Exhibit 10.1

 

MASTER

CREDIT AGREEMENT

 

dated as of August 10, 2007

 

between

 

GREAT PLAINS ETHANOL, LLC

 

as Borrower

 

and

 

AGCOUNTRY FARM CREDIT SERVICES, FLCA

 

as Lender

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I. GENERAL TERMS

1

 

 

 

Section 1.01

Definitions

1

Section 1.02

Master Agreement/Supplements

1

Section 1.03

Notes

2

Section 1.04

Default Interest

2

Section 1.05

Interest Generally; Maximum Rate

2

Section 1.06

Payments Generally

2

Section 1.07

Computations

3

Section 1.08

Prepayments

3

Section 1.09

Advances

4

Section 1.10

Fees

4

Section 1.11

Termination of Existing Loan Documents

4

Section 1.12

Collateral

4

Section 1.13

Priority

4

Section 1.14

Proceeds of Collateral

4

 

 

 

ARTICLE II. CONDITIONS PRECEDENT

5

 

 

 

Section 2.01

Conditions To Effectiveness

5

 

 

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES

8

 

 

 

Section 3.01

Existence; Power

8

Section 3.02

Organizational Power; Authorization

9

Section 3.03

Governmental Approvals; No Conflicts

9

Section 3.04

Financial Statements

9

Section 3.05

Litigation and Environmental Matters

9

Section 3.06

Compliance with Laws and Agreements

10

Section 3.07

Investment Company Act, Etc

10

Section 3.08

Taxes

10

Section 3.09

Margin Regulations

10

Section 3.10

ERISA

10

Section 3.11

Ownership of Property

10

Section 3.12

Disclosure

11

Section 3.13

Labor Relations

11

Section 3.14

Subsidiaries

11

Section 3.15

Permits

11

Section 3.16

Projections

11

Section 3.17

Material Contracts

11

Section 3.18

Anti-Terrorism Laws

12

 

 

 

ARTICLE IV. AFFIRMATIVE COVENANTS

12

 

 

 

Section 4.01

Financial Statements and Other Information

12

Section 4.02

Notices of Material Events

13

Section 4.03

Existence; Conduct of Business; Eligible Borrower

14

 

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Section 4.04

Compliance with Laws, Etc

14

Section 4.05

Payment of Obligations

14

Section 4.06

Books and Records

14

Section 4.07

Visitation, Inspection, Audit, Etc

15

Section 4.08

Maintenance of Properties; Insurance

15

Section 4.09

Use of Proceeds

15

Section 4.10

Subsidiaries

15

Section 4.11

Assignment of Material Contracts

15

Section 4.12

Compliance with Certain Laws

16

Section 4.13

Farm Products

16

 

 

 

ARTICLE V. FINANCIAL COVENANTS

16

 

 

 

Section 5.01

Fixed Charge Coverage Ratio

16

Section 5.02

Working Capital

17

Section 5.03

Tangible Net Worth

17

Section 5.04

Capital Expenditures

17

Section 5.05

Owners’ Equity Ratio

17

Section 5.06

Current Ratio

17

 

 

 

ARTICLE VI. NEGATIVE COVENANTS

18

 

 

 

Section 6.01

Indebtedness

18

Section 6.02

Negative Pledge

18

Section 6.03

Fundamental Changes

18

Section 6.04

Investments, Loans, Etc

19

Section 6.05

Restricted Payments

19

Section 6.06

Sale of Assets

20

Section 6.07

Transactions with Affiliates

20

Section 6.08

Restrictive Agreements

20

Section 6.09

Sale and Leaseback Transactions

21

Section 6.10

Hedging Agreements

21

Section 6.11

Amendment to Material Documents

21

Section 6.12

Accounting Changes

21

Section 6.13

Deposit and Investment Accounts

21

Section 6.14

Use of Proceeds

21

Section 6.15

Legal Status; Eligible Borrower

21

 

 

 

ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES

21

 

 

 

Section 7.01

Events of Default

21

Section 7.02

Remedies

24

 

 

 

ARTICLE VIII. MISCELLANEOUS

24

 

 

 

Section 8.01

Notices

24

Section 8.02

Waiver; Amendments

26

Section 8.03

Expenses; Indemnification

26

Section 8.04

Successors and Assigns

27

Section 8.05

Governing Law; Jurisdiction; Consent to Service of Process

28

Section 8.06

WAIVER OF JURY TRIAL

28

 

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Section 8.07

Right of Setoff

28

Section 8.08

Counterparts; Integration

29

Section 8.09

Survival

29

Section 8.10

Severability

29

Section 8.11

Transferable Record

29

Section 8.12

Confidentiality

30

Section 8.13

Copies

30

Section 8.14

Notice of Claims Against Lender; Limitation of Certain Damages

30

Section 8.15

Termination

30

 

 

 

Attachment I – Definitions

I-1

 

 

 

Exhibit A – Consent and Waiver of Borrower Rights

A

 

 

 

Exhibit 2.01(c)(6) – Opinion Requirements

2.01(c)(6)

 

 

 

Exhibit 4.08 – Insurance Requirements

4.08

 

 

 

Schedule 3.15 – Permits

3.15-1

 

 

 

Schedule 3.17 – Material Contracts

3.17-1

 

 

 

Schedule 4.10 – List of Subsidiaries

4.10

 

 

 

Schedule 6.01(b) – Permitted Indebtedness

6.01(b)

 

 

 

Schedule 6.04(a) – Existing Investments

6.04(a)

 

 

 

Schedule 6.13 – Deposit and Investment Accounts

6.13

 

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MASTER CREDIT AGREEMENT

 

THIS MASTER CREDIT AGREEMENT is made and entered into as of August 10, 2007, by
and between GREAT PLAINS ETHANOL, LLC, d/b/a POET Biorefining – Chancellor, a
South Dakota limited liability company, (“Borrower”) and AGCOUNTRY FARM CREDIT
SERVICES, FLCA, a federal land credit association organized under the Farm
Credit Act of 1971, as amended (“Lender”).

 

RECITALS:

 

A.            Borrower and Lender are parties to a Credit Agreement dated as of
June 19, 2002, as amended by the First Amendment to the Credit Agreement dated
September 1, 2004, and amended and restated pursuant to the terms of the Amended
and Restated Credit Agreement dated July 12, 2005 (collectively, the “Original
Credit Agreement”), and promissory notes, instruments and other documents and
agreements, pursuant to which Lender has made certain loans, credit facilities
and other credit accommodations available to Borrower.

 

B.            Borrower has undertaken an expansion of its production facilities
and requests credit accommodations from Lender to finance a portion of the costs
associated therewith.

 

C.            Subject to the terms and conditions hereof and under the other
Loan Documents, Lender agrees to refinance amounts owing under the Original
Credit Agreement, provide a revolving credit facility, and provide a
construction loan facility for use in expansion of Borrower’s production
facilities.

 

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

 

AGREEMENT:

 

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

 

ARTICLE I.

GENERAL TERMS

 

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

 

Section 1.02         Master Agreement/Supplements. Additional terms of each
loan, credit facility and other credit accommodation are set forth in
supplements (“Supplements”) to this Master Credit Agreement (“Master
Agreement”). The terms of this Master Agreement and the Supplements supersede
all prior agreements and arrangements between Borrower and Lender related to the
Loans and govern the relationship and agreements between Borrower and Lender. In
the event Borrower and Lender agree to additional loans, credit facilities,
and/or other credit accommodations from time to time in the future, Borrower and
Lender will enter into additional

 

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Supplements to this Master Agreement. Each Supplement will set forth additional
terms and conditions specific to such loans and credit facilities, including
without limitation, the applicable:

 

(A)           AMOUNT OF THE LOAN AND/OR CREDIT FACILITY;

 

(B)           INTEREST RATE AND RATE OPTIONS,

 

(C)           FEES, COSTS AND EXPENSES; AND

 

(D)           REPAYMENT TERMS.

 

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

 

Section 1.03         Notes. Each Supplement may be accompanied by one or more
Notes made by Borrower.

 

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

 

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

 

Section 1.06         Payments Generally. All payments will be made to Lender at
the address set forth in Section 8.01 in U.S. Dollars and in immediately
available funds, without set-off, deduction, or counterclaim, not later than
11:00 A.M. (Fargo, North Dakota time) on the date on

 

2

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which such payment is due, and each payment made after such time on such due
date will be deemed to have been made on the next succeeding Business Day. All
payments may be applied by Lender to principal, interest, fees and other amounts
in any order which Lender elects in its sole reasonable discretion. Whenever any
payment is stated to be due on a day that is not a Business Day, such payment
will be due and payable on the next succeeding Business Day, not later than
11:00 A.M., and such extension of time will in such case be included in the
computation of the payment of interest and fees, as the case may be.

 

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

 

Section 1.08         Prepayments. (a)  Subject to applicable fees and charges
and such other terms and conditions as set forth in any applicable Supplement,
Borrower may prepay the Loans, in whole or in part at any time and from time to
time, by giving irrevocable written notice (or telephonic notice promptly
confirmed in writing) to Lender not less than sixty days prior to any such
prepayment; provided, that the amount of any such prepayment may not be less
than $100,000. Each such notice will be irrevocable and will specify the
proposed date of such prepayment (which shall be any regularly scheduled monthly
payment date) and the principal amount to be prepaid. The amount specified in
such notice will be due and payable on the date designated in such notice,
together with accrued interest on the amount so prepaid and any prepayment fee
or premium payable in connection therewith.

 

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

 

(C)           BORROWER WILL PAY TO LENDER A PREPAYMENT PREMIUM IN CONNECTION
WITH ANY PREPAYMENT OF THE LOANS AS A RESULT OF A REFINANCE OR PAYOFF THROUGH
SOURCES OTHER THAN FROM BORROWER’S CASH FLOW FROM OPERATING ACTIVITIES AS
FOLLOWS:

 

(I)            2.0% OF THE OUTSTANDING INDEBTEDNESS UNDER THE LOANS DURING THE
FIRST YEAR FOLLOWING THE CLOSING DATE;

 

(II)           1.0% OF THE OUTSTANDING INDEBTEDNESS UNDER THE LOANS DURING THE
SECOND YEAR FOLLOWING THE CLOSING DATE; AND

 

(III)          0.0% THEREAFTER.

 

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

 

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

 

Section 1.09         Advances. Lender is authorized and directed to credit the
account Borrower designates in writing for all Advances made hereunder. Lender
is authorized, in Lender’s sole discretion, to advance Loan funds for any amount
Borrower is obligated to pay hereunder.

 

Section 1.10         Fees. Borrower agrees to pay to Lender the fees set forth
in the letter of Lender to Borrower dated May 21, 2007, relating to the
commitments made and the services rendered by Lender in connection with the
Loans (the “Fees”). Borrower agrees that the Fees were fully earned by Lender
upon execution by Borrower of Lender’s conditional commitment and fee letters
dated May 21, 2007.

 

Section 1.11         Termination of Existing Loan Documents. Except to the
extent otherwise provided herein or in any other Loan Documents, the Original
Credit Agreement and all other agreements executed and delivered in connection
therewith are terminated and of no further force and effect. However, nothing
herein relieves either party of its indemnification obligations under the
Original Credit Agreement or any agreement, document, or instrument delivered in
connection therewith.

 

Section 1.12         Collateral. The Obligations are secured by Lender’s first
priority Lien on the Collateral. Borrower hereby pledges, mortgages, transfers,
assigns, sets aside, and grants a security interest to Lender in the Collateral.

 

SECTION 1.13         PRIORITY. EXCEPT TO THE EXTENT ANY LOAN IS SPECIFICALLY
SUBORDINATED TO ONE OR MORE OTHER LOANS, EACH LOAN WILL BE PARI PASSU WITH ALL
OTHER LOANS IN ALL RESPECTS.

