EXHIBIT 10.1

                     BION ENVIRONMENTAL TECHNOLOGIES, INC.
              641 Lexington Avenue, 17th Floor, New York, NY  10022
                    tel:  212-758-6622    fax:  212-758-7733


THIS AGREEMENT is made effective the 25 day of September, 2008 by, between
and among Ronald Kreider ('K') and Kreider Farms ('KF') (collectively K and
KF are 'Kreider') and Bion Environmental Technologies, Inc. ('B') and Bion PA
1 LLC ('LLC') (collectively B and LLC are 'Bion')

WHEREAS the parties entered into a Memorandum of Understanding executed
February 20, 2008 ('MOU'); and

WHEREAS Bion has, at its sole expense, pursuant to MOU, engaged in activities
including without limitation, i) work with various Pennsylvania local and
state governmental entities including PA DEP, PENNVEST, Town of Manheim and
various other entities and associations related to design and installation of
a Bion waste treatment and renewable energy generation system at: a) the KF
dairy location in Manheim ('Manheim Facility') and, b) potential renewable
energy production and/or support facilities at the other KF poultry locations
(Mt.'s Joy / Donegal; Pleasant; Middletown) for the collection and
transportation of poultry manure plus c) possible renewable energy production
and/or support facilities at other locations(collectively 'System') and ii)
the establishment of protocols, methodologies and certifications related to:
A) nutrient credits (for nitrogen and phosphorus reductions produced by the
System) ('Credits'); B) potential sale of such Credits; and C) the
production, utilization on site and potential for sale on the grid of
electricity produced by the renewable energy to be generated by the System;

AND WHEREAS Kreider and Bion each desire that Bion construct and operate the
System at KF facilities (with initial components at the Manheim Facility and
possibly additional facilities at other Kreider locations and/or  locations
not owned by Kreider) on the terms and conditions set forth in this
Agreement,

NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, Kreider and Bion do hereby agree as follows in order
to proceed with the design, construction and operation the System:

1) LLC, will design, permit, construct, finance, own and operate (directly
and/or through bonded contractors) the System, subject to permitting,
construction and other conditions successfully completed on the timeline set
forth below.  The Manheim Facility portion of the System will be as generally
described at Exhibit A hereto, subject to final design and permitting
changes, which System shall be developed and operated as follows:

     a)  Be designed, permitted, constructed and financed at the sole cost
and expense of LLC, which total cost and expense is presently estimated to be
approximately *;
_______________

* Confidential material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities and
Exchange Commission.
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     b)  Be operated by LLC pursuant to a license of B's proprietary and
patented technology ('Technology') which will be granted to LLC, for which
license to LLC, *;

     c)  LLC will endeavor to treat the maximum amount of waste feasible
(collectable) from the existing herd at the Manheim Facility in the initial
System components located at the Manheim Facility, which currently includes
of approximately *

     d)  LLC shall initially treat the solids produced by the System from the
dairy waste stream at the Manheim Facility, and, in the future, based upon
completion of permitting and nutrient methodology approvals from the PA DEP,
the poultry wastes from poultry at the Manheim Facility and/or other Kreider
facilities as set forth at Exhibit B through the renewable energy production
portion of the System ('Renewable Energy Production Facilities') to generate
heat/power. With appropriate concern for 'bio-security', the Renewable Energy
Production Facility may be located at: i) the Manheim Facility, ii) other
Kreider facility locations, and/or iii) other locations not owned by Kreider,
as mutually agreed,  PROVIDED, HOWEVER, at least some  Energy Production
Facility will be located at the Manheim Facility to maintain temperature
and/or  to provide needed heat for the Bion waste treatment  modules of the
System located at the Manheim Facility, and

     e)  For all purposes of this Agreement, System shall include Bion waste
treatment modules and the Renewable Energy Generation Facility at the Manheim
Facility , in their initial forms and as altered during the Term, plus all
other facilities constructed by Bion on Kreider facilities or elsewhere
pursuant to this Agreement;

     f)  Operate the System such that dairy waste and poultry litter is
removed, stored and treated in a timely manner in accordance with accepted
husbandry practices and regulatory requirements.

2)  It shall be the responsibility of Bion to establish protocols for the
System and to obtain state and other approvals related to the System and any
Nutrient Credits or renewable energy generated thereby related to treatment
of either or both of dairy and/or poultry wastes from Kreider facilities,
which Credits shall be the sole property of LLC, all of which activities
shall be at the expense of LLC;

3)   Kreider acknowledges that:

     a)  Bion has received approval from the PA DEP to generate approximately
125 nitrogen  and 16 phosphorus credits per dairy cow waste stream treated at
the Manheim Facility based on its Technology and the data and methodology
protocols developed by Bion, which shall be incorporated into the System and
its operations; and

_______________

* Confidential material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities and
Exchange Commission.

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     b)  Bion will develop (and file with PA DEP) similar protocols and
methodologies * as well as secure air permits for the renewable energy
system;

     c) * the combustion testing of the poultry litter and the dairy solids.
These total costs are presently estimated by Bion to be in the range of *;
and

     d)  Bion's waste treatment process contains valuable patented and
proprietary intellectual property and access to the System and data from the
System needs to be deliberate and managed to protect the value of this
intellectual property.

