AGREEMENT
It is agreed this 6th day of August, 200O, by and among Bion
Environmental Technologies, Inc. and subsidiaries (collectively "BION") and
Dream Maker Dairy and Chris Northrup (collectively "CN") (the "AGREEMENT") as
follows:
WHEREAS, CN has a BION NMS System on the Dream Maker Dairy ("Site") (more
fully described in Exhibit A hereto), pursuant to existing agreements with
BION ("Initial Agreements"); and
WHEREAS, the Initial Agreements were supplemented during Spring, 2000 to
allow BION to use the BION NMS System at the Site to develop and test a
computerized monitoring system ("CMS") component to the BION NMS System at
BION's expense ("2000 Agreement"); and
WHEREAS, BION and CN wish to make further agreements concerning
modifications of the BION NMS and the CMS at the Site and, potentially,
ownership of the Site and related business assets (collectively "Dairy") by
BION;
NOW THEREFORE IN CONSIDERATION of the mutual promised performances set
forth herein, in the Initial Agreements and/or the 2000 Agreement,
1. BION agrees to loan to CN the sum of $70,000 (U.S.), incorporating
the $10,000 loan effective June 29, 2000, which total new loan shall be
evidenced by a one year, 10% interest promissory note executed by CN in the
form attached hereto as Exhibit B ("Note"). Such Note shall be secured by a
second lien on the Site. CN shall provide BION with information concerning
CN's first mortgage on the Site, and, within a reasonable time, CN shall
execute such further real estate/security related documents as BION may
reasonably request to perfect its second lien under applicable law.
2. CN agrees to allow BION to modify the existing BION NMS System and
CMS on the Site at BION's cost in a mutually acceptable manner including,
without limitation, the undertaking of excavations and/or other construction,
and placement, removal or modification of equipment. CN agrees that the CMS
(existing or modified) and all related assets and all equipment BION brings to
the Site in the course of the subject modifications and all related assets
and/or intellectual property connected therewith are the sole property of
BION. If BION elects not to exercise the Option described in paragraph 4
below, BION agrees either, to be determined by mutual agreement, to return the
Site to its original condition or to make permanent the modifications as so to
enable CN to operate the NMS. CN acknowledges that CN is bound by the
Confidentiality/Proprietary Information Agreement attached hereto as Exhibit
C.
3. BION will pay to CN or to third party contractors up to $15,000 of
development funds to carry out the projects set forth at Exhibit D, and other
such projects as may be identified. All such third party contracts, as well
as any contracts, consultants or participants with CN shall execute a
Confidentiality/Proprietary Information Agreement prior to involvement in the
project.
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4. CN hereby grants BION the option to purchase the entire Dairy
including, without limitation, the Site, all dairy cows, equipment, and other
inventory at a price equal to the sum of $484,000 (U.S.), the agreed upon
value of the Site, plus the finalized value, based on the market at the time
of closing, for the other business assets ("Option") which are currently
valued at $13,000 per cow for each of the existing 360 cows, totaling
$468,000, and $122,000 for the equipment. The Option will be subject to the
following terms and conditions:
a. The option period will commence when:
i. plans, permits, environmental approvals, etc. are in place
in a manner consistent with the pro forma forecast, attached hereto as Exhibit
E and BION has received the necessary financing commitments; and
ii. BION and CN shall have reached agreement concerning
compensation of CN for services to the Dairy and BION after exercise of the
Option; and
b. The Option will extend for one (1) year; and
c. CN shall execute such real estate/lease documents as BION may
reasonably request to put this Option in a form that can be recorded under
applicable law.
It is the intent of the parties that BION will exercise the Option with all
deliberate speed.
5. From the date of this AGREEMENT through the date of exercise by BION
of the Option described in paragraph 4 above:
a. CN shall operate the Dairy in a businesslike manner, keeping the
Site and the Dairy free from encumbrances other than the first mortgage and
the obligations to BION; and
b. The Initial Agreements and this year 2000 Agreement are hereby
modified to provide that BION will be responsible for all costs of harvesting
the BION NMS and the CN shall be entitled to no participation in BionSoil
revenue.
6. CN agrees to provide all reasonable cooperation to BION in connection
with the installation, testing, modifying and operation of the NMS and CMS at
the Site.
7. No rights or obligations of CN under this Agreement may be assigned
without prior written consent of BION except to a successor or assignee of all
rights of CN in and to the Site who agrees to be bound by and assume all of
CN's obligations as set forth in this AGREEMENT.
8. This AGREEMENT will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
laws of the state where the Site is located, without regard to choice of law
principals, shall apply to the interpretation and construction of this
AGREEMENT.
9. Each provision of this AGREEMENT will be considered severable, and if
any provision of this AGREEMENT shall be invalid, illegal or unenforceable, it
will not affect or impair the validity, legality or enforceability of this
AGREEMENT itself, or of any other provision hereof.
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10. Notices and other communications required by this AGREEMENT or laws,
ordinances, rules, regulations and orders of public authorities, or permitted
to be given hereunder, will be in writing, and will be deemed given to a party
when delivered personally, or five (5) days after being deposited in the
United States mail with sufficient postage affixed registered or certified and
return receipt requested, addressed to such part at the address below:
To BION at: Bion Environmental Technologies, Inc.
7921 Southpark Plaza, Suite 200
Littleton, CO 80120
303.738.0845 (phone)
303.703.3637 (fax)
To CN at: Chris Northrop
Dream Maker Dairy
1970 Folsomdale Road
Cowlesville, NY 14037
716.655.5110 (phone and fax)
or any such other address or addresses as may be given by either of them to
the other in writing from time to time.
11. CN agrees to indemnify, defend and hold harmless BION and BION's
employees and agents from any claim, loss, damage, cost, expense or liability
arising out of or relating to the gross negligence or willful misconduct of CN
or CN's employees or agents in connection with any services to be performed or
provided by CN under this AGREEMENT. CN agrees that the services provided by
BION are specific consideration for this provision. BION agrees to indemnify,
defend and hold harmless CN and CN's employees and agents from any claim,
loss, damage, cost, expense or liability arising out of or relating to the
gross negligence or wilful misconduct of BION or BION's employees or agents in
connection with any services to be performed or provided by BION under this
Agreement. BION further agrees that it will take responsibility for the repair
and remediation of any negative environmental impacts that result from the
operation of the system during the trial period and until such time as the
systems are return to CN's control.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT to be executed
on the 6 day of August, 2000.
BION CN
By:/s/ John Northrop By:/s/ Chris Northrop
Authorized Representative Title: Owner
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