Exhibit 10.1

MASTER CREDIT AGREEMENT

dated December 29, 2015

among

ABE SOUTH DAKOTA, LLC

as Borrower

and

AGCOUNTRY FARM CREDIT SERVICES, PCA

as Lender

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TABLE OF CONTENTS

 

         Page  

ARTICLE I. GENERAL TERMS

     1   

Section 1.01

 

Definitions

     1   

Section 1.02

 

Master Agreement/Supplements

     1   

Section 1.03

 

Notes

     2   

Section 1.04

 

Default Interest

     2   

Section 1.05

 

Interest Generally; Maximum Rate

     2   

Section 1.06

 

Payments Generally

     2   

Section 1.07

 

Computations

     3   

Section 1.08

 

Prepayments

     3   

Section 1.09

 

Payments After Default; Proceeds of Collateral

     4   

Section 1.10

 

Origination Fee

     4   

Section 1.11

 

Collateral

     4   

Section 1.12

 

Priority Among Loans

     4   

Section 1.13

 

Advances

     4   

ARTICLE II. CONDITIONS PRECEDENT

     5   

Section 2.01

 

Conditions To Effectiveness

     5   

ARTICLE III. REPRESENTATIONS AND WARRANTIES

     8   

Section 3.01

 

Existence; Power

     8   

Section 3.02

 

Organizational Power; Authorization

     8   

Section 3.03

 

Governmental Approvals; No Conflicts

     8   

Section 3.04

 

Financial Statements

     8   

Section 3.05

 

Litigation and Environmental Matters

     9   

Section 3.06

 

Compliance with Laws and Agreements

     9   

Section 3.07

 

Investment Company Act, Etc.

     9   

Section 3.08

 

Taxes

     9   

Section 3.09

 

Margin Regulations

     10   

Section 3.10

 

ERISA

     10   

Section 3.11

 

Ownership of Property

     10   

Section 3.12

 

Disclosure

     10   

Section 3.13

 

Labor Relations

     10   

Section 3.14

 

Subsidiaries

     11   

Section 3.15

 

Permits

     11   

Section 3.16

 

Material Contracts

     11   

Section 3.17

 

Anti-Terrorism Laws

     11   

ARTICLE IV. AFFIRMATIVE COVENANTS

     11   

Section 4.01

 

Financial Statements and Other Information

     11   

Section 4.02

 

Notices of Material Events

     13   

Section 4.03

 

Existence; Conduct of Business; Eligible Borrower

     13   

Section 4.04

 

Compliance with Laws, Etc.

     13   

Section 4.05

 

Payment of Obligations

     14   

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Section 4.06

 

Books and Records

     14   

Section 4.07

 

Visitation, Inspection, Audit, Etc.

     14   

Section 4.08

 

Maintenance of Properties; Insurance

     14   

Section 4.09

 

Use of Proceeds

     14   

Section 4.10

 

Subsidiaries

     15   

Section 4.11

 

Assignment of Material Contracts

     15   

Section 4.12

 

Compliance with Certain Laws

     15   

Section 4.13

 

Farm Products

     15   

ARTICLE V. FINANCIAL COVENANTS

     16   

Section 5.01

 

Fixed Charge Coverage Ratio

     16   

Section 5.02

 

Working Capital

     16   

Section 5.03

 

Capital Expenditures

     16   

Section 5.04

 

Owners’ Equity Ratio

     16   

Section 5.05

 

Current Ratio

     16   

Section 5.06

 

Total Outstanding Debt to EBITDA Ratio

     16   

Section 5.07

 

Compliance Generally

     16   

ARTICLE VI. NEGATIVE COVENANTS

     17   

Section 6.01

 

Indebtedness

     17   

Section 6.02

 

Negative Pledge

     17   

Section 6.03

 

Fundamental Changes

     17   

Section 6.04

 

Investments, Loans, Etc.

     17   

Section 6.05

 

Restricted Payments

     18   

Section 6.06

 

Sale of Assets

     19   

Section 6.07

 

Transactions with Affiliates

     19   

Section 6.08

 

Restrictive Agreements

     19   

Section 6.09

 

Sale and Leaseback Transactions

     19   

Section 6.10

 

Hedging Agreements

     19   

Section 6.11

 

Amendment to Material Documents

     19   

Section 6.12

 

Accounting Changes

     19   

Section 6.13

 

Deposit and Investment Accounts

     19   

Section 6.14

 

Use of Proceeds

     20   

Section 6.15

 

Legal Status; Eligible Borrower

     20   

ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES

     20   

Section 7.01

 

Events of Default

     20   

Section 7.02

 

Remedies

     22   

ARTICLE VIII. MISCELLANEOUS

     23   

Section 8.01

 

Notices

     23   

Section 8.02

 

Waiver; Amendments

     24   

Section 8.03

 

Expenses; Indemnification

     24   

Section 8.04

 

Successors and Assigns

     25   

Section 8.05

 

Governing Law; Jurisdiction; Consent to Service of Process

     26   

Section 8.06

 

WAIVER OF JURY TRIAL

     26   

Section 8.07

 

Right of Setoff

     27   

 

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Section 8.08

 

Counterparts; Integration

     27   

Section 8.09

 

Survival

     27   

Section 8.10

 

Severability

     28   

Section 8.11

 

Transferable Record

     28   

Section 8.12

 

Confidentiality

     28   

Section 8.13

 

Copies

     28   

Section 8.14

 

Notice of Claims Against Lender; Limitation of Certain Damages

     28   

Section 8.15

 

Termination

     29   

 

iii

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MASTER CREDIT AGREEMENT

THIS MASTER CREDIT AGREEMENT is made and entered into as of December 29, 2015 by
and among ABE South Dakota, LLC, a Delaware limited liability company,
(“Borrower”), AGCOUNTRY FARM CREDIT SERVICES, PCA (“Lender”), a federal
production credit association organized under the Farm Credit Act of 1971, as
amended.

RECITALS:

A. Borrower is the owner and operator of dry mill, fuel grade ethanol and
related byproducts production facilities located in Aberdeen and Huron, South
Dakota (the “Business”).

B. Subject to the terms and conditions hereof and under the other Loan
Documents, Lender agrees to provide financing to Borrower in connection with the
Business.

C. Borrower may request, and Lender in its discretion may provide to Borrower,
additional loans and other credit accommodations from time to time.

AGREEMENT:

In consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

ARTICLE I.

GENERAL TERMS

Section 1.01 Definitions. Capitalized terms used herein have the meanings set
forth on Attachment I hereto.

Section 1.02 Master Agreement/Supplements. Additional terms of each loan, credit
facility and other credit accommodation are set forth in supplements
(“Supplements”) to this Master Credit Agreement (“Master Agreement”). The terms
of this Master Agreement and the Supplements supersede all prior agreements and
arrangements between Borrower and Lender related to the Loans and govern the
relationship and agreements between Borrower and Lender in respect of the Loans.
In the event Borrower and Lender agree to additional loans, credit facilities,
and/or other credit accommodations from time to time in the future, Borrower and
Lender may enter into additional Supplements to this Master Agreement. Each
Supplement will set forth additional terms and conditions specific to such loans
and credit facilities, including without limitation, the applicable:

(a) amount of the loan and/or credit facility;

(b) interest rate and rate options,

(c) fees, costs and expenses; and/or

(d) repayment terms.

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In the event of any inconsistency between the terms set forth in the Master
Agreement and any Supplement, the terms of the applicable Supplement will
control to the extent provided in such Supplement. Unless otherwise provided in
a Supplement, each Supplement applies solely to the Loans described therein. The
Supplements, including all Supplements entered into as the date hereof and all
future Supplements (when they become effective) are hereby incorporated by
reference. This Master Agreement and all present and future Supplements are
collectively referred to as the “Credit Agreement,” or this “Agreement.”

Section 1.03 Notes. Each Supplement may be accompanied by one or more Notes made
payable to the order of Lender by Borrower.

Section 1.04 Default Interest. Upon the occurrence and during the continuance of
a Default or Event of Default or after acceleration, Borrower will pay interest
(“Default Interest”) with respect to the Loans at the rate otherwise applicable
plus an additional two hundred basis points per annum (2.00%). Default Interest
is payable on demand. The Default Interest rate will apply whether or not an
affected Lender has exercised its option to accelerate the maturity of the Loans
and declare the entire principal balance due and payable.

Section 1.05 Interest Generally; Maximum Rate. Lender’s internal records of
applicable interest rates are determinative in the absence of manifest error. In
the event any Governmental Authority subjects Lender to any new or additional
charge, fee, withholding or tax of any kind with respect to any Loan (other than
taxes based on (or determined solely by) Lender’s net income), or changes the
method of taxation of any Loan (other than taxes based on (or determined solely
by) Lender’s net income), or changes the reserve, capital or deposit
requirements applicable to any Loan, Borrower will pay such additional amounts
as will compensate Lender for such cost (including opportunity cost) or lost
income resulting therefrom as reasonably determined by Lender. Notwithstanding
anything to the contrary herein or in any Supplement, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which may be treated as interest on such Loan under applicable law
(collectively, the “Charges”) exceed the maximum lawful rate of interest (the
“Maximum Rate”) which may be contracted for, charged, taken, received or
reserved by Lender, the rate of interest payable in respect of the Loans,
together with all Charges payable in respect thereof, will be limited to the
Maximum Rate; provided, such Charges may be applied by Lender and collected over
a longer period of time to avoid application of a rate that exceeds the Maximum
Rate. Any amount paid in excess of the Maximum Rate will be applied to principal
and other amounts outstanding in the order Lender deems appropriate.

Section 1.06 Payments Generally. All payments will be made to Lender at its
address set forth in Section 8.01 in U.S. Dollars and in immediately available
funds, without set-off, deduction, or counterclaim, not later than 11:00 A.M.
(Fargo, North Dakota time) on the date on which such payment is due, and each
payment made after such time on such due date will be deemed to have been made
on the next succeeding Business Day. All payments may be applied by Lender to
principal, interest, fees and other amounts in any order which Lender elects in
its sole reasonable discretion. Whenever any payment is stated to be due on a
day that is not a Business Day, such payment will be due and payable on the next
succeeding Business Day, not later than 11:00 A.M., and such extension of time
will in such case be included in the computation of the payment of interest and
fees, as the case may be.

 

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Section 1.07 Computations. Computations of interest and fees (to the extent
computed on the basis of days elapsed) hereunder will be made on the basis of a
year of 360 days with twelve 30 day months, including the first day but
excluding the last day, occurring in the period for which such interest or fees
are payable. Each determination by Lender of an interest amount or fee hereunder
will be final, conclusive, and binding for all purposes, except in the event of
manifest error. All interest and fees will be considered earned when due.

