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EXHIBIT 10.2

                                   AGREEMENT


     THIS AGREEMENT by, between and among Bion Environmental Technologies,
Inc. ('Bion') (Bion, together with its wholly-owned subsidiaries, are
sometimes referred to as the 'Bion Companies') and Edward T. Schafer ('ES')
is executed to be effective January 1, 2011. The previously executed email
agreement/term sheet dated August 12, 2010 ('Initial Agreement') sets forth
the material terms of this Agreement and is incorporated herein by reference
and is attached hereto as Exhibit A.

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

     AND WHEREAS ES 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
services of ES (with the express consent of ES 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 three years after the Commencement Date
('Term'), during which Term ES shall provide to the Bion Companies his
services as set forth in the following provisions:

          a)  ES shall provide his senior management services on an
approximately '75% full time basis' to the Bion Companies, initially as
Executive Vice Chairman ('VC') of Bion, with duties per discussions to date
and as set forth in the Initial Agreement and as determined by Bion's Board
of Directors from time-to-time;

          b)   ES shall, at the request of Bion's Board of Directors, also
serve in such senior management officer ('SMO') positions at Bion's
subsidiaries as determined by the Board of Directors from time-to-time;

          c)  ES, as VC 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; ES shall report
to the Board of Directors of Bion, which will also be responsible for
evaluation of his performance; and

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

          e)   ES 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, ES 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)   ES shall schedule vacation time in coordination with the
senior management of the Bion Companies in a manner consistent with ES's
duties.

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

          a)  Compensation from the Bion Companies to BON for services
provided by ES shall initially be at an annual rate of $250,000 per year,
which compensation shall consist of $150,000 cash compensation and $100,000
payable in Bion's common stock (issued pursuant to Bion's 2006 Consolidated
Incentive Plan and its effective S-8 Registration Statement on a monthly
basis at the closing bid price of the final three  trading days of the prior
calendar month); PROVIDED, HOWEVER, commencing on the month following the
first calendar month end during the Term  after the date on which Bion has
completed an equity financing in excess of $3 million (net of commissions and
other offering expenses) in cash, ES's  compensation shall thereafter be a an
annual rate of $225,000, all of which shall be payable in cash;
NOTWITHSTANDING such provision,  the transition to all cash compaensation
shall take place no later July 1, 2011;such cash compensation  shall be
payable in twice monthly equal  installments commencing unless agreed
otherwise in writing;

          b)  pursuant to the Initial Agreement, Bion has granted to ES on
the  options as set forth therein('Initial Options'), each of which Initial
Options may be exercised and shall vest as set forth in the Initial
Agreement; in addition, effective upon execution of this Agreement, Bion
shall, and hereby does, grant to ES an additional 200,000 options ('New
Options'), which New Options shall vest on the initial date of the Term and
shall be exercisable until January 15, 2018 at a price equal to $.10 above
the closing bid price on December 31, 2010, PROVIDED, HOWEVER, if ES fails to
provide the services to the Bion Companies for the entire Term (except if
this is the result of the Bion Companies terminating ES for other than
cause), all unvested Options on the date on which ES'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)  ES's conviction of any criminal act including, without
limitation, misappropriation of funds or property of the Bion Companies or
any other felony criminal act;

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

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

FURTHER PROVIDED, if ES 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 ES to
Bion) or if Bion terminates ES for cause, the Options which have vested shall
be cancelled on a pro-rata basis and ES shall keep the percentage of Options
which equals the percentage of the Term during which ES appropriately
provided his services to Bion pursuant to this Agreement.


          d)  In the event that the Bion Companies elect to terminate ES
without cause, the Bion Companies shall pay ES his full salary and benefits
(subject to reasonable mitigation by ES) for the lesser of the balance of the
Term or six (6) months.

          e)  Further, while the Bion Companies and ES 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 'end-users') have been financed/constructed/completed, ES understands
that the Bion Companies are making no commitments related to such bonuses to
ES (or any other officer, director, employee or consultant) other than that
ES 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, ES will be treated in the similar manner as all other
SMO's, directors, key employees & consultants pursuant to such policies.

     3)   ES, through a date no earlier than 2 years after the expiration of
the Term (including any extension 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, ES 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 ES 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 ES compete with the Bion Companies;
b) all work product, inventions, etc. of ES made during ES's employment
pursuant to this Agreement shall be the sole property of the Bion Companies
and ES, 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 ES 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), ES
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 ES for purchase of basic
equipment (computer/cell phone/etc.) acquired during the Term which is needed
for performance of ES's duties to the Bion Companies, which equipment will be
owned by the Bion Companies.

          b)  ES shall initially work from his home office in North Dakota
which requirement shall not be changed except by mutual written agreement
between ES 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/ Edward T. Schafer
                                     Edward T. Schafer