Exhibit 10.1
Bion Technologies, Inc.
-----------------------
BION NMS' INSTALLATION AGREEMENT
This agreement (the "AGREEMENT") is made and entered into this _____ day
of _________, 19___, by and between Bion Technologies, Inc. (hereinafter
called "BION") a corporation organized under the laws of Colorado and having a
place of business at 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 and
Crystal Springs, LLC and Xxxxxx Family Farms, Inc. (hereinafter called "BFF")
having a place of business at 000 Xxxx Xxxxxx, Xxxx, XX 00000. (BION and BFF
are collectively the "PARTIES"). This AGREEMENT becomes effective on the later
of the date when BFF signs an agreement with an integrator for provision of
hogs and management of their facilities described in this AGREEMENT, or the
date when BFF completes the financing agreement required for the project
described in this AGREEMENT, but in no event later than November 30, 1997. To
the extent that there is any conflict or contradiction between the terms and
conditions of this AGREEMENT and any subsequent document to which this
AGREEMENT is attached, the terms and conditions of this document shall control
absent express language to the contrary.
WITNESSETH
WHEREAS, BION is a technology based company which has developed and
possesses pending and granted patent assets and certain confidential
proprietary information, data and experience relating to systems for the
treatment and processing of animal waste, for the production of organic soils,
humus, fertilizers, remediated organics and mixtures with other materials
which is considered by BION to be secret and confidential and to constitute a
valuable commercial asset; and,
WHEREAS, BFF acknowledges and understands the secret and confidential
nature of BION's confidential proprietary information, data and experience and
has executed an agreement in which BFF has specifically agreed to maintain
such information, data and experience confidential and has agreed not to use
such information, data and experience in the performance of any other work for
itself or others; and,
WHEREAS, BFF plans to construct a facility in Nebraska and/or Colorado
with initial finishing capacity for 330,000 hogs, which facility is the first
phase ("PHASE I") of a project ("PROJECT") which may contain up to twelve
phases of hog facilities each of comparable size, and which also may contain a
large dairy facility, and this AGREEMENT specifically covers PHASE I and
grants an option on PHASE II,
NOW, THEREFORE, the PARTIES hereto do mutually agree to conduct their
business relationship as follows:
1. ENGAGEMENT OF BION
BFF hereby agrees to engage BION and BION hereby agrees to perform the
services set forth in ATTACHMENT A.
2. SCOPE OF SERVICES
BION shall provide services, (hereinafter referred to as the "WORK"), as set
forth in ATTACHMENT A in accordance with the Standard Terms and Conditions of
this AGREEMENT (ATTACHMENT B). BION retains the right to alter the WORK in
terms of the specific requirements of PHASE I of the PROJECT.
Bion Technologies, Inc.
-----------------------
3. BFF'S RESPONSIBILITIES
A. BFF agrees to:
i. Provide to BION information, including previous reports, plans, and any
other data in the possession or control of BFF relative to the WORK;
ii. give prompt written notice to BION whenever BFF observes or otherwise
becomes aware of any development that affects the WORK or timing of BION's
services;
iii. designate a representative having authority to give instruction, receive
information, define BFF's policies, and make decisions with respect to the
WORK;
iv. bear at all times any and all expenses for obtaining any and all
approvals and permits from public agencies or authorities (including, but not
limited to, field and laboratory tests and surveys) except to the extent that
future permits or regulatory approvals are required as the direct result of
actions taken by employees or designates of BION;
v. bear the cost of all surveying, soils investigation, engineering,
equipment, materials, and construction required to design, install and operate
the Bion NMS including electrical power and equipment maintenance and
replacement; and
vi. physically operate and maintain the Bion NMS and its associated equipment
as defined in the Operations and Maintenance Manual (the "O&M Manual")
prepared for each system (see ATTACHMENT A), and bear all sampling, analysis,
and reporting costs for monitoring of the Bion NMS as required by the
appropriate regulatory agencies.
B. BFF agrees that each Bion NMS system designed and installed under the
terms of this AGREEMENT is designed for the specific use described in this
AGREEMENT and its ATTACHMENTS, is designed to treat a "normal" waste and
wastewater effluent that is produced by confined animal hog raising UNITS, and
is not designed for any significant change in the characteristics of the
wastewater delivered from the hog houses to the system. BFF agrees to notify
BION in writing in advance if there will be any change from the "normal"
wastewater, and agrees to keep all human wastes and toxic and hazardous wastes
out of the Bion NMS including but not limited to all domestic wastewater from
showers, toilets, and sinks, and any needles, syringes, or any veterinary
wastes (cleaners, detergents, and disinfectants approved for use in normal
operation of the facility will not be considered toxic or hazardous wastes).
4. PERIOD OF PERFORMANCE
The primary term of the AGREEMENT shall be for the period beginning on the
date of execution of this AGREEMENT and shall continue for a period of 15
years. Following the primary term this agreement may be renewed for three
successive secondary terms of five years each as follows: Two years prior to
the end of the primary term or any secondary term, either party may decide
that this agreement will not be renewed for the first (or any subsequent)
secondary term. If either party does not give written notice of non-renewal
to the other party on or before the date two years prior to the end of the
term, this agreement will continue on the same terms for the next term.