Section 1.08 Prepayments.

(a) Subject to applicable fees and charges and such other terms and conditions
as set forth in any applicable Supplement, Borrower may prepay the Loans, in
whole or in part at any time and from time to time, by giving irrevocable
written notice (or telephonic notice promptly confirmed in writing) to Lender
not less than five (5) Business Days prior to any such prepayment; provided,
that the amount of any such prepayment may not be less than $100,000. Each such
notice will be irrevocable and will specify the proposed date of such prepayment
(which shall be any regularly scheduled monthly payment date, unless the entire
outstanding amount of the Loans is to be repaid) and the principal amount to be
prepaid. The amount specified in such notice will be due and payable on the date
designated in such notice, together with accrued interest on the amount so
prepaid and any prepayment fee or premium payable in connection therewith.

(b) If Borrower issues any membership interests, any other equity interests, or
any debt securities (other than Indebtedness permitted by Section 6.01), then no
later than the Business Day following the date of receipt of the proceeds
thereof, Borrower must prepay the Loans in an amount equal to all such proceeds,
net of underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith; provided, that no such prepayment is
required in the event Borrower issues membership interests or other equity
interests and the proceeds of such issuance are invested in assets that
constitute Collateral subject to Lender’s first priority Lien under the Loan
Documents. Any such prepayment will applied in accordance with paragraph
(c) below.

(c) Any prepayments will be applied as follows: first to fees and reimbursable
expenses of Lender then due and payable pursuant to any of the Loan Documents;
second to interest then due and payable on the Loans; third pro rata to the
principal balance of each term loan outstanding in inverse order of maturity,
until each loan is paid in full; and fourth pro rata to the principal balance
outstanding under each revolving and other open-end credit facility until all
such amounts are paid in full.

 

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(d) Borrower will pay to Lender a prepayment premium in connection with any
prepayment of the Loans as a result of a refinance or payoff through sources
other than from Borrower’s cash flow from operating activities as follows:

(i) 2.0% of the principal balance of the Loans so prepaid during the during the
first twelve (12) months following the Closing Date;

(ii) 1.0% of the principal balance of the Loans so prepaid during the thirteenth
(13) through the twenty-fourth (24) month following the Closing Date; and

(iii) 0.0% thereafter.

Borrower agrees that the prepayment premium is paid as a fee for the right to
prepay, and that the prepayment premium does not constitute liquidated damages
or a prepayment penalty.

Section 1.09 Payments After Default; Proceeds of Collateral. All payments,
proceeds, and other amounts received by Lender after acceleration of the
Obligations under Section 8.02(c), or from the sale or other liquidation of
Collateral during the continuance of an Event of Default, will be applied in
accordance with Section 1.08(c). After all the Obligations (including without
limitation, all contingent Obligations, other than any inchoate indemnification
obligations under Section 8.03) have been paid and satisfied in full, all
Commitments have been terminated and all other obligations of Borrower to Lender
have been otherwise satisfied, any remaining proceeds of Collateral will be
delivered to the Person entitled thereto as determined by applicable law or
court order or the Loan Documents.

Section 1.10 Origination Fee. Borrower agrees to pay to Lender any origination
fee or other fees as set forth in any Supplement. In addition to fees payable in
connection with the specific Loans under the Supplements, Borrower agrees to pay
to Lender (a) a one-time lead agent fee of $150,000 at closing; (b) a one-time
upfront fee of $75,000 at closing; and (c) an annual administrative fee of
$10,000 at closing and on each anniversary of the Closing Date at any time in
which any amount is outstanding or any commitment is in effect hereunder.
Borrower agrees that all fees, including any fees paid in connection with any
term sheet or conditional commitment, are considered fully earned by Lender when
they become due and payable (the “Fees”).

Section 1.11 Collateral. The Obligations are secured by Lender’s Lien on the
Collateral, subject only to the Permitted Encumbrances. Borrower hereby pledges,
mortgages, transfers, assigns, sets aside, and grants a security interest to
Lender in the Collateral.

Section 1.12 Priority Among Loans. Except to the extent any Loan is specifically
subordinated to one or more other Loans, each Loan will be pari passu with all
other Loans in all respects.

Section 1.13 Advances. Lender is authorized and directed to credit the account
Borrower designates in writing for all Advances made hereunder. Lender is
authorized, in Lender’s sole discretion, to advance Loan funds for any amount
Borrower is obligated to pay hereunder.

 

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ARTICLE II.

CONDITIONS PRECEDENT

Section 2.01 Conditions To Effectiveness. Lender will have no obligation under
this Agreement or any other Loan Document until each of the following conditions
is satisfied (or waived in accordance with Section 8.02) except to the extent
Lender has agreed to accept satisfaction of such conditions as set forth in the
Post-Closing Agreement between Lender and Borrower dated as of the date hereof:

(a) Lender has received all fees and other amounts due and payable on or prior
to the date hereof, including the fees and amounts for reimbursement or payment
of all out-of-pocket expenses required to be reimbursed or paid by Borrower
pursuant to this Agreement, under any other Loan Document, or any other
agreement with Lender.

(b) Borrower has delivered to Lender duly executed counterparts of the
following, each in form and substance acceptable to Lender in all respects:

 

  (1) this Master Agreement;

 

  (2) the First Supplement, along with all Notes and other documents,
instruments and agreements required thereunder;

 

  (3) the Second Supplement, along with all Notes and other documents,
instruments and agreements required thereunder;

 

  (4) the Security Agreement, together with UCC-1 financing statements and other
applicable documents under the laws of the jurisdictions with respect to the
perfection of the Liens granted under the Security Agreement in order to perfect
such Liens, duly authorized for filing by Borrower;

 

  (5) all Control Agreements required under Section 6.13, if any;

 

  (6) the Mortgage, fully notarized, together with evidence that it has been
recorded (or will be recorded with assurance from the Title Company that it will
provide affirmative coverage from the date hereof) in all places to the extent
necessary or desirable, in the judgment of Lender, to create in favor of Lender
a valid and enforceable first priority Lien (subject to Permitted Encumbrances)
on the fee simple estate (or leasehold or other interest if agreeable to Lender)
of the Real Estate, together with UCC fixture financing statements, as
applicable;

 

  (7) such additional Collateral Assignments of Material Contracts as Lender may
require, together with copies of such Material Contracts, certified by a
Responsible Officer as being in full force and effect, and not subject to a
default by any party thereto; along with the written consent thereto by all
counterparties to such Material Contracts; and

 

  (8) the Post-Closing Agreement.

 

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(c) Lender has received as of the Closing Date (or such other date specified in
this Section 2.01(c)) the following, each in form and substance acceptable to
Lender in all respects:

 

  (1) a commitment from the Title Company to issue a title insurance policy
assuring Lender that the Mortgage creates a valid and enforceable encumbrance on
the Real Estate, free and clear of all defects and encumbrances except Permitted
Encumbrances;

 

  (2) copies of favorable UCC, tax, judgment, bankruptcy and fixture lien search
reports (or other evidence of the same satisfactory to Lender) in all necessary
or appropriate jurisdictions and under all legal and trade names of Borrower and
all other parties requested by Lender, indicating that there are no prior Liens
on any of the Collateral other than Permitted Encumbrances and Liens to be
released on the Closing Date;

 

  (3) duly executed lease subordination agreements, landlord waivers and/or
warehouseman, or bailee agreements with respect to all inventory of Borrower
located at leased locations and all other locations not owned by Borrower in fee
simple, if any, along with a certified copy of all Real Estate leases of
Borrower, including a Landlord Estoppel Waiver and Consent, if any;

 

  (4) certified copies of the articles of organization or other charter
documents of Borrower, together with certificates of good standing or existence,
as are available from the Secretary of State (or other applicable Governmental
Authority) of the jurisdiction of organization of Borrower and each other
jurisdiction where Borrower is required to be qualified to do business as a
foreign entity;

 

  (5) a certificate, dated as of the date hereof and signed by an appropriate
Responsible Officer, attaching and certifying copies of the bylaws or similar
documents, and appropriate resolutions authorizing or ratifying, as applicable,
the execution, delivery and performance of the Loan Documents and certifying the
name, title and the signature of each officer executing the Loan Documents;

 

  (6) one or more favorable written opinions of counsel to Borrower, addressed
to Lender, addressing the matters set forth on Exhibit 2.01(c)(6);

 

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  (7) certificates of insurance, in form and substance acceptable to Lender,
describing the types and amounts of insurance (property and liability) carried
by Borrower, in each case insuring Lender as a first mortgagee under a standard
mortgagee clause, and naming Lender as lender loss payee or additional insured,
as the case may be, and which include a stipulation that coverages will not be
cancelled or diminished without at least 30 days’ prior written notice to
Lender, together with a lender’s loss payable endorsement;

 

  (8) copies of duly executed payoff letters, in form and substance satisfactory
to Lender, executed by each existing lender, if any, together with (a) UCC-3 or
other appropriate termination statements, in form and substance satisfactory to
Lender, releasing all liens of the existing lenders upon any of the personal
property of Borrower, (b) cancellations and releases, in form and substance
satisfactory to Lender, releasing all liens of the existing lenders upon any of
the Real Estate, and (c) any other releases, terminations or other documents
reasonably required by Lender to evidence the payoff of Indebtedness owed to
existing lenders;

 

  (9) certified copies of all material consents, permits, approvals,
authorizations, registrations and filings and orders required or advisable to be
made or obtained under any requirement of law or by any material contractual
obligation of Borrower, in connection with the operation of Borrower’s business,
including the production of ethanol and by-products thereof, certified by a
Responsible Officer or appropriate official of the applicable Governmental
Authority, as the case may be, as being in full force and effect, and not being
subject to any condition precedent;

 

  (10) copies of all Phase I Environmental Site Assessment Reports on all of the
Real Estate, along with such further environmental review and audit reports as
Lender requests (which may include Phase II reports), and letters by the firms
preparing such environmental reports authorizing Lender to rely on such reports;

 

  (11) Federal Emergency Management Agency Standard Flood Hazard Determination
Certificates certifying, among other things, that none of the Real Estate is
located within a flood hazard area; and

 

  (12) a certificate dated the Closing Date and signed by a Responsible Officer,
confirming notice to Borrower pursuant to section 326 of the USA Patriot Act of
2001, 31 U.S.C. sec. 5318.

(d) The representations and warranties set forth in the Loan Documents are true
and correct in all material respects.

