EXHIBIT 10.2
THIS NOTE IS NOT TRANSFERABLE WITHOUT THE EXPRESS WRITTEN CONSENT OF BION
ENVIRONMENTAL TECHNOLOGIES, INC. (THE "COMPANY"). THE SECURITIES REPRESENTED
BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
APPLICABLE STATE SECURITIES LAWS.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
No. BN-__
2001 Convertible Bridge Note
$__________ New York, New York
________, 2001
Bion Environmental Technologies, Inc. a Colorado corporation (the
"Company"), for value received, hereby promises to pay to ___________________
or registered assigns (the "Holder"), the principal sum of ___________________
Dollars ($__________), with interest from the date of issuance of this
Convertible Bridge Note on the unpaid principal balance at a rate equal to ten
percent (10%) per annum, on April 30, 2002 (the "Maturity Date"). Payment
shall be made at such place as designated by the Holder upon surrender of this
Convertible Bridge Note, and shall be in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. This Convertible Bridge Note is
one of a duly authorized issue of Bion Environmental Technologies, Inc. 10%
Convertible Bridge Notes in a private offering of a minimum aggregate
principal amount of $1,000,000 and a maximum aggregate principal amount of
$2,000,000 (individually a "Note" and collectively the "Notes") issued
pursuant to a Note and Warrant Purchase Agreement of even date herewith
between the Company, the Holder and the other parties thereto (the "Purchase
Agreement").
ARTICLE 1. Prepayment
This Note (including interest accrued on the principal hereof) may be
prepaid by the Company, at any time without penalty or premium.
ARTICLE 2. Mandatory Prepayment or Conversion
(a) Prepayment or Conversion. (i) In the event the Company shall issue
any capital stock (or instrument convertible into capital stock) ("Stock") of
the Company for an aggregate purchase price of at least $5,000,000 (exclusive
of the sale of the Notes and the conversion of any securities convertible into
Stock which are currently outstanding), pursuant to a public or private
offering (an "Offering"), then the Notes shall be converted ("Conversion")
into such number of shares of the Stock of the Company as is equal to the
Conversion Amount (as defined below) divided by the then current Conversion
Price (as defined below). The Conversion Amount shall be the aggregate
principal value of the Notes held by such Holder plus any accrued and unpaid
interest. Subject to the limitation that in no event shall the Conversion
Price be greater than $2.50 per share (irrespective of the price paid for one
share of Stock in the Offering), the Conversion Price shall be the price paid
for one share of Stock issued in the Offering, subject to adjustment as
provided below.
(ii) Should this Note not be converted into shares of Stock of the
Company pursuant to this Section 2(a) prior to midnight on April 29, 2002,
then the Note shall, at that time, be automatically converted into such number
of shares of Common Stock of the company as is equal to the Conversion Amount
(as defined above) divided by the then current Conversion Price (as defined
below). Subject to the limitation that in no event shall the Conversion Price
be greater than $2.50 per share (irrespective of the market price of the
Company's Common Stock at the time of conversion), the Conversion Price shall
be an amount equal to the Market Price of the Company's Common Stock. For the
purposes hereof, Market Price shall mean an amount not in excess of a maximum
of $2.50 per share that is equal to the average of the closing bid prices of
the Company's Common Stock for the 20 business days immediately preceding the
date of conversion as quoted for such security on any licensed securities
exchange or, if such security is not then quoted on any licensed securities
exchange, on the NASD electronic bulletin board. In the event such
calculation cannot be made and the Company and a majority of the Holders of
the Notes are unable to agree upon the fair market value of the Common Stock,
then such dispute shall be resolved by an investment banking firm mutually
acceptable to the Company and a majority of the Holders of the Notes, and any
fees and costs associated therewith shall be paid by the Company; provided,
however, that in no event shall the Conversion Price be greater than $2.50 per
share.
(b) Conversion Procedures. Each Holder of Notes shall surrender the
Notes at the offices of the Company, which Notes shall be accompanied by
irrevocable written notice to the Company specifying the name or names (with
address) in which a certificate or certificates evidencing shares of Stock are
to be issued.
