cause such Registration Statement to become effective;
(b) Prepare and file with the Securities and Exchange Commission
such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective until February __, 2006, and to comply with
the provisions of the Securities Act (to the extent applicable to the Company)
with respect thereto;
(c) Furnish to each seller of such Registrable Securities such
number of copies of such Registration Statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such Registration Statement (including
each preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably
request, in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) Use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions as any seller reasonably requests, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller, except that
the Company will not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not,
but for the requirements of this Section 16.2(d) be obligated to be qualified,
to subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) Provide a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than
the effective date of such Registration Statement;
(f) Notify each seller of such Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(g) Cause all such Registrable Securities to be listed on each
securities exchange or automated over-the-counter trading system on which
similar securities issued by the Company are then listed;
(h) Enter into such customary agreements and take all such other
actions as reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(i) Make available for inspection by any seller of Registrable
Securities, all financial and other records, pertinent corporation documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller in
connection with the Registration Statement pursuant to Section 16.1.
16.3. Registration and Selling Expenses. (a) All expenses
incurred by the Company in connection with the Company's performance of or
compliance with this Section 16, including, without limitation (i) all
registration and filing fees (including all expenses incident to filing with
the National Association of Securities Dealers, Inc.), (ii) blue sky fees and
expenses, (iii) all necessary printing and duplicating expenses and (iv) all
fees and disbursements of counsel and accountants for the Company (including
the expenses of any audit of financial statements), retained by the Company
(all such expenses being herein called "Registration Expenses"), will be paid
by the Company except as otherwise expressly provided in this Section 16.3.
The term "Registration Expenses" shall not include any underwriting discounts
or commissions incurred by the Purchaser, which shall be the responsibility of
the Purchaser.
(b) The Company will, in any event, in connection with any
registration statement, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties in connection therewith and expenses of
audits of year-end financial statements), the expense of liability insurance
and the expenses and fees for listing the securities to be registered on one
or more securities exchanges or automated over-the-counter trading systems on
which similar securities issued by the Company are then listed.
(c) Nothing herein shall be construed to prevent any holder or
holders of Registrable Securities from retaining such counsel as they shall
choose, the expenses of one of which, as determined by the holder or holders,
shall be borne by the Company.
16.4. [Intentionally Omitted]
16.5. Indemnification. (a) The Company hereby agrees to
indemnify, to the extent permitted by law, each holder of Registrable
Securities, its officers and directors, if any, and each person, if any, who
controls such holder within the meaning of the Securities Act, against all
losses, claims, damages, liabilities and expenses (under the Securities Act or
common law or otherwise) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus (and as amended or supplemented if the Company has furnished any
amendments or supplements thereto) or any preliminary prospectus, which
registration statement, prospectus or preliminary prospectus shall be prepared
in connection with the registration contemplated by this Section 16, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any untrue statement or alleged untrue statement
contained in or by any omission or alleged omission from information furnished
in writing by such holder to the Company in connection with the registration
contemplated by this Section 16, provided the Company will not be liable
pursuant to this Section 16.5 if such losses, claims, damages, liabilities or
expenses have been caused by any selling security holder's failure to deliver
a copy of the registration statement or prospectus, or any amendments or
supplements thereto, after the Company has furnished such holder with the
number of copies required by Section 16.2(c).
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information as is reasonably requested
by the Company for use in any such registration statement or prospectus and
shall severally, but not jointly, indemnify, to the extent permitted by law,
the Company, its directors and officers and each person, if any, who controls
the Company within the meaning of the Securities Act, against any losses,
claims, damages, liabilities and expenses resulting from any untrue statement
or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the
extent such losses, claims, damages, liabilities or expenses are caused by an
untrue statement or alleged untrue statement contained in or by an omission or
alleged omission from information so furnished in writing by such holder in
connection with the registration contemplated by this Section 16. If the
offering pursuant to any such registration is made through underwriters, each
such holder agrees to enter into an underwriting agreement in customary form
with such underwriters and to indemnify such underwriters, their officers and
directors, if any, and each person who controls such underwriters within the
meaning of the Securities Act to the same extent as hereinabove provided with
respect to indemnification by such holder of the Company. Notwithstanding the
foregoing or any other provision of this Agreement, in no event shall a holder
of Registrable Securities be liable for any such losses, claims, damages,
liabilities or expenses in excess of the net proceeds received by such holder
in the offering.
(c) Promptly after receipt by an indemnified party under Section
16.5 (a) or (b) of notice of the commencement of any action or proceeding,
such indemnified party will, if a claim in respect thereof is made against the
indemnifying party under such Section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under such Section. In case any such
action or proceeding is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein, and, to the extent that it wishes,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel approved by such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under such Section for any legal or any other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless incurred at the
written request of the indemnifying party. Notwithstanding the above, the
indemnified party will have the right to employ counsel of its own choice in
any such action or proceeding if the indemnified party has reasonably
concluded that there may be defenses available to it which are different from
or additional to those of the indemnifying party, or counsel to the
indemnified party is of the opinion that it would not be desirable for the
same counsel to represent both the indemnifying party and the indemnified
party because such representation might result in a conflict of interest (in
either of which cases the indemnifying party will not have the right to assume
the defense of any such action or proceeding on behalf of the indemnified
party or parties and such legal and other expenses will be borne by the
indemnifying party). An indemnifying party will not be liable to any
indemnified party for any settlement of any such action or proceeding effected
without the consent of such indemnifying party.
