Exhibit 10.2
EXECUTION COPY
BIONUTRICS, INC.
SUBSCRIPTION AGREEMENT
Name of Subscriber: _______________________________(the "INVESTOR")
Total Investment Amount: $________________________________________
1. SUBSCRIPTION TERMS - SECURITIES
1.1 SUBSCRIPTION. The undersigned Investor, hereby subscribes for
and agrees to purchase a Convertible Promissory Note in the principal amount of
_____________ (the "NOTE" and all Notes shall be collectively referred to as the
"CONVERTIBLE NOTES") in the form attached hereto as EXHIBIT A, and a number of
warrants to purchase shares of the Company's Common Stock (the "WARRANT" and
together with the Note, the "SECURITIES") of the Company for a total investment
of $____________ on the terms and conditions contained in this Subscription
Agreement (the "AGREEMENT"), the Note and the Warrant. The Agreement, Note and
Warrant together with all Exhibits may be referred to herein collectively as the
"OFFERING DOCUMENTS". For purposes of this Subscription Agreement, the shares of
Common Stock issuable upon exercise of the Warrants are referred to herein as
the "WARRANT SHARES" and the securities issuable upon conversion of the Notes
shall be referred to as the "UNDERLYING SHARES".
1.2 SUBSCRIPTION PAYMENT. As payment for this subscription,
simultaneously with the execution hereof, the Investor shall immediately wire
the amount specified in Section 1.1 above, pursuant to the wire transfer
instructions specified on EXHIBIT B or shall send to the address set forth on
EXHIBIT B, via overnight courier, a check payable to "Indigo Securities LLC Sub
Escrow (Bionutrics, Inc.)".
1.3 ACCEPTANCE OR REJECTION OF SUBSCRIPTION.
(a) The Investor understands and agrees that the Company
reserves the right to reject this subscription for the Securities in its sole
and absolute discretion, in whole or in part and at any time prior to the
completion of the offering, notwithstanding prior receipt by the Investor of
notice of acceptance of the Investor's subscription; and
(b) In the event of rejection of this subscription, the
Investor's subscription payment shall be promptly returned to the Investor
without deduction or interest, and this Subscription Agreement shall have no
force or effect.
2. REPRESENTATIONS AND WARRANTIES.
2.1 INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor
acknowledges, represents and warrants to, and agrees with, the Company as
follows:
(a) The Investor is aware this is a "best efforts" offering
subject to the sale of at least $1,600,000 of the Securities which must be sold
and that the Investor's investment involves a high degree of risk as described
in the Confidential Term Sheet dated September 27, 2005 (the "TERM SHEET");
(b) The Investor is aware that there is no assurance as to
the future performance of the Company;
(c) The Investor is purchasing the Securities for the
Investor's own account for investment and not with a view to or for sale in
connection with the distribution of the Securities or the Underlying Shares in
violation of the Securities Act of 1933, as amended (the "SECURITIES ACT"). The
Investor agrees that he, she or it must bear the economic risk of the Investor's
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the Securities Act or under the
securities laws of any states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Securities Act and under applicable securities laws of such states or an
exemption from such registration is available;
(d) The Investor hereby authorizes the Company to place a
legend in substantially the following form denoting the restriction on the
Securities and the Underlying Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND/OR THE SECURITIES
ISSUABLE UPON CONVERSION, EXCHANGE, OR EXERCISE HEREOF) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE
HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR AN EXEMPTION THEREFROM,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE
EFFECTED WITHOUT VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS
AND RULES. NOTWITHSTANDING THE FOREGOING, THE SECURITIES (AND/OR THE SECURITIES
ISSUABLE UPON CONVERSION, EXCHANGE, OR EXERCISE HEREOF) MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES (AND/OR THE SECURITIES ISSUABLE UPON
CONVERSION, EXCHANGE, OR EXERCISE HEREOF)."
In addition, the Investor agrees that the Company may place stop
transfer orders with its transfer agent with respect to such certificates in
order to implement the restrictions on transfer set forth in this Subscription
Agreement. The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the Securities and the
Underlying Shares upon which it is stamped, if, unless otherwise required by
applicable securities laws, (i) such Securities and Underlying Shares are
registered for resale under the Securities Act, (ii) such holder provides the
Company with an opinion of counsel, in form and substance reasonably acceptable
to the Company, to the effect that a sale, assignment or transfer of the
Securities or Underlying Shares may be made without registration under the
Securities Act
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and the transferee agrees to be bound by the terms and conditions of this
Subscription Agreement. Following the date the Registration Statement is
declared effective by the SEC or at such earlier time as a legend is no longer
required, the Company will no later than five (5) business days following the
receipt by the Company's transfer agent of a legended certificate from such
holder representing such holder's Securities or Underlying Shares (and an
opinion of counsel to the extent required hereby), deliver or cause to be
delivered to such holder a certificate representing such Securities or
Underlying Shares that is free from all restrictive and other legends. If the
Company shall fail to deliver a certificate representing such Securities or
Underlying Shares as required, and if such holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such holder of shares of Common Stock that the undersigned anticipated
receiving from the Company (a "BUY-IN"), then the Company shall, within five (5)
business days after such holder's written request and in such holder's
discretion, either (i) pay cash to such holder in an amount equal to such
holder's total purchase price (including reasonable brokerage commissions, if
any) for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such shares of Common Stock shall
terminate or (ii) promptly honor its obligation to deliver to the Purchaser a
certificate or certificates representing such shares of Common Stock and pay
cash to such holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock multiplied
by (B) the Closing Bid Price (as defined in the Warrants) on the date of
delivery of the legended certificate.
