ASSET PURCHASE AGREEMENT

Exhibit 2.1*

Execution Version

 

ASSET PURCHASE AGREEMENT

DATED AS OF APRIL 8, 2009

BY AND AMONG

DOUGHERTY FUNDING LLC

FIRST BANK & TRUST

US BIO MARION, LLC

AND

ADDITIONAL SELLERS

 

 

*

In accordance with Item 601(b)(2) of Regulation S-K, the schedules and similar attachments to the asset purchase agreement in this exhibit, which schedules and similar attachments are listed in the table of contents of the asset purchase agreement, have not been filed. The registrant agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ” is made as of April 8, 2009 (the “ Effective Date ”), by and among Dougherty Funding LLC, a Delaware limited liability company (“ Dougherty ”), First Bank & Trust, a South Dakota banking corporation (“ First Bank ” and collectively with Dougherty, the “ Buyers ”), US Bio Marion, LLC, a South Dakota limited liability company (the “ Company ”), and the Additional Sellers (together with the Company, collectively, “ Sellers ”). Capitalized terms used herein and not otherwise defined herein have the meanings set forth in Article 1 .

RECITALS

WHEREAS, Sellers (other than Parent and VeraSun) are engaged in the business of producing ethanol and its co-products, including distillers grains, at the production facility located in Marion, South Dakota (the “ Facility ”) (such business, as conducted by Sellers, the “ Business ”);

WHEREAS, the Additional Sellers are party to certain Contracts related to the Company which are or may become Assigned Contracts;

WHEREAS, on October 31, 2008 (the “ Petition Date ”), each Seller filed a voluntary petition for relief (each a “ Filing ” and, together, the “ Filings ”) commencing cases under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”);

WHEREAS, Sellers desire to sell to Buyers all of the Acquired Assets, and Buyers desire to purchase from Sellers all of the Acquired Assets and assume all of the Assumed Liabilities, upon the terms and conditions hereinafter set forth;

WHEREAS, the Parties intend to effectuate the transactions contemplated by this Agreement through a sale of the Acquired Assets pursuant to Sections 363 and 365 of the Bankruptcy Code;

WHEREAS, the execution and delivery of this Agreement and Sellers’ ability to consummate the transactions set forth in this Agreement are subject to, among other things, the entry of an Order of the Bankruptcy Court under, inter alia, Sections 363 and 365 of the Bankruptcy Code; and

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows:

 

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ARTICLE 1.

DEFINITIONS

1.1. Definitions

For purposes of this Agreement, the following terms have the meanings specified or referenced below.

“ Accounts Receivable ” means, with respect to Sellers, all accounts receivable and other rights to payment from customers of Sellers and the full benefit of all security for such accounts receivable or rights to payment, including those consisting of all accounts receivable in respect of goods shipped or products sold or services rendered to customers by Sellers, any other miscellaneous accounts receivable of Sellers, and any claim, remedy or other right of Sellers related to any of the foregoing; in all cases, however, only to the extent that such accounts receivable and other payment rights are related to the Business and were earned prior to the Closing.

“ Accrued PTO ” has the meaning set forth in Section 8.4(b) .

“ Acquired Assets ” has the meaning set forth in Section 2.2 .

“ Acquired Inventory ” has the meaning set forth in Section 2.8(a) .

“ Action ” means any legal action, suit or arbitration, or any inquiry, proceeding or investigation, by or before any Governmental Authority.

“ Additional Sellers ” means US BioEnergy Corporation, a South Dakota corporation (“ Parent ”) and VeraSun Energy Corporation, a South Dakota corporation (“ VeraSun ”).

“ Administrative Expense Budget ” has the meaning set forth in Section 3.1(a)(ii) .

“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.

“ Agreement ” has the meaning set forth in the introductory paragraph.

“ Allocation Arbiter ” has the meaning set forth in Section 3.4 .

“ Allocation Schedules ” has the meaning set forth in Section 3.4 .

“ Approved Contract ” means a Contract designated as such pursuant to Section 7.11 .

“ Assigned Contracts ” means (i) the Contracts listed or described in Schedule 1.1(a) , (ii) any Contracts of Sellers listed or described in Schedule 1.1(a)-1 that are designated by Dougherty to be assumed and assigned to Dougherty pursuant to a timely Assignment Election in

 

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accordance with Section 2.6 and (iii) and Approved Contracts, in each case that have not, as of the Closing, been breached by any party thereto.

“ Assignment Election ” has the meaning set forth in Section 2.6(a) .

“ Assumed Liabilities ” has the meaning set forth in Section 2.4(b) .

“ Assumption Agreement ” means an assumption agreement substantially in the form attached hereto as Exhibit A .

“ Auction ” has the meaning set forth in Exhibit B.

“ Avoidance Actions ” means any and all claims for relief of Sellers under chapter 5 of the Bankruptcy Code.

“ Bankruptcy Case ” means the cases commenced by Sellers under chapter 11 of the Bankruptcy Code in the Bankruptcy Court, styled In re VeraSun Energy Corporation, et al., jointly administered under Case No. 08-12606 (BLS), and pending before the Bankruptcy Court.

“ Bankruptcy Code ” means Title 11 of the United States Code, Sections 101 et seq.

“ Bankruptcy Court ” has the meaning set forth in the recitals.

“ Bidding Procedures ” means bid procedures attached hereto as Exhibit B , as approved by the Bankruptcy Court pursuant to the Bidding Procedures Order.

“ Bidding Procedures Order ” means the Order of the Bankruptcy Court attached hereto as Exhibit C .

“ Bill of Sale ” means a bill of sale substantially in the form attached hereto as Exhibit D .

“ Business ” has the meaning set forth in the recitals.

“ Business Day ” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

“ Buyers ” has the meaning set forth in the introductory paragraph.

