EXHIBIT 10.1
NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") dated as of
______________, 2001, by and between BION ENVIRONMENTAL TECHNOLOGIES, INC., a
Colorado corporation (the "Company"), and the other parties executing
signature pages hereto (collectively, the "Purchasers").
WHEREAS, in a series of transactions and upon and subject to the terms
and conditions hereinafter set forth, the Company desires to issue and sell to
the Purchasers, and the Purchasers desire to purchase from the Company (i) a
minimum of $1,000,000 and a maximum of $2,000,000 aggregate face amount of
2001 Series Convertible Bridge Notes (the "Bridge Notes") in the form attached
hereto as Exhibit A and (ii) a minimum of an aggregate of 300,000 a maximum of
an aggregate of 600,000 Bridge Warrants (the "Bridge Warrants") in the form
attached as Exhibit B, each of which shall entitle the holder thereof to
purchase one share of the Common Stock of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Purchasers and the Company hereby agree as
follows:
1. Purchase of Company Securities.
1.1. Purchase and Sale of the Bridge Notes and the Bridge Warrants.
Subject to the terms and conditions set forth herein, the Company hereby
agrees to issue and sell to the Purchasers, and each Purchaser, hereby agrees
to purchase from the Company, such number of Units (as defined below) at the
Closing (as such term is defined in Section 2.1 hereof) as is listed on its
signature page. Each "Unit" shall consist of $250,000 face amount of Bridge
Notes and 75,000 Bridge Warrants. The aggregate purchase price for the Units
sold pursuant to this Agreement shall be equal to the sum of $1.00 for each
$1.00 principal amount of Bridge Notes and $.05 for each Bridge Warrant.
2. Closing.
2.1. Closing. The initial closing and each additional closing of the
purchase and sale of the Units will take place at the offices of Bion. Such
closings (each, a "Closing" and collectively, the "Closings") will take place
at 10:00 A.M., local time, on such dates as may be mutually agreed upon by the
Company and the Purchasers. The date of each Closing is referred to herein as
a "Closing Date." The date of the first Closing shall hereafter be referred
to as the "Initial Closing Date" and the date of the final Closing shall
hereafter be referred to as the "Final Closing Date." At each Closing, the
Company will deliver to the Purchasers the Bridge Notes and the Bridge
Warrants purchased as set forth in Section 1 hereof, against payment of the
Purchase Price, by wire transfer payable to the Company. The Bridge Notes and
the Bridge Warrants shall be registered in each Purchaser's name or the name
of its nominee(s) in such denominations as the Purchaser shall request
pursuant to instructions delivered to the Company not less than two days prior
to such Closing Date.
3. Conditions to the Obligations of Purchasers at the Closing. The
obligation of each Purchaser to purchase and pay for the Units to be purchased
by it at a Closing is subject to the satisfaction on or prior to the Closing
Date of the following conditions, which may only be waived by written consent
of Purchasers:
3.1. Opinion of Counsel to the Company. Purchaser shall have received
from counsel for the Company, its opinion dated the Initial Closing Date in
the form of Exhibit A hereto.
3.2. Representations and Warranties. All of the representations and
warranties of the Company contained in this Agreement shall be true and
correct at and as of such Closing Date, except for changes caused by the
transactions contemplated hereby.
3.3. Performance of Covenants. All of the covenants and agreements of
the Company contained in this Agreement and required to be performed on or
prior to the Closing Date shall have been performed in a manner satisfactory
in all respects to Purchasers.
3.4. Legal Action. No injunction, order, investigation, claim, action
or proceeding before any court or governmental body shall be pending or
threatened wherein an unfavorable judgment, decree or order would restrain,
impair or prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause any such transaction to be rescinded.
3.5. Consents. The Company shall have obtained in writing or made all
consents, waivers, approvals, orders, permits, licenses and authorizations of,
and registrations, declarations, notices to and filings and applications with,
any governmental authority or any other person or entity (including, without
limitation, securityholders and creditors of the Company) required to be
obtained or made in order to enable the Company to observe and comply with all
its obligations under this Agreement and to consummate the transactions
contemplated hereby.
