CREDIT FACILITY
Bion Environmental Technologies, Inc. ("BION") and LoTayLingKyur, Inc.
("LTLK") agree effective as of May 1, 1998 that LTLK will make a credit
facility available to BION, and that BION will use such credit under the terms
and conditions as described below:
a) BION may make monthly draws against this credit facility commencing in May
1998 up to the amounts shown:
$50,000 per month for May through August 1998,
$75,000 per month for September through December 1998,
$100,000 per month for January through October 1999.
b) All monthly draws shall be made by LTLK to BION within five business days
of request by XXXX, are non-cumulative if not drawn in the month
indicated, and will only be paid to BION on BION's request.
c) Interest shall be accrued monthly by BION to LTLK at the rate of 1% per
month on the outstanding balance and will be added to the unpaid
balance.
d) The entire outstanding balance shall be due and payable on December 31,
1999.
e) Advances from LTLK to BION shall be evidenced by a promissory note in the
form attached hereto as Exhibit A.
f) All outstanding amounts owed to LTLK by BION as of the date of this credit
facility shall be added to the principal amount of this facility,
including without limitation the cumulative amount earned pursuant to
the consulting agreement between BION and LTLK (and others) effective
May 6, 1997. However, these consulting fees will not be subject to
accrual of interest.
g) Prepayment of any amount of the outstanding principal by BION shall require
written permission of LTLK.
h) At the option of LTLK, the entire outstanding balance may be converted into
restricted and legended common stock of BION at $6.00 per share on or
before December 31, 1999.
i) LTLK shall be issued one warrant (in the form attached hereto as Exhibit B)
authorizing LTLK to purchase one share of the restricted and legended
common stock of BION at a purchase price of $7.50 per share exercisable
for a period from date of issue of such warrant and expiring on December
31, 2000 for each $2.00 of principal amount of the Note (no warrants will
be issued for interest accumulated on the principal amounts of the
Note).
j) BION shall indemnify and hold harmless LTLK from any liability to BION (or
others) pursuant to 16(b) of the Exchange Act of 1934 for "short
swing profits" which arise from matching this transaction with any
other transaction.
Credit Facility
May 1998
page 2
k) BION shall report to LTLK (in writing by FAX) on the third business day of
each month the total amount owed (principal plus interest) by BION to LTLK
on the credit facility and the total number of shares and warrants
earned pursuant thereto to facilitate required reporting by LTLK.
l) This documents the terms of an oral agreement reached on or about April 15,
1998, to be effective May 1, 1998.
Bion Environmental LoTayLingKyur, Inc.
Technologies, Inc.
by: /s/ Xxx Xxxxxxxx by: /s/ Xxxx X. Xxxxx
---------------------- --------------------------
Authorized Officer Authorized Officer
EXHIBIT A
Date Due: December 31, 1999
PROMISSORY NOTE ("Note")
FOR VALUE RECEIVED, the undersigned, Bion Environmental Technologies,
Inc., a Colorado corporation ("MAKER"), hereby promises to pay to the order of
LoTayLingKyur, Inc. a Nevada corporation ("HOLDER"), its successors and
assignees, at 0000 Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other place
as the HOLDER of this Note may from time to time designate in writing, all
sums due under the Credit Facility to which this Note is attached (plus
interest) in lawful and immediately available money of the United States.
Interest shall be accrued at one percent (1.0%) per month from date owed by
Maker. All outstanding principal shall be due and payable on or before
December 31, 1999, if not previously paid. If this Note or interest due
hereunder is not paid when due or declared due hereunder, the principal shall
draw interest at the rate of one and one half percent (1.5%) per month.
Upon default by the MAKER of the timely payment of principal or interest
due hereunder or upon any Event of Default as hereinafter defined, the HOLDER
may, in its sole discretion, withhold any payments due and payable to MAKER
and apply same to the MAKER's obligations hereunder. In addition, upon any
Event of Default, the HOLDER may declare the full amount of this Note
immediately due and payable.
