-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNn+/fq1SdFN8fFzUPLx5oPRgLfA0w6ifL/a+aO/18jJLWpqmR/Iy9xHWFz3ubLh Xhp+Fh8h9ZusnRSwHMNV4A== 0000949303-99-000072.txt : 19990623 0000949303-99-000072.hdr.sgml : 19990623 ACCESSION NUMBER: 0000949303-99-000072 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990521 ITEM INFORMATION: FILED AS OF DATE: 19990621 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BION ENVIRONMENTAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000875729 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 841176672 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19333 FILM NUMBER: 99649350 BUSINESS ADDRESS: STREET 1: 555 17TH ST STREET 2: STE 3310 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032940750 MAIL ADDRESS: STREET 1: 555 17TH ST STREET 2: SUITE 3310 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: RSTS CORP DATE OF NAME CHANGE: 19930328 8-K 1 8K 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: May 21, 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 ITEM 5. OTHER EVENTS. 1. Effective May 21, 1999, the Company entered into an agreement with Mark A. Smith ("MAS) and LoTayLingKyur, Inc. ("LTLK"), a major shareholder of the Company, pursuant to which MAS became the Company's Chairman. MAS will also serve as a director of the Company and a member of the Executive Committee. See Exhibit 10.1. Mr. Smith, through his own holdings and those of his family, those of LTLK, and pursuant to a voting agreement (see exhibit 10.2) votes a majority of the Company's common stock. Jon Northrop will continue his role as President and CEO of Bion as well as being a director and member of the Executive Committee. Jere Northrop, Bion's previous Chief Operating Officer, will continue as a director and will become Bion's Chief Technology Officer, also effective on May 21, 1999. Additionally, effective May 21, 1999, LTLK agreed to exchange two short-term convertible promissory notes for one long-term convertible promissory note. See Exhibit 10.3. 2. The Company's largest Bion NMS animal waste processing system has commenced operations at Circle Four Farms in Milford, Utah. The system will treat the waste of over 40,000 hogs. The Company expects BionSoil production at an estimated 36,000 cubic yards per year beginning approximately one year from system start-up. 3. The Company declared a stock and warrant dividend on May 21, 1999. All shareholders of record date May 30, 1999 received one share of common stock for every ten shares held and one Class X Warrant for every five shares held. See exhibit 10.4. The dividend was issued on June 14, 1999. 4. Bion opened a new office in Coarsegold, California. The new office is part of the Company's recent expansion into California and the Northwest region of the Country including Arizona, Utah, Montana, Idaho, Washington, and Oregon. Bion's expansion in California is focusing initially in the San Joaquin Valley, which is a center for dairy farms and high value agricultural crops. The Company anticipates substantial market opportunities for its systems with the resulting ability to produce and market BionSoil products to consumers in the area. 5. The Company made agreements with five parties, including Jon Northrop, CEO, Jere Northrop, CTO, M. Duane Stutzman, CFO, and one other employee whereby the Company issued long-term promissory notes to each party for payables aggregating $793,500. See exhibit 10.5. 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: June 21, 1999 By: /s/ M. Duane Stutzman ----------------------------- M. Duane Stutzman, Chief Financial Officer INDEX TO EXHIBITS Financial Statements and Exhibits. 10.1 Consulting Agreement between LoTayLingKyur, Inc. and Bion Environmental Technologies, Inc. 10.2 Voting agreement between Jon Northrop, MAS, LTLK, and Dublin Holding, Ltd. 10.3 Promissory Note agreement between LoTayLingKyur, Inc. and Bion Environmental Technologies, Inc. 10.4 Class X Warrant 10.5 Promissory Note agreements between Bion Environmental Technologies, Inc. and five parties. EX-10.1 2 CONSULTING/ENGAGEMENT AGREEMENT Exhibit 10.1 CONSULTING/ENGAGEMENT AGREEMENT This Agreement effective as of May 21, 1999, by and between Bion Environmental Technologies, Inc. ("Company"), and LoTayLingKyur, Inc. ("LTLK") and Mark A. Smith ("MAS"). WHEREAS, the Company desires that MAS act as Chairman and Executive Committee member and director of the Company; and WHEREAS, MAS is employed by LTLK; and the Company agrees to retain the services of MAS with the consent of LTLK upon the conditions contained in this Agreement; AND WHEREAS, MAS and LTLK desire 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 MAS and MAS does hereby agree to be engaged by the Company, upon the terms and conditions set forth in the following paragraphs: 1. Engagement Period. The Company hereby engages MAS for the period commencing May 21, 1999 and ending December 31, 2001 ("Engagement Period") to serve as Chairman, director, and Executive Committee member with the Company and to render such other services in an executive capacity as the Company shall reasonably require. MAS hereby agrees to remain in the service of the Company for the Engagement Period, subject to the provisions of this Agreement. 2. Duties. MAS agrees that at all times during the Engagement Period he will faithfully and diligently endeavor to promote the business and business interests of the Company. This Agreement shall not restrict MAS 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 MAS of his duties under this Agreement. 