3.6. Closing Documents. The Company shall have delivered to the
Purchasers the following:
(a) an incumbency certificate, dated the Initial Closing Date, for
the officers of the Company executing this Agreement, the Bridge Notes and the
Bridge Warrants and any other documents or instruments delivered in connection
with this Agreement at the Closing;
(b) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Initial Closing Date, as to the continued and valid
existence of the Company, certifying the attached copy of the By-laws of the
Company, the authorization of the execution, delivery and performance of this
Agreement, and the resolutions adopted by the Board of Directors of the
Company authorizing the actions to be taken by the Company under this
Agreement;
(c) a certificate executed by the President or Chief Executive
Officer of the Company, dated the Closing Date, stating that the conditions
set forth in Sections 3.2 through 3.5 have been satisfied and that there have
been no changes in circumstance that would be reflected in the certificates
delivered pursuant to subsections (a) or (b);
(d) a certificate of the Secretary of State of the State of
Colorado, dated a recent date, to the effect that the Company is in good
standing in the State of Colorado and that all annual reports, if any, have
been filed as required and that all taxes and fees have been paid in
connection therewith;
(e) a certified copy of the Articles of Incorporation of the
Company as filed with the Secretary of State of the State of Colorado and any
amendments thereto;
(f) such certificates, other documents and instruments as
Purchasers and their counsel may reasonably request in connection with, and to
effect, the transactions contemplated by this Agreement.
4. Conditions to the Obligations of the Company at the Closing. The
obligation of the Company to issue and sell the Bridge Notes and the Bridge
Warrants to the Purchasers at a Closing is subject to the satisfaction on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:
4.1. Representations and Warranties. The representations and
warranties of the Purchasers contained in this Agreement shall be true and
correct at and as of the Closing Date.
4.2. Legal Action. No injunction, order, investigation, claim, action
or proceeding before any court or governmental body shall be pending or
threatened wherein an unfavorable judgment, decree or order would restrain,
impair or prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause any such transaction to be rescinded.
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers:
5.1. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado.
The Company has all requisite corporate power and authority, and holds all
licenses, permits and other required authorizations from governmental
authorities, necessary to conduct its business as it is now being conducted or
proposed to be conducted and to own or lease the properties and assets it now
owns or holds under lease. Except where such failure to qualify could not
reasonably be deemed to have a material adverse effect on the Company, the
Company is duly qualified or licensed and in good standing as a foreign
corporation in each jurisdiction wherein the character of its properties or
the nature of the activities conducted by it makes such qualification or
licensing necessary.
5.2. Capitalization. The Company's authorized capitalization is set
forth in the SEC Documents (as defined below). All outstanding securities of
the Company are validly issued, fully paid and nonassessable. No shareholder
of the Company is entitled to any preemptive rights with respect to the
purchase or sale of any securities by the Company. Except as has been set
forth in the SEC Documents, there are no outstanding options, warrants or
other rights, commitments or arrangements, written or oral, to purchase or
otherwise acquire any authorized but unissued shares of capital stock of the
Company or any security directly or indirectly convertible into or
exchangeable for any capital stock of the Company or under which any such
option, warrant or convertible security may be issued in the future, and there
are no voting trusts or agreements, shareholders' agreements, pledge
agreements, buy-sell, rights of first offer, negotiation or refusal or proxies
or similar arrangements relating to any securities of the Company to which the
Company is a party, and to the best knowledge of the Company after due
investigation there are no such trusts, agreement, rights, proxies or similar
arrangements as to which the Company is not a party. Except as set forth in
the SEC Documents and as contemplated herein, none of the shares of capital
stock of the Company is reserved for any purpose, and the Company is neither
subject to any obligation (contingent or otherwise), nor has any option to
repurchase or otherwise acquire or retire any shares of its capital stock.
The SEC Documents set forth (i) the number of shares of Common Stock
authorized for issuance under the Company's Fiscal Year 1994 Incentive Plan,
the Company's 1996 Non-employee Director Stock Plan and the Company's 2000
Incentive Plan; (ii) the number of shares of Common Stock as to which options
under such plan have been (a) reserved for issuance and (b) exercised; and
(iii) the exercise prices for all outstanding options under such plan. Except
as set forth in the SEC Documents, no antidilution adjustments with respect to
the outstanding securities of the Company will be triggered by the issuance of
the securities contemplated hereby.