(e) The Investor has the financial ability to bear the
economic risk of the Investor's investment in the Company (including its
possible total loss), has adequate means for providing for the Investor's
current needs and personal contingencies and have no need for liquidity with
respect to the Investor's investment in the Company;
(f) The Investor has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Securities and have obtained, in the Investor's
judgment, sufficient information from the Company to evaluate the merits and
risks of an investment in the Company;
(g) The Investor:
(1) Has carefully read this Subscription Agreement
and the Term Sheet, understand and have evaluated the
risks of a purchase of the Securities and has relied
solely (except as indicated in subsections (2) and (3)
below) on the information contained in the Term Sheet
and this Subscription Agreement;
(2) Has not relied upon any representations or other
information (whether oral or written) from the Company,
or any of its agents other than as set forth in this
Subscription Agreement, the Term Sheet, and the SEC
Documents;
(3) Has been provided an opportunity to obtain any
additional information concerning the Offering, the
Company and all other information to the extent the
Company possesses such information or can
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acquire it without unreasonable effort or expense and
the Company has made available to the Investor all
documents and information that the Investor has
requested relating to an investment in the Company;
(4) Has been given the opportunity to ask questions
of, and receive answers from, the Company concerning the
terms and conditions of the Offering and other matters
pertaining to this investment; and
(5) Has carefully considered and have to the extent
the Investor believes such discussion necessary,
discussed with the Investor's professional, legal, tax
and financial advisers the suitability of an investment
in the Company for the Investor's particular tax and
financial situation and the Investor has determined that
the Securities are a suitable investment for the
Investor.
(h) In making the Investor's decision to purchase the
Securities herein subscribed for, the Investor has relied solely upon
independent investigations made by the Investor. Neither such inquiries nor any
other investigation conducted by or on the undersigned's behalf or its
representatives or counsel shall modify, amend or affect the undersigned's right
to rely on the truth, accuracy and completeness of such information and the
Company's representations and warranties contained in this Subscription
Agreement;
(i) If the undersigned is a corporation, trust, partnership,
employee benefit plan, individual retirement account, ▇▇▇▇▇ Plan, or other
tax-exempt entity, it is authorized and qualified to become an investor in the
Company and the person signing this Subscription Agreement on behalf of such
entity has been duly authorized by such entity to do so;
(j) No representations or warranties have been made to the
undersigned by the Placement Agent, or any of its officers, employees, agents,
affiliates or attorneys;
(k) The information contained in Section 2.2 of this
Subscription Agreement is true and correct including any information which the
Investor has furnished to the Company with respect to the Investor's financial
position and business experience, is correct and complete as of the date of this
Subscription Agreement and if there should be any material change in such
information prior to acceptance of the Investor's subscription, the Investor
shall furnish such revised or corrected information to the Company;
(l) Subject to Section 4 hereof, the Investor hereby
acknowledges and the Investor is aware that, except for any rescission rights
that may be provided under applicable state laws, the Investor is not entitled
to cancel, terminate or revoke this subscription, and any agreements made in
connection herewith shall survive his or her death or disability.
(m) The Investor is aware that the offering of shares of
Series A Preferred Stock may occur in one or more closings, each upon the same
terms and no longer than twenty (20) business days between the first such
closing and the final such closing;
2.2 INVESTOR REPRESENTATIONS AND WARRANTIES CONCERNING SUITABILITY,
ACCREDITED INVESTOR AND ELIGIBLE CLIENT STATUS. The Investor represents that he
is an "accredited investor,"
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as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), as further specified
in the Investor Questionnaire completed by the Investor and attached hereto as
EXHIBIT D.
2.3 DISCLOSURE. In reliance upon exemptions contained in the
Securities Act and Rule 506 promulgated thereunder and applicable state
securities laws, the Securities are being sold without registration under the
Securities Act. The Placement Agent, on behalf of the Company, has delivered the
Term Sheet to the Investor. In addition, the Company is offering the Securities
utilizing this Agreement and the other Offering Documents, The Investor hereby
acknowledges receipt of the foregoing Offering Documents which are delivered
with this Subscription Agreement and receipt of the Term Sheet. The Investor
also has had access to all SEC Documents and the opportunity to review them.
2.4 PROHIBITION ON NET SHORT POSITIONS. From and including the date
of this Subscription Agreement until the effective date of the Registration
Statement to be filed by the Company pursuant to the terms of the Terms Sheet,
the Investor agrees that the Investor will not maintain a Net Short Position in
the Company Stock. "NET SHORT POSITION" shall mean that the aggregate number of
shares of any Common Stock held in a short position with respect to the
Securities by the Investor exceeds the number of Underlying Shares issuable to
the Investor at such time.
2.5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Subject to the
documents heretofore filed by the Company with the Securities and Exchange
Commission (the "SEC Documents"), the Company represents and warrants to each
investor purchasing the Securities which representations and warranties which
are true and correct and shall be true and correct as of the time of the
Closing, as follows:
2.5.1 This Agreement has been duly and validly authorized by
the Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms. The Securities to be issued and sold by the Company
pursuant to this Agreement have been duly authorized and, when issued and paid
for in accordance with this Agreement will be validly issued, fully paid and
non-assessable; the holders thereof are not and will not be subject to personal
liability solely by reason of being such holders; the Securities are not and
will not be subject to any preemptive rights of any stockholder of the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the common stock underlying the Shares and Warrants has been duly
and validly taken by the Company.
