EXHIBIT 10.1

 

 

 

 

 

 

CREDIT AGREEMENT

 

BY AND BETWEEN

HGF ACQUISITION, LLC

AND

 

KRUSE INVESTMENT COMPANY, INC

FEBRUARY 12, 2007

 

 

 

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

TABLE OF CONTENTS

ARTICLE I DEFINITIONS 1

 

 

 

 

 

Section 1.1

 

Definitions

 

1

Section 1.2

 

Other Definitional Terms; Rules of Interpretation

 

4

 

 

 

 

 

ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY

 

4

 

 

 

Section 2.1

 

Advances

 

4

Section 2.2

 

Procedures for Requesting Advances

 

5

Section 2.3

 

Interest; Principal; Default Interest Rate; Usury

 

5

Section 2.4

 

Origination Fee

 

6

Section 2.5

 

Time for Interest Payments; Computation of Interest and Fees

 

6

Section 2.6

 

Voluntary Prepayment; Termination of the Credit Facility by the Borrower

 

6

 

 

 

 

 

ARTICLE III CONDITIONS OF LENDING

 

6

 

 

 

Section 3.1

 

Conditions Precedent to the Initial Advance

 

6

Section 3.2

 

Conditions Precedent to All Advances

 

7

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES

 

7

 

 

 

Section 4.1

 

Existence and Power

 

7

Section 4.2

 

Authorization of Borrowing; No Conflict as to Law or Agreements

 

8

Section 4.3

 

Legal Agreements

 

8

Section 4.4

 

Litigation

 

8

Section 4.5

 

Taxes

 

8

Section 4.6

 

Default

 

8

 

 

 

 

 

ARTICLE V COVENANTS

 

9

 

 

 

 

Section 5.1

 

Compliance with Laws

 

9

Section 5.2

 

Payment of Taxes and Other Claims

 

9

Section 5.3

 

Preservation of Existence

 

9

Section 5.4

 

Sale or Transfer of Assets; Suspension of Business Operations

 

9

Section 5.5

 

Consolidation and Merger; Asset Acquisitions

 

9

 

 

 

 

 

ARTICLE VI EVENTS OF DEFAULT, RIGHTS AND REMEDIES

 

10

 

 

 

Section 6.1

 

Events of Default

 

10

Section 6.2

 

Rights and Remedies

 

11

 

 

 

 

 

ARTICLE VII MISCELLANEOUS

 

12

 

 

 

Section 7.1

 

No Waiver; Cumulative Remedies; Compliance with Laws

 

12

Section 7.2

 

Amendments, Etc.

 

12

Section 7.3

 

Notices; Communication of Confidential Information; Requests for Accounting

12

Section 7.4

 

Further Documents

 

12

Section 7.5

 

Costs and Expenses

 

13

Section 7.6

 

Execution in Counterparts; Telefacsimile Execution

 

13

Section 7.7

 

Binding Effect; Assignment; Complete Agreement; Sharing Information

 

13

Section 7.8

 

Severability of Provisions

 

13

Section 7.9

 

Headings

 

13

Section 7.10

 

Governing Law; Jurisdiction, Venue; Waiver of Jury Trial

 

13

 

EXHIBITS

 

 

 

 

 

Exhibit A

 

Form of Note

Exhibit B

 

Form of Security Agreement

Exhibit C

 

Form of Consent to Security Agreement

 

i

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

CREDIT AGREEMENT

Dated as of February 12, 2007

HGF ACQUISITION, LLC, a Delaware limited liability company (the “Borrower”), and
KRUSE INVESTMENT COMPANY, INC, a California corporation (the “Lender”), hereby
agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1             Definitions.  For all purposes of this Agreement, except
as otherwise expressly provided, the following terms shall have the meanings
assigned to them in this Section or in the Section referenced after such term:

“Advance” has the meaning set forth in Section 2.1.

“Affiliate” or “Affiliates” means any Person controlled by, controlling or under
common control with the Borrower, including any Subsidiary of the Borrower.  For
purposes of this definition, “control,” when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

“Agreement” means this Credit Agreement.

“Availability” means the amount, if any, by which the Maximum Line Amount
exceeds the outstanding principal balance of the Note.

“Business Day” means a day on which the Federal Reserve Bank of New York is open
for business.

“Commitment” means the Lender’s commitment to make Advances to the Borrower
pursuant to Article II.

“Consent to Security Interest” means the Consent to Security Interest executed
by Borrower, Heartland Grain Fuels, L.P., and the other partners of Heartland
Grain Fuels, L.P. substantially in the form of Exhibit C hereto, as the same may
be amended from time to time.

“Constituent Documents” means with respect to any Person, as applicable, such
Person’s certificate of incorporation, articles of incorporation, by-laws,
certificate of formation, articles of organization, limited liability company
agreement, management agreement, operating agreement, shareholder agreement,
partnership agreement or similar document or agreement governing such Person’s
existence, organization or management or concerning disposition of ownership
interests of such Person or voting rights among such Person’s owners.

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

“Credit Facility” means the credit facility under which Advances may be made
available to the Borrower by the Lender under Article II.

“Default” means an event that, with giving of notice or passage of time or both,
would constitute an Event of Default.

“Default Period” means any period of time beginning on the date an Event of
Default occurs and ending on the date identified by the Lender in writing as the
date that such Event of Default has been cured or waived.

“Default Rate” means an annual interest rate in effect during a Default Period
or following the Termination Date, which interest rate shall be equal to 18%.

“Director” means a director if the Borrower is a corporation, a governor or
manager if the Borrower is a limited liability company, or a general partner if
the Borrower is a partnership.

“Event of Default” has the meaning set forth in Section 6.1.

“GAAP” means generally accepted accounting principles, applied on a consistent
basis.