5.3. Due Authorization, Valid Issuance, Etc.. The Bridge Notes have
been duly authorized and, when issued in accordance with this Agreement upon
the Closing Date, will be free and clear of all liens imposed by or through
the Company. The Bridge Warrants have been duly authorized and, when issued
in accordance with this Agreement upon the Closing Date, will be validly
issued and free and clear of all liens imposed by or through the Company. The
shares of capital stock, issuable upon conversion of the Bridge Notes, have
been duly authorized and shares of Common Stock have been reserved, and upon
the conversion of the Bridge Notes will be validly issued, fully paid and
nonassessable and will be free and clear of all liens imposed by or through
the Company. The shares of Common Stock issuable upon the exercise of the
Bridge Warrants have been duly authorized and reserved, and upon the exercise
of the Bridge Warrants in accordance with the terms and conditions thereof and
this Agreement, will be validly issued, fully paid and nonassessable shares of
Common Stock and will be free and clear of all liens imposed by or through the
Company. Except as set forth in the SEC Documents, the issuance, sale and
clear delivery of the Bridge Notes, the Bridge Warrants and the Common Stock
or other capital stock of the Company issuable upon the exercise of the Bridge
Warrants and conversion of the Bridge Notes will not be subject to any
preemptive right of shareholders of the Company or to any right of first
refusal or other right in favor of any person.
5.4. Authorization; No Breach. The Company has the full corporate
power and authority to execute, deliver and enter into this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement, the Bridge Notes, the Bridge Warrants, and any related
financing statement and all other transactions contemplated hereby have been
duly authorized by the Company, and this Agreement constitutes a legal, valid
and binding obligation of the Company, enforceable in accordance with its
terms except as the enforceability hereof may be limited by (a) bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and (b) the availability of remedies under general equitable principles and
(c) to the extent the indemnification provisions contained in Section 8.5
hereof may be limited by applicable federal or state securities laws. To the
Company's knowledge, the execution and delivery by the Company of this
Agreement, the offering, sale and issuance of the Bridge Notes and the Bridge
Warrants pursuant to this Agreement, and the performance and fulfillment of
the Company of its obligations under this Agreement, the Bridge Notes and the
Bridge Warrants, do not and will not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under, or
event which, with notice or lapse of time or both, would constitute a breach
of or default under, (iii) result in the creation of any lien, security
interest, adverse claim, charge or encumbrance upon the capital stock or
assets of the Company pursuant to, (iv) give any third party the right to
accelerate any obligation under or terminate, (v) result in a violation of,
(vi) result in the loss of any license, certificate, legal privilege or legal
right enjoyed or possessed by the Company under, or (vii) except for filings
required to be made with the Securities and Exchange Commission, require any
authorization, consent, approval, exemption or other action by or notice to
any court or administrative or governmental body pursuant to or require the
consent of any other person under, the Articles of Incorporation or By-Laws of
the Company or any law, statute, rule or regulation to which the Company is
subject or by which any of its properties are bound, or any agreement,
instrument, order, judgment or decree to which the Company is subject or by
which its properties are bound.
5.5 Financial Statements and SEC Documents.
(a) Incorporated by reference herein are (i) the audited
financial statements of the Company for the fiscal year ended June 30, 2000,
including the balance sheet as at the end of such fiscal year and the related
statements of operations, shareholders' equity (deficit) and cash flows for
such fiscal year, certified by BDO Xxxxxxx, LLP and (ii) the December 31
Financial Statements (the financial statements referred to in clauses (i) and
(ii) are referred to herein collectively as the "Financial Statements"). For
purposes of this Agreement, December 31, 2000, shall be hereinafter referred
to as the "Balance Sheet Date." The Financial Statements have been prepared
in accordance with the books and records of the Company and generally accepted
accounting principles, applied consistently with the past practices of the
Company (except as otherwise noted in such Financial Statements), reflect all
liabilities and obligations of the Company, as of their respective dates, and
present fairly the financial position of the Company and the results of its
operations as of the time and for the periods indicated therein.
(b) Incorporated by referenced herein are the Form 10-KSB of the
Company for the fiscal year ended June 30, 2000 and each report, schedule,
registration statement and definitive proxy statement filed by the Company
with the Securities and Exchange Commission thereafter (as such documents have
since the time of their filing been amended, the "SEC Documents") which are
all the documents (other than preliminary material) that the Company was
required to file with the Securities and Exchange Commission since such date.