 

Section 1.14         Proceeds of Collateral. All proceeds received by Lender
from the sale or other liquidation of the Collateral when an Event of Default
exists will be applied in accordance with Section 1.08(d). After all the
Obligations (including without limitation, all contingent Obligations) have been
paid and satisfied in full, all Commitments have been terminated and all other
obligations of Lender to Borrower have been otherwise satisfied, any remaining
proceeds of Collateral will be delivered to the Person entitled thereto as
directed by Borrower or as otherwise determined by applicable law or applicable
court order.

 

4

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ARTICLE II.

CONDITIONS PRECEDENT

 

Section 2.01         Conditions To Effectiveness. Lender will have no obligation
under this Agreement or any other Loan Document until each of the following
conditions is satisfied (or waived in accordance with Section 8.02):

 

(A)           LENDER HAS RECEIVED ALL FEES AND OTHER AMOUNTS DUE AND PAYABLE ON
OR PRIOR TO THE DATE HEREOF, INCLUDING THE FEES AND AMOUNTS FOR REIMBURSEMENT OR
PAYMENT OF ALL OUT-OF-POCKET EXPENSES REQUIRED TO BE REIMBURSED OR PAID BY
BORROWER PURSUANT TO THIS AGREEMENT, UNDER ANY OTHER LOAN DOCUMENT, OR ANY OTHER
AGREEMENT WITH LENDER.

 

(B)           BORROWER HAS DELIVERED TO LENDER DULY EXECUTED COUNTERPARTS OF THE
FOLLOWING, EACH IN FORM AND SUBSTANCE ACCEPTABLE TO LENDER IN ALL RESPECTS:

 

(1)           THE MASTER AGREEMENT;

 

(2)           EACH OF THE FIRST SUPPLEMENT, SECOND SUPPLEMENT AND THIRD
SUPPLEMENT TO THIS MASTER AGREEMENT, ALONG WITH ALL NOTES AND OTHER DOCUMENTS,
INSTRUMENTS AND AGREEMENTS REQUIRED THEREUNDER;

 

(3)           THE DULY EXECUTED SECURITY AGREEMENT, TOGETHER WITH UCC-1
FINANCING STATEMENTS AND OTHER APPLICABLE DOCUMENTS UNDER THE LAWS OF THE
JURISDICTIONS WITH RESPECT TO THE PERFECTION OF THE LIENS GRANTED UNDER THE
SECURITY AGREEMENT IN ORDER TO PERFECT SUCH LIENS, DULY AUTHORIZED FOR FILING BY
BORROWER;

 

(4)           ALL CONTROL AGREEMENTS REQUIRED UNDER SECTION 6.13, IF ANY;

 

(5)           THE MORTGAGE, FULLY NOTARIZED, TOGETHER WITH EVIDENCE THAT IT HAS
BEEN RECORDED IN ALL PLACES TO THE EXTENT NECESSARY OR DESIRABLE, IN THE
JUDGMENT OF LENDER, TO CREATE A VALID AND ENFORCEABLE FIRST PRIORITY LIEN
(SUBJECT TO PERMITTED ENCUMBRANCES) ON THE FEE SIMPLE ESTATE (OR LEASEHOLD OR
OTHER INTEREST IF AGREEABLE TO LENDER) OF THE REAL ESTATE, TOGETHER WITH UCC
FIXTURE FINANCING STATEMENTS, AS APPLICABLE;

 

(6)           COLLATERAL ASSIGNMENTS OF ALL MATERIAL CONTRACTS, TOGETHER WITH
COPIES OF SUCH MATERIAL CONTRACTS, CERTIFIED BY A RESPONSIBLE OFFICER AS BEING
IN FULL FORCE AND EFFECT, AND NOT SUBJECT TO A DEFAULT BY ANY PARTY THERETO; AND

 

(7)           THE CONSENT AND WAIVER OF BORROWER RIGHTS.

 

(C)           LENDER HAS RECEIVED AS OF THE CLOSING DATE (OR SUCH OTHER DATE
SPECIFIED IN THIS SECTION 2.01(C)) THE FOLLOWING, EACH IN FORM AND SUBSTANCE
ACCEPTABLE TO LENDER IN ALL RESPECTS:

 

5

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(1)           A COMMITMENT FROM A TITLE COMPANY ACCEPTABLE TO LENDER, IN ITS
SOLE DISCRETION, TO ISSUE A TITLE INSURANCE POLICY ASSURING LENDER THAT THE
MORTGAGE CREATES A VALID AND ENFORCEABLE ENCUMBRANCE ON THE REAL ESTATE, FREE
AND CLEAR OF ALL DEFECTS AND ENCUMBRANCES EXCEPT PERMITTED ENCUMBRANCES;

 

(2)           COPIES OF FAVORABLE UCC, TAX, JUDGMENT, BANKRUPTCY AND FIXTURE
LIEN SEARCH REPORTS (OR OTHER EVIDENCE OF THE SAME SATISFACTORY TO LENDER) IN
ALL NECESSARY OR APPROPRIATE JURISDICTIONS AND UNDER ALL LEGAL AND TRADE NAMES
OF BORROWER AND ALL OTHER PARTIES REQUESTED BY LENDER, INDICATING THAT THERE ARE
NO PRIOR LIENS ON ANY OF THE COLLATERAL OTHER THAN PERMITTED ENCUMBRANCES;

 

(3)           DULY EXECUTED LANDLORD WAIVERS AND/OR WAREHOUSEMAN, OR BAILEE
AGREEMENTS WITH RESPECT TO ALL INVENTORY OF BORROWER LOCATED AT LEASED LOCATIONS
OR OTHER LOCATIONS NOT OWNED BY BORROWER IN FEE SIMPLE, IF ANY, ALONG WITH A
CERTIFIED COPY OF ALL LEASES OF BORROWER, IF ANY;

 

(4)           CERTIFIED COPIES OF THE ARTICLES OF ORGANIZATION OR OTHER CHARTER
DOCUMENTS OF BORROWER, TOGETHER WITH CERTIFICATES OF GOOD STANDING OR EXISTENCE,
AS ARE AVAILABLE FROM THE SECRETARY OF STATE (OR OTHER APPLICABLE GOVERNMENTAL
AUTHORITY) OF THE JURISDICTION OF ORGANIZATION OF BORROWER AND EACH OTHER
JURISDICTION WHERE BORROWER IS REQUIRED TO BE QUALIFIED TO DO BUSINESS AS A
FOREIGN ENTITY;

 

(5)           A CERTIFICATE, DATED AS OF THE DATE HEREOF AND SIGNED BY AN
APPROPRIATE RESPONSIBLE OFFICER, ATTACHING AND CERTIFYING COPIES OF THE BYLAWS
OR SIMILAR DOCUMENTS, AND APPROPRIATE RESOLUTIONS AUTHORIZING THE EXECUTION,
DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS AND CERTIFYING THE NAME, TITLE
AND THE SIGNATURE OF EACH OFFICER EXECUTING THE LOAN DOCUMENTS;

 

(6)           ONE OR MORE FAVORABLE WRITTEN OPINIONS OF COUNSEL TO BORROWER,
ADDRESSED TO LENDER, ADDRESSING THE MATTERS SET FORTH ON EXHIBIT 2.01(C)(6);

 

(7)           CERTIFICATES OF INSURANCE, IN FORM AND SUBSTANCE ACCEPTABLE TO
LENDER, DESCRIBING THE TYPES AND AMOUNTS OF INSURANCE (PROPERTY AND LIABILITY)
CARRIED BY BORROWER, IN EACH CASE INSURING LENDER AS A FIRST MORTGAGEE UNDER A
STANDARD MORTGAGEE CLAUSE, AND NAMING LENDER AS LENDER LOSS PAYEE OR ADDITIONAL
INSURED, AS THE CASE MAY BE, AND WHICH INCLUDE A STIPULATION THAT COVERAGES WILL
NOT BE CANCELLED OR DIMINISHED WITHOUT AT LEAST 30 DAYS’ PRIOR WRITTEN NOTICE TO
LENDER, TOGETHER WITH A LENDER’S LOSS PAYABLE ENDORSEMENT;

 

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(8)           AN ASSIGNMENT OF THE BORROWER’S BUSINESS INTERRUPTION INSURANCE
POLICY, DULY EXECUTED BY BORROWER AND PURSUANT TO WHICH THE BORROWER ASSIGNS TO
LENDER ALL OF BORROWER’S RIGHT, TITLE AND INTEREST IN AND TO ITS BUSINESS
INTERRUPTION INSURANCE POLICY, AND WHICH ASSIGNMENT SHALL HAVE BEEN CONSENTED TO
AND CERTIFIED IN WRITING BY THE OTHER PARTY(IES) TO SUCH INSURANCE POLICY;

 

(9)           SATISFACTORY APPRAISALS OF ALL REAL ESTATE (INCLUDING AN “AS
BUILT” APPRAISAL), TOGETHER WITH SATISFACTORY COLLATERAL AUDITS OF ALL ACCOUNTS,
INVENTORY AND OTHER PERSONAL PROPERTY REQUESTED BY LENDER (INCLUDING FIELD AUDIT
AND SURVEY CONDUCTED BY LENDER);

 

(10)         COPIES OF DULY EXECUTED PAYOFF LETTERS, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, EXECUTED BY EACH EXISTING LENDER, TOGETHER WITH (A)
UCC-3 OR OTHER APPROPRIATE TERMINATION STATEMENTS, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, RELEASING ALL LIENS OF THE EXISTING LENDERS UPON ANY OF
THE PERSONAL PROPERTY OF BORROWER, (B) CANCELLATIONS AND RELEASES, IN FORM AND
SUBSTANCE SATISFACTORY TO LENDER, RELEASING ALL LIENS OF THE EXISTING LENDERS
UPON ANY OF THE REAL ESTATE, AND (C) ANY OTHER RELEASES, TERMINATIONS OR OTHER
DOCUMENTS REASONABLY REQUIRED BY LENDER TO EVIDENCE THE PAYOFF OF INDEBTEDNESS
OWED TO EXISTING LENDERS;

 

(11)         CERTIFIED COPIES OF ALL MATERIAL CONSENTS, PERMITS, APPROVALS,
AUTHORIZATIONS, REGISTRATIONS AND FILINGS AND ORDERS REQUIRED OR ADVISABLE TO BE
MADE OR OBTAINED UNDER ANY REQUIREMENT OF LAW OR BY ANY MATERIAL CONTRACTUAL
OBLIGATION OF BORROWER, IN CONNECTION WITH THE OPERATION OF BORROWER’S BUSINESS,
INCLUDING THE PRODUCTION OF ETHANOL AND BY-PRODUCTS THEREOF, CERTIFIED BY A
RESPONSIBLE OFFICER OR APPROPRIATE OFFICIAL OF THE APPLICABLE GOVERNMENTAL
AUTHORITY, AS THE CASE MAY BE, AS BEING IN FULL FORCE AND EFFECT, AND NOT BEING
SUBJECT TO ANY CONDITION PRECEDENT;

 

(12)         THREE COPIES OF A SURVEY AND MAPS OR PLATS OF THE REAL ESTATE
CERTIFIED TO THE LENDER AND THE TITLE COMPANY IN A MANNER REASONABLY
SATISFACTORY TO EACH OF LENDER AND THE TITLE COMPANY, DATED A DATE REASONABLY
SATISFACTORY TO EACH OF LENDER AND THE TITLE COMPANY BY AN INDEPENDENT
PROFESSIONAL LICENSED LAND SURVEYOR, WHICH MAPS OR PLATS AND THE SURVEYS ON
WHICH THEY ARE BASED ARE SUFFICIENT TO DELETE ANY STANDARD PRINTED SURVEY
EXCEPTION CONTAINED IN THE APPLICABLE TITLE INSURANCE POLICY;

 

(13)         FEDERAL EMERGENCY MANAGEMENT AGENCY STANDARD FLOOD HAZARD
DETERMINATION CERTIFICATES CERTIFYING, AMONG OTHER THINGS, THAT NONE OF THE REAL
ESTATE IS LOCATED WITHIN A FLOOD HAZARD AREA;