The Company shall deliver to the holder of the Notes, or to the nominee
or nominees of such person, certificates evidencing the number of full shares
of Stock to which such person shall be entitled as aforesaid, together with a
cash adjustment of any fraction of a share as hereinafter provided. Subject
to the following provisions of this paragraph, such conversion shall be deemed
to have been made as of the date of such notice and the person or persons
entitled to receive Stock deliverable upon conversion of such Notes shall be
treated for all purposes as the record holder or holders of such Stock on such
date; provided, however, that the Company shall not be required to convert any
Notes while the stock transfer books of the Company are closed for any
purpose, but the giving of notice during any period while such books are so
closed shall become effective for conversion immediately upon the reopening of
such books as if the notice had been given on the date of such reopening, and
the conversion shall be at the conversion rate in effect on such date.
(c) Protection in Case of a Merger, Etc. (i) In case of any capital
reorganization or reclassification, or any consolidation or merger to which
the Company is a party other than a merger or consolidation in which the
Company is the continuing corporation, or in case of any sale or conveyance to
another entity of the property of the Company as an entirety or substantially
as a entirety, or in the case of any statutory exchange of securities with
another corporation (including any exchange effected in connection with a
merger of a third corporation into the Company), the Holder of this Note shall
have the right thereafter to receive on the conversion of this Note the kind
and amount of securities, cash or other property which the Holder would have
owned or have been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance had this Note been converted into shares of Common Stock
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance and in any such case, if necessary, appropriate adjustment shall be
made in the application of the provisions set forth in this Section 2 with
respect to the rights and interests thereafter of the Holder of this Note to
the end that the provisions set forth in this Section 2 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in
relation to any shares of stock or other securities or property thereafter
deliverable on the Note. The above provisions of this Subsection (c)(i) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances. The
Company shall require the issuer of any shares of stock or other securities or
property thereafter deliverable on the exercise of this Note to be responsible
for all of the agreements and obligations of the Company hereunder. Notice of
any such reorganization, reclassification, consolidation, merger, statutory
exchange, sale or conveyance and of said provisions so proposed to be made,
shall be mailed to the Holders of the Notes not less than 30 days prior to
such event. A sale of all or substantially all of the assets of the Company
for a consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(ii) In case any event shall occur as to which the other provision
of this Section 2 is not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the conversion rights represented
by this Note in accordance with the essential intent and principles hereof
then, in each such case, the Holders of Notes may appoint a firm of
independent public accountants of recognized national standing reasonably
acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the conversion rights.
Upon receipt of such opinion, the Company will promptly mail a copy thereof to
the Holder of this Note and shall make the adjustments described therein. The
fees and expenses of such independent public accountants shall be borne by the
Company.
(d) Reservation of Shares; Transfer Taxes; Etc. The Company shall at
all times reserve and keep available, out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Notes, such number of shares of its Common Stock as shall be sufficient to
effect the conversion of all Notes from time to time outstanding. The Company
shall use its best efforts from time to time, in accordance with the laws of
the State of Colorado, to increase the authorized number of shares of Common
Stock if at any time the number of shares of Common Stock not outstanding
shall not be sufficient to permit the conversion of all the then-outstanding
Notes. In the event the Company intends to offer Stock other than Common
Stock, the Company shall authorize the issuance of sufficient shares of such
Stock to permit the conversion of all the then-outstanding Notes.
The Company shall pay any and all issue or other taxes that may be
payable in respect of any issue or delivery of shares of Stock on conversion
of the Notes. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue or
delivery of Stock (or other securities or assets) in a name other than that in
which the Notes so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to
the Company the amount of such tax or has established, to the satisfaction of
the Company, that such tax has been paid.
ARTICLE 3. Fractional Shares
The Company shall not be required to issue fractions of shares of Common
Stock or other Stock of the Company upon the conversion of the Note. If any
fraction of a share would be issuable on the Conversion of the Note, the
Company shall purchase such fraction for an amount in cash equal to the same
fraction of the closing price for the Common Stock on the trading date
immediately preceding the date of exercise of the conversion or the fair
market value of such other Stock, as determined in good faith by the Board of
Directors of the Company.