5. BION COMPENSATION
A. Each site where a Bion NMS is being installed has its unique character.
This requires BION to individually design the application of the Bion NMS for
each site at which it is to be installed. BION's goal is to design each Bion
NMS application to complement the existing site as much as practicable. BION
agrees to perform the services described in Attachment A and such other
activities as required by this AGREEMENT. BFF agrees to pay BION in
consideration of this AGREEMENT the aggregate sum of $4,200,000 payable as
follows:
i. $600,000, 15 days following receipt of payment from the first draw from
the construction loan negotiated by BFF for PHASE I of this PROJECT,
ii. $600,000, 15 days following receipt of payment from the first monthly
draw from the construction loan negotiated by BFF for PHASE I of this PROJECT,
iii. $700,000, 15 days following receipt of payment from the second
monthly draw from the construction loan negotiated by BFF for PHASE I of this
PROJECT,
iv. $550,000, 15 days following receipt of payment from the third through
the fifth monthly draws from the construction loan negotiated by BFF for PHASE
I of this PROJECT,
v. $50,000, 15 days following the receipt of payment from the sixth
through the eighteenth monthly draws from the construction loan negotiated by
BFF for PHASE I of this PROJECT,
provided, however, if BION and BFF agree on a schedule of development whereby
PHASE I of the PROJECT is anticipated to be completed in less than the 18
months, this payment schedule shall be compressed on a ratable basis. Not
withstanding any of the above, upon completion of the construction of all of
the systems contemplated by this AGREEMENT, all amounts are due and payable.
B. Late payment charges of 1.5% per month, payable to BION, will be due if
payments are not received within 15 days of due date. BFF will be responsible
for any and all reasonable legal and/or court expenses incurred by BION in
BION's attempt to recover any unpaid amounts in case of failure of BFF to pay
BION for services performed and/or expenses incurred for BFF'S account.
C. For WORK provided by BION beyond the scope of services described in
ATTACHMENT A, or for unforeseen circumstances or changes in the scope of
services required by BFF, BION shall be compensated for such services as
negotiated by BION and BFF.
6. BION NMS SYSTEM OPERATION COMPENSATION AND PAYMENT
A. BFF agrees to pay BION for start-up and operational services as described
in ATTACHMENT A as follows:
i. $8,250 per month upon the start-up of the first Bion NMS for the first
UNIT.
ii. $16,500 per month commencing with the start-up of the Bion NMS for the
fourth UNIT.
B. Commencing January 1 of the first year after start-up of the first Bion
NMS for the first UNIT, the monthly fee will be adjusted at a rate of 5% (five
percent) or the change in the Consumer Price Index for the previous calendar
year, whichever is less.
C. On a date one year after the start-up of the first Bion NMS, BION and BFF
shall evaluate the monthly payments for start-up and operational services and
negotiate any revisions that may be necessary.
7. BIO-SOLIDS
A. Bio-solids which are produced in the operation of each Bion NMS are owned
by BION. BION agrees to harvest, process, and remove all acceptable
bio-solids from the site. Currently production of bio-solids is estimated to
be between 0.7 and 1.1 cubic yards per year per hog UNIT.
B. BION reserves the right to reject all bio-solids which are contaminated
with human wastes, toxic or hazardous materials including but not limited to,
needles, syringes, other veterinary wastes, or other foreign material.
Harvest and disposal of such rejected bio-solids (and the costs related
thereto) is the sole responsibility of BFF. In the event that bio-solids are
rejected because of contamination, BFF shall pay BION the fair market value of
the rejected bio-solids within 30 days of the determination that they are
contaminated and will be rejected.
C. By the terms of this AGREEMENT, BFF is granted a first option to acquire
up to 50% of the bio-solids produced at the site at a price equal to a 20%
discount from the sales price charged to independent third parties for
comparable bio-solids established in independent markets in other states. BFF
shall notify BION in writing on or before January 1 of each year of the
AGREEMENT as to the amount of bio-solids they wish to acquire in the
succeeding twelve month period. BFF shall make payment for bio-solids
acquired under this AGREEMENT within 30 days of invoice.
8. SECURITIES PURCHASE AGREEMENT
BFF shall receive the securities of Bion Environmental Technologies, Inc. as
described in Attachment C to this AGREEMENT on the terms and conditions set
forth therein.
9. SYSTEM OPERATION
BFF acknowledges that the operation of the Bion NMS systems contemplated by
this AGREEMENT requires extensive knowledge concerning patented and
proprietary information possessed by BION and hereby agrees that all personnel
working for the company that manages the hog raising facilities for BFF will
not be permitted to enter into the Bion NMS systems area without prior
permission from BFF and BION.
10. BOARD OF DIRECTORS REPRESENTATION
Upon completion of the performance required in Section 5, A, i, BION shall use
its best efforts to have Xxxxxxx X. Xxxxxx, Authorized Agent of BFF, or
another person agreeable to BION named as a Director of Bion Environmental
Technologies, Inc., BION's parent company.
This AGREEMENT sets forth all material terms and conditions between the
PARTIES and shall be binding upon execution. The PARTIES hereto acknowledge
that more extensive lawyer drafted documents may be desired by either or both
PARTIES in which case this AGREEMENT shall be incorporated by reference
therein. This AGREEMENT, including all ATTACHMENTS, is subject to the Terms
and Conditions (ATTACHMENT B) which are made part hereof and which BFF
acknowledges that it has read. IN WITNESS WHEREOF, the PARTIES have caused
this AGREEMENT to be executed this _____ day of ________, 1997.