 

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(14)         PHASE I ENVIRONMENTAL SITE ASSESSMENT REPORTS ON ALL OF THE REAL
ESTATE, ALONG WITH SUCH FURTHER ENVIRONMENTAL REVIEW AND AUDIT REPORTS AS LENDER
REQUESTS (WHICH MAY INCLUDE PHASE II REPORTS), AND LETTERS BY THE FIRMS
PREPARING SUCH ENVIRONMENTAL REPORTS AUTHORIZING LENDER TO RELY ON SUCH REPORTS;

 

(15)         A CERTIFICATE DATED THE CLOSING DATE AND SIGNED BY AN APPROPRIATE
RESPONSIBLE OFFICER, CONFIRMING AND CERTIFYING THE SOLVENCY OF BORROWER BEFORE
AND AFTER GIVING EFFECT TO ALL TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS,
TOGETHER WITH (A) THE PROJECTIONS AND (B) THE PRO FORMA BALANCE SHEET FOR
BORROWER AS OF THE CLOSING DATE;

 

(16)         COPIES OF BORROWER’S AUDITED FINANCIAL STATEMENTS AS OF ITS MOST
RECENT FISCAL YEAR END AND INTERNALLY PREPARED FINANCIAL STATEMENTS AS OF THE
LAST DAY OF THE IMMEDIATELY PRECEDING QUARTER, EACH IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER;

 

(17)         A CERTIFICATE DATED THE CLOSING DATE AND SIGNED BY A RESPONSIBLE
OFFICER, CONFIRMING NOTICE TO BORROWER PURSUANT TO SECTION 326 OF THE USA
PATRIOT ACT OF 2001, 31 U.S.C. SEC. 5318; AND

 

(18)         AN AGREEMENT WITH POET MANAGEMENT, LLC ACCEPTABLE TO LENDER IN ALL
RESPECTS.

 

(D)           THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN DOCUMENTS
ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS.

 

(E)           ALL CONDITIONS PRECEDENT IN THE OTHER LOAN DOCUMENTS HAVE BEEN
SATISFIED OR WAIVED IN ACCORDANCE WITH SECTION 8.02.

 

(F)            NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

Section 3.04         Financial Statements. Borrower has furnished to Lender
copies of Borrower’s (a) audited financial statements (consistent with the
requirements of Section 4.01(a)) as of its most recent fiscal year end and (b)
internally prepared financial statements (consistent with the requirements of
Section 4.01(b)) as of the last day of the most recent quarter. Such financial
statements fairly present the financial condition of Borrower as of such dates
and the results of operations for such periods in conformity with GAAP
consistently applied, subject in the case of interim financial statements, to
year-end audit adjustments and the absence of footnotes. Since the date of such
financial statements, there have been no changes with respect to Borrower which
have had or could reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect on the business, results of operations, financial
condition, assets, liabilities or prospects of Borrower.

 

Section 3.05         Litigation and Environmental Matters.

 

(A)           NO LITIGATION, INVESTIGATION OR PROCEEDING OF OR BEFORE ANY
ARBITRATOR OR GOVERNMENTAL AUTHORITY IS PENDING AGAINST OR, TO THE KNOWLEDGE OF
BORROWER, THREATENED AGAINST OR AFFECTING BORROWER (1) AS TO WHICH THERE IS A
REASONABLE POSSIBILITY OF AN ADVERSE DETERMINATION THAT COULD REASONABLY BE
EXPECTED TO HAVE, EITHER INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE
EFFECT OR (2) WHICH IN ANY MANNER DRAWS INTO QUESTION THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

(B)           BORROWER (1) HAS NOT FAILED TO COMPLY WITH ANY ENVIRONMENTAL LAW
OR TO OBTAIN, MAINTAIN OR COMPLY WITH ANY PERMIT, LICENSE OR OTHER APPROVAL
REQUIRED UNDER ANY ENVIRONMENTAL LAW, (2) HAS NOT BECOME SUBJECT TO ANY
ENVIRONMENTAL LIABILITY, (3) HAS

 

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NOT RECEIVED NOTICE OF ANY CLAIM WITH RESPECT TO ANY ENVIRONMENTAL LIABILITY, OR
(4) DOES NOT KNOW OF ANY BASIS FOR ANY ENVIRONMENTAL LIABILITY.

 

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

 

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

 

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

 

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

 

Section 3.10         ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used under GAAP)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used under GAAP) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than $10,000
the fair market value of the assets of all such underfunded Plans.

 

Section 3.11         Ownership of Property. Borrower has good title to or a
valid leasehold interest in all of the real and personal property material to
operation of Borrower’s businesses. Borrower owns, or is licensed or otherwise
has the right to use, all patents, trademarks, service

 

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marks, tradenames, copyrights and other intellectual property material to its
business, and the use thereof by Borrower does not infringe on the rights of any
other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

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

 

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

 

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

 

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

 

Section 3.16         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.

 

Section 3.17         Material Contracts. Borrower is a party to, and Schedule
3.17 sets forth a complete and accurate listing of, all Material Contracts which
are required to be in effect to operate the Project. Material Contracts shall
include but not be limited to the Construction Agreement (and any material
subcontracts thereof, and separate construction contracts with other contractors
for improvements not covered by the Construction Agreement), management
agreements, supply and procurement agreements, sales and marketing agreements,
transportation agreements (including agreements for railroad services, rail car
leases, and the like), and utility

 

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agreements. Borrower is in compliance with all Material Contracts, and to
Borrower’s knowledge, all other parties thereto are in compliance with all
Material Contracts.

 

Section 3.18         Anti-Terrorism Laws. Neither Borrower nor any of its
Affiliates is in violation of (a) any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto, (b)
Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of
the United States (Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism)
or (c) the anti-money laundering provisions of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001)
amending the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq.

 

ARTICLE IV.

AFFIRMATIVE COVENANTS

 

Borrower covenants and agrees that so long as any commitment is in effect or the
principal of or interest on any Loan or any fee remains unpaid:

 

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

 

(A)           AS SOON AS AVAILABLE AND IN ANY EVENT (1) WITHIN 120 DAYS AFTER
THE END OF EACH FISCAL YEAR OF BORROWER, A COPY OF THE ANNUAL AUDITED REPORT FOR
SUCH FISCAL YEAR FOR BORROWER AS OF THE END OF SUCH FISCAL YEAR AND THE RELATED
CONSOLIDATED BALANCE SHEETS, STATEMENTS OF INCOME, OWNERS’ EQUITY AND CASH FLOWS
(TOGETHER WITH ALL FOOTNOTES THERETO) OF BORROWER FOR SUCH FISCAL YEAR, (2)
SETTING FORTH IN COMPARATIVE FORM (FOR ALL REPORTS DELIVERED AFTER BORROWER’S
FIRST FISCAL YEAR OF PLANT OPERATIONS) THE FIGURES FOR THE PREVIOUS FISCAL YEAR,
ALL IN REASONABLE DETAIL AND REPORTED ON BY A FIRM OF INDEPENDENT PUBLIC
ACCOUNTANTS ACCEPTABLE TO LENDER (WITHOUT A “GOING CONCERN” OR LIKE
QUALIFICATION, EXCEPTION OR EXPLANATION AND WITHOUT ANY QUALIFICATION OR
EXCEPTION AS TO SCOPE OF SUCH AUDIT), AND A STATEMENT FROM SUCH ACCOUNTANTS TO
THE EFFECT THAT SUCH FINANCIAL STATEMENTS PRESENT FAIRLY IN ALL MATERIAL
RESPECTS THE FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS OF BORROWER FOR
SUCH FISCAL YEAR IN ACCORDANCE WITH GAAP, THAT THE EXAMINATION BY SUCH
ACCOUNTANTS IN CONNECTION WITH SUCH FINANCIAL STATEMENTS HAS BEEN MADE IN
ACCORDANCE WITH GAAP;

 

(B)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 45 DAYS AFTER THE END
OF EACH QUARTER, AN UNAUDITED BALANCE SHEET OF BORROWER AS OF THE END OF SUCH
QUARTER AND THE RELATED UNAUDITED STATEMENTS OF INCOME, OWNER’S EQUITY AND CASH
FLOW OF BORROWER FOR SUCH QUARTER AND THE THEN ELAPSED PORTION OF SUCH FISCAL
YEAR, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE FIGURES FOR THE
CORRESPONDING QUARTER AND THE CORRESPONDING PORTION OF BORROWER’S PREVIOUS
FISCAL YEAR; IN EITHER CASE ALL CERTIFIED BY AN APPROPRIATE RESPONSIBLE OFFICER
OF BORROWER AS PRESENTING FAIRLY IN ALL MATERIAL RESPECTS THE FINANCIAL

 

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CONDITION AND RESULTS OF OPERATIONS OF BORROWER IN ACCORDANCE WITH GAAP, SUBJECT
TO NORMAL YEAR-END AUDIT ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES;

 

(C)           WITHIN 45 DAYS OF THE LAST DAY OF EACH QUARTER, A CERTIFICATE, IN
FORM AND SUBSTANCE SATISFACTORY TO LENDER IN ALL RESPECTS, OF A RESPONSIBLE
OFFICER, (1) CERTIFYING AS TO WHETHER THERE EXISTS A DEFAULT OR EVENT OF DEFAULT
ON THE DATE OF SUCH CERTIFICATE, AND IF A DEFAULT OR AN EVENT OF DEFAULT THEN
EXISTS, SPECIFYING THE DETAILS THEREOF AND THE ACTION WHICH BORROWER HAS TAKEN
OR PROPOSES TO TAKE WITH RESPECT THERETO, (2) SETTING FORTH IN REASONABLE DETAIL
CALCULATIONS DEMONSTRATING COMPLIANCE WITH ARTICLE V, (3) STATING WHETHER ANY
CHANGE IN GAAP OR THE APPLICATION THEREOF HAS OCCURRED SINCE THE DATE OF
BORROWER’S MOST RECENT PREVIOUSLY DELIVERED AUDITED FINANCIAL STATEMENTS AND, IF
ANY CHANGE HAS OCCURRED, SPECIFYING THE EFFECT OF SUCH CHANGE ON THE FINANCIAL
STATEMENTS ACCOMPANYING SUCH CERTIFICATE; AND (4) ATTACHING A PRODUCTION REPORT,
CERTIFIED AS TO ACCURACY, WHICH SETS FORTH PERTINENT INFORMATION IN RESPECT OF
THE AMOUNT OF ETHANOL PRODUCED AND OTHER INFORMATION AS LENDER MAY REQUEST FROM
TIME TO TIME;

 

(D)           CONCURRENTLY WITH THE FINANCIAL STATEMENTS REFERRED TO IN CLAUSE
(A) ABOVE, A CERTIFICATE OF THE ACCOUNTING FIRM THAT REPORTED ON SUCH FINANCIAL
STATEMENTS STATING WHETHER IT OBTAINED ANY KNOWLEDGE DURING THE CAUSE OF ITS
EXAMINATION OF SUCH FINANCIAL STATEMENTS OF THE OCCURRENCE OF ANY DEFAULT OR
EVENT OF DEFAULT (WHICH CERTIFICATE MAY BE LIMITED TO THE EXTENT REQUIRED BY
ACCOUNTING RULES OR GUIDELINES);

 

(E)           PROMPTLY AFTER THE SAME BECOME AVAILABLE, COPIES OF ALL PERIODIC
REPORTS DISTRIBUTED BY BORROWER TO ITS MEMBERS GENERALLY, OR TO ANY NATIONAL
SECURITIES EXCHANGE, AS APPLICABLE;

 

(F)            CONCURRENTLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS
REFERRED TO IN CLAUSE (A) ABOVE, A COPY OF BORROWER’S PRO FORMA BUDGET AND
BUSINESS PLAN FOR THE SUBSEQUENT FISCAL YEAR FOR BORROWER, CONTAINING A PRO
FORMA CONSOLIDATED BALANCE SHEET OF BORROWER AS OF THE END OF SUCH SUBSEQUENT
FISCAL YEAR AND THE RELATED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME, OWNERS’
EQUITY AND CASH FLOWS (TOGETHER WITH ALL FOOTNOTES THERETO) OF BORROWER FOR SUCH
SUBSEQUENT FISCAL YEAR; AND

 

(G)           PROMPTLY FOLLOWING ANY REQUEST THEREFOR, SUCH OTHER INFORMATION
REGARDING THE RESULTS OF OPERATIONS, BUSINESS AFFAIRS AND FINANCIAL CONDITION OF
BORROWER AS LENDER MAY REASONABLY REQUEST.

