Exhibit 10.1

ADVANCED BIOENERGY, LLC

8000 Norman Center Dr., Suite 610

Bloomington, MN 55437

Letter Agreement

Dated as of January 18, 2013

Mr. Richard R. Peterson

Chief Executive Officer and Chief Financial Officer

Advanced BioEnergy, LLC

8000 Norman Center Drive, Suite 610

Bloomington, MN 55437

 

  RE: Compensation as Chief Executive Officer and Chief Financial Officer of
Advanced BioEnergy, LLC (“ABE” or the “Company”)

Dear Rich:

We are pleased to inform you that the compensation committee of ABE has
recommended, and the board of directors of ABE (the “Board”) has approved, the
following compensation package for you:

 

  1. Outstanding Options and Unit Rights.

 

  •  

All of the outstanding options granted to you pursuant to that certain Award
Agreement for Unit Appreciation Right with Tandem Nonqualified Unit Option
Agreement, to the extent not previously vested, were accelerated and became
immediately vested on December 13, 2012.

 

  •  

You were able to pay the exercise price for all of the units of membership
interest (“Units”) covered by the Award Agreement from the distribution proceeds
that you received from those Units in connection with the sale proceeds from the
sale of the Fairmont facility (the “Fairmont Sale”), and which are now issued
and outstanding Units in your name.

 

  •  

With respect to the Tranche C Units with an exercise price of $4.50 per Unit,
the exercise price for those Units was lowered to equal the distribution payment
amount of $4.15 per Unit.

 

  •  

You and ABE previously entered into that certain Change of Control Agreement
(the “Change of Control Agreement”), dated July 31, 2007, pursuant to which you
were entitled to receive 14,000 Units (the “Change in Control Units”) upon the
occurrence of (i) a “Change in Control,” as defined in the Change of Control
Agreement, and (ii) the termination of your employment with ABE by ABE without
“cause,” as defined in your Employment Agreement (as defined below).

--------------------------------------------------------------------------------

Advanced BioEnergy

January 18, 2013

Page 2

 

The Board approved the issuance of the Change in Control Units to you
notwithstanding the fact that your employment with ABE was not terminated in
connection with a Change in Control, as had been required by the Change of
Control Agreement.

 

  2. Bonus Payments.

 

  •  

You were paid a bonus equal to $100,000 on December 28, 2012 in connection with
the Fairmont Sale (the “Transaction Bonus”).

 

  •  

You are entitled under Section 3(f) of your Second Amended and Restated
Employment Agreement, dated May 11, 2011 (“Employment Agreement”), to an annual
performance bonus. Based upon the criteria set forth on Exhibit A attached
hereto, which criteria was reviewed and discussed with you in Spring 2012, the
Compensation Committee has recommended, and the Board has approved, an annual
performance bonus for 2012 under your Employment Agreement of $27,500 (“2012
Performance Bonus”), payable immediately. By acceptance of the 2012 Performance
Bonus, you hereby waive the requirement under Section 3(f) of the Employment
Agreement that the 2012 Performance Bonus be paid to you within sixty (60) days
following the fiscal year ended September 30, 2012.

 

  •  

The Board has awarded you an additional bonus, payable immediately, of $72,500
for certain cost savings you achieved for ABE during the period ended
December 31, 2012 (the “Cost-Saving Incentive Bonus”), payable immediately.

 

  •  

You will be entitled to an additional bonus of $150,000 (“Escrow Incentive
Bonus”), payable within 20 business days after the Escrow Termination Date (as
defined in the Asset Purchase Agreement, dated October 13, 2012 (the “APA”));
provided, however, for every $500,000 that FHR draws from the Escrow Account (as
defined in the APA), the Escrow Incentive Bonus will be reduced by $30,000 up
until the amount of Escrow Funds due to ABE equals $10 million, at which point
you will not be entitled to any amount of the Escrow Incentive Bonus. In the
event that you are terminated by ABE without cause prior to the Escrow
Termination Date, you will nevertheless be entitled to whatever Escrow Incentive
Bonus you would have received had you been employed as of the Escrow Termination
Date.

 

  3. Unit Appreciation Rights.

You will be awarded Unit Appreciation Rights (“UAR”) with respect to 200,000
Units. As set forth in the Unit Appreciation Right Agreement (whose language is
controlling), the UAR will vest 1/18 per month over an 18 month period beginning
December 7, 2012 and be paid in cash upon such time as ABE sells all or
substantially all the assets of the South Dakota plants.

--------------------------------------------------------------------------------

Advanced BioEnergy

January 18, 2013

Page 3

 

The UAR will expire four years following the date of grant. The UAR will be
issued to you for no consideration and will have a grant price of $1.15 per UAR
at the time of the grant; provided, however, the grant price for the UAR will be
reduced by any distribution received by the Company’s unit holders from the
Escrow Funds or the $10 Million of cash reserved by the Company in connection
with the Fairmont Sale. In order to ensure compliance under Section 162(m) of
the Internal Revenue Code, the issuance of the UAR to you is subject to approval
by the Company’s Unit holders by a majority of votes cast at a member meeting
within twelve (12) months of the date of the grant, and, if not approved, the
UAR will be cancelled and have further no force and effect.

 

  4. Effect on Employment Agreement.

Except as expressly noted in this Letter Agreement, your Employment Agreement
will not be modified and will remain in full force and effect. Your base salary
will continue at $285,000 per year. During the next eighteen months, we expect
you to take appropriate steps to (i) reduce operations in the Minneapolis
office; (ii) wind down the Fairmont subsidiary; and (iii) continue to drive
value in South Dakota assets.

Your Employment Agreement will be amended to have a guaranteed extended term of
eighteen (18) months from December 7, 2012 (“the Extended Term”). If you are
terminated by ABE during that Extended Term for any reason other than “for
cause” (as defined in your Employment Agreement), you will be entitled to your
salary to which you would otherwise have been entitled during the Extended Term
(the “Guaranteed Salary”). If you voluntarily resign for any reason, including
“good reason” (as defined in your Employment Agreement) during the Extended
Term, you will not be entitled to your Guaranteed Salary and you will forfeit
any severance payments to which you may have otherwise been entitled under your
Employment Agreement.

 

  5. Agreement with Respect to Fiscal 2013 Annual Performance Bonus.

The Company and you agree that the Cost-Saving Incentive Bonus, the Escrow
Incentive Bonus, and the grant of the UAR are being awarded to you in lieu of
any other Annual Performance Bonus for fiscal 2013 under Section 3(f) of your
Employment Agreement, and you will not be entitled to any other Annual
Performance Bonus for fiscal 2013.

Sincerely,

Scott A. Brittenham

Chairman of the Board of Directors

Advanced BioEnergy, LLC

--------------------------------------------------------------------------------

Advanced BioEnergy

January 18, 2013

Page 4

 

Agreed to and accepted this

18th day of January 2013

/s/ Richard Peterson Richard Peterson

--------------------------------------------------------------------------------

Exhibit A

Criteria for Peterson Annual Performance Bonus for 2012

Peterson’s Annual Performance Bonus for fiscal year 2012 was based upon the
following criteria:

 

  •  

Financial Performance of the Company (50% of Eligible Bonus);

 

  •  

Development of Management Team (10% of Eligible Bonus);

 

  •  

Development of Robust Benchmarking Process (10% of Eligible Bonus);

 

  •  

Refine Capital Allocation Process (10% of Eligible Bonus);

 

  •  

Develop Appropriate Plan for Rail Car Issue (10% of Eligible Bonus); and

 

  •  

Improve Board Interaction (10% of Eligible Bonus).