EXHIBIT 10.26

CREDIT AGREEMENT

This Credit Agreement (“Agreement”) dated as of January 5, 2007 by and between
Union Bank and Trust Company (“Lender”) and Husker Ag, LLC (“Borrower”), in
consideration of credit extended by Lender under the terms and conditions set
forth below the parties hereto agree as follows:

ARTICLE I - DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth
below (and such meaning shall be equally applicable to both the singular and
plural form of the terms defined, as the context may require):

‘Advance’ shall mean funds advanced to the Borrower under the Loans described in
Article 2 herein.

‘Affiliate’ shall mean any person, firm or corporation (other than a Subsidiary)
which directly or indirectly, is in control of, is controlled by, or is under
common control with, any other person, firm or corporation.

‘Business Day’ shall mean a day, other than a Saturday or Sunday, on which
commercial banks are open for business in Omaha, Nebraska.

‘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 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.

‘Closing Date’ shall mean that date on which the Lender and Borrower have
executed all Loan Documents to which they are parties and on which all
conditions in Article 3 have been met.

‘Code’ means the Internal Revenue Code of the United States, as amended and in
effect from time to time.

‘Collateral’ shall mean the property described in Article 4, together with any
other personal or real property in which the Lender may be granted a lien or
security interest to secure payment of the Loan and together with the Assignment
of all Contracts or Agreements required herein.

‘Construction Contract’ shall mean that principal contract between Borrower and
any third parties and any addenda thereto for construction or expansion of the
Facility.

‘Control’ shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies, whether through ownership of
voting securities, by contract or otherwise.

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‘Debt’ or “Indebtedness” shall mean (i) indebtedness of such Borrower for
borrowed money, (ii) indebtedness of such Borrower for the deferred purchase
price of property or services (except trade payables arising in the ordinary
course of business), (iii) guarantees, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations of such
Borrower to purchase, to provide funds for payment, to supply funds to invest in
any person, corporation or other entity or otherwise to assure a creditor
against loss, (iv) obligations of such Borrower under leases which shall have
been or should be in accordance with GAAP, recorded as capital leases,
(v) Unfunded Benefit Liabilities of such Borrower and (vi) any liability that
would be classified as indebtedness in accordance with GAAP.

‘Default Rate’ shall mean a rate which is 4 percent per annum higher than the
highest rate of interest otherwise then accruing on all or any portion of the
Loan.

‘Deposit Accounts’ means all demand, time, savings, passbook or similar
depository accounts of Borrower with financial institutions, including but not
limited to Borrower’s operating, payroll and other bank or depository accounts.

‘Disbursing Agent’ is initially Union Title Company, and in the event Union
Title Company ceases to act as Disbursing Agent, the Disbursing Agent will be a
Person selected by Lender who succeeds to such duties.

‘Dollar’ and ‘$’ shall mean dollars in lawful currency of the United States of
America.

‘Earnings Before Interest and Taxes’ shall mean the sum of net income of the
Borrower on a consolidated basis, plus interest expense and all charges against
such income for such period for federal, state, and local taxes actually paid or
provided for as a dividend declared but unpaid.

‘Environmental Laws’ shall mean any and, all federal, state, and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment, including, without
limitation, ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.

‘ERISA’ shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.

‘ERISA Affiliate’ means any trade or business which, together with Borrower, 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; (b) the
existence of an “accumulated funding deficiency”; (c) the filing 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

 

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of any liability with respect to the termination of any plan; (e) the receipt by
Borrower or the ERISA Affiliate of any notice relating to an intention to
terminate any plan 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 (g) the
receipt by Borrower or any ERISA Affiliate of any notice concerning the
imposition of withdrawal liability.

‘Event of Default’ shall have the meaning set forth in Article 8 and the term
“Potential Default” shall mean any event or condition, which, with the lapse of
time, or giving of notice, or both, would constitute an Event of Default.

‘Facility’ shall mean the ethanol facilities to be constructed, expanded or
operated by Borrower on the real estate described in Exhibit A attached hereto.

‘Free Cash Flow’ Free Cash Flow shall mean the Borrower’s net income, net of 36%
tax rate, plus the respective calendar year depreciation and amortization
expense, minus allowed capital expenditures and principal payments to Lender and
other authorized creditors.

‘GAAP’ shall mean those generally accepted accounting principles set forth in
Statements of the Financial Accounting Standards Board and in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
accountants or which have other substantial authoritative support in the United
States of America and are applicable in the circumstances, as applied on a
consistent basis. “Consistent basis” shall, however, mean not only that the
accounting principles observed in the current period are comparable in all
material respects to those applied in the preceding period, but that, in the
case of Financial Statements furnished to Banks, the methods of calculation,
aggregation and presentation of the balance sheet, statements of income and
retained earnings and statements of cash flows shall be substantially the same
as those used for the initial Financial Statements, except as may be changed as
the result of direction of Borrower’s outside accountants, in which event
Borrower must notify Lender of such changes and the basis for such changes.

‘Investment Accounts’ means all securities or investment accounts of Borrower
with brokerage firms and others.

‘Lien’ shall mean any mortgage, deed of trust, pledge, charge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law or any jurisdiction to
evidence any of the foregoing.

‘Loan’ or ‘Loans’ shall mean the Loan Facility(ies) identified in Article 2
herein.

‘Loan Documents’ shall mean this Agreement, and any other document or instrument
executed in connection with or evidencing the Loan.

 

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‘Management Contracts’ means all agreements and contracts, if any, which are
material to the management of Borrower’s business in effect presently and
entered into from time to time hereafter, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

‘Material Adverse Effect’ shall mean any event, occurrence or circumstance that
has a material negative effect on (i) the business, operations, property, and
financial condition of the Borrower, or (ii) the validity or enforcement of any
of the Loan Documents or the rights or remedies of the Lender hereunder, or
(iii) the ability of the Borrower to perform its obligations under any of the
Loan Documents.

‘Material Contracts’ means (a) the Construction Contract, other prime,
subcontractor and materials contracts, Management Contracts, Supply Contracts,
Sales and Marketing Contracts, Transportation Contracts, Utility Contracts,
process and performance guarantees, and any license agreement; and (b) such
other agreements and contracts to which Borrower is or becomes a party that are
material to the operation of Borrower’s business.

‘Obligations’ shall mean any Advances and other amounts due to Lender under the
Loan Documents, including without limitation, principal, interest, fees, costs,
and expenses, attorney fees, together with all renewals, extensions, or
refinancing and also all other indebtedness and/or liabilities of Borrower to
Lender.

‘Permitted Investments’ shall mean:

(a) 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;

(b) 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;

(c) 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. Provided, however, for deposits as set
forth above totaling $1,000,000 or more such deposits will be insured over and
above the standard FDIC insurance by the commercial bank.

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

 

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(e) mutual funds investing solely in any aria or more of the Permitted
Investments described in clauses (a) through (d) above;

(f) Hedging Agreements entered into in the ordinary course of business solely to
hedge or mitigate risks to which Borrower is exposed in the conduct of its
business or management of its liabilities; and the Lender Stock.

‘Permitted Liens’ shall mean: (i) liens and security interests securing
indebtedness owed by the Borrower to the Lender; (ii) liens for taxes,
assessments or similar charges not yet due; (iii) liens of material men,
mechanics, warehousemen, or carriers or other like liens arising in the ordinary
course of business and securing obligations which are not yet delinquent;
(iv) purchase money liens or purchase money security interests upon or in any
property acquired or held by the Borrower in the ordinary course of business to
secure indebtedness outstanding on the date hereof (v) liens and security
interests which, as of the date hereof, have been disclosed to and approved by
the Lender in writing or as set forth in an attached Schedule hereto; and
(vi) those liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the not value of
the Borrower’s assets.

‘Person’ shall mean any individual, corporation, partnership, of any type,
limited liability company, joint venture, association, joint stock company,
trust, incorporated organization or government.

‘Request’ shall mean a communication (by telephone, letter, fax or otherwise)
from a person reasonably believed by Lender to be the Borrower or an authorized
officer or manager of Borrower making the Request upon which Lender shall be
entitled to rely.

‘Sales and Marketing Contracts’ means all agreements and contracts in effect
presently and entered into from time to time hereafter which are material to the
sale or disposal of products and by-products produced by Borrower, as such
agreements and contracts are amended, restated, supplemented or otherwise
modified from time to time.

‘Subordinated Debt’ shall mean such liabilities of the Borrower which have been
subordinated to those owed to the Lender in a manner acceptable to the Lender.

‘Subsidiary’ shall mean any corporation, partnership association, joint venture,
limited liability company, or other unincorporated organization or entity with
respect to which Borrower has voting power to elect a board of directors (or
other similar governing body), or has the power under ordinary circumstances to
directly or indirectly control the management thereof.

‘Substantial Completion’ shall be deemed to occur on the date on which the
Construction Contract is sufficiently complete so that Borrower can occupy and
use the Facility for its intended purposes. Substantial Completion shall be
attained at the point in time when the Facility is ready to grind corn and begin
operation for its intended use as a 40 million gallons per year (“MMGY”) fuel
ethanol production plant in addition to the existing plant with a capacity of 20
MMGY.

 

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‘Supply Contracts’ means all agreements and contracts related to the supply of
inputs material to the operation of Borrower’s business in effect presently and
entered into from time to time hereafter, as the same such agreements and
contracts are amended, restated, supplemented or otherwise modified from time to
time.

‘Transportation Contracts’ means all agreements and contracts in effect
presently and entered into from time to time hereafter related to the provision
of transportation or shipping services which are material to the operation of
Borrower’s business as the same such agreements and contracts are amended,
restated, supplemented or otherwise modified from time to time.

‘Utility Contracts’ means all contracts and agreements in effect presently and
entered into from time to time hereafter which are material to the provision to
Borrower of necessary electricity, natural gas, water, fuel oil, coal and other
energy resources in connection with the operation of Borrower’s facility,
equipment and offices, as the same such agreements and contracts are amended,
restated, supplemented or otherwise modified from time to time.

ARTICLE 2 - LOANS

Subject to the terms and conditions set forth in this Agreement, Lender agrees
to make Advances to Borrower on any Business Day from the date hereof to, but
excluding the Final Advancement Date identified for said Advances, so long as no
Event of Default or Potential Default has occurred. Lender agrees to advance
sums to Borrower not to exceed $35,000,000. This Loan shall be evidenced by a
Construction Loan up to $25,000,000 (“Construction Loan”) and Revolving Term
Construction Loan up to $10,000,000 (“Revolving Loan”).

In addition to the foregoing Loans the existing operating loan commitment in the
amount of $5,000,000 will remain in place and will serve as the main operating
loan (“Operating Loan”). The Operating Loan will continue to be governed by the
existing terms of that loan including the borrowing base now in effect and as
hereafter modified.

Section 2.1 Construction Loan. Lender agrees to advance sums to Borrower up to
the amount of $25,000,000 (Maximum Principal Balance) subject to the above
limitations, until the earlier of Substantial Completion, or February 15, 2008,
whichever occurs first (Construction Loan Final Advancement Date). If
circumstances beyond Borrower’s control make it not reasonably possible to
obtain Substantial Completion by February 15, 2008, Lender may extend such date
which consent for extension shall not be unreasonably withheld. Each Advance
made will reduce the funds available for future advances by the amount of the
Advance. Repayments of principal will not be available for subsequent Advances.
The proceeds of said Loan will be used by Borrower for financing the
construction of a 40 million gallon dry mill ethanol plant (Purpose) and
Borrower agrees not to request or use such proceeds for any other purpose.

 

  (a) Interest. Borrower hereby promises to pay interest on the principal
indebtedness outstanding from time to time on each Advance from and including
the date of such Advance and otherwise in accordance with statements issued by
Lender. Interest shall be payable on the following dates, each such date an
“Interest Payment Date”, provided that interest accruing at the Default Rate, if
applicable, shall be payable on demand.