As of their respective dates, the SEC Documents complied in all respects with
the requirements of the Securities Act (as defined in Section 9.7) and/or the
Securities Exchange Act (as defined in Section 9.8) as the case may be, and
the rules and regulations of the Securities and Exchange Commission thereunder
applicable to such SEC Documents and none of the SEC Documents contained any
untrue statement of a material fact or omitted to statement of material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the Securities and Exchange Commission
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-QSB of the Securities and
Exchange Commission) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the financial position of
the Company as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
5.6. No Material Adverse Changes. Except as set forth in the SEC
Documents, since the Balance Sheet Date there has not at any time been (a) any
material adverse change in the financial condition, operating results,
business prospects, employee relations or customer relations of the Company,
or (b) other adverse changes, which in the aggregate have been materially
adverse to the Company.
5.7. Litigation. Except as set forth in the SEC Documents, there are
no actions, suits, proceedings, orders, claims, or, to the Company's
knowledge, investigations pending or, to the Company's knowledge, threatened
against or affecting the Company, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality; there are no arbitration proceedings
pending under collective bargaining agreements or otherwise; and, to the
knowledge of the Company, there is no basis for any of the foregoing.
5.8. Compliance with Law. To the Company's knowledge, the Company has
complied in all material respects with all applicable statutes and regulations
of the United States and of all states, municipalities and applicable agencies
and foreign jurisdictions or bodies in respect of the conduct of its business
and operations, and the failure, if any, by the Company to have fully complied
with any such statute or regulation does not and will not materially adversely
affect the business or operations of the Company.
5.9. Undisclosed Liabilities. To the Company's knowledge, the Company
has no obligation or liability (whether accrued, absolute, contingent,
unliquidated, or otherwise, whether due or to become due) arising out of
transactions entered into at or prior to the Closing of this Agreement, or any
action or inaction at or prior to the Closing of this Agreement, or any state
of facts existing at or prior to the Closing of this Agreement, except (a)
liabilities reflected on the Company Balance Sheet; (b) liabilities incurred
in the ordinary course of business since the Balance Sheet Date (none of which
is a liability for breach of contract, breach of warranty, torts,
infringements, claims or lawsuits); and (c) liabilities or obligations
disclosed in the SEC Documents.
5.10. Disclosure. Neither this Agreement nor any of the schedules,
exhibits, written statements, documents or certificates prepared or supplied
by the Company with respect to the transactions contemplated hereby contain
any untrue statement of a material fact or omit a material fact necessary to
make the statements contained herein or therein not misleading in light of the
circumstances under which made. Except as disclosed in the SEC Documents and
except for matters effecting the industry of the Company as a whole, there
exists no fact or circumstance which, to the knowledge of the Company upon due
inquiry, materially adversely affects, or which could reasonably be
anticipated to have a material adverse effect on, the existing or expected
financial condition, operating results, assets, customer relations, employee
relations or business prospects of the Company. The Purchasers acknowledge
that the industry of the Company is subject to extensive regulation by
national, state and local authorities and that a change in any such
regulations or the institution of any litigation effecting the industry of the
Company in general, could have a material adverse effect on the Company.
5.11. Compliance with the Securities Laws. Assuming the accuracy and
truth of each of the Purchasers' representations set forth in Section 6 of
this Agreement, all securities of the Company heretofore sold and issued by it
were sold and issued, and the Bridge Notes and the Bridge Warrants were
offered and will be sold and issued, in compliance with all applicable federal
and state securities laws.
6. Representations and Warranties of Purchasers. Each of the
Purchasers hereby severally represents and warrants to the Company as follows:
6.1. Investment Intent. Each of the Purchasers is an "accredited
investor" within the meaning of Regulation D under the Securities Act. Each
of the Purchasers has experience in making investments in development stage
technology companies and is acquiring the Bridge Notes and the Bridge Warrants
for its own account and not with a present view to, or for sale in connection
with, any distribution thereof in violation of the registration requirements
of the Securities Act. Each of the Purchasers consents to the placing of a
legend on the certificates representing the Bridge Notes and the Bridge
Warrants to the effect that the shares of Common Stock or other Stock issuable
upon exercise or conversion, as the case may be, of the Bridge Warrants and
the Bridge Notes have not been registered under the Securities Act and may not
be transferred except in accordance with applicable securities laws or an
exception therefrom.
6.2. Authorization. Each of the Purchasers has the power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder, having obtained all required consents, if any, and this Agreement,
when executed and delivered, will constitute a legal valid and binding
obligation of such Purchaser.