“Interest Payment Date” has the meaning set forth in Section 2.5(a).

“Interest Rate” means 12% per annum.

“Lien” means any security interest, mortgage, deed of trust, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument or
device, including the interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a Person, whether now owned or hereafter acquired
and whether arising by agreement or operation of law.

“Loan Documents” means this Agreement, the Note, the Security Agreement and the
Consent to Security Interest, together with every other agreement, note,
document, contract or instrument to which the Borrower now or hereafter is a
party and that is required by the Lender.

“Material Adverse Effect” means any of the following:

(i)           A material adverse effect on the business, operations, results of
operations, prospects, assets, liabilities or financial condition of the
Borrower;

(ii)          A material adverse effect on the ability of the Borrower to
perform its obligations under the Loan Documents;

(iii)         A material adverse effect on the ability of the Lender to enforce
the Obligations or to realize the intended benefits of the Security Documents,

2

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

including a material adverse effect on the validity or enforceability of any
Loan Document, or on the status, existence, perfection, priority or
enforceability of any Lien securing payment or performance of the Obligations;
or

(iv)         Any claim against the Borrower or overt threat of litigation which
if determined adversely to the Borrower would cause the Borrower to be liable to
pay an amount exceeding $200,000 or would be an event described in clauses (i),
(ii) and (iii) above.

“Maturity Date” means July 1, 2007.

“Maximum Line Amount” means $5,000,000.

“Note” means the Borrower’s promissory note, payable to the order of the Lender
in substantially the form of Exhibit A hereto, as same may be renewed and
amended from time to time, and all replacements thereto.

“Obligations” means the Note and each and every other debt, liability and
obligation of every type and description which the Borrower may now or at any
time hereafter owe to the Lender, whether such debt, liability or obligation now
exists or is hereafter created or incurred, whether it arises in a transaction
involving the Lender alone or in a transaction involving other creditors of the
Borrower, and whether it is direct or indirect, due or to become due, absolute
or contingent, primary or secondary, liquidated or unliquidated, or sole, joint,
several or joint and several, and including all indebtedness of the Borrower
arising under any Loan Document, whether now in effect or hereafter entered
into.

“Officer” means with respect to the Borrower, an officer if the Borrower is a
corporation, a manager if the Borrower is a limited liability company, or a
partner if the Borrower is a partnership.

“Owner” means with respect to the Borrower, each Person having legal or
beneficial title to an ownership interest in the Borrower or a right to acquire
such an interest.

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

“Security Agreement” means the Security Agreement executed by Borrower and
Lender substantially in the form of Exhibit B hereto, as the same may be amended
from time to time.

“Subsidiary” means any corporation of which more than 50% of the outstanding
shares of capital stock having general voting power under ordinary circumstances
to elect a majority of the board of Directors of such corporation, irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of

3

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

the happening of any contingency, is at the time directly or indirectly owned by
the Borrower, by the Borrower and one or more other Subsidiaries, or by one or
more other Subsidiaries.

“Termination Date” means the earliest of (i) the Maturity Date, (ii) the date
the Borrower terminates the Credit Facility, or (iii) the date the Lender
demands payment of the Obligations (or the Obligations are automatically
accelerated), following an Event of Default, pursuant to Section 6.2.

Section 1.2             Other Definitional Terms; Rules of Interpretation.  The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.  All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP. 
References to Articles, Sections, subsections, Exhibits, Schedules and the like,
are to Articles, Sections and subsections of, or Exhibits or Schedules attached
to, this Agreement unless otherwise expressly provided.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.  Unless the context in which used herein otherwise clearly
requires, “or” has the inclusive meaning represented by the phrase “and/or”. 
Defined terms include in the singular number the plural and in the plural number
the singular.  Reference to any agreement (including the Loan Documents),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
(and, if applicable, in accordance with the terms hereof and the other Loan
Documents), except where otherwise explicitly provided, and reference to any
promissory note includes any promissory note which is an extension or renewal
thereof or a substitute or replacement therefor.  Reference to any law, rule,
regulation, order, decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect on the determination date, including rules and
regulations promulgated thereunder.

ARTICLE II

AMOUNT AND TERMS OF THE CREDIT FACILITY

Section 2.1             Advances.  The Lender agrees, subject to the terms and
conditions of this Agreement, to make advances (“Advances”) to the Borrower from
time to time after the later of (a) the date that all of the conditions set
forth in Section 3.1 are satisfied and (b) February 19, 2007 to and until (but
not including) the Termination Date in an amount not in excess of the Maximum
Line Amount.  Notwithstanding the foregoing, the Lender shall make an Advance on
the date hereof in the amount of $100,000 to permit Borrower to pay the fee
required by Section 2.4.  The Lender shall have no obligation to make an Advance
to the extent that the amount of the requested Advance exceeds Availability. 
The proceeds of each Advance under this Section 2.1 shall be used to make loans
to Heartland Grain Fuels, L.P., pay the fee required by Section 2.4, and to pay
transaction costs and expenses.  Each Advance under this Section 2.1 shall be in
an amount equal to an integral multiple of $100,000..  Borrower may only request
one Advance in any period of 30 days.  The

4

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

Borrower’s obligation to pay the Advances shall be evidenced by the Note and
shall be secured by the Security Agreement.  The Note shall bear interest on the
unpaid principal amount thereof from the date thereof until paid as set forth in
Section 2.3.