 

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Said interest shall be payable on the 1st day of each quarter commencing the
first day of the first calendar quarter (based on a 4 quarter calendar year)
following the first Advance through and including the Construction Loan Final
Advancement Date and 6 months thereafter. Commencing on the First Principal
Payment Date, as set forth in Section 2.1(b), said interest shall be payable on
the principal payment installment due dates at the following rate per annum:

Libor Rate Libor Rate (London Interbank Offered Rates as reported in the Wall
Street Journal on the last business day of the preceding month) interest shall
accrue from the date of each Advance at a variable rate per annum equivalent to
the 1-month Libor Rate plus 3% (the “Variable Rate”). The Variable Rate will be
adjusted monthly on the 1st of each month until 6 months after Substantial
Completion. Interest rate shall be adjusted 6 months after Substantial
Completion to an amount equal to a 3-month Libor Rate plus 3% then further
subject to adjustment on the 1st day of each calendar quarter (based on a 4
quarter calendar year) according to the following schedule:

If owner equity, (tangible net worth divided by tangible assets) based on
preceding year end’s annual audit (starting year end 2007’s annual audit), is
equal to or greater than 40% then interest shall be adjusted to a rate index of
a 3-Month Libor Rate plus 3%; if owner equity is equal to or greater than 50%
then the interest shall be adjusted to a rate index of a 3-Month Libor Rate plus
2.55%; and if the owner equity is equal to or greater than 60% the interest rate
shall be adjusted to a rate index of a 3-Month Libor Rate plus 2.3%; with these
options, the rate index as set forth in this paragraph will then be annually
adjusted on the date the preceding year end’s annual audit is received by Lender
and backdated to the first day of the current year; OR

The Borrower may select a fixed rate option based on the Federal Home Loan Bank
FHLB 3-year or 5-year fixed advance rate plus 3% beginning on the first day of
the month following 6 full months after Substantial Completion ; Prepayment
penalty will apply if a fixed rate option is selected. A make whole agreement,
which method of determination shall be disclosed to Borrower before Borrower
selects a fixed rate option, will apply if payoff occurs during the first year
of the fixed option and then a penalty 2% of the then outstanding principal
balance thereafter.

 

  (b) Principal Payment. Borrower hereby promises to pay principal plus all
accrued interest as follows:

Interest shall be paid quarterly through the Substantial Completion or
February 15, 2008, whichever occurs first, and 6 months thereafter. Equal
principal payments of $892,857.15 plus interest are to commence on the first day
of the quarter (based on a 4 quarter year) following 6 months after Substantial
Completion and thereafter on a quarterly basis. The Construction Loan shall be
repaid in full in 28 quarterly payments.

 

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Section 2.2 Revolving Loan. Lender agrees to advance sums to Borrower up to the
amount of $10,000,000, Maximum Principal Amount, subject to the limitations in
this Article 2, becoming available January 1, 2007 and until the expiration of
39 months after the Construction Loan has been paid in full or matures,
whichever occurs first, but no later than June 1, 2018. (The Revolving Loan
Final Advancement Date). Repayments of principal will be available for
subsequent Advances until the first principal payment date as described in
2.2(b) when the Maximum Principal Amount will be reduced by the amount of each
scheduled principal payment amount. The proceeds of the Revolving Loan will be
used by Borrower for financing construction of a 40 million gallon dry mill
ethanol plant (Purpose) and Borrower agrees not to request or use such proceeds
for any other purpose.

 

  (a) Interest. Borrower hereby promises to pay interest on the principal
indebtedness outstanding from time to time on each Advance from and including
the date of such Advance and otherwise in accordance with statements issued by
Lender. Interest shall be payable on the following dates, each such date an
“Interest Payment Date”, provided that interest accruing at the Default Rate, if
applicable, shall be payable on demand.

Said interest shall be payable on the 1st day of each quarter commencing the
first day of the first calendar quarter (based on a 4 quarter calendar year)
following the first Advance through the Revolving Loan maturity date of June 1,
2018. Commencing on the First Principal Payment Date, as set forth in
Section 2.2(b), said interest shall be payable on the principal payment
installment due dates at the following rate per annum:

Libor Rate Libor Rate (London Interbank Offered Rates as reported in the Wall
Street Journal on the last business day of the preceding month) interest shall
accrue from the date of each Advance at a variable rate per annum equivalent to
the 1-month Libor Rate plus 3% (the “Variable Rate”). The Variable Rate will be
adjusted monthly on the 1st of each month until 6 months after Substantial
Completion. Interest rate shall be adjusted 6 months after Substantial
Completion to an amount equal to a 3-month Libor Rate plus 3% then further
subject to adjustment on the 1st day of each calendar quarter (based on a 4
quarter calendar year) according to the following schedule:

If owner equity, based on preceding year end’s annual audit (starting year end
2007’s annual audit), is equal to or greater than 40% then interest shall be
adjusted to a rate index of a 3-Month Libor Rate plus 3%; if owner equity is
equal to or greater than 50% then the interest shall be adjusted to a rate index
of a 3-Month Libor Rate plus 2.55% ; and if the owner equity is equal to or
greater than 60% the interest rate shall be adjusted to a rate index of a
3-Month Libor Rate plus 2.3%; with these option, the rate will then be annually
adjusted on the date the preceding year end’s annual audit is received by Lender
and backdated to the first day of the current year; OR

The Borrower may select a fixed rate option based on the Federal Home Loan Bank
FHLB 3-year or 5-year fixed advance rate plus 3% beginning on the first day of
the month following 6 full months after Substantial Completion; Prepayment
penalty will apply if a fixed rate option is

 

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selected. A make whole agreement, which method of determination shall be
disclosed to Borrower before Borrower selects the fixed rate option, will apply
if payoff occurs during the first year of the fixed option and then thereafter a
prepayment premium of 2% of the then outstanding principal balance shall apply.

 

  (b) Principal Payment. Borrower hereby promises to pay principal, plus all
accrued interest as follows:

Quarterly principal payments of $833,333.34 plus interest commencing three
months following the maturity or payment of the Construction Loan, whichever is
earlier, but no later than September 1, 2015. Payments shall be in 12 equal
principal payments plus the accrued interest. The 12th and final payment will be
due no later than June 1, 2018. The actual payment amount of all payments may
vary according to the interest rate then in effect and the outstanding principal
balance and any unpaid fees, costs or expenses.

Section 2.3 Other Loans. The existing Loans between Lender and Borrower shall
remain in effect in accordance with their existing terms and conditions. The
covenants and warranties under the existing Loans are incorporated herein and
become a part of this Credit Agreement effective 6 months after construction
completion of the expansion to the Facility.

Section 2.4 Computation. Interest shall be computed on the basis of a 360 day
year, but charged on the actual number of days elapsed. If interest is not paid
as and when it is due, it may be added to the principal, become and be treated
as a part thereof, and shall thereafter bear like interest.

Section 2.5 Fees. Borrower agrees to pay the following fees, in addition to
those costs and expenses referenced in Section 9.5 of this Agreement.

Section 2.5.1 Loan Origination Fee. Borrower agrees to pay Lender for
structuring the Loan, a fee of $262,500 at closing, to be paid from the loan
proceeds.

Section 2.6 Repayment. Borrower agrees to pay Lender, at the location identified
by Lender, the entire unpaid principal balance, plus interest, fees and other
Lender’s costs and reasonable expenses in U.S. dollars in accordance with this
Agreement and the following provisions. If any payment of principal or interest
falls due on a day that is not a Business Day, then such due date shall be
extended to the next following Business Day. On loans not in default, other than
loans with revolving credit, all payments received will first be applied to
protective advances and fees, then to accrued interest, and finally to
principal. On Loans with revolving credit, unless the payment is designated by
Borrower as an interest payment, payments shall first be applied to protective
advances and fees, then to reduce principal and finally to accrued interest.
Upon the occurrence and continuance of an Event of Default, payments shall first
be applied to default interest, then to protective advances and fees, then to
pre default accrued interest, and finally to principal.

Funds received by Lender will be applied the day received, if before 5:00 p.m.,
Central Standard Time, unless received on a holiday or weekend, in which case
said funds will be credited the next Business Day. Wire transfers will be given
credit the day received only if received before 2:00 p.m., Central Standard
Time.

 

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Funds received by Lender on a revolving credit loan shall be immediately
available for re-advance under the provisions of this Agreement if made by wire
transfer, cash or other method of ensuring funds immediately available to
Lender. Payment made in funds not immediately available to Lender, shall not be
available to Borrower for re-advance for two business days thereafter or until
Lender has confirmed the availability of funds whichever is the last to occur.

Section 2.6.1 Notes Evidencing Advances. The Advances of Lender shall be
evidenced by promissory notes of Borrower substantially in the form set forth in
Exhibit B, payable to the order of Lender, in accordance with the terms of this
Agreement. Lender shall record in its records the date and amount of each
Advance made by Lender, each repayment of principal thereon, and, if applicable,
the dates on which the interest for each such Advance is payable. The aggregate
unpaid principal amount so recorded shall be rebuttable presumptive evidence of
the principal amount owing and unpaid on such Note. The failure to so record any
such amount shall not, however, limit or otherwise affect the obligations of
Borrower hereunder or under any Note to repay the principal amount of the
Advances, together with all interest accruing thereon.

Section 2.7 Prepayment. This provision applies to all prepayments of principal,
whether mandatory or voluntary (except for Free Cash Flow Payments), which
prepay the Loan in full or which exceed any scheduled principal payments.

Section 2.7.1 Voluntary Prepayments. Subject to the payment of any applicable
prepayment fees or funding losses as provided herein, Borrower may prepay the
Loan in full before its maturity or make additional principal payments on the
Construction Loan or Revolving Loan in any amount on any Business Day,
specifying the Loan upon which any prepayment is made. Such additional principal
payment shall not, however, defer, postpone or alter the amount or due date of
any scheduled payments required under this Agreement.

Section 2.7.2 Mandatory Prepayments. If, at any time, the outstanding unpaid
principal amount on any Loan shall exceed the Maximum Principal Balance on said
Loan, Borrower shall immediately repay Advances in an amount sufficient to
reduce the outstanding unpaid principal to the Maximum Principal Balance.

Section 2.7.3 Free Cash Flow Payment. In addition to the scheduled principal
payments required herein, Borrower agrees to make special principal payments
equal to 10% of available Free Cash Flow to the extent that such payment(s) do
not cause default of any of the covenants in this Agreement. Said mandatory
prepayments shall be limited to a maximum of $1,500,000.00 per fiscal year and
the aggregate total of all such payments shall not exceed $5,000,000.00. Such
payments shall be applied to scheduled principal installments of the
Construction Loan in inverse order of maturity. Any mandatory payments from Free
Cash Flow shall be made within 120 days of the end of each fiscal year based on
the Borrower’s audited financial statements for the year just ended. In the

 

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event the amount of such payments would result in a covenant default, the amount
of payment will be reduced to an amount that would not cause a covenant default.

Section 2.7.4 Prepayment fees. Borrower will pay to Lender a prepayment premium
in connection with any prepayment of the Loans, unless a fixed rate option has
been selected which shall then be covered by Section 2.1(a) or 2.2(a), as a
result of a refinancing with another financial institution or lender:

 

  (1) 3.0% of the outstanding indebtedness of both the Construction Loan and the
Revolving Loan from the closing date through third year following the First
Construction Loan Principal Payment Date; and

 

  (2) 1.0% of the outstanding indebtedness of both the Construction Loan and the
Revolving Loan after the third year following the First Construction Loan
Principal Payment Date.

ARTICLE 3 - CONDITIONS PRECEDENT

Section 3.1 Conditions Precedent to Closing. The obligations of Lender to close
the Loans shall be subject to the conditions precedent that Lender shall have
received on or before the Closing Date all of the following in form and
substance satisfactory to Lender.

Section 3.1.1 Organizational Documents. Copies of the organizational documents
of Borrower and any Subsidiary, including certificates of good standing in their
State of organization, and copies of all resolutions, incumbency certificates or
other authorizations of Borrower and any Subsidiary, certified by the
appropriate officers of such entity as being in full force and effect
authorizing, as applicable, the Loans as herein provided, and for the execution,
delivery and performance of this Agreement and the other Loan Documents or any
instruments or agreements required hereunder to which such entity is a party.

Section 3.1.2 Evidence of insurance. Insurance certificates and such other
evidence, in form or substance satisfactory to Lender, of all insurance required
to be maintained under this Agreement and the Loan Documents.

Section 3.1.3 Loan Documents. All duly executed originals of the Loan Documents.

