SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 1, 1997
-------------------------------------------
(Date of earliest event reported)
Bion Environmental Technologies, Inc.
-----------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 0-19333 84-1176672
----------- ----------- -------------
(State of (Commission (I.R.S. Employer
Incorporation) File No.) Identification No.)
555 17th Street, Suite 3310, Denver, Colorado 80202
-----------------------------------------------------------
(Address and Zip Code of Principal Executive Offices)
Registrant's telephone number including area code: (303) 294-0750
<PAGE>
ITEM 5. OTHER EVENTS.
- -------- --------------
(A) On December 1, 1997, Bion Environmental Technologies, Inc. (which along
with its subsidiaries is referred to as the "Registrant" or the "Company")
signed new Employment Agreements (the "Agreements") with Jon Northrop, C.E.O.,
Jere Northrop, President, and M. Duane Stutzman, C.F.O., replacing previously
existing employment agreements which were due to expire on December 31, 1997
for Mr. Stutzman and March 31, 1998 for Messrs. Northrop. All terms of the
Agreements are essentially the same as the previously existing agreements
except that the employment period is extended until December 31, 2002. Copies
of the Agreements are attached hereto as Exhibits 10.1, 10.2, and 10.3,
respectively.
(B) On January 9, 1998 the Registrant signed a contract for the design,
permitting, and construction of its patented Bion NMS' animal waste treatment
system to retrofit a 3,650 sow farm in Knox County, Illinois. This retrofit
to an existing lagoon based treatment system represents Bion's first expansion
into Illinois.
(C) On December 31, 1997, the Registrant executed a Closing
Memorandum/Addendum #3 (the "Memorandum") with Bowman Family Farms, Inc. and
Crystal Springs Farms, LLC (collectively "BFF") which is the third amendment
to the agreement and addendum between Registrant and BFF dated October 8, 1997
as amended November 13, 1997 and November 30, 1997 (collectively the
"Agreement")(see the agreement and addendum attached as Exhibit 10-1 to the
Registrant's September 30, 1997 Form 8-K). The Memorandum sets forth that: 1)
in consideration of payments made by BFF to Registrant the Agreement is now
binding on Registrant and BFF; 2) the appointment of Michael Bowman as a
director of Registrant shall be accomplished upon completion of all payments
required by paragraph 5 A.i of the Agreement; 3) as well as numerous other
matters related to the project contemplated in the Agreement. A copy of the
Memorandum is attached hereto as Exhibit 10.4, and the Agreement is
incorporated in Exhibit 10.4 by reference.
(D) On December 1, 1997 the Registrant issued a bonus to M. Duane
Stutzman, CFO, consisting of 20,000 class H6 Warrants (to purchase restricted
and legended shares of Registrant's common stock at a price of $10.00 per
share exercisable from September 15, 1998 through December 31, 2001), 10,000
class H7 Warrants (to purchase restricted and legended shares of Registrant's
common stock at a price of $12.50 per share exercisable from September 15,
1999 through December 31, 2001), and 10,000 class H8 Warrants (to purchase
restricted and legended shares of Registrant's common stock at a price of
$15.00 per share exercisable from September 15, 1999 through December 31,
2001).
(E) Effective January 1, 1998, the parties to that certain Voting Agreement
(the "Voting Agreement") (see Registrant's Form 8-K dated May 19, 1997) agreed
that such Voting Agreement is amended so that only shares currently owned
(which totalled 4,007,797 in aggregate out of 8,559,455 total shares
outstanding on January 1, 1998) by or that may be issued in the future to
LoTayLingKyur, Inc. and Dublin Holding, Ltd. are to be voted by Jon Northrop,
Registrant's C.E.O., and that the Voting Agreement shall expire on June 30,
1999 absent any renewal or extension.
(F) Effective January 1, 1998, holders of 84% of the Registrant's common
stock (post transaction) participated in an exchange transaction (the
"Exchange") conducted pursuant to Section 351 of the Internal Revenue Code of
1986 as amended that resulted in the exchange of 7,463,012 warrants of various
classes for 4,351,348 shares of restricted stock and 2,832,909 Class Z
Warrants to purchase shares of the Registrant's common stock at $15.00 per
share for a 24 month period commencing January 1, 2000. The Exchange was the
result of negotiations that were initiated in response to a proposal made by
certain warrant holders on November 23, 1997, and finalized on December 24,
1997 (see Exhibit 2.1 attached hereto for the Exchange offer memorandum).
Schedules detailing the calculations for the Exchange, the warrants exchanged,
warrants outstanding after the Exchange, and outstanding options as of January
1, 1998 are contained in Exhibits 99.1, 99.2, 99.3, and 99.4 respectively
hereto. Registrant has prepared the following analysis of its capital
structure on January 2, 1998 following the Exchange:
Common Stock:
Issued and outstanding 8,559,455 1,2
Options 3
Vested 144,460
Not Vested 79,212
Warrants 4
Vested 3,129,836
Not Vested 11,250
1 This is an increase from December 31, 1997 of 4,539,586 shares, 4,351,348 of
which are as a result of the Exchange, and 188,238 of which result from the
issuance of shares previously subscribed.
2 The Registrant currently is obligated to pay $130,000 under the terms of a
convertible credit facility with a shareholder which, if converted, would
result in the issuance of 28,889 shares of restricted Common Stock as payment
in full of the obligation. (See 8-K dated December 1, 1996). If the note is
converted into stock, it would result in the Company having 8,588,344 shares
of Common Stock outstanding.
<PAGE>
3 See Exhibit 99.4 hereto for a detailed listing of the options.
4 See Exhibit 99.3 hereto for a detailed listing of the warrants.
Following completion of the Exchange the ownership positions of all officers
and/or owners of 5% or more of the common stock of the Registrant are as
follows:
<TABLE>
<CAPTION>
Name of Holder Shares Owned Z Warrants Owned
---------------- ------------ ----------------
<S> <C> <C>
Dublin Holding, Ltd. 2,489,090 1,141,003
LoTayLingKyur, Inc. 1,393,808 279,330
Jere Northrop 663,707 356,528
Jon Northrop 642,034 350,556
Mark Smith and Kelly Moone 521,822 216,486
Duane Stutzman 100,237 65,259
</TABLE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
- -------- -------------------------------------
a) Financial Statements None
b) Pro forma Financial Information None
c) Index to Exhibits
2.1: Exchange offer memorandum dated December 24, 1997.
10.1: Employment Agreement for Jon Northrop, CEO, dated December 1,
1997.
10.2: Employment Agreement for Jere Northrop, President, dated
December 1, 1997.
10.3: Employment Agreement for M. Duane Stutzman, CFO, dated
December 1, 1997.
10.4: Closing Memorandum/Addendum #3 between Bion Tech-nologies,
Inc. and Bowman Family Farms, Inc. and Crystal Springs
Farms, LLC dated December 31, 1997.
99.1: Schedule detailing calculations for Exchange offer dated
December 24, 1997, to be effective January 1, 1998.
99.2: Schedule detailing warrants to be exchanged in Exchange offer
dated December 24, 1997, to be effective January 1,
1998.
99.3: Schedule detailing warrants outstanding after Exchange
transaction was completed on January 1, 1998.
99.4: Schedule detailing options outstanding on January 1, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
Date: January 13, 1998 By: /s/ Jon Northrop
------------------------
Jon Northrop,
Chief Executive Officer
<PAGE>
Exhibit 2.1
TRANSCRIPTION OF HAND-WRITTEN FAX COMMUNICATION DATED 12/24/97.
MARK A. SMITH
ATTORNEY AT LAW
2305 BROADWAY
BOULDER, COLORADO 80304-4106
Telephone: (303) 444-1713
FAX: (303) 449-2198
December 24, 1997 VIA FAX
To: Jon Northrop, CEO, Bion Environmental Technologies, Inc. ("BION")
From: Mark A. Smith
Fax No: 303-294-0983 No. of Pages (excluding this page): 10
Re: BION Warrant Exchange ("EXCHANGE")
- ---------------------------------------
Dear Mr. Northrop:
Below find a summary of the terms for an exchange of BION warrants for
restricted BION common shares and a new class of BION warrants ("Z Warrants").
