SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 15, 1999
(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.
1. Bion Environmental Technologies, Inc. ("Bion" or the "Company") added another
swine nutrient management system (Bion NMS(TM)) to its operations. Eason
Farms in North Carolina began stocking its hog houses on March 29, 1999. The
Bion NMS started operations with the introduction of hogs. The Eason Farm is
designed to hold over 3,900 finishing hogs, having the potential to produce
more than 3,240 cubic yards of BionSoil(TM) per year. The Eason Farm system
is the fourth operational swine system in North Carolina. Bion has two
additional North Carolina hog systems in the permitting and construction
phases, which will soon be in operations.
2. The Company recently expanded its West Coast sales operations. On March 29,
1999, the Company hired Dennis Hannaford as the Company's Western Regional
Sales Manager. Mr. Hannaford has over 20 years experience in farm management
and irrigation system sales in the western United States. Mr. Hannaford will
be responsible for Bion NMS sales and marketing in California, Oregon,
Washington, Arizona, Nevada, and Idaho. In addition, Lynn Altomare joined the
Company as Bion's Northwest District Sales Manager and will be responsible
for managing the Oregon, Washington, and Idaho markets. Mr. Altomare's
position will report to Dennis Hannaford in Bion's California office.
3. On April 30, 1999, the Company signed a contract for the design, installation
oversight, and operation of a Bion NMS(TM) animal waste treatment system for
Plato Brook Farms, L.L.C. in Wyoming County, New York. Plato Brook Farms is a
1,600-cow dairy where the Bion NMS will biologically treat the waste
generated in the dairy's freestall barns and milking parlor and convert them
into BionSoil for sale in the Western New York market. The Plato Brook Farm
has the potential to produce 16,000 cubic yards of BionSoil per year.
4. Bion signed a revised contract with Circle Four Farms in Utah on April 16,
1999. The revised contract resulted from an ownership change at Circle Four,
where Murphy Family Farms, Inc. sold its interest to Smithfield Foods, Inc.
The Circle Four Farm unit will house a minimum of 40,000 finishing hogs. The
Bion systems at Circle Four are designed to treat the hog waste stream and
convert the solids and nutrients into BionSoil. The systems are projected to
be operational by mid May. These systems have the potential to produce more
than 35,000 cubic yards of BionSoil per year.
5. Bion signed a contract with Jack Wynn & Co., Inc., a business and financial
publicity news placement company in Washington, DC. The publicist was hired
to place credible, newsworthy feature news stories about Bion in national,
regional, local business investment, and trade media outlets.
6. On April 21, 1999, the Company reached an agreement with The Augustine Equity
Fund, Inc. ("Augustine") for Augustine to provide certain marketing and
promotional services to Bion valued at of $375,000.
<PAGE>
7. a)The Company received private placement investments from LoTayLingKyur, Inc.
("LTLK") in the amount of $412,750 during the period between November 6, 1998
to February 28, 1999. LTLK purchased 127,002 shares of restricted and
legended common stock and 254,004 "Z" warrants in return for the above
investments. b) The Company signed a promissory note (the "Note") to LTLK on
March 15, 1999. The Note provides that the entire outstanding balance will be
due and payable on December 31, 1999. Interest is to be accrued at the rate
of 1% per month on the outstanding balance and will be added to the unpaid
balance. Prepayment of any amount of the outstanding principal by the Company
requires the written permission of LTLK. At the option of LTLK, the entire
outstanding balance may be converted into restricted and legended common
stock of BION at $2.50 per share prior to payment by the Company of the
outstanding principal and interest. As additional consideration for making
this loan available to the Company, LTLK will be issued one Z Warrant
authorizing LTLK to purchase one (1) share of the restricted and legended
common stock of BION at a purchase price of $15.00 per share exercisable for
a 24 month period commencing on January 1, 2000 for each $1.25 of principal
amount of the Note. (No warrants will be issued for interest accumulated on
the principal amounts of the Note). A total of $163,000 of principal was
advanced to Bion by LTLK on this note. A copy of the Note is attached to this
Report as Exhibit 10.1. c) Additionally, on April 15, 1999, the Company
signed another note with LTLK ("Second Note"), which has identical terms to
the Note except that the conversion (if any) to common stock of the Company
will be at $2.00 per share, and one Warrant will be issued for each $1.00 of
principal of the Second Note. As of May, 1999, a total of $583,000 of
principal had been advanced to Bion by LTLK on this Second Note. A copy of
the Second Note is attached to this Report as Exhibit 10.2.
