Exhibit 10.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this “Subscription Agreement”) is being entered into as of the date set forth on the signature page hereto, by and between Benson Hill, Inc., a Delaware corporation (the “Company”), and the undersigned subscriber (the “Investor”). The Company is seeking commitments from accredited investors to purchase units (the “Units”) consisting of (i) one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock,” and the shares of Common Stock acquired by the investors collectively, the “Shares”), and (ii) the right to purchase one-third (1/3) of one share of Common Stock (collectively, the “Warrant Shares”) upon exercise of a stock purchase warrant, in the form of Exhibit A hereto (the “Warrant”), in a private placement for a purchase price of $3.25 per Unit (the “Per Unit Purchase Price”). On or about the date of this Subscription Agreement, the Company is entering into subscription agreements (the “Other Subscription Agreements” and together with the Subscription Agreement, the “Subscription Agreements”) with certain other accredited investors (the “Other Investors” and together with the Investor, the “Investors”), pursuant to which the Investors have, severally and not jointly, agreed to purchase on the Closing Date (as defined below), inclusive of the Units subscribed for by the Investor, an aggregate amount of up to 26,150,000 Units, at the Per Unit Purchase Price.
The aggregate purchase price to be paid by the Investor for the subscribed Units (as set forth on the signature page hereto) is referred to herein as the “Subscription Amount,” and the subscribed shares of Common Stock underlying such Units the “Purchased Shares,” and the subscribed Warrants underlying such Units the “Purchased Warrants”.
In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, each of the Investor and the Company acknowledges and agrees as follows:
1.Subscription. The Investor hereby subscribes for and agrees to purchase from the Company, and the Company agrees to issue and sell to Investor, the number of Units set forth on the signature page of this Subscription Agreement on the terms and subject to the conditions provided for herein.
2.Closing. The closing of the sale of the Units contemplated hereby (the “Closing”) shall occur one (1) business day following the date upon which all conditions precedent to the Investor’s obligation to purchase the Units and the Company’s obligation to deliver the Shares and Warrants have been satisfied or waived in writing (the “Closing Date”). On the Closing Date, the Company shall (a) issue the number of Purchased Shares to the Investor set forth on the signature page to this Subscription Agreement and cause such Shares to be registered in book entry form in the name of the Investor (or its nominee in accordance with its delivery instructions) on the Company’s share register and, as soon as practicable thereafter, provide a copy of the records of the Company’s transfer agent (the “Transfer Agent”) showing the Investor (or such nominee or custodian) as the owner of the Shares on and as of the Closing Date, and (b) issue and deliver to the Investor the Purchased Warrants exercisable for the aggregate number of Warrant Shares being purchased by such Investor; provided, however, that the Company’s obligation to issue the Purchased Shares and Purchased Warrants to the Investor is contingent upon the Company having received the Subscription Amount in full accordance with this Section 2. For purposes of this Subscription Agreement, “business day” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
3.Closing Conditions.
a.The obligation of the parties hereto to consummate the purchase and sale of the Units pursuant to this Subscription Agreement is subject to the following conditions:
(i)no governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, Rule or regulation
(whether temporary, preliminary or permanent) which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby; and
(ii)the Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Units, all of which shall be and remain so long as necessary in full force and effect; and
(iii)trading in the Common Stock shall not have been suspended by the Securities and Exchange Commission (the “SEC”) or the NYSE (as defined below), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market (as defined below), nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Investor, makes it impracticable or inadvisable to purchase the Units at the Closing.
b.The obligation of the Company to consummate the issuance and sale of the Units pursuant to this Subscription Agreement shall be subject to the satisfaction or waiver in writing of the conditions that: (i) all representations and warranties of the Investor contained in this Subscription Agreement are true and correct at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Investor of each of the representations and warranties of the Investor contained in this Subscription Agreement as of the Closing Date; and (ii) all obligations, covenants and agreements of the Investor required to be performed by it at or prior to the Closing Date shall have been performed in all material respects.
c.The obligation of the Investor to consummate the purchase of the Units pursuant to this Subscription Agreement shall be subject to the satisfaction or waiver in writing of the conditions that: (i) all representations and warranties of the Company contained in this Subscription Agreement shall be true and correct at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by the Company of each of the representations, warranties, covenants and agreements of the Company contained in this Subscription Agreement as of the Closing Date; (ii) all obligations, covenants and agreements of the Company required by the Subscription Agreement to be performed by it at or prior to the Closing Date shall have been performed in all material respects; (iii) no Material Adverse Effect (as defined below) shall have occurred that is continuing; (iv) the Company shall have prepared and filed with NYSE a listing application to list the Shares, the Warrants and the Warrant Shares and an additional shares listing notification covering all of the Shares; (v) there shall have been no amendment, waiver or modification to the Other Subscription Agreements that materially economically benefits the Other Investors thereunder unless the Investor has been offered the same benefits; and (vi) the Company shall have delivered the Company Deliverables in accordance with Section 3(d).
d.At or prior to Closing, the Company shall issue, deliver or cause to be delivered to Investor the following (the “Company Deliverables”): (i) the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer, which shall be provided at least one (1) business day prior to the Closing Date; (ii) a legal opinion of K&L Gates LLP, dated as of the Closing Date, addressed to the Investors, in form and substance reasonably satisfactory to the Investors that are funds or accounts managed by BlackRock, Inc. (“BlackRock Investors”); (iii) a certificate of the Secretary of the Company, dated as of the Closing Date, in form and substance reasonably satisfactory to the BlackRock Investors, (A) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by this Agreement and the other Subscription Agreements and the issuance of the Shares, the Warrants, and the Warrant Shares, (B) certifying the current versions of the certificate of incorporation and bylaws of the Company, (C) certifying as to the good standing of the Company and of Benson Hill Holdings, Inc. as of a date within five Business Days of the Closing, and (D) certifying as to
the signatures and authority of persons signing the Subscription Agreements and related documents on behalf of the Company; (iv) a certificate of the chief executive officer or chief financial officer of the Company, dated as of the Closing Date, certifying the fulfillment of the conditions specified in Sections 3(a) and 3(c), in form and substance reasonably satisfactory to the BlackRock Investors; and (v) a copy of the Company’s irrevocable instruction to the Transfer Agent to issue the Shares, registered in the name of the Investor (or its nominee, as applicable), as of the Closing Date.
4.Further Assurances. At or prior to the Closing Date, the parties hereto shall execute and deliver or cause to be executed and delivered such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Subscription Agreement.
5.Company Representations and Warranties. The Company represents and warrants to the Investor and the Placement Agent (as defined below) that:
a.The Company and each of its subsidiaries is an entity duly formed or incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its formation, incorporation or organization, with the requisite power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement. Neither the Company nor any of its subsidiaries is in violation or default of any of the provisions of its respective certificate of incorporation, bylaws or other organizational or charter documents. Each of the Company and its subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to have a Material Adverse Effect (as defined below) and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
b.The Purchased Shares, Purchased Warrants and Warrant Shares underlying the Purchased Warrants (collectively, the “Securities”) will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Subscription Agreement or the Purchased Warrant, as applicable, the Purchased Shares, the Purchased Warrants and Warrant Shares will be validly issued, fully paid and non-assessable, free and clear of any liens or other restrictions (other than those under applicable securities laws), and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s certificate of incorporation or bylaws (each as amended to the Closing Date) or the Delaware General Corporation Law. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Purchased Warrants.
c.This Subscription Agreement has been duly authorized, executed and delivered by the Company and, assuming that this Subscription Agreement constitutes the valid and binding agreement of the Investor, this Subscription Agreement constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
d.The execution and delivery of this Subscription Agreement and the issuance and sale of the Securities and the compliance by the Company with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not: (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject that would reasonably be expected to have a material adverse effect on the business, assets, operations, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole (a “Material Adverse Effect”), or materially affect the validity of the Securities or the legal authority of the Company to perform its obligations hereunder and timely comply in all material respects with the terms of this Subscription Agreement; (ii) result in any violation of the provisions of the organizational documents of the Company; or (iii) result in any violation of any statute or any judgment, order, Rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that would reasonably be expected to have a Material Adverse Effect or materially affect the validity of the Securities or the legal authority of the Company to perform its obligations hereunder and timely comply in all material respects with this Subscription Agreement.
e.The Company is in compliance with all applicable laws, except where such noncompliance would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has not received any written communication from any governmental entity that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect. The Company possesses all certificates, authorizations and permits issued by the appropriate domestic or foreign regulatory authority necessary to conduct its business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and the Company has not received any written notice of proceedings relating to the revocation or modification of any Material Permit.
f.As of their respective dates, all reports, as amended (the “SEC Reports”), required to be filed by the Company with the SEC complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, and such financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis (except as may be disclosed therein or in the notes thereto, subject, in the case of unaudited statements, to normal, year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Reports, the Company has not incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unresolved comments in comment letters received by the Company from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Reports.
g.Except as otherwise set forth in the SEC Reports, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and attempted to design such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. The Company has established internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of such internal controls based on their evaluations as of the Evaluation Date. Except as otherwise set forth in the SEC Reports, since the Evaluation Date, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls. The Company maintains a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the Exchange Act.
h.Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investor hereunder. The Securities (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws.
i.The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Company of this Subscription Agreement (including, without limitation, the issuance of the Securities), other than: (i) filings with the SEC; (ii) filings required by applicable state securities laws, (iii) filings required in accordance with Section 11 of this Subscription Agreement; (iv) those required by the New York Stock Exchange (“NYSE”); and (v) any filing the failure of which to obtain would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.
j.As of the date of this Subscription Agreement, the authorized capital stock of the Company consists of (i) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), and (ii) 440,000,000 shares of Common Stock. As of the date of this Subscription Agreement, (i) no shares of Preferred Stock are issued and outstanding, (ii) 178,806,654 shares of Common Stock are issued and outstanding, and (iii) warrants to purchase 18,397,504 shares of Common Stock are outstanding. All (i) issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights and (ii) outstanding warrants have been duly authorized and validly issued, are fully paid and are not subject to preemptive rights. Except as set forth above and pursuant to the Other Subscription Agreements and the other agreements referred to in the SEC Reports, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Company any shares of Common Stock or other equity interests in the Company, or securities convertible into or exchangeable or exercisable for such equity interests. There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any securities of the Company, other than as set forth in the SEC Reports.
k.Other than the Other Subscription Agreements, the Company has not entered into any side letter or similar agreement with any Other Investor or other person in connection with such Other Investor’s or person’s direct or indirect investment in the Company (other than any side letter or similar agreement relating to the transfer to any investor of securities of the Company by existing securityholders of the Company, which may be effectuated as a forfeiture to the Company and reissuance). No Other Subscription Agreement includes terms and conditions that are more advantageous to any such Other Investor than the Investor hereunder, and such Other Subscription Agreements have not been amended or modified in any material respect following the date of this Subscription Agreement.
l.The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and is listed for trading on the NYSE under the symbol “BHIL”. There is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by NYSE or the SEC, respectively, to prohibit or terminate the listing of the shares of Common Stock on NYSE or to deregister the shares of Common Stock under the Exchange Act. The Company has taken no action that is designed to terminate, or which to its knowledge is likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. For purposes of this Subscription Agreement, “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE, NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market (or any successors to any of the foregoing).
m.Except as otherwise disclosed in the SEC Reports, there is no (i) investigation, action, suit, claim or other proceeding, in each case by or before any governmental authority, pending, or, to the knowledge of the Company, threatened against the Company, or (ii) judgment, decree, injunction, ruling or order of any governmental entity outstanding against the Company, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or materially affect the validity of the Securities or the legal authority of the Company to perform its obligations hereunder and timely comply in all material respects with the terms of this Subscription Agreement.
n.The Company is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Units hereunder other than to the Placement Agent.
o.The Company is not, and immediately after receipt of payment for the Units, will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
p.The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Company shall so certify upon Investor’s request.
