SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K/A-1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: December 28, 1999 (December 11, 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 Incorporation) (Commission File No.) (I.R.S. Employer
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. On December 23, 1999, Bion Environmental Technologies, Inc. ("Bion")
entered into the following transactions with the D2 Co., LLC., a recently
formed Delaware Limited Liability Company, which was formerly unaffiliated
with Bion, ("D2"):
a) Bion entered into a three year Management Agreement with D2, (attached
as Exhibit 10.1 hereto), pursuant to which D2 will provide Bion specific
management and consulting services. A principal of D2, David J. Mitchell
has been appointed to the following positions with Bion: Director, Chief
Executive Officer, and Chairman of Executive Committee. Additionally, D2
has engaged Summerwind Restructuring, Inc., to provide consulting
services to Bion's management and operations personnel. Jon Northrop
will serve as President and will continue as a director and Chief
Financial Officer; Mark A. Smith will continue as Chairman of Bion's
Board; Jere Northrop will continue as a Director and Chief Technical
Officer; and Ronald G. Cullis will continue as a director. The
compensation to D2 for such services are as follows:
i) $240,000 per year payable in Bion common stock or cash; and
ii) 2,500,000 warrants exercisable at $2.50 expiring on December 31,
2004.
See Exhibit 10.1 for details.
b) As part of the Management Agreement with D2, Bion has agreed to fill
three vacant director seats with nominees of D2. The first two nominees
are David J. Mitchell and Salvatore J. Zizza (biographies of
Mr. Mitchell and Mr. Zizza attached in Exhibit 99.1), who have been
appointed directors of Bion.
c) Bion entered into a Warrant Purchase Agreement and other agreements with
D2, pursuant to which D2 purchased 2,500,000 warrants for $1,000,000
($500,000 in cash and $500,000 in a non-recourse promissory note to Bion
that is secured by the subject warrants). See Exhibit 10.2 hereto.
d) Additionally, a Shareholders' Agreement was executed by, between and
among D2, Mark A. Smith, Jere Northrop, Jon Northrop, LoTayLingKyur,
Inc., and Dublin Holding, Ltd. See Exhibit 10.3 hereto.
e) The transactions set forth at paragraphs 2 through 4 below were entered
into to meet conditions set by D2.
2. Effective December 20, 1999, pursuant to an agreement by, between and
among Bion, LoTayLingKyur, Inc., LTLK Defined Benefit Plan, LoTayLingKyur
Foundation, Dublin Holding Ltd. and Mark A. Smith (collectively "First
Parties"): i) First Parties exchanged certain convertible promissory notes
of Bion for new convertible promissory notes with aggregate principal of
$3,075,797.85 due at December 31, 2002; ii) Bion received the right to
convert such new notes to common stock under specific conditions; iii)
First Parties' Class X Warrants were exchanged for 0.3 restricted common
shares plus 0.7 Class Z Warrants for each Class X Warrant (in aggregate,
1,172,426 restricted shares of common stock and 2,735,660 Class Z Warrants
were issued and exchanged for 3,908,084 Class X Warrants); and iv) First
Parties agreed to participate in and support a future registered warrant
exchange on specified terms and conditions. See Exhibit 10.4 for details.
3. During the period from December 11, 1999 through December 15, 1999, Bion
entered into agreements with each of its current employees who had in the
past received Bion warrants (of various classes) as compensation ("Employee
Warrants") to exchange the Employee Warrants for non-qualified options with
identical exercise prices, expiration dates and vesting dates issued
pursuant to Bion's 1994 Incentive Plan. In aggregate, 303,925 Employee
Warrants were exchanged for 303,925 non-qualified options.
4. Effective December 15, 1999, Bion entered into agreements with 8 holders of
outstanding promissory notes of Bion (Jon Northrop, Jere Northrop,
Northrop Family Trust, M. Duane Stutzman, Harley Northrop, Edward Hennig,
William Crossetta, and Craig Scott), pursuant to which each note holder
agreed to exercise either outstanding Bion options or warrants owned by the
note holder by cancellation of the promissory note owned by the holder
under certain specified conditions. Additionally, each note holder agreed
to participate in and support a future registered warrant exchange under
specified terms and conditions. See Exhibits 10.5, 10.6, 10.7, 10.8, 10.9,
10.10, 10.11, and 10.12 hereto for details.
5. As a result of the transactions set forth at paragraphs 1 through 4 above
(and the exhibits thereto), Bion's capital structure has undergone material
changes. Exhibit 10.13 hereto outlines Bion's capital structure as of
December 23, 1999.