4)   Kreider shall cooperate with Bion in connection with each of the
activities set forth at paragraphs 1), 2) and 3) above, which cooperation
shall include, without limitation:

     a)  Actions documenting LLC's ownership of the System and facilitating
LLC's (or its agents/contractors) design, financing, construction and
operation of the System from the date of this Agreement through a date 20
years after the second anniversary of the date on which full scale treatment
of the dairy waste from the Manheim Facility in the System begins ('Term')
(consistent with the Kreider purchase option set forth below): i) which Term
may be extended by the written agreement of the parties hereto; *; and iii)
further provided, that as to the Term related to processing poultry litter,
for each Kreider poultry facility, the 20 year period shall commence
concurrent with the commencement of operations of the dairy waste treatment
facility.

     b)  Provision of the dairy waste from the Manheim Facility to LLC for
treatment in the System, which dairy wastes shall be provided in a state and
manner consistent with Exhibit C;

     c)  *

     d)  *

     e)  Kreider will fully support, as required, the processing and
execution of permitting, construction and financing documents (including
grant applications) for the System (and each portion thereof), provided,
however, that Kreider will have no liability under such documents.  Kreider
participation in these activities will be proactively minimized to extent
feasible.

     f)  Kreider's participation in the process of data collection and other
activities related to validation and/or sale of the Credits generated by the
System (and each portion thereof);

_______________

* Confidential material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities and
Exchange Commission.

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     g)  Provision of access to the System, which access shall be controlled
by Bion  (Bion will not unreasonably withhold access to KF as it relates to
its regulatory requirements), and each component thereof, at each Kreider
facility on which any System component is placed, which site access will be
available to all persons designated by Bion, including without limitation: i)
Bion personnel, contractors, agents, and guests ii) representatives of
regulatory agencies and other branches of the State of Pennsylvania and other
governmental (and quasi governmental) entities; and iii) others as jointly
agreed.

     h)  Grant by Kreider to LLC of cost-free site lease(s) and easement(s)
as required to efficiently construct and operate: i) initial components of
the System at Manheim (which shall include a Dairy waste treatment facility
and an energy facility with at least minimum capacity to process the Dairy
manure and poultry litter from Kreider's Manheim poultry complex, including
sufficient energy to meet the System components' needs for temperature
maintenance and process heat requirements; and, at maximum size, large enough
to process waste and produce renewable energy from all dairy waste and
poultry litter from all of Kreider's facilities), and ii) other components of
the System at Kreider poultry facilities and/or other Kreider locations for
the entire Term;  iii) should any such site proposed and/or selected by
Kreider for a System component be deemed unsuitable by Bion, Bion and Kreider
will work together to identify  suitable site(s)on Kreider facilities;
provided, however, iv) Bion may locate some System components on locations
not owned by Kreider; and v) due to bio-security concerns, no manure or
litter obtained from non-Kreider sources shall be processed stored or used at
facilities located on Kreider property without previous written permission
from Kreider.

     i)  Kreider will provide LLC with a timely advance notice of all
proposed changes at the Kreider facilities which may affect LLC's operation
of the System, including without limitation material changes in the ration,
census of animals (dairy and poultry, increase or decrease), use of chemicals
* etc; except as specified in paragraph 4b above, "timely" will normally be
one week. Nothing herein shall preclude Kreider from continuing the husbandry
practices and procedures currently employed, nor other customary industry
husbandry practices.  Should Bion in the future request a modification of
such practices, which would negatively impact Kreider's profitability,
Kreider shall be entitled to reasonable compensation for such loss.

5)   Kreider shall purchase from LLC the electricity (or power in other
mutually agreeable usable forms) generated by LLC in the Renewable Energy
Production Facility at a price equal to  utility rates going forward and
adjusted periodically as set forth at Exhibit D; LLC will be responsible for
any excess costs of usage and related demand charges over and above normal
charges to Kreider from third party utilities incurred by KF as a result of
LLC's inability to provide electricity at any given time.  Payment for energy
purchases will be made by Kreider to LLC on a monthly basis.

     *.
_______________

* Confidential material has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities and
Exchange Commission.
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7)   Bion will make available to Kreider, for its re-use related to its dairy
production related to the System, any 'green tag(s)' that Bion may secure
during the Term; provided, however, that:

     a)  Kreider will be solely responsible for all fees, if any, due the
environmental organization that sponsors such 'green tag(s)';

     b)  Bion will not charge KF for such 'green tag' utilization; and

     c)  Kreider must agree to maintain all standards, etc. related to such
'green tag(s)';

8)   The Confidentiality and Proprietary Information Agreement already
executed by Kreider shall remain in full force and effect for the entire Term
(plus two years) and shall be treated as if incorporated in this agreement in
its entirety.

9)   This Agreement may be terminated at the option of either party if all
necessary approvals for construction of the Dairy waste treatment portion of
the System are not obtained within 18 months of the effective date of this
Agreement or if construction of the initial System components at the Manheim
Facility is not substantially complete within 24 months of the effective
date.  In the event of such termination, neither party shall have any
continuing responsibility to the other, except that such termination will
have no effect on confidentiality agreements in effect at that time.

10)  Miscellaneous:

     a)  This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns and any
person acquiring, whether by merger, consolidation, liquidation, purchase of
assets or otherwise, all or substantially all of a party's equity or assets
and business.

     b)  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 Pennsylvania 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 Pennsylvania 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.

     c)  Any claim or controversy, which arises out of or relates to this
Agreement, or breach of it, shall be settled by arbitration.

     d)  Should any party hereto waive breach of any provision of this
Agreement, that waiver shall not operate or be construed as a waiver of any
further breach of this Agreement.


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     e)  In the event that any one or more of the provisions of this
Agreement or any portions there under 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.

     f)  This Agreement shall constitute the entire agreement between the
parties hereto and oral modifications of the Agreement shall have no effect.
This Agreement may be altered only by a written agreement signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

                                Bion Environmental Technologies, Inc.


                                By: /s/ MAS   9/27/08
                                    Mark A. Smith, President


                                Bion PA 1 LLC


                                By: /s/ MAS   9/27/08
                                    Mark A. Smith, Manager

                                'Kreider'

                                By: /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 A. Kreider & Sons, a partnership, all of
                                which shall be bound by the signature above.




















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