2.5.2 All issued and outstanding securities of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with respect
thereto; the holders thereof have no preemptive rights and are not subject to
personal liability solely by reason of being such holders; and none of such
securities were issued in violation of any preemptive rights of any holders of
any security of the Company.
2.5.3 The Company has good and marketable title to, or valid
and enforceable leasehold interests in, all material items of real and personal
property as, or to be, owned or leased by it, free and clear of all liens,
encumbrances, claims, security interests and defects of
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any nature whatsoever, other than those set forth herein and liens for taxes not
yet due and payable.
2.5.4 There is no litigation or governmental proceeding
ongoing, pending or threatened against or involving the properties or business
of the Company, except as set forth in the SEC Documents.
2.5.5 The Company's financial statements set forth in the SEC
Documents fairly represent the financial position and the results of operations
of the Company at the dates and for the periods to which they apply.
2.5.6 The Company is duly organized and is validly existing as
a corporation in good standing under the laws of the state of Nevada. The
Company is duly qualified or licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing and where failure to so qualify would have a material adverse effect
on the Company. The Company has all requisite corporate power and authority, and
all material and necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies, to own or lease its properties and conduct its businesses as currently
conducted and the Company is doing business in compliance in all material
respects with all such authorizations, approvals, orders, licenses, certificates
and permits and all Federal, state, local and applicable foreign laws, rules and
regulations concerning the business in which it is engaged except where the
failure so to do business in compliance would not have a materially adverse
impact on the business of the Company. The disclosures attached hereto or set
forth in the SEC Documents concerning the effects of federal, state, local and
applicable foreign regulation on the business of the Company as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact. The Company has all corporate power and authority
to enter into this Agreement and to carry out the provisions and conditions
hereof, and all consents, authorizations, approvals and orders required in
connection herewith have been obtained or will have been obtained prior to the
Closing Date. No consent, authorization or order of, and no filing with, any
domestic court, government agency or other body is required by the Company for
the issuance of the Securities pursuant to this Agreement except with respect to
applicable federal and state securities laws. Since its inception, the Company
has not incurred any liability arising under or as a result of the application
of the provisions of the Act, the Exchange Act or the Rules and Regulations
thereunder.
2.5.7 Except as set forth in the SEC Documents, or the pending
purchase by Company management of the shares of InCon Technologies Inc by the
management thereof, there has been no material adverse change in the condition
or prospects for commercialization of the Company, financial or otherwise, and
the outstanding debt, the property and the business of the Company conforms in
all material respects to the descriptions thereof contained in the SEC
Documents.
2.5.8 The Company is not in violation of its Certificate of
Incorporation or By-Laws. Neither the execution and delivery of this Agreement
nor the issue and sale of the Securities, nor the consummation of any of the
transactions contemplated herein, nor the compliance by the Company with the
terms and provisions hereof, conflicts with, or has resulted in or will result
in a breach of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted
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in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any indenture, mortgage, deed of trust, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money or any
other agreement or instrument to which the Company may be bound or in which any
of the property or assets of the Company is subject except where such lien,
charge or encumbrance, singly or in the aggregate, would not have a material
adverse effect on the financial condition or business of the Company and such
lien, charge or encumbrance would not have a material adverse effect on ability
the Company has to perform its obligations under this Agreement or to consummate
the transactions contemplated hereby; nor will such action result in any
violation of the provisions of the Certificate of Incorporation or the By-Laws
of the Company, assuming due performance by the Placement Agent of its
obligations hereunder, any statute or any order, rule or regulation applicable
to the Company of any court or of any federal, state or other regulatory
authority or other government body (domestic or foreign) having jurisdiction
over the Company.
2.5.9 The Securities and the Subscription Documents conform in
all material respects to all statements in relation thereto contained in the
Offering Documents. Subsequent to the dates as of which information is given in
the SEC Documents, amendment or supplement thereto, and except as may otherwise
be indicated or contemplated therein, the Company has not (i) issued any
securities (other than as specifically disclosed in the SEC Documents) or
incurred any material liability or obligation, direct or contingent, for
borrowed money, or (ii) entered into any material transaction other than in the
ordinary course of business, other than the pending purchase of shares of InCon
Technologies Inc by the management thereof, or (iii) declared or paid any
dividend or made any other distribution on or in respect their capital stock.
2.5.10 Except as set forth herein, there are no claims for
services in the nature of a finder's or origination fee with respect to the sale
of the Securities hereunder.
2.5.11 To the best of the Company's knowledge, except as set
forth in the SEC Documents, the Company owns or possesses, free and clear of all
liens or encumbrances and rights thereto or therein by third parties, the
material licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business, and there is no claim or action by
any person pertaining to, or proceeding, pending or threatened, which challenges
the exclusive rights of the Company with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications and
licenses used in the conduct of the business of the Company. To the best of the
Company's knowledge, except as set forth in the SEC Documents, the Company's
current products, services and processes do not infringe on the patents or other
intellectual property rights of third parties.
2.5.12 Except as otherwise set forth herein or in the SEC
Documents, the Company is not under any obligation to pay royalties or fees of
any kind whatsoever to any third party with respect to technology it has
developed, uses, licenses, employs or intends to use, license or employ, except
where the default of any such obligation would not have a material adverse
effect on the financial condition or business of the Company.