q.Other than as set forth in any SEC Reports or the certain notes and private warrants issued by the Company in 2021, there are no securities or instruments issued by or to which the Company is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Securities or (ii) the securities to be issued pursuant to any Other Subscription Agreement that have not been or will not be validly waived on or prior to the Closing Date.
r.None of the Company nor any person acting on its behalf has, directly or indirectly, made any offers or sales of any Company securities or solicited any offers to buy any Company securities, under circumstances that would adversely affect reliance by the Company, as applicable, on Section 4(a)(2) of the Securities Act for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the Securities Act. None of the Company nor any person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offer or sale of any of the Securities. No disqualifying event described in Rule 506(d)(1)(i)-(viii) under the Securities Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Company Covered Person (as defined below), except for a Disqualification Event as to which Rule 506(d)(2)(ii)-(iv) or (d)(3) under the Securities Act is applicable. The Company has complied, to the extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 under the Securities Act, any person listed in the first paragraph of Rule 506(d)(1) under the Securities Act.
s.The Company has timely prepared and filed (or has obtained an extension of time within which to file) all tax returns required to have been filed by the Company with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it, other than taxes being contested in good faith and for which adequate reserves have been made on the Company’s financial statements included in the SEC Reports, except in all such cases where the failure to so file or the failure to so pay has not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. The charges, accruals and reserves on the books of the Company in
respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company nor any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company as a whole. All taxes and other assessments and levies that the Company is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due, other than taxes being contested in good faith and for which adequate reserves have been made on the Company’s financial statements included in the SEC Reports, except where the failure to so withhold, collect or pay has not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. There are no material tax liens or claims pending or, to the Company’s knowledge, threatened against the Company or any of its assets or property. Except as described in the SEC Reports, there are no outstanding tax sharing agreements or other such arrangements between the Company or other corporation or entity.
t.Except as disclosed in the SEC Reports, the Company has good and marketable title to all real properties and all other material properties and material assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Reports, the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them, except where such exceptions have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.
u.All Intellectual Property of the Company is currently in compliance in all respects with all legal requirements (including timely filings, proofs and payments of fees) and is valid and enforceable, except where such failure has not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. To the Company’s knowledge, no Intellectual Property of the Company which is necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted is now involved in any cancellation, dispute or litigation, and no such action is threatened. To the Company’s knowledge, no patent of the Company which is necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted is now involved in any interference, reissue, re-examination or opposition proceeding. For purposes of this Section 3(u), “Intellectual Property” means, unless the context provides otherwise, all of the Company’s (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation).
v.Except as would not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, the Company is not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), does not own or operate any real property contaminated by the Company with any substance that is subject to any Environmental Laws, is not liable for any off-site disposal or contamination caused by the Company pursuant to any Environmental Laws, and is not subject to any claim relating to any Environmental Laws, and there is no pending or, to the Company’s knowledge, threatened investigation that might lead to such a claim.
w.The Company maintains in full force and effect insurance coverage that, to the Company’s knowledge, is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company.
x.Neither the Company nor, to the Company’s knowledge, any of their respective current or former stockholders, directors, officers, employees, agents or other persons acting on behalf of the Company, has on behalf of the Company or in connection with its business: (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (iii) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (iv) made any false or fictitious entries on the books and records of the Company; or (v) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
y.Neither the Company nor any subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any subsidiary, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. The operations of the Company and its subsidiaries are conducted in material compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any of its subsidiaries, threatened.
z.Except as disclosed in the SEC Reports, none of the officers or directors of the Company or any subsidiary and, to the knowledge of the Company, none of the employees of the Company or any subsidiary, is presently a party to any transaction with the Company or any subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, to the Company’s knowledge, any officer, director or such employee or, to the Company’s knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
6.Investor Representations and Warranties. The Investor represents and warrants to the Company that:
a.The Investor, or each of the funds managed by or affiliated with the Investor for which the Investor is acting as nominee, as applicable, (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), or an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act), in each case, satisfying the applicable requirements set forth on Schedule A, (ii) is acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgments, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and shall provide the requested information set forth on Schedule A). The Investor is not an entity formed for the specific purpose of acquiring the Securities and is an “institutional account” as defined by FINRA Rule 4512(c).
b.The Investor acknowledges and agrees that the Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Securities have not been registered under the Securities Act. The Investor acknowledges and agrees that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to the Company or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates representing the Securities shall contain a restrictive legend to such effect. The Investor acknowledges and agrees that the Securities will be subject to the foregoing transfer restrictions and, as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Shares and may be required to bear the financial risk of an investment in the Securities for an indefinite period of time. The Investor acknowledges and agrees that it has been
advised to consult legal counsel and tax and accounting advisors prior to making any offer, resale, transfer, pledge or disposition of any of the Securities.
c.The Investor acknowledges and agrees that the Investor is purchasing the Securities directly from the Company. The Investor further acknowledges that there have been no representations, warranties, covenants and agreements made to the Investor by or on behalf of the Company, any of its respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Company expressly set forth in Section 5 of this Subscription Agreement.
d.The Investor acknowledges and is aware that Barclays Capital Inc. (the “Placement Agent”) is acting as financial advisor and capital markets advisor to the Company in connection with this financing. The Investor agrees that the Placement Agent shall not be liable to the Investor for any action heretofore or hereafter taken or omitted to be taken by it or have any liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by it, the Company or any other person or entity), whether in contract, tort or otherwise, to the Investor, or to any person claiming through the Investor, in respect of the transactions contemplated by this Subscription Agreement.
e.The Investor’s acquisition and holding of the Securities will not result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended, Section 4975 of the Code, or any applicable similar law.
f.The Investor acknowledges and agrees that the Investor has received such information as the Investor deems necessary in order to make an investment decision with respect to the Securities, including, with respect to the Company, the business of the Company and its subsidiaries. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and such Investor’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities.
g.The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Company, or a representative of the Company and the Securities were offered to the Investor solely by direct contact between the Investor and the Company, or a representative of the Company. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. The Investor acknowledges that the Securities (i) were not offered to it by any form of general advertising or, to its knowledge, general solicitation, and (ii) are not being offered to it in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Placement Agent, the Company or any of their respective affiliates, or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the representations and warranties of the Company contained in Section 5 of this Subscription Agreement, in making its investment or decision to invest in the Company.
h.The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities, including those set forth in the SEC Reports. 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 the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision and the Investor has made its own assessment and has satisfied itself concerning relevant tax and other economic considerations relative to its purchase of the Securities.
i.Alone, or together with any professional advisor(s), the Investor has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the
Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Company. The Investor acknowledges specifically that a possibility of total loss exists.
j.In making its decision to purchase the Securities, the Investor has relied solely upon independent investigation made by the Investor and the SEC Reports.
k.The Investor acknowledges that the Placement Agent (i) has not provided the Investor with any information or advice with respect to the Securities, (ii) has not made any representation, express or implied as to the Company, the Company’s credit quality, the Securities or the Investor’s purchase of the Securities, (iii) has not acted as the Investor’s financial advisor or fiduciary in connection with the issue and purchase of Securities, (iv) may have acquired, or during the term of the offering of the Securities may acquire, non-public information with respect to the Company, which, subject to the requirements of applicable law, the Investor agrees need not be provided to it, and (v) may have existing or future business relationships with the Company (including, but not limited to, lending, depository, risk management, advisory and banking relationships) and will pursue actions and take steps that it deems or they deem necessary or appropriate to protect its or their interests arising therefrom without regard to the consequences for a holder of Securities, and that certain of these actions may have material and adverse consequences for a holder of Securities.
l.The Investor acknowledges and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Securities or made any findings or determination as to the fairness of this investment.
m.The Investor has been duly formed or incorporated and is validly existing and is in good standing under the laws of its jurisdiction of formation or incorporation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.
n.The execution, delivery and performance by the Investor of this Subscription Agreement are within the powers of the Investor, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound which would reasonably be expected to have a material adverse effect on the legal authority of the Investor to enter into and perform its obligations under this Subscription Agreement, and will not violate any provisions of the Investor’s organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Subscription Agreement is genuine, and the signatory has been duly authorized to execute the same, and, assuming that this Subscription Agreement constitutes the valid and binding obligation of the Company, this Subscription Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally and (ii) principles of equity, whether considered at law or equity.
o.The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) (A) to the extent the Investor is not an entity whose securities are listed on a national securities exchange (a “Listed Company”), controlled by, acting on behalf of, or owned, directly or indirectly, by, one or more persons that are named on the OFAC List, or (B) to the extent the Investor is a Listed Company, acting on behalf of or, to such Listed Company’s knowledge, controlled by, one or more persons that are named on the OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (v) a
non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (each, a “Prohibited Investor”). The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, it maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Shares were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.
p.No disclosure or offering document has been prepared by the Placement Agents or any of their respective affiliates in connection with the offer and sale of the Securities.
q.The Investor acknowledges that none of the Placement Agent, any of its respective affiliates, or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing have made any independent investigation with respect to the Company or its subsidiaries or their respective businesses, the Securities or the accuracy, completeness or adequacy of any information supplied to the Investor by the Company.
r.The Investor, when required to deliver payment to the Company pursuant to Section 2 above, will have sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Purchased Shares and Purchased Warrants pursuant to this Subscription Agreement.
7.Registration Rights
a.The Company agrees that, within fifteen (15) calendar days following the Closing Date (such deadline, the “Filing Deadline”; provided, however, that if such Filing Deadline falls on a Saturday, Sunday, or other day that the SEC is closed for business, the Filing Deadline shall be extended to the next business day on which the SEC is open for business), the Company will file with the SEC (at its sole cost and expense) a registration statement on Form S-1 (the “Registration Statement”) covering the resale of the Shares, the Warrants and the Warrant Shares (such securities, and any other equity security issued or issuable with respect to such securities by way of stock split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event, the “Registrable Securities”), and the Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day (or 90th calendar day if the SEC notifies the Company that it will “review” the Registration Statement) following the Closing and (ii) the 5th business day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “Effectiveness Deadline”); provided, however, that if such Effectiveness Deadline falls on a Saturday, Sunday, or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next business day on which the SEC is open for business; and provided further, that the Company’s obligations to include the Registrable Securities in the Registration Statement are contingent upon Investor furnishing in writing to the Company such information regarding Investor or its permitted assigns, the securities of the Company held by Investor and the intended method of disposition of the Registrable Securities (which shall be limited to non-underwritten public offerings) as shall be reasonably requested by the Company to effect the registration of the Registrable Securities, and Investor shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations; provided that Investor shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Registrable Securities. In no event shall Investor be identified as a statutory underwriter in the Registration Statement unless specifically requested by the SEC in which case the Investor will have an opportunity to withdraw from the Registration Statement. Notwithstanding the foregoing, if the SEC prevents the Company from including any or all of the Registrable Securities
proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Registrable Securities or otherwise, such Registration Statement shall register the resale of a number of Registrable Securities which is equal to the maximum number of Registrable Securities as is permitted by the SEC. In such event, the number of Registrable Securities to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders, and the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC, one or more registration statements to register the resale of those Registrable Securities that were not registered on the initial Registration Statement, as so amended. For as long as the Investor holds Registrable Securities, the Company will use commercially reasonable efforts to file all reports for so long as the condition in Rule 144(c)(1) (or Rule 144(i)(2), if applicable) is required to be satisfied, and provide all customary and reasonable cooperation, necessary to enable the undersigned to resell the Registrable Securities pursuant to Rule 144 of the Securities Act (in each case, when Rule 144 of the Securities Act becomes available to the Investor). If the Company is not required to file reports with the SEC pursuant to such laws, it will, for so long as the Investor holds the Registrable Securities, prepare and furnish to the Investor and make publicly available the information described in Rule 144(c)(2), if the provision of such information will allow resales of the Registrable Securities pursuant to Rule 144. Any failure by the Company to file the Registration Statement by the Filing Deadline or to effect such Registration Statement by the Effectiveness Deadline shall not otherwise relieve the Company of its obligations to file or effect the Registration Statement as set forth in this Section 7.
b.In the case of the registration effected by the Company pursuant to this Subscription Agreement, the Company shall, upon reasonable request, inform the Investor as to the status of such registration. At its expense the Company shall:
(i)except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Company determines to obtain, continuously effective with respect to Investor, and to keep the applicable Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions, until the earlier of the following: (A) Investor ceases to hold any Registrable Securities, and (B) the date all Registrable Securities held by Investor may be sold without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144 and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable). The Investor agrees to disclose its ownership to the Company upon request to assist it in making the determination described above. The period of time during which the Company is required hereunder to keep a Registration Statement effective is referred to herein as the “Registration Period”;
(ii)during the Registration Period, advise Investor, as expeditiously as possible (and within no later than three (3) business days):
(1)when a Registration Statement or any amendment thereto has been filed with the SEC; provided that no such notice is required when prospectus supplements to such Registration Statement have been filed;
(2)after it shall receive notice or obtain knowledge thereof, of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose;
(3)of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(4)subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.