8. On April 30, 1999, the Company issued awards to fifteen employees under the
Company's fiscal Year 1994 Incentive Plan. The awards are as follows: 58,371
options with an exercise price of $4.00 per share, 47,121 with an exercise
price of $8.00 per share, and 83,004 options with an exercise price of $15.00
per share. One-third of each class of options will vest twelve, twenty four,
and thirty six months from issuance and will expire on December 31, 2002. The
Company also issued warrants to the above fifteen employees to purchase
legended and restricted stock as follows: 58,371 warrants with an exercise
price of $4.00 per share, 47,121 warrants with an exercise price of $8.00 per
share, and 83,004 warrants with an exercise price of $15.00 per share.
One-third of each class will vest on April 30, 2000, one-third on April 30,
2001 and one-third on April 30, 2002. All of the warrants will expire on
December 31, 2002.
9. On April 30, 1999, the Company issued the following options and warrants to
the Company's Chief Financial Officer: 20,001 options with an exercise price
of $4.00 per share; 9,999 options with an exercise price of $8.00 per share;
9,999 options with exercise price of $15.00; 20,001 warrants with an exercise
price of $4.00 per share; 9,999 warrants with an exercise price of $8.00 per
share; and 9,999 warrants with an exercise price of $15.00 per share for
legended and restricted common stock. The options and warrants will vest
one-third on April 30, 2000, one-third on April 30, 2001, and one-third on
April 30, 2002. All will expire on December 31, 2002.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURES
Pursuant to the requirements of the Securities and 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: May 9, 1999 By: /s/ M. Duane Stutzman
-----------------------------
M. Duane Stutzman, Chief
Financial Officer
<PAGE>
INDEX TO EXHIBITS
Financial Statements and Exhibits.
Exhibit 10.1 Form of Promissory Note (the "Note") between Bion
Environmental Technologies, Inc. and LoTayLingKyur,
Inc.
Exhibit 10.2 Form of Second Promissory Note (the "Second Note")
between Bion Environmental Technologies, Inc. and
LoTayLingKyur, Inc.
Date Due: December 31, 1999
PROMISSORY NOTE ("Note")
FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a
Colorado corporation ("MAKER"), hereby promises to pay to the order of
LoTayLingKyur, Inc. a Nevada corporation ("HOLDER"), its successors and
assignees, at 409 Spruce Street, Boulder, Colorado 80302, or at such other place
as the HOLDER of this Note may from time to time designate in writing, all sums
due under this Note (plus interest) in lawful and immediately available money of
the United States. Interest shall be accrued at one percent (1.0%) per month
from date owed by MAKER. All outstanding principal shall be due and payable on
or before December 31, 1999, if not previously paid. If this Note or interest
due hereunder is not paid when due or declared due hereunder, the principal
shall draw interest at the rate of one and one half percent (1.5%) per month.
The outstanding principal and interest due hereunder shall be convertible, in
whole or in part, at the option of HOLDER, into shares of MAKER's common stock
("Shares") at a price of $2.50 per share at any time prior to payment by MAKER
of such principal and interest. MAKER shall give HOLDER 90 days' notice of
intent to pay the principal and interest of this Note during which period HOLDER
may elect to convert this Note to MAKER's common stock. Upon issuance, MAKER
represents that all shares received as a result of conversion of this Note shall
be fully-paid and non-assessable.
As additional consideration for making this Note, MAKER will issue one (1) Z
Warrant in the form attached hereto as Exhibit 1 (to purchase one share of
MAKER's common stock at a price of $15.00 per share for a 24 month period
commencing January 1, 2000) for each $1.25 of principal amount of the Note (no Z
Warrants will be issued for interest accumulated on the principal amount of this
Note).
