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Exhibit
10.1
PURCHASE
AGREEMENT
THIS PURCHASE AGREEMENT (the
“Agreement”) dated this 31st day of March, 2008 (the
“Effective Date”), is entered into by and between CHS
Inc. (“Buyer”) and US BioEnergy Corporation
(“Seller”).
RECITALS
WHEREAS, Seller and VeraSun
Energy Corporation (“VeraSun”) have agreed to a plan of
merger to be effective in the first quarter of 2008, and as a
result of such merger VeraSun will be performing the marketing of
renewable fuels on behalf of the Seller’s ethanol production
facilities;
WHEREAS, as a result of this
impending merger Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller, Seller’s fifty percent
(50%) membership interest in Provista Renewable Fuels
Marketing, LLC (the “Company”) to be represented by 500
units in said limited liability company on the terms and conditions
set forth herein.
NOW THEREFORE, in
consideration of the mutual covenants herein contained and for
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Seller and Buyer hereby agree as
follows:
1. Purchase and Sale of
Membership Interest . On the terms and subject to the
conditions of this Agreement, on March 31, 2008 (the
“Effective Date”) Seller hereby agrees to sell,
transfer and deliver to Buyer, and Buyer hereby agrees to purchase
from Seller 100% of Seller’s right, title and interest in
Seller’s membership interest in the Company (the
“Membership Interest”) such that subsequent to the
purchase, Buyer will hold 100% of the membership interest in the
Company, in exchange for the Purchase Price, as defined
below.
2. Purchase Price .
The Purchase Price for the Membership Interest shall be determined
ten (10) days after the Effective Date, and shall be an amount
equal to fifty percent (50%) of the Company’s Tangible
Net Worth as of Effective Date less the Deposit Amount (as defined
herein) (the “Purchase Price”). The formula for
determining Tangible Net Worth is set forth in Exhibit A attached
hereto and incorporated herein.
The Purchase Price shall be
reduced by Seven Hundred and no/100 Dollars ($700,000.00), and
Buyer shall pay the same amount to GATX Corporation
(“GATX”) on April 1, 2008 to be held in trust by
GATX (the “Deposit Amount”) in order for GATX to
provide an unconditional consent to the assignment of rail cars
from Company to Seller under the Assignment and Assumption of Lease
dated March 31, 2008 by and between Company and Seller (the
“Assignment”) as further described in
Section 9(a)(i). Seller agrees to use its best efforts to
promptly substitute a letter of credit or other suitable guaranty
of payment to GATX to secure its obligations under the Assignment.
Buyer shall use commercially reasonable efforts to seek the return
of Deposit Amount once notified by GATX or Seller that Seller has a
satisfactory form of credit in place. Buyer agrees to return the
Deposit Amount to Seller, less any actual charges, GATX offsets or
expenses incurred, within three (3) business days of
Buyer’s actual receipt of the Deposit Amount from GATX and
upon written confirmation by GATX that Seller has satisfied
GATX’s credit requirements under the Assignment.
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Buyer shall pay Seller the
Purchase Price ten (10) days after the Effective Date by
delivery of a wire transfer to an account designated by Seller or
by delivery of a cashiers check payable to Seller.
3. Adjustment Loss
Reimbursement .
(a) Seller shall reimburse
the Company 100% of any Adjustment Loss, as herein defined, by wire
transfer within 10 days of the realization of an Adjustment Loss,
provided that following the Effective Date, Buyer shall
cooperate with Seller and use commercially reasonable efforts to
mitigate the extent of any Adjustment Loss and liability associated
therewith, and further provided that Seller shall have sole
authority with respect to the retention of counsel shall manage the
defense of, and shall have sole discretion as to whether and on
what terms to settle any matter which would be deemed an Adjustment
Loss.
(b) For the purposes of this
Agreement, an “Adjustment Loss” shall be any liability,
loss, damage, obligation or expense, including attorneys’
fees and costs and any other expenses whatsoever, arising out of
the compromise, settlement, litigation or liquidation of any claim
related to or in connection with (i) Amaizing Energy, LLC;
(ii) North Country Ethanol, LLC; or (iii) any contracts
of the Company entered into prior to March 31, 2006, if Seller
had knowledge of potential Losses relating to such contracts prior
to December 31, 2006.
4. Non-Solicitation and
Non-competition .
(a) Non-Solicitation by
VeraSun and Seller. For a period of one (1) year from the
Effective Date, neither VeraSun nor Seller will, directly or
indirectly, contact, solicit for employment, seek to employ or
interfere with the relationship Buyer has with any of Buyer’s
employees that are employed by the Buyer on the Effective Date;
provided, however, that the foregoing shall not apply to any
employees of Buyer who are involuntarily terminated by Buyer. In
the event the Seller hires an employee of Buyer who was not
involuntarily terminated by the Buyer, VeraSun shall pay to the
Buyer one hundred percent (100%) of such employee’s
annual base salary for the most recently completed calendar year as
liquidated damages. The payment of this amount of liquidated
damages shall be the Company’s and Buyer’s sole and
exclusive remedy for a breach of this Section.