“ Buyers’ Parties ” means Buyers, their respective Affiliates and the former, current or future equity holders and Representatives of each of the foregoing.

“ Cash Consideration ” has the meaning set forth in Section 3.1(a)(ii) .

“ Closing ” has the meaning set forth in Section 4.1 .

 

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“ Closing Date ” means the date and time as of which the Closing occurs as set forth in Section 4.1 .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Company ” has the meaning set forth in the introductory paragraph.

“ Contract ” means any agreement, contract, obligation, promise, or undertaking (in each case whether written or oral) that is legally binding.

“ Copyrights ” means all United States and foreign copyright rights in any original works of authorship, whether registered or unregistered, including all copyright registrations and applications.

“ Credit Bids ” has the meaning set forth in Section 3.2(b) .

“ Cure Costs ” means amounts that must be paid and obligations that otherwise must be satisfied, including pursuant to Sections 365(b)(1)(A) and (B) of the Bankruptcy Code, in connection with the assumption and/or assignment of the Assigned Contracts.

“ Cure Notice ” means, with respect to each Assigned Contract, the notice submitted by Sellers to the counterparty or counterparties thereto pursuant to the Bidding Procedures Order setting forth the Cure Cost amount with respect thereto as calculated by Sellers.

“ Deeds ” means the deeds transferring title to the Owned Real Property to be delivered by Sellers to Dougherty pursuant to Section 4.5(a) .

“ Designation Deadline ” means the later of (i) 5:00 p.m., Central Time, on the day that is thirty (30) days after the Closing Date or (ii) seven (7) calendar days after the Bankruptcy Court enters an Order with respect to the Cure Costs.

“ Documents ” means all books, records, files, invoices, product specifications, advertising materials, customer lists, cost and pricing information, supplier lists, business plans, catalogs, customer literature, quality control records and manuals, research and development files, records and laboratory books and credit records of customers (including all data and other information stored on discs, tapes or other media), plans, specifications, studies, surveys, maps, plats, drawings, analyses, reports, training materials, and ownership and operating manuals, including any documents posted on the electronic Merrill DataSite maintained by Sellers in connection with the transactions contemplated by this Agreement; in all cases to the extent used primarily in or to the extent relating primarily to the assets, properties, business or operations of the Business.

“ Dougherty ” has the meaning set forth in the introductory paragraph.

“ Dougherty Acquired Assets ” has the meaning set forth in Section 2.1 .

“ Dougherty Assumed Liabilities ” has the meaning set forth in Section 2.4(a) .

 

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“ Dougherty Credit Bid ” has the meaning set forth in Section 3.1(d) .

“ Dougherty Purchase Price ” has the meaning set forth in Section 3.1(a) .

“ Effective Date ” has the meaning set forth in the introductory paragraph.

“ Encumbrance ” means any charge, lien, claim, mortgage, lease, sublease, hypothecation, deed of trust, pledge, security interest, option, right of use or possession, right of first offer or first refusal, easement, servitude, restrictive covenant, encroachment, encumbrance, or other similar restriction of any kind.

“ Environmental, Health and Safety Laws ” has the meaning set forth in Section 5.5(a) .

“ Equipment ” means all furniture, trade fixtures, equipment, computers, machinery, apparatus, appliances, implements, signage, supplies and all other tangible personal property of every kind and description owned by Sellers and used or held for use primarily in the Business, other than spare parts.

“ Excluded Assets ” has the meaning set forth in Section 2.3 .

“ Excluded Cash ” has the meaning set forth in Section 2.3(e) .

“ Excluded Liabilities ” has the meaning set forth in Section 2.5 .

“ Facility ” has the meaning set forth in the recitals.

“ Facility Employee ” means any employee who is employed by Sellers exclusively at the Facility as of the Effective Date.

“ Filing ” and “ Filings ” have the respective meanings set forth in the recitals.

“ Final Order ” means an action taken or order issued by the applicable Governmental Authority as to which: (i) no request for stay of the action or order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it is passed, including any extensions thereof; (ii) no petition for rehearing or reconsideration of the action or order, or protest of any kind, is pending before the Governmental Authority and the time for filing any such petition or protest is passed; (iii) the Governmental Authority does not have the action or order under reconsideration or review on its own motion and the time for such reconsideration or review has passed; and (iv) the action or order is not then under judicial review, there is no notice of appeal or other application for judicial review pending, and the deadline for filing such notice of appeal or other application for judicial review has passed, including any extensions thereof.

“ Finished Ethanol ” means 190 proof ethanol, 200 proof ethanol and denatured ethanol.

“ First Bank ” has the meaning set forth in the introductory paragraph.

 

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“ First Bank Account ” has the meaning set forth in Section 7.13 .

“ First Bank Acquired Assets ” has the meaning set forth in Section 2.2 .

“ First Bank Assumed Liabilities ” has the meaning set forth in Section 2.4(b) .

“ First Bank Credit Bid ” has the meaning set forth in Section 3.2(b) .

“ First Bank LC Agreements ” means the First Bank LC Reimbursement Agreement and all other Loan Documents (as defined in the First Bank LC Reimbursement Agreement).

“ First Bank LC Reimbursement Agreement ” means that certain Letter of Credit Application, Reimbursement and Security Agreement, dated December 18, 2006, by and between the Company and First Bank, as amended, restated, supplemented or otherwise modified from time to time.

“ First Bank Indebtedness ” means all of the obligations outstanding under the First Bank Revolving Agreements, including all pre- and post-petition interest due and owing thereunder (at the contractual default rate) and all unpaid fees and expenses related thereto, in each case at the time of Closing.

“ First Bank Loan Documents ” means the Loan Documents as defined in the First Bank Revolving Credit Agreement.

“ First Bank Purchase Price ” has the meaning set forth in Section 3.2(a) .

