Exhibit 10.1

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Dated as of December 14, 2005

among

MIDWEST GRAIN PROCESSORS COOPERATIVE, AND

MIDWEST GRAIN PROCESSORS, LLC,

as Borrower,

COBANK, ACB,

as Agent

and

VARIOUS FINANCIAL INSTITUTIONS,

as Lenders

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TABLE OF CONTENTS

 

     Page   

 

1      DEFINITIONS

     2   

1.1  General Definitions

     2   

1.2  Index to Other Definitions

     14   

1.3  Accounting Terms

     15   

1.4  Others Defined in Colorado Uniform Commercial Code

     15   

2      LOANS, LETTERS OF CREDIT AND FEES

     15   

2.1  Loans and Letters of Credit

     15   

2.2  Payment of Principal and Interest; Default Rate; Reduction of Revolving
      Term Loan Commitment

     21   

2.3  Prepayments; Termination of the Commitments; Prepayment Fees

     23   

2.4  Purpose

     25   

2.5  Loan Fees

     26   

2.6  Borrower’s Loan Account

     27   

2.7  Statements

     28   

2.8  Termination of Commitments

     28   

2.9  Contribution Agreement

     28   

3      BORROWING BASE

     29   

3.1  Eligible Accounts

     29   

3.2  Eligible Inventory

     29   

4      CONDITIONS TO ADVANCES AND LETTERS

     30   

4.1  Approval of the Agent’s Counsel

     30   

4.2  Compliance

     30   

4.3  Documentation

     30   

4.4  Hedging Activities

     30   

4.5  Compliance with Construction Lending Protocol

     30   

4.6  Equity Capital Funding

     32   

4.7  Risk Management Policies

     32   

5      SECURITY

     32   

5.1  Security Interests and Liens

     32   

5.2  Endorsement by the Agent

     33   

5.3  Delivery of Warehouse Receipts to the Agent

     33   

5.4  Preservation of Collateral and Perfection of Security Interests

     33   

5.5  Loss of Value of Collateral

     33   

5.6  Collection of Accounts; Power of Attorney

     33   

5.7  Account Covenants

     34   

5.8  Account Records and Verification Rights

     34   

5.9  Notice to Account Debtors

     35   

5.10  Inventory Records

     35   

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5.11  Special Collateral

     35   

5.12  Remittance of Proceeds to the Agent

     35   

5.13  Safekeeping of Collateral

     35   

5.14  Sales and Use of Collateral

     35   

5.15  Margin Accounts

     36   

5.16  Real Property

     36   

5.17  Title Insurance

     36   

6      WARRANTIES

     37   

6.1  Litigation and Proceedings

     37   

6.2  Other Agreements

     37   

6.3  Licenses, Patents, Copyrights, Trademarks and Trade Names

     37   

6.4  Collateral

     38   

6.5  Location of Assets; Chief Executive Office

     38   

6.6  Tax Liabilities

     38   

6.7  Indebtedness and Producer Payables

     38   

6.8  Other Names

     39   

6.9  Affiliates

     39   

6.10  Environmental Matters

     39   

6.11  Existence

     39   

6.12  Authority

     39   

6.13  Binding Effect

     40   

6.14  Correctness of Financial Statements

     40   

6.15  Employee Controversies

     40   

6.16  Compliance with Laws and Regulations

     40   

6.17  Account Warranties

     40   

6.18  Inventory Warranties

     41   

6.19  Solvency

     41   

6.20  Pension Reform Act

     41   

6.21  Margin Security

     41   

6.22  Investment Company Act Not Applicable

     41   

6.23  Public Utility Holding Company Act Not Applicable

     41   

6.24  Full Disclosure

     42   

6.25  Intellectual Property

     42   

6.26  Survival of Warranties

     42   

7      AFFIRMATIVE COVENANTS

     42   

7.1  Financial and Other Information

     42   

7.2  Conduct of Business

     43   

7.3  Maintenance of Properties

     44   

7.4  Borrower’s Liability Insurance

     44   

7.5  Borrower’s Property Insurance

     44   

7.6  Financial Covenants and Ratios

     45   

7.7  Benefit Plans

     45   

7.8  Notice of Suit, Adverse Change in Business or Default

     45   

7.9  Use of Proceeds

     46   

 

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7.10  Books and Records

     46   

7.11  Hedging Activities

     46   

7.12  Production Dates

     46   

7.13  Food Security Act Compliance

     46   

7.14  Warehouse Receipts

     47   

8      NEGATIVE COVENANTS

     47   

8.1  Encumbrances

     47   

8.2  Consolidations, Mergers or Acquisitions

     48   

8.3  Deposits, Investments, Advances or Loans

     48   

8.4  Indebtedness

     48   

8.5  Guarantees and Other Contingent Obligations

     48   

8.6  Disposition of Property

     49   

8.7  Capital Investment Limitations

     49   

8.8  Loans to Affiliates

     49   

8.9  Distributions in Respect of Equity, Prepayment of Debt

     49   

8.10  Formation of Subsidiaries; Amendment of Organizational Documents

     49   

8.11  Lease Limitations

     49   

8.12  Use of Names or Trademarks

     49   

8.13  Limitation of Total Project Cost of Michigan Project

     50   

9      DEFAULT AND RIGHTS AND REMEDIES; THE AGENT

     50   

9.1  Liabilities

     50   

9.2  Rights and Remedies

     50   

9.3  Waiver of Demand

     53   

9.4  Waiver of Notice

     53   

9.5  Authorization and Action

     53   

9.6  Agent’s Reliance, Etc

     54   

9.7  Notices of Defaults

     54   

9.8  The Agent as a Lender, Affiliates

     55   

9.9  Non-Reliance on Agent and Other Lenders

     55   

9.10  Indemnification

     55   

9.11  Successor Agent

     56   

9.12  Verification of Borrowing Notices

     56   

10    MISCELLANEOUS

     56   

10.1  Timing of Payments

     56   

10.2  Attorneys’ Fees and Costs

     57   

10.3  Expenditures by the Agent

     57   

10.4  The Agent’s Costs and Expenses as Additional Liabilities

     58   

10.5  Claims and Taxes

     58   

10.6  Custody and Preservation of Collateral

     58   

10.7  Inspection

     59   

10.8  Examination of Banking Records

     59   

10.9  Governmental Reports

     59   

10.10  Reliance by the Agent, the Issuer and the Lenders

     59   

 

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10.11  Parties

     59   

10.12  Applicable Law; Severability

     60   

10.13  SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL
       BY JURY

     60   

10.14  Application of Payments; Waiver

     60   

10.15  Marshaling; Payments Set Aside

     61   

10.16  Section Titles

     61   

10.17  Continuing Effect

     61   

10.18  No Waiver

     61   

10.19  Notices

     61   

10.20  Regulatory Changes

     62   

10.21  LIBOR Rate Loans

     63   

10.22  Taxes

     63   

10.23  Assignments and Participation

     64   

10.24  Maximum Interest

     67   

10.25  Additional Advances

     67   

10.26  Loan Agreement Controls

     67   

10.27  Obligations Several

     68   

10.28  Pro Rata Treatment

     68   

10.29  Confidentiality

     68   

10.30  Independence of Covenants

     69   

10.31  Amendments and Waivers

     69   

10.32  Replacement of a Lender

     70   

10.33  Representations by the Lenders

     70   

10.34  Counterparts and Facsimile Signatures

     70   

10.35  Set-off

     70   

10.36  Equities

     71   

10.37  Patronage Distributions

     71   

10.38  Bylaws and Capital Plan

     72   

10.39  FCSA Capital Plan

     72   

10.40  Binding Effect

     73   

10.41  Accommodation Party Defenses Waived

     73   

10.42  Waiver of Borrower’s Rights Under Farm Credit Law

     73   

10.43  FINAL AGREEMENT

     74   

 

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AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as amended, modified,
supplemented, renewed or restated from time to time, the “Agreement”) is made as
of December 14, 2005, by and among MIDWEST GRAIN PROCESSORS COOPERATIVE, an Iowa
cooperative corporation, and MIDWEST GRAIN PROCESSORS, LLC, a Delaware limited
liability company (each a “Borrower” and collectively, “Borrower”, as the
context may require), the financial institutions listed on the signature pages
hereof and each other financial institution that may hereafter become a party
hereto in accordance with the provisions hereof (collectively the “Lenders” and
individually a “Lender”) and COBANK, ACB, a federally chartered banking
organization (“CoBank”), in its capacity as Agent for the Lenders and for the
Issuer (in such capacity, the “Agent”).

RECITALS

Borrower and U.S. Bank National Association (“US Bank”), in its capacity as
agent for and on behalf of other Lenders as therein described, entered into a
Loan and Security Agreement dated as of December 15, 2004, as amended pursuant
to a First Amendment to Loan and Security Agreement dated as of August 19, 2005
and a Second Amendment to Loan and Security Agreement dated as of October 26,
2005 (as amended, the “Prior Loan Agreement”).

Pursuant to the Second Amendment described above, CoBank replaced US Bank as
agent and US Bank was further replaced as a Lender under the Prior Loan
Agreement.

The Borrower has requested that additional changes be made to the Prior Loan
Agreement and has further requested that the Prior Loan Agreement be amended and
restated in its entirety to reflect such requested revisions, and the Agent and
the remaining Lenders have agreed to do so pursuant to the terms and conditions
hereof.

As a condition to entering into this Amended and Restated Loan and Security
Agreement, Borrower has, and hereby does, acknowledge and agree that it will
receive at least a reasonably equivalent value from the loans, advances,
extensions of credit and/or other financial accommodations to be provided by the
Agent and the Lenders hereunder in exchange for its obligations as herein
described and in exchange for various security interests and liens granted by
Borrower to the Agent for the benefit of the Lenders, all as set forth in this
Agreement and the other Financing Agreements as defined below.

NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, and of any loans or extensions of credit
or other financial accommodations at any time made to or for the benefit of
Borrower by the Agent and the Lenders, Borrower, the Agent and the Lenders agree
as follows:

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  1

DEFINITIONS.

1.1 General Definitions.  When used herein, the following capitalized terms
shall have the meanings indicated, whether used in the singular or the plural:

“Accounts” shall mean all present and future rights (including without
limitation, rights under any Margin Accounts) of Borrower to payment for
Inventory or other Goods sold or leased or for services rendered, which rights
are not evidenced by Instruments or Chattel Paper, regardless of whether such
rights have been earned by performance and any other “accounts” (as defined in
the Code).

“Account Debtor” shall mean any Person that is obligated on or under an Account
or a General Intangible.

“Adjusted Revolving Term Loan Commitment Amount” shall mean an amount equal to
the lesser of (a) the Revolving Term Loan Commitment and (b) the maximum
availability under the Revolving Term Loan Commitment established by the Agent
in its sole discretion upon receipt of such information under the Construction
Lending Protocol for the Michigan Project set forth and described in Exhibit 1D
hereto as to services performed and materials and goods incorporated into the
Michigan Project or delivered to and appropriately stored on site.

“Affiliate”  shall mean any Person: (a) that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common control
with, Borrower; (b) that directly or beneficially owns or holds ten percent
(10%) or more of any class of the voting equity interest of Borrower; (c) ten
percent (10%) or more of the voting equity interest of which is owned directly
or beneficially or held by Borrower; or (d) that is a director, officer, agent
or employee of Borrower.

“Agent” has the meaning set forth in the introduction and shall include any
successor to the Agent that has been appointed in accordance with Section 9.11.

“Agent’s Letter” shall mean the letter agreement between Borrower and the Agent
of substantially even date with this Agreement.

“Anniversary Date” shall mean December 14, 2005 and each December 14 thereafter.

“Applicable Margin” shall mean with respect to Swing Line Advances, Line of
Credit Advances, Term Loan Advances or Revolving Term Loan Advances that are
Base Rate Loans or LIBOR Rate Loans, or with respect to fees for non-use of the
Line of Credit Loan Commitments and the Revolving Term Loan Commitments and
Letter of Credit Fees, the rates per annum set forth in the Pricing Matrix
attached as Schedule B hereto.

“Available Amount” shall mean, at any time, an amount equal to (a) the Line of
Credit Loan Commitments minus (b) the sum of (i) the aggregate principal amount
of the Line of Credit Loan Liabilities, and (ii) the aggregate amount of the LC
Obligations.

 

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“Average Interest Bearing Debt” shall mean, for the then preceding four fiscal
quarters, the average of Interest Bearing Debt at the end of each such fiscal
quarter.

“Bank Products” means any of the following services or facilities extended to
Borrower by the Agent, any Lender or any affiliate of any of the Lenders:
(a) credit cards; (b) cash management, including controlled disbursement
services, automatic clearing house transfer of funds and overdrafts; and
(c) facilities and services extended under Rate Protection Agreements.

“Bank Products Agreements” means all documents and agreements relating to Bank
Products.

“Bank Products Obligations” means, with respect to any Person, all obligations
and liabilities of such Person under any Bank Products Agreements.

“Base Rate” shall mean the greater of (a) the Prime Rate or (b) the Federal
Funds Rate plus one-half of one percent (.5%).

“Borrowing Base” shall mean an amount determined and computed as set forth in
Exhibit 1A.

“Borrowing Base Certificate” shall mean a certificate substantially in the form
of Exhibit 1B, signed as indicated thereon, setting forth the amount of
Borrower’s Borrowing Base.

“Borrowing Base Limit” shall mean, at any time, an amount equal to (a) the
Borrowing Base minus (b) the sum of (i) the aggregate principal amount of the
Line of Credit Loan Liabilities, and (ii) the aggregate amount of the LC
Obligations.

“Business Day” shall mean any day of the year on which commercial banks in New
York, New York and Denver, Colorado are not required or authorized to close.

“Closing Date” shall mean the date of this Agreement.

“CoBank” shall mean CoBank, ACB, a federally chartered banking organization.

“Collateral” shall mean any and all real or personal property in which the Agent
may at any time have a lien or security interest under or pursuant to
Section 5.1 or otherwise to secure the Liabilities.

“Construction Lending Protocol for the Iowa Project” shall mean the terms,
conditions and provisions set forth in Exhibit 1C governing the making of
Advances and other aspects of borrowing under the Term Loan Commitment related
to the Iowa Project.

“Construction Lending Protocol for the Michigan Project” shall mean the terms,
conditions and provisions set forth in Exhibit 1D governing the making of
Advances and other aspects of borrowing under the Revolving Term Loan Commitment
related to the Michigan Project.

 

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“Commitment” shall mean, as to any Lender, such Lender’s Line of Credit Loan
Commitment, such Lender’s Term Loan Commitment, such Lender’s Revolving Term
Loan Commitment and the Agent’s commitment to cause the issuance of Letters
under the Line of Credit, and “Commitments” shall mean collectively, such
Commitments for all the Lenders and the Agent.

“Debt Service Coverage Ratio” shall mean, as of the last day of each fiscal year
of Borrower: (i) the sum of Borrower’s consolidated after-tax net income,
depreciation and amortization for such fiscal year; divided by (ii) the
aggregate of all scheduled principal payments of Borrower’s long term debt
becoming due and payable during such fiscal year.

“Default” shall mean the occurrence or existence of: (a) an event which, through
the passage of time or the service of notice or both, would (assuming no action
is taken by Borrower or any other Person to cure the same) mature into a Matured
Default; or (b) an event which requires neither the passage of time nor the
service of notice to mature into a Matured Default.

“Deposit Accounts” shall mean, (a) all deposit accounts (as defined in the Code)
of Borrower now or hereafter maintained with the Agent, and (b) deposit accounts
(as defined in the Code) at other banks or financial institutions as identified
or described in any other Financing Agreement, including but not limited to any
control agreement.

“Documents” shall mean any and all warehouse receipts, bills of lading or
similar Documents of title relating to Goods in which Borrower at any time has
an interest and any other “documents” (as defined in the Code).

“Dollars” and “$” shall mean lawful currency of the United States of America.

“EBITDA” shall mean, for the then preceding four fiscal quarters, the
consolidated net income of Borrower before provision for income taxes, interest
expense (including without limitation, implicit interest expense on capitalized
leases), depreciation expense, amortization expense and other non-cash expenses
or charges, excluding (to the extent included): (a) non-operating gains
(including without limitation, extraordinary or nonrecurring gains, gains from
discontinuance of operations and gains arising from the sale of assets other
than Inventory) during the applicable period; and (b) similar non-operating
losses during such period.

“Excess Sale Proceeds” shall mean, during any period of determination,
Borrower’s proceeds from the sale of assets (except for the sale of Inventory in
the ordinary course of business), which is not used by Borrower for the
replacement of the assets sold, in excess of $100,000 in the aggregate in any
fiscal year of Borrower.

“Equipment” shall mean any and all Goods, other than Inventory (including
without limitation, equipment, machinery, motor vehicles, implements, tools,
parts and accessories) that are at any time owned by Borrower, together with any
and all accessions, parts and appurtenances and any other “equipment” (as
defined in the Code).

“Federal Funds Rates” shall mean, for any day, the rate of interest per annum
(rounded upward, if necessary, to the nearest whole multiple of 1/100th of 1%)
equal to the weighted

 

4

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average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such date, as
published by the Federal Reserve Bank of New York on such day, or if no such
rate is so published on such day, on the most recent day preceding such day on
which such rate is so published.

“Farm Products” shall mean all personal property of Borrower used or for use in
farming or livestock operations, including without limitation, seed and
harvested or un-harvested crops of all types and descriptions, whether annual or
perennial and including trees, vines and the crops growing thereon, native
grass, grain, feed, feed additives, feed ingredients, feed supplements,
fertilizer, hay, silage, supplies (including without limitation, chemicals,
veterinary supplies and related Goods), livestock of all types and descriptions
(including without limitation, the offspring of such livestock and livestock in
gestation) and any other “farm products” (as defined in the Code).

“FCSA” shall mean Farm Credit Services of America, FLCA, a federally chartered
lender.

