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: September 6, 2001
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(Date of earliest event reported)
Bion Environmental Technologies, Inc.
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(Exact Name of Registrant as Specified in its Charter
Colorado 0-19333 84-1176672
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(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
18 East 50th Street 10th Floor New York, NY 10022
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(Address and Zip Code of Principal Executive Offices)
Registrant's telephone number including area code: (212) 758-6622
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ITEM 5. OTHER EVENTS
(a) Changes in our Management. The following changes in our management
were either adopted or ratified by us on September 6, 2001:
- We accepted the resignation of Ron Cullis as a member of our Board
of Directors. The options held by Mr. Cullis will continue to be
exercisable in accordance with their terms. His resignation was
not the result of any disagreement with us on any matter relating
to our operations, policies or practices.
- We accepted the resignation of Jon Northrop as an officer and
director of our company and as an officer and director of each of
our subsidiaries. Mr. Northrop will continue to serve us as a
consultant and will also serve as a member of our Advisory Board.
His resignation was not the result of any disagreement with us on
any matter relating to our operations, policies or practices.
- Mark Smith resigned as Chairman of our Board and was replaced in
that capacity by David Mitchell, our President. Mr. Smith will
continue to serve as a director and as a member of our Executive
Committee.
- Mr. Mitchell will serve as the President of both of our
subsidiaries.
- The resignation of Bart Chilton as our Senior Vice President in
August 2001 to continue his career with the United States
government was ratified. In recognition of his work with us, Mr.
Chilton was granted fully vested options to purchase a total of
66,000 shares of our Common Stock at a purchase price of $1.50 per
share. These options will expire on August 17, 2003. Options to
purchase 100,000 shares that were previously held by Mr. Chilton
were cancelled at the time the new options were issued.
(b) Severance Agreements. We entered into severance agreements with Jon
Northrop and the only other employee that remained in our Denver, Colorado
office. As a result, we no longer have any employees in Denver and
substantially all of our business operations are conducted out of our office
in New York City, although we will continue to have a small office in Denver
which will be used by Mr. Northrop in his capacity as our consultant. Copies
of both severance agreements are attached as Exhibits 10.1 and 10.2.
(c) Restructuring of Notes to Related Parties and Cancellation of
Options and Warrants. We have amended the terms of certain notes that we owe
to certain related parties and have cancelled certain outstanding options and
warrants held by them. The accrued amounts due under notes that we amended
are as follows:
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Holder Amount of Accrued Debt
(Accrued to November 1, 2001)
Jon Northrop $ 337,466
Jere Northrop $ 297,531
Harley Northrop $ 397,865
Northrop Family Trust $ 136,150
Edward A. Hennig $ 159,173
M. Duane Stutzman $ 181,106
William J. Crossetta $ 279,000
S. Craig Scott $ 49,804
Dublin Holding Ltd. $3,682,944
Mark Smith Rollover IRA $ 393,556
Kelly Smith Rollover IRA $ 339,870
TOTAL $6,254,465
As the result of these amendments we now have approximately $14.2 million
of debt in instruments (including accrued interest to November 1, 2001)that
are now all convertible at the same time and at the same price, subject to
conversion price caps which differ for the various debt instruments from $1.80
to $2.50 per share. The provisions of the agreements vary for each debt
holder, with cancellations of certain options and warrants. All of the
subject debt is convertible to shares of our Common Stock or before April 29,
2002, subject to certain conditions precedent.
Amendments to the agreements relating to Mark Smith and entities owned or
controlled by him are discussed below. Copies of the remaining amended
agreements are attached as Exhibits 10.1 (with respect to Jon Northrop), 10.2
(with respect to Edward Hennig, a former employee in our Denver office), 10.3
(with respect to Harley E. Northrop, Jon and Jere Northrop's father), 10.4
(with respect to Jere Northrop), 10.5 (with respect to William J. Crossetta,
Jr.), 10.6 (with respect to S. Craig Scott, our former shareholder relations
advisor), 10.7 (with respect to the Northrop Family Trust), and 10.8 (with
respect to M. Duane Stutzman, our former Chief Financial Officer). For
further details concerning our capital structure, please see notes 4 and 7 to
our unaudited financial statements contained in our Report on Form 10-QSB for
the quarter ended March 31, 2001.
(d) Mark Smith Agreements.
- Mark Smith and certain entities controlled by him which own shares
of our Common Stock (the "Smith Shares") entered into a voting
agreement that gives David Mitchell, our President and CEO, the
power to vote all of the Smith Shares as to most matters, but Mr.