Section 3.1.4 Payment of Fees and Expenses. Evidence that Borrower has paid all
fees and expenses then due and payable under this Agreement.

Section 3.1.5 Title and Lien Verification. In connection with all real property
included in the Collateral, Lender shall have received a title insurance
commitment in an amount and from a title insurance company in form, scope and
substance satisfactory to Lender to assure Lender of its lien priority as
required by this Agreement and with no exceptions contained therein except as
are approved in writing by attorneys for Lender. Further, that evidence
satisfactory to Lender and the title company be obtained by Borrower
establishing that all labor and material bills have been paid and that there is
no possibility

 

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of a lien for such items which might be prior to Lender’s lien on the
Collateral. In connection with all personal property included in the Collateral,
Lender shall have received searches of appropriate filing offices showing no
liens filed against the Collateral, except those to be released prior to
disbursement or otherwise acceptable to Lender to assure Lender of its lien
priority as required by this Agreement.

Section 3.1.6 No Material Change. No change shall have occurred in the
condition, financial or otherwise, or operation of Borrower since the Loan was
approved based on information known to Lender at time of Loan approval, which
could reasonably be expected to result in a Material Adverse Effect.

Section 3.1.7 Further Assurances. Borrower shall have provided and/or executed
and delivered to Lender such further assignments, documents or financing
statements, in form and substance satisfactory to the Lender, that Borrower is
to execute and/or deliver pursuant to the terms of the Loan Documents, this
Agreement, or as Lender may otherwise reasonably require.

Section 3.1.8 Opinion of Counsel. Borrower shall have provided a favorable
opinion of its counsel addressed to the Lender covering such matters as the
Lender may reasonably require, including, without limitation, due organization,
authorization and execution of all of the Loan Documents, enforceability, and
other opinions as Lender may reasonably request.

Section 3.1.9 Secretary Certificate. A certificate of the Secretary or an
Assistant Secretary of Borrower, dated as of the Closing Date, certifying:
(i) true and complete copies of the articles of organization and operating
agreement (or equivalent documents); (ii) the names and true signatures of the
officers and/or directors authorized to sign this Agreement and the other
documents to be delivered hereunder; (iii) true and complete copies of the
resolutions of the board of directors of the Borrower or other documentation
providing authority for the transactions and documents contemplated hereunder;
(iv) that there is no proceeding for the dissolution or liquidation of the
Borrower or threatening its existence; and (v) that the schedules attached to
the Loan Documents are true and complete as of the Closing Date.

Section 3.1.10 Invested Equity. Borrower shall have provided Lender with
evidence of funding from equity capital, non-repayable grants and tax increment
financing of at least $15,318,000.

Section 3.1.11 Disbursing Agreement. A Disbursing Agreement, in a form
acceptable to Lender, shall have been executed and delivered to Lender with
respect to the process by which Advances are made of proceeds of the Loans.

Section 3.1.12 Appraisal. Lender shall have received an as-built appraisal in
form and amount satisfactory to Lender for the Facility as expanded.

Section 3.1.13 Boundary Survey. Lender shall have received in a form
satisfactory to Lender, a boundary survey of the real estate certified to Lender
and the Title Company

 

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issuing the title insurance, dated a date reasonably satisfactory to each of
Lender and the Title Company by an independent professional licensed land
surveyor, which boundary survey is sufficient to delete any standard printed
survey exception contained in the title insurance policy.

Section 3.1.14 Flood Hazard Determination. Lender shall have received a Federal
Emergency Management Agency Standard Flood Hazard Determination Certificate
certifying, among other things, whether any of the real estate Collateral is
located within a flood hazard area and, if so located, Borrower shall have
provided Lender with evidence of insurance satisfactory to Lender.

Section 3.1.15 Phase I Environmental Site Assessment. Lender shall have received
a Phase I Environmental Site Assessment Report 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 firm preparing such
environmental reports authorizing Lender to rely on such reports.

Section 3.1.16 Construction Documents. Lender shall have received an executed
copy of the Construction Contract and each agreement with a subcontractor (to
the extent separately requested by Lender), together with (A) a copy of the site
plan, (B) a schedule listing all subcontracts relating to the project, and such
other contracts, subcontracts and schedules as Lender may request, (C) a work
progress schedule showing estimated completion time for each phase of the
project construction, (D) a sworn construction cost statement, duly executed by
Borrower, including a reconciliation of actual costs incurred to-date against
budgeted amounts, (E) a copy of each permit and each other building permit,
license and other agreement that Borrower is required by law to obtain in
connection with the project, together with a schedule of all other necessary
licenses and permits which must be obtained in order to occupy and operate a dry
mill ethanol production facility (at maximum capacity of approximately 76 MMGY)
on the real estate where the Facility expansion will be built, and (F) a soil
report related to the real estate where the Facility expansion will be built,
certified by a registered engineer acceptable to Lender, including structural
design recommendations in form and substance satisfactory to Lender.

Section 3.1.17 Consents and Approvals. Certified copies of all material
consents, approvals, authorizations, registrations, 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 project or
operation of Borrower’s business, including the production of ethanol and
by-products thereof, and such consents, approvals, authorizations,
registrations, filings and orders must be in full force and effect and all
applicable waiting periods must have expired.

Section 3.1.18 Financial Statements. Lender shall have received copies of
Borrowers internally prepared financial statements as of the last day of the
immediately preceding calendar quarter, and any and all prior year audited
financial statements.

 

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Section 3.1.19 Representations and Warranties. The representations and
warranties contained in this Agreement and the Loan Documents are true as of the
Closing Date.

Section 3.1.20 Material Contracts. Collateral Assignments of all Material
Contracts in existence as of the Closing Date, together with copies of such
Material Contracts.

Section 3.1.21 Borrowing Base Certificate. A Borrowing Base Certificate, in a
form acceptable to Lender.

Section 3.2 Additional Conditions Precedent to Initial Advance. The obligation
of Lender to make an initial Advance shall be subject to the conditions
precedent in Section 3.1 and the additional conditions that Lender shall have
received on or before the initial Advance all of the following in form and
substance satisfactory to Lender.

Section 3.2.1 No Default. As of the Advance date, no Event of Default or
Potential Default shall have occurred and be continuing and disbursing the
amount of the Advance requested shall not result in an Event of Default or
Potential Default.

Section 3.2.2 Representations and Warranties. The following statements shall be
true and the giving of a Request for an Advance by any Borrower shall be deemed
to be a representation and warranty by the Borrower that the following
statements are true both on the date of such Request and on the date of such
Advance: (i) the representations and warranties contained in Article 5 hereof
and in the other documents to be delivered hereunder are true and complete on
and as of the date of such Advance as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from such Advance,
which constitutes an Event of Default or Potential Default; (iii) no Material
Adverse Effect has occurred and is continuing; (iv) the Total Lender
indebtedness does not exceed the Maximum Principal Balance; and (v) no order,
judgment or decree of any court, arbitrator or Governmental Authority that does,
or seeks to, enjoin or restrain any Lender from making any Advance is pending or
threatened.

Section 3.2.3 No Intervening Liens. Lender’s liens, security interests and
assignments have been perfected, are .first priority liens, security interests
and assignments, and there are no intervening or conflicting liens (including
lis pendens) on or claims to Collateral.

Section 3.2.4 No Notice. No notice has been received from Borrower requesting
Advances under the Loan be restricted.

Section 3.2.5 All Other Requirements Met. All other requirements precedent to
disbursal of loan funds as required by this Agreement have been met.

Section 3.2.6 Consents, Licenses and Approvals. Evidence satisfactory to Lender
that all consents, licenses and approvals of governmental authorities and third
parties, including but not limited to an Construction Air Permit from the
Nebraska Department of Environmental Quality, for a plant capacity of
approximately 76 MMGY, have been obtained which are necessary for, or required
as a condition of the validity and enforceability of the Loan Documents.

 

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Section 3.2.7 Engineer’s Opinion. Lender shall have received an opinion from
Lender’s engineer that all necessary permits for construction and operation have
been obtained and that there is adequate water and sanitary waste, gas and
electric service available based on needs assessment determined by Facility
designers.

Section 3.2.8 Expenditure of Equity and Other Funds. Borrower has provided
documents evidencing Borrower’s expenditure of a minimum of $15,318,000 equity
capital, with respect to the cost of land acquisition, construction costs,
organization costs, financing costs, and pre-production period costs.

Section 3.2.9 Confirmation of Project Costs. Borrower has provided documents and
evidence satisfactory to Lender that equity funds, seed capital, grant proceeds,
tax increment financing and the Loans are sufficient to complete construction
and commence operations in accordance with Borrower’s sworn construction cost
statement and projections for operations.

Section 3.2.10 Title Insurance. The title insurance company is willing to issue
an endorsement to the title insurance policy providing title insurance coverage
for all prior, current and future advances in accordance with this Agreement
without any exceptions for liens or claims of any other Person.

Section 3.3 Conditions Precedent to Subsequent Advances. The obligation of
Lender to fund subsequent Advances is subject to Lender’s satisfaction of each
of the following as well as those in Section 3.2 and each request by Borrower
for an Advance shall constitute a representation by Borrower that all conditions
precedent in this Article have been satisfied and the amount of the Advance does
not exceed the limits set forth in Article 2, or violate or exceed any other
provision of this Agreement:.

Section 3.3.1 No Default. As of the Advance date, no Event of Default or
Potential Default shall have occurred and be continuing and disbursing the
amount of the Advance requested shall not result in an Event of Default or
Potential Default.

Section 3.3.2 Risk Management. Within 180 days of the date of this Agreement,
Borrower shall have provided Lender with their risk management policies and
agreements regarding the procurement of feedstock and marketing of ethanol and
ethanol coproducts, acceptable to Lender.

Section 3.3.3 Representations and Warranties. The following statements shall be
true, and the giving of a Request for an Advance by any Borrower shall be deemed
to be a representation and warranty by the Borrower that the following
statements are true both on the date of such Request and on the date of such
Advance: (i) the representations and warranties contained in Article 5 hereof
and in the other documents to be delivered hereunder are true and complete on
and as of the date of such Advance as though made

 

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on and as of such date; ( no event has occurred and is continuing, or would
result from such Advance, which constitutes an Event of Default or Potential
Default; (iii) no Material Adverse Effect has occurred and is continuing;
(iv) the total Lender Indebtedness does not exceed the Maximum Principal
Balance; and (v) no order, judgment or decree of any court, arbitrator or
governmental authority that does, or seeks to, enjoin or restrain Lender from
making any Advance is pending or threatened.

Section 3.3.4 No Intervening Liens. There are no intervening or conflicting
liens (including lis pendens) on or claims to Collateral.

Section 3.3.5 No Notice. No notice has been received from Borrower requesting
Advances under the Loan be restricted.

Section 3.3.6 All Other Requirements Met. All other requirements precedent to
disbursal of loan funds as required by this Agreement have been met.

Section 3.4 Post Closing Requirements. Prior to funding any Advances on the
Loan, Borrower must deliver to Lender assignments of all commodity hedging
accounts established and all Material Contracts Borrower shall have entered
into, at the time such Advance is requested.

Section 3.5 Post Construction Requirements. Following Substantial Completion,
and prior to the First Construction Loan Principal Payment Date, Borrower shall
satisfy the following conditions and requirements:

Section 3.5.1 Satisfaction of Conditions Precedent. All of the conditions
precedent set forth in Section 3.1, 3.2, 3.3 and 3.4 shall have been satisfied
in full.

Section 3.5.2 Appraisal. Lender shall have received, in form satisfactory to
Lender, an appraisal, or an update to the as-built appraisal obtained prior to
construction of the Facility, confirming that the appraised value of the
Facility will result in the Maximum Principal Balance not exceeding 65% of the
appraised value of the Facility.

Section 3.5.3 ALTA Survey. Lender shall receive, in form satisfactory to Lender,
an ALTA as-built survey of the Facility.

Section 3.5.4 Warranties. Lender shall receive upon request, in form
satisfactory to Lender, copies of all warranties from suppliers and contractors
covering materials, equipment, appliances and the Facility.

Section 3.5.5 Completion of Construction. Lender shall receive, in form
satisfactory to Lender, a certificate from an officer of Borrower, certifying
that construction of the Facility is final and complete in accordance with the
plans and specifications provided to Lender.