“Financing Agreements” shall mean all agreements, instruments and documents,
including without limitation, this Agreement and all security agreements, loan
agreements, notes, letter of credit applications, guarantees, mortgages, deeds
of trust, subordination agreements, pledges, powers of attorney, consents,
assignments, contracts, notices, leases, financing statements and all other
written matter at any time executed by, on behalf of or for the benefit of
Borrower and delivered to the Agent, together with all amendments and all
agreements and documents referred to therein or contemplated thereby and all
Bank Products Agreements.

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

“GAAP” shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

“General Intangibles” shall mean all of Borrower’s present and future right,
title and interest in and to any customer deposit accounts, deposits, rights
related to prepaid expenses, chose in action, causes of action and all other
intangible personal property of every kind and nature (other than Accounts),
including without limitation, Payment Intangibles, beneficial interests in
trusts, corporate or other business records, inventions, designs, patents,
patent applications, trademarks, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, franchises, customer lists, tax refunds,
tax refund claims, customs claims, guarantee claims, contract rights membership
interests, partnership interests, cooperative memberships or patronage benefits,
obligations payable to Borrower for capital stock or other claims against any
Owners, rights to any government subsidy, set aside, diversion, deficiency or
disaster payment or payment in kind, milk bases, brands and brand registrations,
water rights (including without

 

5

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limitation, water stock, ditch rights, well permits, water permits, applications
and the like), Commodity Credit Corporation storage agreements or contracts,
leasehold interests in real and personal property and any security interests or
other security held by or granted to Borrower to secure payment by any Account
Debtor of any of the Accounts, and any other “general intangibles” (as defined
in the Code).

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including without limitation, any arbitration panel, any court, any commission,
any agency or any instrumentality of the foregoing.

“Governmental Requirement” shall mean any material law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement of
any federal, state, county, municipal, parish, provincial or other Governmental
Authority or any department, commission, board, court, agency or any other
instrumentality of any of them (including any of the foregoing that relate to
environmental standards or controls and occupational safety and health standards
or controls).

“Highest Lawful Rate” means, with respect to each Lender, the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged, or received with respect to the Notes
or on other amounts, if any, payable to such Lender pursuant to this Agreement
or any other Financing Agreement, under laws applicable to such Lender which are
presently in effect, or, to the extent allowed by law, under such applicable
laws which may hereafter be in effect and which allow a higher maximum
non-usurious interest rate than applicable laws now allow.

“Immediately Available Funds” shall mean funds with good value on the day and in
the city in which payment is received.

“Interest Bearing Debt” shall mean, for any date of determination, Borrower’s
consolidated outstanding principal amount of all interest bearing indebtedness
(including without limitation, capitalized leases, and borrowed money that bears
interest at zero percent (0%)) plus the then undrawn amount of all outstanding
letters of credit (including without limitation, the Letters).

“Interest Period” shall mean, (A) with respect to LIBOR Rate Loans, the period
of time for which the LIBOR Rate shall be in effect as to any LIBOR Rate Loan
and which shall be a one, two, three, six or twelve month period of time,
commencing with the borrowing date of the LIBOR Rate Loan or the expiration date
of the immediately preceding Interest Period, as the case may be, applicable to
and ending on the effective date of any rate change or rate continuation made as
provided in Section 2.2(g) or as Borrower may specify in the notice of borrowing
delivered pursuant to Section 2.1, provided however, that: (a) any Interest
Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (b) no Interest Period shall extend beyond the
applicable Maturity Date; and (c) there shall be no more than seven (7) Interest

 

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Periods for LIBOR Rate Loans at any one time and (B) with respect to Quoted Rate
Loans, the period of time for which a Quoted Rate shall be in effect for such
Quoted Rate Loan, which shall not be less than thirty (30) days with respect to
outstanding Advances under the Line of Credit Loan Commitment and the Revolving
Term Loan Commitment and not less than one hundred eighty (180) days with
respect to the Term Loan Commitment, commencing with the borrowing date of the
Quoted Rate Loan or the expiration date of the immediately preceding Interest
Period, as the case may be, applicable to and ending on the effective date of
any rate change or rate continuation made as provided in Section 2.2(g) or as
Borrower may specify in a notice of borrowing delivered pursuant to Section 2.1;
provided, however, that (a) no Interest Period with respect to a Quoted Rate
Loan shall extend beyond the applicable Maturity Date and (b) there shall be no
more than seven (7) Interest Periods for Quoted Rate Loans at any one time.

“Inventory” shall mean any and all Goods which shall at any time constitute
“inventory” (as defined in the Code) or Farm Products of Borrower, wherever
located (including without limitation, Goods in transit and Goods in the
possession of third parties), or which from time to time are held for sale,
lease or consumption in Borrower’s business, furnished under any contract of
service or held as raw materials, work in process, finished inventory or
supplies (including without limitation, packaging and/or shipping materials).

“IRC” shall mean the Internal Revenue Code of 1986, as amended, as at any time
in effect, together with all regulations and rulings thereof or thereunder
issued by the Internal Revenue Service.

“Issuer” shall mean any party that issues a Letter pursuant to this Agreement.

“LC Obligations” shall mean, at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the outstanding Letters, and (b) the
aggregate amount drawn under Letters for which the Issuer has not been
reimbursed.

“Letter” or “Letters” shall mean a standby letter of credit issued for the
account of Borrower pursuant to Section 2.1.5 or all of such letters of credit,
respectively.

“Leverage Ratio” shall mean, for any date of determination, the ratio of
Borrower’s (a) Average Interest Bearing Debt; divided by (b) EBITDA.

“Liabilities” shall mean any and all liabilities, obligations and indebtedness
of Borrower to any Lender or Issuer of any and every kind and nature, at any
time owing, arising, due or payable and howsoever evidenced, created, incurred,
acquired or owing, whether joint, several, joint and several, primary,
secondary, direct, contingent, fixed or otherwise (including without limitation
LC Obligations, Bank Product Obligations, fees, charges and obligations of
performance) and whether arising or existing under this Agreement or any of the
other Financing Agreements or by operation of law.

“LIBOR Rate” shall mean, with respect to each day during each Interest Period
applicable to a LIBOR Rate Advance, the one, two, three, six or twelve month
LIBOR rate quoted by the Agent from Telerate Page 3750 or any successor thereto
(which shall be the LIBOR

 

7

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rate in effect two Business Days prior to the LIBOR Rate Loan) rounded up to the
nearest one sixteenth of one percent.

“LIBOR Rate Loan” shall mean any Loan that bears interest at the LIBOR Rate plus
the Applicable Margin.

“Line of Credit Collateral” shall mean Accounts, Inventory, Margin Accounts,
cash and other Investment Property in any blocked account and all uncleared
checks relating to any of the foregoing.

“Line of Credit Loan Commitment” shall mean as to any Lender with a Line of
Credit Loan Commitment, such Lender’s Pro Rata Percentage of $15,000,000, as set
forth opposite such Lender’s name under the heading “Line of Credit Loan
Commitments” on Schedule A, subject to Assignment and Acceptance in accordance
with Section 10.23, and as such amount may be reduced or terminated from time to
time pursuant to Sections 2.3(c), 2.8 or 9.1; and “Line of Credit Loan
Commitments” shall mean collectively, the Line of Credit Loan Commitments for
all the Lenders.

“Line of Credit Loan Liabilities” shall mean all of the Liabilities other than:
(a) the LC Obligations; (b) the principal and interest owing under the Term
Notes; (c) the principal and interest owing under the Revolving Term Notes; and
(d) Bank Products Obligations.

“Margin Accounts” shall mean, collectively, all Commodity Accounts and all
Commodity Contracts.

“Matured Default” shall mean the occurrence or existence of any one or more of
the following events: (a) Borrower fails to pay any principal or interest
pursuant to any of the Financing Agreements (other than the Bank Products
Agreements) at the time such principal or interest becomes due or is declared
due; (b) Borrower fails to pay any of the Liabilities (other than the
Liabilities referred to in (a) above) on or before ten (10) days after such
Liabilities become due or are declared due; (c) Borrower fails or neglects to
perform, keep or observe any of the covenants, conditions, promises or
agreements contained in Sections 8.1, 8.2 or 8.4; (d) Borrower fails or neglects
to perform, keep or observe any of the covenants, conditions, promises or
agreements contained in this Agreement or in any of the other Financing
Agreements (other than those covenants, conditions, promises and agreements a
default in whose performance or whose breach is elsewhere in this definition
specifically dealt with), and such failure or neglect continues for more than
thirty (30) days after such failure or neglect first occurs, provided, however,
that such grace period shall not apply, and a Matured Default shall be deemed to
have occurred and to exist immediately if such failure or neglect may not, in
the Agent’s reasonable determination, be cured by Borrower during such thirty
(30) day grace period; (e) the Available Amount or the Borrowing Base Limit, as
calculated in accordance with the definitions thereof, result in a negative
amount; (f) any warranty or representation at any time made by or on behalf of
Borrower in connection with this Agreement or any of the other Financing
Agreements is untrue or incorrect in any material respect, or any schedule,
certificate, statement, report, financial data, notice, or writing furnished at
any time by or on behalf of Borrower to the Agent or any other Lender is untrue
or incorrect in any material respect on the

 

8

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date as of which the facts set forth therein are stated or certified; (g) a
judgment in excess of $50,000 is rendered against Borrower and such judgment
remains unsatisfied or un-discharged and in effect for thirty (30) consecutive
days without a stay of enforcement or execution, provided, however, that this
clause (g) shall not apply to any judgment for which Borrower is fully insured
(except for deductible amounts permitted under Section 7.4) and with respect to
which the insurer has admitted liability in writing for such judgment; (h) all
or any part of the assets of Borrower or any guarantor of any of the Liabilities
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors; (i) a proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt or receivership law or
statute is filed against Borrower or any guarantor of any of the Liabilities and
such proceeding is not dismissed within thirty (30) days of the date of its
filing, or a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
by Borrower or any guarantor of any of the Liabilities, or Borrower or any
guarantor of any of the Liabilities makes an assignment for the benefit of
creditors; (j) Borrower or any guarantor of any of the Liabilities voluntarily
or involuntarily dissolves or is dissolved, terminates or is terminated or dies;
(k) Borrower is enjoined, restrained, or in any way prevented by the order of
any court or any administrative or regulatory agency or by the termination or
expiration of any permit or license, from conducting all or any material part of
Borrower’s business affairs; (l) Borrower or any guarantor of any of the
Liabilities fails to make any payment due or otherwise defaults on any other
obligation for borrowed money and the effect of such failure or default is to
cause or permit the holder of such obligation or a trustee to cause such
obligation to become due prior to its date of maturity; (m) any guarantor of any
of the Liabilities asserts the invalidity of their guaranty, purports to
terminate their guaranty or purports to limit the application thereof to then
existing Liabilities; (n) the Agent makes an expenditure under Section 10.3;
(o) the occurrence of a non-curable breach or default or a matured default under
any other agreement at any time in existence between Borrower, an Affiliate
(other than an agent or employee) or a guarantor of any of the Liabilities, and
the Agent; (p) the Agent, at any time reasonably determines that the Lenders are
insecure with respect to the amount or quality of Collateral for the Lenders’
loans to Borrower or the prompt payment of all or any part of the Liabilities,
or that such change has occurred in the condition or affairs (financial or
otherwise) of Borrower or any of Borrower’s Affiliates as, in the reasonable
opinion of the Agent, materially affects Borrower’s ability to make prompt
payment on the Liabilities or materially impairs or is likely to materially
impair the value of the Collateral, including without limitation, the occurrence
of such events as would in the Agent’s reasonable opinion create the possibility
that, in accordance with any federal, state or local law, or in accordance with
any contract by which Borrower is bound, any Person could assert liens or
setoffs against the Collateral; (q) with respect to the Iowa Project or the
Michigan Project: (i) a material default shall occur and shall be continuing
under the Construction Contract for the Iowa Project, the Construction Contract
for the Michigan Project or any other material contract for work on the Iowa
Project or the Michigan Project, (ii) the cost to complete either the Iowa
Project or the Michigan Project, in the aggregate, shall be determined by the
Agent to exceed the original projected cost to complete the Iowa Project or the
Michigan Project by more than $500,000, unless the Required Lenders shall have
approved change orders with respect to any such increase, (iii) work on the Iowa
Project or the Michigan Project shall be substantially abandoned for any reason
or (iv) work on the Iowa Project or the Michigan Project shall be delayed or
discontinued for a period of ten (10) consecutive days, provided, however, that
the Matured Default of Borrower under this clause

 

9

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shall be suspended to the extent and for the period that the reason such delay
or discontinuance is beyond Borrower’s reasonable control, including without
limitation, labor disputes, acts of god, Governmental Requirements enacted after
the date hereof, acts of war or conditions arising out of or attributable to
war, riot, civil strike, insurrection or rebellion, fire or explosion (other
than a fire or explosion attributable to the actions of Borrower), earthquake,
storm, flood or other adverse weather conditions, delay or failure by suppliers
or materialmen, contractors or subcontractors, shortage of or inability to
obtain labor, supplies or materials, unless the Completion of the Iowa Project
or Completion of the Michigan Project, as applicable, cannot, by reason of such
excused causes, in the reasonable judgment of the Agent, be accomplished prior
to the Completion Date for the Iowa Project (as defined in the Construction
Lending Protocol for the Iowa Project) or the Completion Date for the Michigan
Project (as defined in the Construction Lending Protocol for the Michigan
Project), as applicable; (r) the Borrower shall be in default under that certain
Lease dated May 16, 2005, as amended, with Adrian & Blissfield Rail Road Company
(the “Water Line Lease”) or the Water Line Lease shall be terminated; or (s) the
Borrower shall have failed to satisfy the requirements set forth in the next to
last sentence of Section 4.5 of this Agreement by the dates required therein.

“Maturity Date” shall mean, as applicable, the earlier of: (a) as to the Swing
Line or the Line of Credit, the Termination Date; (b) as to the Term Loan, the
Term Loan Maturity Date; (c) as to the Revolving Term Loan, the Revolving Term
Loan Maturity Date; (d) the earlier date of termination in whole of the
Commitments pursuant to Sections 2.3(c), 2.8 or 9.1; or (e) the termination in
whole of the Commitments by Borrower and the payment and/or satisfaction in full
of the Liabilities.

“MetLife” shall mean Metropolitan Life Insurance Company and its designated
affiliates.

“MetLife Fixed Rate” shall mean, as applicable, the rate per annum confirmed in
writing to the Agent prior to each Advance under the Term Loan and determined in
accordance with the following protocols:

(a)      The interest rate applicable to MetLife’s allocated portion of the
first Advance under the Term Loan shall be equal to the sum of 250 basis points
(2.50%) and the interpolated yield of a U.S. Treasury Note having a term to
maturity closest to the (TBD)-year average life of the first Advance under the
Term Loan as of 12:00 P.M. Central five business days prior to disbursement,
unless Borrower otherwise requests that the interest rate be determined on
another business day that is not more than 30 days prior to funding. Borrower
may elect to circle an interest rate by notifying MetLife by telephone prior to
12:00 PM Central of its intent to circle.

(b)      The interest rate applicable to MetLife’s allocated portion of the
second Advance under the Term Loan shall be equal to the sum of 250 basis points
(2.50%) and the interpolated yield of a U.S. Treasury Note having a term to
maturity closest to the (TBD)-year average life of the second Advance under the
Term Loan as of 12:00 P.M. Central five business days prior to disbursement,
unless Borrower otherwise requests that the interest rate be determined on
another business day that is not more than 30 days prior to funding. Borrower
may elect to circle an interest rate by notifying MetLife by telephone prior to
12:00 PM Central of its intent to circle.

 

10

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(c)      The interest rate applicable to MetLife’s allocated portion of the
third Advance under the Term Loan shall be equal to the sum of 250 basis points
(2.50%) and the interpolated yield of a U.S. Treasury Note having a term to
maturity closest to the (TBD)-year average life of the third Advance under the
Term Loan as of 12:00 P.M. Central five business days prior to disbursement,
unless Borrower otherwise requests that the interest rate be determined on
another business day that is not more than 30 days prior to funding. Borrower
may elect to circle an interest rate by notifying MetLife by telephone prior to
12:00 PM Central of its intent to circle.

“MetLife Fixed Rate Loan” shall mean any Loan that bears interest at the MetLife
Fixed Rate.

“MetLife Make-Whole Agreement” shall mean the Amended and Restated MetLife
Make-Whole Agreement between Borrower and MetLife dated as of the date of this
Agreement.

“Net Capital Expenditures” shall mean, during any period of determination,
Borrower’s: (a) property, plant and equipment at the end of such period
(including that held under capitalized leases), less (b) property, plant and
equipment at the beginning of such period (including that held under capitalized
leases), plus (c) depreciation expense during such period.

“Note” or “Notes” shall mean any one of the Line of Credit Notes, the Term Notes
or the Revolving Term Notes or all of the Line of Credit Notes, the Term Notes
and the Revolving Term Notes, respectively.

“Net Worth” of Borrower shall mean, as of the date of determination, the
difference (positive only) between (a) the total assets of Borrower, calculated
in accordance with GAAP after deducting adequate reserves in each case where, in
accordance with GAAP, a reserve is proper and (b) the Total Debt of Borrower.

“Owner” shall mean any Person who is a holder of Borrower’s capital stock or
holds a partnership or membership interest in Borrower.

“Person” shall mean any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, cooperative, institution, entity, party or government
(whether national, federal, state, provincial, county, city, municipal or
otherwise, including without limitation, any instrumentality, division, agency,
body or department thereof).

“Prime Rate” shall mean the prime rate announced by CoBank from time to time,
which is a base rate that CoBank from time to time establishes and which serves
as the basis upon which effective rates of interest are calculated for those
loans which make reference thereto. The Prime Rate is not necessarily the lowest
rate offered by CoBank. With respect to Base Rate Loans, each change in the rate
of interest hereunder shall become effective on the date each Prime Rate change
is announced by CoBank.