Smith will still have the right to vote the Smith Shares with
respect to a sale of substantially all of our assets or a merger.
The voting agreement is purely contractual and is not a formal
voting trust.
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- In addition, Mr. Smith and certain entities that he controls
entered into a separate agreement with us which imposes certain
restrictions on the sale and transfer of the Smith Shares and
amends the respective terms of five convertible promissory notes
payable to Dublin Holding, Ltd, the Mark A. Smith Rollover IRA and
the Kelly Smith Rollover IRA to provide that all five of these
notes will be automatically and fully converted (with all
principal and accrued interest calculated as if they had been held
to maturity) into shares of our Common Stock upon the conversion
of our outstanding Convertible Bridge Notes and 2001 Convertible
Notes at a conversion rate equal to the lesser of (i) $1.80 per
share or (ii) the conversion price of our outstanding Convertible
Bridge Notes and 2001 Convertible Notes.
- Copies of both agreements are attached as Exhibits 10.9 and 10.10.
(e) D2CO, LLC Agreements. We entered into an agreement with D2CO, LLC,
Southview, Inc. and Atlantic Partners, LLC, all of which are affiliates of
David Mitchell, our President and CEO (collectively, "D2") in which, among
other things, we agreed to:
- provide that certain compensation to D2 be paid in a deferred
manner as set forth in an exhibit to the agreement;
- be a party to the voting agreement that gives David Mitchell the
power to vote all of the Smith Shares as to most matters;
- release Jon Northrop from the restrictions related to the sale of
shares of our Common Stock owned by him that are contained in the
Shareholders Agreement dated December 23, 1999, as amended; and
- amend the SV1 and SV2 Warrants held by D2 so that upon earlier of
(i) completion of financing or series of financings large enough
to "trigger" the conversion of Bion's outstanding Bridge Notes and
2001 Convertible Notes (collectively "CV Notes") into Bion Common
Stock; or (ii) conversion of the CV Notes into Bion Common Stock
on April 29, 2002, the outstanding Class SV1 and SV2 Warrants
owned by D2 will be adjusted ("Adjusted Warrants") so that D2 owns
Adjusted Warrants to purchase a number of shares of Bion Common
Stock equal to 20% of the "fully-diluted" outstanding shares,
calculated by including (i) the Adjusted Warrants, (ii) the
securities issued in the conversion of the CV Notes and other
notes, (iii) the securities issued in connection with the subject
financing, and (iv) other outstanding options, warrants and/or
convertible promissory notes which are exercisable or convertible,
as applicable, at a price equal to or lower than the exercise
price of the Adjusted Warrants, which Adjusted Warrants will have
the same expiration date as the current SV1 and SV2 Warrants and
will have an exercise price equal to the lower of $1.00 per share
or the conversion price of the CV Notes; provided, however, that
for purposes of calculating the number of Adjusted Warrants, no
securities outstanding related to any portion of a financing
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aggregating greater than $10,000,000 will be included in the
calculation. As partial consideration for our agreeing to the
adjustment to the warrants, Southview agreed to extend the term of
the outstanding promissory note (with an accrued balance of
$521,039.81 as of July 31, 2001)so that such promissory note could
be repaid from the proceeds of a new financing.
A copy of the D2 agreement is attached as Exhibit 10.11.
(f) We have adopted a new incentive plan, a copy of which is attached as
Exhibit 10.12.
(g) We have recently issued two press releases, copies of which are
attached as Exhibits 99.1 and 99.2, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the exhibits filed as a part of this report.
EXHIBITS:
Exhibit
Number Description
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10.1 Severance Agreement of Jon Northrop
10.2 Severance Agreement of Edward Hennig
10.3 Agreement of Harley E. Northrop
10.4 Agreement of Jere Northrop
10.5 Agreement of William J. Crossetta, Jr.
10.6 Agreement of S. Craig Scott
10.7 Agreement of Northrop Family Trust
10.8 Agreement of M. Duane Stutzman
10.9 Stock Voting Agreement dated August 1, 2001
10.10 Mark Smith and Related Entities Agreement dated
August 1, 2001
10.11 D2 Agreement dated August 1, 2001
10.12 2001 Incentive Plan
99.1 Press release dated August 6, 2001
99.2 Press release dated August 22, 2001
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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: September 25, 2001 By: /s/ Mark A. Smith
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Mark A. Smith, Secretary and Director
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