Notwithstanding anything to the contrary set forth herein, the Company shall not, when so advising Investor of such events, provide Investor with any material, nonpublic information regarding the Company other than to the extent that providing notice to Investor of the occurrence of the events listed in (1) through (4) above may constitute material, nonpublic information regarding the Company;
(iii)during the Registration Period, use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;
(iv)during the Registration Period, upon the occurrence of any event contemplated in Section 7(b)(ii)(4) above, except for such times as the Company is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement, the Company shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(v)during the Registration Period, use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange or market, if any, on which the shares of common stock issued by the Company have been listed;
(vi)during the Registration Period, use its commercially reasonable efforts to allow the Investor to review disclosure regarding the Investor in the Registration Statement; and
(vii)during the Registration Period, otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Investor, consistent with the terms of this Subscription Agreement, in connection with the registration of the Registrable Securities.
c.Notwithstanding anything to the contrary in this Subscription Agreement, the Company shall be entitled to delay the filing or effectiveness of, or suspend the use of, the Registration Statement if it determines that in order for the Registration Statement not to contain a material misstatement or omission, (i) an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act, (ii) the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event the Company’s board of directors reasonably believes, upon the advice of outside legal counsel, would require additional disclosure by the Company in the Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Company’s board of directors, upon the advice of outside legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirements, or (iii) an amendment thereto so as to convert the Registration Statement to a Registration Statement on Form S-3 at such time after the Company becomes eligible to use such Form S-3 (each such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend the Registration Statement on more than two occasions or for more than thirty (30) consecutive calendar days, or more than sixty (60) total calendar days, in each case during any twelve-month period. Upon
receipt of any written notice from the Company of the happening of any Suspension Event (which notice shall not contain material non-public information and which notice shall not be subject to any duty of confidentiality) during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein (in light of the circumstances under which they were made, in the case of the prospectus) not misleading, Investor agrees that (i) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until Investor receives copies of a supplemental or amended prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales (which notice shall not contain material non-public information and which notice shall not be subject to any duty of confidentiality), and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Company unless otherwise required by law or subpoena. If so directed by the Company, Investor will deliver to the Company or, in Investor’s sole discretion destroy, all copies of the prospectus covering the Registrable Securities in Investor’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Securities shall not apply (A) to the extent Investor is required to retain a copy of such prospectus (1) to comply with applicable legal, regulatory, self-regulatory or professional requirements or (2) in accordance with a bona fide pre-existing document retention policy or (B) to copies stored electronically on archival servers as a result of automatic data back-up.
d.The Investor may deliver written notice (an “Opt-Out Notice”) to the Company requesting that Investor not receive notices from the Company otherwise required by Section 7(c); provided, however, that Investor may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Investor (unless subsequently revoked), (i) the Company shall not deliver any such notices to Investor and Investor shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Investor’s intended use of an effective Registration Statement, Investor will notify the Company in writing at least two (2) business days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of Section 7(c)) and the related suspension period remains in effect, the Company will so notify Investor, within one (1) business day of Investor’s notification to the Company, by delivering to Investor a copy of such previous notice of Suspension Event, and thereafter will provide Investor with the related notice of the conclusion of such Suspension Event promptly following its availability (which notices shall not contain material non-public information and which notices shall not be subject to any duty of confidentiality).
e.Liquidated Damages.
(i)If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments to each Investor then holding Registrable Securities, as liquidated damages and not as a penalty (the “Registration Liquidated Damages”), in an amount equal to one percent (1.0%) of the aggregate amount invested by such Investor for the initial day of failure to file such Registration Statement by the Filing Deadline and for each subsequent 30-day period (pro rata portion thereof with respect to a final period, if any) thereafter during which no such Registration Statement is filed with respect to the Registrable Securities. Such payments shall be made to each Investor then holding Registrable Securities in cash no later than ten (10) business days after the end of the date of the initial failure to file such Registration Statement by the Filing Deadline and each subsequent 30-day period (or portion thereof with respect to a final period, if any) thereafter until such Registration Statement is filed with respect to the Registrable Securities. Interest shall accrue at the rate of one percent (1.0%) per month on any such liquidated damages payments that shall not be paid by the applicable payment date until such amount is paid in full.
(ii)If (A) a Registration Statement covering the Registrable Securities is not declared effective by the Effectiveness Deadline, (B) after a Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including, without limitation, by reason of a stop order or the Company’s failure to update such Registration Statement), but excluding any suspension permitted pursuant to Section 7(c), or (C) the Company fails to obtain the approval of the NYSE for the listing of any of the Registrable Securities on or before the Effectiveness Deadline, or fails to maintain the listing of the Registrable Securities after a Registration Statement has been declared effective by the SEC (unless such failure was the result of a suspension of the use of the Registration Statement permitted pursuant to Section 7(c)) (each of (A), (B) and (C), a “Maintenance Failure”), then the Company will make pro rata payments to each Investor then holding Registrable Securities, as liquidated damages and not as a penalty (the “Maintenance Liquidated Damages” and together with the Registration Liquidated Damages, the “Liquidated Damages”), in an amount equal to one percent (1.0%) of the aggregate amount invested by such Investor for the Registrable Securities then held by such Investor for the initial day of a Maintenance Failure and for each 30-day period (or pro rata portion thereof with respect to a final period, if any) thereafter until the Maintenance Failure is cured; provided, however, that with respect to any Maintenance Failure with regard to the Warrants (but not the Shares or the Warrant Shares), no Maintenance Liquidated Damages with respect thereto shall be triggered, due or paid provided that (i) the Company exercised its reasonable best efforts to avoid such Maintenance Failure and (ii) there is no Maintenance Failure ongoing with respect to the Shares or the Warrant Shares. The Maintenance Liquidated Damages shall be paid monthly within ten (10) business days of the date of such Maintenance Failure and the end of each subsequent 30-day period (or portion thereof with respect to a final period, if any) thereafter until the Maintenance Failure is cured. Such payments shall be made to each Investor then holding Registrable Securities in cash. Interest shall accrue at the rate of one percent (1.0%) per month on any such liquidated damages payments that shall not be paid by the applicable payment date until such amount is paid in full.
(iii)The parties agree that (1) notwithstanding anything to the contrary herein or in the Warrants, no Liquidated Damages shall be payable with respect to any period after the expiration of the Registration Period (as defined below) (it being understood that this sentence shall not relieve the Company of any Liquidated Damages accruing prior to the expiration of the Registration Period), and in no event shall the aggregate amount of Liquidated Damages payable to an Investor exceed, in the aggregate, six percent (6.0%) of the aggregate purchase price paid by such Investor pursuant to this Subscription Agreement and (2) in no event shall the Company be liable in any thirty (30) day period for Liquidated Damages under this Subscription Agreement in excess of one percent (1.0%) of the aggregate purchase price paid by the Investors pursuant to the Subscription Agreements.
(iv)The Liquidated Damages described in this Section 7(e) shall constitute the Investors’ exclusive monetary remedy for any failure to meet the Filing Deadline and for any Maintenance Failure, but shall not affect the right of the Investors to seek injunctive relief.
f.Indemnification.
(i)The Company agrees to indemnify, to the fullest extent permitted by law, the Investor (to the extent a seller under the Registration Statement), its directors, officers, partners, managers, members, stockholders, advisers and each person who controls Investor (within the meaning of the Securities Act), to the extent permitted by law, from and against any and all losses, claims, damages, liabilities and reasonable and documented out of pocket expenses (including reasonable and documented attorneys’ fees of one law firm (and one firm of local counsel) incurred in connection with defending or investigating any such action or claim), as incurred, that arise out of, are based upon or are caused by any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus included in any Registration Statement (“Prospectus”) or preliminary Prospectus or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading, except insofar and to the extent, but only to the extent, as the same are caused by or contained in any information or affidavit regarding the Investor furnished in writing to the Company by or on behalf of such Investor expressly for use therein.
(ii)The Investor agrees to the fullest extent permitted by law, to indemnify the Company, its directors and officers and each person or entity who controls the Company (within the meaning of the Securities Act) from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained (or not contained in, in the case of an omission) in any information regarding the Investor furnished in writing by on behalf of such Investor expressly for use therein; provided, however, that the liability of the Investor shall be several and not joint with any Other Investor or other selling stockholder named in the Registration Statement and shall be in proportion to and limited to the net proceeds received by such Investor from the sale of Registrable Securities giving rise to such indemnification obligation. Notwithstanding the forgoing, Investor’s indemnification obligations shall not apply to amounts paid in settlement of any losses, claims, damages, liabilities and expenses or action if such settlement is effected without the prior written consent of Investor (which consent shall not be unreasonably withheld or delayed).
(iii)Any person or entity entitled to indemnification herein shall (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced (through the forfeiture of substantive rights and defenses) the indemnifying party) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
(iv)The indemnification provided for under this Subscription Agreement shall remain in full force and effect regardless of any investigation made by or on behalf
of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of Securities.
(v)If the indemnification provided under this Section 7(f) from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that the liability of the Investor shall be limited to the net proceeds received by such Investor from the sale of Registrable Securities giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 7(f)(i), (ii) and (iii) above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7(f)(v) from any person or entity who was not guilty of such fraudulent misrepresentation.
g.For purposes of this Section 7, “Investor” shall include any person to whom the rights under this Section 7 shall have been duly assigned.
h.Subject to receipt from the Investor by the Company and Transfer Agent of customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent (which shall not include a legal opinion) in connection therewith, and, if required by the Transfer Agent, an opinion of the Company’s counsel (which opinion shall not be unreasonably withheld), in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, the Investor may request that the Company remove any legend from the certificates or book entry position evidencing the Registrable Securities within two (2) business days of such request and receipt of such representations and other documentation reasonably acceptable to the Company and the Transfer Agent (which shall not include a legal opinion), following the earliest of such time as such Registrable Securities (A) are subject to an effective registration statement or (B) have been or are about to be sold pursuant to Rule 144. If restrictive legends are no longer required for the Registrable Securities pursuant to the foregoing, the Company shall, in accordance with the provisions of this Section and reasonably promptly following any request therefor from the Investor accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such Registrable Securities. The Company shall be responsible for the fees of the Transfer Agent and counsel to the Company associated with such issuance. Following the earlier of (A) the later of the Closing Date and the effective date of the registration statement registering such Shares and Warrant Shares or (B) Rule 144 becoming available for the resale of such Shares or Warrant Shares without volume or manner-of-sale restrictions, the Company, upon the written request of Investor (and no later than three (3) business days following such request), shall instruct the Transfer Agent to remove the legend from such Shares and Warrant Shares (in whatever form) and shall cause the Company’s counsel to issue any legend removal opinion required by the Transfer Agent.