Upon default by the MAKER of the timely payment of principal or interest due
hereunder or upon any Event of Default as hereinafter defined, the HOLDER may,
in its sole discretion, withhold any payments due and payable to MAKER and apply
same to the MAKER's obligations hereunder. In addition, upon any Event of
Default, the HOLDER may declare the full amount of this Note immediately due and
payable.
If any one or more of the following events ("Events of Default") shall occur for
any reason whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law, pursuant to or in
compliance with any judgment, decree of order of any court, or any order, rule
or regulation of any administrative or governmental body, or otherwise):
<PAGE>
(a) Default shall be made in the payment of principal or of interest on this
Note or any other obligation of MAKER when such shall become due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise;
(b) MAKER shall admit in writing its inability to pay its
debts as they become due, files a petition in bankruptcy or make a petition to
take advantage of an insolvency act; makes an assignment for the benefit of
creditors, commences a proceeding for the appointment of a receiver, trustee
liquidator or conservator of itself or of the whole or any substantial part of
its properties; files a petition or answer seeking reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other applicable law
or statute or the United States or any State; or
(c) MAKER shall be adjudged as bankrupt, or a court shall enter an order,
judgment or decree, appointing a receiver, trustee, liquidator or
conservator of MAKER or of the whole or any substantial part of its
properties, or approve a petition filed against MAKER seeking
reorganization or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United State or any state, or if,
under the provisions of any other law for the relief or aid of debtors, a
court shall assume custody or control of MAKER or the whole or any
substantial part of his properties, or if there is commenced against MAKER
any proceeding for any of the foregoing relief or if a petition in
bankruptcy is filed against MAKER; or if MAKER by any act indicates its
consent to approval of or acquiescence in any such proceeding or petition;
then and in such event, and at any time thereafter, if such or any other
Event of Default shall then be continuing, the HOLDER of this Note may, at
its option, upon written notice to MAKER, declare this Note and any other
promissory note issued by MAKER to HOLDER (whether or not then due in
accordance with its terms) to be due and payable, whereupon the entire
balance of this Note shall forthwith become and be due and payable.
Except as otherwise hereinabove expressly provided, MAKER hereby waives
diligence, demand, protest, presentment and all notices (whether of nonpayment,
dishonor, protest, acceleration or otherwise) and consents to acceleration of
the time of payment, surrender or substitution of security or forbearance, or
other indulgence, without notice.
Jurisdiction and venue shall be in a court of general jurisdiction located in
Boulder, Colorado. In the event that litigation is necessary to collect the
principal (and interest) of the Note, HOLDER shall be entitled to reasonable
attorneys' fees and litigation costs associated therewith.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: __________________________________
Authorized Officer
Date: March 15, 1999
<PAGE>
Exhibit 1
Void after 3:30 p.m., Denver Time, on December 31, 2001
Warrant to Purchase
_______ Shares
of Common Stock
CLASS Z WARRANT TO PURCHASE COMMON STOCK
OF
BION ENVIRONMENTAL TECHNOLOGIES, INC.
This is to certify that, FOR VALUE RECEIVED, _________________ or registered
assigns ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from Bion Environmental Technologies, Inc., a Colorado corporation
("Company"), at any time on or after January 1, 2000, and not later than 3:30
p.m., Denver Time, on December 31, 2001, unless extended as provided in Section
(a) below _______ restricted and legended shares of common stock, no par value
per share, of the Company ("Common Stock") at a purchase price per share of
$15.00 (in cash or fair market value of property acceptable to the Company). The
number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for a share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock" and the exercise price of a
share of Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price."
(a) Exercise of Warrant. Subject to the provisions of Section (1) hereof, this
Warrant may be exercised in whole or in part at any time or from time to time on
or after January 1, 2000, but not later than 3:30 p.m., Denver time on December
31, 2001, or if such date is a day on which banking institutions are authorized
by law to close, then on the next succeeding day which shall not be such a day,
by presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price (in cash or equivalent
value) for the number of shares specified in such form, together with all
federal and state taxes applicable upon such exercise. The Company may
unilaterally extend the time within which the Warrant may be exercised but is
not obligated to do so, but not longer than twelve (12) months. The Company may
unilaterally reduce the exercise price per share. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right hereunder.
