Attached files

EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT


     THIS AGREEMENT by, between and among Bion Environmental Technologies,
Inc. ('Bion') together with its wholly-owned subsidiaries, are sometimes
referred to as the ('Bion Companies'), and Bill O'Neill ('BON') is executed
to be effective January 1, 2011. The previously executed email agreement/term
sheet dated November 16, 2010 ('Initial Agreement') sets forth the material
terms of this Agreement and is incorporated herein by reference and attached
hereto as Exhibit A.

     WHEREAS the Bion Companies desire to receive the services of BON upon
the terms and conditions set forth in this Agreement;

     AND WHEREAS BON desires to provide to the Bion Companies with his
services upon the terms and conditions set forth in this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the Bion Companies do hereby agree to engage the
employee services of BON, and (with the express consent of BON as evidenced
by his signature below), upon the terms and conditions set forth in the
following paragraphs:

     1)   The Term of this Agreement shall run from January 1, 2011
('Commencement Date'), through a date four years after the Commencement Date
('Term'), during which Term BON shall provide to the Bion Companies his
'entrepreneurial' full-time services as set forth in the following
provisions:

          a)  BON shall provide his full-time employee services to the Bion
Companies as Chief Executive Officer ('CEO') of Bion, with duties per
discussions to date and as set by the Board of Directors from time-to-time;

          b)  BON shall, at the request of Bion's Board of Directors, also
serve as CEO (and/or in other senior management officer ('SMO') positions) of
Bion's subsidiaries ;

          c)  BON, as CEO and/or SMO, of Bion and/or its subsidiaries will be
part of a small senior management cadre which will divide among themselves
all of the necessary management duties of the Bion Companies; BON shall
report to the Board of Directors of Bion, which will also be responsible for
evaluation of his performance; and

          d)  Additionally, BON shall serve as a member of Bion's Board of
Directors.

          e)  BON and the Bion Companies shall work out a mutually acceptable
manner of handling office costs, business expenses, travel expenses, etc.
which is consistent with the current treatment by the Bion Companies in
relation to other senior management and senior technical employees; in
addition, BON shall be eligible for reimbursement for reasonable medical
insurance premiums for his family and shall have the right to participate in
existing or subsequently adopted 401(k) plans and/or other senior management
incentive and/or bonus plans;

          f)  BON shall initially have not less than 4 weeks of paid vacation
per year which vacation time shall be scheduled in coordination with the
senior management of the Bion Companies in a manner consistent with BON's
duties.

     2)   Compensation during the Term of this Agreement (all compensation
items herein and this entire Agreement presume that Bion is receiving and BON
is providing the services as set forth above):

          a)  Cash compensation from the Bion Companies to BON for services
provided by BON shall be initially $300,000 per year, which shall be payable
in twice monthly pre-tax installments of $12,500, commencing with the first
month of full-time service;

          b)  Pursuant to the Initial Agreement, Bion has granted to BON the
options as set forth therein, each of which Options may be exercised and
shall vest as set forth in the Initial Agreement; PROVIDED, HOWEVER, if BON
fails to provide the services to the Bion Companies for the entire Term
(except if this is the result of the Bion Companies terminating BON for other
than cause), all unvested Options on the date on which BON's termination
takes place shall be automatically cancelled on such termination date; for
the purposes of these provisions, termination for cause shall include,
without limitation, any of the events listed below:

              A)  BON's conviction of any felony criminal act including,
without limitation, misappropriation of funds or property of the Bion
Companies or any other felony criminal act;

              B)  BON's misfeasance or malfeasance in office, which shall
mean fraud, dishonesty, willful misconduct and/or substantial neglect of
duties; and

              C)  Breach by BON of any material provision of this Agreement;

FURTHER PROVIDED, if BON elects to terminate his employment by Bion (other
than as a result of material uncured breach by Bion of the terms of this
Agreement which remains uncured for 120 days after written notice from BON to
Bion), or if Bion terminates BON for cause, the Options which have vested
shall be cancelled on a pro-rata basis with BON keeping the percentage of the
vested Options equal to the percentage of the Term during which BON
appropriately provided his services to Bion pursuant to this Agreement.