8.Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further
liability on the part of any party in respect thereof, upon the earlier to occur of (a) the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (b) if any of the conditions to Closing set forth in Section 3 of this Subscription Agreement are (i) not satisfied or waived prior to the Closing or (ii) not capable of being satisfied on the Closing and, in the case of each of (i) and (ii), as a result thereof, the transactions contemplated by this Subscription Agreement will not be and are not consummated at the Closing or (c) the Closing does not occur by March 31, 2022 (the termination events described in clauses (a)–(c) above, collectively, the “Termination Events”); provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. Upon the occurrence of any Termination Event, this Subscription Agreement shall be void and of no further effect and any monies paid by the Investor to the Company in connection herewith shall promptly (and in any event within one (1) business day) following the Termination Event be returned to the Investor; provided that the provisions set forth in Section 7 shall survive any such termination of this Subscription Agreement.
9.Other Agreements; Investor Put Right.
a.The Company shall not, and shall use its reasonable best efforts to ensure that no affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that will be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to Investor.
b.The Company shall use its reasonable best efforts to obtain the approval of the NYSE for the applications to list the Shares, the Warrants and the Warrant Shares as promptly as practicable following the Closing. The Company will use commercially reasonable efforts to continue the listing and trading of the Warrants and its Common Stock on the NYSE or other Trading Market and, in accordance therewith, will use commercially reasonable efforts to comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market, as applicable.
c.In the event the Company does not file with the SEC on or before March 30, 2022 an audit opinion with respect to its financial statements for the year ended December 31, 2021, which audit opinion does not contain a going concern uncertainty paragraph that indicates there is a substantial doubt about the Company’s ability to continue as a going concern, then, upon written notice delivered by the Investor to the Company on or before April 2, 2022, the Company shall redeem from the Investor all of the Shares, Warrants and any Warrant Shares held by the Investor for the aggregate price paid by the Investor for such Securities. Such repurchase shall be effected by documentation mutually agreeable by the Investor and the Company.
10.Miscellaneous.
a.Neither this Subscription Agreement nor any rights that may accrue to the parties hereunder (other than the Shares or Warrant Shares acquired hereunder) may be transferred or assigned without the prior written consent of each of the other parties hereto; provided that (i) this Subscription Agreement and any of the Investor’s rights and obligations hereunder may be assigned to any fund or account managed by the same investment manager as the Investor or by an affiliate (as defined in Rule 12b-2 under the Exchange Act) of such investment manager without the prior consent of the Company and (ii) the Investor’s rights under Section 7 may be assigned to an assignee or transferee of the Shares or Warrant Shares; provided further that prior to such assignment any such assignee shall agree in writing to be bound by the terms hereof; provided, that no assignment pursuant to clause (i) of this Section 10(a) shall relieve the Investor of its obligations hereunder unless otherwise agreed to in writing by the Company.
b.The Company may request from the Investor such additional information as the Company may deem necessary to register the resale of the Shares and Warrant Shares and evaluate the eligibility of the Investor to acquire the Shares and Warrant Shares, and the Investor shall promptly provide such information as may reasonably be requested to the extent readily available; provided, that
the Company agrees to keep any such information provided by Investor confidential except (i) as necessary to include in any Registration Statement the Company is required to file hereunder, (ii) as required by the federal securities law or pursuant to other routine proceedings of regulatory authorities or (iii) to the extent such disclosure is required by law, at the request of the staff of the SEC or regulatory agency or under the regulations of any national securities exchange on which the Company’s securities are listed for trading, and in the case of the foregoing, the Company has complied with Section 11. The Investor acknowledges and agrees that if it does not provide the Company with such requested information, the Company may not be able to register the Purchased Shares, the Purchased Warrants or Warrant Shares for resale pursuant to Section 7. The Investor acknowledges that the Company may file a copy of this Subscription Agreement (or a form of this Subscription Agreement) with the SEC as an exhibit to a periodic report or a registration statement of the Company.
c.The Investor acknowledges that (i) the Company will rely on the acknowledgments, understandings, agreements, representations and warranties of the Investor contained in this Subscription Agreement, including Schedule A hereto, and (ii) the Placement Agent will rely on the acknowledgments, understandings, agreements, representations and warranties of the Investor contained in Section 6, including Schedule A hereto.
d.The Company, the Investor and the Placement Agent each is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
e.All of the agreements, representations and warranties made by each party hereto shall survive the Closing.
f.This Subscription Agreement may not be amended, modified, waived or terminated (other than pursuant to the terms of Section 8) except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
g.This Subscription Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as set forth in Section 6 and Section 7(f) with respect to the persons specifically referenced therein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns, and the parties hereto acknowledge that such persons so referenced are third party beneficiaries of this Subscription Agreement with right of enforcement for the purposes of, and solely to the extent of, the rights granted to them, if any, pursuant to such provisions.
h.Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
i.If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
j.This Subscription Agreement may be executed and delivered in one or more counterparts (including by facsimile or any other form of electronic delivery (including .pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or other transmission method)) by different parties in separate counterparts, with the same effect as if all
parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
k.The parties hereto acknowledge and agree that irreparable damage may occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Subscription Agreement, without posting a bond or undertaking and without proof of damages, to seek to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise.
l.This Subscription Agreement shall be governed by and construed in accordance with the laws of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof) as to all matters (including any action, suit, litigation, arbitration, mediation, claim, charge, complaint, inquiry, proceeding, hearing, audit, investigation or reviews by or before any governmental entity related hereto), including matters of validity, construction, effect, performance and remedies.
m.Each party hereto hereby, and any person asserting rights as a third party beneficiary hereunder may do so only if he, she or it, irrevocably agrees that any action, suit or proceeding between or among the parties hereto, whether arising in contract, tort or otherwise, arising in connection with any disagreement, dispute, controversy or claim arising out of or relating to this Subscription Agreement or any related document or any of the transactions contemplated hereby or thereby (“Legal Dispute”) shall be brought only to the exclusive jurisdiction of the courts of the State of New York or the federal courts located in the Southern District of New York, and each party hereto hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding that is brought in any such court has been brought in an inconvenient forum. During the period a Legal Dispute that is filed in accordance with this Section 10(m) is pending before a court, all actions, suits or proceedings with respect to such Legal Dispute or any other Legal Dispute, including any counterclaim, cross-claim or interpleader, shall be subject to the exclusive jurisdiction of such court. Each party hereto and any person asserting rights as a third party beneficiary may do so only if he, she or it hereby waives, and shall not assert as a defense in any Legal Dispute, that (i) such party is not personally subject to the jurisdiction of the above named courts for any reason, (ii) such action, suit or proceeding may not be brought or is not maintainable in such court, (iii) such party’s property is exempt or immune from execution, (iv) such action, suit or proceeding is brought in an inconvenient forum, or (v) the venue of such action, suit or proceeding is improper. A final judgment in any action, suit or proceeding described in this Section 10(m) following the expiration of any period permitted for appeal and subject to any stay during appeal shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable laws. EACH OF THE PARTIES HERETO AND ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY MAY DO SO ONLY IF HE, SHE OR IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM RELATING THERETO. IF THE SUBJECT MATTER OF ANY SUCH LEGAL DISPUTE IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY HERETO NOR ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY SHALL ASSERT IN SUCH LEGAL DISPUTE A NONCOMPULSORY COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. FURTHERMORE, NO PARTY HERETO NOR ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT BE WAIVED.
n.Any notice or communication required or permitted hereunder to be given shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight
carrier, or sent by certified or registered mail, postage prepaid, to such addresses or email addresses set forth on the signature page hereto, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as a party may hereafter designate by notice to the other party.
11.Disclosure. [The Company shall, by 9:00 a.m., New York City time, on March 28, 2022, issue one or more press releases or file with the SEC a Current Report on Form 8-K or other applicable form (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby and by the Other Subscription Agreements and any other material, nonpublic information that the Company has provided to the Investor at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the actual knowledge of the Company, the Investor shall not be in possession of any material, non-public information received from the Company or any of its officers, directors, or employees or agents, and the Investor shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral, with the Company or any of its affiliates, relating to the transactions contemplated by this Subscription Agreement. Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall not publicly disclose the name of the Investor or any of its affiliates or advisers, or include the name of the Investor or any of its affiliates or advisers (i) in any press release or marketing materials without the prior consent of the Investor or (ii) in any filing with the SEC or any regulatory agency or trading market without the prior consent of the Investor, except in the case of clause (ii) as required by the federal securities law or pursuant to other routine proceedings of regulatory authorities or to the extent such disclosure is required by law, at the request of the staff of the SEC or regulatory agency or under the regulations of any national securities exchange on which the Company’s securities are listed for trading, in which case the Company shall provide Investor with prior written notice of such disclosure permitted under clause (ii).]/[Reserved].1
12.Separate Obligations. The obligations of the Investor under this Subscription Agreement are several and not joint with the obligations of any Other Investor under the Other Subscription Agreements, and no Investor shall be responsible in any way for the performance of the obligations of any Other Investor under the Other Subscription Agreements. The decision of Investor to purchase the Securities pursuant to this Subscription Agreement has been made by Investor independently of any Other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company, and neither Investor nor any of its agents or employees shall have any liability to any Other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Investor, shall be deemed to constitute Investor or any Other Investors under the Other Subscription Agreements as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Investor or any Other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the this Subscription Agreement and the Other Subscription Agreements. Investor acknowledges that no Other Investor has acted as agent for Investor in connection with making its investment hereunder and no Other Investor will be acting as agent of Investor in connection with monitoring its investment in the Shares or enforcing its rights under this Subscription Agreement. 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.
[SIGNATURE PAGES FOLLOW]
1 This provision to be replaced with “Reserved” if the Investor is a level 2 investor that signed a level 2 NDA.
IN WITNESS WHEREOF, the Investor has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.
| | | | | |
| Name of Investor: | State/Country of Formation or Domicile: |
| By:____________________________________ | |
| Name: | |
| Title: | |
| Name in which Purchased Shares and Purchased Warrants are to be registered (if different): | Date: ________, 2021 |
| Investor’s EIN: | |
| Business Address-Street: | Mailing Address-Street (if different): |
| City, State, Zip: | City, State, Zip: |
| Attn: | Attn: |
| Telephone No.: | Telephone No.: |
| Facsimile No.: | Facsimile No.: |
| Email: | |
Number of Units subscribed for: [___] (consisting of [___]Shares and Warrants to purchase [__] Shares) | |
| Aggregate Subscription Amount: $ | Price Per Unit: $3.25 |
| |
You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Company on or prior to the Closing Date.
(Signature Page to Subscription Agreement)
IN WITNESS WHEREOF, the Company has accepted this Subscription Agreement as of the date set forth below.
BENSON HILL, INC.
By:
Name:
Title:
Date: ___________, 2022
Address for notice:
Email:
(Signature Page to Subscription Agreement)
SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF THE INVESTOR
| | | | | |
| A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
| (Please check the applicable subparagraphs): |
☐ We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act (a “QIB”)).
** OR **
| | | | | |
| B. | INSTITUTIONAL ACCREDITED INVESTOR STATUS |
| (Please check the applicable subparagraphs): |
| | | | | | | | |
| 1. | ☐ We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act), and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.” |
| | | | | |
| 2. ☐ We are not a natural person. |
Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. The Investor has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to the Investor and under which the Investor accordingly qualifies as an “accredited investor.”
☐ Any bank, registered broker or dealer, SEC- or state-registered investment adviser, exempt reporting adviser, insurance company, registered investment company, business development company, small business investment company, or rural business investment company;
☐ Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
☐ Any employee benefit plan, within the meaning of the Employee Retirement Income Security Act of 1974, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000;
☐ Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, similar business trust, partnership or limited liability company not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
☐ Any trust with assets in excess of $5,000,000, not formed to acquire the securities offered, whose purchase is directed by a sophisticated person; or
☐ Any entity in which all of the equity owners are accredited investors meeting one or more of the above tests.
This page should be completed by the Investor
and constitutes a part of the Subscription Agreement.
EXHIBIT A
[Form of Stock Purchase Warrant]
Exhibit 10.2
THIS WARRANT AND THE UNDERLYING SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND THIS WARRANT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS UNLESS COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED.