 

7

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(e) All conditions precedent in the other Loan Documents have been satisfied or
waived in accordance with Section 8.02.

(f) Borrower shall have purchased the Required Stock.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender, as of the date hereof, the date of
each Supplement, and the date of each Advance (unless otherwise specified) as
follows:

Section 3.01 Existence; Power. Borrower (a) is duly organized, validly existing
and in good standing as a limited liability company under the laws of the State
of Delaware, (b) has all requisite power and authority to carry on its
businesses as now conducted, and (c) is duly qualified to do business, and is in
good standing, in each jurisdiction where such qualification is required, except
where a failure to be so qualified could not reasonably be expected to result in
a Material Adverse Effect.

Section 3.02 Organizational Power; Authorization. The execution, delivery and
performance by Borrower of the Loan Documents to which it is a party are within
its limited liability company powers and have been duly authorized by all
necessary board, manager, and if required, member action. This Agreement and the
other Loan Documents have been duly executed and delivered by Borrower, and
constitute valid and binding obligations of Borrower, enforceable against it in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors’ rights generally and by general principles of
equity.

Section 3.03 Governmental Approvals; No Conflicts. The execution, delivery and
performance by Borrower of the Loan Documents (a) does not require any consent
or approval of, registration or filing with, or any action by, any Governmental
Authority, except those as have been obtained or made and are in full force and
effect or where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, (b) will not
violate any applicable law or regulation or the charter, articles of
incorporation, bylaws, or other organization documents of Borrower or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, material agreement or other material instrument binding on
Borrower or any of its assets or give rise to a right thereunder to require any
payment to be made by Borrower, and (d) will not result in the creation or
imposition of any Lien on any asset of Borrower except Liens created under the
Loan Documents.

Section 3.04 Financial Statements. Borrower has furnished to Lender copies of
Borrower’s (a) audited financial statements (consistent with the requirements of
Section 4.01(a)) as of its most recent fiscal year end and (b) internally
prepared financial statements (consistent with the requirements of
Section 4.01(b)) as of the last day of the most recent quarter. Such financial
statements fairly present the financial condition of Borrower as of such dates
and

 

8

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the results of operations for such periods in conformity with GAAP consistently
applied, subject in the case of interim financial statements, to year-end audit
adjustments and the absence of footnotes. Since the date of the most recent of
the financial statements provided to Lender, there have been no changes with
respect to Borrower which have had or could reasonably be expected to have,
singly or in the aggregate, a Material Adverse Effect on the business, results
of operations, financial condition, assets, liabilities or prospects of
Borrower.

Section 3.05 Litigation and Environmental Matters.

(a) Except as provided in Schedule 3.05(a), no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending
against or, to the knowledge of Borrower, threatened against or affecting
Borrower (1) as to which there is a reasonable possibility of an adverse
determination that could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect or (2) which in any manner draws
into question the validity or enforceability of this Agreement or any other Loan
Document.

(b) Borrower (1) has not failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (2) has not become subject to any Environmental
Liability, (3) has not received notice of any claim with respect to any
Environmental Liability, or (4) does not know of any basis for any Environmental
Liability, which in the case of each of the preceding clauses, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.

Section 3.06 Compliance with Laws and Agreements. Borrower is in compliance with
all (a) applicable laws, rules, and regulations, (b) orders of any Governmental
Authority, and (c) all indentures, agreements or other instruments binding upon
it or its properties; except where non-compliance, either singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

Section 3.07 Investment Company Act, Etc. Borrower is not (a) an “investment
company,” as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended, (b) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 2005, as amended, or
(c) otherwise subject to any other regulatory scheme limiting its ability to
incur debt.

Section 3.08 Taxes. Borrower and each other Person for whose taxes Borrower
could become liable have timely filed or caused to be filed all tax returns and
other filings that are required to be filed by any of them, and have paid all
taxes shown to be due and payable (or with respect to real estate taxes, have
paid all taxes prior to the time the same become delinquent) on such returns or
on any assessments made against it or its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority, except (a) to the extent the failure to do so would not have a
Material Adverse Effect or (b) where the same are currently being contested in
good faith by appropriate proceedings and for which Borrower has set aside
adequate reserves on its books in accordance with GAAP. The charges, accruals
and reserves on the books of Borrower in respect of such taxes are adequate, and
no tax liabilities that could be materially in excess of the amount so provided
are anticipated.

 

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Section 3.09 Margin Regulations. None of the proceeds of the Loans have been
used, directly or indirectly, for “purchasing” or “carrying” any “margin stock”
with the respective meanings of each of such terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect, or for any purpose that violates the provisions of
Regulation U, T or X of the Board of Governors of the Federal Reserve System.

Section 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used under GAAP)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used under GAAP) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than $50,000
the fair market value of the assets of all such underfunded Plans.

Section 3.11 Ownership of Property. Borrower has good title to or a valid
leasehold interest in all of the real and personal property material to
operation of the Business. Except as provided in Schedule 3.05(a), Borrower
owns, or is licensed or otherwise has the right to use, all patents, trademarks,
service marks, trade names, copyrights and other intellectual property material
to the Business, and the use thereof by Borrower does not infringe on the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

Section 3.12 Disclosure. Borrower has disclosed to Lender all agreements,
instruments, and corporate or other restrictions to which Borrower is subject,
and all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of Borrower pursuant to this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, not
misleading.

Section 3.13 Labor Relations. There are no strikes, lockouts or other material
labor disputes or grievances against Borrower, or, to the knowledge of Borrower,
threatened against or affecting Borrower, and no significant unfair labor
practice, charges or grievances are pending against Borrower, or to the
knowledge of Borrower, threatened against Borrower before any Governmental
Authority. All payments due from Borrower pursuant to any collective bargaining
agreement have been paid or accrued as a liability except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.

 

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Section 3.14 Subsidiaries. Borrower has no Subsidiaries other than those for
which Borrower has complied with the requirements of Section 4.10.

Section 3.15 Permits. Borrower has, and Schedule 3.15 sets forth, all of the
material licenses, consents, approvals, authorizations and permits of
Governmental Authorities which Borrower is required to maintain or renew in
connection with the operation of the Business, including but not limited to any
of the foregoing related to Environmental Laws, zoning and land-use laws
(including any requirement to obtain a special exception, if applicable), water
use laws, waste disposal laws, laws requiring construction permits, and
occupancy certificates. Borrower has provided true and correct copies of such
licenses, consents, approvals, authorizations and permits to Lender.

Section 3.16 Material Contracts. Borrower is a party to, and Schedule 3.16 sets
forth a complete and accurate listing of, all Material Contracts which are
required to be in effect to operate the Business. Borrower is in compliance with
all Material Contracts, and to Borrower’s knowledge, all other parties thereto
are in compliance with all Material Contracts.

Section 3.17 Anti-Terrorism Laws. Neither Borrower nor any of its Affiliates is
in violation of (a) any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto, (b) Executive Order
No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism) or (c) the
anti-money laundering provisions of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001) amending the Bank
Secrecy Act, 31 U.S.C. Section 5311 et seq.

ARTICLE IV.

AFFIRMATIVE COVENANTS

Borrower covenants and agrees that so long as any Commitment is in effect or the
principal of or interest on any Loan or any fee or other amount owing to Lender
under the Loan Documents remains unpaid:

Section 4.01 Financial Statements and Other Information. Borrower will deliver
to Lender:

(a) as soon as available and in any event within 120 days after the end of each
fiscal year of Borrower, a copy of the annual audited report for such fiscal
year for Borrower as of the end of such fiscal year and the related consolidated
balance sheets, statements of income, owners’ equity and cash flows (together
with all footnotes thereto) of Borrower for such fiscal year, setting forth in
comparative form the figures for the previous fiscal year, all in reasonable
detail and reported on by a firm of independent public accountants acceptable to
Lender (without a “going concern” or like qualification, exception or
explanation and without any qualification or exception as to scope of such

 

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audit), and a statement from such accountants to the effect that such financial
statements present fairly in all material respects the financial condition and
the results of operations of Borrower for such fiscal year in accordance with
GAAP, that the examination by such accountants in connection with such financial
statements has been made in accordance with GAAP;

(b) as soon as available and in any event within 30 days after the end of each
quarter, an unaudited balance sheet of Borrower as of the end of such quarter
and the related unaudited statements of income, owner’s equity and cash flows of
Borrower for such quarter and the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the corresponding
quarter and the corresponding portion of Borrower’s previous fiscal year; in
either case all certified by an appropriate Responsible Officer of Borrower as
presenting fairly in all material respects the financial condition and results
of operations of Borrower in accordance with GAAP, subject to normal year-end
audit adjustments and the absence of footnotes;

(c) within 30 days of the last day of each quarter, a certificate, in form and
substance satisfactory to Lender in all respects, of a Responsible Officer,
(1) certifying as to whether there exists a Default or Event of Default on the
date of such certificate, and if a Default or an Event of Default then exists,
specifying the details thereof and the action which Borrower has taken or
proposes to take with respect thereto, (2) setting forth in reasonable detail
calculations demonstrating compliance with Article V, (3) stating whether any
change in GAAP or the application thereof has occurred since the date of
Borrower’s most recent previously delivered audited financial statements and, if
any change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate, and (4) attaching a production report,
certified as to accuracy, which sets forth pertinent information in respect of
the amount of ethanol produced and other information, as Lender may request from
time to time;

(d) concurrently with the financial statements referred to in clause (a) above,
a certificate of the accounting firm that reported on such financial statements
stating whether it obtained any knowledge during the cause of its examination of
such financial statements of the occurrence of any Default or Event of Default
(which certificate may be limited to the extent required by accounting rules or
guidelines); promptly after the same become available, copies of all periodic
reports distributed by Borrower to its members generally, or to any national
securities exchange, as applicable;

(e) concurrently with the delivery of the financial statements referred to in
clause (a) above, a copy of Borrower’s pro forma budget and business plan for
the subsequent fiscal year for Borrower, containing a pro forma consolidated
balance sheet of Borrower as of the end of such subsequent fiscal year and the
related pro forma consolidated statements of income, owners’ equity and cash
flows (together with all footnotes thereto) of Borrower for such subsequent
fiscal year; and

(f) promptly following any request therefor, such other information regarding
the results of operations, business affairs and financial condition of Borrower
as Lender may reasonably request.

