EXHIBIT 10.1
August 4, 2003
Xxxxxxx Xxxxxxx
Bright Capital, Ltd.
Dear Xxxxxxx:
By signing below, you confirm the following agreements by, between and
among you, Bright Capital, Ltd. ("Bright Capital"), Bion Environmental
Technologies, Inc. ("Bion") and Bion Dairy Corporation ("Dairy"):
1. As of the date of the date of the initial closing of Dairy's offering
of its 2003 Series A Convertible Promissory Notes (the "Dairy Notes"),
$600,000 of the amount that is then due or payable to Bright Capital pursuant
to the terms of that certain outstanding Secured Promissory Note dated March
28, 2003 between Bion as debtor and Bright Capital as lender in the initial
principal amount of forty two thousand five hundred dollars ($42,500.00) plus
any amounts that were loaned by Bright Capital to Bion pursuant to such note
after the date thereof (the "Initial Note") shall be deemed to have been
converted to an amount due from Dairy to Bright Capital pursuant to a new
promissory note in the initial principal amount of $600,000 (the "Replacement
Note") which is to be issued by Dairy to Bright Capital in connection with
Dairy's offering of Dairy Notes to investors. The Replacement Note shall be
issued by Dairy to Bright Capital at the initial closing of Dairy's offering
of the Dairy Notes. Upon its issuance, the Replacement Note shall be deemed
to partially substitute and replace the Initial Note without cancellation,
novation or payment (with the remaining balance of the Initial Note remaining
outstanding and secured by its existing security interest in the tangible
assets of Bion and its subsidiaries). All of the remaining collateral
consisting of intangible intellectual property securing the indebtedness
evidenced by or described in the Initial Note and its related documents (the
"IP Collateral") shall continue to secure the indebtedness under the
Replacement Note; provided, however, that Bright Capital shall share its
security interest in such IP Collateral in pari passu with all of the
purchasers of the Dairy Notes.
2. Upon issuance of the Replacement Note, that certain State of Colorado
Uniform Commercial Code-Security Agreement related to the IP Collateral that
was executed and delivered by Bion (and its subsidiaries) pursuant to the
Initial Note shall be amended and restated to conform in all material respects
to the form of security agreement that is to be executed and delivered by
Dairy and Bion (and its subsidiaries) in connection with Dairy's issuance of
the Dairy Notes.
3. Through Bright Capital, you shall provide Bion and Dairy with your
personal services on a consulting basis for a period of two years which
commenced on April 1, 2003 and will end on March 31, 2005, pursuant to which
you will personally serve as the General Manager of Dairy (reporting directly
to its President) and as a consultant to Bion as set forth in the Note
Purchase Agreement (a copy of which is attached hereto as "Exhibit A" and is
hereafter referred to as the "Note Purchase Agreement") to be executed in
connection with the issuance of the Replacement Note and the Dairy Notes. As
payment in full for such consulting services, commencing effective April 1,
2003 Bion shall:
(a) Accrue on behalf of Bion and Dairy an obligation to pay to Bright
Capital the sum of $300,000 for the first year (which sum shall be
adjusted downward to reflect your limited availability for a
portion of the first year due to anticipated surgery with a
protracted recovery period), and $300,000 for the second year, all
of which sums Bion may elect to pay in cash or by issuance of its
common stock (based on the average closing price during the prior
20 days of trading) at any time of Bion's choosing through March
31, 2005; provided, however, that in the event that Bion completes
a financing which renders it able to pay such fees on an ongoing
current basis, Bion shall pay such fees in cash on a monthly
basis; and
(b) Grant to you options (effective August 31,2003) exerciseable until
July 31, 2008 which will allow you to purchase up to 200,000
shares of Bion common stock at a price of $7.50 per share;
provided, however, that in the event that Bion obtains a complete
waiver of section 1.2 of that certain Stock Purchase Agreement
dated as of January 10, 2002 by and between Bion OAM, S.p.A., and
Section 2.4 of that certain Subscription Agreement between Bion
and Centerpoint Corporation dated as of January 10, 2002, the
exercise price of such options shall be automatically adjusted to
the higher of $3.00 per share or the closing market price of
Bion's common stock on the date that such waiver becomes
effective. The exercise price of such options shall also be
equitably adjusted for subsequent splits, mergers, etc.; provided,
however, that in the event there is no adjustment to the exercise
price or there is an adjustment to the exercise price to a price
that is greater than $3.00, then upon exercise of the options (in
whole or in part), Bion shall pay to you a sum equal to the
difference between the option exercise price and $3.00, multiplied
by the number of options exercised;
PROVIDED, HOWEVER, that in the event that Dairy and its
shareholders do not enter into the tax-free exchange with Bion
described at paragraph 1.7 of the Note Purchase Agreement, all
obligations (including options) of Bion to you and Bright Capital
set forth in this paragraph 3 shall become obligations of Dairy,
and Bion shall be automatically released from such obligations.
4. Pursuant to prior existing agreements consistent with the terms of
which you and Bright Capital have continued to provide services to Bion, Bion
shall, effective August 31, adjust approximately 650,000 of its outstanding SV
warrants (of which you or persons related to or affiliated with you are
beneficial owners) by issuance of certificates representing 800,000 SV-1
warrants with an exercise price of $7.50 per share of Bion common stock
(subject to adjustment/payment in the identical manner as the options
described above at paragraph 2) and an expiration date of July 31, 2008 (all
other terms remaining unchanged) to parties designated in writing by you.
5. Bion, Dairy, Bright Capital and you each agree to execute such
additional documents as may be required to effectuate the agreements set forth
herein.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing in the spaces provided below.
XXXXXXX XXXXXXX,
Individually
___________________________________
BRIGHT CAPITAL, LTD.
By: _______________________________
BION ENVIRONMENTAL TECHNOLOGIES, INC.
By: _______________________________
BION DAIRY CORPORATION
By: _______________________________