Based on the items set forth below, my clients Dublin Holding, Ltd. and
LoTayLingKyur, Inc., my wife, Kelly Moone, and I (together with our children
and others who have been our donees of BION warrants) agree to participate in
the EXCHANGE:
1) The EXCHANGE, which results from an offer which we first made on
11/23/97, has been subject to ongoing negotiations which culminated in an oral
agreement reached yesterday afternoon during our meeting in Golden, Colorado;
2) The purpose of the EXCHANGE is to restructure the capital structure of
BION in order to:
a) address the repeatedly made concerns of investment bankers and stock
brokers, including without limitation individuals at: 1) at least 2 North
Carolina brokerage firms; 2) Global Financial Group; 3) Sauceda & Granville;
and, as recently as this past Monday, 4) Cohig that the capital structure was
too complex, contained too many warrants exercisable at prices, below and/or
near current market prices and looked too much like the capital structures
found in old fashioned "blind pool" scam deals;
b) remedy the fact that the stock of BION was already being priced as if
10,000,000 shares of stock were outstanding;
c) facilitate NASDAQ application process under rules promulgated in the
last six months;
d) make the stock of BION more attractive to brokerage firms (and
individual brokers) so that they will become involved with BION; and
e) properly posture BION with investment bankers with regard to additional
funding in the public and private markets which BION intends to pursue during
1998.
3) The EXCHANGE shall be effective on January 1, 1998 subject to the
contingencies set forth herein:
a) the transaction shall be "tax-free" pursuant to 351 of IRC (and/or
other applicable provisions) except as to "boot" reflecting the value of the Z
Warrants which BION and the EXCHANGE participants agree have nominal value;
BION shall provide a tax opinion regarding this condition as a condition
precedent to closing;
b) all holders of BION Class E1 and/or Class X warrants shall participate
in the EXCHANGE and shall exchange all warrants of all classes of BION which
they own; BION may include other holders of classes of warrants which are
owned by persons who also own Class E1 or X Warrants (for example, if a holder
of Class E1 or X Warrants also owns Class A Warrants which are included in the
EXCHANGE, BION may allow other holders of Class A Warrants to participate in
the EXCHANGE); additionally, BION may allow employees of BION who do not own
Class E1 or X Warrants to participate so long as such employees own (and
exchange) not less than 100,000 BION warrants, inaggregate;
c) all newly issued BION securities results from the EXCHANGE shall be
issued as restricted shares and all persons who receive 65,000 or more BION
shares in the EXCHANGE shall take the BION shares subject to a two year
holding period prior to public resale;
d) BION shall indemnify and hold harmless all participants in the EXCHANGE
from any and all liability under 16(b) ("short swing profits") derived from
matching the EXCHANGE transactions with any other transactions;
e) definitive documentation concerning language of warrants, voting
rights, resale restrictions, registration rights, etc.
4) For calculation purposes and to equate various classes of warrants to
one another, an aggregate "exchange value" ("EV") shall be calculated as set
forth below. BION and the participants agree and acknowledge that EV does not
---
equal fair market value or price or any equivalent for the warrants to be
exchanged or to be issued in the EXCHANGE. EV has been calculated to make
"apples and orange and pears, etc." equivalent to one another only:
<PAGE>
a) The EV of each warrant to participate in the EXCHANGE shall be
determined as set for at Exhibit A hereto (8 pages) which contains
Black-Scholes values for each class of BION warrants anticipated to
participate as of the stock market close ($7 3/8 per share) on 12/15/97 as
calculated by BION's accounting firm (EKS&H) based on closing market price,
BION stock volatility and applicable terms and exercise prices of warrants;
b) Each participant's total Participant Exchange Value ("PEV") shall be
calculated by multiplying the number of warrants owned by participant in each
class by the Black-Scholes values in Exhibit A;
c) Each participant shall be issued a number of BION restricted common
shares calculated by dividing his PEV by $7.375;
d) Thereafter, for each participant's shares to be issued shall be
multiplied by $5.50 to yield an intermediate value ("IV") which shall be
subtracted from each PEV with the resulting number ("ZV") to be used to
calculate issuance to the participant of Z Warrants. The number of Z Warrants
to be issued to each participant shall equal ZV divided by $2.88. The Z
Warrant shall be exercisable at $15.00 per share until 12/31/01.
e) Although $7.375 has been used to calculate the number of BION shares to
be received by each participant, the participants and BION agree and
acknowledge that this greatly overstates the current value of BION shares in
the quantities being issued in the EXCHANGE as it represents "free trading",
unrestricted BION shares priced by a "thin", limited trading market and that
$7.375 has been used for the purposes of the EXCHANGE because it was the
"value"/"price" embedded in the Black-Scholes calculations, further, the
participants and BION agree and acknowledge that the $2.88 Black-Scholes value
for the Z Warrants is only a calculational number and does not represent the
economic or fair market value of the Z Warrants which the participants and
BION believe to be of nominal value only in light of the financial condition
of BION and the large multiple of Z Warrant exercise price to large negotiated
transactions in BION restricted stock during the past year.
5) To simplify closing of the EXCHANGE, the EXCHANGE shall be effective
upon meeting the contingencies set forth above and the return (for exchange)
to BION of warrant certificates of sufficient quantity so that after the
EXCHANGE the participants own not less than 80% of the common stock of BION
provided, however, that the effective date shall be not earlier than January
1, 1998 nor later than January 15, 1998. Thereafter, BION shall issue the
BION shares and Z Warrants as required by the EXCHANGE.
/s/ Mark A. Smith
-----------------------------
Mark A. Smith
Exhibit 2.1A
SUMMARY
BION
Black Scholes
Summary of Calculations
Assumptions:
Volatility 68.72%
Risk Free Rate 5.50%
Stock Price $7.38
Measurement Price 12/15/97
Term Various
<TABLE>
<CAPTION>
Warrant Class Call Value
------------- ----------
<S> <C>
A $1.69
E1 $4.51
G5.1 $5.33
G5.2 $5.49
G6 $4.63
G9 $5.33
G9.1 $4.27
G9.2 $3.58
G9.3 $5.33
G9.4 $3.58
G9.5 $4.73
H3 $5.16
H4 $4.51
H5 $4.01
H6 $3.61
H7 $3.21
H8 $2.88
K1 $3.35
K2 $3.89
K3 $4.38
L1 $2.68
L1.1 $3.87
L2 $2.78
X $4.47
Z $2.88
</TABLE>
<TABLE>
<CAPTION>
VALUATION
Measurement
Class Expiration Date Term Price
- -------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
A 4/9/99 12/15/97 1.315068493 $10.00
E1 12/31/01 12/15/97 4.046575342 $6.00
G5.1 1/21/01 12/15/97 3.104109589 $3.00
G5.2 9/12/01 12/15/97 3.745205479 $3.00
G6 4/20/02 12/15/97 4.347945205 $6.00
G9 8/1/02 12/15/97 4.630136986 $4.00
G9.1 8/1/02 12/15/97 4.630136986 $8.00
G9.2 8/1/02 12/15/97 4.630136986 $12.00