Dated: March 25, 2022 Certificate No. WB-__
BENSON HILL, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT for value received, subject to the terms and conditions hereinafter set forth, __________________, a _____________________, or permitted assigns (the “Holder”), is entitled to purchase shares of the capital stock of Benson Hill, Inc., a Delaware corporation (the “Company”), as determined in accordance with this Warrant, upon presentation of this Warrant and payment of the Exercise Price (as defined below) for the shares of capital stock purchased at the principal office of the Company or at such other place as shall have been designated by the Company. This Warrant is issued in connection with that certain Subscription Agreement by and between the Company and the Holder, dated as of March 24, 2022 (the “Subscription Agreement”).
This Warrant is subject to the following provisions:
1.Definitions. Capitalized terms used herein and not otherwise defined in this Warrant shall have the meaning(s) ascribed to them in the Subscription Agreement, unless the context would otherwise require. Certain other terms used herein are defined as follows:
(a)“Affiliate” means any Person which directly or indirectly controls, is controlled by, or is under common control with Holder; provided that, with respect to a Holder that is a BlackRock Investor, “Affiliates” shall only mean each other BlackRock Investor.
(b)“Applicable Number” means ___________ (________)1 shares of Common Stock purchasable hereunder.
(c) “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close.
(d)“Common Stock” means the Company’s common stock, par value $0.0001 per share.
(e)“Control,” “controlled by” and “under common control with” mean direct or indirect possession of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise); provided, that control shall be conclusively presumed when any Person or affiliated group directly or indirectly owns five percent (5%) or more of the securities having ordinary voting power for the election of directors of a corporation.
(f)“Exercise Price” means $3.90.
(g)“NYSE” means the New York Stock Exchange.
(h)“Outstanding Shares” means all shares of the Company’s capital stock which have been issued and are outstanding, including diluted shares outstanding that are deemed convertible (including, but not limited to, warrants, options, preferred shares, bonds, and employee stock options).
(i)“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit
1 Insert number equal to one-third of the number of Shares purchased by the Holder pursuant to the Subscription Agreement, rounded down to the nearest whole share.
corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).
(j)“Trading Day” means a day when the NYSE is open for trading in shares of the Common Stock.
(k)“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock if then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) (ii) if the Common Stock is not then listed on a Trading Market, if prices for the Common Stock are then reported on the OTC Bulletin Board, the OTC Markets or in the “Pink Sheets” published by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported or (iii) in all other cases, the fair market value of a share of Common Stock as determined by an independent nationally recognized investment banking, accounting or valuation firm selected in good faith by the Company and reasonably acceptable to the Holder, the fees and expenses of which shall be paid by the Company. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
2.Class, Number, and Exercise Price of Shares of Capital Stock.
(a)This Warrant may be exercised for the Applicable Number of shares of Common Stock (the “Warrant Shares”), subject to adjustment as provided herein.
(b)The purchase price for each Warrant Share purchased upon exercise of this Warrant shall be the Exercise Price, subject to adjustment as provided herein, payable in lawful money of the United States of America in full upon exercise of this Warrant.
3.Exercise of Warrant.
(a)This Warrant may be exercised, in whole or in part, by the surrender of this Warrant to the Company (with the Notice of Exercise form attached hereto as Exhibit A duly executed), at the principal office of the Company at 1001 North Warson Road, St. Louis, Missouri 63132 (or at such other location as Company may advise Holder in writing) at any time or from time to time during the Exercise Period, and upon payment in immediately available funds of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Exercise Price and the Warrant Shares purchasable hereunder are subject to further adjustment as provided in this Warrant. If this Warrant shall have been exercised in part, the Company shall, at the request of the Holder and upon surrender of this Warrant, at the time of delivery of the certificate or certificates representing the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
(b)The “Exercise Period” is that period beginning on the date hereof, and continuing up to and including 11:59.59 p.m., St. Louis Missouri time, on March 25, 2027 (the “Expiration Date”). The Company shall cause the Warrant Shares purchased hereunder to be issued by the Transfer Agent to the Holder by electronic book-entry, at the election of the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder for the applicable number of Warrant Shares to the address specified by the Holder in the Notice of Exercise by the date that is two (2) Trading Days after the latest of (1) the delivery to the Company of the Notice of Exercise, (2) surrender of this Warrant (if required), (3) payment of the aggregate Exercise Price as set forth above and (4) two (2) Trading Days following a cashless exercise pursuant to Section 6, if applicable (such date in (1), (2), (3) or (4), the “Warrant Share Delivery Date”). The applicable Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the applicable exercise date or the date that is two (2) Trading Days following a cashless exercise pursuant to Section 6, as applicable.
(c)The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, the “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(c), in determining the number of Outstanding Shares of Common Stock, a Holder may rely on the number of Outstanding Shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the United States Securities and Exchange Commission (the “SEC”), as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Outstanding Shares of Common Stock. In any case, the number of Outstanding Shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Attribution Parties since the date as of which such number of Outstanding Shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of Outstanding Shares of the Common Stock immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 3(c), provided that the Beneficial Ownership Limitation in no event exceeds 19.99% of the number of Outstanding Shares of the Common Stock immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 3(c) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.2
(d)In addition to any other rights available to the Holder, if the Company fails to issue or cause the issuance of the Warrant Shares in accordance with the provisions of Section 3(b) on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (i) pay in cash to the Holder the amount, if any, by which (A) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue, times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (ii) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.
2 Investor to advise the Company if alternative blocker thresholds are required.
4.Adjustment of Exercise Price and Number of Shares.
(a)The Exercise Price and Warrant Shares shall be subject to the following adjustments:
(i)If, at any time during the Exercise Period, the Company shall declare and pay on the Company’s Common Stock a dividend or other distribution payable in shares of Common Stock, the Warrant Shares shall be proportionately increased so that the Holder shall be entitled to receive (upon exercise of this Warrant) the number of shares of Common Stock which the Holder would have owned or been entitled to receive after the declaration and payment of such dividend or other distribution if the Warrant had been exercised immediately prior to the record date for the determination of stockholders entitled to receive such dividend or other distribution, and the Exercise Price shall be proportionately decreased so that the aggregate Exercise Price payable upon exercise in full of this Warrant shall remain the same.
(ii)If, at any time during the Exercise Period, the Company shall subdivide the Outstanding Shares of the Company’s Common Stock into a greater number of shares, or combine the Outstanding Shares of Common Stock into a lesser number of shares, or issue by reclassification of its shares of Common Stock any shares of the Company’s Common Stock, the Warrant Shares shall be proportionately adjusted so that the Holder shall be entitled to receive (upon exercise of this Warrant) the number of shares of Common Stock or such other shares which the Holder would have owned or been entitled to receive after the happening of any of the events described above if the Warrant had been exercised immediately prior to the happening of such event on the day upon which such subdivision, combination or reclassification, as the case may be, becomes effective, and the Exercise Price shall be proportionately adjusted so that the aggregate Exercise Price payable upon exercise in full of this Warrant shall remain the same.
(b)Whenever the Warrant Shares or the Exercise Price shall be adjusted pursuant to this Section 4, the Company shall deliver to the Holder a written notice setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the new Warrant Shares and Exercise Price. All calculations under this Section 4 shall be made to the nearest one-one hundredth of a share.
(c)Notwithstanding anything to the contrary contained in this Warrant or the Subscription Agreement, if the issuance of the Shares and Warrants pursuant to the Subscription Agreement Company is not compliant with the listing rules of the NYSE, including Section 312 of the NYSE Listed Company Manual, then, to the extent that this Warrant is not exercisable in full, the Applicable Number of Warrant Shares shall be reduced as required to comply with such listing rules, and the Company shall compensate by payment in cash to the Holder of $0.125 for each Warrant Share by which the initial Applicable Number of Warrants Shares was reduced.
5.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect.
6.Cashless Exercise. [If at the time of any exercise of this Warrant (a) the Common Stock not listed on a Trading Market such that the Common Stock does not satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, or (b) a registration statement with respect to the Warrant Shares is not effective after the Effectiveness Deadline (and not during a permitted suspension in connection with a Suspension Event), then the Holder may, at its option, exercise the Warrant on a “cashless basis,” in accordance with Section 3(a)(9) of the Securities Act or another exemption, for that number of shares of Common Stock equal to (i) the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the Fair Market Value less the Exercise Price by (y) the Fair Market Value. For purposes of this Section 6, “Fair Market Value” shall mean the VWAP of the Common Stock as reported during the ten (10) Trading Day period ending on the Trading Day prior to the date that notice of exercise is received by the Warrant Agent from the holder of the Warrants or its securities broker or intermediary. The date that notice of “cashless exercise” is received by the Warrant Agent shall be conclusively determined by the Warrant Agent. In connection with the “cashless exercise” of the Warrant, the Company shall, upon request, provide the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise of the Warrants on a “cashless basis” in accordance with this Section 6 is not required to be registered under the Securities Act and (ii) the shares of Common Stock issued upon such exercise shall be freely tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act) of the Company and, accordingly, shall not be required to bear a restrictive
legend.] / [Notwithstanding anything to the contrary herein, this Warrant shall not be exercisable on a “net exercise” or “cashless basis”.]3
7.Company Redemption.
(a)In the event, for 20 Trading Days during any 30 consecutive Trading Days period, the VWAP for each of the 20 Trading Days exceeds $9.75 (subject to adjustment for forward and reverse stock splits and the like), the Company shall have the right to redeem this Warrant at a price of $0.10 per Warrant Share (the “Redemption Price”) upon written notice to the Holder as described below, provided there is an effective registration statement covering the issuance of the shares of Common Stock issuable upon exercise of the Warrant, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined below).
(b)If the Company elects to redeem the Warrants pursuant to Section 7(a), the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (the “Redemption Period”) to the Holder at its last address as they shall appear on the registration books of the Company. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder received such notice.
(c)The Warrant may be exercised, for cash (or on a “cashless basis” in accordance with Section 6) at any time after notice of redemption shall have been given by the Company pursuant to Section 7(b) and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.
8.Change of Control. Upon the occurrence of any Change of Control (as hereinafter defined), the Successor Entity (as hereinafter defined) shall succeed to, and be substituted for (so that from and after the occurrence or consummation of such Change of Control, each and every provision of this Warrant referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company in this Warrant. In the event of a Change of Control, then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Change of Control, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable as a result of such Change of Control by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Change of Control (without regard to any limitation in Section 3(d) on the exercise of this Warrant). For purposes of this Section 8, (1) “Change of Control” shall mean that (i) the Company shall, directly or indirectly, in one or more related transactions: (a) sell, license, assign, convey or otherwise dispose of all or substantially all of the properties or assets of Company; (b) effect or consummate any reorganization, consolidation, merger or other transaction involving Company; (c) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the of the outstanding voting securities of the Company (not including any shares of voting securities held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (d) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding of the voting securities of the Company (not including any shares of voting securities of the Company the held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (e) reorganize, recapitalize or reclassify its Common Stock or (vi) allow any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock; and (2) “Successor Entity” means one or more Person or Persons (or, if so elected by the Holder, the Company) formed by, resulting from or surviving any Change of Control or one or more Person or Persons (or, if so elected by the Holder, the Company) with which such Change of Control shall have been entered into.
9.Representations of the Company. The Company represents that (i) all corporate actions on the part of the Company, its officers, directors and stockholders necessary for the sale and issuance of this Warrant have been taken; (ii) upon exercise of this Warrant, the Common Stock will be exempt from the registration requirements
3 Investor to advise the Company if it requires the cashless exercise provision removed.
of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions; (iii) the Company will use commercially reasonable efforts to maintain the listing of this Warrant and the Common Stock issuable upon exercise of this Warrant on the NYSE or other Trading Market; and (iv) upon exercise of this Warrant, if the Common Stock is then certificated, the Company will use commercially reasonable efforts to cause stock certificates representing the shares of Common Stock purchased pursuant to the exercise to be issued in the name of Holder, its nominees or assignees, as appropriate at the time of such exercise.
