EXHIBIT 10.2
CAPTIALIZATION AGREEMENT
THIS CAPITALIZION AGREEMENT ('Agreement') is made this 30th day of June,
2009, effective the 1st day of April 2009, by, between and among Bion
Environmental Technologies, Inc. ('BNET') and its subsidiaries ( BNET and
subsidiaries are collectively 'Bion' or 'Bion Companies') and Bion PA 1 LLC
('PA1'), a recently formed Colorado LLC qualified to do business in the State
of Pennsylvania.
WHEREAS the Bion Companies have entered into agreements with Xxxxxxx Farms
(and its principals) ('KF Xxxxxxxxxx'), Xxxxx 0 of which involves design,
construction and operation of a Bion system to treat the waste from
approximately 1200 dairy cows (with possible subsequent expansion) ('Phase
1');
WHEREAS the Bion Companies have expended substantial funds related to the KF
Agreement and Phase 1;
AND WHEREAS the Bion Companies and PA1 desire that the business opportunity
related to Phase 1 be pursued through PA1;
NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the Bion Companies and PA1 agree that the business
opportunity of Phase 1 be pursued through PA1 on the terms and conditions set
forth in the following paragraphs:
1) The Bion Companies hereby assign to PA1 all of their rights to pursue
the Phase 1 opportunity subject to the terms and conditions of the KF
Agreements and this Agreement in consideration of receipt by BNET (and/or its
designated subsidiary) from PA1 of:
a) 1000 units of newly issued equity of PA1 which shall represent
100% equity ownership of PA1; plus
b) an open account receivable from PA1 to BNET ('Receivable') in
an amount equal to:
i) the expenditures of the Bion Companies related to Phase 1
from September 1, 2008 through the effective date of this Agreement; plus
ii) all expenditures of the Bion Companies on Phase 1
subsequent to such date;
iii) which Receivable shall include appropriately allocated
internal costs of the Bion Companies related to provision of technical and
administrative services related to Phase 1 and/or PA1;
iv) which Receivable shall accrue interest at a rate of 3/4%
per month on the monthly opening balance commencing July 1, 2009; and
v) which Receivable shall be repaid to the Bion Companies
from Pennvest reimbursements, revenue from Phase 1 and/or other assets of
PA1;
vi) PROVIDED, HOWEVER, that repayment of the Receivable
shall be subordinated to the rights of Pennvest and/or the bridge lender(s)
that finance Phase 1.
2) Bion Services Group, Inc. shall serve as agent of PA1 and shall
carry out all activities required to design, permit, construct and operate
Phase 1 through its own personnel, the personnel of the Bion Companies and
third party contractors pursuant to such agency and PA 1 shall be
responsible for all costs and expenses related thereto, which costs and
expenses shall be part of the Receivable.
3) PA1 agrees to indemnify, defend and hold harmless the Bion Companies
(and their respective officers, directors, employees and affiliates) from any
and all costs, expenses, liabilities and/or claims, direct or indirect,
related in any manner to Phase 1 and/or PA1.
4) 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 and:
a) 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 Colorado 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 Colorado shall be
applicable and shall govern to the exclusion of the law of any other forum,
with regard to the jurisdiction in which any action or special proceeding may
be instituted.
b) Any claim or controversy, which arises out of or relates to
this Agreement, or breach of it, shall be settled by arbitration.
c) 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.
d) In the event that any one or more of the provisions of this
Agreement or any portions thereunder 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.
e) 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.
and subsidiaries
By: /s/ Xxxx X. Xxxxx
Date: 6/30/09
Bion PA 1 LLC
By: /s/ Xxxx X. Xxxxx
Date: 6/30/09