3. Compensation and Benefits. Subject to the provisions of this Agreement, during the Engagement Period, compensation for MAS' services shall be as follows: a.) LTLK shall earn an aggregate fee of $626,667 for the entire term payable by: issuance to LTLK of (1) a convertible promissory note ("Note") with an initial principal amount of $626,667, in the form of Exhibit 1, and (2) 626,667 X warrants in the form attached hereto as Exhibit 2. b.) The Company agrees that (1) all warrants of the Company held by LTLK and/or Dublin Holding, Ltd. ("DHL") other than Z warrants shall become X warrants with no adjustment for the stock/warrant dividend declared May 21, 1999. c.) To the extent that MAS and/or LTLK incur expenses on behalf of the Company or advance funds to the Company subsequent to May 21, 1999: i.) The funds shall be added to the principal of the Note. ii.) LTLK shall be issued one Class X warrant for each $1.00 added to the principal of the Note. d.) The outstanding obligations of the Company to LTLK shall be replaced by a promissory note identical to the Note except as to principal amount. Exhibit 10.1 e.) All Z warrants issued to LTLK between April 1, 1999 and May 21, 1999 shall become X warrants. f.) The Board of Directors of the Company will review the compensation herein no less than once per year with a view to making such increases in LTLK's compensation or declaring such bonuses or other benefits as may be merited and warranted in light of factors considered pertinent by the Board of Directors. g.) MAS 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. 4. Expenses. All reasonable and necessary expenses incurred by MAS and/or LTLK in the performance of MAS's duties under this Agreement, including but not limited to expenses for entertainment, travel, and similar items, shall be paid by the Company as set forth above upon receipt of appropriate documentation of such expenses. Company shall provide, at its expense, MAS with office space as necessary and secretarial, legal, accounting, and other services as may be necessary to properly support MAS's performance of his duties and to operate in the best interests of the Company. 5. Disability of MAS. In the event of the disability of MAS (as defined herein) prior to the expiration of the Engagement Period, MAS shall nevertheless continue to be compensated as set forth above. For purposes of this Agreement, MAS 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 MAS'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 Engagement Period shall automatically terminate upon the death of MAS; provided, however, that in the event of MAS's death, all compensation MAS is receiving under Paragraph 3 of this Agreement at the time of his death shall be paid to his legal representative. At the discretion of the Board of Directors, the Engagement Period may terminate upon the Disability of MAS (as defined in Paragraph 5 above); provided, however, that MAS 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 MAS without further obligation under this Agreement: a.) MAS's conviction of any criminal act directly related to MAS's duties hereunder including, without limitation, misappropriation of funds or property of the Company or any other felony criminal act. b.) MAS's misfeasance or malfeasance in office, which shall mean fraud, dishonesty, willful misconduct or gross neglect of duties. c.) Breach by MAS of any material provision of this Agreement. 8. Termination Without Cause. In the event MAS 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 Engagement 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 Engagement Period, as a result of which the Board of Directors appoints a person other than MAS to serve in the capacity for which MAS is engaged hereunder or as a result of which MAS shall elect to resign his executive position hereunder, MAS and LTLK 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 MAS continues to perform any services for the Company. 10. Vesting in the Event of Termination. In the event that MAS 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. Indemnification. The Company hereby agrees to indemnify and hold harmless MAS, LTLK, and Dublin Holding, Ltd. from any and all costs and liabilities, direct or indirect, etc. related to Section 16(b) short swing profit calculation, resulting from matching with any transactions during May 1999, which transactions were made in preparation for MAS entering the service of the Company. 12. 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. 13. 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. 14. 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. 15. Integrated Agreement. This Agreement shall constitute the entire agreement between the parties hereto relating to the Engagement of MAS. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and MAS has executed this Agreement, effective as of the date and year first above written. BION ENVIRONMENTAL TECHNOLOGIES, INC. By: _______________________ Authorized Officer _______________________ Mark A. Smith LOTAYLINGKYUR, INC. By: _______________________ Mark A. Smith, President Initial Principal: $626,667* Date Due: December 31, 2001 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"), and 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. The initial principal of this loan is $626,667. Simple interest shall be accrued at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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 (equitably adjusted for subsequent stock splits, dividends, mergers, etc.) 