10.Shares of Common Stock in Reserve. The Company shall at all times to reserve a sufficient number of authorized but unissued shares of Common Stock for the purposes of this Warrant, and to take such action as may be necessary to ensure that all Warrant Shares issued upon exercise of this Warrant will be duly and validly authorized and issued and fully paid and nonassessable.
11.Rights of Stockholders. The Holder shall not be entitled, as a warrant holder, to vote or receive dividends or be deemed the holder of the Warrant Shares or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as a warrant holder, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Warrant Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.
12.Compliance with Securities Laws.
(a)By its acceptance of this Warrant, the Holder represents, warrants, and covenants unto the Company, and acknowledge as appropriate, that: the Holder is an “accredited investor,” as that term is defined pursuant to the securities law of the United Sates and regulations of the SEC; the Holder has sufficient business and financial knowledge and experience so as to be capable of evaluating the merits and risks of its investment in the Warrant Shares, and is able financially to bear the risks thereof; the Holder has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management; this Warrant is acquired for the Holder’s own account for investment purposes; this Warrant and the Warrant Shares issuable upon exercise hereof, respectively, have not been registered under the Securities Act of 1933 and, accordingly, any transfer of this Warrant and such Warrant Shares will be subject to legal restrictions; and the Holder will not offer for sale or sell, assign or otherwise dispose of (except exercise) this Warrant or any Warrant Shares issued to it pursuant to exercise hereof, except in accordance with applicable securities laws.
(b)Notwithstanding anything to the contrary contained in this Warrant, if at any time specified herein for the issuance of Warrant Shares to the Holder, any law, or any regulation or requirement of the SEC or any other federal, state or local governmental authority having jurisdiction, shall require either the Company or the Holder to take any action in connection with the Warrant Shares then to be issued, other than (i) customary approvals required by applicable corporation laws, (ii) notice filings on SEC Form D and similar or related federal, state or local filings and (iii) the filing and maintenance of the Registration Statement pursuant to the terms of the Subscription Agreement (the actions described in clauses (i), (ii) and (iii) are collectively referred to as the “Required Actions”), to the extent such action is required to be taken prior to the issuance of such Warrant Shares the issuance of such Warrant Shares shall be deferred until such action shall have been taken. The Company shall be under no obligation to take such action, other than a Required Action, and the Company shall have no liability whatsoever as a result of the non-issuance of such Warrant Shares as a result of not taking such action, other than a Required Action, except to refund to the Holder any consideration tendered in respect of the Exercise Price.
(c)Unless and until the Warrant Shares have been registered in the Act, all stock certificates evidencing the Warrant Shares shall be restricted by a legend on each certificate in substantially the following form:
The shares represented by this certificate have not been registered under the Securities Act of 1933. These shares have been acquired for investment and not with a view to distribution or resale, and may not be mortgaged, pledged, hypothecated, or otherwise transferred without an effective registration statement for such shares under the Securities Act of 1933 or an opinion of counsel for the corporation that registration is not required under such Act.
13.Replacement Warrant for Lost Certificate. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and reimbursement to the Company of all
reasonable expenses incidental thereto (and upon surrender and cancellation of this Warrant if mutilated), the Company will execute and deliver a new Warrant of like tenor, in lieu of this Warrant.
14.Issue Tax. The issuance of certificates for the Warrant Shares upon the exercise of this Warrant shall be made without charge to the holder of this Warrant for any issue tax (other than applicable income taxes) in respect thereof.
15.Closing of Books. The Company shall not close its transfer books against the transfer of any warrant or of any shares of Common Stock issued or issuable upon the exercise of any warrant in any manner that interferes with the timely exercise of this Warrant.
16.Warrant Agent. By notice to the holder of this Warrant, the Company may appoint a warrant agent as the Company’s agent for purposes of the administration of this Warrant and the exercise thereof (the “Warrant Agent”), and in such case the Holder shall abide by any such Warrant Agent’s instructions and procedures not inconsistent with the provisions of this Warrant.
17.Rights and Obligations Survive Exercise of Warrant. Unless otherwise provided herein, the rights and obligations of the Company, of the holder of this Warrant and of the holder of the Warrant Shares issued upon exercise of this Warrant, shall survive the exercise of this Warrant.
18.Notices. Unless Any notice, request or other document required or permitted to be given or delivered to Holder or Company shall be in writing and personally delivered, sent by overnight courier, or United States mail, postage prepaid, or sent by facsimile or electronic mail, or other authenticated message, charges prepaid, to the other party’s or parties’ addresses shown on the books of Company (in the case of the Holder) at the address indicated therefor in the opening paragraphs of this Warrant (in the case of the Company). Each party may change the address, facsimile number or email address to which notices, requests and other communications are to be sent by giving written notice of such change to each other party. Notice given by hand delivery shall be deemed received on the date delivered; if sent by overnight courier, on the next Business Day after delivery to the courier service; if by first class mail, on the third Business Day after deposit in the U.S. Mail; and if by facsimile or electronic mail, on the date of transmission.
19.Governing Law. This Warrant shall be governed by and construed under the laws of the State of Delaware as applied to agreements entered into and to be performed entirely within Delaware.
20.Assignability and Binding Effect. The Company and any Warrant Agent may deem and treat the registered Holder of this Warrant as the absolute owner of this Warrant, for the purpose of any exercise hereof, of any distribution to the holder of this Warrant, and for all other purposes. This Warrant may be assigned without the consent of the Company, and the Form of Transfer attached hereto as Exhibit B shall be used to effect such assignment. This Warrant shall be binding upon and inure to the benefit of the Company and the Holder, and their respective successors and assigns. Without limiting the foregoing, each Holder and each person to whom this Warrant is subsequently transferred represents and warrants to the Company and agrees (by acceptance of such transfer) that it will not transfer this Warrant unless (i) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction, (ii) pursuant to Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), (iii) the Company receives an opinion of counsel, reasonably satisfactory to the Company, that an exemption from such registration is available or (iv) the Company otherwise satisfies itself that such transaction is exempt from registration.
[The Next Page is the Signature Page]
IN WITNESS WHEREOF, the Company has executed this Warrant effective as of the date first above written.
COMPANY:
BENSON HILL, INC.
By:___________________________
Matthew B. Crisp
Chief Executive Officer
Signature Page to Stock Purchase Warrant
EXHIBIT A
NOTICE OF EXERCISE
To: Benson Hill, Inc.
Attn.: Chief Financial Officer
1001 N. Warson Road
St. Louis, Missouri 63132
1.The undersigned hereby irrevocably elects to purchase __________ shares of the Common Stock, $0.0001 par value, of Benson Hill, Inc., a Delaware corporation (the “Company”), pursuant to the terms of the attached Warrant (the “Warrant”).
2.Select Applicable Provision
•This Notice of Exercise is the undersigned’s check made payable to “Benson Hill, Inc.” in the amount of $______, or the undersigned has transferred or caused to be transferred to the Company lawful money of the United States of America in such amount, representing payment in full for the Exercise Price of the shares being purchased, together with all applicable transfer taxes, if any.
•The undersigned elects to exercise the Warrant on a “net exercise” basis pursuant to Section 6 of the Warrant.
3.Please issue a certificate or certificates representing the number of shares for which the Warrant has been exercised in the name of the undersigned or in such other name as is specified below:
(Name)
(Address)
4.The undersigned hereby represents and warrants that the number of shares for which the Warrant has been exercised are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such shares and all representations and warranties of the undersigned set forth in Section 12 of the Warrant (including Section 12(a) thereof) are true and correct as of the date hereof.
[Signature Page Follows]
Dated:
By:
Name:
Title:
Address:
Signature Page to Notice of Exercise
EXHIBIT B
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers until __________________
__________ (United States taxpayer identification number ______________), with an address at _________________________, the right represented by the attached Warrant to purchase _____________________________________ shares of the Common stock, $0.0001 par value per share, of Benson Hill, Inc., a Delaware corporation (the "Company"), to which the attached Warrant relates, and appoints ___________________ attorney to transfer such right on the books of the Company, with full power of substitution in the premises.
Dated:
By:
Name:
Title:
Address:
Signature Page to Form of Transfer
Exhibit 99.1
Benson Hill Announces Full Year 2021 Financial Results
•Consolidated revenues increased 29% as reported and 47%, as adjusted for a divested business, to $147.2 million.
•Ingredients segment revenues were $90.7 million, an increase of 55% as reported and 104%, as adjusted for a divested business. Fresh segment revenues were $56.3 million, an increase of 2%.
•2022 proprietary revenues are expected to double versus 2021 contributing to a greater than 175% projected increase in Ingredients revenues to an estimated range of $250 million to $275 million.
•Consolidated net loss of $148 million to $153 million and adjusted EBITDA loss of $80 million to $85 million is expected in 2022.
•Completed an $85 million PIPE, including investments from funds and accounts managed by BlackRock, Apollo Capital Management, GV (formerly Google Ventures), and Grosvenor Food & AgTech, to fund the execution of the Company's strategic plan.
ST. LOUIS, MO – March 28, 2022 - Benson Hill, Inc. (the “Company” or “Benson Hill”), a food tech company unlocking the natural genetic diversity of plants, today announced operating and financial results for the year ended December 31, 2021.
“Our robust performance in 2021 established a foundation for the growth we expect in 2022 and beyond,” said Matt Crisp, Chief Executive Officer of Benson Hill. “We made tremendous progress towards commercializing our proprietary soy ingredients portfolio under our brands TruVail™, Veri™, and Bright Day™ for the food, oil, and aquaculture markets, respectively. There are strong tailwinds for our innovative product solutions, which can simplify the supply chain with fewer processing steps, lower costs, use fewer natural resources, and offer a domestic source of supply that is currently constrained to meet demand. This year we will continue to invest in capturing share to deliver strong revenue growth and gross margin improvement. As we look beyond 2022, the compelling value proposition we offer to advance the food system led to broad investor interest in our recent PIPE, which will support the execution of our growth plans, including our objective to generate positive EBITDA and free cash flow in 2025.”
Full Year 2021 Results as Compared to The Same Period of 2020
Reconciliation of non-GAAP financial measures is on page 9.
•Revenues were $147.2 million, an increase of $32.9 million, or 29%. Excluding $14.1 million in revenues from a barley business divested in October 2020, revenues grew 47%. The performance was driven by strong results in the Ingredients segment.
•Gross loss was $0.9 million, a decline in profitability of $12.9 million. Excluding $2.2 million in gross profit contribution from the divested barley business in 2020 and $2.8 million in one-time freight costs in Q1’2021 necessary to accelerate the receipt of soybean seed stock from South America, gross profit declined $7.9 million to $1.9 million. Adjusted gross profit margins were 1.3%.
•Selling, general and administrative expenses were $81.6 million, which included $11.7 million of transaction costs related to the merger with Star Peak Corp II on September 29, 2021. Additionally, the Company incurred non-recurring costs of $5.3 million for public company readiness.
•R&D expenses were $40.6 million, an increase of $11.1 million, primarily to continue expanding scientific capabilities to support the current and future product pipeline including related facility costs for the corporate headquarters and Crop Accelerator.
•Reported net loss was $126.2 million compared to a net loss of $67.2 million.
•Adjusted EBITDA was a loss of $80.4 million compared to a loss of $46.5 million. The Company recognized a loss of $11.7 million on the extinguishment of $37.5 million of high-cost debt.
•Cash and marketable securities on hand was $182.7 million as of December 31, 2021, which included an outlay of approximately $17 million in connection with the unfunded portion of the Company’s acquisition of ZFS Creston on December 29, 2021.
Ingredients Segment
•Revenues for the segment were $90.7 million, an increase of $32.1 million, or 55%. Excluding the $14.1 million contribution from the barley business, which was divested in October 2020, revenues grew 104%. 2021 was the introductory year for the Company’s proprietary soybeans, soybean oil and soybean meal products from the 2020 crop, which generated revenues of approximately $38 million compared to $6 million in 2020. In addition, adverse weather conditions drove higher average selling prices for yellow pea ingredients.