 

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

 

(A)           THE OCCURRENCE OF ANY DEFAULT OR EVENT OF DEFAULT;

 

(B)           THE FILING OR COMMENCEMENT OF ANY ACTION, SUIT OR PROCEEDING BY OR
BEFORE ANY ARBITRATOR OR GOVERNMENTAL AUTHORITY AGAINST OR, TO THE KNOWLEDGE OF
BORROWER, AFFECTING BORROWER WHICH, IF ADVERSELY DETERMINED, COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT;

 

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(C)           THE OCCURRENCE OF ANY EVENT OR ANY OTHER DEVELOPMENT BY WHICH
BORROWER (1) FAILS TO COMPLY WITH ANY ENVIRONMENTAL LAW OR TO OBTAIN, MAINTAIN
OR COMPLY WITH ANY PERMIT, LICENSE OR OTHER APPROVAL REQUIRED UNDER ANY
ENVIRONMENTAL LAW, (2) BECOMES SUBJECT TO ANY ENVIRONMENTAL LIABILITY, (3)
RECEIVES NOTICE OF ANY CLAIM WITH RESPECT TO ANY ENVIRONMENTAL LIABILITY, OR (4)
BECOMES AWARE OF ANY BASIS FOR ANY ENVIRONMENTAL LIABILITY AND IN EACH OF THE
PRECEDING CLAUSES, WHICH INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT;

 

(D)           THE OCCURRENCE OF ANY ERISA EVENT THAT ALONE, OR TOGETHER WITH ANY
OTHER ERISA EVENTS THAT HAVE OCCURRED, COULD REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE EFFECT;

 

(E)           THE INCURRENCE OF ANY INDEBTEDNESS, INCLUDING INDEBTEDNESS
PERMITTED UNDER THIS AGREEMENT; AND

 

(F)            ANY OTHER DEVELOPMENT THAT RESULTS IN, OR COULD REASONABLY BE
EXPECTED TO RESULT IN, A MATERIAL ADVERSE EFFECT.

 

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

 

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

 

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

 

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

 

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Section 4.07         Visitation, Inspection, Audit, Etc.

 

(A)           BORROWER WILL PERMIT ANY REPRESENTATIVE OR AGENT OF LENDER TO
VISIT AND INSPECT ITS PROPERTIES, TO CONDUCT AUDITS OF THE COLLATERAL, TO
EXAMINE ITS BOOKS AND RECORDS AND TO MAKE COPIES AND TAKE EXTRACTS THEREFROM,
AND TO DISCUSS ITS AFFAIRS, FINANCES AND ACCOUNTS WITH ANY OF ITS OFFICERS,
EMPLOYEES AND ITS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, ALL AT SUCH
REASONABLE TIMES AND AS OFTEN AS LENDER, MAY REASONABLY REQUEST AFTER REASONABLE
PRIOR NOTICE TO BORROWER; PROVIDED, IF A DEFAULT OR AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING, NO PRIOR NOTICE WILL BE REQUIRED. BORROWER WILL BEAR
ALL EXPENSES INCURRED BY LENDER IN CONNECTION WITH ANY SUCH VISIT, INSPECTION,
AUDIT, EXAMINATION, OR DISCUSSION.

 

(B)           BORROWER WILL DELIVER TO LENDER SUCH APPRAISALS OF THE REAL ESTATE
AND OTHER FIXED ASSETS OF BORROWER AS LENDER MAY REQUEST AT ANY TIME AND FROM
TIME TO TIME, SUCH APPRAISALS TO BE CONDUCTED BY AN APPRAISER, AND TO BE
PRESENTED IN FORM AND SUBSTANCE, REASONABLY SATISFACTORY TO LENDER, IN EACH CASE
CONDUCTED AT THE EXPENSE OF BORROWER IF THE APPRAISAL IS DELIVERED IN CONNECTION
WITH A REQUEST BY BORROWER FOR AN ACCOMMODATION, WAIVER, OR OTHER CREDIT ACTION.

 

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

 

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

 

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

 

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

 

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

 

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

 

If any warehouse receipt or receipts in the nature of a warehouse receipt is/are
issued in respect of any portion of the Collateral, then Borrower (a) will not
permit such warehouse receipt or receipts in the nature thereof to be
“negotiable” as such term is used in Article 7 of the UCC and (b) will deliver
all such receipts to Lender (or a Person designated by Lender) within five days
of Lender’s request and from time to time thereafter. If no Default or Event of
Default then exists, Lender agrees to deliver to Borrower any receipt so held by
Lender upon Borrower’s request in connection with Borrower’s sale or other
disposition of the underlying Collateral, if such disposition is in the ordinary
course of Borrower’s business.

 

ARTICLE V.

FINANCIAL COVENANTS

 

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

 

Section 5.01         Fixed Charge Coverage Ratio. On the Closing Date, and at
the end of each fiscal year following the Closing Date, Borrower will maintain a
Fixed Charge Coverage

 

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Ratio of not less than 1.15:1.00. After the first fiscal year of operations
after the completion of the Project (as defined in the Third Supplement), which
includes the year construction of the Project is completed, Borrower will
maintain a Fixed Charge Coverage Ratio of 1.00:1.00 increasing to 1.15:1.00
after the second fiscal year after the Project is completed, and each year
thereafter. When an Owners’ Equity Ratio of 60% and working capital of
$12,000,000 is reached and maintained, then the minimum Fixed Charge Coverage
Ratio will be maintained or reduced, as the case may be, to 1.0:1.0. Should the
Owners’ Equity Ratio decline below 60% or working capital decline below
$12,000,000 the minimum Fixed Charge Coverage Ratio of 1.15:1.0 will be
reinstated.

 

Section 5.02         Working Capital. On the Closing Date, and at the end of the
fiscal year following the Closing Date, Borrower will maintain working capital
of at least (a) $5,000,000. After the first fiscal year of operations after the
completion of the Project (as defined in the Third Supplement), which includes
the year construction of the Project is completed, Borrower will maintain
working capital of $10,000,000, increasing to $12,000,000 after the second
fiscal year after the Project is completed. The amount of Lender’s unfunded
Revolving Commitment Amount (as defined in the Second Supplement) will be
considered working capital for purposes of the determination of compliance with
this covenant.

 

Section 5.03         Tangible Net Worth. Borrower’s Tangible Net Worth will be,
and will not fall below, at any time, $70,000,000 as of December 31, 2007.
Borrower’s minimum Tangible Net Worth shall increase annually by an amount equal
to 25% of Borrower’s Net Income measured as of each fiscal year end until an
Owners’ Equity Ratio of not less than 50% is maintained.

 

Section 5.04         Capital Expenditures. During the Funding Period (as defined
in the Third Supplement), Borrower will not make Capital Expenditures unrelated
to the Project (as defined in the Third Supplement) in excess of $750,000
without the prior written consent of Lender. Following completion of the
Project, Borrower will not make Capital Expenditures in excess of $2,000,000 in
any fiscal year without Lender’s prior written approval.

 

Section 5.05         Owners’ Equity Ratio. Borrower must maintain an Owners’
Equity Ratio of at least (a) 45% on the Closing Date and on December 31, 2007,
(b) 47% on December 31, 2008, (c) 49% on December 31, 2009, and (d) 50% on
December 31, 2010, and at all times thereafter.

 

Section 5.06         Current Ratio. On the Closing Date, and at the end of each
fiscal year following the Closing Date, Borrower will maintain a ratio of
current assets to current liabilities of not less than 1.20:1.00. The amount of
Lender’s unfunded Revolving Commitment Amount (as defined in the Second
Supplement) will be considered working capital for purposes of the determination
of compliance with this covenant.

 

Compliance with the financial covenants set forth in this Article V will be
measured based on financial statements dated as of the close of business on the
last day of the immediately preceding quarter for the related period.

 

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ARTICLE VI.

NEGATIVE COVENANTS

 

Borrower covenants and agrees that so long as Lender has a commitment hereunder
or the principal of or interest on any Loan or any fee remains unpaid:

 

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

 

(A)           INDEBTEDNESS CREATED PURSUANT TO THE LOAN DOCUMENTS;

 

(B)           INDEBTEDNESS ACCEPTABLE TO LENDER IN ITS SOLE DISCRETION AND
EXISTING ON THE DATE HEREOF AND SET FORTH ON SCHEDULE 6.01(B) AND EXTENSIONS AND
RENEWALS OF ANY SUCH INDEBTEDNESS THAT DO NOT INCREASE THE OUTSTANDING PRINCIPAL
AMOUNT THEREOF (IMMEDIATELY PRIOR TO GIVING EFFECT TO SUCH EXTENSION, RENEWAL OR
REPLACEMENT) OR SHORTEN THE MATURITY OR THE WEIGHTED AVERAGE LIFE THEREOF;

 

(C)           INDEBTEDNESS SUBORDINATE TO THE OBLIGATIONS IN AN AMOUNT NOT TO
EXCEED $5,000,000 ON TERMS AND CONDITIONS ACCEPTABLE TO LENDER IN ITS SOLE
DISCRETION, PROVIDED SUCH INDEBTEDNESS (I) IS ADVANCED PRIOR TO ANY DISBURSEMENT
OF THE LOANS BY LENDER UNDER THE EXPANSION LOAN FACILITY BY LENDER, (II) IS
UNSECURED, (III) ACCRUES INTEREST AT AN ANNUAL INTEREST RATE OF 12% OR LESS,
(IV) DOES NOT REQUIRE INTEREST PAYMENTS UNTIL THE DATE SUBSTANTIAL COMPLETION
OCCURS, (V) DOES NOT REQUIRE PRINCIPAL PAYMENTS UNTIL AT LEAST ONE YEAR FROM THE
DATE SUBSTANTIAL COMPLETION (AS DEFINED IN THE THIRD SUPPLEMENT) OCCURS, AND
THEN ONLY IF AFTER SUCH PAYMENT IS MADE, BORROWER IS IN COMPLIANCE WITH THE
FINANCIAL COVENANTS SET FORTH IN ARTICLE V OF THE MASTER AGREEMENT, (VI)
REQUIRES DEFERRAL OF ALL PAYMENTS DURING THE CONTINUANCE OF A DEFAULT OR EVENT
OF DEFAULT, (VII) DOES NOT CONTAIN ANY PROVISION PROVIDING FOR A PREMIUM FOR
PREPAYMENT OF SUCH SUBORDINATE DEBT, AND (VIII) IS SUBJECT TO AN INTERCREDITOR
AGREEMENT ACCEPTABLE TO LENDER IN ITS SOLE DISCRETION; AND

 

(d)           Indebtedness in an amount not to exceed $2,500,000 for the purpose
of obtaining one or more letters of credit in connection with supply and
transportation contracts related to the procurement of utilities; provided such
Indebtedness shall be on terms and conditions satisfactory to Lender in is sole
discretion and subordinate to Indebtedness created pursuant to the Loan
Documents under this Agreement, and is subject to an intercreditor agreement
acceptable to Lender in its sole discretion.