          d)  In the event that the Bion Companies elect to terminate BON
without cause or BON passes away during the Term, the Bion Companies shall
pay BON his full salary and benefits (subject to reasonable mitigation by
BON) for the lesser of the balance of the Term or six (6) months, which
payout shall be paid to BON's wife/estate if BON has passed away during the
payout period.

          e)  Further, while the Bion Companies and BON have discussed the
Bion's 'goal' of being able to justify the declaration/payment of substantial
cash and/or stock bonuses  to senior management (and consultants performing
senior management functions) once initial major projects (initial Integrated
Projects and/or Central Processing Facilities with integrated ethanol plants
and/or 'end-users') have been financed/constructed/completed, BON understands
that the Bion Companies are making no commitments related to such bonuses to
BON (or any other officer, director, employee or consultant) other than that
BON will be treated/evaluated in the same manner as all other senior
management personnel (including consultants.  Any such bonuses will be
declared/paid only when and if the then existing Board of Directors of Bion
determines that such bonuses have been earned and are in the best interests
of the shareholders.

          f)  Additionally, to the extent that Bion develops policies
regarding vesting of Options and/or bonuses in the event of a 'change of
control' in the future, BON will be treated in the same manner as all other
SMO's, directors, key employees & consultants pursuant to such policies.


     3)   BON, through a date no earlier than 2 years after the expiration of
the Term (including any extensions thereof) will abide by the terms and
provisions of a Confidentiality/Proprietary Information Agreement (copy
attached hereto as an Exhibit B) and further agrees that, unless expressly
waived by the Bion Companies in writing, BON will require any and all persons
who have access to confidential information of the Bion Companies to execute
copies of agreements substantially similar to Exhibit B and that
notwithstanding any other terms herein, Exhibit B shall remain in full force
and effect; and BON expressly acknowledges and agrees that: a) at no time
during the Term or during a two (2) year period following the end of the Term
(including any extensions thereto) shall BON compete with the Bion Companies;
for the purposes of this provision, 'compete' shall be defined as (and be
limited to): i) engaging directly or as an employee or consultant in business
activities which include and/or are based on the remediation of agricultural
and food processing waste streams (including livestock) and/or the
integration of 'end-product' /'protein production' activities and/or
renewable energy/biofuel production activities with livestock CAFOs; ii)
PROVIDED, HOWEVER, that this provision shall not prevent BON from engaging in
activities in the 'animal protein products' business that neither involve any
of Bion's intellectual property and are consistent limitations set forth in
Exhibit B  and sub-paragraph i) immediately above; b) all work product,
inventions, etc. of BON made during BON's employment pursuant to this
Agreement shall be the sole property of the Bion Companies and BON, as
applicable, shall execute such assignments and /or other documents as may be
required to fully vest such ownership in the Bion Companies; and c) all
proprietary information and other information concerning the Bion Companies
(and each of its partners/joint venturers) acquired pursuant to the service
of BON to the Bion Companies shall at all times be and remain the sole
property of the Bion Companies regardless of how such proprietary information
is stored and upon termination of this Agreement (w/o retaining copies), BON
shall return all such proprietary information to the Bion Companies on
whatever medium it is evidenced (including w/o limitation paper files,
computer memory media, etc.)

     4)   a)  The Bion Companies shall reimburse BON for purchase of basic
equipment (computer/cell phone/etc) acquired during the Term which equipment
is necessary for BON's performance of his duties hereunder, which equipment
will be owned by the Bion Companies.

          b)  BON shall initially work from his home office in Tampa, Florida
which requirement shall not be changed except by mutual written agreement
between BON and Bion.

          c)  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.

          d)  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.

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

          f)  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.

          g)  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.

          h)  This Agreement shall constitute the entire agreement between
the parties hereto. 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/ Mark A. Smith, President


                                     /s/ Bill E. O'Neill
                                     Bill O'Neil