6.3. Suitability. Each Purchaser acknowledges that he is a person who
is able to bear the economic risk of this investment and has adequate means of
providing for his current needs and possible personal contingencies with no
need for liquidity of this investment. In making this statement,
consideration has been given as to whether the Purchaser could afford to hold
his investment in the Company for an indefinite period of time and, whether,
at this time, he could afford a complete loss of his investment, without such
loss affecting his ability to maintain his lifestyle.
6.4. Risks. Each Purchaser acknowledges that this investment is
speculative in nature and involves a high degree of risk, that the Purchaser
may not be able to liquidate this investment and that transferability is
extremely limited.
6.5. Due Inquiry. Each Purchaser acknowledges receipt of all
information regarding the Company which he has requested or desired to know;
that all documents which could be reasonably provided have been made available
for his inspection and review; and that the Purchaser has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company and an
investment therein, and any additional information which he has requested.
7. Covenants of the Company. Until such time as the Registration
Statement (as defined below) is declared effective under the Securities Act,
the Company covenants and agrees with Purchasers as follows:
7.1. Books and Accounts. The Company will make and keep books, records
and accounts, which, in reasonable detail, accurately and fairly reflect its
transactions, including without limitation, dispositions of its assets.
7.2. Reports. The Company will make such filings as may be required
under the Securities Act.
7.3. Use of Proceeds. The Company shall use the net proceeds from the
sale of the Bridge Notes and Bridge Warrants for its working capital needs.
7.4. Corporate Existence, Licenses and Permits; Maintenance of
Properties; New Businesses. The Company will at all times conduct its
business in the ordinary course and cause to be done all things necessary to
maintain, preserve and renew its existence and will preserve and keep in force
and effect, all licenses, permits and authorizations necessary to the conduct
of its business. The Company will also maintain and keep its properties in
good repair, working order and condition, and from time to time, to make all
needful and proper repairs, renewals and replacements, so that the business
carried on in connection therewith may be properly conducted at all times.
7.5. Other Material Obligations. The Company will comply with (a) all
material obligations which it is subject to, or becomes subject to, pursuant
to any contract or agreement, whether oral or written, as such obligations are
required to be observed or performed, unless and to the extent that the same
are being contested in good faith and by appropriate proceedings and the
Company has set aside on its books adequate reserves with respect thereto,
and (b) all applicable laws, rules, and regulations of all governmental
authorities, the violation of which could have a material adverse effect upon
the business of the Company.
7.6. Amendment to the Articles of Incorporation and the By-Laws. The
Company will perform and be in compliance with and observe all of the
provisions set forth in its Articles of Incorporation and By-Laws to the
extent that the performance of such obligations is legally permissible;
provided that the fact that performance is not legally permissible will not
prevent such nonperformance from constituting an event of default under this
Agreement. The Company will not amend its Articles of Incorporation or
By-Laws so as to adversely affect the rights of the Purchasers under this
Agreement, the Articles of Incorporation, the By-Laws, the Bridge Warrants or
the Bridge Notes.
7.7. Dividends; Distributions; Repurchases of Common Stock; Treasury
Stock. The Company shall not declare or pay any dividends on, or make any
other distribution with respect to, its capital stock, whether now or
hereafter outstanding, or purchase, acquire, redeem or retire any shares of
its capital stock, without the prior written consent of the Purchasers,
provided, however, the foregoing shall not prohibit the Company issuing shares
of its capital stock in exchange for extinguishing debt owed to any person, or
from repurchasing any shares of its Common Stock from any present or former
officer, Director or employee of the Company, or from repurchasing any
outstanding warrants.
7.8. Taxes and Liens. The Company will duly pay and discharge when
payable, all taxes, assessments and governmental charges imposed upon or
against the Company or its properties, or any part thereof or upon the income
or profits therefrom, in each case before the same become delinquent and
before penalties accrue thereon, as well as all claims for labor, materials or
supplies which if unpaid might by law become a lien upon any of its property,
unless and to the extent that the same are being contested in good faith and
by appropriate proceedings and the Company has set aside on its books adequate
reserves with respect thereto.
7.9. Restrictive Agreement. The Company covenants and agrees that
subsequent to the Closing, it will not be a party to any agreement or
instrument which by its terms would restrict the Company's performance of its
obligations pursuant to this Agreement, the Articles of Incorporation,
By-laws, the Bridge Warrants or the Bridge Notes.