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2.5.13 Subject to the performance by the Placement Agent of its
obligations hereunder and the offer and sale of the Securities, comply, and will
continue to comply, up to the final closing in all material respects with the
requirements of Rule 506 of Regulation D of the Act and any other applicable
Federal laws, rules, regulations and executive orders. None of the Offering
Documents will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein, in light of the circumstances
under which they were made, not misleading. All statements of material facts
made in this Agreement are true and correct as of the date hereof and will be
true and correct on each closing date.
2.5.14 The Company will use the proceeds from the sale of the
Securities in the manner described in the Use of Proceeds schedule attached
hereto as SCHEDULE 2.5.14.
2.5.15 Except as set forth on SCHEDULE 2.5.15, taxes which are
due and payable from the Company have been paid in full and the Company does not
have any material tax deficiency or claim outstanding assessed or proposed
against it. For purposes of this subsection, the term "material" shall mean in
an aggregate amount of $25,000 or more.
2.5.16 Neither the Company nor any of its respective officers,
employees or agents, nor any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or other person who is or may be in a
position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) which (a) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding which would have a materially adverse effect on the
financial condition and business of the Company, (b) if not given in the past,
might have had a materially adverse effect on the assets, business or operations
of the Company as reflected in any of the financial statements set forth in the
SEC Documents, or (c) if not continued in the future, might adversely affect in
the future, the assets, business, operations or prospects of the Company.
2.5.17 Prior to the initial closing, the Company's
capitalization will be as set forth in Schedule A hereto. All shares of Common
Stock currently outstanding are, and all shares issued pursuant to this
Agreement will be upon issuance, validly issued, fully paid and non-assessable.
2.5.18 At the initial closing, the Company will not have
outstanding any options, stock subscription agreements or warrants to purchase
shares of the Company or any other obligation to issue shares of the Company,
other than those as set forth in the SEC Documents and other than agreed to by
the Company and the Placement Agent. There will be outstanding immediately
following the final closing no other classes or series of capital stock or
convertible securities of the Company except as set forth in the SEC Documents.
2.5.19 DEFINITIONS. For the purposes of this Subscription
Agreement, the following terms shall have the meanings set forth below:
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"AFFILIATE" of the undersigned Investor means any other person or entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with the undersigned Investor. For purposes of this definition,
"control" means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"CLOSING" shall refer to that event which, subject to the terms of the
PA Agreement, occurs when the Placement Agent has received and delivered to the
Company subscriptions which the Company has agreed to accept for at least a
minimum of gross proceeds from Subscribers on or prior to the Termination Date.
Upon the prior consent of the Company, one or more additional Closings may be
held for additional subscriptions accepted by the Company no later than the
Termination Date of the Offering.
"CLOSING DATE" means the date of the Closing.
"COMMON STOCK" means the Company's Common Stock, par value $0.001 per
share.
"FINANCIAL STATEMENTS" means the audited consolidated financial
statements of the Company for the years ended October 31, 2004 and 2003,
including balance sheets and related statements of income, stockholders' equity
and cash flows, together with the related notes, audited by the Company's
independent certified public accountants as the same have been filed with the
SEC as part of the SEC Documents and the unaudited consolidated financial
statements of the Company for the quarters ended July 31, 2004 and 2003,
including balance sheets and related statements of income, stockholders' equity
and cash flows as the same have been filed with the SEC as part of the SEC
Documents.
"HOLDER" or "HOLDERS" means the holder of any Securities and/or any
Placement Agent Warrant, and the securities contained in, and underlying each
of, the foregoing securities.
"INTELLECTUAL PROPERTY" means trademarks, trade names, service marks,
service ▇▇▇▇ registrations, service names, patents, patent rights, copyrights,
inventions, licenses and trade secrets.
"INVESTOR" means the undersigned investor.
"INVESTORS" means the Investor and the other investors to the other
Subscription Agreements pursuant to which such investors shall purchase the
Securities from the Company in connection with the Offering.
"OFFERING" means the solicitation by the Placement Agent of Subscribers
for the purchase of Securities pursuant to this Subscription Agreement, and
applicable law.
"OFFERING DOCUMENTS" shall mean the Term Sheet and all attachments and
exhibits thereto, including, but not limited to the Company's Annual Report on
Form 10-K for the year ended October 31, 2004 and the Company's Quarterly Report
on Form 10-Q for the period ended July 31, 2005, the form of Note, the form of
Warrant and this Subscription Agreement.
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"PA AGREEMENT" shall mean the Placement Agent Agreement dated as of
September 27, 2005 by and between the Company and the Placement Agent.
"PLACEMENT AGENT" shall mean Indigo Securities, LLC.
"PLACEMENT AGENT WARRANTS" shall refer to the warrants issued to the
Placement Agent as part of its compensation for services rendered under the PA
Agreement.
"REGISTRATION RIGHTS AGREEMENT" shall refer to that agreement by and
between the Company, on one hand and the Placement Agent and Holders on the
other hand.
"SEC" refers to the Securities and Exchange Commission.
"SEC DOCUMENTS" means any registration statement, reports and documents
filed with the SEC by the Company.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SUBSCRIBER" or "SUBSCRIBERS" means an "accredited investor," as defined
under Rule 501 of the Securities Act, subscribing to purchase Securities.