Section 3.5.6 Other Documentation. Lender shall have received from Borrower such
other documents, instruments and certificates as Lender may reasonably request.

 

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Section 3.6 Revolving Advance Requirements. As of and subsequent to completion
of construction of the Facility, requests for Advances shall be made directly to
Lender and not through the Disbursing Agent. The obligation of Lender to make
Advances shall be subject to the conditions precedent set forth in Sections 3.1,
3.2, 3.3, 3.4 and 3.5.

ARTICLE 4 - SECURITY

Section 4.1 Collateral. As security for the payment and performance of all
obligations of Borrower to Lender, including all obligations of Borrower under
Article 2 hereof, any future and additional loans or advances made to or on
behalf of Borrower by Lender for any purpose, including advances for the
protection of Collateral, all attorney fees, costs, and expenses incurred by
Lender in the collection of the Loan or in the enforcement or preservation of
the rights of Lender in and to the Collateral, Borrower hereby grants to Lender
a security interest in certain real or personal property, including the
following described property wherever located in which Borrower has or claims an
interest, and in all increases, additions, accessions and substitutions
(Collateral):

(a) A security interest in the following:

Accounts, General Intangibles, and Other Rights to Payment. All accounts,
deposit accounts, contract rights, general intangibles, chattel paper,
investment property, documents, instruments, money and other rights to payment
now existing and hereafter acquired, from any and all sources, all Government
payments whether in cash, in kind or otherwise.

Farm Products. All Farm Products including all crops now growing or hereafter
planted or grown, whether harvested, unharvested or stored; all products of
crops and all seed, fertilizer, chemicals and supplies used or produced in
connection with any crop; all feed and grain from whatever source, stored, used
or to be used, whether grown, purchased, or otherwise acquired.

Documents, Instruments and Securities. All documents, instruments, securities
and general intangibles including but not limited to ownership interest in US
BioEnergy Corporation. Borrower will allow Lender to perfect a security interest
in Borrower’s stock in US BioEnergy Corporation and will not sell, transfer,
liquidate, or pledge the stock without prior written consent from Lender.

Inventory. All inventory owned by or consigned to Borrower of whatever nature.

Machinery and Equipment. All equipment, machinery, nontitled motor vehicles,
tools, tanks, and removable structures used or useful in farming or ranching
operations, all fuel, parts, accessories, and improvements thereto.

 

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Fixtures. All fixtures and irrigation equipment located on the real estate upon
which the Facilities are located.

Deposit Accounts. All deposit accounts including but not limited to demand,
time, savings, passbook and similar accounts.

This security interest is in addition to any security interest or other lien
granted to Lender under the terms of any Mortgage, Trust Deed or Security
Agreement executed by Borrower or by any third party or any other document or
agreement. Said security interest or other lien is continuing and shall include
the proceeds and products of the Collateral, including, but limited to, the
proceeds of any insurance thereon.

(b) A lien in Borrower’s real estate, as identified in Exhibit A, pursuant to
the terms of a trust deed as amended in form satisfactory to Lender.

(c) Assignments of Borrower’s Material Contracts.

(d) Security interests in Borrower’s Investment Accounts and Hedging Account,
pursuant to account control agreements in forms satisfactory to Lender.

Section 4.2 Collateral Matters. Until all obligations have been fully satisfied,
Lender’s security interest in the Collateral, and all proceeds and products
thereof, shall continue in full force and effect. During the term of this
Agreement, Borrower shall not permit any lien, claim or encumbrance (other than
Permitted Liens or those granted to Lender and those subordinated and/or
approved in writing by Lender) to remain against any of the Collateral and
Borrower shall perform any and all steps requested by Lender to perfect,
maintain and protect Lender’s security interest in the Collateral in which a
security interest is granted to Lender under this Agreement or any other
agreement, including, without limitation, executing and filing financing and
continuation statements in form and substance satisfactory to Lender. Lender may
file one or more financing statements disclosing Lender’s security agreement
under this Agreement and Borrower shall pay any costs of, or incidental to, any
recording or filing of any financing statements concerning the Collateral.
Borrower hereby expressly agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement. And further that wherever and whenever available and
allowed by law Secured Party is authorized to file electronically all documents
allowed or required by the Uniform Commercial Code, the Federal Food Security
Act, or other applicable law, including but not limited to financing statements,
effective financing statements, and continuations, amendments, assignments, or
terminations thereof, WITHOUT the physical signature of Borrower and/or us
authorization shall be deemed a digital signature, and/or this authorization
shall be deemed a limited power of attorney appointing Lender as Borrower’s
agent and attorney-in-fact for the express purpose of signing and executing the
aforesaid documents on Borrower’s behalf. Borrower shall execute and deliver to
Lender all necessary stock powers, assignments, unit powers for limited
liability companies, limited powers of attorney, and assignments necessary for
Borrower to sell or transfer documents, instruments or securities in the event
of default by Borrower. Borrower shall pay or cause to be paid, unless contested
in good faith, all taxes, assessments and governmental charges levied, assessed
or imposed upon or with

 

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respect to the Loan, the Collateral, any part thereof, or the Lender by virtue
of the Loan transaction. Unless contested in good faith, if Borrower fails to
pay such taxes, assessments and governmental charges, Lender may (but shall not
be required to) pay the same and charge the cost to the Borrower payable on
demand and secured by the Collateral.

Section 4.3 Sale of Collateral. Except as hereandafter stated, Borrower shall
not sell, transfer, or dispose of the Collateral without applying all proceeds
of such transaction to payment of the Loans secured hereby, within ten (10) days
after the transaction, without Lender’s prior written consent, which shall not
be unreasonably withheld. The restriction in the preceding sentence shall not
apply to the sale of inventory sold in the ordinary course of business or for
the sale of other Collateral with a value of less than $100,000. In addition,
the restriction of the first sentence of this Section 4.3 shall not apply to the
sale of US BioEnergy stock in the event that the proceeds from the sale of such
stock are invested in other assets of the Borrower, approved by Lender, which
are then or will immediately become additional Collateral for the Loan. In
addition Lender may at its discretion authorize Borrower to make a distribution
equal to a net of 36% tax rate of the gain from the sale of the US BioEnergy
stock to Borrower’s owners with the balance of the sale price of the stock to be
applied as described above.

Provided, however, none of the distributions described in this Section 4.3 may
occur if they would cause a violation of any of the Covenants of Borrower set
forth in this Agreement. Borrower will not take or attempt to take the
Collateral from the state where kept without the prior written consent of
Lender. Upon request, Borrower will provide Lender with a current list of all
Collateral and its location.

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES

Borrower warrants and represents that on the Closing Date and on and after each
Advance occurring hereunder:

Section 5.1 Organization and Qualification. Borrower is duly incorporated or
organized and is validly existing as a corporation or other legal entity in good
standing in the jurisdiction of its incorporation or organization; has the power
and authority to own or lease its properties and to conduct the business in
which it is now engaged or proposed to be conducted; is duly qualified to do
business and is in good standing in each jurisdiction in which the transaction
of its business makes such qualification necessary.

Section 5.2 Authorization and Consent. The execution, delivery and performance
by Borrower of the Loan Documents to which it is or is to be a party have been
duly authorized by all required corporate or limited liability company action
and do not and will not (i) require any consent or approval of the stockholders
or members of Borrower, (ii) violate any provisions of any federal, state or
local law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Borrower or
of the charter, articles of incorporation or organization, operating agreement
or bylaws of Borrower, (iii) result in a breach of or constitute a default under
any indenture or loan or credit agreement, or any other agreement, lease or
instrument to which Borrower is a party or by which it or its properties may

 

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be bound or affected or (iv) result in, or require, the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or other charge
or encumbrance of any nature (other than as created by the Loan Documents) upon
or with respect to any of the properties now owned or hereafter acquired by
Borrower, and Borrower is not in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.

Section 5.3 Binding Agreement. Each of the Loan Documents to which Borrower is a
party is a legal, valid and binding obligation of Borrower, enforceable in
accordance with its terms, subject only to limitations on enforceability imposed
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity.

Section 5.4 Compliance with Laws. Borrower is in compliance in all material
respects with all federal, state and local laws, rules, regulations, ordinances,
codes and orders, including, without limitation, ERISA, all Environmental Laws,
all licensing laws and has filed all federal, state and local tax returns and
has paid all federal, state and local taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent the same are
contested in good faith and by appropriate proceedings and for which adequate
reserves have been established, and Borrower has no knowledge of any deficiency
or additional assessment in connection therewith.

Section 5.5 Litigation. There is no pending or threatened legal or governmental
actions, proceedings or investigations to which Borrower is a party or to which
any property of Borrower is subject, which may result in a Material Adverse
Effect, except as previously disclosed to Lender in writing.

Section 5.6 Financial Statements. All financial statements, information and
other data which may have been or which may hereafter be submitted by the
Borrower to the Lender are true, accurate and correct and have been or will be
prepared in accordance with GAAP consistently applied or by other method
acceptable to Lender and accurately represent the financial condition or, as
applicable, the other information disclosed therein, Since the most recent
submission of such financial information or data to the Lender, the Borrower
represents and warrants that no Material Adverse Effect has occurred.

Section 5.7 Assets. Borrower has good and marketable title to and is the record
and beneficial owner of all the Collateral covered by the Collateral Agreements
to which Borrower is or is to be a party, free and clear of all mortgages, deeds
of trust, pledges, liens, security interests and other charges or encumbrances,
except for (i) those created by the Loan Documents, and (ii) Permitted Liens,
and all such Collateral is in all material respects in good order and repair
(ordinary wear and tear excepted) and covered by the insurance required under
Section 6.5.

Section 5.8 ERISA. If the Borrower has a pension, profit sharing or retirement
plan subject to ERISA, such Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrower, nothing has occurred which would cause the loss of such

 

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qualification. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan as required by the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to the Code
has been made with respect to any Plan.

There are no pending or threatened claims, actions or lawsuits, or action by any
Governmental Authority with respect to any Plan, which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan, which has resulted or could reasonably be expected to
result in a Material Adverse Effect and 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

Section 5.9 Environmental Compliance. All known sources of existing or potential
environmental contamination on or near any property owned or operated by
Borrower has been fully disclosed to Lender the operations of the Borrower
comply in all material respects, and during the term of this Agreement will at
all times comply in all material respects, with all environmental laws; the
Borrower has obtained all licenses, permits, authorizations and registrations
required under any environmental law and necessary for its ordinary course
operations, all such environmental permits are in good standing, and the
Borrower is in compliance with all material terms and conditions of such
environmental permits; neither the Borrower nor any of its present property or
operations is subject to any outstanding written order from or agreement with
any governmental authority or subject to any judicial or docketed administrative
proceeding, respecting any environmental law, environmental claim or hazardous
material; there are no hazardous materials or other conditions or circumstances
existing, or arising from operations prior to the date of this Agreement, with
respect to any property of the Borrower that would reasonably be expected to
give rise to material environmental claims. In addition, Borrower shall hold
Lender harmless from any liability for environmental waste or contamination on
any property owned or operated by Borrower or liability imposed as a consequence
by reason of Borrower’s activities and will indemnify Lender against all claims,
losses, liabilities, and expenses incurred by Lender as a result thereof, This
covenant will survive cancellation or termination of this Agreement.

Section 5.10 No Default. Borrower is not in an Event of Default in the payment
of any indebtedness representing any borrowing or financing or is in an Event of
Default, or aware of any third party default, in respect to the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which Borrower is a party.

Section 5.11 Margin Stock. Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.

Section 5.12 Security Interest. Each of the Collateral Agreements constitutes a
valid and perfected first priority security interest and lien, in and to the
Collateral purported to be covered

 

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by each thereof, except as otherwise provided therein, enforceable against all
third parties in all jurisdictions securing the payment of all obligations
purported to be secured thereby (except for Permitted Liens), and, all action
required to perfect fully such security interests and liens so constituted have
been taken and completed.

Section 5.13 Contractual Restrictions. Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction, which would result in a
Material Adverse Effect.