 

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Section 4.02 Notices of Material Events. Borrower will promptly furnish written
notice to Lender of the following, in each case accompanied by a written
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto:

(a) the occurrence of any Default or Event of Default;

(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or, to the knowledge of
Borrower, affecting Borrower which, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;

(c) the occurrence of any event or any other development by which Borrower
(1) fails to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(2) becomes subject to any Environmental Liability, (3) receives notice of any
claim with respect to any Environmental Liability, or (4) becomes aware of any
basis for any Environmental Liability and in each of the preceding clauses,
which individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect;

(d) the occurrence of any ERISA Event that alone, or together with any other
ERISA Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect;

(e) the incurrence of any Indebtedness, including Indebtedness permitted under
this Agreement; and

(f) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Section 4.03 Existence; Conduct of Business; Eligible Borrower. Borrower will do
all things necessary to preserve, renew and maintain in full force and effect
its legal existence and its rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business, and will continue to engage in the same business as presently
conducted or such other businesses that are reasonably related thereto. Borrower
shall maintain at all time its status as an entity eligible to borrow from
Lender and the farm credit system of lending institutions.

Section 4.04 Compliance with Laws, Etc. Borrower will comply with all laws,
rules, regulations and requirements of any Governmental Authority applicable to
it or its properties, except where the failure to do so, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. Borrower will in all respects conform to and comply with all
applicable covenants, conditions, restrictions and reservations, and with all
requirements of Governmental Authorities, including, without limitation, all
building codes and zoning, environmental, hazardous substance, energy and
pollution control laws, ordinances and regulations affecting Borrower’s
business, and the Real Estate and the related improvements, except to the extent
any nonconformance or noncompliance could not reasonably be expected to result
in a Material Adverse Effect.

 

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Section 4.05 Payment of Obligations. Borrower will pay and discharge all of its
obligations and liabilities (including without limitation all tax liabilities
and claims that could result in a statutory Lien) before the same become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) Borrower has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

Section 4.06 Books and Records. Borrower will keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities to the extent necessary
to prepare the consolidated financial statements of Borrower in conformity with
GAAP.

Section 4.07 Visitation, Inspection, Audit, Etc.

(a) Borrower will permit any representative or agent of Lender to visit and
inspect its properties, to conduct audits of the Collateral, to examine its
books and records and to make copies and take extracts therefrom, and to discuss
its affairs, finances and accounts with any of its officers, employees and its
independent certified public accountants, all at such reasonable times and as
often as Lender, may reasonably request after reasonable prior notice to
Borrower; provided, if a Default or an Event of Default has occurred and is
continuing, no prior notice will be required. Borrower will bear all expenses
incurred by Lender in connection with any such visit, inspection, audit,
examination, or discussion.

(b) Borrower will deliver to Lender such appraisals of the Real Estate and other
fixed assets of Borrower as Lender may request at any time and from time to
time, such appraisals to be conducted by an appraiser, and to be presented in
form and substance, reasonably satisfactory to Lender, in each case conducted at
the expense of Borrower if the appraisal is delivered in connection with a
request by Borrower for an accommodation, waiver, or other credit action.

Section 4.08 Maintenance of Properties; Insurance. Borrower will (a) keep and
maintain (or cause others to keep and maintain) all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, except where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and (b) maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily carried by companies in the
same or similar business operating in the same of similar locations and under
the same or similar circumstances, and in any event, with coverages no less than
and subject to the terms described on Exhibit 4.08.

Section 4.09 Use of Proceeds. No part of the proceeds of any Loan will be used,
directly or indirectly, for any purpose that would violate Regulation T, U or X
of the Board of Governors of the Federal Reserve System or for speculative
purposes, including, without limitation, speculating in the commodities and/or
futures markets.

 

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Section 4.10 Subsidiaries. Schedule 4.10 lists Subsidiaries of Borrower as of
the date hereof. Within 10 Business Days after Borrower acquires or forms any
Subsidiary, Borrower will notify Lender and will cause such Subsidiary to
execute a Guarantee of the Obligations, a joinder to the Security Agreement, and
a joinder to such other instruments, agreements, and documents as Lender
requires, each in form and substance satisfactory to Lender, and will cause such
Subsidiary to deliver simultaneously therewith similar documents applicable to
such Subsidiary required under Section 2.01 as requested by Lender.

Section 4.11 Assignment of Material Contracts. Borrower will notify Lender of
the existence of any Material Contract promptly upon entering into the same.
Borrower agrees to promptly execute and deliver to Lender such Collateral
Assignments and take such other actions as Lender requests in furtherance of
Borrower’s collateral assignment of Borrower’s rights under such Material
Contracts.

Section 4.12 Compliance with Certain Laws. Borrower will (a) ensure that no
Person that Controls Borrower is or will be listed on the Specially Designated
Nationals and Blocked Person List or other similar list maintained by the Office
of Foreign Assets Control (“OFAC”), the Department of Treasury or included in
any executive order or other similar list of such Persons published by a
Governmental Authority, (b) not use or permit the use of any proceeds of any
Loan to violate any of the foreign asset control regulations of OFAC or any
enabling statute, executive order, or requirement of a Governmental Authority
relating thereto, and (c) comply with all applicable Bank Secrecy Act laws and
regulations, as amended.

Section 4.13 Farm Products. If Borrower acquires any Collateral which may have
constituted Farm Products in the possession of the seller or supplier thereof,
Borrower will, at its sole expense, use its best efforts to take such steps to
ensure that all Liens (except the security interests granted to Lender) in such
acquired Collateral are terminated or released, including, without limitation,
in the case of such Farm Products produced in a state which has established a
Central Filing System (as defined in the Food Security Act), registering with
the Secretary of State of such state (or such other party or office designed by
such state) and otherwise take such reasonable actions necessary, as prescribed
by the Food Security Act, to purchase Farm Products free of liens, security
interest and encumbrances of any kind (except the security interests granted to
Lender); provided, however, that Borrower may contest and need not obtain the
release or termination of any lien, security interest or encumbrance asserted by
any creditor of any seller of such Farm Products, so long as it contests the
same by proper proceedings and maintain appropriate accruals and reserves
therefore in accordance with GAAP. Upon Lender’s request, Borrower agrees to
forward to Lender promptly after receipt copies of all notices of Liens and
master lists of effective financing statements delivered to Borrower pursuant to
the Food Security Act, which notices and/or lists pertain to any of the
Collateral. Upon Lender’s request, Borrower agrees to provide Lender with the
names of Persons who supply Borrower with such Farm Products and such other
information as Lender may reasonably request with respect to such Persons.

If any warehouse receipt or receipts in the nature of a warehouse receipt is/are
issued in respect of any portion of the Collateral, then Borrower (a) will not
permit such warehouse receipt or receipts in the nature thereof to be
“negotiable” as such term is used in Article 7 of the UCC and (b) will deliver
all such receipts to Lender (or a Person designated by Lender) within five

 

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days of Lender’s request and from time to time thereafter. If no Default or
Event of Default then exists, Lender agrees to deliver to Borrower any receipt
so held by Lender upon Borrower’s request in connection with Borrower’s sale or
other disposition of the underlying Collateral, if such disposition is in the
ordinary course of Borrower’s business.

ARTICLE V.

FINANCIAL COVENANTS

Borrower covenants and agrees that so long as any Obligation remains unpaid or
any Commitment is in effect:

Section 5.01 Fixed Charge Coverage Ratio. Borrower will maintain a minimum Fixed
Charge Coverage Ratio of 1.15:1.00 as measured on the last day of each fiscal
year beginning September 30, 2016. When the Owners’ Equity Ratio of at least 60%
and Working Capital of $15,000,000 or more are both reached and maintained, then
the minimum Fixed Charge Coverage Ratio will be reduced automatically to
1.00:1.00. Should the Owners’ Equity Ratio decline below 60% or Working Capital
decline below $15,000,000, the minimum Fixed Charge Coverage Ratio of 1.15:1.0
will be reinstated automatically without notice or other action by Lender.

Section 5.02 Working Capital. Borrower will maintain Working Capital of at least
$10,000,000 at all times at all times, which shall increase to at least
$12,750,000 by September 30, 2016 and must be maintained at all times
thereafter.

Section 5.03 Capital Expenditures. Borrower will not make Capital Expenditures
in excess of $2,000,000 in any fiscal year without Lender’s prior written
approval.

Section 5.04 Owners’ Equity Ratio. Borrower must maintain an Owners’ Equity
Ratio of at least 42% on the last day of each fiscal year, beginning
September 30, 2016, increasing by 2% at each fiscal year end until an Owner’s
Equity Ratio of 50% is reached and maintained.

Section 5.05 Current Ratio. Borrower will maintain a ratio of current assets to
current liabilities of not less than 1.20:1.00.

Section 5.06 Total Outstanding Debt to EBITDA Ratio. Borrower must ensure that
the Total Outstanding Debt to EBITDA Ratio is less than 4:00:1:00 as monitored
quarterly and tested on the last day of at each fiscal year end, beginning
September 30, 2016.

Section 5.07 Compliance Generally. Compliance with the financial covenants set
forth in this Article V will be tested based on financial statements dated as of
the close of business on the last day of the immediately preceding quarter, or
fiscal year in the case of measurements of the Fixed Charge Coverage Ratio under
Section 5.01, Capital Expenditures under Section 5.03, and Total Outstanding
Debt to EBITDA under Section 5.06, for the related period.

 

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ARTICLE VI.

NEGATIVE COVENANTS

Without the prior written consent of Lender, Borrower covenants and agrees that
so long as any Commitment is in effect or the principal of or interest on any
Loan or any fee remains unpaid:

Section 6.01 Indebtedness. Borrower will not create, incur, assume or suffer to
exist any Indebtedness, except

(a) Indebtedness created pursuant to the Loan Documents;

(b) Indebtedness acceptable to Lender in its sole discretion and existing on the
date hereof and set forth on Schedule 6.01(b) and extensions and renewals of any
such Indebtedness that do not increase the outstanding principal amount thereof
(immediately prior to giving effect to such extension, renewal or replacement)
or shorten the maturity or the weighted average life thereof;

(c) Indebtedness of Borrower incurred to finance the acquisition, construction
or improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition of
any such assets secured by a Lien on any such assets prior to the acquisition
thereof and extensions, renewals, and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof (immediately prior to
giving effect to such extension, renewal or replacement) or shorten the maturity
or the weighted average life thereof; provided, that such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvements; provided further, that the aggregate
principal amount of such Indebtedness does not exceed $500,000 at any time
outstanding; and

(d) Hedging Agreements permitted by Section 6.10.

Section 6.02 Negative Pledge. Except Permitted Encumbrances, Borrower will not
create, incur, assume or suffer to exist any Lien on any of its assets or
property now owned or hereafter acquired.