CRYSTAL SPRINGS, LLC and
BION TECHNOLOGIES, INC.: XXXXXX FAMILY FARMS, Inc.:
By: /s/ Xxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------ ---------------------------
Title: Chief Executive Officer Title: Authorized Agent
--------------------------------- -----------------------
ATTACHMENT A
SCOPE OF SERVICES
-------------------
BION has developed a patented waste management system, Bion NMS' which
treats all aspects of an agricultural waste stream. Every Bion NMS system is
as unique as the agricultural facility on which it is constructed. BION
individually designs each Bion NMS to complement the existing facilities'
operation while optimizing any existing components which may be usable. The
Bion NMS is designed in accordance with BION system standards and in
compliance with Natural Resources Conservation Service (NRCS) Standards and
Specifications for waste storage lagoons.
This AGREEMENT covers BION's participation in PHASE I of the BFF hog
facility PROJECT. PHASE I will provide finish capacity facilities to hold
330,000 hogs in inventory. PHASE I of the PROJECT consists of twelve (12)
units ("UNIT") where each UNIT is made up of 9 finishing buildings, with each
building holding approximately 3,000 hogs. Bion NMS systems will be designed
to treat the waste production of PHASE I of the PROJECT.
The following describes the work to be conducted by BION for the
pre-design, design, construction and operation of each Bion NMS:
1. PRE-DESIGN
A. BION will coordinate the pre-design activities required for the design of
the Bion NMS to be constructed at each UNIT. The pre-design information
detailed below must be provided to BION to ensure proper design and
construction of the Bion NMS.
B. BION will coordinate with BFF to obtain the site specific information
required by BION to complete the individually designed Bion NMS. The
information needed to complete the design is as follows: topographic survey
information, geologic information, regulatory information, wetlands
information, and flood prone areas information, and such other information as
BION may require to design the Bion NMS systems which information will be
supplied by BFF at their cost as long as such cost is reasonable.
I. TOPOGRAPHIC SURVEY INFORMATION
BFF shall provide BION a topographic survey of each of the intended UNIT
sites. The topographic survey provided to BION must include a survey of the
site with one (1) foot contour intervals tied into a local horizontal
coordinate system. The survey must be readable by AutoCAD and contain
information required to conduct a cut and fill analysis. The survey should
also locate any existing buildings and other landmarks needed to locate and
design the Bion NMS.
II. GEOLOGIC INVESTIGATION
BFF shall provide to BION the geotechnical information necessary to design and
construct the Bion NMS. This information is necessary to evaluate the
suitability of the site by examining subsurface soils, location of bedrock and
groundwater conditions. The information should contain data derived from
on-site test pits.
III. REGULATORY INFORMATION
Prior to designing the system, BION will investigate the regulations affecting
the design and construction of the Bion NMS. Regulations could include local
zoning ordinances, Department of Health requirements, State environmental
conservation and/or other Federal agency requirements. BION may need to
identify the PROJECT location and type during various conversations with
regulatory agencies.
IV. WETLANDS INFORMATION
During the early planning stages, BION will determine the proximity of the
Bion NMS to wetlands. BION will consult with the State regulatory authorities
concerning freshwater wetland regulations that may be applicable. In
addition, BION will consult with USDA's Fish and Wildlife Service and the U.S.
Army Corps of Engineers for wetlands under their jurisdiction.
V. FLOOD PRONE AREAS
BION will check with local agencies for flood zone maps and restrictions that
may be applicable. The Bion NMS must be protected from flooding so that a
flood event does not cause high nutrient materials to be washed out.
2. DESIGN
A. BION will design each site specific Bion NMS. BION will prepare the
detailed design drawings and specifications necessary for preparation of
construction drawings for the Bion NMS on each site. BION will prepare and
present the design drawings to BFF and regulatory authorities if necessary for
its review and comment when the design drawings are approximately 50%
complete. BFF will notify BION, in writing, of any comments in regards to the
design drawings.
B. BION will coordinate with BFF consultants the final design and construction
drawings required for the Bion NMS construction. BION will design the Bion
NMS with due regard for the comments received from BFF during its review of
the preliminary design drawings. BION will complete the design drawings based
upon BFF's comments, if any. BION will provide BFF with three (3) copies of
the design drawings and specifications.
C. BION will prepare and provide an engineering design report, if required,
detailing all calculations and design criteria. BION will also assist in the
preparation of permit applications, if required. The design will meet all
applicable Governmental regulations.
3. CONSTRUCTION CONSULTATION
BION will provide on-site staff for the purpose of monitoring construction to
ensure the proper construction of each Bion NMS in accordance with BION'S
design. BION will notify BFF in writing of any failure to follow the design.
BION will prepare, to the best of its ability at it's cost, a certification
report detailing all Quality Control/Quality Assurance matters appropriate to
Bion's standards, sampling results and as-built conditions. BFF shall be
responsible for the cost of all Quality Control/Quality Assurance analysis
required by regulatory agencies.
4. OPERATIONS SUPPORT
A. BION will provide on-site operational support services during the Initial
Start-up phase and Long-term operation of each Bion NMS, as long as this
agreement is in effect. Bion will assist BFF in defining the environmental
standards to which systems will perform and in interfacing with regulatory
inquiries.
B. BION will prepare an O&M Manual for BFF to keep at each facility and refer
to for specific operational information.