Upon receipt by the Company of this Warrant at the office or agency of the
Company, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Exhibit 1 shares of Common Stock
shall not then be actually delivered to the Holder.
<PAGE>
(b) Reservation of shares. The Company, hereby agrees that at all times
subsequent hereto there shall be reserved for issuance and/or delivery upon
exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance or delivery upon exercise of this Warrant
("Warrant Stock").
(c) Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied
by the current market value of such fractional share, determined as
follows:
(1) If the Common Stock is listed on a national securities exchange or admitted
to unlisted trading privileges on such exchange, the current value shall be
the last reported sale price of the Common Stock on such exchange on the
last business day prior to the date of exercise of this Warrant or if no
such sale is made on such day, the average closing bid and asked prices for
such day on such exchange; or
(2) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid
and asked prices reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so quoted on NASDAQ, by the National
Quotation Bureau, Inc.) on the last business day prior to the day of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value
shall be an amount, not less than book value, determined in such reasonable
manner as may be prescribed by the Board of Directors of the Company, such
determination to be final and binding on the Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax; whereupon the
Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided upon
presentation hereof at the office of the Company or at the office of its
stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed
by the Holder hereof. The terms "Warrant" and "Warrants" as used herein
include any Warrants issued in substitution for a replacement of this
Warrant, or into which this Warrant may be divided or exchanged. Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
Exhibit 1 destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
<PAGE>
(e) Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth
herein.
(f) Adjustments to Exercise Price and Number of Shares.
(1) Adjustment of Number of Shares. Anything in this Section (f) to the
contrary notwithstanding, in case the Company shall at any time issue
Common Stock or Convertible Securities by way of dividend or other
distribution on any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the Exercise Price shall be
proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to receive
such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (on the date that
such subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this Section (f) to the
contrary notwithstanding, the Company shall not be required to give effect
to any adjustment in the Exercise Price unless and until the net effect of
one or more adjustments, determined as above provided, shall have required
a change of the Exercise Price by at least one cent, but when the
cumulative net effect of more than one adjustment so determined shall be to
change the actual Exercise Price by at least one cent, such change in the
Exercise Price shall thereupon be given effect.
(3) Number of Shares Adjusted. Upon any adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the number of shares,
calculated to the nearest full share, obtained by multiplying the number of
shares of Common Stock initially issuable upon exercise of this Warrant by
the Exercise Price in effect on the date hereof and dividing the product so
obtained by the new Exercise Price.
(4) Common Stock Defined. Whenever reference is made in this Section (f) to the
issue or sale of shares of Common Stock, the term "Common Stock" shall mean
the Common Stock of the Company of the class authorized as of the date
hereof and any other class of stock ranking on a parity with such Common
Stock. However, subject to the provisions of Section (i) hereof, shares
issuable upon exercise hereof shall include only shares of the class
designated as Common Stock of the Company as of the date hereof. Exhibit 1
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at
its principal office, and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price determined as
herein provided and setting forth in reasonable detail the facts requiring
such adjustment. Each such officer's certificate shall be made available at
all reasonable times for inspection by the Holder and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to
the Holder. Such certificate shall be conclusive as to the correctness of
such adjustment.
<PAGE>
(h) Notices to Warrant Holders. So long as this Warrant shall be outstanding
and unexercised (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock or (ii) if the Company shall offer to
the Holders of Common Stock for subscription or purchase by them any shares
of stock of any class or any other rights or (iii) if any capital
reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x)
a record is to be taken for the purpose of such dividend, distribution or
rights, or (y) such reclassification, reorganization, consolidation,
merger, conveyance, lease, dissolution, liquidation or winding up is to
take place and the date, if any, is to be fixed as of which the Holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company (other than a change in par value, or
from no par value to par value, or as a result of an issuance of Common
Stock by way of dividend or other distribution or of a subdivision or
combination), or in case of any consolidation or merger of the Company with
or into another corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does not result
in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in case of any sale or conveyance to another corporation
of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section (i) shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares
of Common Stock and to successive consolidations, mergers, sales Exhibit 1
or conveyances. In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for or of a security of the
Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of subsection (f) hereof
with the amount of the consideration received upon the issue thereof being
determined by the Board of Directors of the Company, such determination to
be final and binding on the Holder.