Section 2.2             Procedures for Requesting Advances.  The Borrower shall
request each Advance (other than the Advance on the date hereof to pay the fee
required by Section 2.4) at least 18 days prior to the day on which the Advance
is to be made.  Each request that conforms to the terms of this Agreement shall
be effective upon receipt by the Lender.  Such request shall specify the
principal amount of the requested Advance, shall be in writing or by telephone
or telecopy transmission, and shall be confirmed in writing by the Borrower by
(i) an Officer of the Borrower; or (ii) a Person designated as the Borrower’s
agent by an Officer of the Borrower in a writing delivered to the Lender; or
(iii) a Person whom the Lender reasonably believes to be an Officer of the
Borrower or such a designated agent.  Any request for an Advance, whether
written or telephonic, shall be deemed to be a representation by the Borrower
that the conditions set forth in Section 3.2 have been satisfied as of the time
of the request.  Upon fulfillment of the applicable conditions set forth in
Article III, the Lender shall disburse the proceeds of the requested Advance by
crediting the same to the Borrower’s demand deposit account specified in writing
by Borrower from time to time unless the Lender and the Borrower shall agree in
writing to another manner of disbursement.

Section 2.3             Interest; Principal; Default Interest Rate; Usury.

(a)          Interest.  Except as provided in Section 2.3(c), the principal
amount of each Advance shall bear interest at the Interest Rate.

(b)          Principal. The principal balance of the Note shall be due and
payable in full on the Termination Date, or if such day is not a Business Day,
on the next succeeding Business Day.

(c)          Default Interest Rate.  At any time during any Default Period or
following the Termination Date, in the Lender’s sole discretion and without
waiving any of its other rights or remedies, the principal of the Note shall
bear interest at the Default Rate or such lesser rate as the Lender may
determine, effective as of the first day of any Default Period through the last
day of such Default Period, or any shorter time period that the Lender may
determine.  The decision of the Lender to impose a rate that is less than the
Default Rate or to not impose the Default Rate for the entire duration of the
Default Period shall be made by the Lender in its sole discretion and shall not
be a waiver of any of its other rights and remedies, including its right to
retroactively impose the full Default Rate for the entirety of any such Default
Period or following the Termination Date.

(d)          Usury.  In any event no rate change shall be put into effect which
would result in a rate greater than the highest rate permitted by law. 
Notwithstanding anything to the contrary contained in any Loan Document, all
agreements which either now are or which shall become agreements between the
Borrower and the

5

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

Lender are hereby limited so that in no contingency or event whatsoever shall
the total liability for payments in the nature of interest, additional interest
and other charges exceed the applicable limits imposed by any applicable usury
laws.  If any payments in the nature of interest, additional interest and other
charges made under any Loan Document are held to be in excess of the limits
imposed by any applicable usury laws, it is agreed that any such amount held to
be in excess shall be considered payment of principal hereunder, and the
indebtedness evidenced hereby shall be reduced by such amount so that the total
liability for payments in the nature of interest, additional interest and other
charges shall not exceed the applicable limits imposed by any applicable usury
laws, in compliance with the desires of the Borrower and the Lender.  This
provision shall never be superseded or waived and shall control every other
provision of the Loan Documents and all agreements between the Borrower and the
Lender, or their successors and assigns.

Section 2.4             Origination Fee.  The Borrower shall pay the Lender a
fully earned and non-refundable origination fee of $100,000, due and payable
upon the execution of this Agreement.

Section 2.5             Time for Interest Payments; Computation of Interest and
Fees.

(a)     Time For Interest Payments.  Accrued and unpaid interest shall be due
and payable on the Termination Date or if such day is not a Business Day, on the
next succeeding Business Day (the “Interest Payment Date”).  Interest will
accrue from the date of each Advance to the Interest Payment Date.

(b)     Computation of Interest and Fees.  Interest accruing on the outstanding
principal balance of the Advances and fees hereunder outstanding from time to
time shall be computed on the basis of actual number of days elapsed in a year
of 360 days.

Section 2.6             Voluntary Prepayment; Termination of the Credit Facility
by the Borrower.  The Borrower may prepay the Advances in whole (but not in
part) at any time.  The Borrower may terminate the Credit Facility at any time. 
If the Borrower terminates the Credit Facility, all Obligations shall be
immediately due and payable.

ARTICLE III

CONDITIONS OF LENDING

Section 3.1             Conditions Precedent to the Initial Advance.  The
Lender’s obligation to make the initial Advance shall be subject to the
condition precedent that the Lender shall have received all of the following,
each properly executed by the appropriate party and in form and substance
satisfactory to the Lender:

(A)     THIS AGREEMENT.

(B)     THE NOTE.

6

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

(C)     THE SECURITY AGREEMENT.

(D)     THE CONSENT TO SECURITY INTEREST.

(E)     A CERTIFICATE OF THE BORROWER’S SECRETARY OR ASSISTANT SECRETARY
CERTIFYING THAT ATTACHED TO SUCH CERTIFICATE ARE (I) THE RESOLUTIONS OF THE
BORROWER’S DIRECTORS AND, IF REQUIRED, OWNERS, AUTHORIZING THE EXECUTION,
DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS, (II) TRUE, CORRECT AND COMPLETE
COPIES OF THE BORROWER’S CONSTITUENT DOCUMENTS, AND (III) EXAMPLES OF THE
SIGNATURES OF THE BORROWER’S OFFICERS OR AGENTS AUTHORIZED TO EXECUTE AND
DELIVER THE LOAN DOCUMENTS AND OTHER INSTRUMENTS, AGREEMENTS AND CERTIFICATES,
INCLUDING ADVANCE REQUESTS, ON THE BORROWER’S BEHALF.

(F)      A CURRENT CERTIFICATE ISSUED BY THE SECRETARY OF STATE OF DELAWARE,
CERTIFYING THAT THE BORROWER IS IN GOOD STANDING IN THE STATE OF DELAWARE.