C. Following start-up, BION will provide an on-site technical support staff
during the ongoing operation of the systems to insure that the biological
processes are being managed correctly and that the systems are operating as
designed. Each Bion NMS will be visited on a regularly scheduled basis, with
supplemental visits on an as-needed basis. BION will perform biological
evaluations of the systems and the system's components and make necessary
process measurements and adjustments to ensure biodynamic stability.
D. BION will inspect and recommend to BFF any additional maintenance of all
mechanical and electrical components of the system to insure proper
operational control. Hydraulic flow through the system and appropriate
operating levels will be maintained or adjusted as required for appropriate
system functioning.
E. Bio-solids development and deposition will be monitored by Bion to ensure
the development of a high quality final bio-solids harvest.
F. BION will monitor water quality throughout the systems to ensure nutrient
control and reduction performance consistent with disposal and reuse.
G. This Agreement does not cover the specific responsibilities of the PARTIES
regarding bio-solids harvesting, which items shall be specified at a later
date.
ATTACHMENT B
STANDARD TERMS AND CONDITIONS
--------------------------------
1. LICENSE. Bion NMS' is a proprietary process owned and developed by
-------
Bion Technologies, Inc. ("BION"). It is protected by issued patents and
patent applications on file with the U.S. Patent Office as well as by
confidential information, data and experience regarding the Bion NMS, each and
all of which are considered to be valuable proprietary technology assets to
BION. The term "TECHNOLOGY", as used in this AGREEMENT, is comprised of,
without limitation, the patents held by BION, secret and confidential
information, data and experience regarding the Bion NMS, the specifications
and drawings having been prepared specifically as to the application of BION
proprietary information and know-how regarding the subject matter of this
AGREEMENT, together with all information, communications and documentation
provided by BION or its agents for the purpose of constructing the PROJECT
contemplated by this AGREEMENT. In conjunction with this AGREEMENT, BION
grants a non-exclusive license to the BFF to use the TECHNOLOGY only for the
PROJECT specified ("SITE LICENSE"), under the terms and conditions set forth
in this AGREEMENT for the sole purpose of construction, operation and
maintenance of the Bion NMS. The SITE LICENSE provided by BION to BFF does
not and shall not be construed to create a joint venture or partnership
between BION and BFF. The SITE LICENSE will continue in full force and effect
while the AGREEMENT between the PARTIES is in full force and effect and will
automatically terminate upon termination of such AGREEMENT.
The primary term of the AGREEMENT shall be for the period beginning on
the date of execution of this AGREEMENT and shall continue for a period of 15
years. Following the primary term this agreement may be renewed for three
successive secondary terms of five years each as follows: Two years prior to
the end of the primary term or any secondary term, either party may decide
that this agreement will not be renewed for the first (or any subsequent)
secondary term. If either party does not give written notice of non-renewal
to the other party on or before the date two years prior to the end of the
term, this agreement will continue on the same terms for the next term. If
the AGREEMENT is not renewed or is terminated for any reason, the SITE LICENSE
will be revoked and each Bion NMS must be dismantled and permanently taken out
of service by BFF so that it cannot be used, in whole or in part, to produce
bio-solids, or any similarly produced manure by-product, for sale or other
use, including use on BFF's Site.
2. WARRANTY. As to any equipment and/or goods specified, recommended
--------
or chosen by or with the assistance of BION, BFF will look solely to the
manufacturer/supplier of such equipment or goods respectively for defects in
such equipment or products.
3. LIMITATION OF LIABILITY. Notwithstanding anything to the contrary
-----------------------
in this AGREEMENT, it is expressly agreed that, provided the system operates
as described in the attached Installation Agreement, as amended, BION will in
no event be liable for any consequential or incidental damages, including lost
profits, relating to or arising out of or in connection with the delivery, use
or performance of the system or for any actual damages in excess of that
portion of the purchase price actually paid by BFF to BION hereunder. BFF
agrees that the system is designed for the specific use described in this
AGREEMENT and is not designed for any significant change in the
characteristics of the waste and wastewater influent.
4. CONFIDENTIALITY. BFF acknowledges and understands the secret and
---------------
confidential nature of BION's confidential proprietary information, data and
experience (and has executed an agreement in which BFF has specifically agreed
to maintain such information, data and experience confidential and has agreed
not to use such information, data and experience in the performance of any
other work for itself or others) and further acknowledges that the design of
the system and the know-how and technical, financial and commercial
information, data and experience provided by BION to build and operate the
Bion NMS, are confidential in nature and proprietary to BION (collectively the
"CONFIDENTIAL INFORMATION"). Without BION's prior written consent, BFF will
not, directly or indirectly, disseminate or make accessible all or any portion
of such CONFIDENTIAL INFORMATION to any third party, except (i) employees,
contractors, and agents of BFF who have agreed to maintain the confidentiality
of all CONFIDENTIAL INFORMATION to the same extent as BFF is bound hereunder,
and (ii) as required by law.
Without approval from BION, BFF will not copy, in whole or in part, the
O&M Manual or any other materials containing CONFIDENTIAL INFORMATION. Upon
termination of this AGREEMENT, BFF will return the O&M Manual and all
CONFIDENTIAL INFORMATION to BION including all approved copies thereof.