ARTICLE 4. Affirmative Covenants of the Company.
The Company covenants and agrees that until the payment in full of this
Note, the Company shall:
(a) Existence; Business. (i) Preserve, renew and keep in full force and
effect its legal existence and (ii) obtain, preserve, renew, extend and keep
in full force and effect the licenses, permits, authorizations, patents,
trademarks and trade names material to its business.
(b) Use of Proceeds. Use the proceeds of the Notes of this issue
solely as set forth in Section 7.3 of the Purchase Agreement.
(c) Notice of Events of Default. Furnish to the Holder prompt written
notice of any Event of Default, specifying the nature and extent thereof and
corrective action, if any, proposed to be taken with respect thereto.
(d) Authorization of Stock Issuable Upon Conversion. Authorize and
reserve a sufficient number of its shares of Stock and Common Stock for
issuance upon Conversion of the Note.
ARTICLE 5. Negative Covenants of the Company.
The Company covenants and agrees with the Holder that until the payment
in full of this Note, the Company shall not:
(a) Dividends and Distributions. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, with respect to any shares of its capital stock or directly or
indirectly redeem, purchase, retire or otherwise acquire for value any shares
of any class of its capital stock or set aside any amount for any such
purpose, except as permitted by Section 7.14 of the Purchase Agreement.
(b) No Impairment. By amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder
of this Note against impairment.
ARTICLE 6. Events of Default Defined.
The following shall each constitute an "Event of Default" hereunder:
(a) the failure of the Company to make any payment of principal of or
interest on this Note when due and payable;
(b) the failure of the Company to observe or perform any covenant in
this Note or in the Purchase Agreement, and such failure shall have continued
unremedied for a period of five (5) days;
(c) if the Company shall:
(1) admit in writing its inability to pay its debts generally
as they become due,
(2) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(3) make an assignment for the benefit of its creditors,
(4) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property,
(5) on a petition in bankruptcy filed against, be adjudicated
a bankrupt, or
(6) file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America
or any state thereof;
(d) if a court of competent jurisdiction shall enter an order, judgment
or decree appointing, without the consent of the Company, a receiver of the
Company or of the whole or any substantial part of its property, or approving
a petition filed against it seeking reorganization or arrangement of the
Company under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any State thereof, and such order,
judgment or decree shall not be vacated or set aside or stayed within thirty
(30) days from the date of entry thereof;
(e) if, under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction shall assume custody or control
of the Company or the whole or any substantial part of its property and such
custody or control shall not be terminated or stayed within thirty (30) days
from the date of assumption of such custody or control;
(f) the liquidation, dissolution or winding up of the Company;
(g) the failure of the shareholders to authorize and approve the
issuance of these Notes or the issuance of the Stock underlying these Notes,
the Bridge Warrants (as such terms are defined in the Purchase Agreement), or
any Common Stock underlying the foregoing to the extent such authorization is
necessary pursuant to the rules of the Nasdaq National Market or any other
applicable law, rule or regulation; or
(h) A final judgment or judgments for the payment of money in excess of
$100,000 in the aggregate shall be rendered by one or more courts,
administrative or arbitral tribunals or other bodies having jurisdiction
against the Company and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and the Company shall
not, within such 30-day period, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
ARTICLE 7. Remedies upon Event of Default.
(a) Upon the occurrence of an Event of Default, (i) the entire
principal amount of, and all accrued and unpaid interest on, this Note shall
automatically become immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company. In addition, the Holder may take any action available
to it under the Purchase Agreement or at law or in equity or by statute or
otherwise.
(b) No remedy herein conferred upon the Holder of this Note is intended
to be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise.
ARTICLE 8. Note Register.