G9.3 8/1/02 12/15/97 4.630136986 $4.00
G9.4 8/1/02 12/15/97 4.630136986 $12.00
G9.5 8/1/02 12/15/97 4.630136986 $6.00
H3 12/31/01 12/15/97 4.046575342 $4.00
H4 12/31/01 12/15/97 4.046575342 $6.00
H5 12/31/01 12/15/97 4.046575342 $8.00
H6 12/31/01 12/15/97 4.046575342 $10.00
H7 12/31/01 12/15/97 4.046575342 $12.50
H8 12/31/01 12/15/97 4.046575342 $15.00
K1 10/1/99 12/15/97 1.794520548 $6.00
K2 10/1/01 12/15/97 3.797260274 $8.00
K3 10/1/03 12/15/97 5.797260274 $10.00
L1 12/1/98 12/15/97 0.961643836 $6.00
L1.1 12/1/98 12/15/97 0.961643836 $4.00
L2 12/1/99 12/15/97 1.961643836 $8.00
X 12/31/03 12/15/97 6.046575342 $10.00
Z 12/31/01 12/15/97 4.046575342 $15.00
</TABLE>
<PAGE>
VALUATION
<TABLE>
<CAPTION>
Input Variables
As of As of As of As of As of As of
12/15/97 12/15/97 12/15/97 12/15/97 12/15/97 12/15/97
A E1 G5.1 G5.2 G6 G9
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stock price $7.38 $7.38 $7.38 $7.38 $7.38 $7.38
Exercise
price $10.00 $6.00 $3.00 $3.00 $6.00 $4.00
Term 1.32 4.05 3.10 3.75 4.35 4.63
Volatility 68.72% 68.72% 68.72% 68.72% 68.72% 68.72%
Annual Rate
of Quarterly
Dividends 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Discount Rate=
Bond Equivalent
Yield 5.500% 5.500% 5.500% 5.500% 5.500% 5.500%
Intermediate Calculations
Present value of
Stock Ex-
dividend 7.38 7.38 7.38 7.38 7.38 7.38
Present value of
Exercise Price 9.31 4.82 2.53 2.45 4.74 3.11
Cumulative
Volatility 78.81% 138.24% 121.08% 132.99% 143.29% 147.87%
Call Option Value
Proportion of
Stock Present
Value 53.91% 84.12% 93.15% 93.24% 84.73% 90.71%
Proportion of
Exercise
Price PV (24.51)% (35.08)% (60.90)% (56.52)% (34.17)% (43.81)%
Call Option
Value $ 1.69 $4.51 $5.33 $5.49 $ 4.63 $ 5.33
Put Option Value
Proportion of
Stock Present
Value (46.09)% (15.88)% (6.85)% (6.76)% (15.27)% (9.29)%
Proportion of
Exercise Price
PV 75.49% 64.92% 39.10% 43.48% 65.83% 56.19%
Put Option
Value $ 3.63 $1.96 $ .49 $ .57 $ 1.99 $ 1.06
Value of call from
above $1.69 $4.51 $5.33 $ 5.49 $4.63 $ 5.33
Number of
options/
warrants 1 1 1 1 1 1
Imputed value $1.69 $4.51 $5.33 $ 5.49 $4.63 $ 5.33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VALUATION
Input Variables
As of As of As of As of As of As of
12/15/97 12/15/97 12/15/97 12/15/97 12/15/97 12/15/97
G9.1 G9.2 G9.3 G9.4 G9.5 H3
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stock price $7.38 $7.38 $7.38 $7.38 $7.38 $7.38
Exercise
price $8.00 $12.00 $4.00 $12.00 $6.00 $4.00
Term 4.63 4.63 4.63 4.63 4.63 4.05
Volatility 68.72% 68.72% 68.72% 68.72% 68.72% 68.72%
Annual rate
of Quarterly
Dividends 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Discount rate=
Bond
Equivalent
Yield 5.500% 5.500% 5.500% 5.500% 5.500% 5.500%
Intermediate
Calculations
Present value
of stock ex-
dividend 7.38 7.38 7.38 7.38 7.38 7.38
Present value
of exercise
price 6.22 9.33 3.11 9.33 4.67 3.21
Cumulative
volatility 147.87% 147.87% 147.87% 147.87% 147.87% 138.24%
Call Option Value
Proportion of
Stock Present
Value 80.35% 71.91% 90.71% 71.91% 85.29% 90.19%
Proportion of
Exercise Price
PV (26.62)% (18.44)% (43.81)% (18.44)% (33.36)% (46.42)%
Call Option
Value $4.27 $3.58 $5.33 $3.58 $4.73 $5.16
Put Option Value
Proportion of
Stock Present
Value (19.65)% (28.09)% (9.29)% (28.09)% (14.71)% (9.81)%
Proportion of
Exercise
Price
PV 73.38% 81.56% 56.19% 81.56% 66.64% 53.58%
Put Option
Value $3.12 5.54 1.06 5.54 2.02 1.00
Value of call
from above $4.27 $3.58 $5.33 $3.58 $4.73 $5.16
Number of
Options/
Warrants 1 1 1 1 1 1
Imputed
value $4.27 $3.58 $5.33 $3.58 $4.73 $5.16
</TABLE>
<PAGE>
VALUATION
<TABLE>
<CAPTION>
Input Variables
As of As of As of As of As of As of
12/15/97 12/15/97 12/15/97 12/15/97 12/15/97 12/15/97
H4 H5 H6 H7 H8 K1
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stock price $7.38 $7.38 $7.38 $7.38 $7.38 $7.38
Exercise price $6.00 $8.00 $10.00 $12.50 $15.00 $6.00
Term 4.05 4.05 4.05 4.05 4.05 1.79
Volatility 68.72% 68.72% 68.72% 68.72% 68.72% 68.72%
Annual Rate
of Quarterly
Dividends 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Discount Rate=
Bond Equivalent
Yield 5.500% 5.500% 5.500% 5.500% 5.500% 5.500%
Intermediate Calculations
Present value
of stock
ex-dividend 7.38 7.38 7.38 7.38 7.38 7.38%
Present value
of exercise
price 4.82 6.42 8.03 10.04 12.04 5.44
Cumulative
Volatility 138.24% 138.24% 138.24% 138.24% 138.24% 92.06%
Call Option Value
Proportion of
Stock Present
Value 84.12% 78.56% 73.56% 68.02% 63.17% 78.53%
Proportion of
Exercise
Price
PV (35.08)% (27.72)% (22.58)% (18.03)% (14.78)% (44.81)%
Call Option
Value $4.51 $4.01 $3.61 $3.21 $2.88 $3.35
Put Option Value
Proportion of
Stock Present
Value (15.88)% (21.44)% (26.44)% (31.98)% (36.83)% (21.47)%
Proportion of
Exercise Price
PV 64.92% 72.28% 77.42% 81.97% 85.22% 55.19%
Put Option
Value $1.96 3.06 4.27 5.87 7.55 $1.42
Value of
call from
above $4.51 $4.01 $3.61 $3.21 $2.88 $3.35
Number of
options/
warrants 1 1 1 1 1 1
Imputed
value $4.51 $4.01 $3.61 $3.21 $2.88 $3.35
</TABLE>
<PAGE>
VALUATION
<TABLE>
<CAPTION>
Input Variables
As of As of As of As of As of As of As of
12/15/97 12/15/97 12/15/97 12/15/97 12/15/97 12/15/97 12/15/97
K2 K3 L1 L1.1 L2 X Z
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock price $7.38 $7.38 $7.38 $7.38 $7.38 $7.38 $7.38
Exercise
price $8.00 $10.00 $6.00 $4.00 $8.00 $10.00 $15.00
Term 3.80 5.80 .96 .96 1.96 6.05 4.05
Volatility 68.72% 68.72% 68.72% 68.72% 68.72% 68.72% 68.72%
Annual rate
of Quarterly
Dividends 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Discount Rate=
Bond
Equivalent
Yield 5.500% 5.500% 5.500% 5.500% 5.500% 5.500% 5.500%
Intermediate Calculations
Present value
of Stock Ex-
Dividend 7.38 7.38 7.38 7.38 7.38 7.38 7.38
Present value
of Exercise
Price 6.51 7.30 5.69 3.80 4.19 7.20 12.04
Cumulative
Volatility 133.91% 165.46% 67.39% 67.39% 96.25% 168.98% 138.24%
Call Option Value
Proportion of
Stock Present
Value 77.72% 79.77% 76.44% 90.70% 69.40% 80.48% 63.17%
Proportion of
Exercise
Price
PV (28.22)% (20.58)% (51.86)% (74.16)% (32.45)% (20.30)% (14.78)
Call Option
Value $3.89 $4.38 $2.68 $3.87 $2.78 $4.47 $2.88
Put Option Value
Proportion of
Stock Present
Value (22.28)% (20.23)% (23.56)% (9.30)% (30.60)% (19.52)% (36.83)%
Proportion of
Exercise
Price
PV 71.78% 79.42% 48.14% 25.84% 67.55% 79.70% 85.22%
Put Option
Value $3.03 $4.31 $1.00 $0.29 $2.60 $4.30 $7.55
Value of call
from above $3.89 $4.38 $2.68 $3.87 $2.78 $4.47 $2.88
Number of
options/
warrants 1 1 1 1 1 1 1
Imputed
value $3.89 $4.38 $2.68 $3.87 $2.78 $4.47 $2.88
</TABLE>
<PAGE>
VOLATILITY
HISTORICAL VOLATILITY
FOR USE WITH FAS 123
Computed Volatility 68.72%
Observations per year 13
<TABLE>
<CAPTION>
Continuously
Observation Stock Compounded
Date Price Dividend Rate of Return
- ----------- ----------- ---------- -----------------
<S> <C> <C> <C>
31-Dec-96 5.5
31-Jan-97 6.3125 0.137783702
28-Feb-97 6 (0.050772325)
31-Mar-97 5.5 (0.087011377)
30-Apr-97 5.5 0
31-May-97 4.375 (0.228841572)
30-Jun-97 3.375 (0.259511195)
31-Jul-97 3.5 0.036367644
30-Aug-97 3.375 (0.036367644)
30-Sep-97 4.25 0.230523659
31-Oct-97 6.5 0.424883194
28-Nov-97 6.375 (0.019418086)
15-Dec-97 7.375 0.145711811
</TABLE>
Exhibit 10.1
EMPLOYMENT AGREEMENT
---------------------
This Agreement effective as of December 1, 1997, by and between Bion
Enviromental Technologies, Inc. ("Company"), and Jon Northrop ("Employee").