(b) Non-Solicitation by
Buyer. For a period of one (1) year from the Effective Date,
the Buyer will not, directly or indirectly, contact, solicit for
employment, seek to employ or interfere with the relationship
VeraSun or Seller has with any of their employees employed on the
Effective Date for positions within the Company only; provided,
however, that the foregoing shall not apply to any employees of
VeraSun or Seller who are involuntarily terminated by VeraSun or
Seller. In the event the Buyer hires an employee of Seller or
VeraSun to work in a position in the Company who was not
involuntarily terminated by the Seller or VeraSun, Buyer shall pay
to Seller or VeraSun one hundred percent (100%) of such
employee’s annual base salary for the most recently completed
calendar year as liquidated damages. The payment of this amount of
liquidated damages shall be VeraSun’s and Seller’s sole
and exclusive remedy for a breach of this Section.
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(c) Non-competition. For a
period of one (1) year from the Effective Date, neither
VeraSun nor Seller will, directly or indirectly, provide marketing
services for ethanol produced by third parties; provided, however,
that VeraSun, Seller or Affiliates of VeraSun or Seller, may engage
in the (i) marketing of ethanol produced by Seller, VeraSun,
or any of their respective subsidiaries or Affiliates,
(ii) marketing of ethanol purchased by Seller, VeraSun, or any
of their respective subsidiaries for its own account for marketing
and resale; and (iii) marketing of ethanol produced by a third
party, so long as the marketing relationship, agreement or other
arrangement relating to the marketing of such third party’s
ethanol by Seller, VeraSun, or any of their respective Affiliates
was acquired, assumed or was otherwise the extension of a business
line acquired or assumed in connection with Seller, VeraSun, or any
of their respective Affiliates acquiring all or substantially all
of the business or assets of a company that has both production and
third-party marketing components and is not a Pure-Play Marketer of
ethanol. Affiliate is defined as an individual or an entity who
controls, is controlled by or is under common control with VeraSun
or Seller. For purposes of this definition, “control”
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such Affiliate. A Pure-Play Marketer is a marketer that is solely
engaged in the marketing of ethanol, biodiesel, renewable fuels and
other petroleum products and does not market for a production
facility it owns or is owned by an Affiliate of the Pure-Play
Marketer.
(d) VeraSun and Seller
acknowledge and agree that the restrictive covenants set forth in
Section 4 of this Agreement are reasonable and appropriate in
light of Buyer’s payment of substantial funds to Seller and
VeraSun. Seller and VeraSun agree that they will never seek to
challenge the temporal or geographic scope of these restrictive
covenants in any lawsuit, arbitration or other legal action brought
where any of the claims or defense arise out of or relate to this
Agreement. However, if any court having jurisdiction shall at any
time hereafter hold these restrictions to be unenforceable or
unreasonable, whether as to scope or period of time specified
herein, and if such court shall declare or determine the scope or
period of time which it deems to be reasonable, such scope or
period of time shall be deemed to be reduced to that declared or
determined by said court to be reasonable.
(e) VeraSun and Seller each
recognize that in the event of violation of the terms of
Section 4(c), Buyer will suffer irreparable damages and that
it will be difficult if not impossible to compute actual damages
sustained by Buyer as the result of such unauthorized competition.
Therefore, the parties agree that Buyer shall be entitled to
liquidated damages of one million dollars ($1,000,000) in the event
of a breach by Seller, VeraSun or any of their respective
Affiliates as it concerns Section 4(c) of this Agreement. The
payment of this amount of liquidated damages shall be the
Company’s and Buyer’s sole and exclusive remedy for a
breach of Section 4(c).
(f) If on October 1,
2008 the Company is not the sole and exclusive marketer for ethanol
production facilities that, in the aggregate, are capable of
producing at least two hundred fifty million
(250,000,000) gallons of ethanol on an annualized basis, the
terms, conditions, covenants and restrictions set forth in this
Section 4 shall terminate and be of no further
effect.
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5. Beatrice Biodiesel,
LLC . The Company and Beatrice Biodiesel, LLC
(“Beatrice”) entered into an Agreement Regarding
Biodiesel Sales and Marketing Agreement dated April 28, 2006
(“Biodiesel Agreement”) whereby the Company entered
into rail car leases in the Company’s name for
Beatrice’s use in exchange for Beatrice’s payment of
the rail car lease rental charges (the “RC Rent”). The
specifics of the Beatrice lease terms are set forth in Exhibit
B. Buyer and Seller are aware that Beatrice is delinquent in RC
Rent as of the date of this Agreement, and Beatrice’s future
as an ongoing business is uncertain. As such, the parties agree
that the Purchase Price will be reduced by an amount equal to fifty
percent (50%) of Beatrice’s current RC Rent outstanding
and owing as of the Effective Date (the “Beatrice
Receivable”). In the event Buyer recovers any of the Beatrice
Receivable, it shall pay to Seller 50% of such amount, less 50% of
any costs incurred in recovering such monies. In addition, Seller
covenants that it will accept the assignment of and assume
liability for 70 of the 140 rail cars leased to Beatrice under the
Trinity Railroad Car Lease Agreement referenced in
Section 9(a)(iii), and obtain Trinity’s consent to the
assignment and release Buyer from any obligations rel
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