(a) The Company shall keep at its principal executive office a register
(herein sometimes referred to as the "Note Register"), in which, subject to
such reasonable regulations as it may prescribe, but at its expense (other
than transfer taxes, if any), the Company shall provide for the registration
and transfer of this Note.
(b) Whenever this Note shall be surrendered at the principal executive
office of the Company for transfer or exchange, accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company duly
executed by the Holder hereof or his attorney duly authorized in writing, the
Company shall execute and deliver in exchange therefor a new Note or Notes, as
may be requested by such Xxxxxx, in the same aggregate unpaid principal amount
and payable on the same date as the principal amount of the Note or Notes so
surrendered; each such new Note shall be dated as of the date to which
interest has been paid on the unpaid principal amount of the Note or Notes so
surrendered and shall be in such principal amount and registered in such name
or names as such Holder may designate in writing.
(c) Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Note and of indemnity
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Note (in case of mutilation) the Company will make and deliver in lieu of
this Note a new Note of like tenor and unpaid principal amount and dated as of
the date to which interest has been paid on the unpaid principal amount of
this Note in lieu of which such new Note is made and delivered.
ARTICLE 9. Registration Under Securities Act of 1933.
The Holder of this Note shall have registration rights as provided in
Section 8 of the Purchase Agreement, with respect to the Securities issuable
upon conversion of the Notes. If the Holder is not a party to the Purchase
Agreement, by acceptance of this Note, the Holder agrees to comply with
provisions of Section 8 of the Purchase Agreement to the same extent as if it
were a party thereto.
ARTICLE 10. Miscellaneous.
(a) Amendments and Waivers. The holders of a majority in principal
amount of outstanding Notes of this issue may waive or otherwise consent to
the amendment of any of the provisions hereof.
(b) Restrictions on Transferability. In addition to the restrictions
set forth in Section 9 of this Note, the securities represented by this Note
have been acquired for investment and have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state or
other jurisdiction. Without such registration, such securities may not be
sold, pledged, hypothecated or otherwise transferred, except pursuant to
exemptions from the Securities Act of 1933, and the securities laws of any
state or other jurisdiction. Notwithstanding the above, the holder of this
Note has been provided the registration rights contained in Section 8 of the
Purchase Agreement with respect to the shares of the Company's Common Stock
which may be acquired upon the Conversion of the Note.
(c) Forbearance from Suit. No holder of Notes of this issue shall
institute any suit or proceeding for the enforcement of the payment of
principal or interest unless the holders of at least a majority in principal
amount of all of the outstanding Notes of this issue join in such suit or
proceeding.
(d) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, excluding the body of law
relating to conflict of laws. Notwithstanding anything to the contrary
contained herein, in no event may the effective rate of interest collected or
received by the Holder exceed that which may be charged, collected or received
by the Holder under applicable law.
(e) Interpretation. If any term or provision of this Note shall be
held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
(f) Successors and Assigns. This Note shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Holder and its successors and assigns.
(g) Notices. All notices, requests, consents and demands shall be made
in writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the Holder thereof at their respective addresses set forth below
or to such other address as may be furnished in writing to the other party
hereto:
If to the Holder: At the address shown on Schedule A attached hereto.
If to the Company: Bion Environmental Technologies, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
(h) Saturdays, Sundays, Holidays. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in
New York shall be a legal holiday, then the date for the making of that
payment shall be the next subsequent day which is not a Saturday, Sunday or
legal holiday.
(i) Purchase Agreement. This Note is subject to the terms contained in
the Purchase Agreement dated the date hereof between the Company and the
purchasers of the Notes and the holder of this Note is entitled to the
benefits of such Purchase Agreement and may, in addition to any rights
hereunder, enforce the agreements of the Company contained therein and
exercise the remedies provided for thereby or otherwise available in respect
thereof.
IN WITNESS WHEREOF, this Note has been executed and delivered as a sealed
instrument on the date first above written by the duly authorized
representative of the Company.
ATTEST: BION ENVIRONMENTAL
TECHNOLOGIES, INC.
______________________________ By: _____________________________
Name:
Its:
(Corporate Seal)
Schedule A