Company and Employee agree that, in order to preserve cash for operations
of the Company, $100,000 of the salary in Paragraph 3 of this Agreement will
be paid in cash according to the other terms of Paragraph 3, and the remaining
$50,000 shall be accrued until such time as sufficient cash is available for
payment.
WHEREAS, Employee does at present act as an officer and director of the
Company;
WHEREAS, the Company desires to continue to retain the services of
Employee as an employee upon the conditions contained in this Agreement; and
WHEREAS, Employee desires to provide services to the Company under such
conditions;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the Company does hereby agree to engage Employee and
Employee does hereby agree to be engaged by the Company, upon the terms and
conditions set forth in the following paragraphs:
1. Employment Period. The Company hereby engages Employee for the
-----------------
period commencing December 1, 1997 and ending December 31, 2002 ("Employment
Period") to continue to serve in all present positions with the Company and to
render such other services in an executive capacity as the Company shall
reasonably require. Employee hereby agrees to remain in the employ of the
Company for the Employment Period, subject to the provisions of this
Agreement. Employee may terminate his employment with the Company upon 90
days written notice to the Company, in which case this Agreement shall
terminate without liability one to the other upon the date specified by
Employee.
2. Duties. Employee agrees that at all times during the Employment
------
Period he will faithfully and diligently endeavor to promote the business and
business interests of the Company. This Agreement shall not restrict Employee
from engaging, directly or indirectly, in any business or activity which is
not competitive with the business of the Company; provided, however, that such
additional business or activity does not interfere with nor is inconsistent
with the performance by the Employee of his duties under this Agreement.
3. Salary and Benefits. Subject to the provisions of this
---------------------
Agreement, during the Employment Period, Employee shall be compensated as
follows:
<PAGE>
a.) Employee shall earn a salary of $150,000 per annum, payable in
monthly installments, subject to customary payroll deductions for Federal,
State, and local taxes and to such other deductions as are required by law or
by mutual agreement of the Company and Employee.
b.) The Board of Directors of the Company will review Employee's
salary no less than once per year with a view to making such increases in
Employee's salary or declaring such bonuses or other benefits as may be
merited and warranted in light of factors considered pertinent by the Board of
Directors.
c.) Employee shall receive free of cost parking for his automobile;
health, hospitalization and life insurance with coverage exceeding or equal to
that now in force through the Company; as well as such other benefits as the
Board may deem appropriate from time to time.
d.) Employee shall be entitled to four weeks vacation per year to be
taken at such times as do not interfere with the performance of his duties
hereunder.
4. Expenses. All reasonable and necessary expenses incurred by
--------
Employee in the performance of his duties under this Agreement, including but
not limited to expenses for entertainment, travel, and similar items, shall be
paid or reimbursed monthly by the Company upon receipt of appropriate
documentation of such expenses. Company shall provide, at its expense,
Employee with office space as necessary and secretarial, legal, accounting,
and other services as may be necessary to properly support Employee's
performance of his duties and to operate in the best interests of the Company.
5. Disability of Employee. In the event of the disability of
-----------------------
Employee (as defined herein) prior to the expiration of the Employment Period,
Employee shall nevertheless continue to be compensated at his then designated
annual rate and with such benefits provided for in Paragraph 3 hereof. For
purposes of this Agreement, Employee shall be deemed to be fully disabled if,
because of illness or other physical or mental condition, he is unable to
fully perform all of his duties under this Agreement for two successive
months. In the event that he is unable to perform all or a portion of the
duties required under this Agreement for short periods of time aggregating
over two months in any twelve successive calendar months, he shall be deemed
to be partially disabled. The compensation and benefit period shall run from
the time disability commenced until Employee's condition improves sufficiently
to permit him to fully perform his duties, after which date he must be
available at the Company's option. The Company may require such evidence of
disability as it deems appropriate.
6. Termination Upon Death and Disability. The Employment Period
-------------------------------------
shall automatically terminate upon the death of Employee; provided, however,
that in the event of the Employee's death, all compensation Employee is
receiving under Paragraph 3 of this Agreement at the time of his death shall
be paid to his legal representative for a period of one year following the
date of Employee's death or the remainder of the Employment Period, whichever
occurs first. At the discretion of the Board of Directors, the Employment
Period may terminate upon the Disability of Employee (as defined in Paragraph
5 above); provided, however, that Employee shall continue to receive
compensation in accordance with Paragraph 5 above.
7. Termination for Cause. Upon the occurrence of any of the events
---------------------
listed below, the Company may terminate the Employee without further
obligation under this Agreement:
a.) Employee's conviction of any criminal act directly related to
Employee's duties hereunder including, without limitation, misappropriation of
funds or property of the Company or any other felony criminal act.
b.) Employee's misfeasance or malfeasance in office, which shall mean
fraud, dishonesty, willful misconduct or gross neglect of duties.
c.) Breach by Employee of any material provision of this Agreement.
8. Termination Without Cause. In the event Employee is terminated
-------------------------
by the Company for any reason, except as set forth in Paragraph 7 above, he
shall continue to be compensated for the duration of the Employment Period as
provided for in Paragraphs 3, 4, 5, and 6 hereof.
9. Termination Upon Change in Management. In the event that a
--------------------------------------
change in control of the Company shall occur at any time during the Employment
Period, as a result of which the Board of Directors appoints a person other
than Employee to serve in the capacity for which Employee is employed
hereunder or as a result of which Employee shall elect to resign his executive
position hereunder, Employee nevertheless shall be entitled to the benefits of
and subject to all of the terms and conditions set forth herein, including,
without limitation, the right to receive compensation and benefits as provided
in Paragraphs 3, 4, 5, and 6 hereof regardless of whether Employee continues
to perform any services for the Company.
10. Vesting in the Event of Termination. In the event that the Employee
-----------------------------------
is terminated upon death or disability (Paragraph 6), terminated without cause
(Paragraph 8), or terminated upon change in management (Paragraph 9), all
warrants, options, or shares issued but unvested at the date of termination
shall become fully vested as of the date of termination.
11. Parties in Interest. This Agreement shall be binding upon and shall
-------------------
inure to the benefit of the Company and its successors and assigns and any
person acquiring, whether by merger, consolidation, liquidation, purchase of
assets or otherwise, all or substantially all of the Company's equity or
assets and business.
12. Choice of Law. It is the intention of the parties hereto that
-------------
this Agreement and the performance hereunder and all suits and special
proceedings connected herewith be construed in accordance with and pursuant to
the laws of the State of Colorado and that in any action, special proceeding
or other proceeding that may be brought arising out of, in connection with, or
by reason of this Agreement, the laws of the State of Colorado shall be
applicable and shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any action or special proceeding
may be instituted.
13. Severance of Invalid Provisions. In the event that any one or
-------------------------------
more of the provisions of this Agreement or any portions thereunder is
determined to be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
14. Integrated Agreement. This Agreement shall constitute the entire
--------------------
agreement between the parties hereto relating to the Employment of Employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer and Employee has executed this
Agreement, effective as of the date and year first above written.
BION ENVIRONEMTNAL TECHNOLOGIES, INC.
By: /s/ Duane Stutzman
----------------------
Authorized Officer
EMPLOYEE
/s/ Jon Northrop
-------------------
Jon Northrop
Exhibit 10.2
EMPLOYMENT AGREEMENT
---------------------
This Agreement effective as of December 1, 1997, by and between Bion
Environmental Technologies, Inc. ("Company"), and Jere Northrop ("Employee").