 

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

 

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

 

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

 

(A)           INVESTMENTS (OTHER THAN PERMITTED INVESTMENTS) EXISTING ON THE
DATE HEREOF AND SET FORTH ON SCHEDULE 6.04(A);

 

(B)           PERMITTED INVESTMENTS IN WHICH LENDER MAINTAINS A FIRST PRIORITY,
PERFECTED SECURITY INTEREST THEREIN;

 

(C)           LOANS OR ADVANCES TO EMPLOYEES, OFFICERS OR DIRECTORS OF BORROWER
IN THE ORDINARY COURSE OF BUSINESS FOR TRAVEL, RELOCATION AND RELATED EXPENSES;
PROVIDED, HOWEVER, THAT THE AGGREGATE AMOUNT OF ALL SUCH LOANS AND ADVANCES DOES
NOT EXCEED $200,000 AT ANY TIME;

 

(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

 

(E)           OTHER INVESTMENTS WHICH IN THE AGGREGATE DO NOT EXCEED $250,000 IN
ANY FISCAL YEAR OF BORROWER.

 

Section 6.05         Restricted Payments. Other than dividends or distributions
by Borrower solely in units of any class of its membership interests, Borrower
will not pay, declare or make, or agree to pay, declare or make, directly or
indirectly, any dividend or distribution on any class of its membership
interests, or make any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, retirement, defeasance or
other acquisition of, any membership interest, or any options, warrants, or
other rights to purchase any of the foregoing, whether now or hereafter
outstanding, or any payment in respect of Indebtedness subordinated to the
Obligations (each such dividend, distribution, set aside or payment, a
“Restricted Payment”), except, prior to Substantial Completion (as defined in
the Third Supplement), which includes the remainder of the fiscal year in which
Substantial Completion occurs, and so long as no Default or Event of Default has
occurred and is then continuing or would result from such payment, Borrower may
distribute an amount not to exceed 40% of its Net Income for such fiscal year.
In the fiscal years following Substantial Completion, and so long as no Default
or Event of Default has occurred and is then continuing or would result from
such payment:

 

(a)           Borrower may distribute an amount of up to 75% of its Net Income;
and

 

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(b)           So long as Borrower achieves and maintains an Owners’ Equity Ratio
that exceeds 60% and working capital that exceeds $12,000,000 (in each case as
reported on audited fiscal year end financial statements), Borrower may
distribute up to 100% of its Net Income; provided, the limitations set forth in
(a) above will be reinstated if Borrower’s Owners’ Equity Ratio falls below 60%
or working capital falls below $12,000,000 at any quarterly reporting period.

 

Distributions for any prior fiscal year must be declared by Borrower’s board of
managers within 120 days of such fiscal year end or allowance hereunder to
declare and pay the distribution for such fiscal year will be deemed waived by
Borrower and disallowed. In addition, distributions for any current fiscal year
may be declared and paid by Borrower’s board of managers at any time during such
fiscal year. Minutes of Borrower’s board of managers’ meeting, or a writing in
lieu of meeting signed by all members of the board of managers, for which any
distribution is declared must, at a minimum, state the fiscal year period for
which any distribution will be made.

 

Distributions in respect of Net Income for the prior year may not be paid until
after confirmation of Net Income in Borrower’s financial statements submitted
pursuant to Section 4.01(a). Distributions in respect of Net Income for the
current period may be paid in accordance with Borrower’s internally prepared
year-to-date financial statements reflecting its Net Income for the year;
provided, Borrower must promptly provide for additional capital in the event the
amount of distributions exceeds the amount allowed based on Borrower’s audited
financial statements for such year. In addition, notwithstanding the foregoing,
Borrower may make payments on subordinate Indebtedness to the extent such
payments are allowed under an intercreditor agreement between Lender and the
other lender or creditor to which such payments are made.

 

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

 

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

 

Section 6.08         Restrictive Agreements. Borrower will not directly or
indirectly, enter into, incur or permit to exist any agreement that prohibits,
restricts or imposes any condition upon the ability of Borrower to create, incur
or permit any Lien upon any of its assets or properties, whether now owned or
hereafter acquired, except restrictions or conditions imposed

 

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by any agreement relating to secured Indebtedness permitted under this Agreement
if such restrictions and conditions apply only to the property or assets
securing such Indebtedness.

 

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

 

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

 

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

 

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

 

Section 6.13         Deposit and Investment Accounts. Borrower will not
maintain, deposit or invest funds into any Deposit Account or Investment Account
other than those listed on Schedule 6.13 without the prior written consent of
Lender.

 

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

 

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

 

ARTICLE VII.

EVENTS OF DEFAULT AND REMEDIES

 

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

 

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(A)           BORROWER FAILS TO PAY OR DEPOSIT, AS THE CASE MAY BE, ANY AMOUNT
PAYABLE OR REQUIRED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WITHIN 10
DAYS OF WHEN SUCH AMOUNT BECOMES DUE;

 

(B)           ANY REPRESENTATION OR WARRANTY MADE OR DEEMED MADE BY OR ON BEHALF
OF BORROWER IN OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
(INCLUDING THE SCHEDULES ATTACHED HERETO AND THERETO) AND ANY AMENDMENTS OR
MODIFICATIONS HEREOF OR WAIVERS HEREUNDER, OR IN ANY CERTIFICATE, REPORT,
FINANCIAL STATEMENT OR OTHER DOCUMENT SUBMITTED TO LENDER BY BORROWER OR ANY
REPRESENTATIVE OF BORROWER PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT PROVES TO BE MATERIALLY INCORRECT WHEN MADE OR DEEMED
MADE OR SUBMITTED;

 

(C)           BORROWER FAILS TO OBSERVE OR PERFORM ANY COVENANT OR AGREEMENT IN
(I) SECTIONS 4.01, 4.02, OR 4.03, OR ARTICLE V OR VI, OF THIS MASTER AGREEMENT,
(II) ANY AMENDMENT DOCUMENT, OR (III) ANY MATERIAL CONTRACT BEYOND ANY
APPLICABLE CURE PERIOD, IF ANY (INCLUDING ANY PAYMENT DEFAULT UNDER SUCH
MATERIAL CONTRACTS);

 

(D)           BORROWER FAILS TO OBSERVE OR PERFORM ANY COVENANT OR AGREEMENT IN
THIS AGREEMENT (OTHER THAN THOSE REFERRED TO IN CLAUSES (A), (B), OR (C) ABOVE)
OR IN ANY OTHER LOAN DOCUMENT, AND SUCH FAILURE CONTINUES FOR 30 DAYS AFTER THE
EARLIER OF THE DATE (1) BORROWER BECOMES AWARE OF SUCH FAILURE, OR (2) WRITTEN
NOTICE THEREOF IS GIVEN TO BORROWER BY LENDER; OR ANY EVENT OF DEFAULT OTHERWISE
OCCURS UNDER ANY LOAN DOCUMENT;

 

(E)           BORROWER OR ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS,
(WHETHER AS PRIMARY OBLIGOR OR AS GUARANTOR OR OTHER SURETY) FAILS TO PAY ANY
PRINCIPAL OF OR PREMIUM OR INTEREST ON ANY MATERIAL INDEBTEDNESS THAT IS
OUTSTANDING, WHEN AND AS THE SAME BECOMES DUE AND PAYABLE (WHETHER AT SCHEDULED
MATURITY, REQUIRED PREPAYMENT, ACCELERATION, DEMAND OR OTHERWISE), AND SUCH
FAILURE CONTINUES AFTER THE APPLICABLE GRACE PERIOD, IF ANY, SPECIFIED IN THE
AGREEMENT OR INSTRUMENT EVIDENCING SUCH INDEBTEDNESS; OR ANY OTHER EVENT OCCURS
OR CONDITION EXISTS UNDER ANY AGREEMENT OR INSTRUMENT RELATING TO SUCH
INDEBTEDNESS AND CONTINUES AFTER THE APPLICABLE GRACE PERIOD, IF ANY, SPECIFIED
IN SUCH AGREEMENT OR INSTRUMENT, IF THE EFFECT OF SUCH EVENT OR CONDITION IS TO
ACCELERATE, OR PERMIT THE ACCELERATION OF, THE MATURITY OF SUCH INDEBTEDNESS; OR
ANY SUCH INDEBTEDNESS IS DECLARED TO BE DUE AND PAYABLE; OR REQUIRED TO BE
PREPAID OR REDEEMED (OTHER THAN BY A REGULARLY SCHEDULED REQUIRED PREPAYMENT OR
REDEMPTION), PURCHASED OR DEFEASED, OR ANY OFFER TO PREPAY, REDEEM, PURCHASE OR
DEFEASE SUCH INDEBTEDNESS IS REQUIRED TO BE MADE, IN EACH CASE PRIOR TO THE
STATED MATURITY THEREOF;

 

(F)            BORROWER OR ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS, (1)
COMMENCES A VOLUNTARY CASE OR OTHER PROCEEDING OR FILES ANY PETITION SEEKING
LIQUIDATION, REORGANIZATION OR OTHER RELIEF UNDER ANY FEDERAL, STATE OR FOREIGN
BANKRUPTCY, INSOLVENCY OR OTHER SIMILAR LAW NOW OR HEREAFTER IN EFFECT OR
SEEKING THE APPOINTMENT OF A CUSTODIAN, TRUSTEE, RECEIVER, LIQUIDATOR OR OTHER
SIMILAR OFFICIAL OF IT OR ANY SUBSTANTIAL PART OF ITS PROPERTY, (2) CONSENTS TO
THE INSTITUTION OF, OR FAILS TO CONTEST IN A TIMELY AND APPROPRIATE MANNER, ANY
PROCEEDING OR PETITION DESCRIBED IN CLAUSE (1) OF THIS SECTION 7.01(F), (3)
APPLIES FOR OR CONSENTS TO THE APPOINTMENT OF A CUSTODIAN, TRUSTEE, RECEIVER,
LIQUIDATION OR

 

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OTHER SIMILAR OFFICIAL FOR BORROWER OR SUCH GUARANTOR OR FOR A SUBSTANTIAL PART
OF THE ASSETS OF BORROWER OR SUCH GUARANTOR, (4) FILES AN ANSWER ADMITTING THE
MATERIAL ALLEGATIONS OF A PETITION FILED AGAINST IT IN ANY SUCH PROCEEDING, (5)
MAKES A GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS, OR (6) TAKES ANY ACTION
FOR THE PURPOSE OF EFFECTING ANY OF THE FOREGOING;

 

(G)           AN INVOLUNTARY PROCEEDING IS COMMENCED OR AN INVOLUNTARY PETITION
IS FILED SEEKING (1) LIQUIDATION, REORGANIZATION OR OTHER RELIEF IN RESPECT OF
BORROWER OR ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS, OR THE DEBTS, OR
ANY SUBSTANTIAL PART OF THE ASSETS OF BORROWER OR SUCH GUARANTOR UNDER ANY
FEDERAL, STATE OR FOREIGN BANKRUPTCY, INSOLVENCY OR OTHER SIMILAR LAW NOW OR
HEREAFTER IN EFFECT OR (2) THE APPOINTMENT OF A CUSTODIAN, TRUSTEE, RECEIVER,
LIQUIDATOR OR OTHER SIMILAR OFFICIAL FOR BORROWER OR ANY GUARANTOR OF ANY
PORTION OF THE OBLIGATIONS, OR FOR A SUBSTANTIAL PART OF THE ASSETS OF BORROWER
OR SUCH GUARANTOR, AND IN ANY SUCH CASE, SUCH PROCEEDING OR PETITION REMAINS
UNDISMISSED FOR A PERIOD OF 60 DAYS OR AN ORDER OR DECREE APPROVING OR ORDERING
ANY OF THE FOREGOING IS ENTERED;

 

(H)           BORROWER OR ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS
BECOMES UNABLE TO PAY, ADMITS IN WRITING ITS INABILITY TO PAY, OR FAILS TO PAY,
ITS DEBTS AS THEY BECOME DUE;

 