Section 6.03 Fundamental Changes. Borrower will not, and will not permit any
Subsidiary to, engage in any business other than businesses of the type
conducted by Borrower on the date hereof and businesses reasonably related
thereto.

Section 6.04 Investments, Loans, Etc. Borrower will not purchase, hold or
acquire any common stock, evidence of indebtedness or other securities
(including any option, warrant, or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person (all of the foregoing being collectively called “Investments”), or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person that constitute a business unit, or create or
form any Subsidiary, except:

(a) Investments (other than Permitted Investments) existing on the date hereof
and set forth on Schedule 6.04(a);

 

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(b) Permitted Investments in which Lender maintains a first priority, perfected
security interest therein;

(c) loans or advances to employees, officers or directors of Borrower in the
ordinary course of business for travel, relocation and related expenses;
provided, however, that the aggregate amount of all such loans and advances does
not exceed $200,000 at any time; and

(d) Investments not exceeding $500,000 in the aggregate in businesses that have
a contractual relationship with Borrower.

Section 6.05 Restricted Payments. Other than dividends or distributions by
Borrower solely in units of any class of its membership interests, Borrower will
not pay, declare or make, or agree to pay, declare or make, directly or
indirectly, any dividend or distribution on any class of its membership
interests or make any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, retirement, defeasance or
other acquisition of, any membership interest, or any options, warrants, or
other rights to purchase any of the foregoing, whether now or hereafter
outstanding, or any payment in respect of Indebtedness subordinated to the
Obligations (each such dividend, distribution, set aside or payment, a
“Restricted Payment”), so long as no Default or Event of Default has occurred
and is then continuing or would result from such payment:

(a) Borrower may distribute an amount of up to 40% of its Net Income; and

(b) So long as Borrower achieves and maintains an Owners’ Equity Ratio of at
least 60% and Working Capital of at least $15,000,000 (in each case as reported
on audited fiscal year end financial statements), Borrower may distribute up to
100% of its Net Income; provided, the limitations set forth in (a) above will be
reinstated if Borrower’s Owners’ Equity Ratio falls below 60% or Working Capital
falls below $15,000,000 at any quarterly reporting period.

Distributions for any prior fiscal year must be declared by Borrower’s board of
managers within 120 days of such fiscal year end or allowance hereunder to
declare and pay the distribution for such fiscal year will be deemed waived by
Borrower and disallowed. In addition, distributions for any current fiscal year
may be declared and paid by Borrower’s board of managers at any time during such
fiscal year. Minutes of Borrower’s board of managers’ meeting, or a writing in
lieu of meeting signed by all members of the board of managers, for which any
distribution is declared must, at a minimum, state the fiscal year period for
which any distribution will be made. Distributions in respect of Net Income for
the prior year may not be paid until after confirmation of Net Income in
Borrower’s financial statements submitted pursuant to Section 4.01(a).
Distributions in respect of Net Income for the current period may be paid in
accordance with the Borrower’s internally prepared year to date financial
statements reflecting its Net Income for the year; provided, Borrower must
promptly provide for additional capital in the event the amount of distributions
exceed the amount allowed based on Borrower’s audited financial statements for
such year.

 

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Section 6.06 Sale of Assets. Borrower will not convey, sell, lease, assign,
transfer or otherwise dispose of, any of its assets, business or property,
whether now owned or hereafter acquired, to any Person except (a) the sale or
other disposition for fair market value of obsolete or worn out property or
other property not necessary for operations disposed of in the ordinary course
of business; and (b) the sale of inventory in the ordinary course of business.

Section 6.07 Transactions with Affiliates. Borrower will not sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to Borrower
than could be obtained on an arm’s-length basis from unrelated third parties in
comparable transactions, (b) transactions solely between Borrower and any
wholly-owned Subsidiary of Borrower, and (c) transactions permitted by this
Agreement or any other Loan Document.

Section 6.08 Restrictive Agreements. Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement that prohibits, restricts or imposes any condition upon the ability of
Borrower or any Subsidiary to create, incur or permit any Lien upon any of its
assets or properties, whether now owned or hereafter acquired, except
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted under this Agreement if such restrictions and conditions
apply only to the property or assets securing such Indebtedness.

Section 6.09 Sale and Leaseback Transactions. Borrower will not enter into any
arrangement, directly or indirectly, whereby it sells or transfers any property,
real or personal, used or useful in its business, whether now owned or
hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred.

Section 6.10 Hedging Agreements. Borrower will not enter into any Hedging
Agreement other than Hedging Agreements approved by Lender and entered into in
the ordinary course of business to hedge or mitigate risks to which Borrower is
exposed in the conduct of its business or the management of its liabilities.

Section 6.11 Amendment to Material Documents. Except to the extent as could not
reasonably be expected to result in a Material Adverse Effect, Borrower will not
amend, modify or waive any of its rights or any other terms or condition under
(a) its certificate or articles of organization, operating agreement, bylaws or
other organizational documents or (b) any Material Contract.

Section 6.12 Accounting Changes. Borrower will not make any significant change
in accounting treatment or reporting practices, except as required by GAAP, or
change its fiscal year.

Section 6.13 Deposit and Investment Accounts. Borrower will not maintain,
deposit or invest funds into any Deposit Account or Investment Account other
than those listed on Schedule 6.13 without first obtaining a Control Agreement
acceptable to Lender.

 

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Section 6.14 Use of Proceeds. Borrower will not use the proceeds of any Loan,
directly or indirectly, for “purchasing” or “carrying” any “margin stock” with
the respective meanings of each of such terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose that violates the provisions of Regulation U, T or
X of the Board of Governors of the Federal Reserve System.

Section 6.15 Legal Status; Eligible Borrower. Borrower will not (a) change its
jurisdiction of organization, or (b) take or permit any action that would result
in (i) Borrower’s discontinuance as a limited liability company in good standing
under the jurisdiction of Borrower’s organization, or (ii) Borrower becoming
ineligible to borrow from Lender or any Farm Credit System lending institutions.

ARTICLE VII.

EVENTS OF DEFAULT AND REMEDIES

Section 7.01 Events of Default. The following will be considered events of
default (each an “Event of Default”) hereunder:

(a) Borrower fails to pay or deposit, as the case may be, any amount payable or
required under this Agreement or any other Loan Document within 10 days after
such amount becomes due;

(b) any representation or warranty made or deemed made by or on behalf of
Borrower in or in connection with this Agreement or any other Loan Document
(including the Schedules attached hereto and thereto) and any amendments or
modifications hereof or waivers hereunder, or in any certificate, report,
financial statement or other document submitted to Lender by Borrower or any
representative of Borrower pursuant to or in connection with this Agreement or
any other Loan Document proves to be materially incorrect when made or deemed
made or submitted;

(c) Borrower fails to observe or perform any covenant or agreement in
(i) Article V or VI of this Master Agreement, or (ii) any Material Contract
beyond any applicable cure period, if any (other than failure to make any
payment under such Material Contracts being contested in accordance with
Section 4.05);

(d) Borrower fails to observe or perform any covenant or agreement in this
Agreement (other than those referred to in clauses (a), (b), or (c) above) or in
any other Loan Document, and such failure continues for 30 days after the
earlier of the date (1) Borrower becomes aware of such failure, or (2) written
notice thereof is given to Borrower by Lender; or any Event of Default otherwise
occurs under any Loan Document;

(e) Borrower or any guarantor of any portion of the Obligations, (whether as
primary obligor or as guarantor or other surety) fails to pay any principal of
or premium or interest on any Material Indebtedness that is outstanding, when
and as the same becomes due and payable (whether at scheduled maturity, required
prepayment,

 

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acceleration, demand or otherwise), and such failure continues after the
applicable grace period, if any, specified in the agreement or instrument
evidencing such Material Indebtedness; or any other event occurs or condition
exists under any agreement or instrument relating to such Material Indebtedness
and continues after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or permit the acceleration of, the maturity of such Material
Indebtedness; or any such Indebtedness is declared to be due and payable; or
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or any offer to prepay,
redeem, purchase or defease such Material Indebtedness is required to be made,
in each case prior to the stated maturity thereof;

(f) Borrower or any guarantor of any portion of the Obligations, (1) commences a
voluntary case or other proceeding or files any petition seeking liquidation,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a custodian, trustee, receiver, liquidator or other similar
official of it or any substantial part of its property, (2) consents to the
institution of, or fails to contest in a timely and appropriate manner, any
proceeding or petition described in clause (1) of this Section 7.01(f),
(3) applies for or consents to the appointment of a custodian, trustee,
receiver, liquidator or other similar official for Borrower or such guarantor or
for a substantial part of the assets of Borrower or such guarantor, (4) files an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (5) makes a general assignment for the benefit of creditors, or
(6) takes any action for the purpose of effecting any of the foregoing;

(g) an involuntary proceeding is commenced or an involuntary petition is filed
seeking (1) liquidation, reorganization or other relief in respect of Borrower
or any guarantor of any portion of the Obligations, or the debts, or any
substantial part of the assets of Borrower or such guarantor under any federal,
state or foreign bankruptcy, insolvency or other similar law now or hereafter in
effect or (2) the appointment of a custodian, trustee, receiver, liquidator or
other similar official for Borrower or any guarantor of any portion of the
Obligations, or for a substantial part of the assets of Borrower or such
guarantor, and in any such case, such proceeding or petition remains undismissed
for a period of 60 days or an order or decree approving or ordering any of the
foregoing is entered;

(h) Borrower or any guarantor of any portion of the Obligations becomes unable
to pay, admits in writing its inability to pay, or fails to pay, its debts as
they become due;

(i) an ERISA Event occurs with respect to Borrower or any guarantor of any
portion of the Obligations that, in the opinion of Lender, when taken together
with other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;

 

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(j) any final, non-appealable judgment or order for the payment of money in
excess of $250,000 in the aggregate is rendered against Borrower or any
guarantor of any portion of the Obligations, and either (1) such judgment or
order is final and enforcement proceedings have been commenced by any creditor
upon such judgment or order, or (2) such judgment or order shall remain
unsatisfied for a period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, is not in effect;

(k) any non-monetary judgment or order is rendered against Borrower or any
guarantor of any portion of the Obligations that could reasonably be expected to
result in a Material Adverse Effect (except for any judgment or order in the
litigation disclosed in Schedule 3.05(a)), and there is a period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, is not in effect;

(l) a Change in Control occurs or exists;

(m) Borrower ceases to exist or any guarantor of any portion of the Obligation
ceases to exist;

(n) any guarantor of any portion of the Obligations attempts to revoke such
Guarantee, or any such Guarantee becomes unenforceable in whole or in part for
any reason;

(o) an Event of Default occurs under any other agreement with (or instrument in
favor of) Lender that could reasonably be expected to result in a Material
Adverse Effect; or

(p) Borrower fails to deliver any item required under the Post-Closing Agreement
within the time allowed therein.