5. FORCE MAJEURE. Neither party will be liable to the other and neither
-------------
will be deemed in default hereunder for any failure or delay caused by or
arising out of the following conditions of force majeure: fire, explosion,
war, riot, strike, walk-out, labor controversy, naturally occurring flood,
shortage of water, power, labor, transportation facilities or necessary
materials or supplies, default or failure of carriers, act of God or public
enemy, any law, act or order of any court, board, government or other direct
authority of competent jurisdiction, or any other direct cause (whether or not
of the same character as the foregoing) beyond the reasonable control of such
party.
6. ASSIGNMENTS. No rights or obligations of BFF under this AGREEMENT
-----------
may be assigned without prior written consent of BION except to a successor or
assignee of all rights of BFF in and to the Site who agrees to be bound by and
assume all of BFF's obligations as set forth in this AGREEMENT. This
provision shall also apply to any person or entity required to sign a
confidentiality/non-disclosure agreement pursuant to this AGREEMENT.
7. BINDING EFFECT; GOVERNING LAW. 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 of Colorado, without regard to
choice of law principles, shall apply to the interpretation and construction
of this AGREEMENT.
8. SEVERABILITY. 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.
9. REMEDIES. BFF agrees that the remedy at law for a breach of Section
--------
1, Section 4, or Section 11 of these Terms and Conditions will be inadequate
and that BION will be entitled to injunctive relief for such a breach, which
relief will be cumulative to other remedies and relief ordinarily available
under such circumstances and will not be construed as an exclusive remedy or
relief.
10. NOTICES. Notices and other communications required by 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 party at the address below:
To BION at: Bion Technologies, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
To BFF at: Crystal Springs, LLC and
Xxxxxx Family Farms, Inc.
000 Xxxx Xxxxxx
Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
or at any such other address or addresses as may be given by either of them to
the other in writing from time to time.
11. INDEMNIFICATION AND HOLD HARMLESS. BFF 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
negligence, gross negligence or willful misconduct of BFF or BFF's employees
or agents in connection with any services to be performed or provided under
this AGREEMENT.
12. Any claim, controversy, dispute or interpretation of this Agreement
other than those concerning money due to BION from BFF or matters set forth at
sections 1, 4 and 11 of these "Standard Terms and Conditions", that is not
resolved by the Parties within 30 days shall be submitted to mediation and, if
no agreement is reached within 60 days thereafter, to binding arbitration
which shall be the exclusive means of resolution if, and only if, commenced
within the following 30 days.
Bion Technologies, Inc.
-----------------------
ATTACHMENT C
INVESTMENT REPRESENTATION AGREEMENT
-------------------------------------
Bion Environmental Technologies, Inc.
000 00xx Xx. Xxxxx 0000
Xxxxxx, XX 00000
Gentlemen
This Investment Representation Agreement ("XXX") is entered into between
Crystal Springs, LLC and Xxxxxx Family Farms, Inc. (hereinafter "BFF") and
Bion Environmental Technologies, Inc. ("Company") pursuant to the Bion NMS'
Installment Agreement ("Agreement") dated October 8, 1997 and entered into
between BFF and Bion Technologies, Inc. ("Bion"), a wholly owned subsidiary of
the Company. This XXX is attached to the Agreement as Attachment C.
1. Subscription. BFF hereby agrees to purchase in installments from the
------------
Company, pursuant to Section 5, A, i through iv, of the Agreement, 1,000,000
Units at a purchase price of $3.00 (in cash) per Unit where one Unit shall
consist of one share of the restricted and legended (requiring a two year hold
from purchase date prior to registration or sale by agreement) Common Stock of
the Company and one warrant (in the form attached hereto) to purchase one
share of the Company*s restricted and legended (requiring a two year hold from
purchase date prior to registration or sale by agreement) common stock at a
price of $7.00 per share (collectively the "Securities") in a private
negotiated transaction pursuant to Section 3(b) and/or 4(2) or other
applicable provisions of the Securities Act of 1933, as amended ("Act"), (and
the regula-tions promulgated thereunder). BFF*s shall purchase the Units
according to the following schedule in accordance with Section 5, A, i through
iv, of the Agreement:
(a) 166,667 Units upon BFF*s payment to Bion of $600,000, 15 days
following receipt of payment from the first draw, $500,001 of which is payment
for the Units, the balance for Bion fees in connection with Bion*s performance
obligations pursuant to the Agreement;
(b) 166,667 of the Units upon BFF*s payment to Bion of $600,000, 15 days
following receipt of payment from the first monthly draw, $500,001 of which is
payment for the Units, the balance for Bion fees in connection with Bion*s
performance obligations pursuant to the Agreement;
(c) 166,667 Units upon BFF*s payment to Bion of $700,000, 15 days following
receipt of payment from the second monthly draw, $500,001 of which is payment
for the Units, the balance for Bion fees in connection with Bion*s performance
obligations pursuant to the Agreement;
(d) 166,667 Units upon BFF*s payment to Bion of $550,000, 15 days following
receipt of payment from the third monthly draw, $500,001 of which is payment
for the Units, the balance for Bion fees in connection with Bion*s performance
obligations pursuant to the Agreement;
(e) 166,666 Units upon BFF*s payment to Bion of $550,000, 15 days following
the receipt of payment from the fourth through the fifth monthly draws,
$499,998 of which is payment for the Units, the balance for Bion fees in
connection with Bion*s performance obligations pursuant to the Agreement;
The warrants purchased herein are exercisable in whole or in part at any
time or from time to time on or after the purchase dates described in
paragraphs (a) through (f) above but not later than 3:30 p.m., Denver time on
June 30, 1998.