6. Interest of Named Experts and Counsel in filing of Form S-8 dated December
11, 1999. Stanley F. Freedman, the sole owner of an entity which is a
member of the law firm which serves as Bion's outside legal counsel, is the
owner of 7,091 shares of common stock of the Company and the holder of a
currently exercisable option to purchase an additional 40,000 shares at an
exercise price of $2.50 per share. The subject option will expire on
December 31, 2001. In addition, Mr. Freedman is the owner of a Z warrant to
purchase 6,636 additional shares at an exercise price of $13.50 per share
during the period commencing on January 1, 2000 and ending on December 31,
2001.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 Management Agreement and Management Compensation Warrant.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.2 Warrant Purchase Agreement; Promissory Note; Warrant; and Pledge
Agreement.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.3 Shareholder Agreement.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.4 First Parties' Agreement.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.5 Agreement between Jon Northrop and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.6 Agreement between Jere Northrop and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.7 Agreement between Northrop Family Trust and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.8 Agreement between M. Duane Stutzman and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.9 Agreement between Harley Northrop and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.10 Agreement between Edward Hennig and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.11 Agreement between William Crossetta and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.12 Agreement between S. Craig Scott and Bion.
(Incorporated by reference to Form 8-K dated December 11, 1999)
10.13 Bion's Capital Structure as of December 23, 1999.
99.1 Biographies of Messrs. Mitchell and Zizza.
(Incorporated by reference to Form 8-K dated December 11, 1999)
<PAGE>
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: December 28, 1999 By: /s/ Jon Northrop
------------------------
Jon Northrop, Chief Financial
Officer
CAPITAL STRUCTURE
Common Stock
As of December 23, 1999 the Company had 11,779,670 (1) shares of Common Stock
issued and outstanding.
Options
Expiration
----------
Directors
$1.55 11,112 Vested 08/19/02
$2.04 11,112 Vested 08/19/02
$2.91 11,112 Vested 11/17/03
$1.61 10,000 Vested 08/04/04
-------
Total Directors 43,336
Employees (Vested) $2.25 474,000 (2) Vested 12/21/01
$2.50 40,000 (3) Vested 12/31/01
$2.50 19,445 Vested 08/01/00
$2.70 55,556 Vested 12/31/02
$3.04 1,112 Vested 01/28/01
$3.60 87,461 Vested 03/03/00-12/31/02
$3.72 1,112 Vested 08/31/00
$4.05 1,112 Vested 11/30/00
$5.40 33,200 Vested 03/03/00-12/31/01
$5.63 1,112 Vested 05/31/00
$7.20 38,523 Vested 12/31/01
$9.00 11,112 12/31/01
-------
Total Employees (Vested) 763,745
Total Vested 807,081
(Directors and
Employees)
(1) Includes 50,000 shares not vested at December 23, 1999.
(2) Exercisable January 1, 2000. Each holder has agreed to exercise these
options with outstanding promissory notes of Bion upon certain conditions.
See Exhibits 10.5 - 10.12 above.
(3) Holder has agreed to exercise using outstanding long term payable of Bion
upon certain conditions.
Employees Vesting Dates Expiration
(Non-vested) ------------------------- -----------------
$2.50 340,000 01/01/00-06/30/02 12/31/01-06/30/03
$3.60 220,707 08/16/99-04/30/02 12/31/02
$5.40 16,134 02/03/00-09/01/00 12/31/02
$7.20 213,495 03/04/00-08/16/02 12/31/01-12/31/02
$13.50 176,988 04/30/00-04/30/02 12/31/02
-------
Total Non-vested 967,324
Total Employees
and Directors 1,774,405
Warrants
As of December 23, 1999, the Company has the following warrants outstanding:
Warrant Shares Expiration Date Exercise Price
- --------------- ------------- --------------- ----------------
Class AA.01 15,000 (1) 5.40
Class D2P * 2,500,000 (2) 1.75
Class D2C ** 2,500,000 (3) 2.50
Class G-5.1 1,115 (4) 2.70
Class G-5.2 919 (5) 2.70
Class G-6 3,148 (6) 5.40
Class G-8 27,779 (7) 5.40
Class H-1 11,112 (8) 4.50
Class H-2 16,112 (9) 2.70
Class H-9 11,112 (10) 9.00
Class H-9.1 11,112 (11) 11.25
Class H-9.2 11,112 (12) 7.20
Class H-9.3 11,112 (13) 13.50
Class H-9.4 11,112 (14) 5.40
Class H-10 18,519 (15) 3.60
Class H-16 *** 38,000 (16) 2.25
Class I-1 4,167 (17) 5.40
Class X **** 1,116,012 (18) 8.00
Class Z ***** 6,323,884 (19) 13.50
--------- --------------
12,631,327 $1.75-13.50
========== ==============
* See Item 5, paragraph 1c) for a description of the transaction related to
this Class D2P Warrant and the actual warrant agreement at Exhibit 10.2
above.