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) X Warrant, to purchase one share of MAKER's common stock at a price of $8.00 per share (equitably adjusted for subsequent stock splits, dividends, mergers, etc., subsequent to the dividend declared May 21, 1999) for a 24 month period commencing January 1, 2000, for each $1.00 of principal amount of the Note advanced by Holder (no X 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4)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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent to approval of or acquiescence in any such proceeding or petition. 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: May 21, 1999 EX-10.2 3 STOCK VOTING AGREEMENT Exhibit 10.2 May 21, 1999 Mark A. Smith 409 Spruce Street Boulder, Colorado 80302 Dear Mark: In consideration of your joining as Chairman of Bion Environmental Technologies, Inc. ("BION"), I hereby relinquish all rights granted under the Stock Voting Agreement of December 15, 1998 between Dublin Holding, Ltd. ("DHL"), LoTayLingKyur, Inc. ("LTLK"), BION and myself. This agreement is hereby terminated effective May 21, 1999. Sincerely, /s/ Jon Northrop Jon Northrop Chief Executive Officer STOCK VOTING AGREEMENT THIS VOTING AGREEMENT (the "Agreement"), effective this 21st day of May, 1999, is by and between Dublin Holding, Ltd. (the "Shareholder") and Mark A. Smith ("MAS"). WHEREAS, Shareholder owns shares of the issued and outstanding common stock of Bion Environmental Technologies, Inc. ("BION") and warrants to purchase shares of common stock of BION (collectively the "Securities"). NOW THEREFORE, in consideration of the mutual agreements of the parties hereto and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Shareholder hereby constitutes and appoints MAS with full power of substitution, for the period commencing on the date hereof and ending on January 1, 2002, to vote the Securities as the proxy of Shareholder, at any and all meetings, regular or special, of the shareholders of BION, or at any adjournments thereof, which may be held during such period, hereby granting to said MAS (the "Proxy"), as Shareholder's attorney and Proxy, all powers Shareholder would possess if personally present at any such meetings. The Proxy granted hereby is expressly acknowledged to be coupled with an interest and shall be irrevocable to the full extent permitted by law until January 1, 2002, except to the extent specifically provided in Paragraph 3 below. The Proxy granted hereby revokes any other proxy relative to the Securities heretofore granted by Shareholder. 2. During the entire term of this Agreement, the Proxy shall have full and absolute discretion as to the manner in which Securities are to be voted as to any matter whatsoever, all without any liability or obligation of any kind to Shareholder. 3. Nothing contained herein shall be construed in such a manner so as to prohibit or preclude the sale or exchange of all or any part of the Securities by Shareholder in accordance with the provisions of this Paragraph 3. In the event that all or any portion of the Securities are sold, assigned or exchanged by Shareholder (and/or its assigns) to non-affiliated persons or entities prior to January 1, 2002, then the transferred portion of the Securities shall no longer be subject in any manner whatsoever to the voting restrictions set forth above, and shall be entirely released from same, unless otherwise agreed to in writing. 4. A counterpart of this Agreement shall forthwith be deposited with BION at its principal place of business. 5. This Agreement shall be construed in accordance with the laws of the State of Colorado and shall be binding upon the successors and assigns of each party hereto. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set forth above. Dublin Holding, Ltd. By: ________________________ Authorized Officer By: _____________________ Mark A. Smith EX-10.3 4 PROMISSORY NOTE Exhibit 10.3 Initial Principal: $753,543.65 Date Due: December 31, 2001 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"), and 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. The initial principal of this loan is $753,543.65. Simple interest shall be accrued at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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 (equitably adjusted for subsequent stock splits, dividends, mergers, etc.) 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent to approval of or acquiescence in any such proceeding or petition. 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: May 21, 1999 EX-10.4 5 WARRANT TO PURCHASE COMMON STOCK Exhibit 10.4 Void after 3:30 p.m., Denver Time, on December 31, 2001 Warrant to Purchase Shares of Common Stock CLASS X WARRANT TO PURCHASE COMMON STOCK OF BION ENVIRONMENTAL TECHNOLOGIES, INC. This is to certify that ______________ ("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 _______ shares of common stock, no par value per share, of the Company ("Common Stock") at a purchase price per share of $8.00 (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 Sections (k) 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 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. No assignment of this Warrant may be made without the written consent of the Company which the Company may deny in its sole discretion. 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, 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. 