2. Representations and Warranties. BFF warrants and represents to the
--------------------------------
Company (and its shareholders, affiliates and agents) that:
a. The Securities are being acquired by BFF for investment for its own
account, and not with a view to the offer or sale in connection therewith, or
the distribution thereof, and that the undersigned is not now, and will not in
the future, participate, directly or indir-ectly, in an underwriting of any
such undertaking except in compliance with applicable registration provisions
of the Act.
b. BFF will not take, or cause to be taken, any action that would cause
it or the Company to be deemed an underwriter of the Securities, as defined in
Section 2(11) of the Act.
c. BFF has been afforded an opportunity to examine such documents and
obtain such information concerning the Company as it may have requested,
including without limitation all publicly available information, and has had
the opportunity to request such other information (and all information so
requested has been provided) for the purpose of verifying the information
furnished to it and for the purpose of answering any questions it may have had
concerning the business affairs of the Company and it has reviewed to the
extent desired by it the Articles, Bylaws and minutes of the Company,
documentation concerning the Company's financial condition, assets,
liabilities, share ownership and capital structure, minimal operations and
sales, limited assets, and other material documents.
d. BFF (and its officers, directors, principals and agents as
applicable) have had an opportunity to personally ask questions of, and
receive answers from, one or more of the officers and directors of the Company
and/or the attorneys for the Company to ascertain and verify the accuracy and
completeness of all material information regarding the Company, its business
and its officers, directors, and promoters. BFF has had an opportunity to ask
questions of and receive answers from duly designated repre-sentatives of the
Company concerning the terms and conditions pursuant to which the Securities
are being acquired by it.
e. BFF understands that its acquisition of the Securities is a
negotiated private transaction.
f. By reason of its knowledge and experience (and that of its
principals, officers and directors and their respective attorneys, advisors
and investment bankers) in financial and business matters in general, and
investments in particular, it is capable of evaluating the merits and risks of
an investment in the Securities.
g. BFF is capable of bearing the economic risks of an investment in the
Securities.
h. BFF present financial condition is such that it is under no present or
contemplated future need to dispose of any portion of the Securities to
satisfy any existing or contemplated undertaking, need or indebtedness.
i. If required to do so, BFF has retained to advise it, as to the merits
and risks of a prospective investment in the Securities, a purchaser
representative, legal counsel, financial and accounting advisors, investment
bankers, etc.
j. BFF hereby represents and warrants to the Company that all of the
representations, warranties and acknowledgements contained in this agreement
are true, accurate and complete as of the date herein and acknowledges that
the Company, its officers, directors, agents, and affiliates have relied on
its representations and warranties herein in consenting to the restricted
issuance and/or transfer of the Securities and the undersigned hereby agrees
to indemnify and hold the Company (together with its respective officers,
directors, agents and affiliates) harmless with respect to any and all
expenses, claims or litigation (including without limitation reasonable
attorneys' fees related thereto) arising from or related to breach of any
warranty or representation herein.
3. Restrictions on Transferability: BFF undersigned acknowledges and
--------------------------------
understands that the Securities are unregistered and must be held indefinitely
unless they are subsequently registered under the Act or an exemption from
such registration is available.
BFF further acknowledges that it is fully aware of the applicable
limitations on the resale of the Securities. Rule 144 (the "Rule")
promulgated under the Securities Act of 1933 permits sales of "Restricted
Securities" held for not less than one year and upon compliance with the
require-ments of such Rule. BFF agrees to waive its rights pursuant to Rule
144*s one year holding period, and agrees to hold the Securities for no less
than two years prior to registration or sale. BFF further agrees to hereby
waive any and all rights, if any, pursuant to Regulation S under the
Securities Act of 1933 or any other rule or regulation pertaining to the sale
or transfer of the Securities to a non-U.S. person or entity which may have
the effect of reducing Rule 144*s holding period. Further, the Securities
must be sold in an active market and appropriate information relating to the
Company must be generally available in order to effectuate a transaction
pursuant to the Rule by an affiliate of the Company.
There is currently only an extremely limited and "thin" trading market in
securities of the Company on the over-the-counter market, and there is no
assurance that it will continue or that any active trading market will ever
develop, or if such a trading market develops, that it will grow and/or
continue.
Any and all certificates representing the Securities and any and all
securities issued in replacement or conversion thereof or in exchange therefor
shall bear the following legends, or ones substantially similar thereto, which
the undersigned has read and understands:
The securities represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted securities"
as that term is defined in Rule 144 under the Act. The securities may not be
offered for sale, sold or otherwise transferred except pursuant to an
effec-tive registration statement under the Act or pur-suant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company. The holder of these
securities has agreed to a two year hold prior to registration.
In addition, these securities may not be sold or transferred pursuant to
regulation S under the Act, or pursuant to any other rule or regulation
pertaining to the sale or transfer of securities to a non-U.S. person or
entity, which may have the effect of reducing Rule 144's holding period to
less than one year.
BFF further agrees that the Company shall have the right to issue a stop
transfer instruction to its transfer agent, if any, or to note a stop transfer
instruction in its stockholder records, and it acknowledges that the Company
has informed it of its intention to issue such instructions when and if
necessary.