(G)     PAYMENT OF THE FEES DUE UNDER SECTION 2.4 AND EXPENSES INCURRED BY THE
LENDER THROUGH SUCH DATE AND REQUIRED TO BE PAID BY THE BORROWER UNDER SECTION
7.5, INCLUDING ALL LEGAL EXPENSES INCURRED THROUGH THE DATE OF THIS AGREEMENT.

(H)     SUCH OTHER DOCUMENTS AS THE LENDER IN ITS REASONABLE DISCRETION MAY
REQUIRE.

Section 3.2             Conditions Precedent to All Advances.  The Lender’s
obligation to make each Advance shall be subject to the further conditions
precedent that:

(A)     THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV ARE CORRECT
ON AND AS OF THE DATE OF SUCH ADVANCE AS THOUGH MADE ON AND AS OF SUCH DATE,
EXCEPT TO THE EXTENT THAT SUCH REPRESENTATIONS AND WARRANTIES RELATE SOLELY TO
AN EARLIER DATE; AND

(B)     NO EVENT HAS OCCURRED AND IS CONTINUING, OR WOULD RESULT FROM SUCH
ADVANCE WHICH CONSTITUTES A DEFAULT OR AN EVENT OF DEFAULT.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender as follows:

Section 4.1             Existence and Power.  The Borrower is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware and is duly licensed or qualified to transact
business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing or
qualification necessary.  The Borrower has all requisite power and authority to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents.

 

7

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

SECTION 4.2             AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW OR
AGREEMENTS.  THE EXECUTION, DELIVERY AND PERFORMANCE BY THE BORROWER OF THE LOAN
DOCUMENTS AND THE BORROWINGS FROM TIME TO TIME HEREUNDER HAVE BEEN DULY
AUTHORIZED BY ALL NECESSARY LIMITED LIABILITY COMPANY ACTION AND DO NOT AND WILL
NOT (I) REQUIRE ANY CONSENT OR APPROVAL OF THE BORROWER’S OWNERS; (II) REQUIRE
ANY AUTHORIZATION, CONSENT OR APPROVAL BY, OR REGISTRATION, DECLARATION OR
FILING WITH, OR NOTICE TO, ANY GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD,
BUREAU, AGENCY OR INSTRUMENTALITY, DOMESTIC OR FOREIGN, OR ANY THIRD PARTY,
EXCEPT SUCH AUTHORIZATION, CONSENT, APPROVAL, REGISTRATION, DECLARATION, FILING
OR NOTICE AS HAS BEEN OBTAINED, ACCOMPLISHED OR GIVEN PRIOR TO THE DATE HEREOF;
(III) VIOLATE ANY PROVISION OF ANY LAW, RULE OR REGULATION OR OF ANY ORDER,
WRIT, INJUNCTION OR DECREE PRESENTLY IN EFFECT HAVING APPLICABILITY TO THE
BORROWER OR OF THE BORROWER’S CONSTITUENT DOCUMENTS; (IV) RESULT IN A BREACH OF
OR CONSTITUTE A DEFAULT UNDER ANY INDENTURE OR LOAN OR CREDIT AGREEMENT OR ANY
OTHER MATERIAL AGREEMENT, LEASE OR INSTRUMENT TO WHICH THE BORROWER IS A PARTY
OR BY WHICH IT OR ITS PROPERTIES MAY BE BOUND OR AFFECTED; OR (V) RESULT IN, OR
REQUIRE, THE CREATION OR IMPOSITION OF ANY LIEN (OTHER THAN THE LIEN OF THE
SECURITY AGREEMENT) UPON OR WITH RESPECT TO ANY OF THE PROPERTIES NOW OWNED OR
HEREAFTER ACQUIRED BY THE BORROWER.

SECTION 4.3             LEGAL AGREEMENTS.  THIS AGREEMENT CONSTITUTES AND, UPON
DUE EXECUTION BY THE BORROWER, THE OTHER LOAN DOCUMENTS WILL CONSTITUTE THE
LEGAL, VALID AND BINDING OBLIGATIONS OF THE BORROWER, ENFORCEABLE AGAINST THE
BORROWER IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, SUBJECT TO APPLICABLE
BANKRUPTCY, REORGANIZATION, INSOLVENCY, MORATORIUM, AND OTHER SIMILAR LAWS
AFFECTING CREDITORS RIGHTS GENERALLY FROM TIME TO TIME IN EFFECT AND TO GENERAL
PRINCIPLES OF EQUITY.

SECTION 4.4             LITIGATION.  THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS
PENDING OR, TO THE BORROWER’S KNOWLEDGE, THREATENED AGAINST OR AFFECTING THE
BORROWER OR ANY OF ITS AFFILIATES OR THE PROPERTIES OF THE BORROWER OR ANY OF
ITS AFFILIATES BEFORE ANY COURT OR GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD,
BUREAU, AGENCY OR INSTRUMENTALITY, DOMESTIC OR FOREIGN, WHICH, IF DETERMINED
ADVERSELY TO THE BORROWER OR ANY OF ITS AFFILIATES, WOULD HAVE A MATERIAL
ADVERSE EFFECT ON THE FINANCIAL CONDITION, PROPERTIES OR OPERATIONS OF THE
BORROWER OR ANY OF ITS AFFILIATES.

SECTION 4.5             TAXES.  THE BORROWER AND ITS AFFILIATES HAVE PAID OR
CAUSED TO BE PAID TO THE PROPER AUTHORITIES WHEN DUE ALL FEDERAL, STATE AND
LOCAL TAXES REQUIRED TO BE WITHHELD BY EACH OF THEM.  THE BORROWER AND ITS
AFFILIATES HAVE FILED ALL FEDERAL, STATE AND LOCAL TAX RETURNS WHICH TO THE
KNOWLEDGE OF THE OFFICERS OF THE BORROWER OR ANY AFFILIATE, AS THE CASE MAY BE,
ARE REQUIRED TO BE FILED, AND THE BORROWER AND ITS AFFILIATES HAVE PAID OR
CAUSED TO BE PAID TO THE RESPECTIVE TAXING AUTHORITIES ALL TAXES AS SHOWN ON
SAID RETURNS OR ON ANY ASSESSMENT RECEIVED BY ANY OF THEM TO THE EXTENT SUCH
TAXES HAVE BECOME DUE.