8. Registration of Common Stock.
8.1. Registration. Not later than nine months following the Final
Closing Date, 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, no later than 12 months following
the Final Closing Date, 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 the sale and distribution of all
Registrable Securities until the distribution thereof is complete. In the
event the Registration Statement has not been declared effective under the
Securities Act within 12 months of the Final Closing Date, then, for each 90
days thereafter that the Registration Statement has not been declared
effective, the Company shall pay a penalty to each of the Purchasers equal to
5% of the principal amount of the Bridge Notes held by it. This penalty, which
shall be payable at the Company's option in either cash or shares of
registered Common Stock, shall be paid by the Company to the Purchasers within
10 days following the effective date of the Registration Statement, or, in the
event the Registration Statement has still not been declared effective or has
been withdrawn by the Company, no later than the second anniversary of the
Final Closing Date. No penalties will accrue under this Section 8.1 after the
earliest date on which the Registrable Securities cease to be Registrable
Securities.
8.2. Registration Procedures. In connection with the registration of
any Registrable Securities under the Securities Act as provided in this
Section 8, 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 the earlier to occur of December 31,
2005 or such time as the Bridge Warrants have been redeemed pursuant to the
terms therein, 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 8.2(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 quoted on each automated over-the-counter trading
system on which similar securities issued by the Company are then listed or
quoted, as applicable;
(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 8.1.
8.3. Registration and Selling Expenses.
(a) All expenses incurred by the Company in connection with the
Company's performance of or compliance with this Section 8, 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 8.3. The term "Registration Expenses" shall not include any
underwriting discounts or commissions incurred by a Purchaser, which shall be
the responsibility of such 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.
8.4. NASD. In the event any Purchaser is deemed to be a member or an
affiliate of a member of the National Association of Securities Dealers, Inc.
("NASD") and as a result the Registrable Securities held by such Purchaser
cannot be included in the Registration Statement, then such Purchaser shall no
longer be entitled to the registration rights granted under this Section 8.
The Company may, however, in its sole discretion, include the Purchaser's
Registrable Securities in a future registration statement, to the extent
permitted by the NASD or the Securities and Exchange Commission.
8.5. 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 8, 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 8, provided the Company will not be liable pursuant to this Section
8.5 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 8.2(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 8. 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
8.5 (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 8.5(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
8.5(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.
9. Certain Definitions. For the purposes of this Agreement the
following terms have the respective meanings set forth below:
9.1. "Affiliate" means any person, corporation, firm or entity which
directly or indirectly controls, is controlled by, or is under common control
with the indicated person, corporation, firm or entity.
9.2. "Common Stock" means the Company's no par value Common Stock.
9.3. "Generally Accepted Accounting Principles" means generally
accepted accounting principles consistently applied.
9.4. "Officers' Certificate" means a certificate executed on behalf of
the Company by its President, Chairman of the Board, Chief Executive Officer,
Chief Financial Officer, Secretary and/or one of its other Vice-Presidents.
9.5. "Registrable Securities" means (i) the Common Stock or other Stock
issuable upon conversion of the Bridge Notes and exercise of the Bridge
Warrants purchased pursuant to Section 1.1 or (ii) any other shares of Common
Stock now owned or hereafter acquired by Purchasers (whether Common Stock
owned directly or underlying convertible securities of the Company); provided,
however, that such securities shall cease to be Registrable Securities when
(A) a registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of under such registration statement, (B) such securities have
been sold in an open market transaction pursuant to Rule 144 promulgated by
the SEC under the Securities Act ("Rule 144"), (C) as to any Purchaser holding
not more than 1% of the Company's then issued and outstanding shares of Common
Stock (computed on a fully-diluted basis), such securities shall become
eligible for sale to the public pursuant to Rule 144, (D) as to any Purchaser,
such securities shall become eligible for sale to the public pursuant to Rule
144(k) promulgated by the SEC under the Securities Act or (E) they shall have
ceased to be outstanding.
9.6. "Securities" means the Bridge Notes, the Bridge Warrants and any
other capital stock or Common Stock underlying the foregoing whether issued at
the Closing or thereafter.
9.7. "Securities Act" means, as of any given time, the Securities Act
of 1933, as amended, or any similar federal law then in force.
9.8. "Securities Exchange Act" means, as of any given time, the
Securities Exchange Act of 1934, as amended, or any similar federal law then
in force.
9.9. "Securities and Exchange Commission" includes any governmental
body or agency succeeding to the functions thereof.
9.10. "Stock" means any series of stock other than Common Stock issued
upon conversion of the Bridge Notes.
