EXHIBIT 10.13
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.
Class SV/DB-1 Warrant
Warrant to Subscribe August 31, 2003
for 466,000 Shares
Void After July 31, 2013
THIS CERTIFIES that, for value received, The Xxxxxxxx Xxxxxxxxx Xxxxxxx
Trust or its registered assigns ("Holder"), is entitled to subscribe for and
purchase from Bion Environmental Technologies, Inc., a Colorado corporation
(hereinafter called the "Company"), at the price of $3.00 per share (such
price as from time to time adjusted as hereinafter provided being hereinafter
called the "Warrant Price"), from August 31, 2003 until July 31, 2008 (the
"Warrant Expiration Date")(provided, however, that the exercise period shall
immediately commence upon a Change of Control of the Company), up to 466,000
(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 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.
1. Exercise of Warrant.
(a) Method of Exercise.
(i) 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 thereof 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.
(ii) In lieu of exercising this Warrant via cash payment,
the holder may effect a cashless exercise and receive Common Stock equal to
the value of this Warrant (or the portion thereof being cancelled by means of
a net issuance exercise, in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A - B)
-------------
A
Where X = the number of shares of Common Stock to be issued to the
Holder.
Y = the number of shares purchasable under this Warrant or, if
only a portion of the Warrant is being exercised (at the date of such
calculation).
A = the current Market Price (as defined below) of one share of
Common Stock (at the date of such calculation).
B = the exercise price (as adjusted to the date of calculation).
If the above calculation results in a negative number, then no
Warrant shares of Common Stock shall be issued or issuable upon conversion of
this Warrant pursuant to this Section 1 (b), and the Warrant shall not be
deemed to have been exercised, notwithstanding the delivery of the notice of
election.
(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
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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
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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
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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.
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(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
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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).
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(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
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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 the "Holder" 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
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(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
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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.
11
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 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other address as may have been furnished to the Registered
Holder in writing by the Company.
12
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.
(a) In the event that the Company files any registration statement
for its Common Stock hereafter, the Registrable Securities (defined as the
Common Stock Underlying the exercise of the Warrants ) shall have "piggy
back" registration rights in such Registration Statement (one time only),
subject to underwriter approval, with registration expenses allocated as set
forth below.
(b) If the Registrable Securities have not been registered
pursuant to 16.1 (a) above on or before August 31, 2005, the Company will,
thereafter, upon the written request of a majority of the Holders of its
outstanding Class SV warrants (aggregating all SV warrants) 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 for a period of 12 months, unless agreed
otherwise, and to comply with the provisions of the Securities Act (to the
extent applicable to the Company)with respect thereto;
13
(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.
14
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 holders.
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
15
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
16
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.
17
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
18
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.