<PAGE>
(j) Transfer to Comply with the Securities Act of 1933.
(1) This Warrant or the Warrant Stock or any other security issued or issuable
upon exercise of this Warrant may not be sold, transferred or otherwise
disposed of except to a person who, in the opinion of counsel for the
Company, is a person to whom this Warrant or such Warrant Stock may legally
be transferred pursuant to Section (d) hereof without registration and
without the delivery of a current prospectus under the Securities Act with
respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section (j) with respect to
any resale or other disposition of such securities.
(2) The Company may cause the following legend to be set forth on each
certificate representing Warrant Stock or any other security issued or
issuable upon exercise of this Warrant not theretofore distributed to the
public or sold to underwriters for distribution to the public pursuant to
Section (k) hereof, unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:
The securities represented by this certificate may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act"), or pursuant to an exemption from
registration under the Act the availability of which is to be established to the
satisfaction of the Company.
(k) Registration Rights for Warrant Stock. In the event that the Company on or
before the expiration date shall file a registration statement (or similar
document) with the U.S. Securities & Exchange Commission on the Company's
equity securities on a form which would legally allow inclusion of the
Warrant Stock of the Company's common stock issued pursuant hereto, the
Company shall include the Warrant Stock in such registration statement, at
the Company's sole cost; PROVIDED, HOWEVER, in the event of a registration
involving an underwriter, such underwriter shall have the right, in its
sole discretion, to impose restrictions on the resale of the Company's
securities issued pursuant hereto and/or eliminate this registration right
from the underwritten registration statement in its entirety; FURTHER
PROVIDED, HOWEVER, in the event: i) an underwriter has eliminated this
registration right from an underwritten registration statement, or ii) upon
request by Holders of a majority of the outstanding Class Z Warrants, at a
date three months after close or cancellation of such underwritten
registration or after the date of request, as applicable, the Company shall
one time and one time only file and process to effectiveness (and maintain
effectiveness for not less than six months), at the Company's sole expense,
a registration statement including all the Exhibit 1 Warrant Shares (i.e.,
shares underlying the exercise of this Warrant) and the shares underlying
the exercise of any other warrant of the Company owned by Holders. All
expenses of any such registration statement including the shares shall be
borne by the Company.
<PAGE>
(l) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Colorado.
Bion Environmental Technologies, Inc.
Date: _______________ By: ___________________________________
Authorized Officer
Date: _________________ By: ____________________________________
Holder Signature
<PAGE>
Exhibit 1
PURCHASE FORM
Class Z Warrant, January 1, 2000 through December 31, 2001, ______ shares
@$15/share
Dated ___________________
The undersigned hereby irrevocably elects to exercise this warrant to the extent
of purchasing __________ shares of Bion Environmental Technologies, Inc. Common
Stock and hereby makes payment of $________________ in payment of the actual
exercise price thereof.
------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
(please typewrite or print in block letters)
Address____________________________________________________________
Signature__________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells, assigns, and
transfers unto:
Name_____________________________________________________
(please typewrite or print in block letters)
Address____________________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
______________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _______________________________, attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
Signature _________________________________________
Dated: _______________________
Date Due: December 31, 1999
PROMISSORY NOTE ("Note")
FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a
Colorado corporation ("MAKER"), hereby promises to pay to the order of
LoTayLingKyur, Inc. a Nevada corporation ("HOLDER"), its successors and
assignees, at 409 Spruce Street, Boulder, Colorado 80302, or at such other place
as the HOLDER of this Note may from time to time designate in writing, all sums
due under this Note (plus interest) in lawful and immediately available money of
the United States. Interest shall be accrued at one percent (1.0%) per month
from date owed by MAKER. All outstanding principal shall be due and payable on
or before December 31, 1999, if not previously paid. If this Note or interest
due hereunder is not paid when due or declared due hereunder, the principal
shall draw interest at the rate of one and one half percent (1.5%) per month.