"TERMINATION DATE" means the date set forth in Section 11 of the PA
Agreement.
2.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and the Subscribers contained in this Subscription
Agreement shall survive the Closing and remain in full force and effect until
the second anniversary of the Closing Date, except that the representations and
warranties in Section 2.5.13 (Taxes) shall survive until the applicable statue
of limitations has run.
3. COVENANTS.
3.1.1 RULE 144 INFORMATION. For five (5) years after the date
of this Subscription Agreement, the Company shall use its commercially
reasonable efforts file in a timely manner all reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder and shall take such further action to the extent required
to enable the Investor to sell the Securities and the Underlying Shares pursuant
to Rule 144 under the Securities Act (as such rule may be amended from time to
time).
3.1.2 REPORTING STATUS. Until the date on which the Investor
shall have sold all the Securities and the Underlying Shares and none of the
Warrants are outstanding, the Company shall file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
3.1.3 LISTING. The Company shall maintain the eligibility for
quotation of the Common Stock on the NASDAQ OTC Bulletin Board (the "OTCBB").
Subject to applicable law, neither the Company nor any of its Subsidiaries shall
take any action which would be
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reasonably expected to result in the delisting or suspension of the Common Stock
on the OTCBB. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this section.
3.1.4 PLEDGE OF SECURITIES. The Company acknowledges and
agrees that, subject to applicable law, the Securities and the Underlying Shares
may be pledged by the Investor in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Securities or the
Underlying Shares. The pledge of Securities or the Underlying Shares shall not
be deemed to be a transfer, sale or assignment of the Securities or the
Underlying Shares hereunder, and the Investor shall not be required to provide
the Company with any notice thereof or otherwise make any delivery to the
Company pursuant to this Subscription Agreement or any other Offering Document.
The Company hereby agrees to execute and deliver such documentation as a pledgee
of the Securities or the Underlying Shares may reasonably request in connection
with a pledge of the Securities or the Underlying Securities to such pledgee by
the Investor (but without the obligation to incur any cost or expense in
connection therewith).
3.1.5 DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL
INFORMATION. On or before 9:00 a.m., New York time, on the fourth business day
following closing of the offering, the Company shall file a Current Report on
Form 8-K describing the terms of the transactions contemplated by the Offering
Documents in the form required by the Exchange Act and attaching the material
Offering Documents (including, without limitation, this Subscription Agreement,
the form of Note and the form of Warrant) as exhibits to such filing (including
all attachments, the "8-K FILING"). The Company shall not, and shall cause each
of its Subsidiaries and its and each of their respective officers, directors,
employees and agents, not to, provide the Investor with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing with the SEC without the express written consent of the
Investor. Neither the Company nor the Investor shall issue any press releases or
any other public statements with respect to the transactions contemplated
hereby; PROVIDED, HOWEVER, that the Company shall be entitled, without the prior
approval of the Investor, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K
Filing or (ii) as may be required by applicable law, rule or regulation.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Investor, or include the name of the Investor in any filing with the SEC
or any regulatory agency, without the prior written consent of the Investor,
except (i) for disclosure thereof which is required in the 8-K Filing or
Registration Statement or (ii) as required by law or Exchange regulations or any
order of any court or other governmental agency, in which case the Company shall
provide the Investor with prior notice of such disclosure.
3.1.6 RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, after the Closing Date, 125% of the number of shares of Common Stock
issuable upon conversion of the Series A Preferred (as defined below) underlying
the Convertible Notes and upon exercise of the Warrants and the Company shall
undertake to, at all times have authorized, and reserved for the purpose of
issuance, after the closing of the Company's Series A Preferred Stock offering
(the "SERIES A PREFERRED" and such offering, the "SERIES A OFFERING"), 125% of
the number of shares of
11
Common Stock issuable upon conversion of the Series A Preferred and upon
exercise of the warrants issued in connection with the Series A Offering.
3.1.7 USE OF PROCEEDS. The Company will use the proceeds from
the sale of the Securities for working capital purposes and not for the
redemption or repurchase of any of its equity securities.
3.1.8 LISTING. The Company shall secure the listing of all
Registrable Securities (as defined in the Registration Rights Agreement to be
filed in connection with the Series A Offering) upon each national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Registrable Securities from time to time issuable under the terms
of the Offering Documents. The Company shall maintain the Common Stock's
authorization for listing on the Exchange so long as the current rules and
regulations relating to listing requirements on the Exchange are not modified.
3.1.9 TRANSFER AGENT CERTIFICATION. The Company shall deliver
to the Investor a letter from the Company's transfer agent certifying the number
of shares of Common Stock outstanding as of a date within five (5) business days
of the Closing Date.
3.2 CERTAIN PRE-FUNDING COVENANTSThe Company agrees as follows with
respect to the period between the execution of this Agreement and the Closing:
(a) GENERAL. The Company will use its commercially
reasonable efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Subscription Agreement (including satisfaction, but not
waiver, of the conditions to set forth in SECTION 4; provided, however, that
nothing in this SECTION 3.2(A) shall be deemed to require the Investor to
purchase the Securities unless and until the conditions set forth in SECTION 4
are satisfied or, in the sole discretion of the Investor, waived.
(b) OPERATION OF BUSINESS. The Company and its Subsidiaries
shall not engage in any practice, take any action, or enter into any material
transaction which is outside the ordinary course of business, other than the
pending purchase of shares of InCon Technologies Inc by the management thereof.