(d) If the indemnification provided for in Section 16.5(a) or
(b) is unavailable under applicable law to an indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
of the holders of Registrable Securities on the other in connection with the
statements or omissions which resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the holders of
Registrable Securities on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the Company or by the holders of Registrable Securities and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid or payable by a party
as a result of the losses, claims, damages and liabilities referred to above
shall be deemed to include, subject to the limitations set forth in Section
16.5(c), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
(e) Promptly after receipt by the Company or any holder of
Securities of notice of the commencement of any action or proceeding, such
party will, if a claim for contribution in respect thereof is to be made
against another party (the "contributing party"), notify the contributing
party of the commencement thereof; but the omission so to notify the
contributing party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any such
action, suit, or proceeding is brought against any party, and such party
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first above written.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: _________________________________
Authorized Officer
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to exercise
___________ Warrants represented by this certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
and be delivered to
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the within Warrant was
solicited by a member of the National Association of Securities Dealers, Inc.
If not solicited by an NASD member, please write "unsolicited" in the space
below.
_________________________________________
(Name of NASD Member)
Dated: X ___________________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
___________________________________
Signature Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
In Order to Assign Warrant
FOR VALUE RECEIVED, hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
___________________________ of the Warrants represented hereby, and
hereby irrevocably constitutes and appoints
__________________________________________________________________________
Attorney to transfer this Warrant on the books of the Company, with full power
of substitution in the premises.
Dated: _____________________________ X ___________________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND
MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAND PROGRAM.
EXHIBIT B
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
Warrant
Warrant to Subscribe February __, 2001
For _________ shares
Void After February __, 2006
THIS CERTIFIES that, for value received, Southview, Inc., a Delaware
corporation, or its registered assigns ("Southview, Inc."), is entitled to
subscribe for and purchase from Bion Environmental Technologies, Inc., a
Colorado corporation (hereinafter called the "Company"), at the price of:
$1.00 per share in the event that the Common Stock of the Company trades on
the Stock Market (as defined below) with a closing price greater than $4.00
per share for twenty consecutive trading days prior to exercise; $1.50 per
share in the event that the Common Stock of the Company trades on the Stock
Market with a closing price between $3.00 and $4.00 per share for twenty
consecutive trading days prior to exercise; or $2.00 per share in any other
case (such price as from time to time adjusted as hereinafter provided being
hereinafter called the "Warrant Price"), from February __, 2002 until February
__, 2006 (the "Warrant Expiration Date")(provided, however, that the exercise
period shall immediately commence upon a Change of Control of the Company), up
to _________ (subject to adjustment as hereinafter provided) fully paid and
nonassessable shares of Common Stock, no par value per share, of the Company
(hereinafter called the "Common Stock"), subject, however, to the provisions
and upon the terms and conditions hereinafter set forth. This Warrant was sold
by the Company and purchased by Southview Inc. for its fair market value
pursuant to an agreement effective January 8, 2001 between the Company and
Southview Inc., was not issued as compensation for services and neither
Southview Inc. nor the Company shall take any position on their respective
income tax returns inconsistent with the foregoing. This Warrant and any
warrant or warrants subsequently issued upon exchange or transfer thereof are
hereinafter collectively called the "Warrants." "Registered Holder" shall
mean, as to any Warrant and as of any particular date the person in whose name
the certificate representing the Warrant shall be registered on that date on
the books maintained by the Company pursuant to Section 3(b). A "Change of
Control" shall be deemed to occur upon any person or persons, not equity
holders on the date hereof, acquiring the ability to elect a majority of the
Board of Directors of the Company.
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this Warrant may be
exercised by the holder hereof, in whole at any time or from time to time in
part, but not as to a fractional share of Common Stock, by the surrender of
this Warrant (properly endorsed) at the office of the Company as it may
designate by notice in writing to the holder hereof at the address of such
holder appearing on the books of the Company, and as further provided below in
this Section 1 by payment to the Company of the Warrant Price in cash or by
certified or official bank check, for each share being purchased.