(I)            AN ERISA EVENT OCCURS WITH RESPECT TO BORROWER OR ANY GUARANTOR
OF ANY PORTION OF THE OBLIGATIONS THAT, IN THE OPINION OF LENDER, WHEN TAKEN
TOGETHER WITH OTHER ERISA EVENTS THAT HAVE OCCURRED, COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT;

 

(J)            ANY JUDGMENT OR ORDER FOR THE PAYMENT OF MONEY IN EXCESS OF
$250,000 IN THE AGGREGATE IS RENDERED AGAINST BORROWER OR ANY GUARANTOR OF ANY
PORTION OF THE OBLIGATIONS, AND EITHER (1) SUCH JUDGMENT OR ORDER IS FINAL AND
ENFORCEMENT PROCEEDINGS HAVE BEEN COMMENCED BY ANY CREDITOR UPON SUCH JUDGMENT
OR ORDER, OR (2) THERE IS A PERIOD OF 30 CONSECUTIVE DAYS DURING WHICH A STAY OF
ENFORCEMENT OF SUCH JUDGMENT OR ORDER, BY REASON OF A PENDING APPEAL OR
OTHERWISE, IS NOT IN EFFECT;

 

(K)           ANY NON-MONETARY JUDGMENT OR ORDER IS RENDERED AGAINST BORROWER OR
ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS THAT COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, AND THERE IS A PERIOD OF
30 CONSECUTIVE DAYS DURING WHICH A STAY OF ENFORCEMENT OF SUCH JUDGMENT OR
ORDER, BY REASON OF A PENDING APPEAL OR OTHERWISE, IS NOT IN EFFECT;

 

(L)            A CHANGE IN CONTROL OCCURS OR EXISTS;

 

(M)          BORROWER CEASES TO EXIST OR ANY GUARANTOR OF ANY PORTION OF THE
OBLIGATION CEASES TO EXIST;

 

(N)           BORROWER OR ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS
BECOMES THE SUBJECT OF ANY OUT-OF-COURT SETTLEMENT WITH ITS CREDITORS FOR THE
PAYMENT OF MONEY IN EXCESS OF $250,000;

 

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(O)           ANY GUARANTOR OF ANY PORTION OF THE OBLIGATIONS ATTEMPTS TO REVOKE
SUCH GUARANTEE, OR ANY SUCH GUARANTEE BECOMES UNENFORCEABLE IN WHOLE OR IN PART
FOR ANY REASON;

 

(P)           AN EVENT OF DEFAULT OCCURS UNDER ANY OTHER AGREEMENT WITH (OR
INSTRUMENT IN FAVOR OF) LENDER THAT COULD REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT; OR

 

(Q)           ANY OTHER EVENT OCCURS OR EXISTS WHICH COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

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

 

(A)           TERMINATE THE COMMITMENTS, WHEREUPON THE COMMITMENTS WILL
TERMINATE IMMEDIATELY;

 

(B)           DECLARE THE PRINCIPAL OF AND ANY ACCRUED INTEREST ON THE LOANS,
AND ALL OTHER OBLIGATIONS TO BE DUE AND PAYABLE, WHEREUPON THE SAME WILL BECOME
DUE AND PAYABLE IMMEDIATELY, WITHOUT PRESENTMENT, DEMAND, PROTEST OR OTHER
NOTICE OF ANY KIND, ALL OF WHICH ARE HEREBY WAIVED BY BORROWER;

 

(C)           SETOFF;

 

(D)           TAKE OTHER STEPS TO PROTECT OR PRESERVE LENDER’S INTEREST IN ANY
COLLATERAL, INCLUDING, WITHOUT LIMITATION, NOTIFYING ACCOUNT DEBTORS TO MAKE
PAYMENTS DIRECTLY TO LENDER, ADVANCING FUNDS TO PROTECT ANY COLLATERAL, AND
INSURING COLLATERAL; AND/OR

 

(E)           EXERCISE ALL REMEDIES PROVIDED FOR IN ANY OTHER LOAN DOCUMENT OR
AS OTHERWISE PROVIDED BY LAW.

 

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

 

ARTICLE VIII.

MISCELLANEOUS

 

Section 8.01         Notices.

 

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

 

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To Borrower:

 

Great Plains Ethanol, LLC

 

 

Attention: Rick Serie

 

 

27716 462 Avenue

 

 

Chancellor, South Dakota 57015

 

 

Facsimile: No. (605) 647-2442

 

 

 

And to:

 

Great Plains Ethanol, LLC

 

 

c/o POET, LLC

 

 

4615 North Lewis Avenue

 

 

Sioux Falls, South Dakota 57104

 

 

Attn: Vice President of Project Development

 

 

Facsimile No. (605) 965-2203

 

 

 

With a copy to:

 

James M. Wiederrich, Esq.

 

 

Woods, Fuller, Shultz & Smith P.C.

 

 

300 South Phillips Avenue, Suite 300

 

 

Post Office Box 5027

 

 

Sioux Falls, South Dakota 57117-5027

 

 

Facsimile No. (605) 339-3357

 

 

 

To Lender:

 

AgCountry Farm Credit Services, FLCA

 

 

Attention: Randolph L. Aberle, Vice President

 

 

Post Office Box 6020

 

 

1900 44th Street South

 

 

Fargo, North Dakota 58108

 

 

Facsimile No. (701) 277-9054

 

 

 

With a copy to:

 

Ronald K. Vaske, Esq.

 

 

Lindquist & Vennum P.L.L.P.

 

 

4200 IDS Center

 

 

80 South Eighth Street

 

 

Minneapolis, Minnesota 55402

 

 

Facsimile: (612) 371-3207

 

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

 

Any agreement of Lender to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of Borrower. Lender will be
entitled to rely on the authority of any Person purporting to be a Person
authorized by Borrower to give such notice and Lender will not have any
liability to Borrower or any other Person as a result of any action taken or not
taken by Lender in reliance upon such telephonic or facsimile notice. The
obligation of

 

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Borrower to repay the Loans and all other Obligations hereunder will not be
affected in any way or to any extent by any failure of Lender to receive written
confirmation of any telephonic or facsimile notice or the receipt by Lender of a
confirmation which is at variance with the terms understood by Lender to be
contained in any such telephonic or facsimile notice.

 

Section 8.02         Waiver; Amendments.

 

(A)           NO FAILURE OR DELAY BY LENDER IN EXERCISING ANY RIGHT OR POWER
HEREUNDER OR ANY OTHER LOAN DOCUMENT, AND NO COURSE OF DEALING BETWEEN BORROWER
AND LENDER, WILL OPERATE AS A WAIVER, NOR WILL ANY SINGLE OR PARTIAL EXERCISE OF
ANY SUCH RIGHT OR POWER OR ANY ABANDONMENT OR DISCONTINUANCE OF STEPS TO ENFORCE
SUCH RIGHT OR POWER, PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE
EXERCISE OF ANY OTHER RIGHT OR POWER HEREUNDER OR THEREUNDER. THE RIGHTS AND
REMEDIES OF LENDER HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS ARE CUMULATIVE
AND ARE NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES PROVIDED BY LAW. NO WAIVER OF
ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR CONSENT TO ANY
DEPARTURE BY BORROWER THEREFROM WILL IN ANY EVENT BE EFFECTIVE UNLESS THE SAME
IS PERMITTED BY PARAGRAPH (B) OF THIS SECTION, AND THEN SUCH WAIVER OR CONSENT
WILL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE PURPOSE FOR WHICH
GIVEN. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE MAKING OF AN
ADVANCE WILL NOT BE CONSTRUED AS A WAIVER OF ANY DEFAULT OR EVENT OF DEFAULT,
REGARDLESS OF WHETHER LENDER HAD NOTICE OR KNOWLEDGE OF SUCH DEFAULT OR EVENT OF
DEFAULT AT THE TIME.

 

(B)           NO AMENDMENT OR WAIVER OF ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, NOR CONSENT TO ANY DEPARTURE BY BORROWER THEREFROM, WILL IN
ANY EVENT BE EFFECTIVE UNLESS THE SAME IS IN WRITING AND SIGNED BY BORROWER AND
LENDER AND THEN SUCH WAIVER OR CONSENT WILL BE EFFECTIVE ONLY IN THE SPECIFIC
INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.

 

Section 8.03         Expenses; Indemnification.

 

(A)           BORROWER INDEMNIFIES LENDER AND EACH PARTICIPANT AGAINST, AND
HOLDS LENDER AND EACH PARTICIPANT HARMLESS FROM, ANY AND ALL COSTS, LOSSES,
LIABILITIES, CLAIMS, DAMAGES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES
AND DISBURSEMENTS OF ANY ENGINEERS, CONSULTANTS, AGENTS AND COUNSEL FOR LENDER
AND/OR ANY PARTICIPANT, WHICH ARE INCURRED BY OR ASSERTED AGAINST LENDER AND/OR
ANY PARTICIPANT ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF (1) THE
EXECUTION, DELIVERY AND DOCUMENTATION OF THE CONDITIONAL COMMITMENT LETTER DATED
MAY 21, 2007, THE FEE LETTER DATED MAY 21, 2007, THIS MASTER AGREEMENT, ANY
SUPPLEMENT, ANY OTHER LOAN DOCUMENT, OR ANY OTHER AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, (2) ANY ADVANCES OR ANY ACTUAL OR PROPOSED USE
OF THE PROCEEDS THEREFROM, (3) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF
HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED BY BORROWER OR ANY SUBSIDIARY,
OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO BORROWER OR ANY SUBSIDIARY,
OR (4) ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING
RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY AND REGARDLESS OF WHETHER LENDER IS A PARTY THERETO, INCLUDING ATTORNEYS’
FEES AND ALL OTHER COSTS AND FEES (I) INCURRED BEFORE OR AFTER

 

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COMMENCEMENT OF LITIGATION OR AT TRIAL, ON APPEAL OR IN ANY OTHER PROCEEDING,
AND (II) INCURRED IN ANY BANKRUPTCY PROCEEDING; PROVIDED, THAT BORROWER IS NOT
OBLIGATED TO INDEMNIFY LENDER OR ANY PARTICIPANT FOR ANY OF THE FOREGOING
ARISING OUT OF LENDER’S OR SUCH PARTICIPANT’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL AND
NONAPPEALABLE JUDGMENT.

 

(B)           BORROWER WILL PAY, AND HOLD LENDER AND EACH PARTICIPANT HARMLESS
FROM AND AGAINST, ANY AND ALL TAXES WITH RESPECT TO THIS AGREEMENT AND ANY OTHER
LOAN DOCUMENT, ANY COLLATERAL DESCRIBED THEREIN, OR ANY PAYMENTS DUE THEREUNDER,
AND WILL SAVE LENDER AND EACH PARTICIPANT HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES WITH RESPECT TO OR RESULTING FROM ANY DELAY OR OMISSION TO PAY SUCH
TAXES.

 

(C)           TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER WILL NOT
ASSERT, AND BORROWER HEREBY WAIVES, ANY CLAIM AGAINST LENDER AND/OR ANY
PARTICIPANT, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES (AS OPPOSED TO ACTUAL OR DIRECT DAMAGES) ARISING OUT OF, IN
CONNECTION WITH OR AS A RESULT OF, THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE TRANSACTIONS CONTEMPLATED THEREIN, ANY ADVANCE OR THE
USE OF PROCEEDS THEREOF.

 

(D)           ALL AMOUNTS DUE UNDER THIS SECTION 8.03 ARE DUE AND PAYABLE
PROMPTLY ON DEMAND.

 

Section 8.04         Successors and Assigns.

 

(A)           THE PROVISIONS OF THIS AGREEMENT ARE BINDING UPON AND INURE TO THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS,
EXCEPT THAT BORROWER MAY NOT ASSIGN OR TRANSFER ANY OF ITS RIGHTS HEREUNDER
WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER (AND ANY ATTEMPTED ASSIGNMENT OR
TRANSFER BY BORROWER WITHOUT SUCH CONSENT WILL BE CONSIDERED NULL AND VOID).