(c) FULL ACCESS. The Company will permit representatives of
the Investor to have reasonable access at reasonable times to its premises,
properties, personnel, and to the books and documents of or pertaining to the
Company.
(d) NOTICE OF DEVELOPMENTS. The Company will give prompt
written notice to the Investor of any development causing a breach of any of the
representations and warranties in SECTION 2.5. No disclosure by any party
pursuant to this SECTION 3.2(d), however, shall be deemed to amend or supplement
the schedules hereto or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant, unless the Investor consents to the
incorporation of such amendment or supplement or disclosure by consummating the
transactions contemplated hereby.
12
3.3 TRANSFER AGENT INSTRUCTIONS. As of the date hereof, and
conditioned only upon the issuance of the Securities at the Closing, the Company
shall issue irrevocable instructions to its transfer agent in the form attached
hereto as EXHIBIT C (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"), and any
subsequent transfer agent, to promptly issue certificates, registered in the
name of the Investor or its respective nominee(s), for the Underlying Shares in
such amounts as specified from time to time by the Investor to the Company upon
conversion of the Series A Preferred Stock or upon exercise of the Warrants.
4. CONDITIONS TO THE INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
the Investor under Section 1(b) of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each of the
representations and warranties of the Company contained in Section 2 shall be
true and correct in all material respects on and as of the date hereof and on
and as of the date of the Closing with the same effect as though such
representations and warranties had been made as of the Closing.
(b) PERFORMANCE. The Company shall have performed and
complied in all respects with all agreements, obligations and conditions
contained in this Subscription Agreement that are required to be performed or
complied with by it on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the purchase and
sale described herein.
(c) COMPLIANCE CERTIFICATE. The Company will have delivered
to the Investors a certificate signed on its behalf by its Chief Executive
Officer or Chief Financial Officer certifying that the conditions specified in
Sections 4(a) and 4(b) hereof have been fulfilled.
(d) AGREEMENT. The Company shall have executed and delivered
to the Investors this Subscription Agreement.
(e) SECURITIES EXEMPTIONS. The offer and sale of the
Securities to the Investors pursuant to this Subscription Agreement shall be
exempt from the registration requirements of the Securities Act and the
registration and/or qualification requirements of all applicable state
securities laws.
(f) NO SUSPENSION OF TRADING OR LISTING OF THE COMMON STOCK.
The Common Stock (i) shall be designated for quotation or listed on the OTCBB
and (ii) shall not have been suspended from trading by the SEC or on the
Exchange nor shall suspension by the SEC or the OTCBB have been threatened, as
of the Closing Date, either (A) in writing by the SEC or the OTCBB or (B)
because the price per share of the Common Stock has fallen below the minimum
listing maintenance requirements of the OTCBB.
(g) GOOD STANDING CERTIFICATES. The Company shall have
delivered to the Investors a certificate of the Secretary of State of the State
of Nevada, dated as of a date within seven (7) business days of the date of the
Closing and an oral "bring down" good standing from the Secretary of State of
the State of Nevada on the date of the Closing, with respect to the good
standing of the Company.
13
(h) SECRETARY'S CERTIFICATE. The Company shall have
delivered to the Investors a certificate of the Company executed by the
Secretary of the Company attaching and certifying to the truth and correctness
of (1) the Certificate of Incorporation, (2) the Bylaws and (3) the resolutions
adopted by the Board of Directors in connection with the transactions
contemplated by the Offering Documents.
(i) OPINION OF COMPANY COUNSEL. The Investors will have
received an opinion on behalf of the Company, dated as of the date of the
Closing, from Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC, counsel to the Company.
(j) INTELLECTUAL PROPERTY LEGAL OPINION. The Investors will
have received an opinion on behalf of Nostrum Pharmaceuticals, Inc. ("NOSTRUM"),
dated as of the date of the Closing, from ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & Presser
("SSMP"), intellectual property counsel to Nostrum regarding certain
intellectual property owned by SSMP.
(k) NO STATUTE OR RULE CHALLENGING TRANSACTION. No statute,
rule, regulation, executive order, decree, ruling, injunction, action,
proceeding or interpretation shall have been enacted, entered, promulgated,
endorsed or adopted by any court or governmental authority of competent
jurisdiction or any self-regulatory organization (including the Exchange) or the
staff of any of the foregoing having authority over the matters contemplated
hereby which questions the validity of, or challenges or prohibits the
consummation of, any of the transactions contemplated by the Offering Documents.
(l) AMOUNT INVESTED. The Investors under the Subscription
Agreements shall have tendered at closing not less than $1,000,000 in the
aggregate for the Securities.
(m) OTHER ACTIONS. The Company shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Investor in
connection with the transactions contemplated hereby.
(n) IRREVOCABLE TRANSFER AGENT INSTRUCTIONS. The Company
shall have delivered the Irrevocable Transfer Agent Instructions, executed by
each of the Company and its transfer agent.
(o) LEGAL DOCUMENTS. Legal documentation satisfactory to the
Placement Agent and prospective Investors shall have been completed.
(p) DUE DILIGENCE. Satisfactory completion of due diligence
by the Placement Agent and prospective Investors (including a complete review of
all requested Nostrum Pharmaceutical's due diligence materials).