(b) Delivery of Certificates. Etc. In the event of any exercise of the
rights represented by this Warrant, a certificate or certificates for the
shares of Common Stock so purchased, registered in the name of the holder,
shall be delivered to the holder hereof within a reasonable time, not
exceeding ten days, after the rights represented by this Warrant shall have
been so exercised; and, unless this Warrant has expired, a new Warrant
representing the number of shares (except a remaining fractional share), if
any, with respect to which this Warrant shall not then have been exercised
shall also be issued to the holder hereof within such time. The person in
whose name any certificate for shares of Common Stock is issued upon exercise
of this Warrant shall for all purposes be deemed to have become the holder of
record of such shares on the date on which the Warrant was surrendered and
payment of the Warrant Price and any applicable taxes was made, except that,
if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
2. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of this Warrant, such number of shares of Common Stock as
shall then be issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Common Stock which shall be issuable upon
exercise of this Warrant shall, at the time of delivery (assuming full payment
of the purchase price thereof), be duly and validly issued, fully paid,
nonassessable and free from all issuance taxes, liens and charges with respect
to the issue thereof including, without limitation, adverse claims whatsoever
(with the exception of claims arising through the acts of the Registered
Holders themselves and except as arising from applicable Federal and state
securities laws), that the Company shall have paid all taxes, if any, in
respect of the original issuance thereof and that upon issuance such shares,
to the extent applicable, shall be listed on, or included in, the Stock
Market. As used herein, "Stock Market" shall mean the principal national
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, shall mean NASDAQ or, if the Common Stock is not quoted
on Nasdaq, shall mean the OTC Bulletin Board or, if the Common Stock is not
quoted on the OTC Bulletin Board, shall mean the over-the-counter market as
furnished by any NASD member firm selected from time to time by the Company
for that purpose.
(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of this Warrant hereunder require registration
with, or the approval of, any governmental authority under any federal
securities law before such securities may be validly issued or delivered upon
such exercise, then the Company will in good faith and as expeditiously as
reasonably possible, endeavor to secure such registration or approval. The
Company will use reasonable efforts to obtain appropriate approvals or
registrations under state "blue sky" securities laws; provided, that the
Company shall not be required to qualify as a foreign corporation or file a
general or limited consent to service of process in any such jurisdictions or
make any changes in its capital structure or any other aspects of its business
or enter into any agreements with blue sky commissions, including any
agreement to escrow shares of its capital stock. With respect to any such
securities, however, Warrants may not be exercised by, or shares of Common
Stock issued to, any Registered Holder in any state in which such exercise
would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other similar governmental charges that may be imposed with respect
to the issuance of this Warrant, or the issuance or delivery of any shares
upon exercise of this Warrant; provided, however, that if the shares of Common
Stock are to be delivered in a name other than the name of the Registered
Holder on any Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Company the amount of
transfer taxes or charges incident thereto, if any.
3. Exchange and Registration of Transfer.
(a) This Warrant may be exchanged for another Warrant
representing an equal aggregate number of Warrants of the same class or may be
transferred in whole or in part, by surrendering it to the Company at its
corporate office. Upon satisfaction of the terms and provisions hereof, the
Company shall execute, and the Company shall sign, issue and deliver in
exchange therefore, such new Warrant or Warrants that the Registered Holder
making the exchange shall be entitled to receive.
(b) The Company shall keep at its office books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrants
and any transfers thereof in accordance with its regular practice. Upon due
presentment for registration of transfer of any Warrant at such office, the
Company shall execute and the Company shall issue and deliver to the
transferee or transferees a new Warrant or Warrants representing an equal
aggregate number of Warrants.
(c) With respect to all Warrants presented for registration or
transfer, or for exchange or exercise, the subscription form attached hereto
shall be duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the Company,
duly executed by the Registered Holder or his attorney-in-fact duly authorized
in writing.
(d) Prior to due presentment for registration of transfer
thereof, the Company may deem and treat the Registered Holder of any Warrant
as the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary.
4. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant and (in case of loss, theft or destruction) of
indemnity satisfactory to it, and (in the case of mutilation) upon surrender
and cancellation thereof, the Company shall execute, sign and deliver to the
Registered Holder in lieu thereof a new Warrant of like tenor representing an
equal aggregate number of Warrants.
5. Adjustment of Warrant Price and Number of Shares of Common Stock or
Warrants. Upon each adjustment of the Warrant Price pursuant to this Section
5, the total number of shares of Common Stock purchasable upon the exercise of
each Warrant shall (subject to the provisions contained in Subsection 5(c)) be
such number of shares (calculated to the nearest tenth) purchasable at the
Warrant Price in effect immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Warrant Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price in effect immediately after such adjustment.
(a) Except as otherwise provided herein, in the event the
Company shall, at any time or from time to time after the date hereof, (i)
sell or issue any shares of Common Stock for a consideration per share less
than the Warrant Price in effect on the date of such sale or issuance, (ii)
issue any shares of Common Stock as a stock dividend to the holders of Common
Stock, or (iii) subdivide or combine the outstanding shares of Common Stock
into a greater or fewer number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Warrant Price in effect immediately
prior to such Change of Shares shall be changed to a price (rounded to the
nearest cent) determined by multiplying the Warrant Price in effect
immediately prior thereto by a fraction, the numerator of which shall be (x)
the sum of (A) the number of shares of Common Stock outstanding immediately
prior to the sale or issuance of such additional shares or such subdivision or
combination plus (B) the number of shares of Common Stock that the aggregate
consideration received (determined as provided in Paragraph 5(g)(v)) for the
issuance of such additional shares would purchase at the Warrant Price in
effect on the date of such issuance and the denominator of which shall be (y)
the number of shares of Common Stock outstanding immediately after the sale or
issuance of such additional shares or such subdivision or combination. Such
adjustment shall be made successively whenever any such issuance is made.