“ First Bank Revolving Agreements ” means the First Bank Revolving Credit Agreement and all other First Bank Loan Documents.

“ First Bank Revolving Credit Agreement ” means that certain Revolving Credit and Security Agreement, dated June 29, 2006, by and between Company and First Bank, as amended, restated, supplemented or otherwise modified from time to time.

“ Governmental Authority ” means any United States federal, state or local or any foreign government, governmental authority or regulatory or administrative authority or any court, tribunal or judicial body having jurisdiction.

“ Governmental Authorization ” means any approval, consent, license, permit, waiver or other authorization issued, granted or otherwise made available by or under the authority of any Governmental Authority.

“ Hazardous Substance ” means any “pollutant,” “contaminant,” “hazardous waste,” “hazardous material” or “hazardous substance” under any Environmental, Health and Safety Laws.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

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“ Intellectual Property ” means all intellectual property, including all Copyrights, Patents, Trademarks and Trade Secrets, owned, used or licensed by Sellers and used or held for use primarily in the Business.

“ Inventory ” means all of the following, all of which is subject to a first priority security interest held by First Bank: (i) all Finished Ethanol stored at the Facility; (ii) all Work in Progress; (iii) all corn and other grains stored at the Facility or stored elsewhere to the extent owned by the Company; (iv) all dry distillers grain and wet distillers grain located at the Facility; (v) all spare parts located at the Facility (“ Spare Parts ”); and (vi) all yeast, enzymes, chemicals, denaturant, additives and other supplies located at the Facility (collectively, the “ Supplies ”).

“ Inventory Purchase Price ” has the meaning set forth in Section 2.8(b) .

“ Knowledge ” means, with respect to any matter in question, in the case of the Company or Additional Sellers, the actual knowledge of any of the individuals listed on Schedule 1.1(b) with respect to such matter.

“ Legal Requirement ” means any federal, state, provincial, local, municipal, foreign, international, multinational, or other administrative Order, constitution, law, ordinance, principle of common law, regulation, statute or treaty.

“ Liability ” means any debt, losses, claim, damage, demand, fine, judgment, penalty, liability or obligation (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due).

“ Material Adverse Effect ” means (x) a material adverse change in or material adverse effect on the Acquired Assets or the Business (excluding the Excluded Assets and the Excluded Liabilities), in each case taken as a whole, or (y) a material adverse change in or to the ability of Sellers to consummate the transactions contemplated by this Agreement, but excluding, in either case, (a) any change or effect to the extent that it results from or arises out of (i) the Filings; (ii) the execution and delivery of this Agreement or the announcement thereof or the pendency or consummation of the transactions contemplated hereby; (iii) geopolitical conditions or any outbreak or escalation of hostilities or acts of terrorism or war; (iv) any hurricane, tornado, flood, earthquake or other natural disaster; (v) changes in (or proposals to change) Legal Requirements or accounting regulations or principles; (vi) any action contemplated by this Agreement or taken at the request of Buyers; (vii) changes in prices or costs of commodities or supplies; (viii) failure of any of Sellers to meet any internal or published projections, forecasts, estimates or predictions in respect of financial or operating metrics; or (ix) any motion, application, pleading or Order filed under or in connection with the Bankruptcy Case; and (b) any change or effect generally applicable to (i) the industries and markets in which any of Sellers operate or (ii) economic or political conditions or the securities or financial markets in any country or region, in the case of each of clauses (a)(vii), (b)(i) and (b)(ii), to the extent that such change or effect does not affect the Business, taken as a whole, in a disproportionate manner relative to other participants in the industries and markets in which the Business operates.

“ Option ” has the meaning set forth in Section 2.8(a) .

 

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“ Order ” means any award, writ, injunction, judgment, order or decree entered, issued, made, or rendered by any Governmental Authority.

“ Owned Real Property ” has the meaning set forth in Section 5.4(a) .

“ Parent ” has the meaning set forth in the definition of Additional Sellers.

“ Participant Designee ” means either (i) any entity in which the Participants (as defined in the Prepetition Senior Loan Agreement) are members or shareholders, (ii) each of the Participants in accordance with their pro rata interests in the Prepetition Dougherty Senior Loan Indebtedness or (iii) a special purpose single-member limited liability company formed by Dougherty under the laws of the State of Delaware.

“ Party ” or “ Parties ” means, individually or collectively, Buyers and Sellers.

“ Patents ” means United States and foreign patents and patent applications, as well as any continuations, continuations-in-part, divisions, extensions, reexaminations, reissues, renewals and patent disclosures related thereto.

“ Periodic Taxes ” has the meaning set forth in Section 8.1(b) .

“ Permits ” means all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances and Orders that are necessary for Sellers to own, lease and operate their properties and assets or to carry on the Business and the Facility at a normal and fully functional mode of operation (as opposed to a “hot idle” mode of operation).

“ Permitted Encumbrances ” means: (i) easements, leases, reservations, or other rights of others in, or minor defects and irregularities in title that do not materially impair the use of, the encumbered property or assets for the purposes for which they are held; (ii) any Encumbrance or privilege vested in any lessor, licensor or permittor for rent or other obligations solely related to the period after the Closing; (iii) licenses of or other grants of rights to use Intellectual Property entered into in the ordinary course of business that do not materially impair the conduct of the Business; (iv) Encumbrances, title exceptions or other imperfections of title caused by or resulting from the acts of Buyers or any of its Affiliates, employees, officers, directors, agents, contractors, invitees or licensees; (v) liens for Taxes not yet due and payable or that are being contested in good faith; and (vi) Encumbrances set forth on Schedule 1.1(c).

“ Person ” means any individual, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, estate, trust, association, organization or other entity or Governmental Authority.

“ Petition Date ” has the meaning set forth in the recitals.