SECTION 4.6             DEFAULT.  THE BORROWER IS IN COMPLIANCE WITH ALL
PROVISIONS OF ALL AGREEMENTS, INSTRUMENTS, DECREES AND ORDERS TO WHICH IT IS A
PARTY OR BY WHICH IT OR ITS PROPERTY IS BOUND OR AFFECTED, THE BREACH OR DEFAULT
OF WHICH COULD HAVE A MATERIAL ADVERSE EFFECT.

8

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

 

ARTICLE V

COVENANTS

So long as the Obligations shall remain unpaid, or the Credit Facility shall
remain outstanding, the Borrower will comply with the following requirements,
unless the Lender shall otherwise consent in writing:

SECTION 5.1             COMPLIANCE WITH LAWS.  THE BORROWER SHALL (A) COMPLY
WITH THE REQUIREMENTS OF APPLICABLE LAWS AND REGULATIONS, THE NON-COMPLIANCE
WITH WHICH WOULD MATERIALLY AND ADVERSELY AFFECT ITS BUSINESS OR ITS FINANCIAL
CONDITION AND (B) USE AND KEEP ITS ASSETS, ONLY FOR LAWFUL PURPOSES, WITHOUT
VIOLATION OF ANY FEDERAL, STATE OR LOCAL LAW, STATUTE OR ORDINANCE.

SECTION 5.2             PAYMENT OF TAXES AND OTHER CLAIMS.  THE BORROWER WILL
PAY OR DISCHARGE, WHEN DUE, (A) ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES
LEVIED OR IMPOSED UPON IT OR UPON ITS INCOME OR PROFITS, UPON ANY PROPERTIES
BELONGING TO IT (INCLUDING THE COLLATERAL, AS DEFINED IN THE SECURITY AGREEMENT)
OR UPON OR AGAINST THE CREATION, PERFECTION OR CONTINUANCE OF THE SECURITY
INTEREST (AS DEFINED IN THE SECURITY AGREEMENT), PRIOR TO THE DATE ON WHICH
PENALTIES ATTACH THERETO, (B) ALL FEDERAL, STATE AND LOCAL TAXES REQUIRED TO BE
WITHHELD BY IT, AND (C) ALL LAWFUL CLAIMS FOR LABOR, MATERIALS AND SUPPLIES
WHICH, IF UNPAID, MIGHT BY LAW BECOME A LIEN UPON ANY PROPERTIES OF THE
BORROWER; PROVIDED, THAT THE BORROWER SHALL NOT BE REQUIRED TO PAY ANY SUCH TAX,
ASSESSMENT, CHARGE OR CLAIM WHOSE AMOUNT, APPLICABILITY OR VALIDITY IS BEING
CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND FOR WHICH PROPER RESERVES
HAVE BEEN MADE.

SECTION 5.3             PRESERVATION OF EXISTENCE.  THE BORROWER WILL PRESERVE
AND MAINTAIN ITS EXISTENCE AND ALL OF ITS RIGHTS, PRIVILEGES AND FRANCHISES
NECESSARY OR DESIRABLE IN THE NORMAL CONDUCT OF ITS BUSINESS AND SHALL CONDUCT
ITS BUSINESS IN AN ORDERLY, EFFICIENT AND REGULAR MANNER.

SECTION 5.4             SALE OR TRANSFER OF ASSETS; SUSPENSION OF BUSINESS
OPERATIONS.  THE BORROWER WILL NOT SELL, LEASE, ASSIGN, TRANSFER OR OTHERWISE
DISPOSE OF (A) THE STOCK OF ANY SUBSIDIARY, THE LIMITED PARTNERSHIP INTEREST IN
HEARTLAND GRAIN FUELS, L.P., OR THE COMMON STOCK OF DAKOTA FUELS, INC. OR
(B) ALL OR A SUBSTANTIAL PART OF ITS ASSETS, (WHETHER IN ONE TRANSACTION OR IN A
SERIES OF TRANSACTIONS) TO ANY OTHER PERSON, AND WILL NOT LIQUIDATE, DISSOLVE OR
SUSPEND BUSINESS OPERATIONS.

SECTION 5.5             CONSOLIDATION AND MERGER; ASSET ACQUISITIONS.  THE
BORROWER WILL NOT CONSOLIDATE WITH OR MERGE INTO ANY PERSON, OR PERMIT ANY OTHER
PERSON TO MERGE INTO IT, OR ACQUIRE (IN A TRANSACTION ANALOGOUS IN PURPOSE OR
EFFECT TO A CONSOLIDATION OR MERGER) ALL OR SUBSTANTIALLY ALL THE ASSETS OF ANY
OTHER PERSON; PROVIDED THAT BORROWER MAY ACQUIRE ADDITIONAL LIMITED PARTNERSHIP
INTERESTS IN HEARTLAND GRAIN FUELS, L.P. AND ADDITIONAL COMMON STOCK IN DAKOTA
FUELS, INC.