(b) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another entity (other than
a consolidation or merger in which the Company is the continuing entity and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock other than the number thereof),
or in case of any sale or conveyance to another entity of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, upon the terms and
conditions specified in the Warrant and in lieu of the shares of Common Stock
immediately theretofore purchasable upon exercise of the Warrant, to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased upon exercise
of such Warrant immediately prior to such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance.
Any such provision shall include provision for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Section 5. The Company shall not effect any such consolidation, merger
or sale unless prior to, or simultaneously with, the consummation thereof the
successor (if other than the Company) resulting from such consolidation or
merger or the entity purchasing assets or other appropriate entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of each Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase and the other obligations under this
Warrant. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
(c) If, at any time or from time to time, the Company shall
issue or distribute to the holders of shares of Common Stock evidence of its
indebtedness, any other securities of the Company or any cash, property or
other assets (excluding an issuance or distribution governed by one of the
preceding Subsections of this Section 5 and also excluding cash dividends or
cash distributions paid out of net profits legally available therefore in the
full amount thereof (any such non-excluded event being herein called a
"Special Dividend")), then in each case the Registered Holders of the Warrants
shall be entitled to a proportionate share of any such Special Dividend as
though they were the holders of the number of shares of Common Stock of the
Company for which their Warrants are exercisable as of the record date fixed
for the determination of the holders of Common Stock of the Company entitled
to receive such Special Dividend.
(d) The Company may elect, upon any adjustment of the Warrant
Price hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such adjustment
of the number of Warrants shall become that number of Warrants (calculated to
the nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Warrant Price in effect immediately prior to
such adjustment and the denominator of which shall be the Warrant Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Section 5, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrants on
the date of such adjustment Warrants evidencing, subject to Section 6, the
number of additional Warrants to which such Holder shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrants
held by him prior to the date of adjustment (and upon surrender thereof, if
required by the Company) new Warrants evidencing the number of Warrants to
which such Holder shall be entitled after such adjustment.
(e) Irrespective of any adjustments or changes in the Warrant
Price or the number of shares of Common Stock purchasable upon exercise of
this Warrant, the Warrants theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrants pursuant to Subsection
3(a), continue to express the same Warrant Price per share, number of shares
purchasable thereunder and Redemption Price therefore as when the same were
originally issued.
(f) After each adjustment of the Warrant Price pursuant to this
Section 5, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Warrant Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants pursuant to
Subsection 5(d), the number of Warrants to which the registered holder of each
Warrant shall then be entitled, and the adjustment in Redemption Price
resulting there from, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will cause a brief summary thereof to be sent by
ordinary first class mail to each Registered Holder of Warrants at his or her
last address as it shall appear on the registry books. No failure to mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of such adjustment. The affidavit the Secretary or an Assistant
Secretary of the Company that such notice has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(g) For purposes of Subsections 5(a) and 5(d), the following
provisions (i) to (v) shall also be applicable:
(i) the number of shares of Common Stock deemed
outstanding at any given time shall include all shares of capital stock
convertible into, or exchangeable for, Common Stock (on an as converted basis)
as well as all shares of Common Stock issuable upon the exercise of (x) any
convertible debt, (y) warrants outstanding on the date hereof and (z) options
outstanding on the date hereof.
(ii) No adjustment of the Warrant Price shall be made
unless such adjustment would require an increase or decrease of at least $.01
in such price; provided that any adjustments which by reason of this Paragraph
(ii) are not required to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment which, together
with adjustments so carried forward, shall require an increase or decrease of
at least $.01 in the Warrant Price then in effect hereunder.
(iii) In case of (1) the sale by the Company (including
as a component of a unit) of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or any securities
convertible into or exchangeable for Common Stock (such securities
convertible, exercisable or exchangeable into Common Stock being herein called
"Convertible Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefore, of any rights or
warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, whether or not such rights, warrants
or options, or the right to convert or exchange such Convertible Securities,
are immediately exercisable, and the consideration per share for which Common
Stock is issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities (determined by
dividing (x) the minimum aggregate consideration, as set forth in the
instrument relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount,
payable to the Company upon the exercise of such rights, warrants or options,
plus the consideration received by the Company for the issuance or sale of
such rights, warrants or options, plus, in the case of such Convertible
Securities, the minimum aggregate amount, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of additional
consideration, if any, other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total maximum number, as set
forth in the instrument relating thereto without regard to any antidilution or
similar provisions contained therein for a subsequent adjustment of such
amount, of shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights, warrants or options) is
less than the Warrant Price of the Common Stock as of the date of the issuance
or sale of such rights, warrants or options, then such total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities (as
of the date of the issuance or sale of such rights, warrants or options) shall
be deemed to be "Common Stock" for purposes of Subsections 5(a) and 5(d) and
shall be deemed to have been sold for an amount equal to such consideration
per share and shall cause an adjustment to be made in accordance with
Subsections 5(a) and 5(d).