(q) AGREEMENT TO REGISTER SECURITIES. The Company hereby
agrees that it will either (i) grant the Investors the same registration rights
as those granted to Investors in the Company's next Qualified Equity Financing
with respect to all shares of Common Stock underlying (a) the Series A Preferred
into which the Notes are convertible and (b) the Warrants issued in connection
with the Notes (collectively the "Registrable Securities"); or (ii) if a
Qualified Equity Financing has not occurred by the six (6) month anniversary of
this Subscription Agreement, the Company agrees that it will grant the Investors
unlimited demand
14
registration rights with respect to the Registrable Securities so long as such
registered offerings are not less than $200,000.
5. TERMINATION
(a) The Investor and the Company may terminate this
Subscription Agreement by mutual written consent at any time prior to the
Closing;
(b) The Investor may terminate this Subscription Agreement
by giving written notice to the Company at any time prior to the Closing:
(i) in the event that the Company has breached any
representation, warranty, or agreement contained in this
Subscription Agreement or in any other Offering Document in any
material respect, the Investor or any other Investor has
notified the Company of the breach, and the breach has continued
without cure for a period of fifteen (15) days after the notice
of breach,
(ii) if the Closing shall not have occurred on or
before September 30, 2005, by reason of the failure of any
condition precedent under SECTION 4 hereof or if satisfaction of
any such condition by such date is or becomes impossible (unless
the failure results primarily from any Investor itself breaching
any representation, warranty, or covenant contained in the
Subscription Agreements or any other Offering Document).
(c) The Company may terminate this Agreement by giving
written notice to the Investor at any time prior to the Closing in the event
that the Investor has breached any representation, warranty, or covenant
contained in this Subscription Agreement in any material respect, the Company
has notified the Investor of the breach, and the breach has continued without
cure for a period of fifteen (15) days after the notice of breach.
(d) EFFECT OF TERMINATION. Each party's right of termination
under SECTION 5(a) is in addition to any other rights it may have under this
Subscription Agreement or otherwise, and the exercise of such right of
termination will not be an election of remedies. Upon any termination, the
amount deposited in escrow shall be immediately wired to the Investor.
6. INDEMNIFICATION.
(a) The Investor, severally and not jointly with any other
investors in the offering of Securities referenced herein, hereby agrees to
indemnify and hold harmless the Company and its officers, directors, managers,
members, partners, shareholders, employees, agents and attorneys and any control
persons against any and all losses, claims, demands, liabilities, actions or
causes of action, encumbrances and expenses (including reasonable legal or other
expenses) incurred by each such person in connection with defending or
investigating any such claims or liabilities, whether or not resulting in any
liability to such person) to which any such indemnified party may become subject
under the Securities Act, under any other statute, at common law or otherwise,
insofar as such losses, claims, demands, liabilities and expenses arise out of
or are based upon any breach by the Investor of any representation, warranty,
covenant, obligation or agreement thereof contained herein.
15
(b) The Company hereby agrees to indemnify and hold harmless
the Investors and its officers, directors, managers, members, partners,
shareholders, employees, agents and attorneys and any control persons against
any and all losses, claims, demands, liabilities, actions or causes of action,
encumbrances and expenses (including reasonable legal or other expenses)
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person) to which any such indemnified party may become subject under the
Securities Act, under any other statute, at common law or otherwise, insofar as
such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
made by the Company and contained in this Subscription Agreement, the other
Offering Documents, the Term Sheet or the SEC Documents, or (b) arise out of or
are based upon any breach by the Company of any representation, warranty,
covenant, obligation or agreement thereof contained herein or therein. The
Company hereby agrees to indemnify the Investor for expenses (including
reasonable legal or other expenses) incurred by the Investor in connection with
any claims made by the Investor against the Company arising out of or based upon
any breach of any representation, warranty, covenant, obligation or agreement of
the Company contained herein.
7. CONSENT TO JURISDICTION. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Subscription Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in Manhattan, New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Manhattan, New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement hereof). Each party agrees not
to commence a claim or proceeding hereunder in a court other than a state court
or federal court sitting in Manhattan, New York, except (i) if required as a
mandatory counterclaim or cross-claim in a proceeding commenced by a Person in a
different jurisdiction or (ii) if such party has first brought such claim or
proceeding in such court sitting in Manhattan, New York and both the state
courts and the federal courts sitting in Manhattan, New York have denied
jurisdiction over such claim or proceeding. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Subscription Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
(including its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Subscription Agreement or the transactions contemplated hereby.
8. SEVERABILITY. In the event any parts of this Subscription Agreement are
found to be void, the remaining provisions of this Subscription Agreement shall
nevertheless be binding with the same effect as though the void parts were
deleted.
9. COUNTERPARTS. This Subscription Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute
16
one and the same instrument. The execution of this Subscription Agreement may be
by actual or facsimile signature.
10. BENEFIT. This Subscription Agreement shall be binding upon and inure to
the benefit of the parties' hereto and their legal representatives, successors
and assigns.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Subscription Agreement (except payment) shall be in writing, and
shall be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted next business day delivery followed by next
business day delivery, or by facsimile delivery, as follows:
Investor: At the address designated in Section 2.2 of
this Subscription Agreement
The Company: Bionutrics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D., President
With a copy to: Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by
mailing.
12. GOVERNING LAW. This Subscription Agreement and any dispute,
disagreement, or issue of construction or interpretation arising hereunder
whether relating to its execution, its validity, the obligations provided
therein or performance shall be governed or interpreted according to the laws of
the State of New York, without giving effect to conflicts of laws.