9

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

ARTICLE VI

EVENTS OF DEFAULT, RIGHTS AND REMEDIES

SECTION 6.1             EVENTS OF DEFAULT.  “EVENT OF DEFAULT”, WHEREVER USED
HEREIN, MEANS ANY ONE OF THE FOLLOWING EVENTS:

(a)             Default in the payment of any principal or interest on the loan
when it becomes due and payable;

(b)            Default in the payment of any fees, costs or expenses to be paid
by Borrower under this Agreement or any other Loan Document and the continuation
of such default for more than 5 Business Days after written notice thereof has
been given to the Borrower by Lender;

(c)             Default in the performance, or breach, of any covenant or
agreement of the Borrower contained in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in this
Section 6.1 specifically dealt with) or in any other Loan Document and the
continuation of such default or breach for a period of 30 calendar days after
written notice thereof has been given to the Borrower by Lender;

(d)            The Borrower shall be or become insolvent, or admit in writing
its inability to pay its debts as they mature, or make an assignment for the
benefit of creditors; or the Borrower shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for it or for all or
any substantial part of its property; or such receiver, trustee or similar
officer shall be appointed without the application or consent of the Borrower;
or the Borrower shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding relating to it under the
laws of any jurisdiction; or any such proceeding shall be instituted (by
petition, application or otherwise) against the Borrower; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued or levied
against a substantial part of the property of the Borrower;

(e)             A petition shall be filed by or against the Borrower under the
United States Bankruptcy Code naming the Borrower as debtor, and, if such
petition is an involuntary petition filed against the Borrower, such involuntary
petition is not dismissed within 60 days after its filing;

(f)             Any representation or warranty made by the Borrower in this
Agreement, or by the Borrower (or any of its Officers) in any Loan Document,
agreement, certificate, instrument or financial statement or other statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement shall prove to have been incorrect in any material respect when deemed
to be effective;

10

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

(g)            The rendering against the Borrower of an arbitration award, final
judgment, decree or order for the payment of money in excess of $500,000 and the
continuance of such arbitration award, judgment, decree or order unsatisfied and
in effect for any period of 30 consecutive days without a stay of execution;

(h)            A default under any bond, debenture, note or other evidence of
indebtedness of the Borrower for borrowed money exceeding $500,000 in principal
amount owed to any Person other than the Lender, or under any indenture or other
instrument under which any such evidence of indebtedness has been issued or by
which it is governed, and the expiration of the applicable period of grace, if
any, specified in such evidence of indebtedness, indenture or other instrument;
or

(i)              The Borrower shall liquidate, dissolve, terminate or suspend
its business operations or otherwise fail to operate its business in the
ordinary course, merge with another Person unless the Borrower is the surviving
entity; or sell or attempt to sell all or substantially all of its assets,
without the Lender’s prior written consent.

SECTION 6.2             RIGHTS AND REMEDIES.  DURING ANY DEFAULT PERIOD, THE
LENDER MAY EXERCISE ANY OR ALL OF THE FOLLOWING RIGHTS AND REMEDIES:

(a)             The Lender may, by notice to the Borrower, declare the
Commitment to be terminated, whereupon the same shall forthwith terminate;

(b)            The Lender may, by notice to the Borrower, declare the
Obligations to be forthwith due and payable, whereupon all Obligations shall
become and be forthwith due and payable, without presentment, notice of
dishonor, protest or further notice of any kind, all of which the Borrower
hereby expressly waives;

(c)             The Lender may, without notice to the Borrower and without
further action, apply any and all money owing by the Lender to the Borrower to
the payment of the Obligations;

(d)            The Lender may exercise and enforce its rights and remedies under
the Loan Documents; and

(e)             The Lender may exercise any other rights and remedies available
to it by law or agreement.

NOTWITHSTANDING THE FOREGOING, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
DESCRIBED IN SECTION 6.1(D) OR (E), THE OBLIGATIONS SHALL BE IMMEDIATELY DUE AND
PAYABLE AUTOMATICALLY WITHOUT PRESENTMENT, DEMAND, PROTEST OR NOTICE OF ANY
KIND.

11

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

ARTICLE VII

MISCELLANEOUS

SECTION 7.1             NO WAIVER; CUMULATIVE REMEDIES; COMPLIANCE WITH LAWS. 
NO FAILURE OR DELAY BY THE LENDER IN EXERCISING ANY RIGHT, POWER OR REMEDY UNDER
THE LOAN DOCUMENTS SHALL OPERATE AS A WAIVER THEREOF; NOR SHALL ANY SINGLE OR
PARTIAL EXERCISE OF ANY SUCH RIGHT, POWER OR REMEDY PRECLUDE ANY OTHER OR
FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR REMEDY
UNDER THE LOAN DOCUMENTS.  THE REMEDIES PROVIDED IN THE LOAN DOCUMENTS ARE
CUMULATIVE AND NOT EXCLUSIVE OF ANY REMEDIES PROVIDED BY LAW.

SECTION 7.2             AMENDMENTS, ETC.  NO AMENDMENT, MODIFICATION,
TERMINATION OR WAIVER OF ANY PROVISION OF ANY LOAN DOCUMENT OR CONSENT TO ANY
DEPARTURE BY THE BORROWER THEREFROM SHALL BE EFFECTIVE UNLESS THE SAME SHALL BE
IN WRITING AND SIGNED BY THE LENDER, AND THEN SUCH WAIVER OR CONSENT SHALL BE
EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
GIVEN.  NO NOTICE TO OR DEMAND ON THE BORROWER IN ANY CASE SHALL ENTITLE THE
BORROWER TO ANY OTHER OR FURTHER NOTICE OR DEMAND IN SIMILAR OR OTHER
CIRCUMSTANCES.