“Prior Loan Agreement” shall have the meaning given such term in the Recitals.

 

11

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“Producer Payables” shall mean all amounts at any time payable by Borrower for
the purchase of Inventory.

“Property” shall mean those premises owned or operated by Borrower, including
without limitation, the real property described in Borrower’s mortgages referred
to in Section 5.1.

“Pro Rata Percentage” shall mean with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the sum of such
Lender’s Line of Credit Loan Commitment, Term Loan Commitment and Revolving Term
Loan Commitment, respectively, and the denominator of which shall be the
aggregate amount of all the Line of Credit Loan Commitments, Term Loan
Commitments and Revolving Term Loan Commitments of the Lenders, respectively, as
adjusted from time to time in accordance with Section 10.23, which percentages
shall, in each case, be applicable even in the event that the commitments of the
Lenders to make Advances have been suspended or terminated in accordance with
the terms of this Agreement; provided, however, that from and after the
occurrence and during the continuance of a Matured Default, the Pro Rata
Percentage of a Lender shall be adjusted as follows: (a) in respect of a
Lender’s right to share in payments and recoveries in respect of the liquidation
of Term Loan Collateral, a fraction (expressed as a percentage), the numerator
of which shall be the principal amount of all Loans due and owing to such Lender
under its Term Loan Commitment and its Revolving Term Loan Commitment, in the
aggregate, and the denominator of which shall be the aggregate principal amount
of all Loans due and owing to all Lenders under their Term Loan Commitments and
Revolving Term Loan Commitments, in the aggregate; and (b) in respect of a
Lender’s right to share in payments and recoveries in respect of the liquidation
of Line of Credit Collateral, a fraction (expressed as a percentage), the
numerator of which shall be the principal amount of all Loans and LC Obligations
due and owing to such Lender under its Line of Credit Commitment and the
denominator of which shall be the aggregate principal amount of all Loans and LC
Obligations due and owing to all Lenders under their Line of Credit Commitments,
in the aggregate.

“Quoted Rate” shall mean, with respect to each day during each Interest Period
applicable to a Quoted Rate Advance, the rate quoted by the Agent in its sole
discretion, in each instance for a permitted Interest Period as requested by
Borrower from time to time. The Agent shall be entitled to quote any rate it so
desires to be applicable to a Quoted Rate Loan and shall have no obligation to
justify or explain to Borrower the basis for any such Quoted Rate.

“Quoted Rate Loan” shall mean any Loan that bears interest at a Quoted Rate.

“Rate Protection Agreement” means, collectively, any currency or interest rate
swap, cap, collar or similar agreement or arrangements designed to protect
against fluctuations in interest rates or currency exchange rates entered into
by Borrower under which the counterparty to such agreement is (or at the time
such Rate Protection Agreement was entered into, was) a Lender or an affiliate
of a Lender.

“Required Lenders” shall mean, at any time Lenders holding in the aggregate at
least fifty-one percent (51%) of the aggregate amount of all of the Lenders’
Commitments, which percentage shall be applicable even in the event that the
commitments of the Lenders to make

 

12

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Advances have been suspended or terminated in accordance with the terms of this
Agreement; provided, however, that from and after the occurrence of a Matured
Default and for so long as such Matured Default shall continue, “Required
Lenders” shall mean at any time Lenders holding in the aggregate at least
fifty-one percent (51%) of the aggregate amount of all outstanding Loans and LC
Obligations.

“Revolving Term Loan Commitment” shall mean as to any Lender with a Revolving
Term Loan Commitment, such Lender’s Pro Rata Percentage of the Revolving Term
Loan Commitment of $56,000,000, as reduced from time to time in accordance with
Section 2.2, as set forth opposite such Lender’s name under the heading
“Revolving Term Loan Commitments” on Schedule A, subject to Assignment and
Acceptance in accordance with Section 10.23, and as such amount may be
terminated pursuant to Sections 2.3(c), 2.8 or 9.1; and “Revolving Term Loan
Commitments” shall mean collectively, such Revolving Term Loan Commitments for
all of such Lenders.

“Revolving Term Loan Maturity Date” shall mean April 1, 2016.

“Term Loan Collateral” shall mean all assets of Borrower except those assets
constituting Line of Credit Collateral.

“Term Loan Commitment” shall mean as to any Lender with a Term Loan Commitment,
such Lender’s Pro Rata Percentage of the Tranche A Term Loan Commitment of
$28,400,000 and/or such Lender’s Pro Rata Percentage of the Tranche B Term Loan
Commitment of $28,400,000, as reduced from time to time in accordance with
Section 2.2, as set forth opposite such Lender’s name under the heading “Term
Loan Commitments” on Schedule A, subject to Assignment and Acceptance in
accordance with Section 10.23, and as such amount may be terminated pursuant to
Sections 2.3(c), 2.8 or 9.1; and “Term Loan Commitments” shall mean
collectively, such Tranche A Term Loan Commitments and/or Tranche B Term Loan
Commitments for all of such Lenders.

“Term Loan Maturity Date” shall mean January 1, 2015.

“Termination Date” shall mean December 1, 2006.

“Total Debt” shall mean Borrower’s total liabilities as determined in accordance
with GAAP consistently applied.

“Type” shall mean, with respect to any Loan, whether such Loan is a Base Rate
Loan, Quoted Rate Loan or a LIBOR Rate Loan.

“Working Capital” shall mean as of any particular date, the amount of Borrower’s
consolidated current assets, less Borrower’s consolidated current liabilities
(both as determined in accordance with GAAP consistently applied), except that
in determining current assets, any amount available under the Adjusted Revolving
Term Loan Commitment (less the amount that would be considered a current
liability under GAAP if fully advanced) may be included.

 

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1.2 Index to Other Definitions. When used herein, the following capitalized
terms shall have the meanings given in the indicated portions of this Agreement:

 

Term

  

Location

Advance, Advances

  

Section 2.1.6

Agreement

  

Introduction

Application

  

Section 2.1.5

Assignee

  

Section 10.23

Assignment and Acceptance

  

Section 10.23

Beneficiary

  

Section 2.1.5

Benefit Plans

  

Section 6.20

Borrower

  

Introduction

Borrower’s Proportionate Share

  

Section 2.9

Borrower’s Work on the Michigan Project

  

Construction Lending Protocol for the Michigan Project

Broker

  

Section 5.15

CoBank Equities

  

Section 10.36

Code

  

Section 1.4

Completion of the Iowa Project

  

Construction Lending Protocol for the Iowa Project

Completion of the Michigan Project

  

Construction Lending Protocol for the Michigan Project

Compliance Certificate

  

Section 7.1

Construction Contract Assignment for the Iowa Project

  

Construction Lending Protocol for the Iowa Project

Construction Contract Assignment for the Michigan Project

  

Construction Lending Protocol for the Michigan Project

Construction Contract for the Iowa Project

  

Construction Lending Protocol for the Iowa Project

Construction Contract for the Michigan Project

  

Construction Lending Protocol for the Michigan Project

Default Rate

  

Section 2.2

Eligible Accounts

  

Section 3.1

Eligible Inventory

  

Section 3.2

Environmental Laws

  

Section 6.10

Equalization Transfer

  

Section 2.1.6

ERISA

  

Section 6.20

Excess

  

Section 10.24

Iowa Project

  

Section 2.4

Iowa Project Site

  

Construction Lending Protocol for Iowa Project

Lenders

  

Introduction

Line of Credit

  

Section 2.1.2

Line of Credit Advances

  

Section 2.1.2

Line of Credit Notes

  

Section 2.1.2

 

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Term

  

Location

Loan Account

  

Section 2.6

Loan, Loans

  

Section 2.1.6

Michigan Project

  

Section 2.4

Michigan Project Site

  

Construction Lending Protocol for Michigan Project

Purchasing Lender

  

Section 2.1.6

Replacement Candidate

  

Section 10.32

Revolving Term Loan

  

Section 2.1.4

Revolving Term Loan Advance

  

Section 2.1.4

Revolving Term Loan Notes

  

Section 2.1.4

Securities Act

  

Section 10.33

Selling Lender

  

Section 2.1.6

Swing Line

  

Section 2.1.1

Swing Line Advances

  

Section 2.1.1

Taxes

  

Section 10.22

Term Loan

  

Section 2.1.3

Term Loan Advance

  

Section 2.1.3

Term Notes

  

Section 2.1.3

Tranche A Term Loan

  

Section 2.1.3

Tranche B Term Loan

  

Section 2.1.3

UCP

  

Section 2.1.5

1.3  Accounting Terms. Any accounting terms used in this Agreement which are not
specifically defined in this Agreement shall have the meanings customarily given
them in accordance with GAAP, as consistently applied as of the date of this
Agreement.

1.4  Others Defined in Colorado Uniform Commercial Code. All other terms
contained in this Agreement (which are not specifically defined in this
Agreement) shall have the meanings set forth in the Uniform Commercial Code of
Colorado (“Code”) to the extent the same are used or defined therein,
specifically including, but not limited to the following: Chattel Paper,
Commercial Tort Claims, Commodity Accounts, Commodity Contracts, Electronic
Chattel Paper, Goods, Instruments, Intellectual Property Rights, Investment
Property, Letters of Credit, Letter-of-Credit-Rights, Payment Intangibles,
Securities Accounts and Tangible Chattel Paper.

 

  2

LOANS, LETTERS OF CREDIT AND FEES.

2.1   Loans and Letters of Credit. Subject to all of the terms and conditions
contained in this Agreement, the Agent and the Lenders severally and not jointly
agree to make the following extensions of credit to or for the benefit of
Borrower:

2.1.1   Swing Line. The Agent agrees to make advances (“Swing Line Advances”) to
Borrower from time to time on any one or more Business Days from and after the
date of this Agreement, upon Borrower’s written (including facsimile) notice
given by Borrower to the Agent not later than 11:00 a.m. (local time of Agent)
on the first Business Day prior to the date of any

 

15

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proposed Advance, through and including the earlier of the Maturity Date or the
Termination Date, in amounts up to the lesser of: (a) Two Million Dollars
($2,000,000) minus the outstanding Swing Line Advances; (b) the Available Amount
or (c) the then current Borrowing Base Limit (“Swing Line”). The Swing Line
Advances shall be evidenced by and repayable in accordance with the terms of
Borrower’s Line of Credit Note to CoBank. The Agent, upon the written approval
of the Required Lenders, may elect to make Swing Line Advances to Borrower in
excess of the dollar amount stated above (but not in excess of the Available
Amount or the Borrowing Base Limit), and any such Swing Line Advances shall also
be governed by the terms hereof. The Agent shall also have the option, in its
sole discretion and without any obligation to do so, to extend the Termination
Date for the making of Swing Line Advances, provided, however, any Lender that
does not give its written approval of such extension of the Termination Date
shall have no obligation to make Equalization Transfers in respect of Swing Line
Advances made after the original Termination Date. In the event that the Agent
elects to extend such Termination Date, the Agent shall give notice to Borrower
pursuant to Section 10.19.

2.1.2 Line of Credit. Each Lender with a Line of Credit Loan Commitment
severally agrees to make advances (“Line of Credit Advances”) to Borrower from
time to time on any one or more Business Days from and after the date of this
Agreement (through the Agent as set forth in Section 2.1.6), upon Borrower’s
written (including facsimile) notice given by Borrower to the Agent not later
than 11:00 a.m. (local time of Agent) on the third Business Day prior to the
date of any proposed LIBOR Rate Loan or upon Borrower’s written (including
facsimile) notice given by Borrower to the Agent not later than 11:00 a.m.
(local time of Agent) on the first Business Day prior to the date of any
proposed Base Rate Loan, up to an aggregate principal amount not exceeding each
such Lender’s Pro Rata Percentage of the lesser of (a) the Available Amount on
such Business Day or (b) the Borrowing Base Limit on such Business Day, through
and including the earlier of the Termination Date or the Maturity Date, in
aggregate amounts up to the lesser of the Available Amount or the then current
Borrowing Base Limit (“Line of Credit”). The Line of Credit Advances shall be
evidenced by and repayable in accordance with the terms of Borrower’s promissory
notes to each of the Lenders (“Line of Credit Notes”), the form of which is
attached as Exhibit 2A. The Lenders with a Line of Credit Commitment, in their
sole and absolute discretion, may elect to make Line of Credit Advances to
Borrower in excess of the amounts available pursuant to the terms of this
Agreement, and any such Line of Credit Advances shall also be governed by the
terms hereof. The Lenders with a Line of Credit Commitment shall also have the
option, in their sole discretion and without any obligation to do so, to extend
the Termination Date for the making of Line of Credit Advances. In the event
that the Lenders elect to extend such Termination Date, the Agent shall give
notice to Borrower pursuant to Section 10.19. As of the Closing Date, all
outstanding Line of Credit Advances under the Prior Loan Agreement shall be
deemed issued and outstanding under this Agreement and shall be evidenced by the
Line of Credit Notes as if made hereunder.

2.1.3 Term Loan. Each Lender with a Term Loan Commitment severally agrees to
make advances (“Term Loan Advances”) to Borrower (through the Agent as set forth
in Section 2.1.6), up to an aggregate principal amount not exceeding each such
Lender’s Pro Rata Percentage of the Tranche A Term Loan Commitments and the
Tranche B Term Loan Commitments (respectively, the “Tranche A Term Loan” and the
“Tranche B Term Loan”, and collectively, “Term Loan”). The Term Loan shall be
evidenced by and repayable in

 

16

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accordance with the terms of Borrower’s promissory notes to each of the Lenders
(“Term Notes”), the forms of which are attached as Exhibit 2B. Term Loan
Advances shall be the lesser of (a) Fifty-six Million Eight Hundred Thousand
Dollars ($56,800,000); or (b) Sixty-Five Percent (65%) of the appraised value of
the ethanol production facility at Lakota, Iowa, currently owned and operated by
Borrower, that is a part of the Property and is located at the Iowa Project
Site. As of the date of this Agreement, the outstanding principal balance of the
Tranche A Term Loan is $23,400,000 and the outstanding principal balance of the
Tranche B Term Loan is $23,400,000. Subject to and in accordance with
Construction Lending Protocol for the Iowa Project and subject to the other
terms and conditions of this Agreement, after Completion of the Iowa Project,
but not later than February 15, 2006, additional Term Loan Advances shall be
made to the Borrower in the aggregate amount of $10,000,000, constituting the
remaining unadvanced portion of the Term Loan Commitment. Amounts representing
Term Loan Advances that have been (or will in the future be) repaid by Borrower
may not be reborrowed. As of the Closing Date, all outstanding Term Loan
Advances under the Prior Loan Agreement shall be deemed issued and outstanding
under this Agreement and shall be evidenced by the Term Notes as if made
hereunder.

2.1.4  Revolving Term Loan. Each Lender with a Revolving Term Loan Commitment
severally agrees to make advances (“Revolving Term Loan Advances”) to Borrower
from time to time on any one or more Business Days from and after the date of
this Agreement (through the Agent as set forth in Section 2.1.6), upon
Borrower’s written (including facsimile) notice given by Borrower to Agent not
later than 11:00 a.m. (local time of Agent) on the first (1st) Business Day
prior to the date of any proposed Base Rate Loan, up to an aggregate principal
amount not exceeding each such Lender’s Pro Rata Percentage of the Adjusted
Revolving Term Loan Commitment Amount on such Business Day, less all outstanding
Revolving Term Loan Advances, through and including the Term Loan Maturity Date
(the “Revolving Term Loans”). The Revolving Term Loan Advances shall be made
subject to and in accordance with the Construction Lending Protocol for the
Michigan Project (Exhibit 1D) and subject to the other terms and conditions of
this Agreement. The Revolving Term Loan shall be evidenced by and repayable in
accordance with the terms of Borrower’s promissory notes to each of the Lenders
(“Revolving Term Notes”), the form of which is attached as Exhibit 2C. Within
the above limits, Borrower may obtain Revolving Term Advances, prepay Revolving
Term Advances in accordance with the terms hereof and reborrow Revolving Term
Advances in accordance with the applicable terms and conditions of this
Agreement.

2.1.5  Letters of Credit.

(a)        The Agent further agrees to issue or cause to be issued by a Lender,
Letters for Borrower’s account for any purpose acceptable to the Agent in its
reasonable discretion (the Agent or such Lender thereby becoming an Issuer) in
amounts up to the lesser of: (a) Three Million Dollars ($3,000,000) minus the
then outstanding LC Obligations; (b) the Available Amount or (c) the then
current Borrowing Base Limit, for the benefit of one or more beneficiaries to be
named by Borrower (the “Beneficiary”, whether one or more), in form and
substance acceptable to the Issuer, with an expiration date not later than the
Termination Date. In order to effect the issuance of each Letter, Borrower shall
deliver to the Agent a letter of credit application (the “Application”) not
later than 11:00 a.m. (local time of Agent), five (5) Business

 

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Days prior to the proposed date of issuance of the Letter. The Application shall
be duly executed by a responsible officer of Borrower, shall be irrevocable and
shall (i) specify the day on which such Letter is to be issued (which shall be a
Business Day), and (ii) be accompanied by a certificate executed by a
responsible officer setting forth calculations evidencing availability for the
Letter and stating that all conditions precedent to such issuance have been
satisfied. The Agent shall provide Borrower and each Lender with a copy of the
Letter that has been issued. Each Letter shall (i) provide for the payment of
drafts presented for honor thereunder by the beneficiary in accordance with the
terms thereof, when such drafts are accompanied by the documents described in
the Letter, if any, and (ii) to the extent not inconsistent with the express
terms hereof or the applicable Application, be subject, as applicable, to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 or the International
Standby Practices (ISP 98 — International Chamber Of Commerce Publication Number
590) (in each case, together with any subsequent revisions thereof approved by a
Congress of the International Chamber of Commerce and adhered to by the Issuer,
the “UCP” and the “ISP98”, respectively), and shall, as to matters not governed
by the UCP or the ISP98, be governed by, and construed and interpreted in
accordance with, the laws of the State in which the Issuer resides.