4. Notices. Any notices or other communications required or permitted
-------
hereby shall be sufficiently given if sent by regis-tered or certified mail,
postage prepaid, return receipt requested, and, if to the Company, at the
address to which this XXX is addressed, and if to the undersigned, at the
address set forth below my signature hereto, or to such other addresses as
either you or the undersigned shall designate to the other by notice in
writing.
5. Successors and Assigns. This XXX shall be binding upon and shall
------------------------
inure to the benefit of the parties hereto and to the successors and assigns
of the Company and to the personal and legal representatives, heirs,
guardians, successors and permitted assignees of the undersigned.
6. Applicable Law. This XXX shall be governed by and construed in
---------------
accordance with the laws of the State of Colorado and, to the extent it
involves any United States statute, in accordance with the laws of the United
States, and jurisdiction and venue for any dispute related hereto shall be in
a court of general jurisdiction located in Denver, Colorado.
Crystal Springs, LLC and
Xxxxxx Family Farms, Inc., Purchaser
By: /s/ Xxxxxxx X. Xxxxxx Date: November 13, 1997
---------------------------------- -------------------
signature
Xxxxxxx X. Xxxxxx
------------------------
print or type name of signatory
000 Xxxx Xx., Xxxx, XX 00000
-----------------------------------
Address
ACCEPTED:
Bion Environmental Technologies, Inc.
By: /s/ Xxx Xxxxxxxx Date: November 13, 1997
------------------------ ---------------------
Authorized Officer (signature)
Xxx Xxxxxxxx
---------------
print name of officer
Void after 3:30 p.m., Denver Time, on JUNE 30, 1998
Warrant to Purchase
_______ Shares
of Common Stock
CLASS B WARRANT TO PURCHASE COMMON STOCK
OF
BION ENVIRONMENTAL TECHNOLOGIES, INC.
This is to certify that, FOR VALUE RECEIVED, CRYSTAL SPRINGS, LLC AND
XXXXXX FAMILY FARMS, INC. ("BFF") or registered assigns ("Holder), is entitled
to purchase, subject to the provisions of this Warrant and the Bion NMS'
Installment Agreement dated __________, from Bion Environmental Technologies,
Inc., a Colorado corporation ("Company"), at any time on or after PURCHASE
DATE, and not later than 3:30 p.m., Denver Time, on JUNE 30, 1998, unless
extended as provided in Section (a) below, UP TO _________ SHARES of
restricted and legended (requiring a two year hold prior to registration or
sale) common stock, no par value per share, of the Company ("Common Stock") at
a purchase price per share of $7.00 (in cash). 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 PURCHASE DATE, but not later than 3:30 p.m., Denver
time on JUNE 30, 1998, 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.
(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, provided
however that BFF agrees to waive any rights pursuant to Rule 144*s one year
holding period, and hereby agrees to hold said Warrant Stock for a minimum of
two years prior to registration or sale. Additionally, BFF agrees not to sell
the Warrant Stock pursuant to Regulation S under the Act.
(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
Dated ________________
The undersigned hereby irrevocably elects to exercise the B 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__________________________________________
_____________________________
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: _______________________
Bion Technologies, Inc.
-----------------------
BION NMS' INSTALLATION AGREEMENT
ADDENDUM
This addendum dated October 8, 1997 (the "ADDENDUM") is the first
addendum to the agreement (the "AGREEMENT") between Bion Technologies, Inc.
(hereinafter called "BION") and Crystal Springs, LLC and Xxxxxx Family Farms,
Inc. ("BFF") (collectively BION and BFF are the "PARTIES") dated October 8,
1997 as amended __________, 1997. To the extent that there is any conflict or
contradiction between the terms and conditions of this ADDENDUM and the
AGREEMENT to which it is attached, the terms and conditions of this ADDENDUM
shall control. To the extent that there is any conflict or contradiction
between the terms and conditions of this ADDENDUM and the AGREEMENT to which
it is attached and any subsequent document to which they are attached, the
terms and conditions of this ADDENDUM shall control absent express language to
the contrary.
1. The following additional clause shall apply to SECTION 5, BION
COMPENSATION:
D. To the extent that the aggregate capital cost to design and construct the
twelve Bion NMS systems for the twelve 27,000 finishing hog UNITS contemplated
in PHASE I of the PROJECT exceeds the aggregate standard cost in the "Xxxxxx
Model" for waste handling installation (which BFF and BION each agree is
between $45 and $50 per finishing hog UNIT), BION will offset such excess cost
by payment to BFF over a three year period commencing with the first sale of
bio-solids generated by such Bion NMS of an additional royalty on such sale of
bio-solids. In any subsequent phases of the PROJECT, to the extent that the
actual capital cost is less than the aggregate standard cost in the "Xxxxxx
Model" BFF shall make available to BION for the remaining term of this
AGREEMENT, a revolving credit line on commercial terms (prime plus 1/2 point)
an amount equal to one half of such capital savings on a cumulative basis.
2. The following additional clauses shall apply to SECTION 7, BIO-SOLIDS:
D. BFF may elect to receive up to 10% of the bio-solids harvested, in the
physical form that is standard for harvested bio-solids from the site, as an
in-kind royalty for use by BFF for field crop application only. Should BFF
elect to receive the bio-solids for this in-kind royalty in a form that
requires BION to process such bio-solids in any manner, BFF shall pay BION the
costs of such processing.
E. BION shall pay BFF a royalty of $2.00 per cubic yard (or the equivalent)
for all bio-solids harvested and removed from the site by BION or its agents.