Company and Employee agree that, in order to preserve cash for operations
of the Company, $100,000 of the salary in Paragraph 3 of this Agreement will
be paid in cash according to the other terms of Paragraph 3, and the remaining
$50,000 shall be accrued until such time as sufficient cash is available for
payment.
WHEREAS, Employee does at present act as an officer and director of the
Company;
WHEREAS, the Company desires to continue to retain the services of
Employee as an employee upon the conditions contained in this Agreement; and
WHEREAS, Employee desires to provide services to the Company under such
conditions;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the Company does hereby agree to engage Employee and
Employee does hereby agree to be engaged by the Company, upon the terms and
conditions set forth in the following paragraphs:
1. Employment Period. The Company hereby engages Employee for the
-----------------
period commencing December 1, 1997 and ending December 31, 2002 ("Employment
Period") to continue to serve in all present positions with the Company and to
render such other services in an executive capacity as the Company shall
reasonably require. Employee hereby agrees to remain in the employ of the
Company for the Employment Period, subject to the provisions of this
Agreement. Employee may terminate his employment with the Company upon 90
days written notice to the Company, in which case this Agreement shall
terminate without liability one to the other upon the date specified by
Employee.
2. Duties. Employee agrees that at all times during the Employment
------
Period he will faithfully and diligently endeavor to promote the business and
business interests of the Company. This Agreement shall not restrict Employee
from engaging, directly or indirectly, in any business or activity which is
not competitive with the business of the Company; provided, however, that such
additional business or activity does not interfere with nor is inconsistent
with the performance by the Employee of his duties under this Agreement.
3. Salary and Benefits. Subject to the provisions of this
---------------------
Agreement, during the Employment Period, Employee shall be compensated as
follows:
<PAGE>
a.) Employee shall earn a salary of $150,000 per annum, payable in
monthly installments, subject to customary payroll deductions for Federal,
State, and local taxes and to such other deductions as are required by law or
by mutual agreement of the Company and Employee.
b.) The Board of Directors of the Company will review Employee's
salary no less than once per year with a view to making such increases in
Employee's salary or declaring such bonuses or other benefits as may be
merited and warranted in light of factors considered pertinent by the Board of
Directors.
c.) Employee shall receive free of cost parking for his automobile;
health, hospitalization and life insurance with coverage exceeding or equal to
that now in force through the Company; as well as such other benefits as the
Board may deem appropriate from time to time.
d.) Employee shall be entitled to four weeks vacation per year to be
taken at such times as do not interfere with the performance of his duties
hereunder.
4. Expenses. All reasonable and necessary expenses incurred by
--------
Employee in the performance of his duties under this Agreement, including but
not limited to expenses for entertainment, travel, and similar items, shall be
paid or reimbursed monthly by the Company upon receipt of appropriate
documentation of such expenses. Company shall provide, at its expense,
Employee with office space as necessary and secretarial, legal, accounting,
and other services as may be necessary to properly support Employee's
performance of his duties and to operate in the best interests of the Company.
5. Disability of Employee. In the event of the disability of
-----------------------
Employee (as defined herein) prior to the expiration of the Employment Period,
Employee shall nevertheless continue to be compensated at his then designated
annual rate and with such benefits provided for in Paragraph 3 hereof. For
purposes of this Agreement, Employee shall be deemed to be fully disabled if,
because of illness or other physical or mental condition, he is unable to
fully perform all of his duties under this Agreement for two successive
months. In the event that he is unable to perform all or a portion of the
duties required under this Agreement for short periods of time aggregating
over two months in any twelve successive calendar months, he shall be deemed
to be partially disabled. The compensation and benefit period shall run from
the time disability commenced until Employee's condition improves sufficiently
to permit him to fully perform his duties, after which date he must be
available at the Company's option. The Company may require such evidence of
disability as it deems appropriate.
6. Termination Upon Death and Disability. The Employment Period
-------------------------------------
shall automatically terminate upon the death of Employee; provided, however,
that in the event of the Employee's death, all compensation Employee is
receiving under Paragraph 3 of this Agreement at the time of his death shall
be paid to his legal representative for a period of one year following the
date of Employee's death or the remainder of the Employment Period, whichever
occurs first. At the discretion of the Board of Directors, the Employment
Period may terminate upon the Disability of Employee (as defined in Paragraph
5 above); provided, however, that Employee shall continue to receive
compensation in accordance with Paragraph 5 above.
7. Termination for Cause. Upon the occurrence of any of the events
---------------------
listed below, the Company may terminate the Employee without further
obligation under this Agreement:
a.) Employee's conviction of any criminal act directly related to
Employee's duties hereunder including, without limitation, misappropriation of
funds or property of the Company or any other felony criminal act.
b.) Employee's misfeasance or malfeasance in office, which shall mean
fraud, dishonesty, willful misconduct or gross neglect of duties.
c.) Breach by Employee of any material provision of this Agreement.
8. Termination Without Cause. In the event Employee is terminated
-------------------------
by the Company for any reason, except as set forth in Paragraph 7 above, he
shall continue to be compensated for the duration of the Employment Period as
provided for in Paragraphs 3, 4, 5, and 6 hereof.
9. Termination Upon Change in Management. In the event that a
--------------------------------------
change in control of the Company shall occur at any time during the Employment
Period, as a result of which the Board of Directors appoints a person other
than Employee to serve in the capacity for which Employee is employed
hereunder or as a result of which Employee shall elect to resign his executive
position hereunder, Employee nevertheless shall be entitled to the benefits of
and subject to all of the terms and conditions set forth herein, including,
without limitation, the right to receive compensation and benefits as provided
in Paragraphs 3, 4, 5, and 6 hereof regardless of whether Employee continues
to perform any services for the Company.
10. Vesting in the Event of Termination. In the event that the Employee
-----------------------------------
is terminated upon death or disability (Paragraph 6), terminated without cause
(Paragraph 8), or terminated upon change in management (Paragraph 9), all
warrants, options, or shares issued but unvested at the date of termination
shall become fully vested as of the date of termination.
11. Parties in Interest. This Agreement shall be binding upon and shall
-------------------
inure to the benefit of the Company and its successors and assigns and any
person acquiring, whether by merger, consolidation, liquidation, purchase of
assets or otherwise, all or substantially all of the Company's equity or
assets and business.
12. Choice of Law. It is the intention of the parties hereto that
-------------
this Agreement and the performance hereunder and all suits and special
proceedings connected herewith be construed in accordance with and pursuant to
the laws of the State of Colorado and that in any action, special proceeding
or other proceeding that may be brought arising out of, in connection with, or
by reason of this Agreement, the laws of the State of Colorado shall be
applicable and shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any action or special proceeding
may be instituted.
13. Severance of Invalid Provisions. In the event that any one or
-------------------------------
more of the provisions of this Agreement or any portions thereunder is
determined to be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
14. Integrated Agreement. This Agreement shall constitute the entire
--------------------
agreement between the parties hereto relating to the Employment of Employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer and Employee has executed this
Agreement, effective as of the date and year first above written.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ Jon Northrop
--------------------
Authorized Officer
EMPLOYEE
/s/ Jere Northrop
-------------------
Jere Northrop
Exhibit 10.3
EMPLOYMENT AGREEMENT
---------------------
This Agreement is effective as of December 1, 1997 by and between Bion
Environmental Technologies, Inc. ("Company") and M. Duane Stutzman
("Employee").
Company and Employee agree that, in order to preserve cash for operations
of the Company, $90,000 of the salary in Paragraph 3 of this Agreement will be
paid in cash according to the other terms of Paragraph 3, and the remaining
$30,000 shall be accrued until such time as sufficient cash is available for
payment.
WHEREAS, Employee acts as an officer and director of the Company; and
WHEREAS, the Company desires to continue to retain the services of
Employee as an employee upon the conditions contained in this Agreement; and
WHEREAS, Employee desires to provide services to the Company under such
conditions;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the Company does hereby agree to engage Employee and
Employee does hereby agree to be engaged by the Company, upon the terms and
conditions set forth in the following paragraphs:
1. Employment Period. The Company hereby engages Employee for the
-----------------
period commending December 1, 1997 and ending December 31, 2002 ("Employment
Period") to serve as Chief Financial Officer for the Company and to render
such other services in an executive capacity as the Company shall reasonably
require. Employee hereby agrees to remain in the employ of the Company for
the Employment Period, subject to the provisions of this Agreement. Employee
may terminate his employment with the Company upon 90 days written notice to
the Company, in which case this Agreement shall terminate without liability
one to the other upon the date specified by Employee.