Section 5.14 Approvals and Licenses. Borrower possesses all the franchises,
permits and licenses necessary or required in the conduct of its business, and
the same are valid, binding and enforceable and all authorizations, consents,
approvals or licenses of, or filings or registrations with, any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any specifically granted exemptions from any of the
foregoing, necessary to the valid execution, delivery or performance by Borrower
of this Agreement and the Loan Documents to which it is or is to be a party have
been obtained and are in full force and effect.

Section 5.15 No Untrue Statements. No information, exhibit, schedule or report
furnished by Borrower to Lenders contained or contains any untrue statement of
material fact or omitted or Omits to state any material fact necessary to make
the statements contained therein, in light of the circumstances under which such
statements are made, misleading.

Section 5.16 Solvency. Borrower is and, after consummation of the transactions
contemplated by this Agreement and the other Loan Documents, shall be, solvent
For the purposes of this paragraph, “solvent” means (i) the fair value of the
property of Borrower is greater than the total amount of liabilities, including
contingent liabilities of Borrower, (ii) the amount that will be required to pay
the probable liabilities of Borrower on its debts as they become absolute and
matured shall not be greater than the fair value of the assets of Borrower at
such time, (iii) Borrower is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) Borrower does not intend to, and
does not believe it shall, incur debts or liabilities beyond its ability to pay
as such debts and liabilities mature and (v) Borrower is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which Borrower’s property would constitute unreasonably small
capital after giving due consideration to prevailing practices in the industry
in which Borrower is engaged. in computing the amount of any contingent
liability at any time, it is intended that such liability shall be computed at
the amount that, in light of all the facts and circumstances existing at such
time, represents the amount that might reasonably be expected to become an
actual or matured liability.

Section 5.17 Taxes. Borrower and each other Person for whose taxes Borrower
could become liable have timely filed or caused to be filed all federal income
tax returns and all other material tax returns 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

 

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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. 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.

Section 5.18 Projections. As of the Closing Date, the projections fairly present
Borrower’s reasonable forecast of the results of operations and changes in cash
flows for the periods covered thereby, based on the assumptions set forth
therein, which assumptions are reasonable based on historical experience and
presently known facts. Since the date of such projections, there have been no
changes with respect to Borrower or its Subsidiaries which could reasonably be
expected to result in, singly or in the aggregate, a material discrepancy
between such projections and Borrower’s actual results for the periods stated.

Section 5.19 Material Contracts. As of the Closing Date, there are no Material
Contracts other than those which have been disclosed to Lender and subject to
assignment to Lender.

ARTICLE 6 - AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that during the term of this Agreement and so
long as any indebtedness remains unpaid or any amounts drawn hereunder remain
unreimbursed, the Borrower shall comply with the Financial and General Covenants
under existing Commercial Loan Agreements with Lender and with the following
requirements:

Section 6.1 Preservation of Existence. Borrower shall maintain and preserve its
existence and good standing in the jurisdiction in which such qualification and
good standing are necessary in order for Borrower to lawfully conduct its
business and own its property in said jurisdiction.

Section 6.2 Compliance with Laws. Borrower shall comply with all laws, rules,
regulations and orders of any Government Authority applicable to it or its
property, such compliance to include, without limitation, ERISA and
Environmental Laws and paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property,
unless contested in good faith.

Section 6.3 Books and Records. Borrower shall at all times keep proper books of
record and account in which correct and complete entries shall be made of all
its dealings, in accordance with generally accepted accounting principles or
other method acceptable to Lender.

Section 6.4 Inspection of Properties and Books. Borrower shall, upon reasonable
notice and at any reasonable time and from time to time, permit Lender, upon
request, to visit and inspect any of the Collateral or properties of Borrower
and to examine the books, accounts and other records of the Borrower and to take
abstracts therefrom and to discuss the affairs, finances, loans and accounts of
the Borrower with Borrower’s representatives. If the Borrower shall maintain any
records in the possession of a third party, the Borrower authorizes such third
party to provide Lender with copies of any records which it may request.

 

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Section 6.5 Maintenance of Property Insurance. Borrower shall maintain all of
its properties necessary or useful in its business in good condition, repair and
working order, normal wear and tear accepted, and shall maintain insurance with
financially sound and reputable insurance companies in such amounts and covering
such risks as are usually carried by companies engaged in the same or a similar
business and similarly situated. Borrower shall maintain casualty insurance on
the Collateral for not less than its full replacement value and shall name
Lender as mortgagee on all casualty insurance and shall provide Lender with
evidence of such insurance upon request. Except for insurance proceeds from
losses of less than $100,000 (which shall be paid directly to Borrower), all
proceeds of any insurance will be held by Lender as additional collateral and
shall be used to pay for reconstruction, repair, or replacement of the
Collateral, or applied to payment of the Loans, at Lenders sole discretion. In
addition, to the extent that any real property interests which constitute a part
of the collateral lie within a designated flood plain, Borrower must maintain
flood insurance with respect to such real property interest. In addition,
Borrower shall maintain commercial general liability insurance, business
automobile liability insurance, workers’ compensation insurance, business
interruption insurance of 3 months of projected expenses for the facility,
directors and officers liability insurance, and such other insurance coverages
as shall be required by Lender, all with terms and conditions satisfactory to
Lender. Insurance will be obtained from companies reasonably satisfactory to
Lender and said policies shall name Lender as an additional insured. The
policies shall provide that there be no cancellation or modification without 30
days advance notification to Lender.

Section 6.6 Notice of Material Events. Borrower agrees to give Lender prompt
written notice of any and all (i) Events of Default or Potential Default;
(ii) litigation, arbitration or administrative proceedings to which the Borrower
is a party and, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect; (iii) default under any note, indenture, loan
agreement, mortgage, lease, contract, deed or other similar agreement to which
Borrower is a party or by which Borrower is bound, which relates to borrowed
money, or of any other default under any other note, indenture, loan agreement,
mortgage, lease, contract, deed or other similar agreement to which any Borrower
is a party or by which Borrower is bound if such other default may result in a
Material Adverse Effect; (iv) violation of environmental laws or permits and
(v) other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect. Each notice delivered under this Section shall be
accompanied by a statement of an officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

Section 6.7 Reports. Borrower shall provide to Lender the following financial
reports and such other reports with respect to the financial condition and
operations of Borrower as Lender may from time to time reasonably request:

Section 6.7.1 Annual Financial Statements and Budget Projections. As soon as
available, but in no event later than 120 days after the end of the fiscal year
of Borrower, an audit report in accordance with GAAP and prepared by an
accountant acceptable to Lender for such year and accompanying financial
statements (including all footnotes thereto) including a consolidated balance
sheet, a consolidated statement of income and retained earnings and, within 30
days prior to the end of the fiscal year of Borrower, a

 

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pro-forma budget projection, including proposed capital expenditures, for the
next fiscal year in form and content acceptable to Lender, both of which shall
be an Event of Default if not provided within 30 days after said report and
projection is due.

Section 6.7.2 Periodic Financial Statements. As soon as available, beginning
with the month in which ethanol production from the expanded ethanol facilities
commences, and in no event later than 30 days after the end of each month
thereafter (excluding the last month of Borrower’s fiscal year) a consolidated
balance and consolidated income statement and production report of all
Borrower’s production of ethanol for that month and for year-to-date since the
last fiscal year end, such report certified complete and correct from a source
acceptable to Lender, which shall be an Event of Default if not provided within
30 days after said report is due.

Section 6.7.3 Additional Information. Such other information respecting the
condition or operations, financial or otherwise of Borrower or such other
information relating to Borrower as any Lender may from time to time reasonably
request.

Section 6.8 Account Authorization. Borrower will require the financial or other
institutions with which it maintains or has maintained depository and operating
accounts to promptly provide such information concerning the Borrower, its
financial condition and any transactions as Lender may from time to time
request. Borrower hereby authorizes such institutions to directly provide to
Lender such information as Lender may request.

Section 6.9 Execution of Supplemental Instruments. Execute and deliver to Lender
from time to time, upon demand, such supplemental agreements, statements,
transfers, assignments, authorizations to release information, or documents
relating to the Collateral, and such other instruments or documents as Lender
may request, in order that the full intent of this Agreement may be carried into
effect.

Section 6.10 Financial Covenants. Borrower agrees to maintain sufficient capital
resources, as determined by Lender’s market valuation of Borrower’s assets and
full disclosure of Borrower’s liabilities such as to maintain the following
financial covenants. In the event that Borrower fails to comply with said
covenants and said failure continues for 30 days after notification from Lender,
Lender may deem said failure an Event of Default.

Section 6.10.1 Working Capital. Beginning with the month in which Substantial
Completion occurs, Borrower agrees to maintain working capital (current assets,
plus the unadvanced portion of Revolving Loan minus current liabilities) of not
less than $6,000,000 (six million dollars).

Section 6.10.2 Debt Coverage Ratio. Beginning 3 months after production from the
expanded facilities occurs and quarterly thereafter, Borrower agrees to maintain
a Debt Coverage Ratio, defined as net income plus depreciation and amortization
minus extraordinary gain(loss) minus after tax income(expense) minus gain(loss)
on assets sale to current principal of long-term debt, of not less than
1.50:1.00 based on a rolling four (4) quarter average.

 

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Section 6.10.3 Tangible Net Worth. Beginning on Closing Date, Borrower shall
have a minimum Tangible Net Worth (total assets minus intangible assets and
minus total liabilities, as defined by GAAP) of not less than $34,800,000.
Borrower shall maintain minimum Tangible Net Worth of no less than the amount
that will not allow owners equity to be below 49%. Prior to any loan Advance,
Borrower shall supply to Lender satisfactory evidence of funding from equity
capital totaling not less than $15,318,000. In addition, Borrower shall apply
$13,000,000, of which $9,800,000 has been applied as of the date of this
Agreement, toward expansion of the Facility. The remaining $3,200,000 will be
applied toward the expansion in a monthly amount of no less than $533,333.33
beginning in March 1, 2007 and on the same day of each month thereafter.

Section 6.11 Compliance Certificate. Beginning with last day of the month in
which ethanol production from the expanded Facilities commences, Borrower agrees
to provide Lender with a Compliance Certificate showing or certifying compliance
with the aforesaid reporting and financial requirements and as of the last day
of each month (Reporting Period) thereafter, in form and content acceptable to
Lender. Such Certificate shall be provided to Lender within 20 days following
the end of each Reporting Period, and in default after 30 days.

Section 6.12 Construction Covenants.

Section 6.12.1 Insurance/Bonds. In addition to the insurance requirements set
forth in this Agreement, Borrower agrees to procure and maintain at Borrower’s
expense insurance coverage from reputable companies for builder’s risk, fire and
extended coverage in an amount equal to the completed value of the Facility with
Lender named as mortgagee together with such other property insurance on
Borrower’s business as Lender may require; and public liability coverage and
insurance against loss under any workman’s compensation laws. Proof of insurance
in compliance with this provision will be provided Lender during the term of
this Agreement as Lender may require.

Borrower shall retain the services of an inspecting engineer to monitor
comparisons with reports and applications for payment received from the general
contractor, Borrower shall also require the project design engineer to procure a
professional liability policy insuring said engineer and shall furnish Lender a
copy of said policy.

Section 6.12.2 Compliance with Law. Borrower will obtain and keep in farce all
permits or certificates required for completion of the work under the
Construction Contract, and will comply with all applicable zoning, building or
other laws or regulations applicable to the Facility and its operations, and
will provide Lender with proof of compliance prior to construction and
thereafter during the term of this Agreement as Lender may require.

Section 6.12.3 Construction Contract. Borrower agrees to use its best efforts to
bring the Facility as expanded into production no later than February 15, 2008
and agrees to use its best efforts to complete construction according to the
plans and specifications

 

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furnished to Lender and pursuant to the Construction Contract no later than
February 15, 2008. Borrower will obtain Lender’s prior written approval of any
change to the plans and specifications that might adversely affect Lender’s
security or any change to the terms and conditions of the Construction Contract
that exceeds $500,000 or exceeds Borrower’s budgeted costs for construction of
the Facility, must be approved by Lender. Borrower will also obtain all
approvals of any changes in plans, specifications, work, materials or contracts
that are required by law or any covenants or agreements relating to the
Facility. The project budget, plans and specifications, cost breakdowns,
disbursement schedules, completion reports and other construction information
currently or in the future submitted to Lender fairly and accurately present the
matters contained therein as of the date thereof, there are no omissions from
the information so submitted or other facts and circumstances not reflected in
such information which are or may be material and there have been no material or
adverse changes in the information so supplied without notice of the same by
Borrower to Lender.