•Adjusted EBITDA for the segment was a loss of $29.6 million, an increase in loss of $21.6 million. The cost to introduce new products, startup costs for the acquired soy crush facility in Seymour, Indiana, and higher research and development costs to support existing and future products impacted the year over year results.
Fresh Segment
•Revenues for the segment were $56.3 million, an increase of $1.0 million, or 2%. An increase in volume sold was nearly offset by lower average selling prices. The U.S. fresh produce industry experienced an oversupply as a result of higher regional and ex-U.S. crop yields.
•Adjusted EBITDA was a loss of $3.1 million, which was a decline in segment profitability of $3.3 million.
Consolidated Fourth Quarter 2021 Highlights as Compared to The Same Period of 2020
Reconciliation of non-GAAP financial measures is on page 9.
•Revenues were $43.7 million, an increase of $20.2 million, or 86%. Revenues increased 95% excluding $1.1 million in revenues from the barley business divested in 2020. The increase was primarily driven by sales of proprietary soybeans, soybean oil and soybean meal, and higher average selling prices on yellow peas. Partially offsetting these increases was the impact of lower average selling prices of fresh produce.
•Gross loss and gross loss margin were $1.9 million and (4)%, respectively. The positive impact from the favorable market for yellow pea ingredients was offset by lower average selling prices for fresh produce, higher than planned transportation costs, initial startup costs of the Seymour facility, and
losses generated by the commercial launch of the proprietary soy ingredients. In the prior year, the barley operation generated $0.2 million in gross profit.
•Reported net loss was $42.2 million compared to a net loss of $25.4 million.
•Adjusted EBITDA was a loss of $29.6 million compared to a loss of $16.7 million.
Company Milestones
Benson Hill completed several important milestones in 2021 to establish the foundation to execute the Company’s strategy for growth.
Technology
The Company achieved its goal to double its data acquisition, as well as add important data layers to its CropOS® innovation engine. The Crop Accelerator became fully operational and has dramatically increased the capacity for and speed of product pipeline innovation. Advancements in the yellow pea program led to validation of a pea protein concentrate product specification, which is a critical milestone on the Company’s path to introduce the first proprietary yellow pea crop in 2024 and commence commercialization in 2025 for a more nutrient dense and more sustainable pea protein concentrate.
Farmer Engagement
Benson Hill contracted and successfully harvested 70,000 acres of proprietary soybean crop, with results exceeding expectations for nutrient density and the successful completion of the Company’s largest field data collection effort to date. The launch of the Benson Hill Food System Innovators and Plant for Protein™ programs helped to strengthen farmer partner relationships. As a result, the Company achieved its 2022 soy contracting goal earlier than expected with returning farmers increasing their acre commitments by an average of over 20%.
Commercial
The Company has built an experienced Ingredients operations and go-to-market team. The launch of TruVail™, a new line of domestically sourced, non-GMO plant-based protein ingredients with sustainability benefits, established a portfolio of soy ingredient products for the food market. Furthering the commercialization efforts is the integrated business model enabled by the acquisition of the Creston, Iowa operation for food-grade ingredient production. In addition, the Company established a commercial collaboration with Riverence, the largest land-based producer of steelhead and rainbow trout in North America, to enhance the sustainability of aquaculture supply chains using Benson Hill’s Ultra-High Protein soy ingredients under its Bright Day™ brand.
2022 Outlook
Benson Hill expects consolidated revenues to be in the range of $315 million to $350 million, which represents year-over-year growth of over 100%. Ingredients segment revenues are expected in the range of $250 million to $275 million, representing total and organic (excluding legacy, non-proprietary revenues from Creston) year-over-year growth of more than 175% and 65%, respectively. A significant contributor to organic revenue growth is expected from the Company’s proprietary soy ingredient portfolio with revenues of $70 to $80 million, approximately double what was achieved in 2021. Revenue from legacy activity at the Creston facility is anticipated to be $90 million to $100 million. Revenues for the Fresh segment are expected to increase to $65 million to $75 million.
Consolidated gross profit is expected to be in the range of $9 million to $13 million with gross margin improvement over 2021 because of expected sales of a broader soy portfolio and a reduction of high-cost third-party tolling expense. The Company expects price stabilization in the Fresh segment resulting in high single digit gross margins, which will remain substantially below historical levels.
The Company expects a net loss of $148 million to $153 million and adjusted EBITDA to be a loss of $80 million to $85 million, which is a slightly greater loss than in 2021.
Finally, the Company expects use of cash to moderate in 2022 due to higher gross margins, lower Capex requirements and cost management efforts.
Capital Formation
Today, Benson Hill also announced that it has entered into definitive agreements with certain investors for a PIPE (Private Investment in Public Equity) offering of common stock and warrants to purchase common stock, which delivered approximately $85 million in gross proceeds. The Company intends to use the proceeds from the transaction to help fund its ongoing business growth, namely in its Ingredients segment.
Mr. Crisp continued, “We’re pleased to have raised this additional financing, which enables us to continue executing on our plans for growth and solidify our position as a leader in the plant-based food movement. We evaluated a number of potential financing paths and ultimately determined that this agreement was the best path forward to position the business for continued success. We are grateful for the support from existing and new investors who understand the significant role we are positioned to play in advancing the food system. This is an exciting time at Benson Hill, and we remain confident in our ability to create value for our customers, farmers partners, consumers and shareholders by delivering food made better from the beginning”
The definitive agreements define the issuance and sale of 26,150,000 units at a purchase price of $3.25 per unit in a private placement. Each unit consisted of one share of the Company’s common stock, par value $0.0001 per share, and a warrant to purchase one-third of one share of the Company’s common stock. In the aggregate, 8,716,661 shares of the Company’s common stock are underlying the warrants.
The warrants have an exercise price of $3.90 per share of common stock (subject to customary adjustments), were exercisable upon issuance, and will expire on March 25, 2027. Each warrant is redeemable by the Company for $0.10 upon the Company’s common stock trading greater than $9.75 per share for 20 of 30 consecutive trading days.
The aggregate gross proceeds to the Company of the offering were approximately $85 million. The offering closed on March 25, 2022.
Webcast
A webcast of the conference call will begin at 8:30 am ET today. The link to participate is available on the Investor Relations page of the Company’s website.
About Benson Hill
Benson Hill moves food forward with the CropOS® platform, a cutting-edge food innovation engine that combines data science and machine learning with biology and genetics. Benson Hill empowers innovators to unlock nature’s genetic diversity from plant to plate, with the purpose of creating nutritious, great-tasting food and ingredient options that are both widely accessible and sustainable. More information can be found at bensonhill.com or on Twitter at @bensonhillinc.
Use of Non-GAAP Financial Measures
In this press release, the Company includes non-GAAP performance measures. The Company uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of the Company’s historical operating results. The Company’s management believes these non-GAAP measures are useful in evaluating the Company’s operating performance and are similar measures reported by publicly listed U.S. competitors, and regularly used by securities analysts, institutional investors,
and other interested parties in analyzing operating performance and prospects. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company’s business. By providing these non-GAAP measures, the Company’s management intends to provide investors with a meaningful, consistent comparison of the Company’s performance for the periods presented. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company's definition of these non-GAAP measures may differ from similarly titled measures of performance used by other companies in other industries or within the same industry.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures and the Company's definition of these non-GAAP measures is included in the tables accompanying this release.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the Company’s future financial or operating performance. These forward-looking statements include, among other things, statements regarding: the Company’s currently expected guidance regarding its full year 2022 consolidated revenues, revenues for its proprietary soy portfolio, incremental revenues from legacy activity at the Creston facility, segment revenues, gross profit, gross margins, net loss and adjusted EBITDA, and cash usage; the anticipated benefits of the PIPE transaction and the capital raised thereby to the Company and its stockholders; financial or other information based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company’s strategies and plans for growth; the Company’s, positioning, resources, capabilities, and expectations for future performance; estimates and forecasts of financial and other performance metrics; projections of market opportunity; the Company’s outlook and financial and other guidance; and management’s strategy and plans for growth. In some cases, the reader can identify forward-looking statements by words such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” or similar words. Such forward-looking statements are based upon assumptions made by Benson Hill as of the date hereof and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the Company’s ability to achieve anticipated benefits of recent business combinations, which may be affected by, among other things, competition, the ability of the combined company to grow and achieve growth profitably, maintain relationships with customers and suppliers, and retain its management and key employees; the ability to deploy capital raised in the PIPE transaction in a manner that furthers Benson Hill’s growth strategy, as well as the general ability to execute the Company’s business plans; the transition to becoming a public company; and other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. Forward-looking statements are also subject to the risks and other issues described above under “Use of Non-GAAP Financial Measures,” which could cause actual results to differ materially from current expectations included in the Company’s forward-looking statements included in this press release. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward looking statements will be achieved. There may be additional risks about which the Company is presently unaware or that the Company currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Benson Hill expressly disclaim any duty to update these forward-looking statements, except as otherwise required by law.
###
Contacts
Investors: Ruben Mella: (314) 714-6313 / rmella@bensonhill.com
Media: Melanie Bernds: (314) 605-6363 / mbernds@bensonhill.com
Benson Hill, Inc.
Consolidated Balance Sheets
(In Thousands)
| | | | | | | | | | | |
| December 31, |
| 2021 | | 2020 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 78,963 | | | $ | 9,743 | |
| Marketable securities | 103,689 | | 100,334 |
| Accounts receivable, net | 31,729 | | 14,271 |
| Inventories, net | 48,724 | | 13,040 |
| Prepaid expenses and other current assets | 20,253 | | 3,061 |
| Total current assets | 283,358 | | 140,449 |
| Property and equipment, net | 126,885 | | 31,624 |
| Right of use asset, net | 77,452 | | 34,117 |
| Goodwill and intangible assets, net | 42,664 | | 24,083 |
| Other assets | 4,538 | | 1,512 |
| Total assets | $ | 534,897 | | | $ | 231,785 | |
| | | | | | | | | | | |
| December 31, |
| 2021 | | 2020 |
| Liabilities and stockholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 35,508 | | | $ | 16,128 | |
| Revolving line of credit | 47 | | | — | |
| Current lease liability | 2,422 | | | 1,627 | |
| Current maturities of long-term debt | 6,934 | | | 5,466 | |
| Accrued expenses and other current liabilities | 26,771 | | | 12,315 | |
| Total current liabilities | 71,682 | | | 35,536 | |
| Long-term debt | 77,170 | | | 24,344 | |
| Long-term lease liability | 79,154 | | | 33,982 | |
| Warrant liabilities | 46,051 | | | 5,241 | |
| Conversion option liability | 8,783 | | | — | |
| Deferred tax liabilities | 294 | | | — | |
| Other non-current liabilities | 316 | | | — | |
| Total liabilities | 283,450 | | | 99,103 | |
| Stockholders’ equity: | | | |
| Redeemable convertible preferred stock, $0.0001 par value; 1,000 and 105,922 shares authorized, 0 shares issued and outstanding as of December 31, 2021 and 2020, respectively | — | | | — | |
Common stock, $0.0001 par value, 440,000 and 128,467 shares authorized, 178,089 and 108,697 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 18 | | | 11 | |
Additional paid-in capital | 533,101 | | | 287,318 | |
Accumulated deficit | (280,569) | | | (154,322) | |
Accumulated other comprehensive loss | (1,103) | | | (325) | |
| Total stockholders’ equity | 251,447 | | | 132,682 | |
Total liabilities and stockholders’ equity | $ | 534,897 | | | $ | 231,785 | |
Benson Hill, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Information)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2021 | | 2020 | | 2019 |
| Revenues | $ | 147,212 | | | $ | 114,348 | | | $ | 79,523 | |
| Cost of sales | 148,157 | | | 102,430 | | | 70,961 | |
| Gross (loss) profit | (945) | | | 11,918 | | | 8,562 | |
| Operating expenses: | | | | | |
| Research and development | 40,578 | | | 29,457 | | | 24,810 | |
| Selling, general and administrative expenses | 81,552 | | | 37,446 | | | 27,457 | |
| Impairment of goodwill | — | | | 4,832 | | | — | |
| Total operating expenses | 122,130 | | | 71,735 | | | 52,267 | |
| Loss from operations | (123,075) | | | (59,817) | | | (43,705) | |
| Other expense (income): | | | | | |
| Interest expense, net | 4,490 | | | 6,708 | | | 195 | |
| Loss on extinguishment of debt | 11,742 | | | — | | | — | |
| Change in fair value of warrants | (12,127) | | | 661 | | | — | |
| Other income, net | (1,164) | | | (75) | | | (9) | |
| Total other expense (income), net | 2,941 | | | 7,294 | | | 186 | |
| Net loss before income tax | (126,016) | | | (67,111) | | | (43,891) | |
| Income tax expense | 231 | | | 48 | | | 19 | |
| Net loss | $ | (126,247) | | | $ | (67,159) | | | $ | (43,910) | |
| Net loss per common share: | | | | | |
| Basic and diluted loss per common share | $ | (1.04) | | | $ | (0.81) | | | $ | (0.65) | |
| Weighted average shares outstanding: | | | | | |
| Basic and diluted weighted average shares outstanding | 121,838 | | | 83,295 | | | 67,707 | |
Benson Hill, Inc.