2. Duties. Employee agrees that at all times during the Employment
------
Period he will faithfully and diligently endeavor to promote the business and
business interests of the Company. This Agreement shall not restrict Employee
from engaging, directly or indirectly, in any business or activity which is
not competitive with the business of the Company; provided, however, that such
additional business or activity does not interfere with nor is inconsistent
with the performance by the Employee of his duties under this Agreement.
3. Salary and Benefits. Subject to the provisions of this
---------------------
Agreement, during the Employment Period, Employee shall be compensated as
follows:
<PAGE>
a.) Employee shall earn a salary of $120,000 per annum, payable in
monthly installments, subject to customary payroll deductions for Federal,
State, and local taxes and to such other deductions as are required by law or
by mutual agreement of the Company and Employee.
b.) The Board of Directors of the Company will review Employee's
salary no less than once per year with a view to making such increases in
Employee's salary or declaring such bonuses or other benefits as may be
merited and warranted in light of factors considered pertinent by the Board of
Directors.
c.) Employee shall receive free of cost parking for his automobile;
health, hospitalization and life insurance with coverage exceeding or equal to
that now in force through the Company; as well as such other benefits as the
Board may deem appropriate from time to time.
d.) Employee shall be entitled to four weeks vacation per year to be
taken at such times as do not interfere with the performance of his duties
hereunder.
4. Expenses. All reasonable and necessary expenses incurred by
--------
Employee in the performance of his duties under this Agreement, including but
not limited to expenses for entertainment, travel, and similar items, shall be
paid or reimbursed no less than monthly by the Company upon receipt of
appropriate documentation of such expenses. Company shall provide, at its
expense, Employee with office space as necessary and secretarial, legal,
accounting, and other services as may be necessary to properly support
Employee's performance of his duties and to operate in the best interests of
the Company.
5. Disability of Employee. In the event of the disability of
-----------------------
Employee (as defined herein) prior to the expiration of the Employment Period,
Employee shall nevertheless continue to be compensated at his then designated
annual rate and with such benefits provided for in Paragraph 3 hereof for a
period of twelve months from the date of disability. For purposes of this
Agreement, Employee shall be deemed to be fully disabled if, because of
illness or other physical or mental condition, he is unable to fully perform
all of his duties under this Agreement for two successive months. In the
event that he is unable to perform all or a portion of the duties required
under this Agreement for short periods of time aggregating over two months in
any twelve successive calendar months, he shall be deemed to be partially
disabled. The compensation and benefit period shall run from the time
disability commenced until Employee's condition improves sufficiently to
permit him to fully perform his duties, after which date he must be available
at the Company's option. The Company may require such evidence of disability
as it deems appropriate.
6. Termination Upon Death and Disability. The Employment Period
-------------------------------------
shall automatically terminate upon the death of Employee; provided, however,
that in the event of the Employee's death, all compensation Employee is
receiving under Paragraph 3 of this Agreement at the time of his death shall
be paid to his legal representative for a period of six months following the
date of Employee's death or the remainder of the Employment Period, whichever
occurs first. At the discretion of the Board of Directors, the Employment
Period may terminate upon the Disability of Employee (as defined in Paragraph
5 above); provided, however, that Employee shall continue to receive
compensation in accordance with Paragraph 5 above.
7. Termination for Cause. Upon the occurrence of any of the events
---------------------
listed below, the Company may terminate the Employee without further
obligation under this Agreement:
a.) Employee's conviction of any criminal act directly related to
Employee's duties hereunder including, without limitation, misappropriation of
funds or property of the Company or any other felony criminal act.
b.) Employee's misfeasance or malfeasance in office, which shall mean
fraud, dishonesty, willful misconduct or gross neglect of duties.
c.) Breach by Employee of any material provision of this Agreement.
8. Termination Without Cause. In the event Employee is terminated
-------------------------
by the Company for any reason, except as set forth in Paragraph 7 above, he
shall continue to be compensated for the duration of the Employment Period or
twelve months, whichever occurs first, as provided for in Paragraphs 3, 4, 5,
and 6 hereof.
9. Termination Upon Change in Management. In the event that a
--------------------------------------
change in control of the Company shall occur at any time during the Employment
Period, as a result of which the Board of Directors appoints a person other
than Employee to serve in the capacity for which Employee is employed
hereunder or as a result of which Employee shall elect to resign his executive
position hereunder, Employee nevertheless shall be entitled to the benefits of
and subject to all of the terms and conditions set forth herein, including,
without limitation, the right to receive compensation and benefits as provided
in Paragraphs 3, 4, 5, and 6 hereof for the remainder of the Employment Period
regardless of whether Employee continues to perform any services for the
Company.
10. Vesting in the Event of Termination. In the event that the
------------------------------------
Employee is terminated upon death or disability (Paragraph 6), terminated
without cause (Paragraph 8), or terminated upon change in management
(Paragraph 9), all warrants, options, or shares issued but unvested at the
date of termination shall become fully vested as of the date of termination.
11. Parties in Interest. This Agreement shall be binding upon and shall
-------------------
inure to the benefit of the Company and its successors and assigns and any
person acquiring, whether by merger, consolidation, liquidation, purchase of
assets or otherwise, all or substantially all of the Company's equity or
assets and business.
12. Choice of Law. It is the intention of the parties hereto that
-------------
this Agreement and the performance hereunder and all suits and special
proceedings connected herewith be construed in accordance with and pursuant to
the laws of the State of Colorado and that in any action, special proceeding
or other proceeding that may be brought arising out of, in connection with, or
by reason of this Agreement, the laws of the State of Colorado shall be
applicable and shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any action or special proceeding
may be instituted.
13. Severance of Invalid Provisions. In the event that any one or
-------------------------------
more of the provisions of this Agreement or any portion thereunder is
determined to be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
14. Integrated Agreement. This Agreement shall constitute the entire
--------------------
agreement between the parties hereto relating to the employment of Employee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer and Employee has executed this
Agreement, effective as of the date and year first above written.
Bion Environmental Technologies, Inc.
By: /s/ Jon Northrop
------------------
Authorized Officer
EMPLOYEE
/s/ M. Duane Stutzman
------------------------
M. Duane Stutzman
Exhibit 10.4
BION NMS TM INSTALLATION AGREEMENT
CLOSING MEMORANDUM / ADDENDUM #3
It is AGREED this 31st day of December, 1997 between the undersigned that
the agreements attached hereto at EXHIBIT A are amended as set forth herein
(EXHIBIT A is incorporated herein by reference):
1.) In consideration of the receipt of $100,000 paid this day by Bowman
Family Farms, Inc. and/or Crystal Springs Farms, LLC (collectively "BFF") to
Bion Technologies, Inc. ("BION") pursuant to paragraph 5 A.i of EXHIBIT A,
the agreements set forth at EXHIBIT A are now binding on BFF and BION and all
contingencies are met and/or have been waived and work under said agreement
shall commence.
2.) Michael Bowman shall become a director of BION ENVIRONMENTAL
TECHNOLOGIES, INC. upon completion of all payments required by paragraph 5 A.i
of EXHIBIT A.
3.) Section 8 of EXHIBIT A and Attachment C therein shall be amended to
provide that: a.) If the payments under paragraph 5 A.i do not occur until
after February 16,1998 but before March 15, 1998, the price per unit shall
increase to $3.50; b.) If the payments required by paragraph 5 A.i occur
between March 15, 1998 and April 14, 1998, the price per unit shall increase
to $4.00; c.) If such payments have not been made before April 15, 1998, BFF
and BION shall renegotiate the terms of unit purchase to another mutually
agreeable higher price; d) BFF shall have the option of either increasing the
total dollars paid for the units or decreasing the number of units purchased
to reflect the higher price per unit.
4.) a.) If greater than 12 BION NMS Systems are required for performance of
Phase I, the fees due BION pursuant to paragraph 5 A.i, shall increase by
$20,000 for each such system above 12; b.) the fees required by paragraph 6
A.ii shall increase by $600 per month for each system above 12.