“ Pre-Closing Designated Contract ” means (i) each Contract listed or described on Schedule 1.1(a) and (ii) each of the Scheduled Contracts for which Dougherty has delivered an Assignment Election to Sellers prior to the Closing Date.

 

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“ Pre-Paid Expenses ” means all deposits and prepaid charges and expenses of Sellers as of the Closing Date to the extent related to the Business and transferable to Dougherty.

“ Prepetition Dougherty Senior Loan Agreement ” means that certain Loan and Security Agreement, dated as of June 22, 2006, by and between Company and Dougherty, as amended, restated, supplemented or otherwise modified from time to time.

“ Prepetition Dougherty Senior Loan Documents ” means the Loan Documents as defined in the Prepetition Dougherty Senior Loan Agreement.

“ Prepetition Dougherty Senior Loan Indebtedness ” means all of the obligations outstanding under the Prepetition Dougherty Senior Loan Documents, including all pre- and post-petition interest due and owing thereunder (at the contractual default rate) and all unpaid fees and expenses related thereto, in each case at the time of Closing.

“ Prepetition First Bank Loan Documents ” means the First Bank Revolving Agreements and the First Bank LC Agreements.

“ Prepetition First Bank Loan Indebtedness ” means all of the obligations outstanding under the Prepetition First Bank Loan Documents, including all pre- and post-petition interest due and owing thereunder (at the contractual default rate) and all unpaid fees and expenses related thereto, in each case as the time of Closing.

“ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.

“ Purchase Price ” has the meaning set forth in Section 3.2(a) .

“ Release ” means any past or present spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous Substance into the environment (including the abandonment or discharging of barrels, containers and other closed receptacles containing any Hazardous Substance).

“ Removal Election ” has the meaning set forth in Section 2.6(a) .

“ Representative ” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.

“ Sale Motion ” means the motion styled “Motion Pursuant to 11 U.S.C. §§ 105(a), 363, 365 and Fed. R. Bankr. P. 2002, 6004, 6006 for (I) Entry of an Order (A) Establishing Bidding and Auction Procedures Related to the Sale of Some or All of the Debtors’ Assets; (B) Approving Bid Protections for Sale of VSE Assets; (C) Establishing Procedures for the Debtors to Enter into Additional Stalking Horse Agreements with Bid Protections in Connection with Sale of Assets; (D) Scheduling an Auction and Sale Hearing for the Sale of the Debtors’ Assets; (E) Permitting Credit Bidding Pursuant to Bankruptcy Code Section 363(K); (F) Establishing Certain Notice Procedures for Determining Cure Amounts; (G) Approving Form and Manner of

 

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Notice of All Procedures, Protections, Schedules and Agreements; and (H) Granting Certain Related Relief; and (II) Entry of an Order (A) Approving the Sale of Debtors’ Assets Free and Clear of All Liens, Claims, Encumbrances and Interests; (B) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; and (C) Granting Certain Related Relief” and filed with the Bankruptcy Court on February 6, 2009 (Docket No. 622 in the Bankruptcy Case).

“ Sale Order ” means an Order of the Bankruptcy Court approving this Agreement and the transactions contemplated hereby.

“ Scheduled Contracts ” means the Contracts of Sellers listed or described in Schedule 1.1(a)-1 .

“ Seller Parties ” means Sellers, their respective Affiliates and the former, current or future equity holders and Representatives of each of the foregoing.

“ Sellers ” has the meaning set forth in the introductory paragraph.

“ Subsidiary ” means any entity with respect to which a specified Person (or a Subsidiary thereof) has the power, through the ownership of securities or otherwise, to elect a majority of the directors or similar managing body.

“ Successful Bidders ” has the meaning set forth in the Bidding Procedures.

“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) means (i) any federal, state, provincial, local, foreign or other income, alternative, minimum, add-on minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, intangibles, windfall profits, gross receipts, value added, sales, use, goods and services, excise, customs duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental (including taxes under Section 59A of the Code), natural resources, real property, personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers’ compensation, payroll, health care, withholding, estimated or other similar tax, duty, levy or other governmental charge or assessment or deficiency thereof (including all interest and penalties thereon and additions thereto whether disputed or not) and (ii) any transferee liability in respect of any items described in clause (i) above.

“ Tax Return ” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting estimates, elections, schedules, statements, or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.

“ Title Company ” means Commercial Partners Title, LLC, 200 South Sixth Street, Suite 1300, Minneapolis, Minnesota 55402.

“ Trade Secrets ” means trade secrets and other confidential and proprietary information and know-how.

 

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“ Trademarks ” means United States, state and foreign trademarks, service marks, logos, slogans, trade dress and trade names, Internet domain names and any other similar designations of source of goods or services, whether registered or unregistered, and registrations and pending applications to register the foregoing, and all goodwill related to or symbolized by the foregoing.

“ Transaction Documents ” means this Agreement and any other agreements, instruments or documents entered into pursuant to this Agreement.

“ Transfer Taxes ” has the meaning set forth in Section 8.1(a) .

“ Treasury Regulations ” means the regulations promulgated by the U.S. Treasury Department pursuant to the Code.

“ VeraSun ” has the meaning set forth in the definition of Additional Sellers.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, any similar Legal Requirement and the rules and regulations thereunder.

“ WIP Purchase Price ” has the meaning set forth in Section 2.8(c) .

“ Work in Progress ” means all unfinished ethanol (or ethanol components) still involved in the production process (i.e., not Finished Ethanol) and located in fermentation devices, distillation devices, piping or elsewhere within the Facility, as well as all grains and grain products still involved in the production process (i.e., not yet ready to be marketed as dry, modified or wet distillers grains) and located anywhere within the Facility.

1.2. Other Definitions and Interpretive Matters

(a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period . When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a day other than a Business Day, the period in question shall end on the next succeeding Business Day.