 

(B)           LENDER MAY AT ANY TIME, WITHOUT THE CONSENT OF BORROWER, ASSIGN TO
ONE OR MORE ASSIGNEES ALL OR A PORTION OF ITS RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, INCLUDING ALL OR A PORTION OF ANY
COMMITMENT AND/OR ALL OR ANY PORTION OF ANY LOAN.

 

(C)           LENDER AND EACH PARTICIPANT MAY AT ANY TIME, WITHOUT THE CONSENT
OF BORROWER, SELL PARTICIPATION INTERESTS TO ONE OR MORE PERSONS (A
“PARTICIPANT”) IN ALL OR A PORTION OF LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT, INCLUDING ALL OR A PORTION OF ANY COMMITMENT AND/OR ALL OR ANY
PORTION OF ANY LOAN. IN THE EVENT LENDER OR ANY PARTICIPANT SELLS ONE OR MORE
PARTICIPATION INTERESTS, LENDER’S (AND SUCH PARTICIPANT’S) OBLIGATIONS UNDER
THIS AGREEMENT WILL REMAIN UNCHANGED, AND BORROWER WILL CONTINUE TO DEAL SOLELY
AND DIRECTLY WITH LENDER IN CONNECTION WITH LENDER’S RIGHTS AND OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

(D)           LENDER MAY AT ANY TIME PLEDGE OR ASSIGN A SECURITY INTEREST IN ALL
OR ANY PORTION OF ITS RIGHTS UNDER THIS AGREEMENT AND THE NOTES WITHOUT
COMPLYING WITH THIS SECTION. NO SUCH PLEDGE OR ASSIGNMENT WILL RELEASE LENDER
FROM ANY OF ITS OBLIGATIONS HEREUNDER OR SUBSTITUTE ANY SUCH PLEDGEE OR ASSIGNEE
FOR LENDER AS A PARTY HERETO.

 

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

 

(A)           THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT TO THE EXTENT
OTHERWISE PROVIDED THEREIN) WILL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF
THE STATE OF NORTH DAKOTA.

 

(B)           BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT OF THE DISTRICT OF NORTH DAKOTA, AND OF ANY STATE COURT OF THE
STATE OF NORTH DAKOTA LOCATED IN CASS COUNTY, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NORTH DAKOTA STATE COURT OR, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING WILL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL
AFFECT ANY RIGHT LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(C)           BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING DESCRIBED IN PARAGRAPH (B) OF THIS SECTION AND BROUGHT IN
ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

Section 8.06         WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 8.07         Right of Setoff. As additional security for payment of the
Obligations, Borrower grants to Lender a security interest in, a lien on, and an
express contractual right, at any time or from time to time upon the occurrence
and during the continuance of a Default or

 

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

 

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

 

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

 

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

 

Section 8.11         Transferable Record. This Agreement, the Notes and the
other Loan Documents, as amended, are “transferable records” as defined in
applicable law relating to electronic transactions. Therefore, Lender may, on
behalf of Borrower, create a microfilm, optical disk or electronic image of such
Loan Documents that are authoritative copies under

 

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applicable law. Lender may store such authoritative copies in microfilm or
electronic form and destroy the paper original as part of its normal business
practices. Lender, on its own behalf, may control and transfer such
authoritative copies as permitted by applicable law.

 

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

 

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

 

Section 8.14         Notice of Claims Against Lender; Limitation of Certain
Damages. In order to allow Lender to mitigate any damages to Borrower from
Lender’s alleged breach of its duties under the Loan Documents or any other
duty, if any, to Borrower, the Borrower agrees to give Lender immediate written
notice of any claim or defense it has against Lender, whether in tort or
contract, relating to any action or inaction by Lender under any Loan Document,
or the transactions related thereto, or of any defense to payment of the
Obligations for any reason. The requirement of providing timely notice to Lender
represents the parties’ agreed-upon standard of performance regarding claims
against Lender. Notwithstanding any claim that Borrower may have against Lender,
and regardless of any notice Borrower may have given Lender, Lender will not be
liable to Borrower for consequential, punitive and/or special damages.

 

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

 

SIGNATURE PAGE FOLLOWS

 

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

 

 

 

BORROWER:

 

 

 

 

 

GREAT PLAINS ETHANOL, LLC

 

 

 

 

 

 

 

By:

/s/ Darrin Ihnen

 

 

Name:

Darrin Ihnen

 

Title:

President

 

 

 

 

 

 

 

LENDER:

 

 

 

 

AGCOUNTRY FARM CREDIT SERVICES, FLCA

 

 

 

 

 

 

By:

  /s/ Randolph L. Aberle

 

 

Name:

Randolph L. Aberle

 

Title:

Vice President

 

SIGNATURE PAGE TO

MASTER CREDIT AGREEMENT

 

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ATTACHMENT I

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Borrower” means Great Plains Ethanol, LLC, d/b/a POET Biorefining – Chancellor,
a South Dakota limited liability company.

 

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

 

“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)

 

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set forth on a consolidated statement of cash flows of Borrower for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by
Borrower during such period.

 

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

 

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

 

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

 

“Closing Date” means August 10, 2007, and with respect to each Supplement, the
date specified in such supplement if a different closing date is specified.

 

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

 

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

 

“Collateral Assignment” means each collateral assignment by Borrower in favor of
Lender of a Material Contract, including all such collateral assignments made
prior to the date hereof and all of those made hereafter.

 

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

 

“Consent and Waiver of Borrower Rights” means the consent and waiver in the form
attached hereto as Exhibit A.

 

“Control” means the power, directly or indirectly, either to (a) vote 10% or
more of securities having ordinary voting power for the election of directors
(or persons performing similar functions) of a Person or (b) direct or cause the
direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. The terms
“Controls,” “Controlling,” “Controlled by,” and “under common Control with” have
meanings correlative thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Fixed Charges” means, for any period determined on a consolidated basis in
accordance with GAAP, the sum of (a) interest expense, (b) scheduled principal
payments made on Total Debt, (c) income tax expense for such period, (d)
Restricted Payments declared or otherwise allocated, and (e) the lesser of
$1,000,000 of maintenance Capital Expenditures or actual maintenance Capital
Expenditures.

 

“Fixed Charge Coverage Ratio” means for any period of four consecutive quarters,
the ratio of (a) EBITDA to (b) Fixed Charges.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Lender” means AgCountry Farm Credit Services, FLCA, a federal land credit
association organized under the Farm Credit Act of 1971, as amended, and its
successors and assigns.

 

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

 

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

 

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

 

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

 

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

 

“Material Contract” means an agreement to which Borrower is or hereafter becomes
a party which is material to the operation of Borrower’s business.

 

“Material Indebtedness” means Indebtedness (other than the Loans) or obligations
in respect of one or more Hedging Agreements in an aggregate principal amount of
$500,000 or more. For purposes of determining Material Indebtedness, the
“principal amount” of the

 

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obligations in respect to any Hedging Agreement at any time is the maximum
aggregate amount (giving effect to any netting agreements) that Borrower would
be required to pay if such Hedging Agreement were terminated at such time.

 

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

 

“Mortgage” means the Future Advance Mortgage and Security Agreement, and Fixture
Financing Statement and Assignment of Leases and Rents between Borrower and
Lender dated the date hereof, as further amended, restated, revised or otherwise
modified from time to time hereafter.

 

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

 

“Net Income” means net income (or loss) determined on a consolidated basis in
accordance with GAAP, but excluding (a) extraordinary gains or losses, (b) gains
attributable to write-up of assets, (c) any equity interest in unremitted
earnings of any Person that is not a Subsidiary, and (d) income (or loss) of any
Person which accrued prior to the date such Person becomes a Subsidiary or is
merged into or consolidated with Borrower or any Subsidiary on the date such
Person’s assets are acquired by the Borrower or a Subsidiary. Net Income shall
include USDA Bio Energy program payments and other payments and benefits
received by Borrower in respect of incentives provided by the State of South
Dakota or any other Governmental Authority.

 

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

 

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

 

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

 

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hereunder or thereunder, together with all renewals, extensions, modifications
or refinancings thereof.

 

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

 

“Original Credit Agreement” has the meaning set forth in the Recitals.

 

“Owners’ Equity Ratio” means the product of Net Worth plus subordinate
Indebtedness authorized in writing by Lender divided by total assets, expressed
as a percentage of total assets.

 

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

 

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

 

“Permitted Encumbrances” means:

 

(A)           LIENS IMPOSED BY LAW FOR TAXES NOT YET DUE (OR WITH RESPECT TO
REAL ESTATE TAXES, NOT YET DELINQUENT) OR WHICH ARE BEING CONTESTED IN GOOD
FAITH BY APPROPRIATE PROCEEDINGS AND WITH RESPECT TO WHICH ADEQUATE RESERVES ARE
BEING MAINTAINED IN ACCORDANCE WITH GAAP;

 

(B)           STATUTORY LIENS OF LANDLORDS AND LIENS OF CARRIERS, WAREHOUSEMEN,
MECHANIC, MATERIALMEN AND OTHER LIENS IMPOSED BY LAW CREATED IN THE ORDINARY
COURSE OF BUSINESS FOR AMOUNTS NOT YET DUE OR WHICH ARE BEING CONTESTED IN GOOD
FAITH BY APPROPRIATE PROCEEDINGS AND WITH RESPECT TO WHICH ADEQUATE RESERVES ARE
BEING MAINTAINED IN ACCORDANCE WITH GAAP;

 

(C)           PLEDGES AND DEPOSITS MADE IN THE ORDINARY COURSE OF BUSINESS IN
COMPLIANCE WITH WORKERS’ COMPENSATION, UNEMPLOYMENT INSURANCE AND OTHER SOCIAL
SECURITY LAWS OR REGULATIONS;

 

(D)           DEPOSITS TO SECURE THE PERFORMANCE OF BIDS, TRADE CONTRACTS,
LEASES, STATUTORY OBLIGATIONS, SURETY AND APPEAL BONDS, PERFORMANCE BONDS AND
OTHER OBLIGATIONS OF A LIKE NATURE, IN EACH CASE IN THE ORDINARY COURSE OF
BUSINESS;

 

(E)           JUDGMENT AND ATTACHMENT LIENS NOT GIVING RISE TO AN EVENT OF
DEFAULT OR LIENS CREATED BY OR EXISTING FROM ANY LITIGATION OR LEGAL PROCEEDING
THAT ARE CURRENTLY BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND
WITH RESPECT TO WHICH ADEQUATE RESERVES ARE BEING MAINTAINED IN ACCORDANCE WITH
GAAP;

 

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(F)            EASEMENTS, ZONING RESTRICTIONS, RIGHTS-OF-WAY AND SIMILAR
ENCUMBRANCES ON REAL PROPERTY IMPOSED BY LAW OR ARISING IN THE ORDINARY COURSE
OF BUSINESS THAT DO NOT SECURE ANY MONETARY OBLIGATIONS AND DO NOT MATERIALLY
DETRACT FROM THE VALUE OF THE AFFECTED PROPERTY OR MATERIALLY INTERFERE WITH THE
ORDINARY CONDUCT OF BUSINESS OF BORROWER AND ITS SUBSIDIARIES TAKEN AS A WHOLE;
AND

 

(G)           LIENS IN FAVOR OF LENDER.

 

“Permitted Investments” means:

 

(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 WHICH HAS A COMBINED CAPITAL AND SURPLUS
AND UNDIVIDED PROFITS OF NOT LESS THAN $500,000,000;

 

(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;

 

(E)           MUTUAL FUNDS INVESTING SOLELY IN ANY ONE OR MORE OF THE PERMITTED
INVESTMENTS DESCRIBED IN CLAUSES (A) THROUGH (D) ABOVE; AND

 

(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.