(iv) In case of the sale or other issuance by the
Company of any Convertible Securities, whether or not the right of conversion
or exchange thereunder is immediately exercisable, and the price per share for
which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount of
consideration received by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of additional
consideration, if any, other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total maximum number, as set
forth in the instrument relating thereto without regard to any antidilution or
similar provisions contained therein for a subsequent adjustment of such
amount, of shares of Common Stock issuable upon the conversion or exchange of
such Convertible Securities) is less than the Warrant Price of the Common
Stock as of the date of the sale of such Convertible Securities, then such
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be "Common Stock" for purposes of
Subsections 5(a) and 5(d) and shall be deemed to have been sold for an amount
equal to such consideration per share and shall cause an adjustment to be made
in accordance with Subsections 5(a) and 5(d).
(v) In case the Company shall modify the rights of
conversion, exchange or exercise of any of the securities referred to in
Paragraphs (iii) or (iv) of this Subsection 5(g) or any other securities of
the Company convertible, exchangeable or exercisable for shares of Common
Stock, for any reason other than an event that would require adjustment to
prevent dilution, so that the consideration per share received by the Company
after such modification is less than the Warrant Price as of the date prior to
such modification, then such securities, to the extent not theretofore
exercised, converted or exchanged, shall be deemed to have expired or
terminated immediately prior to the date of such modification and the Company
shall be deemed, for purposes of calculating any adjustments pursuant to this
Section 5, to have issued such new securities upon such new terms on the date
of modification. Such adjustment shall become effective as of the date upon
which such modification shall take effect. On the expiration or cancellation
of any such right, warrant or option or the termination or cancellation of any
such right to convert or exchange any such Convertible Securities, the Warrant
Price then in effect hereunder shall forthwith be readjusted to such Warrant
Price as would have obtained (a) had the adjustments made upon the issuance or
sale of such rights, warrants, options or Convertible Securities been made
upon the basis of the issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total consideration received
therefore) upon the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities and (b) had adjustments
been made on the basis of the Warrant Price as adjusted under clause (a) of
this sentence for all transactions (which would have affected such adjusted
Warrant Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(vi) In case of the sale of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefore shall be
deemed to be the gross sales price therefore without deducting there from any
expense paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in connection
therewith. In the event that any securities shall be issued in connection
with any other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated among the
securities, then each of such securities shall be deemed to have been issued
for such consideration as the Board of Directors of the Company determines in
good faith; provided, however that if holders of more than of 10% of the then
outstanding Warrants disagree with such determination, the Company shall
retain an independent investment banking firm for the purpose of obtaining an
appraisal.
(h) Notwithstanding any other provision hereof, no adjustment to
the Warrant Price of the Warrants or to the number of shares of Common Stock
purchasable upon the exercise of each Warrant will be made:
(i) upon the exercise of any of the options outstanding
on the date hereof under the Company's existing stock option plans; or
(ii) upon the issuance or exercise of options which may
hereafter be granted with the approval of the Board of Directors, or
exercised, under any employee benefit plan of the Company to officers,
directors, consultants or employees, but only with respect to such options as
are exercisable at prices no lower than the Closing Bid Price (or, if the
price referenced in the definition of Closing Bid Price cannot be determined,
the Fair Market Value (as defined below)) of the Common Stock as of the date
of grant thereof; or
(iii) upon the issuance or exercise of any options or
warrants that are granted to or held by Southview Inc. or any of its
successors, assigns, affiliates and or agents; or
(iv) upon the issuance of sale of Common Stock or
convertible securities for a consideration to the Company that is not less
than the bid price of the Company's Common Stock on the date of issuance (as
determined by quotations on the Stock Market); or
(v) upon the issuance or sale of Common Stock or
Convertible Securities pursuant to the exercise of any rights, options or
warrants to receive, subscribe for or purchase, or any options for the
purchase of, Common Stock or Convertible Securities, whether or not such
rights, warrants or options were outstanding on the date of the original sale
of this Warrant or were thereafter issued or sold, provided that an adjustment
was either made or not required to be made in accordance with Subsections 5(a)
and 5(d) in connection with the issuance or sale of such securities or any
modification of the terms thereof; or
(vi) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, provided that any
adjustments required to be made upon the issuance or sale of such Convertible
Securities or any modification of the terms thereof were so made, and whether
or not such Convertible Securities were outstanding on the date of the
original sale of the Warrants or were thereafter issued or sold.
Paragraph 5(g)(v) shall nevertheless apply to any modification of the rights
of conversion, exchange or exercise of any of the securities referred to in
Paragraphs (i), (ii) and (iii) of this Subsection 5(h). For purposes hereof,
"Fair Market Value" shall mean the average Closing Bid Price for twenty (20)
consecutive trading days, ending with the trading day prior to the date as of
which the Fair Market Value is being determined, (with appropriate adjustments
for subdivisions or combinations of shares effected during such period)
provided that if the prices referred to in the definition of Closing Bid Price
cannot be determined for such period, "Fair Market Value" shall be the fair
market value as determined by the Board of Directors in good faith.