Dollars . Any reference in this Agreement to $ means U.S. dollars.

Exhibits/Schedules . All Exhibits and Schedules attached or annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

Gender and Number . Any reference in this Agreement to gender includes all genders, and words imparting the singular number only include the plural and vice versa.

 

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Headings . The provision of a table of contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in the construction or interpretation of this Agreement. All references in this Agreement to any “ Section ” or “ Article ” are to the corresponding Section or Article of this Agreement unless otherwise specified.

Herein . Words such as “ herein ,” “ hereof ’ and “ hereunder ” refer to this Agreement as a whole and not merely to a subdivision in which such words appear, unless the context otherwise requires.

Including . The word “ including ” or any variation thereof means “ including, without limitation, ” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

(b) No Strict Construction . Buyers, on the one hand, and Sellers, on the other hand, participated jointly in the negotiation and drafting of this Agreement, and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by Buyers, on the one hand, and Sellers, on the other hand, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. Without limitation as to the foregoing, no rule of strict construction construing ambiguities against the draftsperson shall be applied against any Person with respect to this Agreement.

ARTICLE 2.

PURCHASE AND SALE

2.1. Purchase and Sale of Dougherty Acquired Assets

Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Sellers shall sell, transfer, assign, convey and deliver, or cause to be sold, transferred, assigned, conveyed and delivered, to Dougherty, and Dougherty shall purchase, free and clear of all Encumbrances (other than Permitted Encumbrances), all right, title and interest of Sellers in, to or under the following (collectively the “ Dougherty Acquired Assets ”):

(a) all of the properties and assets of Sellers (other than the First Bank Acquired Assets and the Excluded Assets) of every kind and description, wherever located, real, personal or mixed, tangible or intangible, to the extent owned, leased, licensed, used or held for use primarily in or relating primarily to the Business, as the same shall exist on the Closing Date, including all right, title and interest of Sellers in, to or under:

(i) all Equipment;

(ii) the Assigned Contracts;

(iii) the Owned Real Property listed or described on Schedule 2.1(a)(iii) ;

 

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(iv) all Permits and pending applications therefor, in each case to the extent assignable;

(v) all Intellectual Property other than Intellectual Property included in the Excluded Assets;

(vi) all Pre-Paid Expenses;

(vii) all goodwill associated with the Business or the Dougherty Acquired Assets;

(viii) all rights under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers, contractors or others to the extent relating to the operation of the Business or affecting the Equipment or other tangible Dougherty Acquired Assets;

(ix) to the extent reasonably practicable, all telephone, telex and telephone facsimile numbers and other directory listings relating exclusively to the Facility;

(x) all cash and cash equivalents held in Sellers’ reserve accounts as set forth in Schedule 2.1(a)(x);

(xi) to the extent assignable or transferable in accordance with the terms and conditions of the applicable insurance policies, applicable law or the Sale Order, all proceeds of insurance payable in the event any asset which would have been a Dougherty Acquired Asset has been damaged or destroyed by fire or other cause prior to the Closing Date or prior to the delivery of any such asset hereunder to Dougherty;

(xii) to the extent assignable or transferable in accordance with the terms and conditions of the applicable insurance policies, all refunds and reimbursements received under any insurance policies related to the Business and the Facility;

(xiii) to the extent assignable, all bonds, notes and other similar securities with respect to which Sellers or any of their Affiliates is the holder, payee or other beneficiary (but not an obligor), to the extent issued by any Governmental Authority or other issuer to fund infrastructure improvements or other economic development activities related to the Facility, or the repayment of which is otherwise to be made, directly or indirectly, through any tax payments or other payment obligations that, with respect to any of the foregoing, will become the responsibility (directly or indirectly, whether contractually or otherwise) of Dougherty or any successor owner of the Facility;

(xiv) all computer hardware, software programs, data and associated licenses owned by the Company; and

(xv) all other or additional privileges, rights and interests associated with the Dougherty Acquired Assets described in this Section 2.1(a) of every kind and description and wherever located to the extent that they are used or intended for use primarily in connection with the Business as presently being operated.

 

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(b) the assets of Sellers listed on Schedule 2.1(b);

(c) to the extent payable to the Company, any cash refunds related to the Transfer Taxes and Periodic Taxes payable by Dougherty pursuant to Section 8.1 ; and

(d) to the extent available and permitted by applicable Legal Requirements, all Documents that relate primarily to any of the Dougherty Acquired Assets specified in Section 2.1(a) or Section 2.1(b) , provided that Sellers may retain copies of such Documents.

2.2. Purchase and Sale of First Bank Acquired Assets .

Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Sellers shall sell, transfer, assign, convey and deliver, or cause to be sold, transferred, assigned, conveyed and delivered, to First Bank, and First Bank shall purchase, free and clear of all Encumbrances (other than Permitted Encumbrances), all right, title and interest of Sellers in, to or under the following (collectively the “ First Bank Acquired Assets ” and together with the Dougherty Acquired Assets, the “ Acquired Assets ”):

(a) subject to Section 2.8 , all Inventory;

(b) all Accounts Receivable;

(c) to the extent payable to the Company, any cash refunds related to the Transfer Taxes and Periodic Taxes payable by First Bank pursuant to Section 8.1 .

2.3. Excluded Assets.

The Acquired Assets shall not include any of the following (collectively, the “ Excluded Assets ”):

(a) the Purchase Price delivered to Sellers pursuant to this Agreement;

(b) all Owned Real Property not listed or described on Schedule 2.1(a)(iii) ;

(c) all Trade Secrets;

(d) the intellectual property listed or described on Schedule 2.3(d) .