(d)        Upon the issuance date of each Letter, the Agent shall be deemed,
without further action by any party hereto, to have sold to each other Lender
with a Line of Credit Loan Commitment, and each other such Lender shall be
deemed, without further action by any party hereto, to have purchased from the
Agent, a participation, to the extent of such Lender’s Pro Rata Percentage, in
the Letter, the obligations thereunder and in the reimbursement obligations of
Borrower due in respect of drawings made under the Letter. If requested by the
Agent, the other Lenders with a Line of Credit Loan Commitment will execute any
other documents reasonably requested by the Agent to evidence the purchase of
such participation.

(e)        If Issuer has received documents purporting to draw under a Letter
that Issuer believes conform to the requirements of the Letter, or if Issuer has
decided that it will comply with Borrower’s written or oral request of
authorization to pay a drawing on any Letter that Issuer does not believe
conforms to the requirements of the Letter, Issuer or the Agent will notify
Borrower of that fact. An amount equal to the amount of such drawing shall be
paid by a Swing Line Advance or Line of Credit Advances initiated by the Agent
on the date such drawing is made. The obligation of Borrower to repay the Agent
for any Advance made to fund such reimbursement, shall be absolute,
unconditional and irrevocable, shall continue for so long as any LC Obligation
is outstanding notwithstanding any termination of this Agreement, and shall be
paid strictly in accordance with the terms of this Agreement, notwithstanding
any of the following:

 

  (i)

Any lack of validity or enforceability of any Letter or LC Obligation;

 

  (ii)

The existence of any claim, setoff, defense or other right which Borrower may
have or claim at any time against any beneficiary, transferee or holder of any
Letter (or any Person for whom any such beneficiary, transferee or holder may be
acting), Issuer or any other Person, whether in connection with a Letter, this
Agreement, the transactions contemplated hereby, or any unrelated transaction;
or

 

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  (iii)

Any statement or any other document presented under any Letter proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatever so long as such
statement or document appeared to comply with the terms of the Letter.

(f)     None of Issuer, the Lenders or any of the officers, directors or
employees of any of them shall be liable or responsible for, and the obligations
of Borrower to Issuer and the Lenders shall not be impaired by:

 

  (i)

The use that may be made of any Letter or for any acts or omissions of any
beneficiary, transferee or holder thereof in connection therewith;

 

  (ii)

The validity, sufficiency or genuineness of documents, or of any endorsements
thereon, even if such documents or endorsements should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged so long as such
statement or document appeared to comply with the terms of the Letter;

 

  (iii)

The acceptance by Issuer of documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary; or

 

  (iv)

Any other action of Issuer in making or failing to make payment under any Letter
if in good faith and in conformity with applicable U.S. or foreign laws,
regulations or customs.

(g)        Notwithstanding the foregoing, Borrower shall have a claim against
Issuer and the Agent, and Issuer and/or the Agent shall be liable to Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by Borrower which Borrower proves were caused by
Issuer’s or the Agent’s willful misconduct or gross negligence in determining
whether documents presented under any Letter comply with the terms thereof.

(h)        If any Letter is issued and outstanding on the Maturity Date,
Borrower shall deposit with the Agent, for the ratable benefit of the Lenders
and the Issuer, cash collateral in an amount equal to the LC Obligations
relating to such Letter.

2.1.6  Equalization Transfers.

(a)      The Swing Line Advances, the Line of Credit Advances, the Term Loan
Advances and the Revolving Term Loan Advances (collectively “Advances” and
individually, an “Advance”) shall also sometimes collectively be referred to in
each case as a “Loan” and collectively the “Loans”. It is anticipated that on
each Business Day Borrower may wish to borrow and repay Loans. To the extent
possible, these Loans will be made under the Swing Line. To minimize the number
of transfers of funds to and from the Lenders resulting from such borrowings and
repayments, the Agent may fund daily Loans for the accounts of the Lenders and
apply daily repayments of Loans to the accounts of the Lenders, other than
according to the Lenders’ Pro Rata Percentages (i.e., without receiving from the
other Lenders their Pro Rata Percentage of a Loan on the date of disbursement
thereof or without paying the other Lenders

 

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their Pro Rata Percentage of a repayment of a Loan on the date of payment
thereof), provided however, that no such Loan shall be made and no repayment of
a Loan shall be applied other than according to the Lenders’ Pro Rata
Percentages, if: (i) at the time of such Loan or repayment the Agent has actual
knowledge of a Matured Default, or (ii) after giving effect to the requested
Loan or after applying the repayment, the absolute value of the amount that
would have to be reallocated to make the Loans held according to the Lenders’
Pro Rata Percentages, would exceed $2,000,000; or (iii) after giving effect to
the requested Loan, CoBank would hold at the end of any Business Day, Loans
under the Term Loan exceeding its Term Loan Commitment, Loans under the
Revolving Term Loan exceeding its Revolving Term Loan Commitment or Loans under
the Swing Line and the Line of Credit exceeding its Line of Credit Loan
Commitment plus $2,000,000.

(b)      At any time in the discretion of the Agent and in any event as of the
end of the first Business Day of each week if the outstanding Loans are not held
according to the Lenders’ Pro Rata Percentages, by reason of Swing Line Advances
by the Agent or otherwise, the Agent shall give notice to the Lenders of the
amount of funds to be transferred from the Agent to the Lenders, or from the
Lenders to the Agent, or from one Lender to another, as the case may be (each
such transfer, an “Equalization Transfer”) required to cause the Loans to be
held by the Lenders according to their Pro Rata Percentages. On the next
Business Day following such notice the necessary Equalization Transfers shall be
made in Immediately Available Funds not later than 11:00 a.m. (local time of
Agent); provided, however, Equalization Transfers necessary to avoid the event
described in Section 2.1.6(a)((iii)) shall be made on the same Business Day.

(c)      Except as provided in Section 2.1.6(d), any Equalization Transfer by
the Lenders to the Agent shall be deemed to constitute Loans by such Lenders to
Borrower and repayments by Borrower of Loans held by the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be deemed to constitute
Loans by the Agent to Borrower and repayments of Loans held by the Lenders.

(d)      In the event that on the date on which any Equalization Transfer is
required to be made pursuant to Section 2.1.6(b), a Matured Default of the type
described in clause (i) of the definition thereof shall have occurred and be
continuing, any Equalization Transfer by the Lenders to the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be deemed to constitute
a purchase by the Lenders or the Agent, as the case may be, of a direct
interest, in the amount of such Equalization Transfer, in outstanding Loans of
the Lenders to Borrower, to the end that each of the Lenders shall have an
undivided participating interest therein equal to their respective Pro Rata
Percentages as of the date of occurrence of such Matured Default.

(e)      At any time after any Lender (a “Selling Lender”) has received any
Equalization Transfer that constitutes a purchase by any other Lender (a
“Purchasing Lender”) of a direct interest in such Selling Lender’s Loans
pursuant to Section 2.1.6(d), if such Selling Lender receives any payment on
account of its Loans, such Selling Lender will distribute to such Purchasing
Lender its proportionate share of such payment (appropriately adjusted in the
case of interest payments, to reflect the period of time during which such
Purchasing Lender’s direct undivided participating interest was outstanding and
funded); provided however, that in the event that such payment received by such
Selling Lender is required to be returned, such Purchasing

 

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Lender will return to such Selling Lender any portion thereof previously
distributed to it by such Selling Lender.

(f)      Each Lender’s obligation to make Equalization Transfers pursuant to
Section 2.1.6(b) shall be absolute and unconditional and shall not be affected
by any circumstance, including without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have against the Agent or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or a Matured Default or the
termination of the Commitments; (iii) any adverse change in the condition
(financial or otherwise) of Borrower or any other Person; (iv) any breach of
this Agreement by Borrower or any other Lender, including without limitation,
any other Lender’s failure to make any Equalization Transfer; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

2.2 Payment of Principal and Interest; Default Rate; Reduction of Revolving Term
Loan Commitment. Except as otherwise provided in this Agreement, the principal
amount outstanding under the Line of Credit Notes shall be due and payable on
the Termination Date. Except as otherwise provided in this Agreement, the
principal amount outstanding under the Term Notes shall be payable in quarterly
installments (which shall be applied pro-rata to the Term Notes) of $1,500,000
each, commencing on January 1, 2006 and on the first day of each quarter
thereafter, with any and all remaining principal outstanding on the Maturity
Date due and payable on the Maturity Date. On each such scheduled payment date
with respect to the Term Loans as provided above, the Term Loan Commitment shall
automatically and irrevocably reduce, in the aggregate, by the amount of each
such required payment. Except as otherwise provided in this Agreement, the
principal amount outstanding under the Revolving Term Notes shall be payable in
semi-annual installments (which shall be applied pro-rata to the Revolving Term
Notes) of (i) $2,680,000 each, commencing on April 1, 2007 and continuing on the
first day of each October and April thereafter through and including April 1,
2015, (ii) $5,680,000 on October 1, 2015 and (iii) $4,760,000 on April 1, 2016,
with any and all remaining principal outstanding on the Maturity Date due and
payable on the Maturity Date. Additional mandatory prepayments of the principal
amount outstanding under the Term Loan and the Revolving Term Loan shall be
payable as follows: On or before the 10th day after the receipt thereof, an
amount equal to one hundred percent (100%) of any Excess Sale Proceeds, applied
first, to the Revolving Term Loan and second, to the Term Loan. On each such
scheduled payment date with respect to the Revolving Term Loans as provided
above, and upon mandatory prepayment from Excess Sales Proceeds, the amount of
the Revolving Term Loan Commitment shall automatically and irrevocably reduce,
in the aggregate, by the amount of each such required payment. Loans under the
Swing Line shall be Base Rate Loans. Loans under the Line of Credit may, at the
option of Borrower, be Base Rate Loans or LIBOR Rate Loans. Loans under the
Tranche A Term Loan may, at the option of Borrower, be Base Rate Loans, LIBOR
Rate Loans or Quoted Rate Loans. Loans under the Revolving Term Loan may, at the
option of the Borrower, be Base Rate Loans, LIBOR Rate Loans or Quoted Rate
Loans. Each request for LIBOR Rate Loans or Quoted Rate Loans shall be in a
minimum amount of $1,000,000 and an integral multiple of $500,000 and shall be
subject to the restrictions set forth in the definition of Interest Period and
the other restrictions set forth in this Section 2.2. Loans under the Tranche B
Term Loan shall be MetLife Fixed Rate Loans. Borrower shall pay interest on the
unpaid principal amount of each Loan made

 

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by each Lender from the date of such Loan until such principal amount shall be
paid in full, at the times and at the rates per annum set forth below:

(a)      So long as no Matured Default has occurred or is continuing, during
such periods as such Loan is a Base Rate Loan, a rate per annum equal to the
lesser of (i) the sum of the Base Rate in effect from time to time plus the
Applicable Margin and (ii) the Highest Lawful Rate, payable monthly in arrears
on the first day of each month and on the Maturity Date, which interest shall be
paid by an Agent initiated Advance pursuant to Section 2.1, without prior demand
by the Agent.

(b)      So long as no Matured Default has occurred or is continuing, during
such periods as such Loan is a LIBOR Rate Loan, a rate per annum during each day
of each Interest Period for such Loan equal to the lesser of (i) the sum of the
LIBOR Rate for such Interest Period for such Loan plus the Applicable Margin and
(ii) the Highest Lawful Rate, payable in arrears on the last day of the Interest
Period in respect of such LIBOR Rate Loan, and, if the Interest Period with
respect to such LIBOR Rate Loan exceeds three months, the day which is three
months, six months and nine months after the making of such LIBOR Rate Loan, as
the case may be, which interest shall be paid by an Agent initiated Advance
pursuant to Section 2.1, without prior demand by the Agent.

(c)      So long as no Matured Default has occurred or is continuing, during
such periods as such Loan is a MetLife Fixed Rate Loan, a rate per annum equal
to the lesser of (i) the MetLife Fixed Rate applicable to such Loan and (ii) the
Highest Lawful Rate, payable monthly in arrears on the first day of each month
and on the Maturity Date, which interest shall be paid by an Agent initiated
Advance pursuant to Section 2.1, without prior demand by the Agent.

(d)      So long as no Matured Default has occurred or is continuing, during
such periods as a Loan is a Quoted Rate Loan, a rate per annum during each day
such Quoted Rate Loan shall remain outstanding equal to the lesser of (i) the
Quoted Rate, as established by the Agent in its sole discretion, and (ii) the
Highest Lawful Rate, payable monthly in arrears on the first day of each month
and on the Maturity Date, which interest shall be paid by an Agent initiated
Advance pursuant to Section 2.1, without prior demand by the Agent.

(e)      After the occurrence of a Matured Default and for so long as such
Matured Default is continuing, the Agent may (upon the direction of the Required
Lenders) notify Borrower that any and all amounts due hereunder, under the Notes
or under any other Financing Agreement, whether for principal, interest (to the
extent permitted by applicable law), fees, expenses or otherwise, shall bear
interest, from the date of such notice by the Agent and for so long as such
Matured Default continues, payable on demand, at a rate per annum (the “Default
Rate”) equal to the lesser of (i) (A) with respect to a Base Rate Loan, the sum
of two percent (2.0%) per annum plus the Base Rate in effect from time to time
plus the Applicable Margin; (B) with respect to a LIBOR Rate Loan, the sum of
two percent (2.0%) per annum plus the LIBOR Rate then in effect for such LIBOR
Rate Loan plus the Applicable Margin; (C) with respect to MetLife Fixed Rate
Loans, the sum of five percent (5.0%) per annum plus the applicable MetLife
Fixed Rate; or (D) with respect to Quoted Rate Loans, the sum of two percent

 

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(2.0%) per annum plus the Quoted Rate then in effect for such Quoted Rate Loan;
or (ii) the Highest Lawful Rate.

(f)      Computations of interest pursuant to this Section 2.2 shall be made by
the Agent with respect to Base Rate Loans on the basis of a year of 365/366 days
and with respect to LIBOR Rate Loans, MetLife Fixed Rate Loans and Quoted Rate
Loans on the basis of a year of 360 days, unless the foregoing would result in a
rate exceeding the Highest Lawful Rate, in which case such computations shall be
based on a year of 365 or 366 days, as the case may be. Interest with respect to
all Loans, whether based on a year of 360, 365 or 366 days, shall be charged for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable. Each determination
by the Agent or MetLife of an interest rate shall be conclusive and binding for
all purposes, absent manifest error.

(g)      Borrower may on any Business Day, upon Borrower’s written (including
facsimile) notice given by Borrower to the Agent not later than 11:00 a.m.
(Denver time) on the third Business Day prior to the date of any proposed
interest conversion or rollover, (a) convert Loans of one Type into Loans of
another Type, unless restricted under the terms of this Agreement, or
(b) continue or rollover existing LIBOR Rate Loans or Quoted Rate Loans;
provided however, (i) with respect to any conversion into or rollover of a LIBOR
Rate Loan or Quoted Rate Loan, no Default or Matured Default shall have occurred
and be continuing, (ii) with respect to any facsimile notice of interest
conversion, Borrower shall promptly confirm such notice by sending the original
notice to the Agent, (iii) any continuation or rollover of LIBOR Rate Loans for
the same or a different Interest Period or into Base Rate Loans, shall be made
on, and only on, the last day of an Interest Period for such LIBOR Rate Loans
and (iv) any continuation or rollover of Quoted Rate Loans for the same or a
different Interest Period or into Base Rate Loans or LIBOR Rate Loans shall be
made on, and only on, the last day of the Interest Period for such Quoted Rate
Loan. Each such notice of interest conversion shall specify therein the
requested (x) date of such conversion, (y) the Loans to be converted and whether
such Loans constitute LIBOR Rate Loans or Quoted Rate Loans, and (z) if such
interest conversion is into Loans constituting LIBOR Rate Loans or Quoted Rate
Loans, the duration of the Interest Period for each such Loan. The Agent shall
promptly deliver a copy thereof to each Lender. Each such notice shall be
irrevocable and binding on Borrower. If Borrower shall fail to give a notice of
interest conversion with respect to any LIBOR Rate Loan or Quoted Rate Loans as
set forth above, such Loan shall automatically convert to a Base Rate Loan on
the last day of the Interest Period with respect thereto. The provisions of this
Section 2.2(g) shall also apply to initial Advances made as LIBOR Rate Loans or
Quoted Rate Loans.

2.3  Prepayments; Termination of the Commitments; Prepayment Fees.

(a)      Borrower may at any time prepay the outstanding principal amount of any
Loan, in either case in whole or in part, in accordance with this Section 2.3.
With respect to any prepayment other than prepayments made pursuant to the
Agent’s routine receipt of proceeds of Accounts and Inventory in accordance with
the provisions of this Agreement, Borrower shall give prior written notice of
any such prepayment to the Agent, which notice shall state the proposed date of
such prepayment (which shall be a Business Day), the Loans to be prepaid and the
aggregate amount of the prepayment, and which notice shall be delivered to the
Agent not

 

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later than 11:00 a.m. (local time of Agent): (a) with respect to any Loan which
is a Base Rate Loan, on the date of the proposed prepayment, and (b) with
respect to any Loan which is a LIBOR Rate Loan or Quoted Rate Loan, three
(3) Business Days prior to the date of the proposed prepayment. All prepayments
of Base Rate Loans shall be without premium. All prepayments of LIBOR Rate Loans
or Quoted Rate Loans shall be made together with accrued and unpaid interest (if
any) to the date of such prepayment on the principal amount prepaid without
premium thereon, provided however, that losses, costs or expenses incurred by
any Lender as described in this Section 2.3 shall be payable with respect to
each such prepayment. All notices of prepayment shall be irrevocable and the
payment amount specified in each such notice shall be due and payable on the
prepayment date described in such notice, together with, in the case of LIBOR
Rate Loans or Quoted Rate Loans, accrued and unpaid interest (if any) on the
principal amount prepaid and any amounts due under this Section 2.3. Borrower
shall have no optional right to prepay the principal amount of any LIBOR Rate
Loan or Quoted Rate Loan other than as provided in this Section 2.3.

