EXHIBIT 10.1

KREIDER/BION POULTRY WASTE JOINT VENTURE AGREEMENT

This KREIDER/BION POULTRY WASTE JOINT VENTURE AGREEMENT (‘JVA’ or ‘Agreement’)
is made effective this __ day of May, 2016 by, between and among Ronald Kreider
(‘K’) and Kreider Farms (‘KF’) (collectively K and KF are ‘Kreider’) and Bion
Environmental Technologies, Inc. (‘Bion’) (collectively Kreider and Bion are the
‘Parties’), to a) set out as an independent agreement the material terms
pursuant to which Kreider and Bion will pursue their longstanding venture
regarding treatment of Kreider’s Poultry Litter (defined below) while b)
clarifying and amending the provisions of all of the prior written agreements
among the Parties (‘Prior Agreements’) with regard to development of LTF
(defined below), (each of which Prior Agreements (including the Lease) remains
in full force and effect and continue to control all activities related to the
Bion dairy waste system at KF#1 System (defined below) and the relations between
Kreider and Bion PA1 LLC (‘PA1’) except to the extent that any term of any part
of the Prior Agreements differs from the terms set forth in this JVA). In the
event of any conflict or difference in the terms set forth in this JVA and any
part of the Prior Agreements, the terms of this JVA shall control and shall be
followed for all purposes related to the Kreider/Bion Poultry Waste Joint
Venture (‘JV’) set forth herein.

WHEREAS Kreider has committed to provide JV with the waste stream from its
existing poultry operations (from both the old barns and ‘new poultry barns’ as
defined in the Prior Agreements) and potentially any and all Kreider’s expanded
and/or additional poultry operations (subject to the elections set forth below)
within the Susquehanna watershed which become operational during the Term of
this JVA (as extended) ('Expansion Operations') on the terms set forth below
from the date of commencement of operation of the LTF (defined below)
collectively such waste streams constitute the ‘Poultry Litter’, 'Litter' or
'Kreider Litter') for the Term the JV (including any extensions);

WHEREAS Bion has expended substantial sums and deployed substantial resources
(personnel, time, etc.) on research and development, securing credit
certifications and development of business and cost models, and other
pre-development work, and continues to work on regulatory, technical and other
matters related to development of a facility to treat/process the Poultry Litter
(‘Litter Treatment Facility’ or ‘LTF’) in an efficient and profitable manner in
the current regulatory and political environment;

AND WHEREAS Kreider and Bion intend to continue to work on development of LTF
pursuant to the JVA with Bion as ‘Managing Member’ of JV and ‘developer’ of LTF;

NOW THEREFORE, in consideration of the mutual covenants, promises and conditions
set forth in this JVA (and the Prior Agreements) and the performance by Bion in
pursuing the development of the LTF to date, and each action performed pursuant
thereto, the Parties, intending to be legally bound, do hereby agree as follows:

 

1)

Deadlines, Term and Extensions.

a.

Any deadlines set forth in the Prior Agreements related in any manner to the
development of LTF, including without limitation the deadline to achieve
agreement with the Pennsylvania Department of Environmental Protection (‘DEP’)
regarding amended nutrient credit protocols related to treatment of the Poultry
Litter and/or permits for the construction and/or operation of the Litter
Treatment Facility (sometimes referred to as ‘REF’ in the Prior Agreements)
together with Kreider’s obligation to deliver the Litter to JV for treatment in
the LTF (subject to timely elections as set forth below) are extended to April
1, 2021 , provided, however, the parties acknowledge that such deadline shall be
automatically extended by up to two years to allow sufficient time to place LTF
in commercial operation if the LTF has entered the permitting process by such
date. Failure to meet such deadlines shall be cause for Kreider to terminate the
agreement upon notice to the other party. For purposes of interpreting this
paragraph, “entered the permitting process” means that completed applications
for all permits necessary for permission to build and operate the facility (in
such form as can reasonably be expected to comply with regulations) shall have
been submitted to the appropriate authorities.

b.

The initial Term of JV shall be run through a date 10 years from the date of
commencement of full commercial operation of LTF, which Term shall be
automatically extended for up to four additional five year periods so long as
LTF continues to operate commercially without any interruption greater than six
(6) months.

2)

Definitions.

The items set forth below shall be defined as follows:

a.

The proposed Litter Treatment Facility (in whatever form and at whatever
location(s)) and any entity in/at which Bion chooses to develop and/or operate
LTF together with all contract rights, assets, and potential revenue streams
from operations derived from/related to the Poultry Litter, shall be referenced
as 'KF#2" or LTF.

b.