(e) other than any cash or cash equivalents forming part of the Dougherty Acquired Assets pursuant to Section 2.1(a)(x) , all cash and cash equivalents (including checks, commercial paper, treasury bills, certificates of deposit and other bank deposits) held in (i) the First Bank Account, (ii) the bank account of the Company with Bank of America with ABA Routing Number 026009593 and account number 3755551267, (iii) the bank account of VeraSun with Bank of America with ABA Routing Number 026009593 and account number 3755552884 and (iv) any other bank accounts of the Company (collectively, the “ Excluded Cash ”);

 

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(f) all capitalized leases other than pursuant to any Assigned Contract;

(g) any shares of capital stock or other equity interest of any Seller or any of Sellers’ Subsidiaries or any securities convertible into, exchangeable or exercisable for shares of capital stock or other equity interest of any Seller or any of Sellers’ Subsidiaries;

(h) all minute books, stock ledgers, corporate seals and stock certificates of Sellers;

(i) any Contract that is not an Assigned Contract;

(j) subject to Section 2.1(c) and Section 2.2(d) , any Tax refunds or credits;

(k) all telephone, telex and telephone facsimile numbers and other directory listings, other than telephone, telex and facsimile numbers relating exclusively to the Facility and included in Acquired Assets pursuant to Section 2.1(a)(ix) ;

(l) all Permits and pending applications therefor other than those specified in Section 2.1(a)(iv) ;

(m) except for any properties or assets of Sellers listed on Schedule 2.1(b) or specified in Section 2.1(d) , any properties and assets of Sellers not related primarily to, used primarily in or held for use primarily in the Business;

(n) all insurance policies and rights to proceeds thereof, other than proceeds specified in Section 2.1(a)(xi) and Section 2.1(a)(xii) ;

(o) subject to Section 8.7 , the Avoidance Actions;

(p) all computer hardware, software programs, data and associated licenses owned by either of the Additional Sellers; and

(q) any rights, claims or causes of action of Sellers under this Agreement or any other Transaction Document.

2.4. Assumed Liabilities.

(a) Assumed Liabilities by Dougherty . Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Dougherty shall execute and deliver to Sellers an Assumption Agreement pursuant to which Dougherty shall assume and agree to discharge, when due (in accordance with their respective terms and subject to the respective conditions thereof), only the following Liabilities (collectively, the “ Dougherty Assumed Liabilities ”) and no others:

(i) Dougherty Acquired Assets . All Liabilities of Sellers first arising and accruing after the Closing Date with respect to the ownership, use or possession of the Dougherty Acquired Assets or Dougherty’s operation of the Business following the Closing.

 

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(ii) Assigned Contracts . All Liabilities of Sellers under the Assigned Contracts.

(iii) Cure Costs . All Cure Costs.

(iv) Taxes . Sellers’ Liability for Transfer Taxes and Periodic Taxes, as provided in Section 8.1 .

(b) Assumed Liabilities by First Bank . Upon the terms and subject to the conditions of this Agreement, on the Closing Date, First Bank shall execute and deliver to Sellers an Assumption Agreement pursuant to which First Bank shall assume and agree to discharge, when due (in accordance with their respective terms and subject to the respective conditions thereof), only the following Liabilities (collectively, the “ First Bank Assumed Liabilities ” and together with the Dougherty Assumed Liabilities, the “ Assumed Liabilities ”) and no others:

(i) First Bank Acquired Assets . All Liabilities of Sellers first arising and accruing after the Closing Date with respect to the ownership, use or possession of the First Bank Acquired Assets or First Bank’s operation of the Business following the Closing.

(ii) Taxes . Sellers’ Liability for Transfer Taxes and Periodic Taxes, as provided in Section 8.1 .

The assumption by Buyers of their respective Assumed Liabilities shall not, in any way, enlarge the rights of any third parties relating thereto.

2.5. Excluded Liabilities.

Notwithstanding any provision in this Agreement to the contrary, Buyers shall not assume and shall not be obligated to assume or be obliged to pay, perform or otherwise discharge any Liability of Sellers, and Sellers shall be solely and exclusively liable with respect to all Liabilities of Sellers, other than the Assumed Liabilities (such Liabilities other than Assumed Liabilities, collectively, the “ Excluded Liabilities ”). For the purpose of clarity, and without limitation of the generality of the foregoing, the “ Excluded Liabilities ” shall include each of the following Liabilities of Sellers other than the Assumed Liabilities:

(a) all indebtedness for borrowed money of Sellers;

(b) subject to Section 8.3(c) , all guarantees of third party obligations by Sellers and reimbursement obligations to guarantors of Sellers’ obligations or under letters of credit;

(c) all Actions and Proceedings pending against Sellers on or before the Closing Date or to the extent relating to the Business or the Acquired Assets prior to the Closing Date even if instituted after the Closing Date;

 

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(d) all Liabilities of Sellers to any owner or former owner of capital stock or warrants, holder of indebtedness for borrowed money, or current or former officer or director of any Seller;

(e) except as set forth in Section 8.4 , all Liabilities of Sellers to any former or current employee (including Facility Employees), including: (i) for salary, wages, benefits, vacation, supplies or overhead and, (ii) arising out of acts or omissions with respect to any employee benefit plan of Sellers, employee practices or programs, including employee claims of wrongful discharge or discrimination, (iii) severance liabilities, (iv) obligations of Sellers under employment contracts, (v) any change of control amounts payable to any employees as a result of the transactions contemplated by this Agreement, and (vi) under the WARN Act;

(f) drafts or checks outstanding at the Closing;

(g) subject to Section 2.6(c) , any claims to the extent related to Excluded Assets, including Contracts that are not Assigned Contracts;

(h) obligations under any futures contracts, options on futures, swap agreements or forward sale agreements entered into by Sellers;

(i) Liabilities arising out of the use, storage or Release of any Hazardous Substance at or from the Owned Real Property at any time prior to Closing, and Liabilities arising out of any violation by Sellers of any Environmental, Health and Safety Laws;

(j) any brokerage or finders’ fees or agents’ commissions or other similar payment, including any success fees approved by the Bankruptcy Court in connection with the Bankruptcy Case, in connection with this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby for which the Seller Parties are or will become liable;

(k) subject to Section 2.4(a)(iv) , Section 2.4(b)(ii) and Section 8.1 , all Taxes imposed on the Business and the Acquired Assets; and

(l) subject to Section 2.4(a)(ii) , Section 2.4(a)(iii) , Section 2.4(a)(iv) , Section 2.4(b)(ii) and Section 8.1 , other Liabilities relating to the conduct of the Business or to the Acquired Assets (and the use thereof) arising or accruing at any time on or prior to the Closing Date.