Consolidated Statements of Comprehensive Loss
(In Thousands)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2021 | | 2020 | | 2019 |
| Net loss | $ | (126,247) | | | $ | (67,159) | | | $ | (43,910) | |
| Foreign currency: | | | | | |
| Comprehensive income (loss) | 4 | | | (226) | | | (21) | |
| 4 | | | (226) | | | (21) | |
| Marketable securities: | | | | | |
| Comprehensive income (loss) | (1,813) | | | (109) | | | 374 | |
| Adjustments for net (losses) income realized in net loss | 1,031 | | | 223 | | | (17) | |
| (782) | | | 114 | | | 357 | |
| Total other comprehensive (loss) income | (778) | | | (112) | | | 336 | |
| Total comprehensive loss | $ | (127,025) | | | $ | (67,271) | | | $ | (43,574) | |
Benson Hill, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2021 | | 2020 | | 2019 |
| Operating activities | | | | | |
| Net loss | $ | (126,247) | | | $ | (67,159) | | | $ | (43,910) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
| Depreciation and amortization | 12,817 | | | 7,504 | | | 3,790 | |
| Share-based compensation expense | 7,183 | | | 1,010 | | | 644 | |
| Bad debt expense | 309 | | | 133 | | | 281 | |
| Change in fair value of warrants | (12,127) | | | 661 | | | — | |
| Amortization related to financing activities | 1,389 | | | 2,507 | | | 18 | |
| Loss on extinguishment of debt | 11,742 | | | — | | | — | |
| Impairment of goodwill | — | | | 4,832 | | | — | |
| Other | (65) | | | 364 | | | 48 | |
| Changes in operating assets and liabilities: | | | | | |
| Accounts receivable | (7,038) | | | 693 | | | (2,597) | |
| Inventories | (11,690) | | | (5,364) | | | (4,287) | |
| Prepaid expenses and other current assets | (13,149) | | | (30) | | | (1,241) | |
| Accounts payable | 11,293 | | | (1,949) | | | 4,291 | |
| Accrued expenses | 7,539 | | | 4,120 | | | 106 | |
| Other liabilities | 294 | | | — | | | (1,496) | |
| Net cash used in operating activities | (117,750) | | | (52,678) | | | (44,353) | |
| Investing activities | | | | | |
| Purchases of marketable securities | (648,923) | | | (208,780) | | | (36,348) | |
| Proceeds from maturities of marketable securities | 2,499 | | | 9,070 | | | 10,700 | |
| Proceeds from sales of marketable securities | 639,612 | | | 107,243 | | | 54,765 | |
| Payments for acquisitions of property and equipment | (31,490) | | | (9,855) | | | (6,841) | |
| Payments made in connection with business acquisitions | (116,287) | | | — | | | (26,822) | |
| Proceeds from divestitures | — | | | 1,650 | | | — | |
| Net cash used in investing activities | (154,589) | | | (100,672) | | | (4,546) | |
| Financing activities | | | | | |
Net contributions from Merger and PIPE financing, net of transaction costs of $34,940 | 285,378 | | | — | | | — | |
| Payments for extinguishment of debt | (43,082) | | | — | | | — | |
| Principal payments on debt | (4,400) | | | (8,941) | | | (831) | |
| Proceeds from issuance of debt | 103,634 | | | 24,534 | | | 15,293 | |
| Borrowing under revolving line of credit | 20,954 | | | 25,587 | | | 28,518 | |
| Repayments under revolving line of credit | (20,907) | | | (27,082) | | | (27,023) | |
| Proceeds from issuance of redeemable convertible preferred stock, net of costs | — | | | 154,420 | | | 32,561 | |
| Retirement of redeemable convertible preferred stock | — | | | (7,766) | | | — | |
| Repayments of financing lease obligations | (703) | | | (121) | | | (60) | |
| Proceeds from the exercise of stock options and warrants | 681 | | | 72 | | | 89 | |
| Net cash provided by financing activities | 341,555 | | | 160,703 | | | 48,547 | |
| Effect of exchange rate changes on cash | 4 | | | (226) | | | (21) | |
| Net increase (decrease) in cash and cash equivalents | 69,220 | | | 7,127 | | | (373) | |
| Cash and cash equivalents, beginning of year | 9,743 | | | 2,616 | | | 2,989 | |
| | | | | | | | | | | | | | | | | |
| Cash and cash equivalents, end of year | $ | 78,963 | | | $ | 9,743 | | | $ | 2,616 | |
| Supplemental disclosure of cash flow information | | | | | |
| Cash paid for taxes | $ | 53 | | | $ | — | | | $ | 5 | |
| Cash paid for interest | $ | 6,591 | | | $ | 4,685 | | | $ | 622 | |
| Supplemental disclosure of non-cash activities | | | | | |
| Issuance of Notes Payable Warrants and Convertible Notes Payable Warrants | $ | 6,663 | | | $ | 4,580 | | | $ | — | |
| Conversion of Notes Payable Warrants upon Merger | $ | 4,576 | | | $ | — | | | $ | — | |
| Public Warrants and Private Placement Warrants acquired in Merger | $ | 50,850 | | | $ | — | | | $ | — | |
| Issuance of conversion option | $ | 8,783 | | | $ | — | | | $ | — | |
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities | $ | 3,578 | | | $ | 669 | | | $ | 952 | |
| Purchases of inventory included in accounts payable and accrued expenses and other current liabilities | $ | 1,854 | | | $ | — | | | $ | — | |
| Financing leases | $ | 46,021 | | | $ | 33,523 | | | $ | — | |
Benson Hill, Inc.
Supplemental Schedules - Segment Information and Non-GAAP Reconciliation
(Dollar Amounts in Thousands)
The Company defines and calculates adjusted EBITDA as consolidated net loss before net interest expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation, and the impact of significant non-recurring items.
The Company defines and calculates adjusted revenue as revenue as determined under GAAP, excluding revenue of $14.1 million for the year ended December 31, 2020 contributed from the barley operation sold in October 2020.
The Company defines and calculates adjusted gross profit as gross profit as determined under GAAP, excluding (i) gross margin of $2.2 million for the year ended December 31, 2020 contributed from the barley operation sold in October 2020 and (ii) one-time excess freight costs of $2.8 million incurred in the year ended December 31, 2021 to ship seeds from South America.
| | | | | | | | | | | |
| Year Ended December 31, 2021 | Revenue | | Adjusted
EBITDA |
| Ingredients | $ | 90,654 | | | $ | (29,592) | |
| Fresh | 56,266 | | | (3,069) | |
| Unallocated and other | 292 | | | (47,719) | |
| Total segment results | $ | 147,212 | | | $ | (80,380) | |
Adjustments to reconcile consolidated net loss to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (126,247) | |
| Interest expense, net | 4,490 | |
| Income tax expense (benefit) | 231 | |
| Depreciation and amortization | 12,817 | |
| Stock-based compensation | 7,183 | |
| Change in fair value of warrants | (12,127) | |
| Other non-recurring costs, including acquisition costs | 3,994 | |
| Employee retention credit | (2,226) | |
| Merger transaction costs | 11,693 | |
| Non-recurring public company readiness costs | 5,265 | |
| Loss on extinguishment of debt | 11,742 | |
| South America seed production costs | 2,805 | |
| Total Adjusted EBITDA | $ | (80,380) | |
| | | | | | | | | | | |
| Year Ended December 31, 2020 | Revenue | | Adjusted
EBITDA |
| Ingredients | $ | 58,566 | | | $ | (7,999) | |
| Fresh | 55,278 | | | 218 | |
| Unallocated and other | 504 | | | (38,690) | |
| Total segment results | $ | 114,348 | | | $ | (46,471) | |
Adjustments to reconcile consolidated net loss to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (67,159) | |
| Interest expense, net | 6,708 | |
| Income tax (expense) benefit | 48 | |
| Depreciation and amortization | 7,504 | |
| Stock-based compensation | 1,010 | |
| Change in fair value of warrants | 661 | |
| Other non-recurring costs, including acquisition costs | (75) | |
| Impairment of goodwill | 4,832 | |
| Total Adjusted EBITDA | $ | (46,471) | |
Benson Hill, Inc.
Supplemental Schedules - Segment Information and Non-GAAP Reconciliation
(Dollar Amounts in Thousands)
| | | | | | | | | | | |
| Three Months Ended December 31, 2021 | Revenue | | Adjusted
EBITDA |
| Ingredients | $ | 30,606 | | | $ | (11,103) | |
| Fresh | 12,984 | | | (495) | |
| Unallocated and other | 128 | | | (18,017) | |
| Total segment results | $ | 43,718 | | | $ | (29,615) | |
Adjustments to reconcile consolidated net loss to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (42,207) | |
| Interest expense, net | 457 | |
| Income tax expense (benefit) | 13 | |
| Depreciation and amortization | 4,357 | |
| Stock-based compensation | 4,414 | |
| Change in fair value of warrants | 398 | |
| Other non-recurring costs, including acquisition costs | 2,953 | |
| Total Adjusted EBITDA | $ | (29,615) | |
| | | | | | | | | | | |
| Three Months Ended December 31, 2020 | Revenue | | Adjusted
EBITDA |
| Ingredients | $ | 11,758 | | | $ | (1,215) | |
| Fresh | 12,433 | | | (722) | |
| Unallocated and other | (659) | | | (14,799) | |
| Total segment results | $ | 23,532 | | | $ | (16,736) | |
Adjustments to reconcile consolidated net loss to Adjusted EBITDA:
| | | | | |
| Consolidated net loss | $ | (25,390) | |
| Interest expense, net | 1,699 | |
| Income tax expense (benefit) | 48 | |
| Depreciation and amortization | 2,158 | |
| Stock-based compensation | 259 | |
| Change in fair value of warrants | (77) | |
| Other non-recurring costs, including acquisition costs | (265) | |
| Impairment of goodwill | 4,832 | |
| Total Adjusted EBITDA | $ | (16,736) | |
Benson Hill, Inc.
Supplemental Schedules – 2022 Non-GAAP Reconciliation
(Dollar Amounts in Thousands)
Adjustments to reconcile estimated 2022 consolidated net loss to Adjusted EBITDA: | | | | | |
Consolidated net loss | $ (148,000) – (153,000) |
Interest expense, net | 23,000 |
Depreciation and amortization | 23,000 |
Stock-based compensation | 21,000 |
Other non-recurring costs | 1,000 |
Total Adjusted EBITDA | $ (80,000) – (85,000) |