9.11. "Subsidiary" means any person, corporation, firm or entity at
least the majority of the equity securities (or equivalent interest) of which
are, at the time as of which any determination is being made, owned of record
or beneficially by the Company, directly or indirectly, through any Subsidiary
or otherwise.
10. Company Indemnities. The Company agrees to indemnify, defend and
hold the Purchasers and their officers, directors, partners, employees,
consultants and agents (the "Purchasers' Indemnitees") harmless from and
against any liability, obligation, claim, cost, loss, judgment, damage or
expense (including reasonable legal fees and expenses) (collectively,
"Liabilities") incurred or suffered by any of the Purchasers' Indemnitees as a
result of or arising out of or in connection with the Company's breach of any
representation, warranty, covenant or agreement of the Company contained
herein.
11. Miscellaneous.
11.1. Termination; Survival of Representations, Warranties and
Covenants. Except as therwise provided for in this Agreement all
representations, warranties, covenants and agreements contained in this
Agreement, or in any document, exhibit, schedule or certificate by any party
delivered in connection herewith shall survive the execution and delivery of
this Agreement and the Closing Date and the consummation of the transactions
contemplated hereby, regardless of any investigation made by the Purchasers or
on their behalf.
11.2. Expenses. The Company shall pay all its own expenses in
connection with this Agreement and the transactions contemplated herein. The
Company agrees to pay promptly and save the Purchasers harmless against
liability for the payment all expenses incurred by the Company and the
Purchasers in connection with the preparation, printing and filing with the
Securities and Exchange Commission the Registration Statement and amendments,
post-effective amendments, and supplements thereto; preparing, printing and
delivering exhibits thereto and copies of the preliminary, final and
supplemental prospectuses; preparing, printing and delivering all selling
documents, including but not limited to the stock and warrant certificates
(the "Bridge Loan Costs"). The "Bridge Loan Costs" shall not include any
underwriting discounts or commissions incurred by a Purchaser or costs and
expenses under Section 8, including, without limitation, the Registration
Costs Exchange Commission the Registration Statement and amendments,
post-effective amendments, and supplements thereto and preparing, printing
and delivering exhibits thereto and copies of the preliminary, final and
supplemental prospectuses which such costs shall in all cases be paid by the
Company.
11.3. Amendments; Waivers; Forbearance from Suit and Damages. This
Agreement and all exhibits and schedules hereto set forth the entire agreement
and understanding among the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them. This Agreement may be amended only by mutual written
agreement of the Company and the holders of a majority of principal amount of
the Bridge Notes (the "Majority Purchasers"), and the Company may take any
action herein prohibited or omit to take any action herein required to be
performed by it, and any breach of any covenant, agreement, warranty or
representation may be waived, only if the Company has obtained the written
consent or waiver of Majority Purchasers. No course of dealing between or
among any persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement. In
addition, (A) no Purchaser shall institute any suit or proceeding for the
enforcement of the payment of principal or interest under the Bridge Notes or
for the enforcement of any other provision of this Agreement, the Bridge Notes
or the Bridge Warrants unless the holders of at least a majority in principal
amount of all of the outstanding Bridge Notes join in such suit or proceeding
and (B) except as set forth in Section 8.1 above, each Purchaser hereby waives
any claims for damages other than principal and interest due on the Bridge
Notes, including but not limited to punitive damages claims.
11.4. Successors and Assigns. This Agreement may not be assigned by
the Company except with the prior written consent of the holders of a majority
of principal value of the Bridge Notes. This Agreement shall be binding upon
and inure to the benefit of the Company and its permitted successors and
assigns and Purchasers and their successors and assigns. The provisions
hereof which are for Purchasers' benefit as purchasers or holders of the
Bridge Notes and the Bridge Warrants are also for the benefit of, and
enforceable by, any subsequent holder of such Bridge Notes and Bridge
Warrants.
11.5. Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given personally or when
mailed by certified or registered mail, return receipt requested and postage
prepaid, and addressed to the addresses of the respective parties set forth
below or to such changed addresses as such parties may have fixed by notice;
provided, however, that any notice of change of address shall be effective
only upon receipt:
If to the Company:
Bion Environmental Technologies, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
With a Copy to:
RubinBaum, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to the Purchasers:
At the address specified on their signature page hereto.
11.6. Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by the internal laws of the State
of New York without giving effect to such State's principles of conflict of
laws.