13. ENTIRE AGREEMENT. This Subscription Agreement constitutes the entire
Subscription Agreement between the parties and supersedes all prior oral and
written agreements between the parties hereto with respect to the subject matter
hereof. Neither this Subscription Agreement nor any provision hereof may be
amended, waived, discharged or terminated, except by a statement in writing
signed by the party or parties against which enforcement or the change, waiver,
discharge or termination is sought.
14. SECTION HEADINGS. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Subscription Agreement.
17
15. SURVIVAL OF AGREEMENTS. The agreements contained herein shall survive
the delivery of and payment for the Securities.
16. REMEDIES. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Investor and the
Company will be entitled to specific performance under this Subscription
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
17. INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS. The obligations of the
Investor under this Subscription Agreement are several and not joint with the
obligations of any other Investor under any other Subscription Agreement, and
the Investor shall not be responsible in any way for the performance of the
obligations of any other Investor under any of the other Subscription
Agreements. The decision of the Investor to purchase the Securities pursuant to
this Subscription Agreement has been made by such Investor independently of any
other Investor. Nothing contained herein or in any of the other Subscription
Agreements, and no action taken by any Investor pursuant thereto, shall be
deemed to constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Investors
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Agreements. The Investor acknowledges
that no other Investor has acted as agent for Investor in connection with making
its investment hereunder and that no other Investor will be acting as agent of
the Investor in connection with monitoring its investment in the Securities or
enforcing its rights under this Subscription Agreement. The Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Subscription Agreement, and it shall
not be necessary for any other Investor to be joined as an additional party in
any proceeding for such purpose.
18. REPLACEMENT OF SECURITIES AND UNDERLYING SHARES. If any certificate or
instrument evidencing any Securities or any Underlying Shares is mutilated,
lost, stolen or destroyed, the Company shall promptly issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in
lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Securities or Underlying Shares.
19. PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to the Investor pursuant to this Subscription Agreement or the Investor
enforces or exercises its rights hereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
18
20. MATERIAL NON-PUBLIC INFORMATION. The Company has not provided, and will
not provide, to the undersigned any material non-public information other than
information related to the transactions contemplated hereby or by the Offering
Documents, all of which information related to the transactions contemplated
hereby shall be disclosed by the Company pursuant to Section 2.3 hereof.
21. DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. The Company
shall file, in a timely manner, a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Offering Documents in the form
required by the Exchange Act and attaching the material Offering Documents
(including, without limitation, this Subscription Agreement, the Certificate of
Designations and the forms of Warrant) as exhibits to such filing (including all
attachments, the "8-K Filing"). From the Closing, the Company shall not provide
the Investor with any material, nonpublic information from the Company, any of
its Subsidiaries or any of its respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing. The Company shall not, and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents, not to, provide the Investor with any
material, nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the 8-K Filing with the SEC without the express
written consent of the Investor. Neither the Company nor the Investor shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of the Investor, to make any press release
or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing or (ii) as may be required by applicable law,
rule or regulation. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Investor, or include the name of the Investor
in any filing with the SEC or any regulatory agency, without the prior written
consent of the Investor, except (i) for disclosure thereof which is required in
the 8-K Filing or Registration Statement or (ii) as required by law or
regulations or any order of any court or other governmental agency, in which
case the Company shall provide the Investor with prior notice of such
disclosure.
19
INVESTOR SUBSCRIPTION AGREEMENT SIGNATURE PAGE
Individual Investors:
--------------------------------------------------------------------------------
Social Security Number Print Name of Investor No. 1
--------------------------------------------------------
Signature of Investor No. 1
--------------------------------------------------------------------------------
Social Security Number Print Name of Investor No. 2
--------------------------------------------------------
Signature of ▇▇▇▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇: $__________________
Manner in which Securities are to be held:
_____ Individual Ownership _____ Partnership
_____ Tenants-in-Common _____ Trust
_____ Joint Tenant With Right of Survivorship _____ Corporation
_____ Community Property _____ Employee Benefit Plan
_____ Separate Property _____ Other (please indicate)
Corporate or Other Entity:
__________________________________ ______________________________
Federal ID Number Print Name of Entity
By:___________________________
Signature, Title
DATED: _______________, 2005
20
COMPANY SUBSCRIPTION AGREEMENT SIGATURE PAGE
By signing below, the undersigned accepts the foregoing subscription and
agrees to be bound by its terms.
BIONUTRICS, INC.
By: ___________________________ Dated:___________, 2005
▇▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D.
President
21
SCHEDULE A
----------
CAPITALIZATION TABLE
--------------------
BIONUTRICS, INC. FULLY DILUTED SHARES OUTSTANDING AS OF SEPTEMBER 12, 2005
Shares Outstanding as of 09/12/05 22,681,725
Unexercised Options & Warrants 129,000
Unexercised Warrants 170,000
Series A Preferred Shares, As Converted 118,370
----------
Accumulated Series A Preferred Dividends 46,440
TOTAL 23,145,535
EXHIBIT A
---------
FORM OF NOTE
------------
EXHIBIT B
---------
WIRE TRANSFER INSTRUCTIONS
--------------------------
Signature Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA #: ▇▇▇▇▇▇▇▇▇
Acct. Name: Indigo Securities LLC Sub Escrow (BioNutrics)
Acct. #: 1500421947
2
EXHIBIT C
---------
TRANSFER AGENT INSTRUCTIONS
---------------------------
EXHIBIT D
---------
INVESTOR QUESTIONNAIRE
----------------------