If any one or more of the following events ("Events of Default") shall
occur for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law,
pursuant to or in compliance with any judgment, decree of order of any court,
or any order, rule or regulation of any administrative or governmental body,
or otherwise):
(a) Default shall be made in the payment of principal or of interest
on this Note or any other obligation of MAKER when such shall become
due and payable, whether at the stated maturity thereof or by
acceleration or otherwise;
(b) MAKER shall admit in writing its inability to pay its debts as
they become due, files a petition in bankruptcy or make a petition
to take advantage of an insolvency act; makes an assignment
for the benefit of creditors, commences a proceeding for the
appointment of a receiver, trustee liquidator or conservator of itself
or of the whole or any substantial part of its properties; files
a petition or answer seeking reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute or the United States or any State; or
(c) MAKER shall be adjudged as bankrupt, or a court shall enter an
order, judgment or decree, appointing a receiver, trustee,
liquidator or conservator of MAKER or of the whole or any
substantial part of its properties, or approve a petition filed
against MAKER seeking reorganization or similar relief under the
federal bankruptcy laws or any other applicable law or statute of
the United State or any state, or if, under the provisions of any
other law for the relief or aid of debtors, a court shall assume
custody or control of MAKER or the whole or any substantial
part of his properties, or if there is commenced against MAKER any
proceeding for any of the foregoing relief or if a petition in
bankruptcy is filed against MAKER; or if MAKER by any act indicates
its consent to approval of or acquiescence in any such proceeding
or petition; then and in such event, and at any time thereafter,
if such or any other Event of Default shall then be continuing,
the HOLDER of this Note may, at its option, upon written notice
to MAKER, declare this Note and any other promissory note issued
by MAKER to HOLDER (whether or not then due in accordance with its
terms) to be due and payable, whereupon the entire balance of this
Note shall forthwith become and be due and payable.
Except as otherwise hereinabove expressly provided, MAKER hereby
waives diligence, demand, protest, presentment and all notices
(whether of nonpayment, dishonor, protest, acceleration or
otherwise) and consents to acceleration of the time of payment,
surrender or substitution of security or forbearance, or other
indulgence, without notice.
Jurisdiction and venue shall be in a court of general
jurisdiction located in Boulder, Colorado. In the event that
litigation is necessary to collect the principal (and interest) of
the Note, HOLDER shall be entitled to reasonable attorneys' fees
and litigation costs associated therewith.
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxxxxx
--------------------------
Authorized Officer
Date: May 21, 1998
EXHIBIT B
Void after 3:30 p.m., Denver Time, on December 31, 2000
Warrant to Purchase
_______ SHARES
of Common Stock
CLASS L WARRANT TO PURCHASE COMMON STOCK
OF
BION ENVIRONMENTAL TECHNOLOGIES, INC.
This is to certify that, FOR VALUE RECEIVED, LOTAYLINGKYUR, INC. or registered
assigns ("Holder), is entitled to purchase, subject to the provisions of this
Warrant, from Bion Environmental Technologies, Inc., a Colorado corporation
("Company"), at any time on or after _______________, and not later than 3:30
p.m., Denver Time, on DECEMBER 31, 2000, unless extended as provided in
Section (a) below _________ restricted and legended shares of common stock, no
par value per share, of the Company ("Common Stock") at a purchase price per
share of $7.50 (in cash or fair market value of property acceptable to the
Company). The number of shares of Common Stock to be received upon the
exercise of this Warrant and the price to be paid for a share of Common Stock
may be adjusted from time to time as hereinafter set forth. The shares of
Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Stock" and the
exercise price of a share of Common Stock in effect at any time and as
adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(a) Exercise of Warrant. Subject to the provisions of Section (1)
---------------------
hereof, this Warrant may be exercised in whole or in part at any time or from
time to time on or after _______________, but not later than 3:30 p.m., Denver
time on December 31, 2000, 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 securi-ties exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sale price of the Common Stock on such exchange on
the last business day prior to the date of exercise of this Warrant or if no
such sale is made on such day, the average closing bid and asked prices for
such day on such exchange; or
(2) If the Common Stock is not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so quoted on NASDAQ, by the National
Quotation Bureau, Inc.) on the last business day prior to the day of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value
shall be an amount, not less than book value, determined in such reasonable
manner as may be prescribed by the Board of Directors of the Company, such
determination to be final and binding on the Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is
--------------------------------------------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax; whereupon the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
cancelled. 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.
---------------------------------------------------------
(1) Adjustment of Number of Shares. Anything in this Section (f) to the
------------------------------
contrary notwithstanding, in case the Company shall at any time issue Common
Stock or Convertible Securities by way of dividend or other distribution on
any stock of the Company or subdivide or combine the outstanding shares of
Common Stock, the Exercise Price shall be proportionately decreased in the
case of such issuance (on the day following the date fixed for determining
shareholders entitled to receive such dividend or other distribution) or
decreased in the case of such subdivision or increased in the case of such
combination (on the date that such subdivision or combination shall become
effective).