Borrower will furnish to Lender, at Lender’s request, correct lists of all
contractors, subcontractors and suppliers employed in connection with
construction of the Facility and true and correct copies of all executed
contracts and subcontracts.

Section 6.12.4 During Construction Draws. Lender, Lender’s participating banks,
Lender’s inspecting engineer and Disbursing Agent shall have the right to
inspect the construction work at all reasonable times. Any inspection of the
work, books, or the review, examination, or approval of any contract, document,
insurance policy or other matters shall be for the sole benefit of Lender and
not for the benefit of the Borrower, contractor, or others. Lender is under no
duty to supervise or inspect construction or examine any books and records. No
default of Borrower will be waived by any inspection by Lender. In no event will
any inspection by Lender be a representation that there has been or will be
compliance with the plans or specifications or that the construction is free
from defective materials or workmanship.

(a) Disbursements for construction shall be made at Borrower’s request no more
frequently than monthly solely to pay costs incurred under the Construction
Contract for work completed under the terms of said Construction Contract and to
the extent such costs are in conformity with the cost estimate provided to
Lender. Borrower shall be required, under the terms of this Agreement, to pay
certain of the initial costs of construction before any disbursements are made
by Lender for the balance of the costs of construction, An Advance for
construction and non-construction purposes until Substantial Completion,
pursuant to a Draw Request, shall be made in accordance with the terms and
conditions of a disbursing agreement in a form acceptable to Lender (the
“Disbursing Agreement”).

(b) Each Advance on a Loan shall be made only upon Borrower’s written (or
telephonic notice promptly confirmed in writing) request to Disbursing Agent and
Lender in a form approved by Lender (“Draw Request”). Each Draw Request will
constitute a certification, representation and warranty that the conditions
precedent for an Advance under this Agreement have been satisfied and that no
Material Contract has been entered into other than those which are subject to a
collateral assignment in favor of Lender or which Lender has agreed in writing
that no collateral assignment will be required.

 

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(c) Disbursement shall be made only if this documentation and any inspection
shows that construction is proceeding in accordance with the plans and
specifications approved by Lender and the Borrower is not otherwise in default.
If there is a material deviation from the Construction Contract, a deficiency in
the materials or workmanship, a termination or abandonment of the contract, an
uninsured loss or damage to the completed work or failure to comply with the
terms of this Agreement, Lender may declare default and among other remedies,
refuse to make further disbursement until default is cured. The making of
disbursement prior to fulfillment of any or all of these loan conditions,
however, shall not be construed as a waiver of these conditions. Lender reserves
the right to require their fulfillment prior to making any subsequent
disbursements. Final disbursement of the loan shall only be made when the
Construction Contract is fully completed and upon receipt of a certificate
signed by the Borrower and contractor certifying that all work has been
completed satisfactorily and in accordance with the Construction Contract
(Completion Certificate). Lender will retain the sum of not less than
$2,100,000.00 pending satisfaction of the construction lending conditions set
forth herein.

(d) If Lender reasonably determines at any time that the amount of the
undisbursed Loan proceeds will not be sufficient to pay for all costs required
to complete acquisition and construction of the Facility in accordance with the
approved plans and specifications, whether that deficiency is attributable to
changes in the construction work, in the plans and specifications, or to any
other cause, Lender may demand in writing that the Borrower deposit with Lender
non-interest bearing funds equal to the amount of the shortage reasonably,
determined by Lender. The Borrower must then deposit the required funds with
lender within ten (10) days after the date of Lender’s written demand. No
further disbursements need be made by Lender until those funds are deposited by
the Borrower with Lender. Whenever Lender has any of those funds on deposit, all
disbursements will be considered to be made by Lender first from those funds
until they are exhausted.

Section 6.12.5 Post-Construction Draws. (b) Each Advance on a Loan following
Substantial Completion shall be made only upon Borrower’s written (or facsimile)
request to Lender, (“Draw Request”) not later than 1:00 P.M. Central Standard
Time on any Business Day from disbursal of immediately available funds that same
day. Any request for Advances received after 1:00 P.M. may be made on the next
Business Day. Each Draw Request will constitute a certification, representation
and warranty that the conditions precedent for an Advance under this Agreement
have been satisfied and that no Material Contract has been entered into other
than those which are subject to a collateral assignment in favor of Lender or
which Lender has agreed in writing that no collateral assignment will be
required. After Substantial Completion, the principal amount of each Draw
Request must be at least $100,000.00 and in multiples of $100,000.00.

 

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Section 6.12.6 Construction Cost Reconciliation. Until Substantial Completion,
as soon as available, but in no event later than 30 days after the end of each
month, Borrower agrees to provide a reconciliation of actual versus projected
construction costs of the Facility for that month and for year-to-date.

Section 6.12.7 No Third Party Right. This agreement is between Borrower and
Lender only and does not create any rights inuring to the benefit of a
contractor, subcontractor or any other third party.

Section 6.12.8 Assignment of Construction Contract. Borrower assigns and grants
to Lender, as additional security for the loan, Borrower’s interest in the
Construction Contract and any other contracts, drawings, plans, specifications
or permits pertinent to the construction of the Facility. In the event of
Borrower default on the Loans, Borrower agrees that Lender may elect to complete
construction under the terms of said Construction Contract, although Lender
shall not be bound by said contract to do so, or may contract to employ other
parties to proceed with the work until completed. If Lender elects to complete
the Facility, Borrower agrees not to hold Lender liable for the manner or
quality of said construction. Such disbursements for completion after Borrower
default shall be considered to have been disbursed to the Borrower and will be
secured by the trust deed executed in connection with this Agreement. If such
disbursements exceed the Maximum Principal Balance of the Loans, they will be
considered to be an additional loan to the Borrower, bearing interest at the
highest rate provided in the note.

Section 6.12.9 Indemnification. In consideration for said Loans, Borrower agrees
to indemnify Lender and hold it harmless from any losses, costs or damages,
including attorneys’ fees, arising by reason of defective workmanship or
materials occurring in the construction or operation of the Facility, or
occurring by reason of any breach or default of this Agreement or the
Construction Contract. The provisions of this Section will survive the
termination of this Agreement.

Section 6.12.10 Assignment of Material Contracts. Borrower agrees to notify
Lender of the existence of any Material Contract promptly upon entering into the
same. Borrower agrees to assign to Lender all Material Contracts and take such
other actions as Lender requests to perfect Lender’s security interest in
Borrower’s rights under such Material Contracts.

Section 6.12.11 Grain Hedging. Borrower agrees to execute a Security Agreement
and Assignment of Hedging Account on a form provided or approved by Lender to be
acknowledged by all brokers involved in Borrower’s hedging program.

Section 6.12.12 Account Control Agreements. Borrower agrees to notify Lender of
any new Investment Account and/or hedging account promptly upon creating the
same. Borrower agrees to assign the Lender all investment accounts and hedging
accounts, and take such other actions as Lender requests to perfect Lender’s
security interest in Borrower’s right to the accounts.

 

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ARTICLE 7 - NEGATIVE COVENANTS

The Borrower covenants and agrees that as long as the Loan remains unpaid,
Borrower will comply with the Negative Covenants under existing Commercial Loan
Agreements with Lender and with the following requirements, unless the Lender
shall otherwise consent in writing.

Section 7.1 No Material Change. The Borrower will not adopt any material change
in accounting method or principles, unless approved by Lender; will not adopt,
permit or consent to any change in its fiscal year; and will not enter into any
contract, agreement or transaction affecting the Collateral or the Loan which
would have a Material Adverse Effect.

Section 7.2 No Other Business. The Borrower will not engage in any material
respects in any business activity or operations materially different from that
presently engaged in by the Borrower and will not purchase, lease or otherwise
acquire assets not related to or used in its business.

Section 7.3 Transactions with Subsidiaries. Borrower will not purchase, acquire,
provide, or sell any equipment, other personal property, real property or
services from or to any Subsidiary, except in the ordinary course and pursuant
to the reasonable requirements of Borrower’s business.

Section 7.4 Transactions with Affiliates. The Borrower will not enter into any
transaction, including without limitation, the purchase, sale, lease or exchange
of any property, or the rendering of any service, with any Affiliate of the
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower’s business and upon fair and reasonable terms no
less favorable to the Borrower than would be obtained in a comparable
arms-length transaction .with a person not an Affiliate of the Borrower.

Section 7.5 Consolidation and Merger. The Borrower will not, and will not permit
any Subsidiary to, consolidate with or merge with any entity, or acquire all or
substantially all of the assets of any person or entity, nor shall Borrower
change its business form, provided that Borrower or any Subsidiary may acquire
the assets of any person or entity if there has been no Event of Default or
Potential Default and shall not be after giving effect to said acquisition, and
that said acquisition shall not result in a Material Adverse Effect.

Section 7.6 Transfer of Assets. The Borrower will not sell, assign (by operation
of law or otherwise) transfer, exchange, lease or otherwise dispose of any of
the Collateral, nor will Borrower deliver actual or constructive possession of
the Collateral to any other person or entity, other than in the ordinary course
of business as presently conducted and at fair market, value and which are
either replaced or are no longer necessary or useful for the business conducted
by Borrower.

Section 7.7 Liens; Negative Pledge. The Borrower will not create, incur, assume
or permit to exist any lien, mortgage, pledge, charge or other encumbrance on,
or any security interest in, any of its real or personal properties, except
liens in favor of Lender; liens existing prior to the date

 

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of this Agreement that have been disclosed in writing to Lender; liens for taxes
and other governmental charges which are not delinquent or the validity of which
is being contested in good faith; liens of carriers warehousemen, mechanics and
other like liens arising in the ordinary course of business; and except
Permitted Liens.

Section 7.8 Indebtedness. The Borrower will not create, incur, assume, guaranty,
permit or suffer to exist any indebtedness or otherwise become liable with
respect to the obligations or liabilities of any person or entity except:
indebtedness of Borrower arising under this Credit Agreement; indebtedness
existing prior to the date of this Agreement that has been disclosed in writing
to Lender; debt subordinated in form and substance reasonably acceptable to
Lender; trade payables of Borrower incurred in the ordinary course of business;
and except such additional debt obligations or annual capitalized lease payments
as may be listed herein or which do not exceed in the aggregate the sum of
$250,000.00.

Section 7.9 Loans, Advances and Guarantees. The Borrower will not make, or
permit any Subsidiary to make, any loans or advances to, or guarantees of, or
otherwise become liable, or permit any Subsidiary to become liable, with respect
to (other than guarantees by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business), or
permit to exist, or allow any Subsidiary to permit to exist, any loans or
advances to, or such guarantees or other such liabilities with respect to, any
Person, except: loans, advances and guarantees existing as of the date hereof
and provided to Lender in writing; and trade credit extended in the ordinary
course of business.

Section 7.10 Subordinated Debt. The Borrower will not make payments on account
of any existing subordinated debt and shall not incur any additional
subordinated debt except to the extant permissible under the agreement by which
such subordinated debt is subordinated to the Loan. Borrower shall not amend,
supplement, or otherwise modify any provisions of the subordinated debt
agreement, and shall not refinance any portion of the subordinated debt, except
on terms no less favorable to Borrower and Lender.

Section 7.11 Capital Spending. Other than for construction of the Facility,
Borrower will not make Capital Expenditures during any fiscal year from any
source of funds available which exceed $1,700,000.00 in the aggregate, which
shall be subject to annual revision.

Section 7.12 Distributions. Cash Distributions may be paid out up to 3 times per
year beginning in April, based on March financial results, August or September,
based on June financial results and December, based on November financial
results. Distributions will be limited to the following schedule:

Upon Substantial Completion and when owner equity is equal to or greater than
40%, then a distribution of net income up to 50% may be made; when owner equity
is equal to or greater than 50%, then a distribution of net income of up to 60%
may be made; and when owner equity is equal to or greater than 60%, then a
distribution of net income of up to 70% may be made. The above distributions may
be made conditioned upon Borrower being in compliance prior to and subsequent to
such distributions with all covenants contained in this Agreement. Provided,
however, that any distribution allowable under this provision which is above 36%
of

 

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earnings then 10% of the amount over the 36% up to the maximum amount allowable
under the foregoing limitation shall be paid as an additional special principal
payment to Lender to be applied to scheduled principal installments in inverse
order of maturity on Borrower’s Loans. All distributions, except as otherwise
authorized in this Agreement, must be approved by 66.6% (by dollar amount of
Borrower’s indebtedness to Lender) of the Lender group, (which is Lender and its
participants), in advance.