11.7. Counterparts. This Agreement may be executed in any number of
counterparts and, notwithstanding that any of the parties did not execute the
same counterpart, each of such counterparts shall, for all purposes, be deemed
an original, and all such counterparts shall constitute one and the same
instrument binding on all of the parties thereto. Any signature received by
facsimile transmission shall, for all purposes, be deemed an original
signature.
11.8. Headings. The headings of the Sections hereof are inserted as a
matter of convenience and for reference only and in no way define, limit or
describe the scope of this Agreement or the meaning of any provision hereof.
11.9. Severability. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected except to the extent necessary to
delete such illegal, invalid or unenforceable provision unless the provision
held invalid shall substantially impair the benefit of the remaining portion
of this Agreement.
11.10. Rights of Holders Inter Se. Each Holder of securities shall
have the absolute right to exercise or refrain from exercising any right or
rights which such Holder may have by reason of this Agreement or any security
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an agreement
with the Company for the purpose of modifying this Agreement or any agreement
effecting such modification, and such Holder shall not incur any liability to
any other Holder or Holders of securities with respect to exercising or
refraining from exercising any such right or rights.
11.11. Exculpation Among Purchasers and Holders. Each Purchaser
acknowledges and agrees that it is not relying upon any other Purchaser, or
any officer, director, employee partner or affiliate of any such other
Purchaser, in making its investment or decision to invest in the Company or in
monitoring such investment. Each Purchaser agrees that no Purchaser nor any
controlling person, officer, director, shareholder, partner, agent or employee
of any Purchaser shall be liable for any action heretofore or hereafter taken
or omitted to be taken by any of them relating to or in connection with the
Company or the securities, or both.
11.12. Actions by Purchasers; Waiver. Any actions permitted to be
taken by holders or Purchasers of Bridge Notes and/or Bridge Warrants and any
consents required to be obtained from the same under this Agreement, may be
taken or given only by, in the case of consents or actions requiring approval
of the Purchasers, by the Purchasers, and in all other cases, only by holders
of a majority of (i) in the case of the Bridge Notes, the Majority Purchasers
and (ii) in the case of the Bridge Warrants, the number of underlying shares
of Common Stock, and if such holders constituting a majority the ("Majority
Holders") as set forth in (i) or (ii) above or the Purchasers take any action
or grant any consent, such action or consent shall be deemed given or taken by
all holders or Purchasers' who shall be bound by the decision or action taken
by the Majority Holders or the Purchasers without any liability on the part of
the Majority Holders or the Purchasers to any other holder of securities
hereto.
11.13. Arbitration. In the event that any dispute arises hereunder
which cannot be settled by the parties, the parties agree that any such
controversy or claim arising out of or relating to this Agreement or the
breach hereof shall be settled by Arbitration before three arbitrators
selected as hereinafter provided (the "Arbitrators"), conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
("AAA") then in effect. The Arbitration shall take place in New York, New
York. Each of the Company and the Majority Purchasers shall select one
Arbitrator and the Company and the Majority Purchasers shall in good faith
attempt to agree upon a third Arbitrator. If they are unable to agree upon
the third Arbitrator within thirty (30) days of any request for Arbitration,
such Arbitrator shall be selected by the AAA, upon application of the Company
or the Majority Purchasers. The persons selected as Arbitrators need not be
professional arbitrators, and persons such as lawyers, accountants, brokers
and bankers shall be acceptable. Before undertaking to resolve the dispute,
each of the Arbitrators shall be duly sworn faithfully and fairly to hear and
examine the matters in controversy and to make a just award according to the
best of his or her understanding. The written decision of the Arbitrators
shall be final, conclusive and binding on the Company and the Purchasers.
Each party shall bear its own costs and expenses (including legal fees and
expenses) relating to the Arbitration proceeding, except that the fees of the
Arbitrators and other related costs of the arbitration shall be shared equally
by the Company and the Purchasers. Judgment on the award, if it is not paid
within thirty (30) days, may be entered in any court having jurisdiction over
the matter. The Arbitrators shall be limited, in granting any relief, to
comply with any express provisions of this Agreement relating to damages or
the limitation thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By:____________________________________
Name:
Title:
PURCHASER SIGNATURE PAGE
Units Subscribed For: ______________________________
PURCHASER NAME
Address:
______________________________
______________________________
______________________________
Aggregate Purchase Price:
By:___________________________
Name:
Title:
__________________________