 

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

 

“Projections” means Borrower’s forecasted (a) balance sheets; (b) profit and
loss statements; and (c) cash flow statements; all prepared on a consolidated
basis and otherwise consistent with the historical financial statements of
Borrower, together with appropriate supporting details and a statement of
underlying assumptions which are believed by Borrower to be reasonable and fair
in light of the current condition and past performance of Borrower and to
reflect a reasonable estimate of the projected balance sheets, results of
operations, cash flows and other information presented therein for five (5)
years following the Closing Date.

 

I-9

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

 

“Real Estate” means all real property owned or leased by Borrower that is
intended as collateral for any Loan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Tangible Net Worth” means, as of any date (a) the total assets of Borrower that
should be reflected on Borrower’s consolidated balance sheet as of such date
prepared in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries, less (b) the sum of (i) Total Debt as of such date, (ii) the
amount of appraisal surplus or any write-up in the book value of any assets
resulting from a

 

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revaluation thereof or any write-up in excess of the cost of such assets
acquired reflected on the consolidated balance sheet of Borrower as of such date
prepared in accordance with GAAP, and (iii) the net book amount of all assets of
Borrower that should be classified as intangible assets (including investments
in other entities) on a consolidated balance sheet of Borrower as of such date
prepared in accordance with GAAP.

 

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

 

“Third Supplement” means the Third Supplement to the Master Credit Agreement
(2007 Expansion Loan Facility) between Borrower and Lender dated the date
hereof, as amended, restated, supplemented, or otherwise modified from time to
time.

 

“Title Company” means Dakota Homestead Title Insurance Company.

 

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

 

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

 

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

 

I-11

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EXHIBIT A

 

CONSENT AND WAIVER OF BORROWER RIGHTS

 

Reference is made to the Master Credit Agreement dated as of August 10, 2007
(the “Credit Agreement”), by and between Great Plains Ethanol, LLC, d/b/a POET
Biorefining – Chancellor, a South Dakota limited liability company (“Borrower”)
and AgCountry Farm Credit Services, FLCA. Terms defined in the Credit Agreement
are used herein with the same meanings.

 

The Borrower does hereby consent to the sale or participation of the Loans to
one or more Participants and waives the Borrower Rights, a copy of which are set
forth on Exhibit 1 attached hereto.

 

This Consent and Waiver is being delivered pursuant to Farm Credit
Administration Regulations, Section 617.7015 (69 FR 10908, March 9, 2004).

 

IN WITNESS WHEREOF, I have hereunto signed my name this            day of
August, 2007.

 

 

Great Plains Ethanol, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

A-1

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EXHIBIT 1
BORROWER RIGHTS

 

1.             At loan closing, Borrower shall receive copies of Loan Documents
signed by Borrower. Upon request thereafter Borrower is entitled to copies of
documents signed or delivered by Borrower, copies of Lender’s, or the Lender’s
parent association’s, charter and by laws, as applicable, and copies of Lender’s
appraisals of the collateral.

 

2.             If the Loans have an adjustable or variable interest rate,
Borrower will be notified in writing of any change in interest rate. The notice
will be given not later than any deadline date required by regulations
promulgated by the Farm Credit Administration.

 

3.             If Borrower’s Loans are in a differential interest rate program,
Borrower may request that Lender review the Loans to verify that the proper
interest rate category has been assigned, and also to explain in writing to
Borrower the basis for the interest rate charged and how the credit status of
the Borrower may be improved to receive a lower interest rate on the Loans.

 

4.             If Lender places Borrower’s Loans in nonaccrual status and such
action results in an adverse action being taken against Borrower (such as
revocation of any undisbursed loan commitment), the Lender shall notify Borrower
in writing of such change in status and the reasons therefore. If Borrower was
not delinquent in any payments under the Loans at the time and Borrower’s
request to have the Loans reinstated to accrual status is denied, Borrower may
obtain a review of such denial before the Lender’s credit review committee.

 

5.             Lender may not commence foreclosure or other legal action against
any collateral securing the Loans unless at least 45 days before such
commencement Lender has provided Borrower with a copy of Lender’s restructuring
policy and forms on which Borrower may submit a request for restructuring. If
Borrower’s request for restructuring is denied, Borrower may appeal the denial
to Lender’s credit review committee, and may also obtain an independent
appraisal of any collateral (at Borrower’s expense) for consideration by the
credit review committee.

 

If Lender acquires agricultural real estate by enforcement of Lender’s lien,
when Lender elects to sell or lease the acquired property, Borrower shall have a
right of first refusal on the property. Lender shall notify Borrower in writing
and Borrower may purchase or lease the property, as appropriate, at the
appraised fair market value or fair rental value, or if the property is sold by
public offering, at the price of the highest qualified bid.

 

A-2

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EXHIBIT 2.01(c)(6)

 

OPINION REQUIREMENTS

 

1.             Borrower (a) is a limited liability company duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority and the legal right to own and
operate its property and to conduct its business.

 

2.             Borrower has the power and authority to execute, deliver and
perform the Loan Documents to which it is a party and has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party.

 

3.             No consent, approval or authorization of, or registration or
filing with, any Person (including, without limitation, any Governmental
Authority) is required in connection with the execution, delivery or performance
by Borrower of the Loan Documents.

 

4.             Borrower has duly executed and delivered the Loan Documents to
which it is a party, and the Loan Documents constitute, legal, valid and binding
obligations of Borrower enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.

 

5.             The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party will not (a) violate the articles of
organization or the operating agreement of Borrower, (b) violate any law
applicable to Borrower, (c) insofar as known to us, violate any determination of
an arbitrator or a court or other Governmental Authority applicable to Borrower,
(d) insofar as known to us, cause a breach or default under any contractual
obligation of Borrower, or (e) result in the creation or imposition of any Lien
on any of the property or revenues of Borrower.

 

6.             To the best of our knowledge, no litigation, investigation or
proceeding of or before any Governmental Authority are pending or threatened by
or against Borrower, or against any of its properties or revenues, existing or
future (a) with respect to any Loan Document or any of the transactions
contemplated thereby, or (b) which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect.

 

7.             The rates of interest and the fees provided for in the Credit
Agreement and the description thereof provided in the Credit Agreement and the
Notes do not violate any laws of the State of South Dakota relating to interest
and usury, and will not violate any such law by virtue of any fluctuations in
any base, prime, index or equivalent rate or rates on which interest charges may
be based under such agreements.

 

8.             Under the laws of the State of South Dakota, the Loan Documents
will be governed by the internal laws of the State of North Dakota, including
all such laws relating to interest and usury.

 

9.             To the extent Borrower has rights in the “Collateral” described
in the Security Agreement and Collateral Assignments, the provisions of the
Security Agreement and the

 

2.01(c)(6)-1

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Collateral Assignments are sufficient to grant to Lender, a security interest in
all right, title and interest of the Borrower in those items and types of
Collateral in which a security interest may be created under Article 8 or
Article 9 of the UCC. To the extent that the Borrower has rights in the
“Collateral” described in the Security Agreement and the Collateral Assignments
and to the extent that such Collateral consists of types of items of property in
which a security interest may be perfected by the filing of financing statements
in the State of South Dakota, such security interests have been perfected by the
filing of the Financing Statements in the offices of the South Dakota Secretary
of State and the Fixture Financing Statements in the office of the Recorder in
Turner County, South Dakota.

 

10.           The Mortgage, upon due recordation in the office of the Recorder
in Turner County, South Dakota, will constitute in favor of Lender, a valid and
continuing lien on the property described therein as security for the
Obligations and will be enforceable in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
and other similar laws, and equity principles of general application, relating
to or affecting the enforcement of creditors’ rights generally.

 

2.01(c)(6)-2

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EXHIBIT 4.08

 

Insurance Requirements

 

Insurance – Borrower shall carry insurance containing the following coverages:

 

(1)           Borrower shall keep the buildings, structures, fixtures, personal
property, and other improvements now existing or hereafter erected or placed on
the Project insured against loss by fire, perils of extended coverage, and such
other hazards, casualties, and contingencies as required by Lender in an amount
at least equal to the unpaid indebtedness secured by the mortgage outstanding at
any given time. The policies shall include “all risk” coverage, and shall be
satisfactory in form and substance to Lender. All insurance shall be carried
with companies approved by Lender, and the policies and renewals thereof shall
(i) contain a waiver of defense based on co-insurance (ii) be assigned and
pledged to Lender as additional security, and (iii) have attached thereto
standard mortgagee and loss payee clauses in form acceptable to Lender.

 

(2)           If steam boilers or similar equipment for the generation of steam
are located in, on or about the Project, Borrower shall maintain insurance
against loss or damage by explosion, rupture or bursting of such equipment and
appurtenances thereto, without a co-insurance clause, in an amount satisfactory
to Lender, and containing a standard mortgagee clause in form acceptable to
Lender.

 

(3)           If the Project or any part thereof is located in a flood hazard
area for which flood insurance is available, Borrower shall maintain flood
insurance insuring the existing and contemplated improvements on the Project to
the maximum limit of coverage made available, or in such lesser amount as Lender
may in writing consent, and containing standard mortgagee and lender loss payee
clauses in form acceptable to Lender.

 

(4)           Borrower shall maintain comprehensive general liability insurance
naming Lender as an additional insured in an amount acceptable to Lender,
insuring against claims arising from any accident or occurrence in or upon the
Project.

 

All insurance policies shall be issued by companies approved by Lender, and
shall provide at least thirty (30) days notice to Lender prior to cancellation
or non-renewal thereof. Borrower shall provide copies of all such insurance
policies to Lender.

 

4.08-1

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Schedule 3.15

 

Permits

 

1.             Turner County Building Permit

 

2.             South Dakota DENR Air Quality Permit #28.0501-61

 

3.             South Dakota DENR General Permit for Storm Water Discharges
Associated with Industrial Activity, Permit No. SDR00B310

 

4.             South Dakota DENR Surface Water Discharge Permit No. SD0027901

 

5.             BATF Alcohol Fuel Producer Permit No. AFP-SD-111

 

6.             South Dakota Grain Dealers License No. 1943

 

3.15-1

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Schedule 3.17

 

Material Contracts

 

1.         Ethanol Marketing and Services Agreement, dated December 18, 2000, as
amended on November 28, 2002, and November 30, 2006

 

2.         RINS Software License and Services Agreement, dated September 1, 2007

 

3.         Technology and Patent Rights License Agreement and Addendum, both
dated April 5, 2005

 

4.         DDGS Marketing Agreement, dated January 7, 2003

 

5.         Agreements Between Owner and Design Builder, dated August 28, 2006
and May 9, 2007

 

6.         Corn and Natural Gas Price Risk Management Agreement, dated April 1,
2007

 

7.         Data Management Systems Agreement, dated May 13, 2002

 

8.         Trademark and Service Mark Sublicense Agreement, dated April 1, 2007

 

9.         South Lincoln Rural Water Purchase Agreement, dated May 24, 2002

 

10.       Southeastern Electric Cooperative Electric Service Agreement, dated
September 25, 2002

 

11.       Northwestern Energy Natural Gas Supply Agreement, dated April 20,
2007, as amended on April 27, 2007

 

12.       Centerpoint Energy Base Contract for Sale and Purchase of Natural Gas,
dated November 22, 2006

 

13.       Friessen Construction Co., Inc., Lease Agreement dated November 1,
2006, as amended

 

3.17-1

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Schedule 4.10

 

List of Subsidiaries

 

None.

 

4.10-1

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Schedule 6.01(b)

 

Permitted Indebtedness

 

Irrevocable Letter of Credit issued by Home Federal in favor of Northwestern
Services Corporation in the original amount of $1,600,000

 

6.01(b)-1

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Schedule 6.04(a)

 

Existing Investments

 

None.

 

6.04(a)-1

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Schedule 6.13

 

Deposit and Investment Accounts

 

The following deposit and investment accounts held at Home Federal Bank:

 

1.             Checking account number 3348637

2.             Money market account number 3348646

3.             Investment sweep account number 3530393

 

6.13-1

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