Should BFF elect to receive any of the up to 10% bio-solids as in-kind royalty
from any harvest of bio-solids BFF will forgo the $2.00 royalty on such
bio-solids.
F. BION and BFF hereby establish a reciprocal pricing arrangement whereby
BION has the right to sell up to 80% of the bio-solids produced by the Bion
NMS systems contemplated by this AGREEMENT to BFF for a price of $4.00 per
liquid ton of bio-solids (at approximately 12% solids content) for the first
two years of bio-solids production. Additionally, BFF has the right to sell
all or a portion of the 10% bio-solids in-kind royalty received from BION to
BION for a price of $4.00 per liquid ton of bio-solids (at approximately 12%
solids content) for the term of this AGREEMENT, provided, however, that this
right can only be exercised if BION has demand in excess of the 90% bio-solids
available to BION under the terms of this AGREEMENT.
3. SALES REPRESENTATION AGREEMENT
BION and BFF agree that BFF (or an entity formed by BFF) shall become the
exclusive sales representative for BION systems installations for the duration
of this AGREEMENT in Yuma County, Colorado, and Dundy County, Nebraska. In
the event that a sale is made, a cash commission in an amount to be negotiated
for each sale will be paid by BION to BFF plus a royalty agreement will be
established with terms and conditions substantially equivalent to the royalty
described in paragraph 2. E of this ADDENDUM to the AGREEMENT, which royalty
shall be reduced by any royalty due to any other party.
4. OPTION FOR PHASE II
A. BION hereby grants BFF the following option (the "OPTION") covering BION'S
services for the design, construction and operation of PHASE II (PHASE I
consisting of the first 330,000 finishing hogs, PHASE II consisting of up to
an additional 330,000 finishing hogs raising the total number of finishing
hogs to up to 660,000) of the hog facility PROJECT described in ATTACHMENT A
of the AGREEMENT. This option for PHASE II may be exercised by written notice
from BFF to BION and shall remain in effect for a period of twelve (12) months
commencing on the date that this ADDENDUM is executed.
B. Under the terms of this OPTION, BION and BFF agree that all of the terms
and conditions of the AGREEMENT shall apply to the agreement covering PHASE II
of the PROJECT (the "PHASE II AGREEMENT") when the PHASE II AGREEMENT is
executed with the following changes and/or exceptions:
i. SECTION 5, BION COMPENSATION shall be amended in the PHASE II AGREEMENT to
read:
"A. Each site where a Bion NMS is being installed has its unique character.
This requires BION to individually design the application of the Bion NMS for
each site at which it is to be installed. BION's goal is to design each Bion
NMS application to complement the existing site as much as practicable. BION
agrees to perform the services described in Attachment A and such other
activities as required by this PHASE II AGREEMENT. BFF agrees to pay BION in
consideration of this PHASE II AGREEMENT the aggregate sum of $800,000 payable
as follows:
i. $100,000, 15 days following receipt of payment from the first draw from
the construction loan negotiated by BFF for this PHASE II of the PROJECT,
ii. $100,000, 15 days following receipt of payment from the first monthly
draw from the construction loan negotiated by BFF for this PHASE II of the
PROJECT,
iii. $100,000, 15 days following receipt of payment from the second
monthly draw from the construction loan negotiated by BFF for this PHASE II of
the PROJECT,
iv. $31,250, 15 days following receipt of payment from the third through
the eighteenth monthly draws from the construction loan negotiated by BFF for
this PHASE II of the PROJECT,
provided, however, if BION and BFF agree on a schedule of development whereby
PHASE II of the PROJECT is anticipated to be completed in less than the 18
months, this payment schedule shall be compressed on a ratable basis. Not
withstanding any of the above, upon completion of the construction of all of
the systems contemplated by this PHASE II AGREEMENT, all amounts are due and
payable.
B. Late payment charges of 1.5% per month, payable to BION, will be due if
payments are not received within 15 days of due date. BFF will be responsible
for any and all reasonable legal and/or court expenses incurred by BION in
BION's attempt to recover any unpaid amounts in case of failure of BFF to pay
BION for services performed and/or expenses incurred for BFF's account.
C. For WORK provided by BION beyond the scope of services described in
ATTACHMENT A, or for unforeseen circumstances or changes in the scope of
services required by BFF, BION shall be compensated for such services as
negotiated by BION and BFF.
D. To the extent that the actual capital cost to design and construct the Bion
NMS systems contemplated in PHASE II is less than the aggregate standard cost
in the "Xxxxxx Model" BFF shall make available to BION a credit line on
commercial terms (prime plus 1/2 point) an amount equal to one half of such
capital savings on a cumulative basis."
ii. The terms and conditions of SECTION 6, BION NMS SYSTEM OPERATION
COMPENSATION AND PAYMENT shall be negotiated to cover the expanded operation
that is a part of PHASE II of the PROJECT.
C. This OPTION is only exercisable if the material conditions related to PHASE
II of the PROJECT are substantially equivalent to PHASE I.
The PARTIES have caused this ADDENDUM to be executed this _____ day of
________, 1997.
CRYSTAL SPRINGS, LLC and
BION TECHNOLOGIES, INC.: XXXXXX FAMILY FARMS, Inc.:
By: _____________________________________ By:
_________________________________
Title: ___________________________________ Title:
________________________________