2.6. Designation of Assigned Contracts; Cure Costs.

(a) Prior to the Designation Deadline, Dougherty shall designate by notices to Sellers (such notices to be signed and dated by Dougherty) each of the Scheduled Contracts, if any, that Dougherty elects to (i) have assumed and assigned to it as an Assigned Contract effective as of the Designation Deadline (each, an “ Assignment Election ”) or (ii) have irrevocably removed from Schedule 1.1(a)-1 as a Scheduled Contract (a “ Removal Election ”). Dougherty and Sellers shall cause each of the Scheduled Contracts for which Dougherty delivers an Assignment Election prior to the Designation Deadline to be assumed and assigned to

 

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Dougherty pursuant to one or more contract assignment and assumption agreements, in the form attached hereto as Exhibit E , duly executed by the applicable Sellers and Dougherty. Upon delivery of a Removal Election by Dougherty with respect to any Scheduled Contract, such Contract shall no longer be deemed a Scheduled Contract under this Agreement for any purpose.

(b) Sellers shall be responsible for the verification of all Cure Costs and submission of all Cure Notices for each Assigned Contract and for the Scheduled Contracts, including all administrative responsibilities associated therewith, in the Bankruptcy Case and otherwise, and shall use reasonable efforts to establish the proper Cure Cost, if any, for each Assigned Contract (as soon as practicable and in all events prior to the Designation Deadline, where possible), including taking all reasonable actions with respect to the filing and prosecution of any pleadings and proceedings in the Bankruptcy Court and the service and delivery of any related notices or pleadings. Dougherty agrees to promptly satisfy all Cure Costs, as and when such Cure Costs become due, in respect of Assigned Contracts for which all necessary consents and/or Bankruptcy Court approval to transfer have been obtained.

(c) With respect to any Scheduled Contract for which Dougherty either (i) has not delivered a Removal Election or (ii) has not delivered an Assignment Election on or prior to the Closing Date, Dougherty shall pay to the counterparty under such Scheduled Contract any amounts due and payable for services rendered, goods provided or benefits obtained by Dougherty thereunder after the Closing Date and prior to the Designation Deadline. After the Designation Deadline, Sellers may in their sole and absolute discretion, subject to applicable Legal Requirements, assume, assign or reject any Contract other than an Assigned Contract. Sellers may in their sole and absolute discretion, subject to applicable Legal Requirements, assume, assign to a third party or reject any Scheduled Contract with respect to which a Removal Election has been delivered by Dougherty upon receipt of such Removal Election by Sellers.

(d) From the Effective Date through and including the Designation Deadline, (i) Sellers shall maintain and perform all Liabilities required to be performed under each Assigned Contract and each of the Scheduled Contracts, subject to Section 2.6(c) , and (ii) Sellers shall not reject any Assigned Contract or any of the Scheduled Contracts unless otherwise agreed to in writing by Dougherty.

(e) From the Effective Date through the date that is seven (7) Business Days prior to Closing, Dougherty shall have the right to elect, by written notice to Sellers, to move any Contract other than an Approved Contract from Schedule 1.1(a) to Schedule 1.1(a)-l .

2.7. Assignment of Acquired Assets.

To the maximum extent permitted by the Bankruptcy Code, the Dougherty Acquired Assets and the First Bank Acquired Assets shall be assumed by and assigned to Dougherty and First Bank, respectively, pursuant to Section 365 of the Bankruptcy Code as of the Closing Date or such other date as specified in the Sale Order or this Agreement, as applicable. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any asset or any right thereunder if an attempted assignment without the consent of a third party, which consent has not been obtained

 

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prior to the Closing (after giving effect to the Sale Order and the Bankruptcy Code), would be legally invalid. If with respect to any Acquired Asset such consent is not obtained or such assignment is not attainable pursuant to Sections 105, 363 or 365 of the Bankruptcy Code other than as a result of the failure to pay Cure Costs (other than Cure Costs to be paid by Dougherty pursuant to Section 2.6) , then such Acquired Asset shall not be transferred hereunder and the Closing shall proceed with respect to the remaining Acquired Assets without any reduction in the Purchase Price. In the case of licenses, certificates, approvals, authorizations, leases, Contracts and other commitments included in the Acquired Assets (i) that cannot be transferred or assigned without the consent of third parties, which consent has not been obtained prior to the Closing (after giving effect to the Sale Order and the Bankruptcy Code), Sellers shall, at the appropriate Buyer’s sole expense and subject to any approval of the Bankruptcy Court that may be required, reasonably cooperate with such Buyer in endeavoring to obtain such consent and, if any such consent is not obtained, Sellers shall, following the Closing, at such Buyer’s sole expense and subject to any approval of the Bankruptcy Court that may be required, cooperate with such Buyer in all reasonable respects to provide to such Buyer the benefits thereof in some other manner, or (ii) that are otherwise not transferable or assignable (after giving effect to the Sale Order and the Bankruptcy Code), Sellers shall, following the Closing, at such Buyer’s sole expense and subject to any approval of the Bankruptcy Court that may be required, reasonably cooperate with such Buyer to provide to such Buyer the benefits thereof in some other manner (including the exercise of the rights of Sellers thereunder); provided that nothing in this Section 2.7 shall (x) require Sellers to make any expenditure or incur any obligation on their own or on behalf of a Buyer for which funds in the full amount of such expenditure or obligation are not provided to Sellers by a Buyer in advance in cash or (y) prohibit any Seller from ceasing operations or winding up its affairs following the Closing.