Section 7.13 No Change in Management, Ownership or Control. Borrower will not
make any change in present control of its business or of the Collateral;
provided, however, this Section 7.13 does not in any manner apply to the action
of the board of directors of the Borrower as provided for in the Operating
Agreement of Borrower, or the members of the Borrower in electing directors.

Section 7.14 Deposit and Investment Accounts. Borrower will not maintain,
deposit or invest funds into any Deposit Account or Investment Account other
than those identified in writing to Lender.

Section 7.15 Investments. 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 identified in writing to Lender;

 

  (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 $100,000 at any time;

 

  (d) investments in other business organizations whose primary business is the
production of ethanol and byproducts related thereto and in which Lender
maintains a first priority, perfected security interest in such investments;
provided, at the time any such investment is made, the aggregate book value of
the sum of all such investments may not, without the prior written consent of
Lender, exceed five percent (5.0%) of the net worth of Borrower; and

Section 7.16 Amendments. Borrower will not materially amend or terminate their
Articles of Organization, Operating Agreement, or Material Contracts, without
Lender’s prior written consent, which consent shall not be unreasonably
withheld.

 

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Section 7.17 Construction. Borrower will not become a party to any contract for
the performance of any work related to the project or for the supplying of any
labor, materials or services for the construction of improvements that would
have the effect of increasing the costs of the project more than $2,100,000 (in
the aggregate with previous such cost increases) above those set forth in the
sworn construction cost statement, except in such amounts and upon such terms
and with such parties as are approved in writing by Lender (which approval will
not be unreasonably withheld). No approval by Lender of any contract or change
order will make Lender responsible for the adequacy, form or content of such
contract or change order. Borrower will expeditiously complete and fully pay for
the development and construction of the project in a good and workmanlike manner
and in accordance with the contracts, subcontracts and construction plans
submitted to Lender and in compliance with all applicable requirements of all
governmental authorities, and any covenants, conditions, restrictions and
reservations applicable thereto, so that Substantial Completion occurs on or
before the required completion date. Borrower assumes full responsibility for
the compliance of the construction plans and the project with all requirements
of all governmental authorities and with sound building and engineering
practices, and notwithstanding any approvals by Lender, Lender has no obligation
or responsibility whatsoever for the Construction Plans or any other matter
incident to the project or construction related to the project. Borrower will
correct or cause to be corrected (a) any defect in improvements related to the
project, (b) any departure from the construction plans or any requirements of
any governmental authorities, and (c) any encroachment by any part of any
structure located on the real estate on any building line, easement, property
line or restricted area. Borrower will cause all roads necessary for the
efficient operation of the plant contemplated by the project to be completed and
dedicated (if dedication thereof is required by any governmental authority), the
bearing capacity of the soil on the real estate to be made sufficient to support
all improvements thereon, and sufficient local utilities to be made available to
the project and installed at costs (if any) set out in the sworn construction
cost statement, on or before the required completion date. No work may be
performed pursuant to any change order or pending change order to the
construction plans prior to delivery thereof to Lender.

ARTICLE 8 - EVENTS OF DEFAULT

Section 8.1 Events of Default. The occurrence of any of the following events
shall constitute an event of default (“Event of Default”) hereunder:

Section 8.1.1 Failure to Make Payments. Borrower shall fail to pay, in
accordance with the terms of this Agreement, (i) any principal on any Loan on
the date that such is due, (ii) any interest on such Loan within 5 days from the
date that such is due, or (iii) any fee or other cost owing to Lender under the
Agreement within 15 days after the date that such sum is due.

Section 8.1.2 Breach of Warranty or Representation. Any representation or
warranty made by Borrower under or in connection with this Agreement or any
financial statement given by Borrower, which shall prove to have been materially
misrepresented on or as of the date made or given.

 

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Section 8.1.3 Insolvency. Borrower shall: (i) become insolvent or be unable to
pay its debts as they mature; (ii) make an assignment for the benefit of
creditors or to an agent authorized to liquidate any substantial amount of its
properties and assets; (iii) file a voluntary petition in bankruptcy or seeking
reorganization or to effect a plan or other arrangement with creditors;
(iv) file an answer admitting the material allegations of an involuntary
petition relating to bankruptcy or reorganization or join in any such petition;
(v) become or be adjudicated as bankrupt; or (vi) apply for or consent to the
appointment of, or consent that an order be made, appointing any receiver,
custodian or trustee, for itself or any of its properties, assets or businesses,
or (vii) have an involuntary bankruptcy petition filed against Borrower, and
such petition remains undismissed for more than 30 days.

Section 8.1.4 Execution. Any writ of execution or attachment or any judgment
lien shall be issued against any property of the Borrower and shall not be
discharged or bonded against or released within 30 days after the issuance or
attachment of such writ or lien.

Section 8.1.5 Suspension. Borrower shall voluntarily suspend, without just
cause, the transaction of business or allow to be suspended, terminated, revoked
or expired any permit, license or approval of any governmental body necessary to
conduct the Borrower’s business resulting in a Material Adverse Effect.

Section 8.1.6 Due on Sale. Except as permitted under Article 4 herein, there
shall occur, without Lender’s prior written consent, the sale, transfer or
further encumbrance of any material item of Collateral, other than in the
ordinary course of business.

Section 8.1.7 Material Adverse Change. If there occurs a Material Adverse Effect
in the Borrower’s business or financial condition that would likely cause an
event of Default within the following 30 days, or if there is a material
impairment of the prospect of repayment of any portion of the Loan or there is a
material impairment of the value or priority of the Lender’s security interest
in the Collateral.

Section 8.1.8 Change in Ownership. There shall occur a change affecting the
Control of the Borrower which shall mean for purposes of this Section 8.1,8 the
transfer of a majority of the outstanding membership interests (units) of the
Borrower within a 180 day period.

Section 8.1.9 Impairment of Collateral. There shall occur any injury or damage
to all or any part of the Collateral or all or any part of the Collateral shall
be lost, stolen or destroyed resulting in a Material Adverse Effect.

Section 8.1.10 Performance Under This Agreement. The Borrower shall fail in any
material respect to perform or observe any other term, covenant or agreement
contained in this Agreement or in any of the Loan Documents or any other
document or agreement executed by Borrower with or in favor of Lender, not
specifically mentioned above and capable of being remedied by Borrower and any
such failure shall continue unremedied for more than 30 days after written
notice from the Lender to the Borrower of the existence and character of such
Event of Default.

 

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Section 8.2 Cross Default/Cross Collateralization. The Loans and Loan Documents,
as well as any other contract obligation or Debt Borrower may now or in the
future have with Lender, are expressly cross-defaulted. Declaration of default
under any Loan described herein or any other contract obligation or Debt
Borrower may have with Lender or Lender’s Affiliate may, at Lender’s option,
cause all Loans and such other contract obligations to be declared in default,
charged interest at the default rate and become immediately due and payable. The
Collateral, whether real or personal property, and whether secured by mortgage,
deed of trust, or by security agreement/financing statement, shall secure
payment of all the Loans, or any of them. The Loans are hereby
cross-collateralized and none of the Collateral shall be released until all of
said Loans are paid in full.

Section 8.3 Right to Cure. If any default, other than a default in payment, is
curable, and if Borrower has not been given a notice of a breach of the same
provision of the Loan within the preceding 12 months, such default may be cured
(and no Event of Default will have occurred) if Borrower, after receiving
written notice from Lender demanding cure of such; (1) cures the default within
15 days; or (2) if the cure requires more than 15 days immediately initiates
steps which Lender deems, in Lender’s sole discretion, to be sufficient to cure
the default, and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

Section 8.4 Remedies on Default. Upon the occurrence of any Event of Default,
Lender may, at its sole discretion, do any of the following:

Section 8.4.1 Acceleration. Declare any or all of the Borrower’s Loans, whether
under this Agreement or any other document, instrument or agreement, immediately
due and payable, whether or not otherwise due and payable.

Section 8.4.2 Default Interest. If any principal, interest, or Advance is past
due, regardless of the length of time, or if there is any failure to comply with
any covenant, condition, or agreement contained in this Agreement subject to
cure periods, or in any mortgage, trust deed, security agreement, or other
document, given to secure payment of the Loan, then, at the election of the
Lender, all principal, all accrued interest thereon and all advances will become
immediately due and payable without demand and the whole will bear interest at
the Default Rate from and including the date of election to but excluding the
date paid. Any reasonable attorney fees (to the extent allowed by law), costs,
or expenses incurred and advanced by Lender to enforce collection of the Loan
will be added to the principal and bear interest at the Default Rate from the
date of advance to but excluding the date paid. At Lender’s option, any Event of
Default may allow Lender to charge interest on all principal, all accrued
interest thereon, and all advances at the Default Rate without declaring the
Loan immediately due and payable.

 

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Section 8.4.3 Cease Extending Credit. Cease making advances or otherwise
extending additional credit to or for the account of the Borrower under this
Agreement or under any other agreement now existing or hereafter entered into
between the Borrower and Lender.

Section 8.4.4 Termination. Terminate this Agreement as to any future obligation
of the Lender without affecting the Borrower’s Obligations to the Lender or the
Lender’s rights and remedies under this Agreement or under any other document,
instrument or agreement.

Section 8.4.5 Protection of Security Interest. Make additional or protective
advances and do such acts as the Lender, in its sole judgment, considers
necessary and reasonable to protect its security interest or lien in the
Collateral. Such additional or protective advances may be made to protect the
Collateral, including but not limited to, payment of insurance premiums and
taxes, as well as payments to protect the Collateral from claims of other
creditors, diminution in value, waste, destruction or abandonment. Such advances
may be added to the Loan and will, at Lender’s option, be immediately due and
payable and bear interest at the Default Rate from the date advanced to but
excluding the date paid. The Borrower hereby irrevocably authorizes the Lender
to pay, purchase, contest or compromise any encumbrance, lien or claim which the
Lender, in its sole and reasonable judgment, deems to be prior or superior to
its security interest. Further, the Borrower hereby agrees to pay to the Lender,
upon demand, all expenses (including reasonable attorney’s fees) incurred in
connection with the foregoing.

Section 8.4.6 Foreclosure. Enforce any security interest or lien given or
provided for under this Agreement or under any security agreement, mortgage,
deed of trust or other document, in such manner and such order, as to all or any
part of the properties subject to such security interest or lien, as the Lender,
in its sole judgment, deems to be necessary or appropriate and the Borrower
hereby waives any and all rights, obligations or defenses now or hereafter
established by law relating to the foregoing. In the enforcement of its security
interest or lien, the Lender is authorized to enter upon the premises where any
Collateral is located and take possession of the Collateral or any part thereof,
together with the Borrower’s records pertaining thereto, or the Lender may
require the records be made available to the Lender at a place reasonably
designated by the Lender. If any part of the Collateral is accounts receivable,
Lender may notify at any time the account debtor to make payment thereon
directly to Lender and may take control of the cash and noncash proceeds of any
such accounts. The Lender may sell the Collateral or any portions thereof,
together with all additions, accessions and accessories thereto, giving only
such notices and following only such procedures as are required by law, at
either a public or private sale, or both, with or without having the Collateral
present at the time of the sale, which sale shall be on such terms and
conditions and conducted in such manner as the Lender determines in its sole
judgment to be commercially reasonable. Any deficiency that exists after the
disposition or liquidation of the Collateral shall be a continuing liability of
the Borrower to the Lender and shall be immediately paid by the Borrower to the
Lender.