(2) No Adjustment for Small Amounts. Anything in this Section (f) to the
-------------------------------
contrary notwithstanding, the Company shall not be required to give effect to
any adjustment in the Exercise Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required a change
of the Exercise Price by at least one cent, but when the cumulative net effect
of more than one adjustment so determined shall be to change the actual
Exercise Price by at least one cent, such change in the Exercise Price shall
thereupon be given effect.
(3) Number of Shares Adjusted. Upon any adjustment of the Exercise
----------------------------
Price, the Holder of this Warrant shall thereafter (until another such
adjustment) be entitled to purchase, at the new Exercise Price, the number of
shares, calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock initially issuable upon exercise of this
Warrant by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the new Exercise Price.
(4) Common Stock Defined. Whenever reference is made in this Section (f)
--------------------
to the issue or sale of shares of Common Stock, the term "Common Stock" shall
mean the Common Stock of the Company of the class authorized as of the date
hereof and any other class of stock ranking on a parity with such Common
Stock. However, subject to the provisions of Section (i) hereof, shares
issuable upon exercise hereof shall include only shares of the class
designated as Common Stock of the Company as of the date hereof.
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted
---------------------
as required by the provisions of Section (f) hereof, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at
its principal office, and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment.
Each such officer's certificate shall be made available at all reasonable
times for inspection by the Holder and the Company shall, forthwith after each
such adjustment, deliver a copy of such certificate to the Holder. Such
certificate shall be conclusive as to the correctness of such adjustment.
(h) Notices to Warrant Holders. So long as this Warrant shall be
-----------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to
the Holders of Common Stock for subscription or purchase by them any shares of
stock of any class or any other rights or (iii) if any capital reorganization
of the Company, reclassification of the capital stock of the Company,
consolidation or merger of the Company with or into another corporation, sale,
lease or transfer of all or substantially all of the property and assets of
the Company to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall cause to be delivered to the
Holder, at least ten days prior to the date specified in (x) or (y) below, as
the case may be, a notice containing a brief description of the proposed
action and stating the date on which (x) a record is to be taken for the
purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any,
is to be fixed as of which the Holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger. In case of any
---------------------------------------------
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from no
par value to par value, or as a result of an issuance of Common Stock by way
of dividend or other distribution or of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger the Company
is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in
case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, the Company shall
cause effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in any such
capital reorganization or reclassifi-cation, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for or of a security
of the Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of subsection (f) hereof with
the amount of the consideration received upon the issue thereof being
determined by the Board of Directors of the Company, such determination to be
final and binding on the Holder.
(j) Transfer to Comply with the Securities Act of 1933.
----------------------------------------------------------
(1) This Warrant or the Warrant Stock or any other security issued or
issuable upon exercise of this Warrant may not be sold, transferred or
otherwise disposed of except to a person who, in the opinion of counsel for
the Company, is a person to whom this Warrant or such Warrant Stock may
legally be transferred pursuant to Section (d) hereof without registration and
without the delivery of a current prospectus under the Securities Act with
respect thereto and then only against receipt of an agreement of such person
to comply with the provisions of this Section (j) with respect to any resale
or other disposition of such securities.
(2) The Company may cause the following legend to be set forth on each
certificate representing Warrant Stock or any other security issued or
issuable upon exercise of this Warrant not theretofore distributed to the
public or sold to underwriters for distribution to the public pursuant to
Section (k) hereof, unless counsel for the Company is of the opinion as to any
such certificate that such legend is unnecessary:
The securities represented by this certificate may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement under the Securities Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act the availability of which is to be
established to the satisfaction of the Company.
(k) Registration Rights for Warrant Stock. There are no registration
----------------------------------------
rights, express or implied, for the Warrant Stock to be issued pursuant hereto
except to the extent that other warrants held by the Holder have registration
rights, in which case those registration rights shall apply to the Warrant
Stock.
(l) Applicable Law. This Warrant shall be governed by, and construed in
--------------
accordance with, the laws of the State of Colorado.
Bion Environmental Technologies, Inc.
Date: _______________ By: ____________________________
Authorized Officer
PURCHASE FORM
--------------
CLASS L WARRANT, ____________ THROUGH DECEMBER 31, 2000, _______ SHARES @
$7.50/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 exercis-able 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: _______________________