(b)      Borrower will indemnify each Lender against, and reimburse each Lender
on demand for, any loss, cost or expense incurred or sustained by such Lender
(including without limitation, any loss or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired by such Lender
to fund or maintain any LIBOR Rate Loan or Quoted Rate Loan and/or loss of net
yield) as a result of (a) any payment, conversion, rollover, or prepayment of
all or a portion of any LIBOR Rate Loan or Quoted Rate Loan on a day other than
the last day of an Interest Period for such LIBOR Rate Loan or Quoted Rate Loan,
(b) any payment, conversion, rollover or prepayment (whether required hereunder
or otherwise) of such Lender’s Loan made after the delivery of a notice of
borrowing delivered pursuant to Section 2.2 (whether oral or written) but before
the proposed date for such LIBOR Rate Loan or Quoted Rate Loan if such payment
or prepayment prevents the proposed borrowing from becoming fully effective,
(c) after receipt by the Agent of a notice of borrowing delivered pursuant to
Section 2.2, the failure of any Loan to be made or effected by such Lender due
to any condition precedent to a borrowing not being satisfied or due to any
other action or inaction of Borrower or (d) any rescission of a notice of
borrowing delivered pursuant to Section 2.2 or a notice of interest conversion
delivered pursuant to Section 2.2. Any Lender demanding payment under this
Section 2.3 shall deliver to Borrower and the Agent a statement reasonably
setting forth the amount and manner of determining such loss, cost or expense,
which statement shall be conclusive and binding for all purposes, absent
manifest error. Compensation owing to a Lender as a result of any such loss,
cost or expense resulting from a payment, prepayment, conversion or rollover of
a LIBOR Rate Loan or Quoted Rate Loan shall include without limitation, an
amount equal to the sum of (i) the amount of the net yield that, but for such
event, such Lender would have earned for the remainder of the applicable
Interest Period plus (ii) any expense incurred by such Lender. Notwithstanding
any provision herein to the contrary, each Lender shall be entitled to fund and
maintain its funding of all of any part of the LIBOR Rate Loans or Quoted Rate
Loans in any manner it elects; it being understood, however, that all
determinations hereunder shall be made as if the Lender had actually funded and
maintained each LIBOR Rate Loan or Quoted Rate Loan during the Interest Period
for such Advance through the purchase of deposits having a term corresponding to
such Interest Period and bearing an interest rate equal, in the case of LIBOR
Rate Loans or Quoted Rate Loans, to the LIBOR Rate or Quoted Rate, as the case
may

 

24

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be, for such Interest Period (whether or not the Lender shall have granted any
participations in such Loans).

(c)      Borrower shall have the right, upon at least five Business Days’
written notice to the Lenders, to terminate the Line of Credit Loan Commitments,
(i) in whole, or (ii) in part, in a minimum amount of $500,000 and an integral
multiple of $500,000, but not to an amount less than $1,000,000. Provided,
however, that any such termination shall be accompanied, (i) in the case of a
termination in whole, by payment of the Line of Credit Loan Liabilities and the
return or cash coverage of any Letter then outstanding, or (ii) in the case of a
partial termination, payment of the Line of Credit Loan Liabilities to the
extent necessary to cause the Available Amount to be not less than zero. Any
partial reduction of the Line of Credit Loan Commitments pursuant to this
Section 2.3(c) shall result in a reduction pro-rata of the Line of Credit Loan
Commitments of each of the Lenders with a Line of Credit Loan Commitment.
Voluntary and mandatory prepayments of the Term Loans and the Revolving Term
Loans shall be applied first to required payments of principal in inverse order
of maturity. Notwithstanding any other term of this Section 2.3, prepayments of
the MetLife Fixed Rate Loans, shall be made together with amounts due to the
holder thereof in accordance with the MetLife Make-Whole Agreement.

(d)      In the event that the Term Loans and the Revolving Term Loans are
prepaid prior to December 31, 2007 in connection with any refinancing of the
Term Loans and the Revolving Loans which is not provided by the Agent and the
Lenders or in connection with any acquisition of the Borrowers or either
Borrower or of the assets of the Borrowers or either Borrower (including by
merger or otherwise) by another Person or Persons, then, simultaneously with
such prepayment, the Borrowers jointly and severally agree to pay to the Agent
for distribution to the Lenders (based on their respective Pro Rata Percentages
of the sum of the Term Loan Commitments and the Revolving Term Loan Commitments)
a prepayment fee in an amount equal to two percent (2%) of the sum of the Term
Loan Commitments and the Revolving Term Loan Commitments of all of the Lenders
on such prepayment date. Notwithstanding the foregoing, the Borrowers shall not
be obligated to pay the prepayment fee required by the preceding sentence in
connection with a refinancing of the Term Loans and the Revolving Loans provided
that (a) no Default or Matured Default exists at the time of such refinancing,
(b) the Borrowers have requested in writing that the Agent and the Lenders
provide increased financing (above the level of financing currently contemplated
in this Agreement), (c) in connection with the request for increased financing,
the Borrowers have promptly provided to the Agent and the Lenders such
projections and other information related to such requested increased financing
as the Agent and the Lenders shall have reasonably requested, (d) the Agent and
the Lenders shall have notified the Borrowers in writing that the Agent and the
Lenders have declined to provide such requested increased financing to the
Borrowers, and (e) a Person or Persons other than the Agent and the Lenders
shall have provided such increased financing to the Borrowers on terms which are
identical in all material respects to the terms of the increased financing which
were requested by the Borrowers from the Agent and the Lenders and declined by
the Agent and the Lenders.

2.4 Purpose. The purpose of the Line of Credit and the Swing Line is to provide
funds for the working capital needs and the general corporate purposes of the
Borrower. The purpose of the Term Loan is to provide funds for the construction,
in accordance with the applicable

 

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Construction Lending Protocol, of an expansion to Borrower’s ethanol production
plant located on the Borrower’s Property in Lakota, Iowa (such property, such
existing plant and such expansion related to such existing plant are herein
collectively referred to as the “Iowa Project”). The purpose of the Revolving
Term Loan is to provide funds for the construction, in accordance with the
applicable Construction Lending Protocol, of Borrower’s new ethanol production
plant located on the Borrower’s Property in Riga, Michigan (such property and
such plant are herein collectively referred to as the “Michigan Project”) and,
so long as the unadvanced portion of the Revolving Term Loan is at all times
sufficient to complete the Michigan Project, for the working capital needs and
the general corporate purposes of the Borrower.

2.5  Loan Fees.

(a)      Agent’s Fees. Borrower agrees to pay to the Agent, in respect of its
administrative duties hereunder, an annual fee in the amount set forth in the
Agent’s Letter. The annual Agent’s fee shall be due and payable in advance on
the date of this Agreement and on each Anniversary Date as long as Advances are
available or outstanding hereunder. Fronting fees shall be payable to the Agent
at the issuance of each Letter, computed at the rate set forth in the Agent’s
Letter on the face amount of such Letter. Each of the Agent’s fees shall be
fully earned on the date they become payable and, at the option of the Agent,
shall be paid by Advances pursuant to Section 2.1, without prior demand by the
Agent. The Agent’s Letter also covers the annual audit fee referred to in
Section 10.7. No Persons other than the Agent shall have any interest in any
such Agent’s fees. Borrower also agrees to reimburse the Agent, for any fees and
expenses incurred in connection with the syndication of the Commitments as set
forth in the Agent’s Letter.

(b)      Origination Fees. Borrower agrees to pay to the Agent for distribution
to the Lenders with Revolving Term Loan Commitments, including the Agent (based
on their respective Pro Rata Percentages of the Revolving Term Loan Commitments)
a fee equal to Two Hundred and Eighty Thousand Dollars ($280,000) on the Closing
Date. Borrower agrees to pay to the Agent for distribution to the Lenders with a
Line of Credit Loan Commitment, including the Agent (based on their respective
Pro Rata Percentages of the Line of Credit Commitments) a fee equal to
Thirty-Seven Thousand Five Hundred Dollars ($37,500) on the Closing Date. Each
of the foregoing fees shall be fully earned when paid on the Closing Date, and,
at the option of the Agent, shall be paid by Advances pursuant to Section 2.1,
without prior demand by the Agent.

(c)      Non-Use Fee with respect to the Line of Credit. Borrower agrees to pay
to the Agent for distribution to the Lenders with Line of Credit Commitments
(based on their respective Pro Rata Percentages of the Line of Credit
Commitments) a monthly non-use fee from the Closing Date to the Maturity Date,
calculated using the applicable rate per annum provided in the Pricing Matrix
attached as Schedule B hereto, and applied to the daily average Available
Amount. The monthly non-use fee shall be due and payable in arrears with respect
to the prior month on the first day of each month hereafter through the Maturity
Date. Each monthly non-use fee shall be earned as it accrues and, at the option
of the Agent, shall be paid by Advances pursuant to Section 2.1, without prior
demand by the Agent.

(d)      Non-Use Fee with respect to the Revolving Term Loan. Borrower agrees to
pay to the Agent for distribution to the Lenders with Revolving Term Loan
Commitments (based on

 

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their respective Pro Rata Percentages of the Revolving Term Loan Commitments) a
monthly non-use fee from the date on which the Borrower requests the initial
Revolving Term Loan Advance or June 1, 2006, whichever occurs earlier, through
the Maturity Date, calculated using the applicable rate per annum provided in
the Pricing Matrix attached as Schedule B hereto, and applied to the difference
between the aggregate amount of the Revolving Term Loan Commitments and the
outstanding principal amount of the Revolving Term Loan Advances. The monthly
non-use fee shall be due and payable in arrears with respect to the prior month
on the first day of each month hereafter through the Maturity Date. Each monthly
non-use fee shall be earned as it accrues and, at the option of the Agent, shall
be paid by Advances pursuant to Section 2.1, without prior demand by the Agent.

(e)      Letter of Credit Fees. Borrower agrees to pay to the Agent, for
distribution to the Lenders with Line of Credit Commitments (based on their
respective Pro Rata Percentages of the Line of Credit Commitments), a fee,
payable monthly, quarterly or annually, as mutually agreed to by the Agent and
the Borrower in respect of each Letter issued hereunder, computed at a rate per
annum equal to the then effective Applicable Margin on the aggregate daily
average face amounts of all Letters outstanding during such period. Borrower
shall also pay to the Agent for the account of the Issuer issuing any Letter,
the normal and customary processing fees charged by such Issuer in connection
with the issuance of or drawings under each such Letter. Each letter of credit
fee and processing fee shall be fully earned as it accrues and, at the option of
the Agent, shall be paid by Advances pursuant to Section 2.1, without prior
demand by the Agent.

(f)      Calculation of Fees. The fees payable under this Section 2.5 which are
based on an annual percentage rate shall be calculated by the Agent on the basis
of a 360-day year, for the actual days (including the first day but excluding
the last day) occurring in the period for which such fee is payable. Each
determination by the Agent of fees payable under this Section 2.5 shall be
conclusive and binding for all purposes, absent manifest error.

(g)      Fees Not Interest. The fees described in this Agreement represent
compensation for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not constitute
compensation for the use, detention, or forbearance of money, and the obligation
of Borrower to pay each fee described herein shall be in addition to, and not in
lieu of, the obligation of Borrower to pay interest, other fees described in
this Agreement, and expenses otherwise described in this Agreement. Fees shall
be payable when due in Dollars and in Immediately Available Funds. All fees
shall be non-refundable.

2.6  Borrower’s Loan Account. The Agent shall maintain a loan account (“Loan
Account”) on its books in which shall be recorded: (a) all Line of Credit
Advances made by the Agent to Borrower pursuant to this Agreement; (b) all Term
Loan Advances made by the Agent to Borrower pursuant to this Agreement; (c) all
Revolving Term Loan Advances made by the Agent to Borrower pursuant to this
Agreement; (d) all Swing Ling Advances made by the Agent to Borrower pursuant to
this Agreement; (e) all receipts and disbursements from and to the other
Lenders; (f) all payments made by Borrower; and (g) all other appropriate debits
and credits as provided in this Agreement, including without limitation, all
receipts of cash proceeds of collateral, fees, charges, expenses and interest.
All entries in Borrower’s Loan Account shall be made in accordance with the
Agent’s customary accounting practices as in effect from time to

 

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time. Borrower promises to pay the amount reflected as owing by and under its
Loan Account and all other obligations hereunder as such amounts become due or
are declared due pursuant to the terms of this Agreement.

2.7  Statements. All Advances to Borrower, and all other debits and credits
provided for in this Agreement, shall be evidenced by entries made by the Agent
in its internal data control systems showing the date, amount and reason for
each such debit or credit. Until such time as the Agent shall have rendered to
Borrower and the Lenders written statements of account, the balance in
Borrower’s Loan Account, as set forth on the Agent’s most recent printout, shall
be rebuttable presumptive evidence of the amounts due and owing the Lenders by
Borrower and, as the case may be, by the Lenders to each other. On or about the
last day of each calendar month, the Agent shall mail to Borrower a statement
setting forth the balance of Borrower’s Loan Account, including without
limitation, principal, interest, expenses and fees. Each such statement shall be
subject to subsequent adjustment by the Agent but shall, absent manifest errors
or omissions, be presumed correct and binding upon Borrower and shall constitute
an account stated unless, within sixty (60) days after receipt of any statement
from the Agent, Borrower or a Lender shall deliver to the Agent written
objection specifying the error or errors, if any, contained in such statement.

2.8  Termination of Commitments . Subject to and in accordance with Section 9.1,
the Agent shall have the right, without notice to Borrower, to terminate the
Commitments immediately upon a Matured Default. In addition, the Line of Credit
Loan Commitments shall be deemed immediately terminated, without notice to
Borrower, on the Termination Date if the Lenders elect not to extend the
Termination Date of the Swing Line and the Line of Credit pursuant to Sections
2.1.1 and 2.1.2. In the event the Commitments are terminated, the remainder of
this Agreement and the other Financing Agreements shall remain in full force and
effect until the payment in full of the Liabilities and the termination of any
Letters. Notwithstanding the foregoing, in the event that a proceeding under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute is filed by or against Borrower or any
guarantor of the Liabilities, or Borrower or any guarantor of the Liabilities
makes an assignment for the benefit of creditors, the Commitments shall be
deemed to be terminated immediately, and all the Liabilities shall be due and
payable, without presentment, demand, protest or further notice (including
without limitation, notice of intent to accelerate and notice of acceleration)
of any kind, all of which are expressly waived by Borrower, provided, however,
that in the event a proceeding against Borrower or any guarantor of the
Liabilities is dismissed within thirty (30) days of the date of its filing then
the Commitments shall be deemed to be reinstated as of the date the order of
dismissal becomes final and the Agent is given notice thereof, and provided,
however, the automatic reimbursement of the Issuer by the Lenders as provided
for in this Agreement shall continue with respect to any post-petition drawings
under any Letters. This Agreement shall terminate when the Commitments have
terminated, any Letters issued hereunder have terminated and the Liabilities
have been indefeasibly paid in full.

2.9  Contribution Agreement. As an inducement to the Agent and the Lenders to
make Advances and extend credit to each Borrower, each Borrower agrees to
indemnify and hold the other harmless from and each shall have a continuing
right of contribution against each other Borrower, if and to the extent that a
Borrower makes or is caused to make disproportionate

 

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payments of the Liabilities in excess of that Borrower’s Proportionate Share (as
defined below), from dispositions of its assets or otherwise. These
indemnification and contribution obligations shall be unconditional and
continuing obligations of each Borrower and shall not be waived, rescinded,
modified, limited or terminated in any way whatsoever without the prior written
consent of the Agent and the Lenders, in their sole discretion. For purposes
hereof, a Borrower’s Proportionate Share shall mean a fraction, in which the
numerator is the net worth of a Borrower (defined as the fair salable value of
its assets minus its liabilities, other than the Liabilities and its
contribution obligations hereunder) on the date of the determination with regard
to such payments and the denominator is the consolidated net worth of every
Borrower (as so defined) on such date.

 

  3

BORROWING BASE.

3.1  Eligible Accounts. The Agent shall have the right, in the exercise of the
Agent’s reasonable discretion, to determine whether Accounts are eligible for
inclusion in the Borrowing Base at any particular time (such eligible accounts
being referred to as “Eligible Accounts”). Without limiting the Agent’s right to
determine that Accounts do not constitute Eligible Accounts, the following
Accounts shall not be Eligible Accounts: (a) all Accounts which are at that time
unpaid for a period exceeding sixty (60) days after the original invoice due
date of the original invoice related thereto; (b) all Accounts owing by an
Account Debtor if more than ten percent (10%) of the Accounts owing by such
Account Debtor are at that time unpaid for a period exceeding sixty (60) days
after the invoice due date of the original invoice related thereto; (c) those
Accounts, except Accounts owing from the Account Debtors listed on Exhibit 3A,
of an Account Debtor, the aggregate face amount of which is in excess of five
percent (5%) of the aggregate face amount of all other Eligible Accounts of all
other Account Debtors; (d) those Accounts owing from the United States or any
department, agency or instrumentality thereof unless Borrower shall have
complied with the Assignment of Claims Act to the satisfaction of the Agent;
(e) Accounts which arise out of transactions with Affiliates; (f) Accounts of an
Account Debtor that is located outside the United States, unless such Accounts
are covered by a letter of credit issued or confirmed by a bank acceptable to
the Agent or are covered by foreign credit insurance acceptable to the Agent;
(g) Accounts which are or may be subject to rights of setoff or counterclaim by
the Account Debtor (to the extent of the amount of such setoff or counterclaim);
(h) Accounts in which the Agent does not, for any reason, have a first priority
perfected security interest; and (i) Accounts which in the Agent’s opinion may
be subject to liens or conflicting claims of ownership, whether such liens or
conflicting claims are asserted or could be asserted by any Person.