(i) As used in this Section 5, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the date of the
original issue of the Warrants and shall also include any capital stock of any
class of the Company thereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Company; provided, however, that
the shares issuable upon exercise of the Warrants shall include only shares of
such class designated in the Company's Certificate of Incorporation, as
amended, as Common Stock on the date of the original issue of the Warrants or
(i), in the case of any reclassification, change, consolidation, merger, sale
or conveyance of the character referred to in Subsection 5(c), the stock,
securities or property provided for in such section or (ii), in the case of
any reclassification or change in the outstanding shares of Common Stock
issuable upon exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no
par value, or from no par value to par value, such shares of Common Stock as
so reclassified or changed.
(j) Any determination as to whether an adjustment in the Warrant
Price in effect hereunder is required pursuant to Section 5, or as to the
amount of any such adjustment, if required, shall be binding upon the holders
of the Warrants and the Company if made in good faith by the Board of
Directors of the Company.
(k) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into
or exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company may at its option elect concurrently therewith to grant to
each Registered Holder as of the record date for such transaction of the
Warrants then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date used to
determine the shareholders entitled to the rights, warrants or options being
granted by the Company, the Registered Holder were the holder of record of the
number of whole shares of Common Stock then issuable upon exercise of his or
her Warrant. If the Company shall so elect under this Subsection 5(k), then
such grant by the Company to the holders of the Warrants shall be in lieu of
any adjustment which otherwise might be called for pursuant to this Section 5.
6. Fractional Warrants and Fractional Shares. If the number of shares
of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 5, the Company nevertheless shall not be required to issue
fractions of shares, upon exercise of the Warrant or otherwise, nor to
distribute certificates that evidence fractional shares. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Registered Holder an amount in cash equal to such fraction multiplied
by the Fair Market Value of one share of Common Stock as of the date of
exercise.
7. Warrant Holders Not Deemed Shareholders. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
8. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the holder of any
other Warrant, may, in his own behalf and for his own benefit, enforce against
the Company his right to exercise his Warrant for the purchase of shares of
Common Stock in the manner provided herein.
9. Agreement of Warrant Holders. Every holder of any Warrant, by his
acceptance thereof, consents and agrees with the Company and every other
holder of any Warrant that:
(i) The Warrants are transferable only on the registry
books of the Company by the Registered Holder thereof in person or by his or
her attorney duly authorized in writing and only if such Warrants are
surrendered at the office of the Company, duly endorsed or accompanied by a
proper instrument of transfer satisfactory to the Company, in its sole
discretion, together with payment of any applicable transfer taxes; and
(ii) The Company may deem and treat the person in whose
name the Warrant is registered as the holder and as the absolute, true and
lawful owner thereof for all purposes, and the Company shall not be affected
by any notice or knowledge to the contrary, except as otherwise expressly
provided in Section 3.
10. Investment Representation and Legend. The holder, by acceptance of
the Warrants, represents and warrants to the Company that it is acquiring the
Warrants and the shares of Common Stock (or other securities) issuable upon
the exercise hereof for investment purposes only and not with a view towards
the resale or other distribution thereof and agrees that the Company may affix
upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the representation of
the holder that it has been acquired for investment purposes and not
with a view towards the resale or other distribution thereof. Neither
this Warrant nor the shares issuable upon the exercise of this Warrant
have been registered under the Securities Act of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that the Company may
affix the following legend to certificates for shares of Common Stock issued
upon exercise of this Warrant:
"The securities represented by this certificate have been issued in
reliance upon the representation of the holder that they have been
acquired for investment and not with a view toward the resale or other
distribution thereof, and have not been registered under the Securities
Act of 1933, as amended. Neither the securities evidenced hereby, nor
any interest therein, may be offered, sold, transferred, encumbered or
otherwise disposed of unless either (i) there is an effective
registration statement under said Act relating thereto or (ii) the
Company has received an opinion of counsel, reasonably satisfactory in
form and substance to the Company, stating that such registration is not
required."
11. Cancellation of Warrants. If the Company shall purchase or acquire
any Warrant or Warrants, by redemption or otherwise, each such Warrant shall
thereupon be and canceled by it and retired. The Company shall also cancel
the Warrant or Warrants following exercise of any or all thereof or delivered
to it for transfer, split up, combination or exchange.
12. Modification of Warrant. The terms of the Warrants shall not be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders representing at least a majority of the
Warrants then outstanding; provided, that, no change in the number or nature
of the securities purchasable upon the exercise of any Warrant, or the Warrant
Price therefore, or the acceleration of the Warrant Expiration Date, shall be
made without the consent in writing of the Registered Holder of the Warrant,
and in compliance with applicable law.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed by means of first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant, at the
address of such holder as shown on the registry books maintained by the
Company; if to the Company, at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, or at such other address as may have been furnished to the Registered
Holder in writing by the Company.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without reference to
principles of conflict of laws.
15. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company, the Registered Holder and their respective
successors and assigns, and the holders from time to time of the Warrants.
Nothing in this Warrant is intended nor shall be construed to confer upon any
other person any right, remedy or claim, in equity or at law, or to impose
upon any other person any duty, liability or obligation.