The outstanding principal and interest due hereunder shall be convertible, in
whole or in part, at the option of HOLDER, into shares of MAKER's common stock
("Shares") at a price of $2.00 per share at any time prior to payment by MAKER
of such principal and interest. MAKER shall give HOLDER 90 days' notice of
intent to pay the principal and interest of this Note during which period HOLDER
may elect to convert this Note to MAKER's common stock. Upon issuance, MAKER
represents that all shares received as a result of conversion of this Note shall
be fully-paid and non-assessable.
As additional consideration for making this Note, MAKER will issue one (1) Z
Warrant in the form attached hereto as Exhibit 1 (to purchase one share of
MAKER's common stock at a price of $15.00 per share for a 24 month period
commencing January 1, 2000) for each $1.00 of principal amount of the Note (no Z
Warrants will be issued for interest accumulated on the principal amount of this
Note).
Upon default by the MAKER of the timely payment of principal or interest due
hereunder or upon any Event of Default as hereinafter defined, the HOLDER may,
in its sole discretion, withhold any payments due and payable to MAKER and apply
same to the MAKER's obligations hereunder. In addition, upon any Event of
Default, the HOLDER may declare the full amount of this Note immediately due and
payable.
If any one or more of the following events ("Events of Default") shall occur for
any reason whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law, pursuant to or in
compliance with any judgment, decree of order of any court, or any order, rule
or regulation of any administrative or governmental body, or otherwise):
(a) Default shall be made in the payment of principal or of interest on this
Note or any other obligation of MAKER when such shall become due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise;
(b) MAKER shall admit in writing its inability to pay its debts as they become
due, files a petition in bankruptcy or make a petition Exhibit 10.2 to take
advantage of an insolvency act; makes an assignment for the benefit of
creditors, commences a proceeding for the appointment of a receiver,
trustee liquidator or conservator of itself or of the whole or any
substantial part of its properties; files a petition or answer seeking
reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute or the United States
or any State; or
(c) MAKER shall be adjudged as bankrupt, or a court shall enter an order,
judgment or decree, appointing a receiver, trustee, liquidator or
conservator of MAKER or of the whole or any substantial part of its
properties, or approve a petition filed against MAKER seeking
reorganization or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United State or any state, or if,
under the provisions of any other law for the relief or aid of debtors, a
court shall assume custody or control of MAKER or the whole or any
substantial part of his properties, or if there is commenced against MAKER
any proceeding for any of the foregoing relief or if a petition in
bankruptcy is filed against MAKER; or if MAKER by any act indicates its
consent to approval of or acquiescence in any such proceeding or petition;
then and in such event, and at any time thereafter, if such or any other
Event of Default shall then be continuing, the HOLDER of this Note may, at
its option, upon written notice to MAKER, declare this Note and any other
promissory note issued by MAKER to HOLDER (whether or not then due in
accordance with its terms) to be due and payable, whereupon the entire
balance of this Note shall forthwith become and be due and payable.
Except as otherwise hereinabove expressly provided, MAKER hereby waives
diligence, demand, protest, presentment and all notices (whether of nonpayment,
dishonor, protest, acceleration or otherwise) and consents to acceleration of
the time of payment, surrender or substitution of security or forbearance, or
other indulgence, without notice.
Jurisdiction and venue shall be in a court of general jurisdiction located in
Boulder, Colorado. In the event that litigation is necessary to collect the
principal (and interest) of the Note, HOLDER shall be entitled to reasonable
attorneys' fees and litigation costs associated therewith.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: __________________________________
Authorized Officer
Date: April 15, 1999
<PAGE>
Exhibit 1
Void after 3:30 p.m., Denver Time, on December 31, 2001
Warrant to Purchase
_______ Shares
of Common Stock
CLASS Z WARRANT TO PURCHASE COMMON STOCK
OF
BION ENVIRONMENTAL TECHNOLOGIES, INC.
This is to certify that, FOR VALUE RECEIVED, _________________ or registered
assigns ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from Bion Environmental Technologies, Inc., a Colorado corporation
("Company"), at any time on or after January 1, 2000, and not later than 3:30
p.m., Denver Time, on December 31, 2001, unless extended as provided in Section
(a) below _______ restricted and legended shares of common stock, no par value
per share, of the Company ("Common Stock") at a purchase price per share of
$15.00 (in cash or fair market value of property acceptable to the Company). The
number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for a share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock" and the exercise price of a
share of Common Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price."