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 Company shall equitably adjust the terms of this Warrant. (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 an 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 a 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 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) This warrant may be exercised only if a registration statement covering the warrant stock has been declared effective by the U.S. Securities & Exchange Commission or an exemption from registration has been established to the satisfaction of legal counsel of the Company. (3) This Warrant may not be assigned or transferred with out the express written consent of the Company, which may be withheld or granted in the sole discretion of the Company. (4) 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, 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) 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 PURCHASE FORM Class X Warrant, January 1, 2000 through December 31, 2001, ______ shares @$8/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: _______________________ EX-10.5 6 PROMISSORY NOTE Initial Principal: $300,000 Date Due: December 31, 2001 PROMISSORY NOTE ("Note") FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of Jon Northrop ("HOLDER"), and his successors and assignees, at 1922 W. Sanibel Ct., Littleton, Colorado 80120, 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. The initial principal of this loan is $300,000. Interest shall be accrued and added to principal at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent Exhibit 10.5 to approval of or acquiescence in any such proceeding or petition. 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 Denver, 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: May 21, 1999 Initial Principal: $230,000 Date Due: December 31, 2001 PROMISSORY NOTE ("Note") FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of Jere Northrop ("HOLDER"), and his successors and assignees, at 1961 Tonawanda Creek Rd., Amherst, New York 14228, 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. The initial principal of this loan is $230,000. Simple interest shall be accrued at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consentto approval of or acquiescence in any such proceeding or petition. 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 Denver, 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: May 21, 1999 Initial Principal: $140,000 Date Due: December 31, 2001 PROMISSORY NOTE ("Note") FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of M. Duane Stutzman ("HOLDER"), and his successors and assignees, at 7483 West Laurel Ave., Littleton, Colorado 80128, 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. The initial principal of this loan is $140,000. Simple interest shall be accrued at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent to approval of or acquiescence in any such proceeding or petition. 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 Denver, 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: May 21, 1999 Initial Principal: $38,500 Date Due: December 31, 2001 PROMISSORY NOTE ("Note") FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of Craig Scott ("HOLDER"), and his successors and assignees, at 3252 E. Phillips Drive, Littleton, Colorado 80122, 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. The initial principal of this loan is $38,500. Simple interest shall be accrued at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent to approval of or acquiescence in any such proceeding or petition. 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 Denver, 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: May 21, 1999 Initial Principal: $85,000 Date Due: December 31, 2001 PROMISSORY NOTE ("Note") FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies, Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of Family Trust U/A 3rd U/W Catherine Northrop ("HOLDER"), and its successors and assignees, at 1922 W. Sanibel Ct., Littleton, Colorado 80120, 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. The initial principal of this loan is $85,000. Simple interest shall be accrued to principal at one percent (1.0%) per month from date owed by MAKER. All outstanding principal and interest shall be due and payable on or before December 31, 2001, 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. 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) 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: (a) MAKER fails to make 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 (1) admits its inability to pay its debts as they become due; (2) files a petition in bankruptcy or makes a petition to take advantage of an insolvency act; (3) makes an assignment for the benefit of creditors; (4) 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; (5) 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; (c) MAKER (1) is adjudged as bankrupt, (2) a court enters 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 States or any state; (3) under the provisions of any other law for the relief or aid of debtors, a court assumes custody or control of MAKER or the whole or any substantial Exhibit 10.5 part of its properties; (4) there is commenced against MAKER any proceeding for any of the foregoing relief; (5) a petition in bankruptcy is filed against MAKER; or (6) MAKER by any act indicates its consent to approval of or acquiescence in any such proceeding or petition. 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 Denver, 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: May 21, 1999 - -------- * Plus any future advances made by LoTayLingKyur, Inc. -----END PRIVACY-ENHANCED MESSAGE-----