All of the nutrient reduction credits and any other credits and/or other things
of value such as by-products generated (now and in the future) from KF#2 and/or
any other activities related to treatment and/or handling of Kreider's Poultry
Litter by JV shall be referenced as the 'KF#2 Assets'.

c.

The KF#2 Assets and LTF shall be assets of JV.

 

3)

Poultry Litter.

a.

In consideration of its various interests in JV set forth herein, Kreider shall
provide JV with the waste stream from all of its poultry operations, including
existing operations (at both the old barns and 'new poultry barns' as defined in
the Prior Agreements) and potentially from any of Kreider's Expansion
Operations, (collectively such waste streams constitute the 'Poultry Litter)
without cost to JV from the date LTF commences operations until the end of the
entire Term (as extended); PROVIDED, HOWEVER, nothing herein shall: i)obligate
Kreider with regard to any poultry litter or poultry facilities outside the
Susquehanna watershed and/or ii) prevent Bion from developing additional
facilities to treat poultry litter and/or other animal waste at any location
free of any obligations pursuant to this JVA.

b.

PROVIDED, HOWEVER, Bion shall inform Kreider of its intention to take litter
from each Expansion Operation facility pursuant to this JVA by a date that is
the later of: i) 30 days after the completion of permitting for any such
facility, or ii) a date 18 months prior to the housing of birds in each such
Expansion Operation facility; FURTHER PROVIDED that such obligation will be
conditioned upon Kreider providing Bion with timely (defined to allow no less
than 30 days of time to make an informed decision) written notice regarding each
such Expansion Operation facility which notice shall include all details
regarding each such facility (including without limitation the location, number
of birds, intended husbandry practices, timelines, permitting status, etc.)
(That Bion reasonably requires to make a decision to commit to process the
litter from each such facility. Such election by Bion will be deemed an
obligation for the JV to remove and treat such litter by the later of the
commencement of operations in the expansion Operation or commencement of
operations by the Litter Treatment Facility.

c.

Kreider shall provide Bion and JV with a technical specification regarding the
Poultry Litter from each of its poultry facilities to use in credit
certification, design of LTF, operation of LTF, and all other matters

d.

The cost to transport the Poultry Litter from Kreider's poultry facilities to
LTF will be borne by JV.

4)

Management of and Interests in JV.

 

a.

Bion shall continue to work on development of LTF with the intention of
developing LTF so that it will treat/process the Poultry Litter in an efficient
and profitable manner in the current regulatory and political environment.

b.

Bion shall act as the 'developer' of LTF and 'Managing Member' of JV with the
authority to take all actions required to design, locate, permit, finance,
construct and operate LTF as further detailed below.

c.

Bion shall initially own 100% of the equity of JV with Kreider initially owning
a 40% interest in DNCF (defined below and subject to adjustments as set forth in
Section 4) d. and Section 6) below) of JF ('Kreider Initial JV Interest').

d.

The interests of Kreider and Bion set forth above (and more fully described
below) shall be diluted on a pro-rata basis by any third party financing of JV.

e.

Bion will provide JV with licenses to its technology necessary to operate the
LTF at no additional cost. In addition, it will be Bion's responsibility to
develop a business model/strategy for the JV and source LTF's long-term
operating management and/or contract operator.

f.

Kreider will execute a Confidentiality and Proprietary Information Agreement
('CPIA') regarding Bion's technology and 'know how' (technical,
political/regulatory and business) utilized in the development and/or operation
of JV and/or shared with Kreider which CPIA shall be in the form attached hereto
as Exhibit A.

5)

Final/Structure of JV and ITC's.

a.

The Parties acknowledge that it is not currently possible to determine the exact
final form/structure of entity in which JV's LTF shall be financed and
owned/operated that will maximize the economic return while limiting The
liability to the Parties. Therefore, the Parties hereby agree that such decision
will be finalized at the time of financing LTF, at which point they can better
determine what is required to maximize the economic return to the parties taking
into account all operating, liability, subsidy and/or tax issues (including tax
credits and other tax attributes), as applicable.

b.

PROVIDED, HOWEVER, if any ITC's or similar tax items become available to JV
related to 'poultry house improvements', such items shall be allocated to
Kreider while all other LTC's or similar items related to the LTF and/or JV
shall be the property of the JV.

6)

Bion PA-2 LLC ('PA2').