16. Registration Rights. Registration of Common Stock.
16.1. Registration. Not later than six months following the
first date on which this Warrant may be exercised, the Company will file a
registration statement (the "Registration Statement") with respect to the
resale of the Registrable Securities with the Securities and Exchange
Commission. The Company will use commercially reasonable efforts to effect
the registrations, qualifications or compliances (including, without
limitation, the execution of any required undertaking to file post-effective
amendments, appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with applicable securities
laws, requirements or regulations) as may be reasonably requested and as would
permit or facilitate that sale and distribution of all Registrable Securities
until the distribution thereof is complete.
16.2 Registration Procedures. In connection with the
registration of any Registrable Securities under the Securities Act as
provided in this Section 16, the Company will use its best efforts, as
expeditiously as possible to:
(a) Prepare and file with the Securities and Exchange Commission
the Registration Statement with respect to such Registrable Securities and use
its best efforts to cause such Registration Statement to become effective;
(b) Prepare and file with the Securities and Exchange Commission
such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective until February ___, 2006, and to comply with
the provisions of the Securities Act (to the extent applicable to the Company)
with respect thereto;
(c) Furnish to each seller of such Registrable Securities such
number of copies of such Registration Statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such Registration Statement (including
each preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably
request, in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) Use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions as any seller reasonably requests, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller, except that
the Company will not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not,
but for the requirements of this Section 16.2(d) be obligated to be qualified,
to subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) Provide a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than
the effective date of such Registration Statement;
(f) Notify each seller of such Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(g) Cause all such Registrable Securities to be listed on each
securities exchange or automated over-the-counter trading system on which
similar securities issued by the Company are then listed;
(h) Enter into such customary agreements and take all such other
actions as reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(i) Make available for inspection by any seller of Registrable
Securities, all financial and other records, pertinent corporation documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller in
connection with the Registration Statement pursuant to Section 16.1.
16.3. Registration and Selling Expenses. (a) All expenses
incurred by the Company in connection with the Company's performance of or
compliance with this Section 16, including, without limitation (i) all
registration and filing fees (including all expenses incident to filing with
the National Association of Securities Dealers, Inc.), (ii) blue sky fees and
expenses, (iii) all necessary printing and duplicating expenses and (iv) all
fees and disbursements of counsel and accountants for the Company (including
the expenses of any audit of financial statements), retained by the Company
(all such expenses being herein called "Registration Expenses"), will be paid
by the Company except as otherwise expressly provided in this Section 16.3.
The term "Registration Expenses" shall not include any underwriting discounts
or commissions incurred by the Purchaser, which shall be the responsibility of
the Purchaser.
(b) The Company will, in any event, in connection with any
registration statement, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties in connection therewith and expenses of
audits of year-end financial statements), the expense of liability insurance
and the expenses and fees for listing the securities to be registered on one
or more securities exchanges or automated over-the-counter trading systems on
which similar securities issued by the Company are then listed.
(c) Nothing herein shall be construed to prevent any holder or
holders of Registrable Securities from retaining such counsel as they shall
choose, the expenses of one of which, as determined by the holder or holders,
shall be borne by the Company.
16.4. [Intentionally Omitted]
16.5. Indemnification. (a) The Company hereby agrees to
indemnify, to the extent permitted by law, each holder of Registrable
Securities, its officers and directors, if any, and each person, if any, who
controls such holder within the meaning of the Securities Act, against all
losses, claims, damages, liabilities and expenses (under the Securities Act or
common law or otherwise) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus (and as amended or supplemented if the Company has furnished any
amendments or supplements thereto) or any preliminary prospectus, which
registration statement, prospectus or preliminary prospectus shall be prepared
in connection with the registration contemplated by this Section 16, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any untrue statement or alleged untrue statement
contained in or by any omission or alleged omission from information furnished
in writing by such holder to the Company in connection with the registration
contemplated by this Section 16, provided the Company will not be liable
pursuant to this Section 16.5 if such losses, claims, damages, liabilities or
expenses have been caused by any selling security holder's failure to deliver
a copy of the registration statement or prospectus, or any amendments or
supplements thereto, after the Company has furnished such holder with the
number of copies required by Section 16.2(c).
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information as is reasonably requested
by the Company for use in any such registration statement or prospectus and
shall severally, but not jointly, indemnify, to the extent permitted by law,
the Company, its directors and officers and each person, if any, who controls
the Company within the meaning of the Securities Act, against any losses,
claims, damages, liabilities and expenses resulting from any untrue statement
or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the
extent such losses, claims, damages, liabilities or expenses are caused by an
untrue statement or alleged untrue statement contained in or by an omission or
alleged omission from information so furnished in writing by such holder in
connection with the registration contemplated by this Section 16. If the
offering pursuant to any such registration is made through underwriters, each
such holder agrees to enter into an underwriting agreement in customary form
with such underwriters and to indemnify such underwriters, their officers and
directors, if any, and each person who controls such underwriters within the
meaning of the Securities Act to the same extent as hereinabove provided with
respect to indemnification by such holder of the Company. Notwithstanding the
foregoing or any other provision of this Agreement, in no event shall a holder
of Registrable Securities be liable for any such losses, claims, damages,
liabilities or expenses in excess of the net proceeds received by such holder
in the offering.