Section 7.02 Remedies. Upon the occurrence of an Event of Default (other than an
event described in clause (f), (g) or (h) of Section 7.01), and at any time
thereafter, Lender may take any one or more or all of the following actions, at
the same or different times:

(a) terminate the Commitments, whereupon the Commitments will terminate
immediately;

(b) declare the principal of and any accrued interest on the Loans, and all
other Obligations to be due and payable, whereupon the same will become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower;

(c) Setoff;

(d) take other steps to protect or preserve Lender’s interest in any Collateral,
including, without limitation, notifying account debtors to make payments
directly to Lender, advancing funds to protect any Collateral, and insuring
Collateral; and/or

(e) exercise all remedies provided for in any other Loan Document or as
otherwise provided by law.

 

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If an Event of Default specified in either clause (f), (g) or (h) of
Section 7.01 occurs, all Commitments will automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon,
and all fees, and all other Obligations will automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by Borrower.

ARTICLE VIII.

MISCELLANEOUS

Section 8.01 Notices.

Except in the case of notices and other communications expressly permitted to be
given by telephone, all notices and other communications to any party herein to
be effective will be in writing and delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

 

To Borrower:    ABE South Dakota, LLC    Attention: President    8000 Norman
Center Drive, Suite 610    Bloomington, Minnesota 55437    Facsimile No. (763)
226-2725 With a copy to:    David Vander Haar, Esq.    Barnes & Thornburg LLP   
225 South Sixth Street    Suite 2800    Minneapolis, Minnesota 555402-4662   
Facsimile No. (612) 333-6798 To Lender:    AgCountry Farm Credit Services   
Attention: Randolph L. Aberle, Senior Vice President    Post Office Box 6020   
1900 44th Street South    Fargo, North Dakota 58108    Facsimile No. (877)
811-4074 With a copy to:    Ronald K. Vaske, Esq.    Lindquist & Vennum LLP   
4200 IDS Center    80 South Eighth Street    Minneapolis, Minnesota 55402   
Facsimile No. (612) 371-3207

 

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Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties. All notices and
other communications delivered to Borrower will, when transmitted by overnight
delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or
if mailed, upon the third Business Day after the date deposited in the mail or
if delivered, upon delivery. Notices delivered to Lender will not be effective
until actually received at its address specified in this Section 8.01.

Any agreement of Lender to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of Borrower. Lender will be
entitled to rely on the authority of any Person purporting to be a Person
authorized by Borrower to give such notice and Lender will not have any
liability to Borrower or any other Person as a result of any action taken or not
taken by Lender in reliance upon such telephonic or facsimile notice. The
obligation of Borrower to repay the Loans and all other Obligations hereunder
will not be affected in any way or to any extent by any failure of Lender to
receive written confirmation of any telephonic or facsimile notice or the
receipt by Lender of a confirmation which is at variance with the terms
understood by Lender to be contained in any such telephonic or facsimile notice.

Section 8.02 Waiver; Amendments.

(a) No failure or delay by Lender in exercising any right or power hereunder or
any other Loan Document, and no course of dealing between Borrower and Lender,
will operate as a waiver, nor will any single or partial exercise of any such
right or power or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or the exercise
of any other right or power hereunder or thereunder. The rights and remedies of
Lender hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies provided by law. No waiver of any provision
of this Agreement or any other Loan Document or consent to any departure by
Borrower therefrom will in any event be effective unless the same is permitted
by paragraph (b) of this Section, and then such waiver or consent will be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of an Advance will
not be construed as a waiver of any Default or Event of Default, regardless of
whether Lender had notice or knowledge of such Default or Event of Default at
the time.

(b) No amendment or waiver of any provision of this Agreement or any other Loan
Document, nor consent to any departure by Borrower therefrom, will in any event
be effective unless the same is in writing and signed by Borrower and Lender and
then such waiver or consent will be effective only in the specific instance and
for the specific purpose for which given.

Section 8.03 Expenses; Indemnification.

(a) Borrower indemnifies Lender and each Participant against, and holds Lender
and each Participant harmless from, any and all costs, losses, liabilities,
claims, damages and related expenses, including the fees, charges and
disbursements of any engineers, consultants, agents and counsel for Lender
and/or any Participant, which are

 

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incurred by or asserted against Lender and/or any Participant arising out of, in
connection with or as a result of (1) the execution, delivery and documentation
of this Master Agreement, any Supplement, any other Loan Document, or any other
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of any of
the transactions contemplated hereby or thereby, (2) any Advances or any actual
or proposed use of the proceeds therefrom, (3) any actual or alleged presence or
release of Hazardous Materials on or from any property owned by Borrower or any
Subsidiary, or any Environmental Liability related in any way to Borrower or any
Subsidiary, or (4) actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether Lender is a party thereto, including
attorneys’ fees and all other costs and fees (i) incurred before or after
commencement of litigation or at trial, on appeal or in any other proceeding,
and (ii) incurred in any bankruptcy proceeding; provided, that Borrower is not
obligated to indemnify Lender or any Participant for any of the foregoing
arising out of Lender’s or such Participant’s gross negligence or willful
misconduct.

(b) Borrower will pay, and hold Lender and each Participant harmless from and
against, any and all Taxes with respect to this Agreement and any other Loan
Document, any Collateral described therein, or any payments due thereunder, and
will hold Lender and each Participant harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
Taxes.

(c) To the extent permitted by applicable law, Borrower will not assert, and
Borrower hereby waives, any claim against Lender and/or any Participant, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to actual or direct damages) arising out of, in connection with or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the transactions contemplated therein, any Advance or the use of
proceeds thereof.

(d) All amounts due under this Section 8.03 are due and payable promptly on
demand.

Section 8.04 Successors and Assigns.

(a) The provisions of this Agreement are binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights hereunder without the
prior written consent of Lender (and any attempted assignment or transfer by
Borrower without such consent will be considered null and void).

(b) Lender may at any time, without the consent of Borrower, assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement and the other Loan Documents, including all or a portion of any
Commitment and/or all or any portion of any Loan.

 

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(c) Lender and each Participant may at any time, without the consent of
Borrower, sell participation interests to one or more Persons (a “Participant”)
in all or a portion of Lender’s rights and obligations under this Agreement,
including all or a portion of any Commitment and/or all or any portion of any
Loan. In the event Lender or any Participant sells one or more participation
interests, Lender’s (and such Participant’s) obligations under this Agreement
will remain unchanged, and Borrower will continue to deal solely and directly
with Lender in connection with Lender’s rights and obligations under this
Agreement and the other Loan Documents.

(d) Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement and the Notes without complying with
this Section. No such pledge or assignment will release Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for Lender as a
party hereto.

Section 8.05 Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement and the other Loan Documents (except to the extent otherwise
provided therein) will be construed in accordance with and be governed by the
law (without giving effect to the conflict of law principles thereof) of the
State of North Dakota.

(b) Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the non-exclusive jurisdiction of the United States District Court
of the District of North Dakota, and of any state court of the State of North
Dakota located in Cass County, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any
judgment. Each of the parties irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such North Dakota state court or, to the extent permitted by applicable law,
such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document will affect any right
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against Borrower or its properties in the
courts of any jurisdiction.

(c) Borrower irrevocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding described in paragraph (b) of this Section and brought in any court
referred to in paragraph (b) of this Section. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

Section 8.06 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR

 

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ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 8.07 Right of Setoff. As additional security for payment of the
Obligations, Borrower grants to Lender a security interest in, a lien on, and an
express contractual right, at any time or from time to time upon the occurrence
and during the continuance of a Default or an Event of Default, without prior
notice to Borrower, any such notice being expressly waived by Borrower to the
extent permitted by applicable law, to set off and apply against all deposits
(general or special, time or demand, provisional or final) of Borrower at any
time held or other obligations at any time owing by Lender to or for the credit
or the account of Borrower against any and all Obligations held by Lender or any
Participant (“Setoff”), irrespective of whether Lender or any Participant has
made demand hereunder and although such Obligations may be unmatured. Lender or
any Participant, as applicable, agrees to notify Borrower after any Setoff and
any application made by Lender or any Participant; provided, that the failure to
give such notice will not affect the validity of such Setoff and application.
The rights of Lender and the Participants under this Section 8.07 are in
addition to any rights now or hereafter granted under applicable law and do not
limit any such rights.

Section 8.08 Counterparts; Integration. This Agreement may be executed in any
number of separate counterparts (including by telecopy or other electronic mail,
or any other electronic means), and all of said counterparts taken together will
be deemed to constitute one and the same instrument. This Agreement, the other
Loan Documents, and any separate letter agreement(s) relating to any fees
payable to Lender constitute the entire agreement among the parties hereto and
thereto regarding the subject matters hereof and thereof and supersede all prior
agreements and understandings, oral or written, regarding such subject matters.

Section 8.09 Survival. All covenants, agreements, representations and warranties
made by Borrower herein and in the certificates or other instruments delivered
in connection with or pursuant to this Agreement will be considered to have been
relied upon by Lender and will survive the execution and delivery of this
Agreement, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and will continue in full force and effect as long as the
principal of or any accrued interest on the Loans or any fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as any
Commitment is in effect. The provisions of Section 8.03 will survive and remain
in full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, and termination of the
Commitments, or this Agreement or any provision hereof. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement will survive the execution and
delivery of this Agreement and the other Loan Documents.

 

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Section 8.10 Severability. Any provision of this Agreement or any other Loan
Document held to be illegal, invalid or unenforceable in any jurisdiction, will,
as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction will not invalidate or render unenforceable such
provision in any other jurisdiction.

Section 8.11 Transferable Record. This Agreement, the Notes and the other Loan
Documents, as amended, are “transferable records” as defined in applicable law
relating to electronic transactions. Therefore, Lender may, on behalf of
Borrower, create a microfilm, optical disk or electronic image of such Loan
Documents that are authoritative copies under applicable law. Lender may store
such authoritative copies in microfilm or electronic form and destroy the paper
original as part of its normal business practices. Lender, on its own behalf,
may control and transfer such authoritative copies as permitted by applicable
law.