Until the determination at Paragraph 5 above is made, the activities of JV shall
take place in (and be the sole activities of) Bion's subsidiary, Bion PA-2 LLC
('PA2') and Bion shall continue its work as developer of LTF through and within
PA2. Bion and Kreider agree that all the activities related to the Poultry
Litter, LTF and JV as defined above shall initially take place in PA2 on the
basis immediately following:

a.

Initially, Bion shall continue to be sole member and own 100% of PA 2.

b.

Dominic Bassani, Bion's CEO, and Mark A. Smith, Bion's President, shall
initially each serve as Managers of PA2 and serve on its governing board, with
other Bion personnel providing services as needed; Bion shall appoint senior
management personnel and/or board members to the board on an ongoing basis; PA2
shall keep Kreider informed of its activities/status on a regular basis in
informal and formal manners, as appropriate.

c.

Kreider shall have the right to appoint a representative to serve on the
governing board of PA2 at any time Kreider is ready to take an ongoing active
role in the pre-development/development activities related to LTF.

d.

Kreider's initial JV Interest in PA2/JV shall entitle Kreider to receive 40%
(Bion shall initially receive the other 60% of DNCF: 20% for its role as
Managing Member and 40% as consideration for its contributions of technology and
'know how' and its advances of funds to develop the LTF to date) of
Distributable Net Cash Flow of JV/PA2 ("DCNF"), subject to prorate reduction to
the extent that litter from Kreider's poultry facilities comprises less than 100
% of the poultry litter treated in LT, which DCNF shall be determined
periodically by PA2 after payment of: i) operating expenses, ii) debt service,
iii) Bion's Advances (defined below), iv) other similar items, and v) creation
of a reasonable reserve for working/operating capital needs has been set aside
by JV.

e.

Kreider shall have the option to convert the Kreider Initial JV Interest into
the equivalent of a 40% equity ownership interest in JV, subject to prorate
reduction to the extent that litter from Kreider's poultry facilities comprises
less than 100% of the poultry litter treated in LTF ('Kreider Equity Interest')
on any date after execution of this JVA, through a date two years after the
commencement of operation of the facility. ('Kreider Option') If Kreider Option
is executed by Kreider, Kreider will own the Kreider Equity Interest (40%
ownership of JV, subject to prorate reduction to the extent that litter from
Kreider's poultry facilities comprise less than 100 % of the poultry litter
treated in LTF and dilution related to third party financing) and Bion will own
the balance of JV, each of which ownership interests will be proportionately
reduced to the extent that any portion of the financing for LTF and/or JV
involves the sale of equity interests in JV.

f.

PROVIDED, HOWEVER, that $2 million of Bion's costs/expenses expended pursuant to
the Prior Agreements through December 31, 2014 ('Prior Bion Expenses') shall be
a debt obligation of JV (whether pursued in PA2 or another entity) with JV/PA2
having no obligations for sums expended by Bion prior to December 31, 2014 in
excess of the Prior Bion Expenses; the Prior Bion Expenses plus any costs
incurred by and appropriately allocated to JV subsequent to December 31, 2014
('New Bion Advances') by Bion, shall be the 'Bion Advances', which Bion Advances
shall be a debt obligation of JV to be repaid to Bion by JV to Bion out of
either; i) project financing, ii) cash flow of JV, or iii) other funding sources
and/or assets of JV prior to the distribution of any DNCF to either Kreider and
Bion (and any other owners of equity interests in JV) pursuant to their
respective JV interests.

g.

Bion shall (through PA2) serve as developer of LTF and 'Managing Member' of
JV/PA2 and shall be responsible for and shall have authority to take all actions
to develop LTF, including without limitation decision making power related to:
i) seeking amended credit certification from the PADEP ii) design, permitting
and construction of LTF, iii) negotiating and arranging financing for LTF, iv)
location of LTF, v) operation of LTF, and vi) all matters that arise in the
course of development, construction and operation of LTF, subject to supervision
by the governing board of PA2.

h.

Kreider have the right, but not the obligation, to designate member(s) of
PA2/JV's 'governing board' (however named) in proportion at least equal to its
interest in DCNF(or equity) to the total board membership (with a minimum of one
seat) ; Bion will have the right to designate a majority of the members on such
'governing board' (currently 2 persons).

i.