5.) Upon exercise of the option for Phase II, BFF and BION shall agree upon a
work schedule and coordinate a fee schedule with such work schedule provided,
however, that all fees shall be paid prior to the end of construction.
6.) If desired, the parties may subsequently incorporate this document into a
more formal document but the parties agree that this shall be binding when
executed below.
BOWMAN FAMILY FARMS, INC. BION TECHNOLOGIES, INC.
By: /s/ Michael A. Bowman By: /s/ Jon Northrop
-------------------------- ------------------
Authorized Officer Authorized Officer
CRYSTAL SPRINGS FARMS, LLC
By: /s/ Michael A. Bowman
----------------------------
Authorized Officer
Detailed Calculations for Warrant Exchange Transaction
Exhibit 99.1
<TABLE>
<CAPTION>
Holder Class Number Blk/Sch Exch/Val #Shares@
(Blk/Sch Times #Shares $7.375
# of Warrants) @$7.375 Times $5.50
- ------- ------ ------ ------- -------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delta
Petroleum A 125,000 $1.69 $211,250
125,000 $211,250 28,644 $157,542
Dublin
Holding,
Ltd. E1 2,209,764 $4.51 $9,966,036
K1 50,000 $3.35 $167,500
K2 50,000 $3.89 $194,500
K3 50,000 $4.38 $219,000
L1 50,000 $2.68 $134,000
L1.1 35,000 $3.87 $135,450
L2 35,000 $2.78 $97,300
X 450,000 $4.47 $2,011,500
2,929,764 $12,925,286 1,752,581 $9,639,196
Freedman,
Stanley E1 15,000 $4.51 $67,650
15,000 $67,650 9,173 $50,451
Keller,
Mark E1 3,000 $4.51 $13,530
X 5,000 $4.47 $22,350
8,000 $35,880 4,865 $26,758
Keller,
Richard E1 3,000 $4.51 $13,530
X 3,000 $4.47 $13,410
6,000 $26,940 3,653 $20,091
LoTayLing
Kyur E1 650,000 $4.51 $2,931,500
L1.1 15,000 $3.87 $58,050
L2 15,000 $2.78 $41,700
680,000 $3,031,250 411,017 $2,260,593
Moone,
Chas E1 5,000 $4.51 $22,550
X 5,000 $4.47 $22,350
10,000 $44,900 6,088 $33,485
</TABLE>
Continued below
<PAGE>
<TABLE>
<CAPTION>
Current # of Total
# of Z Pre-Exchange Shares % Total
Holder Ram Val Warrants Shares 1/1/98 1/1/98 Shares
- -------- ----------- -------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Delta
Petroleum $53,708 18,648 156,778 185,422 2.1663
Dublin
Holding, $3,286,090 1,141,003 748,209 2,500,790 29.2167
Ltd.
Freedman,
Stanley $17,199 5,972 0 9,173 0.1072
Keller,
Mark $9,122 3,167 150 5,015 0.0586
Keller,
Richard $6,849 2,378 350 4,003 0.0468
LoTayLing
Kyur $770,657 267,589 1,095,990 1,507,007 17.6063
Moone,
Chas $11,415 3,964 0 6,088 0.0711
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Shares @
$7.375
(Blk/Sch Times # Shares Times
Holder Class Number Blk/Sch # of Warrants) @$7.375 $5.50
- ------ ------ -------- -------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Moone,
Chris E1 50,000 $4.51 $225,500
X 50,000 $4.47 $223,500
100,000 $449,000 60,881 $334,847
Moone,
Quenby E1 35,000 $4.51 $157,850
X 20,000 $4.47 $89,400
55,000 $247,250 33,525 $184,390
Mukpo,O.R. E1 10,000 $4.51 $45,100
X 10,000 $4.47 $44,700
20,000 $89,800 12,176 $66,969
Namgyel,
DKJ E1 50,000 $4.51 $225,500
X 50,000 $4.47 $223,500
100,000 $449,000 60,881 $334,847
Northrop,
Hallie E1 20,000 $4.51 $90,200
20,000 $90,200 12,231 $67,268
Northrop,
Harley E1 31,500 $4.51 $142,065
31,500 $142,065 19,263 $105,947
Northrop,
Jere A 125,000 $1.69 $211,250
E1 700,000 $4.51 $3,157,000
X 150,000 $4.47 $670,500
975,000 $4,038,750 547,627 $3,011,949
Northrop,
Jon A 125,000 $1.69 $211,250
E1 685,000 $4.51 $3,089,350
X 150,000 $4.47 $670,500
960,000 $3,971,100 538,454 $2,961,498
Northrop,
Lara E1 25,000 $4.51 $112,750
25,000 $112,750 15,288 $84,085
Northrop,
Stephanie E1 20,000 $4.51 $90,200
20,000 $90,200 12,231 $67,268
</TABLE>
Continued below.
<PAGE>
<TABLE>
<CAPTION>
Current # of Total
# of Z Pre-Exchange Shares % Total
Holder Rem Val Warrants Shares 1/1/98 1/1/98 Shares
- ------- ------- -------- ------------- ------ --------
<S> <C> <C> <C> <C> <C>
Moone, Chris $114,153 39,636 3,900 64,781 0.7568
Moone, Quenby $62,860 21,826 2,715 36,240 0.4234
Mukpo, O.R. $22,831 7,927 2,800 14,976 0.1750
Namgyel, DKJ $114,153 39,636 1,600 62,481 0.7300
Northrop,
Hallie $22,932 7,963 29,275 41,506 0.4849
Northrop,
Harley $36,118 12,541 139,558 158,821 1.8555
Northrop,
Jere $1,026,801 356,528 146,413 694,040 8.1085
Northrop,
Jon $1,009,602 350,556 133,913 672,367 7.8553
Northrop,
Lara $28,665 9,953 54,550 69,838 0.8159
Northrop,
Stephanie $22,932 7,963 29,275 41,506 0.4849
</TABLE>
<TABLE>
<CAPTION>
Exch/Val # Shares @
(Blk/Sch Times) # Shares $7.375
Holder Class Number Blk/Sch # of Warrants) @$7.375 Times $5.50
- ------ ------- -------- --------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robeck,
Susan E1 3,000 $4.51 $13,530
X 3,000 $4.47 $13,410
6,000 $26,940 3,653 $20,091
Schlegel-
milch,B E1 1,000 $4.51 $4,510
X 1,000 $4.47 $4,470
2,000 $8,980 1,218 $6,697
Schlegel-
milch,D E1 1,000 $4.51 $4,510
X 1,000 $4.47 $4,470
2,000 $8,980 1,218 $6,697
Schlegel-
milch,M E1 10,000 $4.51 $45,100
X 10,000 $4.47 $44,700
20,000 $89,800 12,176 $66,969
Scott,
Craig & G5.1 3,052 $5.33 $16,267
Scott,
Julie G5.2 4,723 $5.49 $25,929
G6 9,665 $4.63 $44,749
G9 40,000 $5.33 $213,200
G9.1 40,000 $4.27 $170,800
G9.2 80,000 $3.58 $286,400
G9.3 75,000 $5.33 $399,750
G9.4 65,000 $3.58 $232,700
G9.5 50,000 $4.73 $236,500
367,440 $1,626,295 220,515
Smith, Ben & E1 10,000 $4.51 $45,100
Smith, Rowena 10,000 $45,100 6,115
Smith,Diana E1 70,000 $4.51 $315,700
X 30,000 $4.47 $134,100
100,000 $449,800 60,990
Smith,Jesse E1 1,000 $4.51 $4,510
X 1,000 $4.47 $4,470
2,000 $8,980 1,218
</TABLE>
Continued below.
