Exhibit 4
NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") dated as of
______________, by and between BION ENVIRONMENTAL TECHNOLOGIES, INC., a Colorado
corporation (the "Company"), D2 CO., LLC, a Delaware limited liability company
("D2") and the other parties executing signature pages hereto (collectively with
D2, 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 $1,000,0000 and a maximum of $5,000,000 aggregate face amount of
convertible Bridge Notes (the "Bridge Notes") in the form attached hereto as
Exhibit A and (ii) a minimum of an aggregate of 300,000 and a maximum of an
aggregate of 1,500,000 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 $25,000 face amount of Bridge Notes
and 7,500 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 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) 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;
(b) an incumbency certificate, dated the 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;
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(c) a certificate of the Secretary or Assistant Secretary of the
Company, dated the 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;
(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 that except as set forth on the
schedule (the "Disclosure Schedule") attached hereto:
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
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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. Except as set forth on
the Disclosure Schedule, noshareholder 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 Disclosure Schedule, 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 on the
Disclosure Schedule 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 and the Company's
1996 Non-employee Director Stock 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 on the Disclosure Schedule, 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 on the Disclosure Schedule, 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
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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, 1999, 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 Xxxxxxxx Xxxxx
Xxxxxxx & Xxxxxxx PC and (ii) the September 30 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,
September 30, 1999, 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.
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(b) Incorporated by referenced herein are each report, schedule,
registration statement and definitive proxy statement filed by the Company with
the Securities and Exchange Commission since May 15, 1996 (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 on the
Disclosure Schedule, 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 on the Disclosure Schedule,
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.
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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 on the schedules hereto.
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. Neither the Company nor
anyone acting on its behalf has directly or indirectly offered the Bridge Notes
and the Bridge Warrants or any part thereof or any similar security of the
Company (or any other securities convertible or exchangeable for the Bridge
Notes and the Bridge Warrants or any similar security), for sale to, or
solicited any offer to buy the same from, anyone other than Purchasers. 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
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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; Restriction on Payments. The Company shall use
the net proceeds from the sale of the Bridge Notes and Bridge Warrants to bridge
its working capital needs through such time as it can consummate an offering of
its securities. The Company covenants and
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agrees that it will not directly or indirectly use any of the proceeds to
redeem, repurchase or otherwise acquire any equity security of the Company.
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
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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.
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, 2004
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;
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(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 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 8.1.
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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
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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
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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.
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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).
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.
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11. Miscellaneous.
11.1. Termination; Survival of Representations, Warranties and
Covenants. Except as otherwise 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 and consummation of the Agreement
and the transactions contemplated herein, including but not limited to: all
costs and expenses under Section 8, including without limitation, the costs of
preparing, 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; legal fees and disbursements of RubinBaum, LLP,
D2's counsel (which amount shall not exceed $13,000 and which shall be paid on
the Initial Closing Date) in connection with the preparation and consummation of
this Agreement and the transactions contemplated herein, including the legal
fees and costs of negotiating and drafting any transaction documents, due
diligence and any necessary regulatory filings (including, without limitation,
the Registration Statement, Forms 3, 4 and 5 and Schedule 13-D filings) (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. The provisions of this Section
shall survive any termination of this Agreement in all instances, including
without limitation, (i) if the transactions contemplated by this Agreement have
not been consummated or (ii) if the transactions have been terminated by the
Purchasers for any reason.
11.3. Amendments and Waivers. 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, 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 the holders of a majority of principal value of the
Bridge Notes. No course of dealing between or among any persons having
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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.
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.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
With a Copy to:
Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C.
000 00xx Xxxxxx
Xxxxx 0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. ("Xxx") Xxxxxxxx, Esq.
If to the Purchasers:
At the address specified on their signature page hereto.
If to D2:
D2 Co., LLC
0 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
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With a Copies to:
Summerwind Restructuring, Inc.
00 Xxxxxxx Xxxx Xxxxx
Xxx Xxxxx, Xxx Xxxx 00000
and to
RubinBaum, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
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
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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. 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 face amount of the
principal 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. Consent to Jurisdiction. The parties hereto irrevocably
consent to the jurisdiction of the courts of the State of New York and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Agreement, any document or instrument
delivered pursuant to, in connection with or simultaneously with this Agreement,
or a breach of this Agreement or any such document or instrument. In any such
action or proceeding, each party hereto waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 11.5. Within 30 days after such service, or such other
time as may be mutually agreed upon in writing by the attorneys for the parties
to such action or proceeding, the party so served shall appear or answer such
summons, complaint or other process.
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:
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PURCHASER SIGNATURE PAGE
Units Subscribed For: -----------------------------------
PURCHASER NAME
------------------------------
Address:
-----------------------------------
-----------------------------------
Aggregate Purchase Price: -----------------------------------
By:
--------------------------------
Name:
------------------------------ Title:
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