As it is not presently possible to accurately predict how the Poultry Litter
will be treated in LTF, initially and on a long term basis, and because there
could be one or multiple transactions with one or multiple parties over various
time frames which transactions could potentially include processing litter from
facilities other than Kreider's facilities to achieve sufficient scale to
economically justify such investment, Bion, as Managing Member of JV, shall use
its commercially reasonable best efforts to negotiate such transaction(s) on
behalf of JV in a manner which endeavors to insure that JV's (and therefore
Kreider's) interest in the expanded JV's revenue stream appropriately reflects
Kreider's contributions to the venture and Bion acknowledges its fiduciary
obligations to Kreider in the context of such negotiations.

j.

NOTWITHSTANDING ANY OTHER LANGUAGE SET FORTH IN THIS JVA, Bion and Kreider agree
that there shall be no 'self-dealing' of any sort whatsoever (whether with
parties hereto and/or third parties); FURTHER PROVIDED, the parties acknowledge
that each undertakes a fiduciary relation (in additional to contractual) to the
other parties in this joint venture to avoid self-dealing and/or sweetheart
contracts; and in the event of any contracts or agreements between the JV and
any party hereto for which the terms are not set forth in this agreement,
approval shall be required from the non-interested owners of the JV, if any; AND
FURTHER PROVIDED that the parties hereto agree that more extensive governance
provisions consistent with these principles will be incorporate into executed
agreements at the time of financing LTF.

7)

Miscellaneous.

a.

Arbitration. In the event of any dispute between Kreider and Bion over any
provision of the JVA (including the Prior Agreements), Kreider and Bion agree
that if they cannot resolve such dispute in 90 days (from written notice), such
dispute shall be subject to resolution through binding arbitration (in
Pennsylvania), which arbitration shall be by a mutually agreeable arbitrator (if
the parties cannot agree on a mutual acceptable arbitrator, each shall nominate
an independent third party and such third parties shall chose an arbitrator
without consultation with Kreider and Bion which arbitrator shall be deemed to
be mutually acceptable). The parties shall split the costs related to such
arbitration.

b.

Regulatory Agreements. The Parties expressly acknowledge and agree that they
each understand that it is likely that Kreider and Bion shall each be required
to execute and/or amend one or more agreements with the PA Department of
Environmental Protection ('DEP') and/or other regulatory authorities
(collectively 'Regulatory Agreements') in connection with issuance of the DEP
permit(s) and/or credit certifications for LTF and Kreider and Bion each hereby
agree that they will cooperate in the negotiation and execution of such
Regulatory Agreements as the DEP and/or other regulatory authorities shall
require related to permitting, construction and/or operation of LTF. This
paragraph should not be construed to mean that Kreider will be required to
assume any liability or modify its operations without reasonable compensation.

c.

Modification. Neither this Agreement nor any provisions hereof shall be waived
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any such waiver, modification, discharge or termination
is sought.

d.

Notices. Any notice, demand or other communication which any party hereto may be
required, or may elect, to give to anyone interested hereunder shall be in
writing and delivered in person sent by facsimile transmission or sent by United
States Certified, Registered or Express Mail, Federal Express or other private
courier, postage prepaid, and return receipt requested in the event of delivery
by mail (with electronic copies forwarded by email). Notices shall be given when
delivered personally, or when sent by facsimile transmission if sent during
regular business hours of the recipient and if not, on the next following
business day or if mailed, at midnight on the third business day after the date
of mailing or if sent by Federal Express or by other private courier on the next
following business day.

e.

Counterparts. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts and each of such counterparts
shall, for all purposes, constitute one agreement binding on all parties, not
withstanding that all parties are not signatories to the same counterpart.
Electronic copies of this Agreement shall have the same force and effect as
originals.

f.

Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof, and there are no representations,
covenants or other agreements except as state or referred to herein.

g.

Severability. Each provision of this Agreement is intended to be severable from
every other provision, and the invalidity or illegality of any portion hereof
shall not affect the validity or legality of the remainder hereof.

 

h.

Assignability. This Agreement is not transferable or assignable by the
undersigned except as may be provided herein.

i.

Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Pennsylvania as applied to residents of that state
executing contracts wholly to be performed in that state.

Bion Environmental Technologies, Inc.

/s/ Dominic Bassani

Dominic Bassani, Chief Executive Officer

‘Kreider’

/s/ Ronald E. Kreider

Ronald Kreider, individually and as controlling shareholder/partner of all
entities defined as Kreider and/or Kreider Farms herein, including without
limitation, Noah W. Kreider & Sons, a partnership, all of which shall be bound
by the signature above