<PAGE>
<TABLE>
<CAPTION>
Current # of Total
# of Z Pre-Exchange Shares % Total
Holder Rem Val Warrants Shares 1/1/98 1/1/98 Shares
- ------ ------- -------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
Robeck,
Susan $6,849 2,378 1,908 5,561 0.0650
Schlegel-
milch, B. $2,283 793 0 1,218 0.0142
Schlegel-
milch, D. $2,283 793 0 1,218 0.0142
Schlegel-
milch, M. $22,831 7,927 150 12,326 0.1440
Scott, Craig
& Scott,
Julie $413,465 143,564 54,200 274,715 3.2095
Smith, Ben
& Smith
Rowena 11,466 3,981 22,300 28,415 0.3320
Smith,
Diana $114,356 39,707 5,000 65,990 0.7710
Smith,
Jesse $2,283 793 750 1,968 0.0230
</TABLE>
<TABLE>
<CAPTION>
# Shares @
(Blk/Sch Times # Shares $7.375
Holder Class Number Blk/Sch # of Warrants) @$7.375 Times $5.50
- ------- -------- ------- ---------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Smith,
Mark & E1 147,154 $4.51 $663,665
Moone,
Kelly X 400,154 $4.47 $1,788,688
547,308 $2,452,353 332,522 $1,828,873
Smith,N.T. E1 3,000 $4.51 $13,530
X 3,000 $4.47 $13,410
6,000 $26,940 3,653 $20,091
Smith,
Pamela E1 3,000 $4.51 $13,530
X 3,000 $4.47 $13,410
6,000 $26,940 3,653 $20,091
Smith,
Rosalynde E1 70,000 $4.51 $315,700
X 30,000 $4.47 $134,100
100,000 $449,800 60,990 $335,444
Smith,
Shannon L. E1 1,000 $4.51 $4,510
X 1,000 $4.47 $4,470
2,000 $8,980 1,218 $6,697
Smith,Su.
T. E1 10,000 $4.51 $45,100
X 10,000 $4.47 $44,700
20,000 $89,800 12,176 $66,969
Smith-Osrow,
J E1 1,000 $4.51 $4,510
X 1,000 $4.47 $4,470
2,000 $8,980 1,218 $6,697
Stutzman,
Duane E1 20,000 $4.51 $90,200
H3 25,000 $5.16 $129,000
H4 25,000 $4.51 $112,750
H5 20,000 $4.01 $80,200
H6 40,000 $3.61 $144,400
H7 30,000 $3.21 $96,300
H8 30,000 $2.88 $86,400
190,000 $739,250 100,237 $551,305
TOTAL 4,351,348 $23,932,412
</TABLE>
Continued below
<TABLE>
<CAPTION>
Current # of Total
# of Z Pre-Exchange Shares % Total
Holder Rem Val Warrants Shares 1/1/98 1/1/98 Shares
- ------ -------- ---------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Smith, Mark
& Moone
Kelly $623,480 216,486 187,300 519,822 6.0731
Smith,
N.T. $6,849 2,378 2,500 6,153 0.0719
Smith,
Pamela $6,849 2,378 500 4,153 0.0485
Smith,
Rosalynde $114,356 39,707 5,000 65,990 0.7710
Smith,
Shannon L. 2,283 793 750 1,968 0.0230
Smith,
Su. T. $22,831 7,927 0 12,176 0.1423
Smith-
Osrow, J. $2,283 793 750 1,968 0.0230
Stutzman,
Duane $187,945 65,259 33,583 133,820 1.5634
TOTAL $8,158,777 2,832,909 2,860,167 7,211,515 84.25
</TABLE>
Exhibit 99.2
Warrants Exchanged in Warrant Exchange Transaction
<TABLE>
<CAPTION>
Exercise Period
-----------------------
Beginning End
Class Shares Price Date Date
<S> <C> <C> <C> <C>
A 375,000 $10.00 04/09/98 04/09/99
E1 4,863,418 6.00 01/01/01 12/31/01
G5.1 3,052 3.00 01/22/96 01/21/01
G5.2 4,723 3.00 09/13/96 09/12/01
G6 9,665 6.00 04/21/97 04/20/02
G9 40,000 4.00 08/01/97 08/01/02
G9.1 40,000 8.00 08/01/97 08/01/02
G9.2 80,000 12.00 08/01/97 08/01/02
G9.3 75,000 4.00 01/15/98 08/01/02
G9.4 65,000 6.00 01/15/98 08/01/02
G9.5 50,000 12.00 01/15/98 08/01/02
H3 25,000 4.00 09/15/97 12/31/01
H4 25,000 6.00 09/15/97 12/31/01
H5 20,000 8.00 09/15/97 12/31/01
H6 40,000 10.00 09/15/98 12/31/01
H7 30,000 12.50 09/15/99 12/31/01
H8 30,000 15.00 09/15/99 12/31/01
K1 50,000 6.00 03/01/98 10/01/99
K2 50,000 8.00 03/01/00 10/01/01
K3 50,000 10.00 03/01/02 10/01/03
L1 50,000 6.00 06/01/98 12/01/98
L1.1 50,000 4.00 06/01/98 12/01/98
L2 50,000 8.00 06/01/99 12/01/99
X 1,387,154 10.00 01/01/03 12/31/03
Total
Exchanged 7,463,012
</TABLE>
Exhibit 99.3
Warrants Outstanding on January 1, 1998, post Warrant Exchange Transaction
<TABLE>
<CAPTION>
Exercise Period
----------------------
Beginning End
Class Shares Price Date Date
<S> <C> <C> <C> <C>
Vested
G 25,000 $5.00 06/20/96 06/20/99
G5.1 3,678 3.00 01/22/96 01/21/01
G5.2 827 3.00 09/13/96 09/12/01
G6 4,172 6.00 04/21/97 04/20/02
G7 35,000 4.00 06/05/97 06/30/99
G8 100,000 6.00 06/05/97 06/30/00
H1 10,000 5.00 08/21/96 08/20/01
H2 14,500 3.00 08/21/96 08/20/01
H9 10,000 10.00 02/01/97 12/31/01
H9.1 10,000 12.50 02/01/97 12/31/01
H9.2 10,000 8.00 02/01/97 12/31/01
H9.3 10,000 15.00 02/01/97 12/31/01
H9.4 10,000 6.00 02/01/97 12/31/01
I1 3,750 6.00 06/09/98 12/31/01
K1 50,000 6.00 03/01/98 10/01/99
Z 2,832,909 15.00 01/01/00 12/31/01
Total
Vested 3,129,836
Non-Vested
I2.1 3,750 $8.00 06/09/99 12/31/01
I2.2 3,750 10.00 06/09/99 12/31/01
I2.3 3,750 12.50 06/09/99 12/31/01
Total
Non-Vested 11,250
Total
Warrants 3,141,086
</TABLE>
Exhibit 99.4
Options Outstanding on January 1, 1998
<TABLE>
<CAPTION>
Exercise Period
----------------------
Beginning End
Shares Price Date Date
<S> <C> <C> <C>
Vested 7,500 $5.00 08/31/96 06/30/98
14,000 5.00 08/31/96 04/30/98
10,000 1.72 08/20/97 08/19/02
10,000 2.27 08/20/97 08/19/02
1,247 4.00 10/21/97 12/31/01
25,000 6.75 10/07/97 03/31/98
18,519 4.00 09/15/97 12/31/01
10,000 6.00 09/15/97 12/31/01
694 4.00 12/16/97 12/31/01
17,500 4.00 08/01/97 08/01/02
5,000 6.25 10/06/97 12/31/98
10,000 6.25 10/06/97 09/30/98
5,000 6.75 10/06/97 03/31/99
10,000 7.25 10/06/97 03/31/99
Total
Vested 144,460
Non-
Vested 1,247 $6.00 10/21/98 12/31/01
1,246 8.00 10/21/99 12/31/01
1,200 4.00 02/03/98 12/31/01
1,200 6.00 02/03/99 12/31/01
1,200 8.00 02/03/00 12/31/01
8,517 6.00 09/15/98 12/31/01
8,516 8.00 09/15/99 12/31/01
10,000 8.00 09/15/98 12/31/01
10,000 10.00 09/15/98 12/31/01
10,000 12.50 09/15/99 12/31/01
10,000 15.00 09/15/99 12/31/01
834 4.00 06/02/98 12/31/01
833 6.00 06/02/99 12/31/01
833 8.00 06/02/00 12/31/01
693 6.00 12/16/98 12/31/01
693 8.00 12/16/99 12/31/01
1,734 4.00 08/04/98 12/31/01
1,733 6.00 08/04/99 12/31/01
1,733 8.00 08/04/00 12/31/01
1,000 4.00 06/09/98 12/31/01
1,000 6.00 06/09/99 12/31/01
1,000 8.00 06/09/00 12/31/01
1,334 4.00 08/11/98 12/31/01
1,333 6.00 08/11/99 12/31/01
1,333 8.00 08/11/00 12/31/01
Total
Non-
Vested 79,212
Total
Options 223,672
</TABLE>