3.2  Eligible Inventory. The Agent shall have the right, in the exercise of the
Agent’s reasonable discretion, to determine whether Inventory is eligible for
inclusion in the Borrowing Base at any particular time (such eligible inventory
being referred to as “Eligible Inventory”). Without limiting the Agent’s right
to determine that Inventory does not constitute Eligible Inventory, the
following Inventory shall not be Eligible Inventory: (a) Inventory reasonably
determined by the Agent to be out-of-condition or otherwise unmerchantable,
including, without limitation, Inventory deemed to be out-of-condition or
otherwise unmerchantable by the United States Department of Agriculture, any
state’s Department of Agriculture, or any other Governmental Authority having
regulatory authority over Borrower or any of Borrower’s assets

 

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or activities; (b) Inventory for which a prepayment has been received;
(c) Inventory in the possession of third parties, unless it is Inventory: (i) at
a location shown on Exhibit 3B, for which the Agent has received a bailee letter
satisfactory to the Agent, executed by such third party, or (ii) covered by
negotiable warehouse receipts or negotiable bills of lading issued by either:
(A) a warehouseman licensed and bonded by the United States Department of
Agriculture or any state’s Department of Agriculture, or (B) a recognized
carrier having an office in the United States and in a financial condition
reasonably acceptable to the Agent, which receipts or bills of lading designate
the Agent directly or by endorsement as the only Person to which or to the order
of which the warehouseman or carrier is legally obligated to deliver such Goods;
(d) Inventory in which the Agent does not, for any reason, have a first priority
perfected security interest; and (e) Inventory which in the Agent’s opinion may
be subject to liens or conflicting claims of ownership (except with regard to
Producer Payables deducted in accordance with the Borrowing Base computation),
whether such liens or conflicting claims are asserted or could be asserted by
any Person.

 

  4

CONDITIONS TO ADVANCES AND LETTERS.

Notwithstanding any other provisions to the contrary contained in this
Agreement, the making of Advances or the issuance of Letters provided for in
this Agreement shall be conditioned upon the following:

4.1  Approval of the Agent’s Counsel. Legal matters, if any, relating to any
Advance or any Letter shall have been reviewed by and shall be satisfactory to
counsel for the Agent.

4.2   Compliance. All representations and warranties contained in this Agreement
shall be true on and as of the date of the making of each Advance or the
issuance of each Letter as if such representations and warranties had been made
on and as of such date, and no Default or Matured Default shall have occurred
and be continuing or shall exist.

4.3  Documentation. Prior to the initial Advance, Borrower shall have executed
and/or delivered to the Agent all of the documents listed on the List of Closing
Documents attached as Exhibit 4A and a Borrowing Base Certificate setting forth
the Borrowing Base as of a date not more than thirty (30) days prior to such
Advance.

4.4  Hedging Activities. With respect to each Advance, the Agent shall be
satisfied that Borrower is in compliance with Borrower’s covenants and
agreements contained in Section 5.15.

4.5  Compliance with Construction Lending Protocol. With respect to each Term
Loan Advance, Borrower shall have complied with all procedures and conditions
set forth in the Construction Lending Protocol for the Iowa Project on and as of
the date of any request for such Term Loan Advance. With respect to each
Revolving Term Loan Advance, Borrower shall have complied with all procedures
and conditions set forth in the Construction Lending Protocol for the Michigan
Project on and as of the date of any request for such Revolving Term Loan
Advance. In addition, prior to the date of the initial Advance under the
Revolving Term Loan Commitment or March 1, 2006, whichever shall occur earlier,
each of the following requirements shall have been satisfied to the satisfaction
of the Agent: (a) the Agent shall have received such

 

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additional detail related to the total project cost certificate of the Borrower,
the sworn construction cost statement of the General Contractor for the Michigan
Project, and the sworn construction cost statement of the Borrower for the
Borrower’s Work on the Michigan Project, and the matters covered thereby, all as
the Agent and the disbursing agent for the Michigan Project shall require,
(b) if required by the Agent, an endorsement to the Agent’s title insurance
policy for the Iowa Project insuring the appurtenant utility easements described
in the Agent’s mortgage on the Iowa Project, subject only to such exceptions as
are acceptable to the Agent in its sole discretion; provided, however, if the
Borrower has been diligently pursuing the satisfaction of this requirement
(b) but has been unable to accomplish such satisfaction prior to the date of the
initial Advance under the Revolving Term Loan or March 1, 2006, whichever shall
occur earlier, then, so long as the Borrower continues to diligently pursue
satisfaction of this requirement (b), the Borrower shall have until March 31,
2006 to satisfy this requirement (b), (c) if not already included in the Agent’s
title insurance policy for the Michigan Project, an endorsement to the Agent’s
title insurance policy for the Michigan Project insuring the Borrower’s
leasehold estate under that certain Lease dated May 16, 2005 from the Adrian &
Blissfield Rail Road Company, as lessor, and Borrower, as lessee, as amended,
subject only to such exceptions as are acceptable to the Agent in its reasonable
discretion; provided, however, if the Borrower has been diligently pursuing the
satisfaction of this requirement (c) but has been unable to accomplish such
satisfaction prior to the date of the initial Advance under the Revolving Term
Loan or March 1, 2006, whichever shall occur earlier, then, so long as the
Borrower continues to diligently pursue satisfaction of this requirement (c),
the Borrower shall have until June 30, 2006 to satisfy this requirement (c),
(d) an amendment to the Lease referred to in requirement (c) above, duly
executed by the Adrian & Blissfield Rail Road Company in favor of Borrower,
which permits the lien of the Agent in the Lease referred to in requirement
(c) above, clarifies the concept of “cessation of operations” in a manner
reasonably acceptable to the Agent, and agrees to such other changes in the
Lease as shall be reasonably requested by the Agent; provided, however, if the
Borrower has been diligently pursuing the satisfaction of this requirement
(d) but has been unable to accomplish such satisfaction prior to the date of the
initial Advance under the Revolving Term Loan or March 1, 2006, whichever shall
occur earlier, then, so long as the Borrower continues to diligently pursue
satisfaction of this requirement (d), the Borrower shall have until June 30,
2006 to satisfy this requirement (d), (e) a consent and non-disturbance
agreement in favor of the Borrower, duly executed by any mortgagee of the
Adrian & Blissfield Rail Road Company in form and content reasonably acceptable
to the Agent; provided, however, if the Borrower has been diligently pursuing
the satisfaction of this requirement (e) but has been unable to accomplish such
satisfaction prior to the date of the initial Advance under the Revolving Term
Loan or March 1, 2006, whichever shall occur earlier, then, so long as the
Borrower continues to diligently pursue satisfaction of this requirement (e),
the Borrower shall have until June 30, 2006 to satisfy this requirement (e),
(f) a “to-be-built” survey of the Michigan Project in form and content
acceptable to the Agent, (g) executed consents, acknowledgments and reliance
letters from third-parties (including, without limitation, R.J. O’Brien, F.C.
Stone, LLC, TIC and TIC Holdings, Inc.) to the extent not provided on the
Closing Date, and (h) a new letter of credit (or amendment to the existing
letter of credit) provided for the account of TIC for the benefit of the
Borrower which complies with the requirements of the Construction Contract for
the Michigan Project. Failure of the Borrower to satisfy the requirements set
forth in the preceding sentence by the dates required in the preceding sentence
shall constitute a Matured Default under this Agreement.

 

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4.6  Equity Capital Funding.  Prior to the initial Advance under the Revolving
Term Loan Commitment, evidence satisfactory to the Agent of the availability and
funding of not less than Twenty Million Dollars ($20,000,000) from equity
capital providers or non-refundable grants for use in construction of the
Michigan Project.

4.7  Risk Management Policies.  The Borrower shall have provided the Agent with
copies of risk management policies and programs acceptable to the Agent in its
sole discretion regarding the procurement of corn and for ethanol and DDGS/WDGS
marketing, together with evidence of the retention of professional organizations
experienced in the marketing of ethanol and DDGS/WDGS acceptable to the Agent.

 

  5

  SECURITY.

5.1  Security Interests and Liens.  To secure the payment and performance of the
Liabilities, each Borrower hereby grants to the Agent for the ratable benefit of
the Lenders and the Issuer a continuing security interest in and to the
following property and interests in property of each Borrower, whether now owned
or existing or hereafter acquired or arising and wheresoever located: all
Accounts, Inventory, Equipment, Farm Products, Goods, General Intangibles,
Payment Intangibles, Commercial Tort Claims, Deposit Accounts, Margin Accounts,
Commodity Accounts, Commodity Contracts, Securities Accounts, Investment
Property, Instruments, Letter of Credit Rights, Documents, Chattel Paper,
Electronic Chattel Paper, Tangible Chattel Paper, Investor Notes and Investor
Loan Documents, all accessions to, substitutions for, and all replacements,
products and proceeds of the foregoing (including without limitation, proceeds
of insurance policies insuring any of the foregoing), all books and records
pertaining to any of the foregoing (including without limitation, customer
lists, credit files, computer programs, printouts and other computer materials
and records), and all insurance policies insuring any of the foregoing. Each
Borrower hereby agrees to grant to the Agent for the ratable benefit of the
Lenders, liens and security interests against all of Borrower’s interests in the
Iowa Project and related real and personal property, which liens and security
interests shall be granted pursuant to an Amended and Restated Mortgage (which
may be hereafter amended, modified or restated from time to time), in form and
content acceptable to the Agent, dated as of the date hereof. Each Borrower
hereby agrees to grant to the Agent for the ratable benefit of the Lenders,
liens and security interests against all of Borrower’s interests in the Michigan
Project and related real and personal property, which liens and security
interests shall be granted pursuant to the Mortgage (which may be hereafter
amended, modified or restated from time to time), in form and content acceptable
to the Agent, dated as of the date hereof. Each Borrower shall also assign and
grant a security interest to the Agent for the ratable benefit of the Lenders in
all contracts, guaranties, plans, specifications and other contracts, rights and
agreements which it may have related to the Iowa Project and the Michigan
Project. Midwest Grain Processors Cooperative agrees to grant to the Agent for
the ratable benefit of the Lenders, a pledge and security interest in one
hundred percent (100%) of the membership interests in Midwest Grain Processors,
LLC, pursuant to the Amended and Restated Pledge Agreement, in form and content
acceptable to the Agent, dated as of the date hereof. Borrower agrees to grant
to the Agent for the ratable benefit of the Lenders, an Assignment of Commodity
Accounts and Commodity Contracts referred to in Section 5.15. Upon the request
of Agent, each Borrower hereby agrees to grant to the Agent for the ratable
benefit of the Lenders, liens and security interests in any other property,

 

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assets or rights which such Borrower may now have or hereafter acquire pursuant
to documentation prepared by counsel to the Agent.

5.2  Endorsement by the Agent.  Borrower authorizes the Agent to endorse, in
Borrower’s name, any item, however received by the Agent, representing payment
on or other proceeds of any of the Collateral.

5.3  Delivery of Warehouse Receipts to the Agent.  In the event that any
Inventory becomes the subject of a negotiable or nonnegotiable warehouse
receipt, said warehouse receipt shall be promptly delivered to the Agent with
such endorsements and assignments as are necessary to vest title and possession
in the Agent. Provided that a Matured Default does not then exist and would not
be created thereby, the Agent shall return such warehouse receipts to Borrower
within two (2) Business Days of Borrower’s request therefor, but only for
purposes of negotiation, delivery or exchange in the ordinary course of
Borrower’s business, and provided, however, that Borrower shall comply with such
terms and conditions deemed appropriate by the Agent to secure the return to the
Agent of the proceeds of such warehouse receipts, where such return of proceeds
would be required in accordance with Borrower’s obligations to the Agent under
the Financing Agreements.

5.4  Preservation of Collateral and Perfection of Security Interests.  Borrower
shall execute and deliver to the Agent, concurrently with the execution of this
Agreement and at any time hereafter, all financing statements or other documents
(and pay the cost of filing or recording the same in all public offices deemed
necessary by the Agent), as the Agent may request, in a form satisfactory to the
Agent, to perfect and keep perfected the security interest in the Collateral
granted by Borrower to the Agent and otherwise to protect and preserve the
Collateral and the Agent’s security interests. The Agent is hereby irrevocably
authorized to file (and sign on behalf of Borrower, if necessary) UCC or
effective financing statements on the Collateral on or before the date of this
Agreement or from time to time hereafter. Borrower further agrees that an
electronic, carbon, photographic, or other reproduction of a financing statement
is sufficient as a financing statement. Borrower further authorizes, ratifies
and approves any UCC financing statements filed to perfect the Agent’s security
interest prior to the date of this Agreement. Each Borrower acknowledges that
the grant of the security interest in favor of the Agent in Section 5.1 hereof
constitutes a grant of security interest in all of each Borrower’s personal
property and authorizes the Agent to file financing statements designating the
collateral described therein as “all assets” of each Borrower. To perfect the
Agent’s security interest in any Equipment covered by certificates of title,
Borrower shall ensure that all such certificates of title are properly noted or
endorsed by the appropriate state officials whenever such notation or
endorsement is, in the Agent’s sole determination, either permitted or required
as a condition to perfection.

5.5  Loss of Value of Collateral.  Borrower shall immediately notify the Agent
of any material loss or decrease in the value of the Collateral.

5.6  Collection of Accounts; Power of Attorney.  At the request of the Agent,
Borrower shall take all reasonable steps, including without limitation, the
placement of such designations on invoices as may be appropriate, to cause all
Account Debtors to make all payments to

 

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Borrower for Borrower’s prompt deposit in a blocked account at CoBank or such
other bank as the Agent shall require, which account shall be subject to a
blocked account agreement or control agreement in form and content acceptable to
the Agent. Upon and during the occurrence of a Matured Default, Borrower agrees,
upon the Agent’s demand, to establish a lockbox into which Account Debtors shall
make payments. Borrower hereby designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent) as Borrower’s true and lawful
attorney-in-fact, with power, in Borrower’s or the Agent’s name, during the
existence of a Matured Default, to: (a) demand payment of Accounts; (b) enforce
payment of Accounts by legal proceedings or otherwise; (c) exercise all of
Borrower’s rights and remedies with respect to proceedings brought to collect an
Account; (d) sell or assign any Account upon such terms, for such amount and at
such time or times as the Agent deems advisable; (e) settle, adjust, compromise,
extend or renew any Account; (f) discharge and release any Account; (g) take
control in any manner of any item of payment or proceeds of any Account;
(h) prepare, file and sign Borrower’s name upon any items of payment or proceeds
and deposit the same to the Agent’s account on account of the Liabilities;
(i) endorse Borrower’s name upon any Chattel Paper, Document, Instrument,
invoice, warehouse receipt, bill of lading, or similar Document or agreement
relating to any Account or any other Collateral; (j) sign Borrower’s name on any
verification of Accounts and notices to Account Debtors; (k) prepare, file and
sign Borrower’s name on any proof of claim in bankruptcy or similar proceeding
against any Account Debtor; and (l) do all acts and things which are necessary,
in the Agent’s sole discretion, to sell, transfer or otherwise obtain the
proceeds of any Collateral or otherwise to fulfill Borrower’s obligations under
this Agreement. The foregoing power of attorney is coupled with an interest and
is therefore irrevocable.

5.7  Account Covenants.  Borrower shall: (a) promptly upon Borrower’s learning
thereof, inform the Agent, in writing, of any material delay in Borrower’s
performance of any of Borrower’s obligations to any Account Debtor or of any
assertion of any material claims, offsets or counterclaims by any Account
Debtor; (b) not permit or agree to any extension, compromise or settlement or
make any change or modification of any kind or nature in excess of $50,000 with
respect to any Account without the prior written consent of the Agent; and
(c) promptly upon Borrower’s learning thereof, furnish to and inform the Agent
of all material adverse information relating to the financial condition of any
Account Debtor if Accounts attributable to such Account Debtor aggregate in
excess of $50,000 or if such information would render such Account no longer an
Eligible Account.

5.8  Account Records and Verification Rights.  Borrower represents and warrants
to and covenants with the Agent that Borrower now keeps and at all times shall
keep correct and accurate records relating to the Accounts and the financial and
payment records of the Account Debtors, all of which records shall be available
upon demand during Borrower’s usual business hours to any of the Agent’s
officers, employees or agents. Any of the Agent’s officers, employees or agents
shall have the right at any time, in the Agent’s name, in the name of a
fictional nominee or in the name of Borrower, to verify the validity, amount or
any other matter relating to any Accounts, by mail, telephone, telegraph or
otherwise. Borrower shall promptly notify the Agent of any amounts that are in
dispute for any reason in excess of $50,000 which are due and owing from an
Account Debtor.

 

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5.9  Notice to Account Debtors.  The Agent may (upon the direction of the
Required Lenders), at any time or times upon and during the occurrence of a
Matured Default, and without prior notice to Borrower, notify any or all Account
Debtors that the Accounts have been assigned to the Agent and that the Agent has
been granted a security interest therein and may direct any or all Account
Debtors to make all payments upon the Accounts directly to the Agent or to a
lockbox to be established pursuant to Section 5.6. The Agent shall furnish
Borrower with a copy of such notice.

5.10  Inventory Records.  Borrower represents and warrants to and covenants with
the Agent that Borrower now keeps and at all times shall keep correct and
accurate records itemizing and describing the kind, type, quality and quantity
of Inventory, Borrower’s costs and selling prices of Inventory and daily
withdrawals and additions of Inventory, all of which records shall be available
on demand during Borrower’s usual business hours to any of the Agent’s officers,
employees or agents.