SECTION 7.3             NOTICES; COMMUNICATION OF CONFIDENTIAL INFORMATION;
REQUESTS FOR ACCOUNTING.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL
NOTICES, REQUESTS, DEMANDS AND OTHER COMMUNICATIONS PROVIDED FOR UNDER THE LOAN
DOCUMENTS SHALL BE IN WRITING AND SHALL BE (A) PERSONALLY DELIVERED, (B) SENT BY
FIRST CLASS UNITED STATES MAIL, (C) SENT BY OVERNIGHT COURIER OF NATIONAL
REPUTATION, (D) TRANSMITTED BY TELECOPY, OR (E) SENT AS ELECTRONIC MAIL, IN EACH
CASE DELIVERED OR SENT TO THE PARTY TO WHOM NOTICE IS BEING GIVEN TO THE
BUSINESS ADDRESS, TELECOPIER NUMBER, OR E MAIL ADDRESS SET FORTH BELOW NEXT TO
ITS SIGNATURE OR, AS TO EACH PARTY, AT SUCH OTHER BUSINESS ADDRESS, TELECOPIER
NUMBER, OR E MAIL ADDRESS AS IT MAY HEREAFTER DESIGNATE IN WRITING TO THE OTHER
PARTY PURSUANT TO THE TERMS OF THIS SECTION.  ALL SUCH NOTICES, REQUESTS,
DEMANDS AND OTHER COMMUNICATIONS SHALL BE DEEMED TO BE AN AUTHENTICATED RECORD
COMMUNICATED OR GIVEN ON (A) THE DATE RECEIVED IF PERSONALLY DELIVERED, (B) WHEN
DEPOSITED IN THE MAIL IF DELIVERED BY MAIL, (C) THE DATE DELIVERED TO THE
COURIER IF DELIVERED BY OVERNIGHT COURIER, OR (D) THE DATE OF TRANSMISSION IF
SENT BY TELECOPY OR BY E MAIL, EXCEPT THAT NOTICES OR REQUESTS DELIVERED TO THE
LENDER PURSUANT TO ANY OF THE PROVISIONS OF ARTICLE II OF THIS AGREEMENT SHALL
NOT BE EFFECTIVE UNTIL RECEIVED BY THE LENDER.  ALL NOTICES, FINANCIAL
INFORMATION, OR OTHER BUSINESS RECORDS SENT BY EITHER PARTY TO THIS AGREEMENT
MAY BE TRANSMITTED, SENT, OR OTHERWISE COMMUNICATED VIA SUCH MEDIUM AS THE
SENDING PARTY MAY DEEM APPROPRIATE AND COMMERCIALLY REASONABLE; PROVIDED,
HOWEVER, THAT THE RISK THAT THE CONFIDENTIALITY OR PRIVACY OF SUCH NOTICES,
FINANCIAL INFORMATION, OR OTHER BUSINESS RECORDS SENT BY THE BORROWER MAY BE
COMPROMISED SHALL BE BORNE EXCLUSIVELY BY THE BORROWER.

SECTION 7.4             FURTHER DOCUMENTS.  THE BORROWER WILL FROM TIME TO TIME
EXECUTE, DELIVER, ENDORSE AND AUTHORIZE THE FILING OF ANY AND ALL INSTRUMENTS,
DOCUMENTS, CONVEYANCES, ASSIGNMENTS, SECURITY AGREEMENTS, FINANCING STATEMENTS,
CONTROL AGREEMENTS AND OTHER AGREEMENTS AND WRITINGS THAT THE LENDER MAY
REASONABLY REQUEST IN ORDER TO SECURE, PROTECT, PERFECT OR ENFORCE THE LENDER’S
RIGHTS UNDER THE LOAN DOCUMENTS (BUT ANY FAILURE TO REQUEST

12

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

OR ASSURE THAT THE BORROWER EXECUTES, DELIVERS, ENDORSES OR AUTHORIZES THE
FILING OF ANY SUCH ITEM SHALL NOT AFFECT OR IMPAIR THE VALIDITY, SUFFICIENCY OR
ENFORCEABILITY OF THE LOAN DOCUMENTS, REGARDLESS OF WHETHER ANY SUCH ITEM WAS OR
WAS NOT EXECUTED, DELIVERED OR ENDORSED IN A SIMILAR CONTEXT OR ON A PRIOR
OCCASION).

SECTION 7.5             COSTS AND EXPENSES.  THE BORROWER SHALL PAY ON DEMAND
ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, INCURRED BY THE
LENDER IN CONNECTION WITH THE OBLIGATIONS, THIS AGREEMENT, THE LOAN DOCUMENTS,
AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ALL SUCH COSTS, EXPENSES AND
FEES INCURRED IN CONNECTION WITH THE NEGOTIATION, PREPARATION, EXECUTION,
AMENDMENT, ADMINISTRATION, PERFORMANCE, COLLECTION AND ENFORCEMENT OF THE
OBLIGATIONS AND ALL SUCH DOCUMENTS AND AGREEMENTS.

SECTION 7.6             EXECUTION IN COUNTERPARTS; TELEFACSIMILE EXECUTION. 
THIS AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO BE
AN ORIGINAL AND ALL OF WHICH COUNTERPARTS, TAKEN TOGETHER, SHALL CONSTITUTE BUT
ONE AND THE SAME INSTRUMENT.  DELIVERY OF AN EXECUTED COUNTERPART OF THIS
AGREEMENT BY TELEFACSIMILE SHALL BE EQUALLY AS EFFECTIVE AS DELIVERY OF AN
ORIGINAL EXECUTED COUNTERPART OF THIS AGREEMENT.  ANY PARTY DELIVERING AN
EXECUTED COUNTERPART OF THIS AGREEMENT BY TELEFACSIMILE ALSO SHALL DELIVER AN
ORIGINAL EXECUTED COUNTERPART OF THIS AGREEMENT BUT THE FAILURE TO DELIVER AN
ORIGINAL EXECUTED COUNTERPART SHALL NOT AFFECT THE VALIDITY, ENFORCEABILITY, AND
BINDING EFFECT OF THIS AGREEMENT.