(c) Promptly after receipt by an indemnified party under Section
16.5 (a) or (b) of notice of the commencement of any action or proceeding,
such indemnified party will, if a claim in respect thereof is made against the
indemnifying party under such Section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under such Section. In case any such
action or proceeding is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein, and, to the extent that it wishes,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel approved by such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under such Section for any legal or any other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless incurred at the
written request of the indemnifying party. Notwithstanding the above, the
indemnified party will have the right to employ counsel of its own choice in
any such action or proceeding if the indemnified party has reasonably
concluded that there may be defenses available to it which are different from
or additional to those of the indemnifying party, or counsel to the
indemnified party is of the opinion that it would not be desirable for the
same counsel to represent both the indemnifying party and the indemnified
party because such representation might result in a conflict of interest (in
either of which cases the indemnifying party will not have the right to assume
the defense of any such action or proceeding on behalf of the indemnified
party or parties and such legal and other expenses will be borne by the
indemnifying party). An indemnifying party will not be liable to any
indemnified party for any settlement of any such action or proceeding effected
without the consent of such indemnifying party.
(d) If the indemnification provided for in Section 16.5(a) or
(b) is unavailable under applicable law to an indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
of the holders of Registrable Securities on the other in connection with the
statements or omissions which resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the holders of
Registrable Securities on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the Company or by the holders of Registrable Securities and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid or payable by a party
as a result of the losses, claims, damages and liabilities referred to above
shall be deemed to include, subject to the limitations set forth in Section
16.5(c), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
(e) Promptly after receipt by the Company or any holder of
Securities of notice of the commencement of any action or proceeding, such
party will, if a claim for contribution in respect thereof is to be made
against another party (the "contributing party"), notify the contributing
party of the commencement thereof; but the omission so to notify the
contributing party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any such
action, suit, or proceeding is brought against any party, and such party
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first above written.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: _________________________________
Authorized Officer
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to exercise
___________ Warrants represented by this certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
and be delivered to
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the within Warrant was
solicited by a member of the National Association of Securities Dealers, Inc.
If not solicited by an NASD member, please write "unsolicited" in the space
below.
_________________________________________
(Name of NASD Member)
Dated: X ___________________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
___________________________________
Signature Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
In Order to Assign Warrant
FOR VALUE RECEIVED, hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
[please print or type name and address]
___________________________ of the Warrants represented hereby, and
hereby irrevocably constitutes and appoints
__________________________________________________________________________
Attorney to transfer this Warrant on the books of the Company, with full power
of substitution in the premises.
Dated: _____________________________ X ___________________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND
MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAND PROGRAM.
EXHIBIT C
PROMISSORY NOTE
$500,000.00 New York, New York
July 30,2001
FOR VALUE RECEIVED, Bion Environmental Technologies, Inc., a Colorado
corporation (the "Borrower") promises to pay to the order of SOUTHVIEW, INC.
at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as payee, the principal sum
of Five Hundred Thousand ($500,000.00) DOLLARS lawful money of the United
States of America, together with interest at the rate of eight percent (8%)
per annum, payable on the first day of each month while this Note remains
outstanding.
The Borrower may pay all, or less than all of the outstanding principal amount
of this Note at any time without premium or penalty. In the event of a
financing that exceeds One and One Half Million Dollars ($1,500,000.00), net
proceeds to borrower. This Note shall convert to a Demand Note.
Should any monies due and owing under this Note remain unpaid for more than
ten (10) days after the date(s) upon which they are due and payable, then
Borrower shall pay a late charge of Two ($.02) Cents for each dollar ($1.00)
past due.
The Lenders shall not by any act be deemed to have waived any of its rights or
remedies hereunder unless such waiver is in writing and signed by the Lenders,
and then only to the extent set forth therein. A waiver as to any one event
shall in no way be construed as a continuing waiver or as preventing exercise
of such rights or remedy on a subsequent event.
Borrower promises to pay all costs, expenses and attorneys' fees incurred by
the holder hereof in any proceeding for the collection of the debt, or the
protecting, sustaining or realization upon any security securing this Note, or
in any litigation or controversy arising from or connected with said security
or this Note, in any bankruptcy or receivership proceeding, or any appeal from
any of the foregoing in which the holder hereof prevails. If a judgment is
obtained thereon, such attorneys' fees, costs and expenses, including those
incurred at trial, on appeal or on petition for review, shall be awarded in
such amount as the court shall deem reasonable. As used in this Note,
attorneys' fees shall include all attorneys' fees which shall be incurred
whether or not legal action is commenced and any such fees incurred at trial,
arbitration, hearing or any judicial proceeding, and on appeal.
It is the specific intent of Borrower and Lenders that this Note bear a lawful
rate of interest, and if any court of competent jurisdiction should determine
that the rate herein provided exceeds that which is statutorily permitted for
the type of transaction evidenced hereby, the interest rate shall be reduced
to the highest rate permitted by applicable law, with any excess interest
theretofore collected being applied against principal or, if such principal
has been fully repaid, returned to Maker on demand.
This Note and all matters relating thereto shall be governed by and construed
and interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered, all on the day and year first above written.
(SEAL]
ATTEST:
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By:
_________________________________
Representing Agent
_________________________________
Date