2.8. Option to Purchase Inventory.

(a) Dougherty shall have the right and option, in its sole discretion (the “ Option ”), to purchase all or any portion of the Inventory (such acquired portion, the “ Acquired Inventory ”) from the Sellers at the Closing. Dougherty may exercise the Option by delivering written notice to the Company and First Bank no later than one Business Day prior to the Closing Date that Dougherty is exercising the Option. If Dougherty exercises the Option, then on the Closing Date (i) Sellers shall sell, transfer, assign, convey and deliver, or cause to be sold, transferred, assigned, conveyed and delivered, to Dougherty, and Dougherty shall purchase, free and clear of all Encumbrances (other than Permitted Encumbrances), all right, title and interest of Sellers in, to or under the Acquired Inventory and (ii) the Acquired Inventory shall be deemed to be a “Dougherty Acquired Asset” for purposes of this Agreement. The exercise by Dougherty of the Option shall be irrevocable and binding upon Dougherty, Sellers and First Bank with respect to their respective obligations hereunder.

(b) The purchase price for the Acquired Inventory, other than Work in Progress (the “ Inventory Purchase Price ”), shall be an amount equal to the fair market value of the Acquired Inventory on the Business Day prior to the Closing Date, as mutually agreed among Dougherty, Sellers and First Bank or, if they are unable to agree, as determined by an appraisal firm mutually acceptable to Dougherty, Sellers and First Bank; provided, however, that Dougherty, Sellers and First Bank hereby agree that the fair market value for any Spare Parts or Supplies included in the Acquired Inventory (and exclusive of any other Acquired Inventory,

 

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including the Work in Progress) shall be as set forth in the that certain Marion Ethanol Plant Audit, dated March 10, 2009, submitted by Jeffrey G. See. At the Closing, Dougherty shall pay the Inventory Purchase Price directly to First Bank by wire transfer of immediately available funds to an account specified by First Bank and such payment shall be retained by First Bank and shall be considered to have been constructively received by the Sellers and satisfy Dougherty’s payment obligation therefor.

(c) The purchase price for the Work in Progress (the “ WIP Purchase Price ”) shall be an amount equal to (i) all amounts received by Dougherty from the sale of the Finished Ethanol and distillers grains that Dougherty produces from such Work in Progress minus (ii) all costs and expenses incurred by Dougherty to process such Work in Progress and produce the Finished Ethanol and distillers grains. Promptly following Dougherty’s sale of the Finished Ethanol and distillers grains produced from the Work in Progress, Dougherty shall pay First Bank the WIP Purchase Price by wire transfer of immediately available funds to an account specified by First Bank and such payment shall be retained by First Bank and shall be considered to have been constructively received by the Sellers and satisfy Dougherty’s payment obligation therefor. Notwithstanding the foregoing, the Buyers agree and acknowledge that the WIP Purchase Price shall be paid to First Bank by Dougherty according to the following timeline: (i) with respect to any Finished Ethanol and distillers grains produced from the Work in Progress that is sold within thirty (30) days following the Closing, the WIP Purchase Price shall be paid on the thirtieth (30th) day following the Closing and (ii) with respect to any Finished Ethanol and distillers grains produced from the Work in Progress that is sold after the thirty (30) day period following the Closing, the WIP Purchase Price shall be paid within three (3) Business Days following Dougherty’s sale of such Finished Ethanol and distillers grains.

(d) If Dougherty does not exercise the Option to purchase the Work in Progress, then First Bank will cause, at its sole cost and expense, all Work in Progress to be removed from the Facility within thirty (30) days following the Closing Date. If First Bank does not cause all Work in Progress to be removed from the Facility within thirty (30) days following the Closing Date, then Dougherty may choose to process all remaining Work in Progress and sell the resulting Finished Ethanol and distillers grains, in which case Dougherty will deliver to First Bank an amount equal to (i) all amounts received by Dougherty from the sale of such Finished Ethanol and distillers grains minus (ii) an amount equal to two (2) times the amount of all costs and expenses incurred by Dougherty to process such Work in Progress and produce such Finished Ethanol and distillers grains.

2.9. Covenant Not to Sue.

The parties acknowledge that certain Trade Secrets owned by or licensed to Sellers exist in the Facility or in the knowledge of the individuals employed at the Facility as of the Closing Date. Sellers shall not, and shall not authorize or cause any third party to, challenge Dougherty’s or its Affiliates’ use of such Trade Secrets for any purpose. Buyers acknowledge that Sellers may use or permit others to use such Trade Secrets for any purpose, and Buyers shall not challenge such use.

 

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2.10. Further Assurances.

At the Closing, and at all times thereafter as may be necessary, Sellers shall execute and deliver to Dougherty and First Bank such other instruments of transfer as shall be reasonably necessary or appropriate to vest in Dougherty and First Bank good and indefeasible title to the Dougherty Acquired Assets and the First Bank Acquired Assets, respectively, free and clear of all Encumbrances (other than Permitted Encumbrances) and to comply with the purposes and intent of this Agreement and such other instruments as shall be reasonably necessary or appropriate to evidence the assignment by Sellers and assumption by Dougherty of the Assigned Contracts, and each of Sellers, on the one hand, and Buyers, on the other hand, shall use their reasonable efforts to take,