SECTION 7.7             BINDING EFFECT; ASSIGNMENT; COMPLETE AGREEMENT; SHARING
INFORMATION.  THE LOAN DOCUMENTS SHALL BE BINDING UPON AND INURE TO THE BENEFIT
OF THE BORROWER AND THE LENDER AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS,
EXCEPT THAT THE BORROWER SHALL NOT HAVE THE RIGHT TO ASSIGN ITS RIGHTS
THEREUNDER OR ANY INTEREST THEREIN WITHOUT THE LENDER’S PRIOR WRITTEN CONSENT. 
TO THE EXTENT PERMITTED BY LAW, THE BORROWER WAIVES AND WILL NOT ASSERT AGAINST
ANY ASSIGNEE ANY CLAIMS, DEFENSES OR SET-OFFS WHICH THE BORROWER COULD ASSERT
AGAINST THE LENDER.  THIS AGREEMENT SHALL ALSO BIND ALL PERSONS WHO BECOME A
PARTY TO THIS AGREEMENT AS A BORROWER.  THIS AGREEMENT, TOGETHER WITH THE LOAN
DOCUMENTS, COMPRISES THE COMPLETE AND INTEGRATED AGREEMENT OF THE PARTIES ON THE
SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR AGREEMENTS, WRITTEN OR ORAL, ON
THE SUBJECT MATTER HEREOF.  TO THE EXTENT THAT ANY PROVISION OF THIS AGREEMENT
CONTRADICTS OTHER PROVISIONS OF THE LOAN DOCUMENTS, THIS AGREEMENT SHALL
CONTROL.

SECTION 7.8             SEVERABILITY OF PROVISIONS.  ANY PROVISION OF THIS
AGREEMENT WHICH IS PROHIBITED OR UNENFORCEABLE SHALL BE INEFFECTIVE TO THE
EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE
REMAINING PROVISIONS HEREOF.

SECTION 7.9             HEADINGS.  ARTICLE, SECTION AND SUBSECTION HEADINGS IN
THIS AGREEMENT ARE INCLUDED HEREIN FOR CONVENIENCE OF REFERENCE ONLY AND SHALL
NOT CONSTITUTE A PART OF THIS AGREEMENT FOR ANY OTHER PURPOSE.

SECTION 7.10           GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY
TRIAL.  THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE SUBSTANTIVE LAWS (OTHER THAN CONFLICT LAWS) OF THE STATE OF MINNESOTA.  THE
PARTIES HERETO HEREBY (I) CONSENT TO

13

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

THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE
OF MINNESOTA IN CONNECTION WITH ANY CONTROVERSY RELATED TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS; (II) WAIVE ANY ARGUMENT THAT VENUE IN ANY SUCH FORUM IS
NOT CONVENIENT; (III) AGREE THAT ANY LITIGATION INITIATED BY THE LENDER OR THE
BORROWER IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE
VENUED IN EITHER THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF MINNEAPOLIS,
MINNESOTA, COUNTY OF HENNEPIN, MINNESOTA; AND (IV) AGREE  THAT A FINAL JUDGMENT
IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.  THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT AND THE NOTE OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.

(Signature Page Follows)

 

14

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
above written.

Kruse Investment Company, Inc.

 

KRUSE INVESTMENT COMPANY, INC.

 

P.O. Box 1029

 

 

 

 

 

31120 West Street

 

By:

/s/ Ejnar Knudsen

 

Goshen, CA 93227

 

 

Name:

Ejnar Kudsen

 

Telecopier: 559-380-2800

 

 

Title:

EVP

 

Attention: Mark Labounty

 

 

 

 

 

e-mail:

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

HGF Acquisition 

 

HGF ACQUISITION, LLC

 

10201 Wayzata Blvd, Suite 250

 

 

 

 

 

Minneapolis, MN 55305

 

By:

/s/ Revis L. Stephenson III

 

Telecopier: 763-226-2725

 

 

Name:

 

 

Attention: Revis L. Stephenson III

 

 

Title:

 

 

e-mail:rstephenson@advancedbioenergy.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Signature Page to Credit Agreement)

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

 

Exhibit A to Credit Agreement

PROMISSORY NOTE

 

$5,000,000                                                                                                                                                              
February 12, 2007

 

                For value received, the undersigned, HGF ACQUISITION, LLC, a
Delaware limited liability company (the “Borrower”), hereby promises to pay on
the Termination Date under the Credit Agreement (defined below), to the order of
KRUSE INVESTMENT COMPANY, INC., a California Corporation (the “Lender”), at its
office in Goshen, California, or at any other place designated at any time by
the holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Five Million Dollars
($5,000,000) or, if less, the aggregate unpaid principal amount of all Advances
(as defined in the Credit Agreement) made by the Lender to the Borrower under
the Credit Agreement (defined below) together with interest on the outstanding
principal amount hereunder remaining unpaid from time to time, computed on the
basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid at the rate from time to time in effect
under the Credit Agreement dated the same date as this Note (the “Credit
Agreement”) by and between the Lender and the Borrower.  The outstanding
principal hereof and interest accruing thereon shall be due and payable as
provided in the Credit Agreement.  This Note may be prepaid only in accordance
with the Credit Agreement.

                This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof.  This
Note is the Note referred to in the Credit Agreement.  This Note is secured
pursuant to the Security Agreement as therein defined, and may now or hereafter
be secured by one or more other security agreements, mortgages, deeds of trust,
assignments or other instruments or agreements.

                The Borrower shall pay all costs of collection, including
reasonable attorneys’ fees and legal expenses if this Note is not paid when due,
whether or not legal proceedings are commenced.

                Presentment or other demand for payment, notice of dishonor and
protest are expressly waived.

HGF ACQUISITION, LLC

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

 

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