(a) Exercise of Warrant. Subject to the provisions of Section (1) hereof, this
Warrant may be exercised in whole or in part at any time or from time to
time on or after January 1, 2000, but not later than 3:30 p.m., Denver time
on December 31, 2001, or if such date is a day on which banking
institutions are authorized by law to close, then on the next succeeding
day which shall not be such a day, by presentation and surrender hereof to
the Company or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of
the Exercise Price (in cash or equivalent value) for the number of shares
specified in such form, together with all federal and state taxes
applicable upon such exercise. The Company may unilaterally extend the time
within which the Warrant may be exercised but is not obligated to do so,
but not longer than twelve (12) months. The Company may unilaterally reduce
the exercise price per share. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right hereunder. Upon
receipt by the Company of this Warrant at the office or agency of the
Company, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Exhibit 1 shares of Common
Stock shall not then be actually delivered to the Holder.
(b) Reservation of shares. The Company, hereby agrees that at all times
subsequent hereto there shall be reserved for issuance and/or delivery upon
exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance or delivery upon exercise of this Warrant
("Warrant Stock").
(c) Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied
by the current market value of such fractional share, determined as
follows: (1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange, the
current value shall be the last reported sale price of the Common Stock on
such exchange on the last business day prior to the date of exercise of
this Warrant or if no such sale is made on such day, the average closing
bid and asked prices for such day on such exchange; or
(2) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid
and asked prices reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so quoted on NASDAQ, by the National
Quotation Bureau, Inc.) on the last business day prior to the day of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value
shall be an amount, not less than book value, determined in such reasonable
manner as may be prescribed by the Board of Directors of the Company, such
determination to be final and binding on the Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax; whereupon the
Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided upon
presentation hereof at the office of the Company or at the office of its
stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed
by the Holder hereof. The terms "Warrant" and "Warrants" as used herein
include any Warrants issued in substitution for a replacement of this
Warrant, or into which this Warrant may be divided or exchanged. Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
Exhibit 1 destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
(e) Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth
herein.
(f) Adjustments to Exercise Price and Number of Shares.
(1) Adjustment of Number of Shares. Anything in this Section (f) to the
contrary notwithstanding, in case the Company shall at any time issue
Common Stock or Convertible Securities by way of dividend or other
distribution on any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the Exercise Price shall be
proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to receive
such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (on the date that
such subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this Section (f) to the
contrary notwithstanding, the Company shall not be required to give effect
to any adjustment in the Exercise Price unless and until the net effect of
one or more adjustments, determined as above provided, shall have required
a change of the Exercise Price by at least one cent, but when the
cumulative net effect of more than one adjustment so determined shall be to
change the actual Exercise Price by at least one cent, such change in the
Exercise Price shall thereupon be given effect.
(3) Number of Shares Adjusted. Upon any adjustment of the Exercise Price, the
Holder of this Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the number of shares,
calculated to the nearest full share, obtained by multiplying the number of
shares of Common Stock initially issuable upon exercise of this Warrant by
the Exercise Price in effect on the date hereof and dividing the product so
obtained by the new Exercise Price.
(4) Common Stock Defined. Whenever reference is made in this Section
(f) to the issue or sale of shares of Common Stock, the term "Common Stock"
shall mean the Common Stock of the Company of the class authorized as of
the date hereof and any other class of stock ranking on a parity with such
Common Stock. However, subject to the provisions of Section (i) hereof,
shares issuable upon exercise hereof shall include only shares of the class
designated as Common Stock of the Company as of the date hereof. Exhibit 1
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at
its principal office, and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price determined as
herein provided and setting forth in reasonable detail the facts requiring
such adjustment. Each such officer's certificate shall be made available at
all reasonable times for inspection by the Holder and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to
the Holder. Such certificate shall be conclusive as to the correctness of
such adjustment.