Section 8.12 Confidentiality. Lender agrees to take normal and reasonable
precautions to maintain the confidentiality of any information designated in
writing as confidential and provided to it by Borrower or any Subsidiary, except
that such information may be disclosed (a) to any Affiliate, Participant or
advisor of Lender, including without limitation accountants, legal counsel and
other advisors, provided that Lender shall have taken reasonable steps to assure
that such Affiliates, participants, and advisors will maintain such information
in confidence to the same extent required of Lender hereunder, (b) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (c) to the extent requested by any regulatory agency or authority,
(d) to the extent that such information becomes publicly available, other than
as a result of a breach of this Section 8.12, or which becomes available to
Lender on a nonconfidential basis from a source other than Borrower, (e) in
connection with the exercise of any remedy hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
and (f) subject to provisions substantially similar to this Section 8.12, to any
actual or prospective assignee or Participant, or (g) with the consent of
Borrower. Any Person required to maintain the confidentiality of any information
as provided for in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such information as such Person would accord its
own confidential information.

Section 8.13 Copies. Borrower hereby acknowledges the receipt of a copy of this
Agreement and all other Loan Documents.

Section 8.14 Notice of Claims Against Lender; Limitation of Certain Damages. In
order to allow Lender to mitigate any damages to Borrower from Lender’s alleged
breach of its duties under the Loan Documents or any other duty, if any, to
Borrower, the Borrower agrees to give Lender immediate written notice of any
claim or defense it has against Lender, whether in tort or contract, relating to
any action or inaction by Lender under any Loan Document, or the transactions
related thereto, or of any defense to payment of the Obligations

 

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for any reason. The requirement of providing timely notice to Lender represents
the parties’ agreed-upon standard of performance regarding claims against
Lender. Notwithstanding any claim that Borrower may have against Lender, and
regardless of any notice Borrower may have given to Lender, Lender will not be
liable to Borrower for consequential, punitive and/or special damages.

Section 8.15 Termination. Upon satisfaction of all of Borrower’s obligations
hereunder, and the related documents and instruments, Lender will (a) release
its security interests and file appropriate documentations of the same, and
(b) redeem the Required Stock.

SIGNATURE PAGE FOLLOWS

 

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

 

BORROWER: ABE SOUTH DAKOTA, LLC By:   /s/ Richard R. Peterson Name:   Richard R.
Peterson Title:   President and Chief Executive Officer LENDER: AGCOUNTRY FARM
CREDIT SERVICES, PCA By:   /s/ Randolph L. Aberle Name:   Randolph L. Aberle
Title:   Senior Vice President

SIGNATURE PAGE TO

MASTER CREDIT AGREEMENT

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ATTACHMENT I

DEFINITIONS

A. Accounting Terms and Determination. Unless otherwise defined or specified
herein, all accounting terms used herein will be interpreted, all accounting
determinations hereunder will be made, and all financial statements required to
be delivered hereunder will be prepared, in accordance with GAAP as in effect
from time to time.

B. Terms Generally. The definitions of terms herein apply equally to the
singular and plural forms of the terms defined. The words “include,” “includes”
and “including” are herein deemed to be followed by the phrase “without
limitation.” Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein will be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person will
be construed to include such Person’s successors and permitted assigns, (c) the
words “hereof,” “herein” and “hereunder” and words of similar import will be
construed to refer to this Agreement as a whole and not to any particular
provision hereof, (d) all references to Articles, Sections, Exhibits and
Schedules will be construed to refer to Articles, Sections, Exhibits and
Schedules to this Agreement, and (e) all references to a specific time will be
construed to refer to the time in the city provided herein for Lender’s receipt
of notices hereunder, unless otherwise indicated.

C. Supplements. Certain terms are defined specifically in one or more
Supplements. If there is an inconsistency between the terms hereof and a
Supplement, the definitions in the Supplement will control to the extent
provided therein.

D. Defined Terms. In addition to the other terms defined in the Agreement, the
following terms have the meanings herein specified.

“Advance” means an advance of Loan funds by Lender to or for the benefit of
Borrower.

“Affiliate” means, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, such Person.

“Agreement” means, collectively, the Master Agreement and each of the
Supplements in effect from time to time.

“Borrower” means ABE South Dakota, LLC, a Delaware limited liability company.

“Business” has the meaning provided in Recital A.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in the city of Fargo, North Dakota, are authorized or required
by law to close.

 

I-1

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“Capital Expenditures” means, for any period, without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of
Borrower that are (or would be) set forth on a consolidated statement of cash
flows of Borrower for such period prepared in accordance with GAAP and
(b) Capital Lease Obligations incurred by Borrower during such period.

“Capital Lease Obligations” of any Person means the capitalized amount,
determined in accordance with GAAP, of all obligations of such Person to pay
rent or other amounts under any lease (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP.

“Change in Control” means the occurrence of one or more of the following events:
(a) any sale, lease, exchange or other transfer (in a single transaction or a
series of related transactions) of all or substantially all of the assets of
Borrower or any guarantor of any portion of the Obligations to any Person or
“group” (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder in effect on the date
hereof), (b) acquisition of Control of the Borrower or any guarantor of any
portion of the Obligations by any Person who does not Control the Borrower or
such guarantor on the date of this Agreement, or (c) occupation of a majority of
the seats on the board of directors/managers of Borrower or any guarantor of any
portion of the Obligations by Persons who were neither (1) nominated by the
immediately previous board of directors or (2) appointed by directors so
nominated.

“Charges” has the meaning set forth in Section 1.05.

“Closing Date” means December 29, 2015, and with respect to each Supplement, the
date specified in such supplement if a different closing date is specified.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time.

“Collateral” means all of Borrower’s and each Subsidiary’s tangible and
intangible property, real and personal, including without limitation, all
casualty insurance proceeds and condemnation awards.

“Collateral Assignment” means each collateral assignment by Borrower in favor of
Lender of a Material Contract.

“Commitment” means any commitment by Lender to advance funds to Borrower as set
forth in this Master Agreement or any Supplement.

“Control” means the power, directly or indirectly, either to (a) vote 50% or
more of securities having ordinary voting power for the election of directors
(or persons performing similar functions) of a Person or (b) direct or cause the
direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. The terms
“Controls,” “Controlling,” “Controlled by,” and “under common Control with” have
meanings correlative thereto.

 

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“Control Agreements” means the agreements requested by Lender, if any, to
perfect Lender’s security interest in Deposit Accounts and Investment Accounts,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.

“Default” means any condition or event that, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.

“Default Interest” has the meaning set forth in Section 1.04.

“Deposit Accounts” means all demand, time, savings, passbook or similar
depository accounts of Borrower with any Person, including Borrower’s operating,
payroll, and other bank or depository accounts.

“EBITDA” for any period means an amount equal to (a) Net Income plus (b) to the
extent deducted in determining Net Income, the sum of (i) Interest Expense,
(ii) income taxes, (iii) depreciation and amortization, and (iv) all other
non-cash charges.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or to
health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental investigation and
remediation, costs of administrative oversight, fines, related attorneys’ fees,
natural resource damages, penalties or indemnities), directly or indirectly
resulting from or based upon (a) any actual or alleged violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) any actual or alleged
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials, or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute.

“ERISA Affiliate” means any trade or business (whether or not incorporated),
which, together with Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for the purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA

 

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with respect to the termination of any Plan; (e) the receipt by Borrower or the
ERISA Affiliate from the PBGC or a plan administrator appointed by the PBGC of
any notice relating to an intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (f) the incurrence by Borrower or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Borrower
or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

“Event of Default” has the meaning set forth in Section 7.01.

“Farm Products” has the meaning ascribed thereto in the UCC.

“First Supplement” means the First Supplement to the Master Credit Agreement
(Revolving Term Facility) between Borrower and Lender dated the date hereof, as
amended, restated, supplemented, or otherwise modified from time to time.

“Fixed Charge Coverage Ratio” means for any fiscal year, the ratio of (a) EBITDA
to (b) Fixed Charges.

“Fixed Charges” means, for any period determined on a consolidated basis in
accordance with GAAP, the sum of (a) interest expense, (b) scheduled mandatory
principal payments on Total Debt, (c) income tax expense for such period,
(d) Restricted Payments declared or otherwise allocated, and (e) Non-Financed
Maintenance Capital Expenditures.

“Food Security Act” means the Food Security Act of 1985, 7 U.S.C. § 1631, as
amended, and the regulations promulgated thereunder.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States applied on a consistent basis.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person, including without limitation any Governmental
Authority providing a guarantee of any portion of the Obligations, (the
“guarantor”) means any obligation, contingent or otherwise, of the guarantor
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the “primary obligor”) in any manner,
whether directly or indirectly and including any obligation, direct or indirect,
of the guarantor (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement

 

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condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (d) as an account party
in respect of any letter of credit or letter of guarantee issued in support of
such Indebtedness or obligation. The term “Guarantee” does not include
endorsements for collection or deposits in the ordinary course of business. The
amount of any Guarantee is deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which Guarantee is
made or, if not so stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith. The term “Guarantee”
used as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Agreements” means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, commodity agreements and other similar agreements or
arrangements designed to protect against fluctuations in interest rates,
currency values or commodity values, in each case to which Borrower is a party.

“Indebtedness” of any Person means, without duplication (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person in respect of the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business;
provided, that for purposes of Section 7.01(e), trade payables overdue by more
than 120 days are included in this definition except to the extent that any of
such trade payables are being disputed in good faith and by appropriate
measures), (d) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(e) all Capital Lease Obligations of such Person, (f) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (g) all Guarantees of such Person,
(h) the lesser of (X) all Indebtedness of a third party secured by any Lien on
property owned by such Person, whether or not such Indebtedness has been assumed
by such Person, and (Y) the greater of (1) the book value of such property and
(2) the amount by which such Indebtedness is debt of such Person under GAAP,
(i) all obligations of such Person, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any common stock, membership unit
or other capital interest of such Person, (j) Off-Balance Sheet Liabilities, and
(k) all capital interests of such person (such as preferred units) which call
for a fixed or formulaic amount to be paid to the holder thereof or that have a
maturity date. The Indebtedness of any Person includes the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer, except to the extent that the terms of such Indebtedness provide
that such Person is not liable therefor.

“Interest Expense” shall mean, for Borrower and its Subsidiaries for any period
determined on a consolidated basis in accordance with GAAP, the sum of (i) total
cash interest expense, including without limitation the interest component of
any payments in respect of

 

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Capital Lease Obligations capitalized or expensed during such period (whether or
not actually paid during such period), plus (ii) the net amount payable (or
minus the net amount receivable) under Hedging Agreements during such period
(whether or not actually paid or received during such period).