5.11  Special Collateral.  Immediately upon Borrower’s receipt thereof, Borrower
shall (except as provided for in Section 5.3 with regard to warehouse receipts)
deliver or cause to be delivered to the Agent, with such endorsements and
assignments as are necessary to vest title and possession in the Agent, all
Chattel Paper, Instruments and Documents which Borrower now owns or which
Borrower may at any time acquire. Borrower shall promptly mark all copies of
such Chattel Paper, Instruments and Documents to show that they are subject to
the Agent’s security interest.

5.12  Remittance of Proceeds to the Agent.  Except as otherwise provided in
Section 5.6, in the event any proceeds of any Collateral (other than proceeds of
Inventory or Accounts Receivable received in the ordinary course of business)
shall come into the possession of Borrower (or any of Borrower’s Owners,
directors, officers, managers, employees, agents or any Persons acting for or in
concert with Borrower), Borrower or such Person shall receive, as the sole and
exclusive property of the Agent, and as trustee for the Agent, all monies,
checks, notes, drafts and all other payments for and/or other proceeds of
Collateral, and no later than the first Business Day following receipt, Borrower
shall remit the same (or cause the same to be remitted), in kind, to the Agent
or to such agent or agents (at such agent’s or agents’ designated address or
addresses) as are appointed by the Agent for that purpose, to be applied to the
Liabilities pursuant to Section 10.14.

5.13  Safekeeping of Collateral.  The Agent shall not be responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency or any other Person
relating to the Collateral. All risk of loss, damage, destruction or diminution
in value of the Collateral shall be borne by Borrower.

5.14  Sales and Use of Collateral.  Except as set forth in this Section or in
Section 8.6, Borrower shall not sell, lease, transfer or otherwise dispose of
any Collateral. So long as there shall not have occurred and be continuing a
Matured Default, Inventory may be sold by Borrower in the ordinary course of
Borrower’s business, but shall not otherwise be taken or removed from Borrower’s
premises or approved third party locations, except for raw materials or work in

 

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process for the purpose of conversion into finished Goods. Upon and during the
occurrence of a Matured Default and if the Agent so notifies Borrower in
writing, neither Inventory nor any other Collateral shall be sold or taken or
removed from Borrower’s premises or approved third party locations, except with
the prior written consent of the Agent and upon payment of an amount equivalent
to the value of the Collateral to be sold or removed, such amounts to be paid to
the Agent to be applied upon the Liabilities. So long as there shall not have
occurred a Matured Default, Collateral may be used by Borrower in the ordinary
course of Borrower’s business, subject to the Agent’s continuing security
interest. Upon and during the occurrence of a Matured Default and if the Agent
so notifies Borrower in writing, Collateral shall not be used except with the
prior written consent of the Agent.

5.15  Margin Accounts.  All Margin Accounts shall be kept with FC Stone and R.J.
O’Brien (collectively, “Broker”) unless the Agent shall otherwise consent in
writing. Borrower represents and warrants to the Agent that: (a) Borrower is now
the owner, free and clear of all liens, security interests and encumbrances,
except for those in favor of the Agent or Broker, of any and all Margin Accounts
which are listed in any financial statements or books and records of Borrower as
being the property of Borrower; and (b) except as otherwise permitted by this
Agreement, Borrower owns no open futures positions which are not either covered
by existing, unsold Inventory or covered by reciprocal contracts for future
delivery of the product by reliable sellers, or directly related to Inventory
which Borrower plans to purchase in the ordinary course of Borrower’s business.
Concurrently with the execution of this Agreement, Borrower, the Broker and the
Agent have executed an Assignment of Commodity Accounts and Commodity Contracts,
the form of which is attached as Exhibit 5D which covers all Margin Accounts
maintained by the Borrower with the Broker. All of the Agent’s rights under such
Assignment of Commodity Accounts and Commodity Contracts shall be in addition to
the Agent’s rights hereunder, and shall also apply to any Margin Accounts that
are maintained, in violation of this Agreement, with any Person other than the
Broker. Borrower warrants that the Margin Accounts will be used solely for the
hedging of Borrower’s investments in Inventory and not for speculative purposes.

5.16  Real Property.  Borrower shall pay all costs associated with the recording
of the mortgages referred to in Section 5.1, together with any subsequent
amendments thereto, with the appropriate authorities, and shall take all other
actions requested by the Agent in order to vest in the Agent a perfected lien on
each such parcel of real property described therein, subject to no other liens,
claims or encumbrances, except those expressly acknowledged thereby.

5.17  Title Insurance.  Borrower shall cooperate with the Agent to obtain
delivery to the Agent of policies of title insurance and such endorsements as
the Agent shall reasonably require (which shall be subject only to such
exceptions as shall be acceptable to Agent in its sole discretion), insuring the
Agent’s mortgagee’s interest, in accordance with the title insurance commitments
delivered to the Agent pursuant to Section 4.3 and the Construction Lending
Protocol for the Iowa Project and for the Michigan Project, respectively, which
cooperation shall be deemed to include without limitation, doing all things
necessary to satisfy the requirements set forth in said title insurance
commitments or other requirements of the issuer thereof (including without
limitation, the payment of premiums). The Agent shall have no obligation to make
any Advance hereunder unless and until all requirements set forth in said title
insurance commitments or other requirements of the issuer thereof have been
satisfied. The Agent shall

 

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have the right to request updates to such title insurance commitments and such
endorsements to such title insurance policies at such times as the Agent, in its
sole discretion, shall deem appropriate, and shall have the right to instruct
the issuer of the title insurance commitments to set forth as added requirements
such things as would be necessary to eliminate added exceptions to coverage. In
the event the Agent reasonably determines that any policy of title insurance
will not be issued in accordance with any title insurance commitment by reason
of Borrower’s failure to cooperate as aforesaid, then the Agent shall have the
right to terminate its Commitments pursuant to Section 2.8 and Borrower shall
remain obligated to the Agent for all Liabilities incurred to date thereof
(including without limitation, all fees and cost reimbursements provided for
herein). Without limiting the generality of the foregoing, with respect to the
Agent’s title insurance policy on the Iowa Project, at any time upon the request
of the Agent, the Borrower shall undertake to obtain, at the Borrower’s cost and
expense, an endorsement to the Agent’s title insurance policy on the Iowa
Project insuring the appurtenant utility easements related to the Iowa Project
(including those described in the mortgage in favor of the Agent related to the
Iowa Project), subject only to such exceptions as are reasonably acceptable to
the Agent. Without limiting the generality of the foregoing, with respect to the
Agent’s title insurance policy on the Michigan Project, the Borrower will
undertake to obtain, at the Borrower’s cost and expense, the endorsement to the
Agent’s title insurance policy on the Michigan Project required by
Section 4.5(c) of this Agreement.

 

  6

  WARRANTIES.

Borrower represents and warrants to the Lenders that:

6.1  Litigation and Proceedings.  Except as set forth on Part 1 of Exhibit 5A,
no judgments are outstanding against Borrower, nor is there pending or
threatened any litigation, contested claim, or governmental proceeding by,
against or with respect to Borrower as of the date of this Agreement. After the
date of this Agreement, no judgments are outstanding against Borrower, nor is
there pending or threatened any litigation, contested claim, or governmental
proceeding by, against or with respect to Borrower, (a) except to the extent
they relate back to matters disclosed on Part 1 of Exhibit 5A (for example, a
disclosed claim results in a judgment that could be anticipated from the
description of a disclosed claim), and (b) except for judgments and pending or
threatened litigation, contested claims and governmental proceedings which are
not, in the aggregate, material to Borrower’s financial condition, results of
operations or business.

6.2  Other Agreements.  Except as set forth on part 2 of Exhibit 5A, Borrower is
not in default under any contract, lease or commitment to which Borrower is a
party or by which Borrower is bound except those defaults which are not, in the
aggregate, material to Borrower’s financial condition, results of operations or
business. Borrower knows of no dispute, except as set forth on part 2 of Exhibit
5A, relating to any contract, lease, or commitment except those disputes which
are not, in the aggregate, material to Borrower’s financial condition, results
of operations or business.

6.3  Licenses, Patents, Copyrights, Trademarks and Trade Names.  All of
Borrower’s licenses, patents, copyrights, trademarks and trade names and all of
Borrower’s applications for

 

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any of the foregoing are set forth on part 3 of Exhibit 5A as updated from time
to time by Borrower. There is no action, proceeding, claim or complaint pending
or threatened to be brought against Borrower by any Person which might
jeopardize any of Borrower’s interest in any of the foregoing licenses, patents,
copyrights, trademarks, trade names or applications except those which are not,
in the aggregate, material to Borrower’s financial condition, results of
operations or business.

6.4  Collateral.  Except as permitted under Section 8.1 and except as set forth
on part 4 of Exhibit 5A, all of the Collateral is free and clear of all security
interests, liens, claims and encumbrances. No Goods held by Borrower on
consignment or under sale or return contracts have been represented to be
Inventory and no amounts receivable by Borrower in respect of the sale of such
Goods (except markups or commissions which have been fully earned by Borrower)
have been represented to be Accounts. All Producer Payables which are owing to
suppliers of any of the Collateral have been paid when due, other than those
being contested in good faith by Borrower, and no Person to whom such Producer
Payables are owed has demanded turnover of any Collateral or proceeds thereof.
Borrower has adequate procedures in place to insure that Collateral purchased by
Borrower is free of security interests in favor of Persons other than the Agent
in accordance with the Federal Food Security Act. Borrower will furnish, at the
Agent’s request, the names and addresses of all Persons who supply Inventory to
Borrower or who deliver Goods to Borrower on consignment or under sale or return
contracts.

6.5  Location of Assets; Chief Executive Office.  The chief executive office of
Borrower is located at 1660 428th Street, Lakota, IA 50451 and Borrower’s assets
(including without limitation, Inventory and Equipment) are all located in the
locations set forth on part 5 of Exhibit 5A as updated from time to time by
Borrower. As of the execution of this Agreement, the books and records of
Borrower, and all of Borrower’s Chattel Paper and records of account are located
at the chief executive office of Borrower. If Borrower shall intend to make any
change in any of such locations, Borrower shall notify the Agent at least 30
days prior to such change.

6.6  Tax Liabilities.  Borrower has filed all federal, state and local tax
reports and returns required by any law or regulation to be filed by Borrower
and has either duly paid all taxes, duties and charges indicated to be due on
the basis of such returns and reports or has made adequate provision for the
payment thereof; and the assessment of any material amount of additional taxes
in excess of those paid and reported is not reasonably expected. The reserves
for taxes reflected on Borrower’s balance sheet are adequate in amount for the
payment of all liabilities for all taxes (whether or not disputed) of Borrower
accrued through the date of such balance sheet. There are no material unresolved
questions or claims concerning any tax liability of Borrower, except as
described on part 6 of Exhibit 5A.

6.7  Indebtedness and Producer Payables.  Except as contemplated by this
Agreement, as disclosed on part 7 of Exhibit 5A and as disclosed on the
financial statements identified in Section 6.14, Borrower has no other
indebtedness, contingent obligations or liabilities, outstanding bonds, letters
of credit or acceptances to any other Person or loan commitments from any other
Person, other than accounts payable incurred in the ordinary course of business.

 

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6.8  Other Names.  Borrower has not, during the preceding five (5) years, been
known by or used any names other than those disclosed on part 8 of Exhibit 5A.

6.9  Affiliates.  Borrower has no Affiliates, other than its directors,
officers, agents and employees and those Persons disclosed on part 9 of Exhibit
5A as updated from time to time by Borrower, and the legal relationships of
Borrower to each such Affiliate are accurately and completely described thereon.

6.10  Environmental Matters.  Except as disclosed on part 10 of Exhibit 5A,
(a) Borrower has not received any notice to the effect, or has any knowledge,
that the Property or its operations are not in compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations (“Environmental Laws”) or are the subject of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance into the
environment, which noncompliance or remedial action could have a material
adverse effect on the business, operations, Property, assets or conditions
(financial or otherwise) of Borrower; (b) there have been no releases of
hazardous materials at, on or under the Property that, singly or in the
aggregate could have a material adverse effect on the business, operations,
Property, assets or conditions (financial or otherwise) of Borrower; (c) there
are no underground storage tanks, active or abandoned, including without
limitation petroleum storage tanks, on or under the Property that, singly or in
the aggregate could have a material adverse effect on the business, operations,
Property, assets or conditions (financial or otherwise) of Borrower;
(d) Borrower has not directly transported or directly arranged for the
transportation of any hazardous material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA or on
any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material claims
against Borrower for any remedial work, damage to natural resources or personal
injury, including without limitation, claims under CERCLA; and (e) no conditions
exist at, on or under the Property which, with the giving of notice, would rise
to any material liability under any Environmental Laws.

6.11  Existence.  Midwest Grain Processors, LLC, is a limited liability company
duly organized and in good standing under the laws of the State of Delaware and
is duly qualified to do business and is in good standing the States of Iowa and
Michigan and in all other states where such qualification is necessary, except
for those jurisdictions in which the failure so to qualify would not, in the
aggregate, have a material adverse effect on its financial condition, results of
operations or business. Part 11 of Exhibit 5A sets forth the ownership interests
in Midwest Grain Processors, LLC. Midwest Grain Processors Cooperative, is a
cooperative corporation duly organized and in good standing under the laws of
the State of Iowa and is duly qualified to do business and is in good standing
in all states where such qualification is necessary, except for those
jurisdictions in which the failure so to qualify would not, in the aggregate,
have a material adverse effect on its financial condition, results of operations
or business.

6.12  Authority.  The execution and delivery by Borrower of this Agreement and
all of the other Financing Agreements and the performance of Borrower’s
obligations hereunder and thereunder: (a) are within Borrower’s powers; (b) are
duly authorized by Borrower’s board of directors or board of managers (as
applicable) and, if necessary, Borrower’s Owners (and their

 

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respective governing boards, members or governing persons, as applicable);
(c) are not in contravention of the terms of Borrower’s articles or certificate
of incorporation or bylaws or Borrower’s articles or certificate of organization
or operating agreement; (d) are not in contravention of any law or laws, or of
the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower or any of Borrower’s property is bound; (e) do not
require any consent, registration or approval of any Governmental Authority or
of any other Person, except such consents or approvals as have been obtained;
(f) do not contravene any contractual restriction or Governmental Requirement
binding upon Borrower; and (g) will not, except as contemplated or permitted by
this Agreement, result in the imposition of any lien, charge, security interest
or encumbrance upon any property of Borrower under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other material agreement or
instrument to which Borrower is a party or by which Borrower or any of
Borrower’s property may be bound or affected. Borrower shall deliver to the
Agent, upon the Agent’s request therefor, a written opinion of counsel as to the
matters described in the foregoing clauses (a) through (g).

6.13  Binding Effect.  This Agreement and all of the other Financing Agreements
set forth the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms.

6.14  Correctness of Financial Statements.  The financial statements delivered
from time to time by Borrower to the Lenders present fairly the financial
condition of Borrower, and have been prepared in accordance with GAAP
consistently applied. Since the date of the most recent financial statements
delivered to the Lenders, there has been no materially adverse change in the
condition or operation of Borrower.

6.15  Employee Controversies.  There are no controversies pending or threatened
between Borrower or any of Borrower’s employees, other than employee grievances
arising in the ordinary course of Borrower’s business or which are not, in the
aggregate, material to Borrower’s financial condition, results of operations or
business.

6.16  Compliance with Laws and Regulations.  Borrower is in compliance with all
Governmental Requirements relating to the business operations and the assets of
Borrower, except for violations of Governmental Requirements which would not
have a material adverse effect on the value of the Collateral or the Lenders’
interest in any of the Collateral and, in the-aggregate, would not have a
material adverse effect on Borrower’s financial condition, results of operations
or business. Borrower holds an operating permit by the Bureau of Alcohol,
Tobacco and Firearms to manufacture fuel grade ethanol (and other such permits
and licenses as are disclosed on Part 3 of Exhibit 6A) and agrees to furnish
copies to the Agent of any audits or inspections conducted by any person
relating to such licenses or permits.

6.17  Account Warranties.  Borrower warrants and represents to the Agent that:
(a) except as disclosed to the Agent from time to time in writing, all Accounts
which are at any time included in the Borrowing Base or which are reflected on
Borrower’s financial statements delivered to the Agent pursuant to Section 7.1
are genuine, in all respects what they purport to be, have not been reduced to
any judgment, are evidenced by not more than one executed original agreement,
contract or document, and represent undisputed, bona fide transactions completed
in

 

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accordance with the terms and conditions of any related document; (b) the
Accounts have not been pledged, sold or assigned to any Person other than the
Agent; and (c) except as disclosed to the Agent from time to time in writing,
Borrower has no knowledge of any fact or circumstance which would impair the
validity or collectibility of any of the Accounts that in the aggregate are
material in amount.

6.18  Inventory Warranties. Borrower warrants and represents to the Agent that:
(a) except for Goods covered by Documents which have been delivered to the
Agent, and except as promptly disclosed to the Agent from time to time in
writing, all Inventory is located on the premises described in Section 6.5 or is
in transit; and (b) except as promptly disclosed to the Agent from time to time
in writing, all Inventory shall be of good and merchantable quality, free from
any defects which might affect the market value of such Inventory.

6.19  Solvency. Borrower is solvent, able to pay Borrower’s debts generally as
such debts mature, and has capital sufficient to carry on Borrower’s business
and all businesses in which Borrower is about to engage. The saleable value of
Borrower’s total assets at a fair valuation, and at a present fair saleable
value, is greater than the amount of Borrower’s total obligations to all Persons
(taking into account, as applicable, rights of contribution, subrogation and
indemnity with regard to obligations shared with others). Borrower will not be
rendered insolvent by the execution or delivery of this Agreement or of any of
the other Financing Agreements or by the transactions contemplated hereunder or
thereunder.

