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EXHIBIT 99.2
BION ENVIRONMENTAL TECHNOLOGIES, INC.
2006 CONSOLIDATED INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This OPTION AGREEMENT is made this 7th day of November, 2007
between Bion
Environmental Technologies, Inc., a Colorado corporation
("Company"), 641
Lexington Avenue 17th Floor, New York, New York 10022, and Mark
A. Smith
("Optionee") PO Box 566, Crestone CO 81131.
In consideration of the mutual covenants hereinafter set forth
and for other
good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. Pursuant to the provisions of the Company's
2006
Consolidated Incentive Plan ("Plan"), the Company hereby grants
to the
Optionee, subject to the terms and conditions of the Plan (as it
presently
exists and as it may hereafter be amended), and subject to the
further terms
and conditions hereinafter set forth, the right and option to
purchase from
the Company all or any part of an aggregate of 125,000 shares of
the
Company's no par value common stock ("Common Stock") at the
purchase price of
$2.20 per share ("Shares"), such option to be exercised only as
hereinafter
provided. The option ("Option") is not intended to be, and will
not be
treated as, an Incentive Stock Option within the meaning of
Section 422A of
the Internal Revenue Code of 1986, as amended. The number of
Shares with
respect to which the Option is exercisable, and the purchase
price with
respect to each Share to be acquired pursuant to the exercise of
the Option
herein granted, each are subject to adjustment under certain
circumstances as
more fully set forth in the Plan. The term "Common Stock" as
used herein
shall include any other class of stock or other securities
resulting from any
such adjustment.
2. Exercise of Option. 125,000 options granted shall vest and
be
exercisable commencing on January 1, 2008. To the extent that it
has not
theretofore been exercised, each Option shall expire at 11:59
P.M. on
December 31, 2011.
3. Option Exercise. Subject to the terms and conditions of
Section 2
above, the Option granted hereunder may be exercised in whole or
in any part,
and may be exercised in part from time to time, all subject to
the
limitations on exercise set forth herein and in the Plan,
provided that no
partial exercise of the Option shall be for an aggregate
exercise price of
less than $1,000 unless such partial exercise is for the last
remaining
unexercised portion of the Option. The partial exercise of the
Option shall
not cause the expiration, termination or cancellation of the
remaining
portion thereof. The Option may be exercised by delivering
written notice,
in the form attached hereto, to the principal office of the
Company, to the
attention of its Secretary, no less than three business days in
advance of
the effective date of the proposed exercise. Such notice shall
be
accompanied by this Option Agreement and shall specify the
number of Shares
of Common Stock with respect to which the Option is being
exercised and the
effective date of the proposed exercise, and shall be signed by
the Optionee.
The Optionee may withdraw such notice at any time prior to the
close of
business on the business day immediately preceding the effective
date of the
proposed exercise, in which case this Option Agreement shall be
returned to
the Optionee.
4. Method of Exercise.
a) Payment for Shares of Common Stock to be purchased upon
the
exercise of the Option shall be made on the effective date of
such exercise
either (i) in cash, by certified check, bank cashier's check or
wire
transfer, or (ii) subject to the approval of the Incentive Plan
Committee, in
Shares of Common Stock owned by the Optionee and valued at their
fair market
value on the effective date of such exercise (determined in
accordance with
the method for establishing fair market value as set forth in
the Plan), or
partly in Shares of Common Stock with the balance in cash, by
certified
check, bank cashier's check or wire transfer. Any payment in
Shares of
Common Stock shall be effected by the delivery of such Shares to
the
Secretary of the Company, duly endorsed in blank or accompanied
by stock
powers duly executed in blank, together with any other documents
and
evidences as the Secretary of the Company shall require from
time to time; or
b) Cashless Exercise. In lieu of exercising this Option via
cash
payment or as otherwise set forth at paragraph 4.a) above, the
Holder may
effect a cashless exercise and receive Common Stock equal to the
value of
this Option (or the portion thereof being cancelled) by means of
a net
issuance exercise, in which event the Company shall issue to the
Holder a
number of Shares of Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of Shares of Common Stock to be issued to
the Holder.
Y = the number of Shares purchasable under this option or, if
only a
portion of the Option is being exercised (at the date of
such
calculation), that portion.
A = the current market price of one Share of Common Stock (at
the
date of such calculation).
B = the exercise price (as adjusted to the date of
calculation).
If the above calculation results in a negative number, then no
Option Shares
of Common Stock shall be issued or issuable upon conversion of
this Option
pursuant to this Provision, and the Option shall not be deemed
to have been
exercised, notwithstanding the delivery of the notice of
election.
c) The Option may be exercised by a broker-dealer acting on
behalf of
the Optionee if (i) the broker-dealer has received from the
Optionee or the
Company a fully-and-duly-endorsed agreement evidencing the
Option and
instructions signed by the Optionee requesting that the Company
deliver the
Shares of Common Stock subject to the Option to the
broker-dealer on behalf
2
of the Optionee and specifying the account into which such
Shares should be
deposited, (ii) adequate provision has been made with respect to
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