 

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Section 8.4.7 Non-Exclusivity of Remedies. Exercise one or more of the Lender’s
rights set forth herein or exercise any and all rights or remedies granted to it
under any Loan Document, by applicable law, or otherwise, including the right to
accelerate the maturity of the Loan and to proceed against all or any portion of
the Collateral, in any order. In addition, the Lender may hold and set off and
apply against the Loan any and all accounts or other property in the possession
of or under the control of Lender. All rights and remedies granted to the Lender
under the Loan Documents or this Agreement or available under applicable law
shall be deemed concurrent and cumulative and not alternative remedies, and the
Lender may proceed with any number of such remedies at the same time until
obligations of the Borrower to the Lender are paid and satisfied in full. The
exercise of any one right or remedy shall not be deemed a waiver or release of
any other right or remedy, and the Lender, upon the occurrence of any Event of
Default, may proceed against the Borrower at any time, with any available remedy
and in any order,

Section 8.4.8 Application of Proceeds. All amounts received by the Lender as
proceeds from the disposition or liquidation of the Collateral shall be applied
to the Loan as follows: first, to the costs and expenses of collection,
enforcement, protection and preservation of the Lender’s lien in the Collateral,
including court costs and reasonable attorney’s fees, whether or not suit is
commenced by the Lender; next, to those costs and expense incurred by the Lender
in protecting, preserving, enforcing, collecting, liquidating, selling or
disposing of the Collateral; next, to the payment of accrued and unpaid interest
on all of the Loans; next, to the payment of the outstanding principal balance
of the Loan; and last, to the payment of any other indebtedness owed by the
Borrower to the Lender.

ARTICLE 9 - MISCELLANEOUS

Section 9.1 Entire Agreement and Amendments. This Agreement and all documents
and agreements mentioned herein constitute the entire and complete understanding
of the parties hereto and supercede all prior agreements and understandings
relative to the subject matter hereof. it may not be effectively amended,
changed, altered or modified, except in writing executed by all parties. To the
extent the provisions contained in this Agreement are inconsistent with those
contained in any other document, instrument or agreement mentioned herein or
executed pursuant hereto, the terms and provisions contained herein shall
control. Otherwise, such provisions shall be considered cumulative.

Section 9.2 Survival. All representations, warranties, covenants and agreements
herein contained on the part of Borrower shall survive the termination of this
Agreement and shall be effective until the Loan is repaid and performed in full.

Section 9.3 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
any such provision.

 

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Section 9.4 No Waiver; Cumulative Remedies. If Lender shall waive any power,
right or remedy arising hereunder or under any applicable law, such waiver shall
not be deemed to be a waiver upon the later occurrence or recurrence of any of
said events. No failure or delay on the part of Lender in exercising any right,
power or remedy under the Loan Documents, or in extending time for payment,
accepting partial payment or release of any Collateral or proceeds of any
Collateral, or failure to enforce strict compliance with any covenant or
condition contained herein, shall operate as a waiver nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.

Section 9.5 Costs and Expenses. Borrower shall pay Lender’s out-of-pocket costs
and expense incurred in connection with structuring of the Loans, this Agreement
and relating loan documentation, the making or disbursement of the Loan or in
the exercise of any of its rights or remedies under this Agreement, including,
but not limited to, title insurance, legal fees, appraisal fees, and testing
fees, architect, engineering, or consultant’s fees, Lender inspection fees and
any other reasonable fees and costs for services that are not customarily
performed by Lenders salaried employees and are not specifically covered by any
commitment fee for the Loan. All such costs and expenses constitute obligations
secured by the Collateral. The provisions of this Section shall survive the
termination of this Agreement and repayment of the Loan.

Section 9.6 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered by hand, or three days after
being deposited in the mail, postage prepaid, or, in the case of facsimile
notice, when received, or, in the case of delivery by a nationally recognized
overnight courier, when received, addressed to one or more of the individuals
executing this Agreement on behalf of such party at the address appearing below
the signature of such party, or to such other address as such party may
designate for itself by like notice.

Section 9.7 Assignments and Participations. The terms of this Agreement shall
bind and benefit the heirs, legal representatives, successors, and assigns of
the parties; provided, however, that the Borrower may not assign this Agreement,
or any Advances made hereunder, or assign or delegate any of its rights or
obligations, without the prior written consent of Lender. Lender shall have the
right to sell participations in the Loan to any other entities without the
consent of, or notice to, the Borrower, provided that no such action by Lender
shall relieve Lender of its obligations to make advances under the Loan when
required by this Agreement. Lender may disclose to any participants or
prospective participants any information or other data or material in Lenders
possession relating to the Borrower, and matters pertinent to the Loan, without
the consent of, or notice to, the Borrower.

Section 9.8 Advice from Independent Counsel. The parties hereto understand that
this Agreement is a legally binding agreement that may affect such party’s
rights. Each party hereto represents to the other that it has received legal
advice from counsel of its choice regarding the meaning or legal significance of
this Agreement and that it is satisfied with its legal counsel and the advice
received.

 

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Section 9.9 Governing Law; Jurisdiction; Waiver of Jury Trial.

Section 9.9.1 Governing Law. The Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of Nebraska, except to the
extent that the law of any other Jurisdiction applies as to the perfection or
enforcement of the Lender’s security interest in or lien on any Collateral and
except to the extent expressly provided to the contrary in any Loan Document.

Section 9.9.2 Jurisdiction. Each Lender and Borrower hereby irrevocably submits
to the jurisdiction of any state or federal court sitting in the State of
Nebraska, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents, and agrees that all claims in
respect of such action or proceeding may be heard and determined in such state
or federal court. The Borrower hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrower irrevocably consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing of copies of such
process to the Borrower at its address specified herein. The Borrower agrees
that a final judgment in any such action or proceeding may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section shall affect the right of Lender to service legal
process in any other manner permitted by law or affect the right of Lender to
bring any action or proceeding against the Borrower or their property in the
courts of other jurisdictions.

Section 9.9.3 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT.

Section 9.10 Headings. The headings herein are for convenience only and in no
way define, limit or describe the scope or intent of any provisions or sections
of this Agreement.

Section 9.11 Counterparts. This Agreement may be executed in several
counterparts and such counterparts together shall constitute one and the same
instrument.

Section 9.12 Non-Business Day. If any payment of principal or interest shall
fall due on a day which is not a Business day, interest at the rate such Loan
bears for the period prior to maturity shall continue to accrue on such
principal from the stated due date thereof to and including the next succeeding
Business Day on which the same is payable.

Section 9.13 No Third Party Beneficiaries. This Agreement, the Loan Documents
and the advances and disbursements hereunder and thereunder are for the sole
benefit of Lender and Borrower, and no third parties shall have any rights or
benefits hereunder or thereunder, whether pursuant to any theory of third party
beneficiary or otherwise.

 

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Section 9.14 Set Off. Any funds of Borrower held by Lender in any account are
subject to applicable policies and procedures as may be adopted by Lender from
time to time. Borrower grants Lender a security interest in all of said funds
and Lender may exercise the right to apply these funds against any Loan.

Section 9.15 Disbursement Authorization. Any person executing this Agreement on
behalf of the Borrower is authorized to request, accept, receive, and receipt
for all or any portion of the proceeds of the Loans or of any refinance,
conversion, extension, additional loan, reamortization or revision of the same
and to execute and approve all agreements required by Lender in the disbursement
of Loan proceeds. Such person, and/or authorized personnel as disclosed on
Schedule 9.15, may initiate/request either in person, in writing or by facsimile
disbursements in the form of check, wire or electronic transfer to the account
specified by requestor. Lender is authorized to disburse or retain any amounts
required to: purchase stock in Lender; pay any fees or charges required to be
paid to Lender; pay other services provided by or through Lender; obtain any
evidence of title to Collateral; satisfy any title requirements required to
clear title or obtain Lender’s required lien position on Collateral; and pay any
letters of credit issued for or on behalf of Borrower.

Upon any written or facsimile request of Borrower, or its authorized
representative, for a wire transfer (“Payment Order”) Lender shall wire transfer
funds through a commercial bank chosen by Lender and qualified to execute the
transfer, to an account identified in the verbal or written instructions. Wire
instructions are to be sufficiently complete to allow Lender to execute the
Payment Order and will include, at a minimum, the name and number of beneficiary
financial institution, any intermediary financial institutions as applicable,
and a beneficiary name and account number. Every receiving or beneficiary
financial institution may rely on the identifying number to make payment even if
it identifies a financial institution, person, or account other than the one
named. Lender will accept the wiring instructions as provided to it and is under
no obligation to verify the authenticity or accuracy of the instructions.

Borrower is liable for all losses relating to unauthorized transactions which do
not result solely from the gross negligence or intentional misconduct by Lender.

All wire transfers will be made in U.S. dollars unless otherwise specified in
the wiring instructions. For wire transfers requested by Borrower in a foreign
currency, Borrower agrees to accept and bear the foreign exchange risk for
converted currency. Borrower acknowledges delays in beneficiary’s receipt of
wire transfers to foreign banks and agrees to hold harmless Lender against such
delays.

Borrower agrees to repay all Payment Orders made by wire transfer in accordance
with the terms and conditions of the Credit Agreement and other Loan Documents.
Lender will have no obligation to execute wire transfer payment order at the
request of Borrower or an authorized representative of Borrower if such
disbursement would result in any indebtedness of Borrower being in excess of
Loan to Borrower.

 

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Section 9.16 Confidentiality; Sharing Information. Lender shall hold all
non-public information obtained by Lender pursuant to the requirements of this
Agreement in accordance with Lender’s customary procedures for handling
confidential information of this nature; provided, however, Lender may disclose
such confidential information (i) to its examiners, affiliates, outside
auditors, counsel and other professional advisors, (ii) to any prospective
purchasers under Section 9.7 herein, (iii) to any guarantors of the Loan or
third parties pledging collateral as security for the Loan, and (iv) to any
officers, managers, members, partners, personal representatives, employees,
agents or other persons authorized by Borrower to receive confidential
information as authorized in writing by Borrower on a form approved by Lender.
Such authorization shall survive the repayment of the Loan(s) and the
termination of this Agreement and can only be revoked by written notice to
Lender.

Section 9.17 Anti-Terrorism Laws. To the best of its knowledge, neither Borrower
nor any of its Affiliates is in violation of (i) 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, (ii) 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) (the “Executive Order”) or (iii) 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 (collectively, “Anti-Terrorism Laws”).

Section 9.18 Payer of Record. Husker Ag, LLC is identified as the primary
customer/payer of record as Borrower under this Agreement to accept and receive
tax notices and any dividend, patronage, or other distributions declared by
Lender.

Section 9.19 IRS Declaration. The Internal Revenue Service does not require your
consent to any provision of this document other than the following certification
required to avoid backup withholding. Under penalties of perjury, I/we certify
that the Taxpayer Identification Number shown herein is correct and that I/we
am/are not subject to backup withholding either because I/we are exempt, have
not been notified that I/we are subject to backup withholding due to failure of
reporting interest or dividends, or the Internal Revenue Service has notified
me/us that 1/we am/are no longer subject to backup withholding. I/we am/are a
U.S. person (including U.S. resident alien):

Husker Ag, LLC        47-0836953

Section 9.20 Principal Headquarters. Borrower’s principal headquarters and the
place where the records required by Section 6.5 are kept is located at 54048
Highway 20, Plainview, Nebraska 68769.

IN WITNESS WHEREOF, the parties hereto have set their hand effective the day and
year first above written.

 

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BORROWER:

 

Husker Ag, LLC By:   /s/ Mike Kinney   Mike Kinney, Chairman By:   /s/ Kent
Friedrich   Kent Friedrich, Vice Chairman By:        Leonard Wostrel, Secretary
By:   /s/ Robert Brummels   Robert Brummels, Treasurer

Address for Notice:    54048 Highway 20, Plainview, Nebraska 68769

LENDER:

 

Union Bank and Trust Company By:   /s/ Joe Rohach   Sr. Vice President

Address for Notice:    4732 Calvert Street, Lincoln, Nebraska 68506

 

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BORROWER:

 

Husker Ag, LLC By:        Mike Kinney, Chairman By:        Kent Friedrich, Vice
Chairman By:   /s/ Leonard Wostrel   Leonard Wostrel, Secretary By:       
Robert Brummels, Treasurer

Address for Notice:    54048 Highway 20, Plainview, Nebraska 68769

LENDER:

 

Union Bank and Trust Company By:          

Address for Notice:    4732 Calvert Street, Lincoln, Nebraska 68506

 

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