(h) Notices to Warrant Holders. So long as this Warrant shall be outstanding
and unexercised (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock or (ii) if the Company shall offer to
the Holders of Common Stock for subscription or purchase by them any shares
of stock of any class or any other rights or (iii) if any capital
reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x)
a record is to be taken for the purpose of such dividend, distribution or
rights, or (y) such reclassification, reorganization, consolidation,
merger, conveyance, lease, dissolution, liquidation or winding up is to
take place and the date, if any, is to be fixed as of which the Holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company (other than a change in par value, or
from no par value to par value, or as a result of an issuance of Common
Stock by way of dividend or other distribution or of a subdivision or
combination), or in case of any consolidation or merger of the Company with
or into another corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does not result
in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in case of any sale or conveyance to another corporation
of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section (i) shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares
of Common Stock and to successive consolidations, mergers, sales Exhibit 1
or conveyances. In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for or of a security of the
Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of subsection (f) hereof
with the amount of the consideration received upon the issue thereof being
determined by the Board of Directors of the Company, such determination to
be final and binding on the Holder.
(j) Transfer to Comply with the Securities Act of 1933.
(1) This Warrant or the Warrant Stock or any other security issued or issuable
upon exercise of this Warrant may not be sold, transferred or otherwise
disposed of except to a person who, in the opinion of counsel for the
Company, is a person to whom this Warrant or such Warrant Stock may legally
be transferred pursuant to Section (d) hereof without registration and
without the delivery of a current prospectus under the Securities Act with
respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section (j) with respect to
any resale or other disposition of such securities.
(2) The Company may cause the following legend to be set forth on each
certificate representing Warrant Stock or any other security issued or
issuable upon exercise of this Warrant not theretofore distributed to the
public or sold to underwriters for distribution to the public pursuant to
Section (k) hereof, unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:
<PAGE>
The securities represented by this certificate may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act"), or pursuant to an exemption from
registration under the Act the availability of which is to be established to the
satisfaction of the Company.
(k) Registration Rights for Warrant Stock. In the event that the Company on or
before the expiration date shall file a registration statement (or similar
document) with the U.S. Securities & Exchange Commission on the Company's
equity securities on a form which would legally allow inclusion of the
Warrant Stock of the Company's common stock issued pursuant hereto, the
Company shall include the Warrant Stock in such registration statement, at
the Company's sole cost; PROVIDED, HOWEVER, in the event of a registration
involving an underwriter, such underwriter shall have the right, in its
sole discretion, to impose restrictions on the resale of the Company's
securities issued pursuant hereto and/or eliminate this registration right
from the underwritten registration statement in its entirety; FURTHER
PROVIDED, HOWEVER, in the event: i) an underwriter has eliminated this
registration right from an underwritten registration statement, or ii) upon
request by Holders of a majority of the outstanding Class Z Warrants, at a
date three months after close or cancellation of such underwritten
registration or after the date of request, as applicable, the Company shall
one time and one time only file and process to effectiveness (and maintain
effectiveness for not less than six months), at the Company's sole expense,
a registration statement including all the Exhibit 1 Warrant Shares (i.e.,
shares underlying the exercise of this Warrant) and the shares underlying
the exercise of any other warrant of the Company owned by Holders. All
expenses of any such registration statement including the shares shall be
borne by the Company.
(l) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Colorado.
Bion Environmental Technologies, Inc.
Date: _______________ By: ___________________________________
Authorized Officer
Date: _________________ By: ____________________________________
Holder Signature
<PAGE>
Exhibit 1
PURCHASE FORM
Class Z Warrant, January 1, 2000 through December 31, 2001, ______ shares
@$15/share
Dated ___________________
The undersigned hereby irrevocably elects to exercise this warrant to the extent
of purchasing __________ shares of Bion Environmental Technologies, Inc. Common
Stock and hereby makes payment of $________________ in payment of the actual
exercise price thereof.
------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
(please typewrite or print in block letters)
Address____________________________________________________________
Signature__________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________ hereby sells, assigns, and
transfers unto:
Name_____________________________________________________
(please typewrite or print in block letters)
Address____________________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
______________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _______________________________, attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
Signature _________________________________________
Dated: _______________________