“Inventory” has the meaning ascribed thereto in the UCC, and shall include,
without limitation, grain, grain sorghum, corn, soybeans, wheat, ethanol, dried
distiller’s grains and solubles, corn oil, and other goods, held by Borrower for
sale or for processing and sale.

“Investment Accounts” means all securities or investment accounts of Borrower
with brokerage firms and other Persons.

“Investments” has the meaning set forth in Section 6.04.

“Lender,” means AgCountry Farm Credit Services, PCA, and its successors and
assigns.

“Lien” means any mortgage, pledge, security interest, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement,
or other arrangement having the practical effect of the foregoing or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any capital lease having the same economic effect as any
of the foregoing).

“Loan” means a loan, commitment, credit facility or accommodation made or
available to Borrower under this Agreement as more fully described in a
Supplement.

“Loan Documents” means collectively this Master Agreement, the Supplements, the
Mortgage, the Security Agreement, the Notes, the Collateral Assignments, all UCC
financing statements filed by Lender in connection with perfection of Lender’s
security interest in the Collateral, and any Control Agreements, draw requests,
and any and all other instruments, agreements, documents and writings executed
pursuant to any of the foregoing which have been delivered in fulfillment of a
condition precedent to effectiveness or to Lender’s obligations under any of the
foregoing, or which have otherwise been executed by Borrower and delivered to
Lender in connection with the Obligations or the Collateral.

“Master Agreement” means solely this Master Credit Agreement, not including the
Supplements, as amended, restated, or otherwise modified (other than by
Supplements entered into pursuant to Section 1.02) from time to time.

“Material Adverse Effect” means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singularly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not related, a
material adverse change in, or a material adverse effect on, (a) the business,
results of operations, financial condition, assets, or liabilities, of Borrower,
(b) the ability of Borrower to perform any of its obligations under the Loan
Documents, (c) the rights and remedies of Lender under any of the Loan Documents
or (d) the legality, validity or enforceability of any of the Loan Documents.

 

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“Material Contract” means an agreement to which Borrower is or hereafter becomes
a party to which (a) has a term of more than two years, (b) calls for payment to
or from Borrower in any calendar year in excess of $1,000,000, or (c) is
material to the conduct of the Business as determined by Lender with notice to
Borrower.

“Material Indebtedness” means Indebtedness (other than the Loans) or obligations
in respect of one or more Hedging Agreements in an aggregate principal amount of
$500,000 or more. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations in respect to any Hedging Agreement at any
time is the maximum aggregate amount (giving effect to any netting agreements)
that Borrower would be required to pay if such Hedging Agreement were terminated
at such time.

“Maximum Rate” has the meaning set forth in Section 1.05.

“Mortgage” means the Future Advance Mortgage and Security Agreement and Fixture
Financing Statement and Assignment of Leases and Rents between Borrower and
Lender dated December 29, 2015, as amended from time to time.

“Multiemployer Plan” has the meaning set forth in Section 4001(a)(3) of ERISA.

“Net Income” means net income (or loss) determined on a consolidated basis in
accordance with GAAP, but excluding (a) extraordinary gains or losses, (b) gains
attributable to write-up of assets, (c) any equity interest in unremitted
earnings of any Person that is not a Subsidiary, and (d) income (or loss) of any
Person which accrued prior to the date such Person becomes a Subsidiary or is
merged into or consolidated with Borrower or any Subsidiary on the date such
Person’s assets are acquired by the Borrower or a Subsidiary.

“Non-Financed Maintenance Capital Expenditures” shall mean the sum of Capital
Expenditures paid during the period related to maintenance of Borrower’s
property and plant and equipment, except the term shall not include Capital
Expenditures to the extent Borrower or any Subsidiary incurred Indebtedness in
connection therewith.

“Notes” means, collectively, all notes of Borrower in favor of Lender issued
pursuant to a Supplement.

“Obligations” means all amounts owed by Borrower to Lender pursuant to or in
connection with this Agreement or any other Loan Document, and any other
obligation of Borrower to Lender of any nature whatsoever, including without
limitation, all principal, interest (including any interest accruing after the
filing of any petition in bankruptcy or the commencement of any insolvency,
reorganization or like proceeding relating to Borrower, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding), all
reimbursement obligations, fees, prepayment premiums, expenses, indemnification
and reimbursement payments, costs and expenses (including all fees and expenses
of counsel to Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder,
together with all renewals, extensions, modifications or refinancings thereof.

 

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“Off-Balance Sheet Liabilities” of any Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any liability of such Person under any sale
and leaseback transactions which do not create a liability on the balance sheet
of such Person, (c) any liability of such Person under any so-called “synthetic”
lease transaction, or (d) any obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person.

“Owners’ Equity Ratio” means the product of Tangible Net Worth divided by
Tangible Total Assets, expressed as a percentage of total assets.

“Participant” has the meaning set forth in Section 8.04(c).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA, and any successor entity performing similar functions.

“Permits” means all of the material licenses, consents, approvals,
authorizations and permits of Governmental Authorities which Borrower is
required to maintain in connection with the Project and the operation of the
Business, including but not limited to any of the foregoing related to
Environmental Laws, zoning and land-use laws (including any requirement to
obtain a special exception, if applicable), water use laws, waste disposal laws,
laws requiring construction permits, and occupancy certificates.

“Permitted Encumbrances” means:

(a) Liens securing Indebtedness permitted under Section 6.01 but only to the
extent such Indebtedness is secured at the time it is incurred.

(b) Liens imposed by law for taxes not yet due (or with respect to real estate
taxes, not yet delinquent) or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;

(c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanic,
materialmen and other Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;

(d) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations;

(e) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

 

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(f) judgment and attachment liens not giving rise to an Event of Default or
Liens created by or existing from any litigation or legal proceeding that are
currently being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with GAAP;

(g) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or materially interfere with the ordinary conduct
of business of Borrower and its Subsidiaries taken as a whole;

(h) Liens in favor of Lender; and

(i) Farm Lease Agreement dated February 10, 2014 between Borrower, as lessor,
and Vernon Schwab, as lessee, covering certain land in Brown County, South
Dakota, and any renewals and extensions thereof, and any subsequent lease
involving the same property on substantially similar terms.

“Permitted Investments” means:

1. direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States), in each case maturing within one year from the
date of acquisition thereof;

2. commercial paper having the highest rating, at the time of acquisition
thereof, of S&P or Moody’s and in either case maturing within six months from
the date of acquisition thereof;

3. certificates of deposit, bankers’ acceptances and time deposits maturing
within 180 days of the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States of America or any state thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;

4. fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (1) above and entered into with a
financial institution satisfying the criteria described in clause (3) above;

5. mutual funds investing solely in any one or more of the Permitted Investments
described in clauses (1) through (4) above; and

6. Hedging Agreements approved in writing by Lender solely to hedge or mitigate
risks to which Borrower is exposed in the conduct of its business or management
of its liabilities.

 

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“Person” means any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
Governmental Authority.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.

“Real Estate” means all real property owned or leased by Borrower.

“Release” means any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

“Responsible Officer” means Borrower’s chairman, vice chairman, president, chief
operating officer, vice president, secretary, general manager or chief financial
officer, or such other duly authorized Person as may be designated in writing
with the prior written consent of Lender.

“Restricted Payment” has the meaning set forth in Section 6.05.

“Required Stock” means the member stock or participation certificates in Lender
in amounts as Lender may require Borrower to purchase from time to time under
the capital plan adopted by Lender.

“Second Supplement” means the Second Supplement to the Master Credit Agreement
(Term Loan) between Borrower and Lender dated the date hereof, as amended,
restated, supplemented, or otherwise modified from time to time.

“Security Agreement” means the Security Agreement between Lender and Borrower
dated the date hereof, as amended, restated, supplemented or otherwise modified
from time to time.

“Setoff” has the meaning set forth in Section 8.07.

“Subsidiary” means, with respect to any Person (the “parent”), any corporation,
partnership, joint venture, limited liability company, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, partnership, joint venture, limited liability company, association
or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (b) that is, as of
such date, otherwise Controlled (as set forth in clause (b) of the definition
thereof), by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Unless otherwise indicated,
all references to “Subsidiary” hereunder mean a Subsidiary of Borrower
(including Subsidiaries formed after the Closing Date).

 

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“Supplements” has the meaning set forth in Section 1.02.

“Tangible Total Assets” means, total assets less minority investment interests
in other entities, less the amount of appraisal surplus or any write-up in book
value of any assets resulting from a revaluation thereof or any write-up in
excess of the cost of such assets acquired reflected on the consolidated balance
sheet of Borrower as of such date prepared in accordance with GAAP, less the net
book amount of all intangible assets.

“Tangible Net Worth” means, as of any date, (a) the sum of (1) the total assets
of Borrower that would be reflected on Borrower’s consolidated balance sheet as
of such date prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and surplus of
Subsidiaries, and (2) subordinated indebtedness authorized in writing by Lender,
less (b) the sum of (1) the total liabilities of Borrower that would be
reflected on a consolidated balance sheet of Borrower as of such date prepared
in accordance with GAAP, (2) the amount of appraisal surplus or any write-up in
the book value of any assets resulting from a revaluation thereof or any
write-up in excess of the cost of such assets acquired reflected on the
consolidated balance sheet of Borrower as of such date prepared in accordance
with GAAP, and (3) the net book amount of all intangible assets.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority
arising from payment hereunder or from the execution, delivery, or enforcement
of, any Loan Document, including, without limitation, all present or future
stamp or documentary taxes or any other excise or property taxes. “Taxes” does
not include taxes based on (or determined solely by) Lender’s net income.

“Title Company” means Old Republic National Title Insurance Company and its
successors and assigns, and/or any other title insurance company selected by
Lender from time to time.

“Total Debt” means all Indebtedness that should be reflected on Borrower’s
consolidated balance sheet prepared in accordance with GAAP.

“Total Outstanding Debt to EBITA Ratio” means the ratio of all interest bearing
Indebtedness to EBITDA.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect from time to time in the State of North Dakota.

“Utilities” means natural gas, telephone, water, and electricity.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

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“Working Capital” means on the date of determination, the sum of (i) current
assets (excluding all reserves) and (ii) the undrawn portion of the Revolving
Commitment Amount (as defined in the First Supplement), in each case as of such
date, less current liabilities (including the current portion of the Loans and
other long term Indebtedness, except to the extent such liabilities are
accounted for by reserves excluded from current assets.

 

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