** See Item 5, paragraph 1a) for a description of the transaction related to
this Class D2C Warrant and the actual warrant agreement at Exhibit 10.1
above. Class D2C warrant will be issued on 01/01/00.
*** Holders have agreed to exercise by cancellation of promissory notes of
Bion on certain conditions. See Exhibits 10.5 - 10.12 above.
**** Holders of 502,146 Class X Warrants have agreed to participate in a future
registered exchange offer subject to terms and conditions. See Exhibits
10.4 - 10.12 above.
***** Holders of 5,937,823 Class Z Warrants have agreed to participate in a
future registered exchange offer subject to certain terms and conditions.
See Exhibits 10.4 - 10.12 above.
<PAGE>
1. Class AA.01 warrants may be exercised to purchase 15,000 shares of common
stock for approximately a 28 month period beginning August 12, 19999 and
ending December 31, 2001.
2. Class D2P warrants may be exercised to purchase 2,500,000 shares of common
stock for a 60 month period beginning December 23, 1999 and ending December
31, 2004.
3. Class D2C warrants may be exercised to purchase 2,500,000 shares of common
stock for a 54 month period beginning January 1, 2000 and ending June 30,
2004.
4. Class G-5.1 warrants may be exercised to purchase 1,115 shares of common
stock for a 60 month period beginning January 22, 1996 and ending January 21,
2001.
5. Class G-5.2 warrants may be exercised to purchase 919 shares of common stock
for a 60 month period beginning September 13, 1996 and ending September 12,
2001.
6. Class G-6 warrants may be exercised to purchase 3,148 shares of common stock
for a 60 month period beginning April 21, 1997 and ending April 20, 2002.
7. Class G-8 warrants may be exercised to purchase 27,779 shares of common stock
for a 37 month period beginning June 5, 1997 and ending June 30, 2000.
8. Class H-1 warrants may be exercised to purchase 11,112 shares of common stock
for a 60 month period beginning August 21, 1996 and ending August 20, 2001.
9. Class H-2 warrants may be exercised to purchase 16,112 shares of common stock
for a 60 month period beginning August 21, 1996 and ending August 20, 2001.
10.Class H-9 Warrants may be exercised to purchase 11,112 shares of common
stock for a 47 month period beginning February 1, 1997 and ending December
31, 2001.
11.Class H-9.1 Warrants may be exercised to purchase 11,112 shares of common
stock for a 47 month period beginning February 1, 1997 and ending December
31, 2001.
12.Class H-9.2 Warrants may be exercised to purchase 11,112 shares of common
stock for a 47 month period beginning February 1, 1997 and ending December
31, 2001.
13.Class H-9.3 Warrants may be exercised to purchase 11,112 shares of common
stock for a 47 month period beginning February 1, 1997 and ending December
31, 2001.
14.Class H-9.4 Warrants may be exercised to purchase 11,112 shares of common
stock for a 47 month period beginning February 1, 1997 and ending December
31, 2001.
15.Class H-10 may be exercised to purchase 18,519 shares of common stock for a
50 month period beginning November 2, 1998 and ending December 31, 2002.
16.Class H16 may be exercised to purchase 38,000 shares of common stock for a
24 month period beginning January 1, 2000 and ending December 31, 2002.
17.Class I-1 warrants may be exercised to purchase 4,167 shares of common stock
for approximately a 42 month period beginning June 9, 1998 and ending
December 31, 2001.
18.Class X may be exercised to purchase 1,116,012 shares of common stock for a
24 month period beginning January 1, 2000 and ending December 31, 2001.
19.Class Z warrants may be exercised to purchase 6,323,884 shares of common
stock for a 24 month period beginning January 1, 2000 and ending December 31,
2001.
At December 23, 1999, there were warrants exercisable to purchase 153,431 shares
of common stock.
Convertible Notes
- -----------------
The following notes can be converted, in whole or in part, at the holders option
into shares of common stock at a price of $1.80 per share.
Underlying Shares of Stock
Note Amount (at 12/20/99)
--------------- --------------------------
*LoTayLingKyur, Inc. $1,147,681.72 637,601
*LTLK $278,116.13 154,509
Defined Benefit
Plan
*Dublin Holding, $1,650,000.00 916,667
Ltd.
*H. Northrop $328,986.47 182,771
------------------------- ------------
TOTAL $3,404,784.32 1,891,488
* Holders of the notes have agreed to convert under certain conditions. See
Exhibits 10.4 & 10.9 above.
Long Term Notes
** The company has $1,208,955.80 in long term notes due on December 31, 2001.
** Holders have agreed to exercise outstanding options/warrants under certain
conditions in exchange for the notes. See Exhibits 10.5 - 10.12 above.