6.20  Pension Reform Act. No events, including without limitation, any
“reportable event” or “prohibited transactions,” as those terms are defined in
the Employee Retirement Income Security Act of 1974 as the same may be amended
from time to time (“ERISA”), have occurred in connection with any type of plan,
arrangement, association or fund covered by ERISA in which any personnel of
Borrower or an Affiliate which is under common control with Borrower (within the
meaning of applicable provisions of the IRC) participate (“Benefit Plans”). The
Benefit Plans are otherwise in compliance with all applicable provisions of
ERISA and the IRC and meet the minimum funding standards of ERISA and the IRC.

6.21  Margin Security. Borrower does not own any margin security and none of the
loans advanced hereunder shall be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulations T, U or X of the Board of
Governors of the Federal Reserve System.

6.22  Investment Company Act Not Applicable. Borrower is not an “investment
company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended.

6.23  Public Utility Holding Company Act Not Applicable. Borrower is not a
“holding company”, or a “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company”:, or an affiliate of a “subsidiary company”
of a “holding company”, or a “public utility”, as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.

 

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6.24  Full Disclosure. All factual information taken as a whole in the materials
furnished by or on behalf of Borrower to the Agent or any Lender for purposes of
or in connection with the transactions contemplated under this Agreement and the
other Financing Agreements, does not contain any untrue statement of a material
fact or omit to state any material fact necessary to keep the statements
contained therein from being misleading as of the date of this Agreement, and
thereafter as supplemented by information provided to the Agent or the Lenders
in writing pursuant to this Agreement. The financial projections and other
financial information furnished to the Agent and the Lenders by Borrower and to
be delivered under this Agreement, were prepared in good faith on the basis of
information and assumptions that Borrower believed to be reasonable as of the
date of such information.

6.25  Intellectual Property. Borrower owns or possesses (or will be licensed or
otherwise have the full right to use) all intellectual property that is
necessary for the operation of its business, without any known conflict with the
rights of others. No product of Borrower infringes upon any intellectual
property owned by any other Person and no claim or litigation is pending or (to
the knowledge of Borrower) threatened against or affecting such Person,
contesting its right to sell or to use any product or material, in any case
which could have a material adverse effect on the business, operations,
Property, assets or conditions (financial or otherwise) of Borrower. There is no
violation by Borrower of any right of Borrower with respect to any material
patent, trademark, trade name, service mark, copyright or license owned or used
by Borrower.

6.26  Survival of Warranties. All representations and warranties contained in
this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement and shall continue to be true and
correct (subject to the qualifications set forth therein) from the date of this
Agreement until the Liabilities shall be paid in full and the Lenders shall
cease to be committed to make Loans or issue Letters under this Agreement.

 

  7

AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that so long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
the Lenders remain committed to make Loans or issue Letters under this
Agreement:

7.1  Financial and Other Information. Except as otherwise expressly provided for
in this Agreement, Borrower shall keep proper books of record and account in
which full and true entries will be made of all dealings and transactions of or
in relation to the business and affairs of Borrower, in accordance with GAAP
consistently applied, and Borrower shall cause to be furnished to the Agent
(with copies to the other Lenders), from time to time and in a form acceptable-
to the Agent, such information as the Agent may reasonably request, including
without limitation, the following:

(a)        as soon as practicable and in any event within ninety (90) days after
the end of each fiscal year of Borrower, audited statements of income, retained
earnings and cash flow of Borrower for each year, and a balance sheet of
Borrower for such year, setting forth in each case, in comparative form,
corresponding figures as of the end of the preceding fiscal year, all in

 

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reasonable detail and satisfactory in scope to the Agent and certified to
Borrower by such independent public accountants as are selected by Borrower and
satisfactory to the Agent, whose opinion shall be in scope and substance
satisfactory to the Agent;

(b)        as soon as practicable and in any event within thirty (30) days after
the end of each monthly accounting period in each fiscal year of Borrower:
(i) statements of income of Borrower for such monthly period and for the period
from the beginning of the then current fiscal year to the end of such monthly
period, and a balance sheet of Borrower as of the end of such monthly period,
setting forth in each case, in comparative form, figures for the corresponding
periods in the preceding fiscal year, all in reasonable detail and certified as
accurate by the chief financial officer of Borrower, subject to changes
resulting from normal year end adjustments, (ii) copies of all operating
statements for such month prepared by Borrower for its internal use, including
without limitation, purchases and sales of Inventory and other Goods, (iii) as
requested, an aged trial balance of all Accounts indicating which Accounts are
thirty (30), sixty (60) and ninety (90) days past the original invoice date of
the original invoice related thereto and listing the names of all Account
Debtors, and (iv) a listing of Borrower’s accounts payable indicating which
accounts payable are more than thirty (30) days past due;

(c)        as soon as practicable and in any event within thirty (30) days after
the end of each quarterly accounting period in each fiscal year of Borrower, at
the same time as the applicable monthly financial statements are delivered
pursuant to the preceding Subsection (b), a compliance certificate of the chief
financial officer of Borrower in substantially the form attached as Exhibit 6A
(“Compliance Certificate”);

(d)        as soon as practicable and in any event within thirty (30) days after
the end of each monthly accounting period in each fiscal year of Borrower, a
Borrowing Base Certificate for Borrower computed as of the last day of such
month, signed by the chief financial officer of Borrower;

(e)        as soon as practicable and in any event within thirty (30) days after
the end of each monthly accounting period in each fiscal year of Borrower, a
position report in the form attached as Exhibit 6B; and

(f)        as soon as practicable and in any event within ninety (90) days
before the beginning of each fiscal year of the Borrower, an operating budget
and business plan for such year in form and detail reasonably acceptable to the
Agent and the Lenders.

7.2  Conduct of Business. Except as contemplated by this Agreement, Borrower
shall: (a) maintain Borrower’s existence and maintain in full force and effect
all licenses, bonds, franchises, leases, patents, contracts and other rights
necessary to the conduct of Borrower’s business; (b) continue in, and limit
Borrower’s operations to, the same general line of business as that presently
conducted by Borrower; (c) comply with all Governmental Requirements, except for
such violations of Governmental Requirements which would not, in the aggregate,
have a material adverse effect on Borrower’s financial condition, results of
operations or business; (d) keep and conduct Borrower’s business separate and
apart from the business of Borrower’s Affiliates; and (e) otherwise do all
things necessary to make the Representations and Warranties

 

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set forth in Section 6 of this Agreement true and correct (subject to the
qualifications set forth therein) at all times.

7.3  Maintenance of Properties. Borrower shall keep Borrower’s real estate,
leaseholds, equipment and other fixed assets in good condition, repair and
working order, normal wear and tear excepted, and shall not allow Borrower’s
chief executive office or any of the Collateral to be moved from the locations
set forth in Section 6.5 (or to be placed on consignment) without the written
consent of the Agent, which consent shall not be unreasonably withheld. Borrower
shall keep the Inventory in good and merchantable condition and shall, as
applicable, clean, feed, shelter, store, secure, refrigerate, water, medicate,
fumigate, fertilize, cultivate, irrigate, prune, process and otherwise maintain
the Inventory in accordance with the standards and practices adhered to
generally by others in the same businesses as Borrower.

7.4  Borrower’s Liability Insurance. Borrower shall maintain, at Borrower’s
expense, such liability insurance (including as applicable commercial general
liability insurance, products liability insurance and workman’s compensation
insurance) as is ordinarily maintained by other companies in similar businesses,
provided, however, that in no event shall such liability insurance provide for
coverage less than $11,000,000 per occurrence for personal injury and
$11,000,000 per occurrence for property damage. Borrower’s liability insurance
may provide for a deductible of not more than $25,000 per occurrence. All such
policies of insurance shall be in form and with insurers reasonably acceptable
to the Agent and copies thereof, together with all amendments and schedules,
shall be provided to the Agent within ten (10) days of Borrower’s receipt of the
same.

7.5  Borrower’s Property Insurance. Borrower shall bear the full risk of loss
from any cause of any nature whatsoever in respect to the Collateral. At
Borrower’s own cost and expense, Borrower shall keep all Collateral fully
insured, with carriers, and in amounts acceptable to the Agent, against the
hazards of fire, theft, collision, spoilage, hail, those covered by extended or
all risk coverage insurance and such others as may be required by the Agent.
Borrower shall cause to be delivered to the Agent the insurance policies
therefor or proper certificates evidencing the same. Such policies shall
provide, in a manner satisfactory to the Agent, that any losses under such
policies shall be payable first to the Agent, for the ratable benefit of the
Lenders, as the Agent’s interest may appear. Each such policy shall include a
provision for written notice to the Agent not less than thirty (30) days prior
to any cancellation or expiration and show the Agent, as agent for the benefit
of the Lenders, as mortgagee and loss payee as provided in a form of loss
payable endorsement in form and substance satisfactory to the Agent. In the
event of any loss covered by any such policy, the carrier named in such policy
is directed by Borrower to make payment for such loss to the Agent, for the
ratable benefit of the Lenders, and not to Borrower. Borrower makes, constitutes
and appoints the Agent (and all Persons designated by the Agent) as Borrower’s
true and lawful agent and attorney-in-fact, with power to make, settle or adjust
claims under such policies of insurance (provided, however, that so long as
there shall not have occurred a Matured Default, the Agent shall consult with
Borrower prior to finally making, settling or adjusting claims under such
policies of insurance and will not settle such claims without Borrower’s
consent, which consent will not be unreasonably withheld). The foregoing power
of attorney is coupled with an interest and is therefore irrevocable. If payment
as a result of any insurance losses shall be paid by check, draft or other
Instrument payable to Borrower, or to

 

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Borrower and the Agent jointly, the Agent may endorse the name of Borrower on
such check, draft or other Instrument, and may do such other things as the Agent
may deem advisable to reduce the same to cash. Subject to the provisions of
Borrower’s mortgages referred to in Section 5.1, all loss recoveries received by
the Agent on account of any such insurance may be applied and credited by the
Agent to the Liabilities. The Agent shall pay to Borrower any unapplied or
unused surplus of insurance proceeds. Borrower shall pay to the Agent, on
demand, the amount of any deficiency in the Collateral reasonably determined by
the Agent to exist after the application of insurance proceeds to the
Liabilities. If Borrower fails to procure insurance as provided in this
Agreement, or to keep the same in force, or fails to perform any of Borrower’s
other obligations hereunder, then the Agent may, at the option of the Agent or
the Required Lenders, and without obligation to do so, obtain such insurance and
pay the premium thereon for the account of Borrower, or make whatever other
payments the Agent or the Required Lenders may deem appropriate to protect the
Lender’s security for the Liabilities. Any such payments shall be additional
Liabilities of Borrower to the Lenders, payable on demand and secured by the
Collateral. To the extent the provisions relating to insurance in a mortgage,
deed of trust, leasehold mortgage or leasehold deed of trust are different from
the provisions relating to insurance in this Section 7.5, the provisions
relating to insurance in the mortgage, deed of trust, leasehold mortgage or
leasehold deed of trust shall be controlling with respect to the Property
covered thereby.

7.6  Financial Covenants and Ratios. Borrower shall maintain at the end of each
fiscal year with respect to clause (d) of this Section 7.6 and with respect to
each quarterly accounting period in each fiscal year of Borrower with respect to
clauses (a), (b) and (c) of this Section 7.6: (a) Working Capital not less than
(i) $10,000,000 for the period between the Closing Date through November 30,
2006 and (ii) $15,000,000 on December 31, 2006 and thereafter; (b) Net Worth of
not less than (i) $65,000,000 for the period between the Closing Date through
May 31, 2006, and (ii) $85,000,000 on June 30, 2006 and thereafter; and (c) a
Leverage Ratio of not greater than (i) 3.50 to 1 for period between the Closing
Date and December 31, 2005, (ii) 3.00 to 1 for the period between January 1,
2006 through June 30, 2007, (iii) 2.50 to 1 for the period between July 1, 2007
through June 30, 2009, and (iv) 2.00 to 1 thereafter; and (d) a Debt Service
Coverage Ratio of not less than 1.25 to 1 for the fiscal year ended June 30,
2006 and for each fiscal year-end thereafter.

7.7  Benefit Plans. Borrower shall: (a) keep in full force and effect any and
all Benefit Plans which are presently in existence or may, from time to time,
come into existence under ERISA, unless such Benefit Plans can be terminated
without material liability to Borrower in connection with such termination (as
distinguished from any continuing funding obligation); (b) make contributions to
all Benefit Plans in a timely manner and in an amount sufficient to comply with
the requirements of ERISA; (c) comply with all requirements of ERISA which
relate to such Benefit Plans; and (d) notify the Agent immediately upon receipt
by Borrower of any notice of the institution of any proceeding or other action
relating to any Benefit Plans that would reasonably be expected to have a
material adverse effect on Borrower or its financial condition.

7.8  Notice of Suit, Adverse Change in Business or Default. Borrower shall, as
soon as possible, and in any event within five (5) days after Borrower learns of
the following, give

 

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written notice to the Agent of: (a) any proceeding being instituted or
threatened to be instituted by or against Borrower in any federal, state, local
or foreign court or before any commission or other regulatory body (federal,
state, local or foreign) for which claimed damages exceed $50,000; (b) any
material adverse change in the business, assets or condition, financial or
otherwise, of Borrower; and (c) the occurrence of any Default.

7.9  Use of Proceeds. Borrower shall use Advances only for the purposes stated
in Section 2.4 and for no other purpose.

7.10  Books and Records. Borrower shall maintain proper books of record and
account in accordance with GAAP consistently applied in which true, full and
correct entries will be made of all their respective dealings and business
affairs. If any changes in accounting principles are hereafter required or
permitted by GAAP and are adopted by Borrower with the concurrence of its
independent certified public accountants and such changes in GAAP result in a
change in the method of calculation or the interpretation of any of the
financial covenants, standards or terms found in Section 7.6 or any other
provision of this Agreement, Borrower and the Required Lenders agree to amend
any such affected terms and provisions so as to reflect such changes in GAAP
with the result that the criteria for evaluating Borrower’s financial condition
shall be the same after such changes in GAAP as if such changes in GAAP had not
been made.

7.11  Hedging Activities. Borrower shall at all times remain in a fully hedged
position with respect to all Inventory consisting of corn in inventory or
committed to purchase on an as converted basis less ethanol in inventory or
committed to sell, except that Borrower may maintain a total un-hedged position
(either long or short) of up fifty (50%) of the next six months estimated
production. Borrower will have all commodity brokers that maintain accounts for
Borrower deliver copies of all regular position reports and all transactional
confirmations directly to the Agent in order to substantiate Borrower’s hedged
position.

7.12  Production Dates. The Borrower shall place the Iowa Project into full
production not later than February 15, 2006 and will place the Michigan Project
into full production not later than January 1, 2007.

7.13  Food Security Act Compliance. If any Borrower acquires any Collateral
which may have constituted Farm Products in the possession of the seller or
supplier thereof, such Borrower shall, at its own expense, use its best efforts
to take such steps to insure that all liens and security interests and
encumbrances of any kind (except the security interests granted to the Agent
pursuant hereto) 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 designated 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 interests and encumbrances of any
kind (except the security interests granted to the Agent pursuant hereto);
provided, however, that such 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 shall be
contesting the same by proper proceedings and maintain appropriate accruals and
reserves therefor in accordance with

 

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GAAP. Upon the Agent’s request, each Borrower agrees to forward to the Agent
promptly after receipt copies of all notices of liens and master lists of
effective financing statements delivered to each Borrower pursuant to the Food
Security Act, which notices and/or lists pertain to any of the Collateral. Upon
the Agent’s request, each Borrower agrees to provide the Agent with the names of
Persons who supply each Borrower with such Farm Products and such other
information as the Agent may reasonably request with respect to such Persons.

7.14  Warehouse Receipts. If any warehouse receipt or receipts in the nature of
a warehouse receipt is issued in respect of any portion of the Collateral, then
the Borrower (i) 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 Code
and (ii) will deliver all such receipts to the Agent (or a Person designated by
the Agent) within five (5) days of the Agent’s or any Lender’s request and from
time to time thereafter. If no Material Default exists, the Agent agrees to
deliver to such Borrower any receipt so held by the Agent upon such Borrower’s
request in connection with such Borrower’s sale or other disposition of the
underlying Collateral, if such disposition is in the ordinary course of such
Borrower’s business.

 

  8

NEGATIVE COVENANTS.

Borrower covenants and agrees that so long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
the Lenders remain committed to make Loans or issue Letters under this Agreement
(unless the Agent, with the written approval of the Required Lenders, shall give
the Agent’s prior written consent):

8.1  Encumbrances. Except for those liens, security interests and encumbrances
presently in existence and reflected in Borrower’s financial statements referred
to in Section 6.14 and disclosed in Exhibit 5A under Section 6.4, Borrower shall
not create, incur, assume or suffer to exist any security interest, mortgage,
pledge, lien, capitalized lease, levy, assessment, attachment, seizure, writ,
distress warrant, or other encumbrance of any nature whatsoever on or with
regard to any of Borrower’s assets (including without limitation, the
Collateral) other than: (a) liens securing the payment of taxes, either not yet
due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which Borrower shall, if appropriate under GAAP, have set
aside on Borrower’s books and records adequate reserves; (b) liens securing
deposits under workmen’s compensation, unemployment insurance, social security
and other similar laws, or securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or securing
indemnity, performance or other similar bonds for the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or securing statutory obligations or surety bonds, or securing indemnity,
performance or other similar bonds in the ordinary course of Borrower’s
business, which are not past due; (c) liens securing appeal bonds securing
judgments not in excess of $50,000; (d) liens and security interests in favor of
the Agent for the ratable benefit of the Lenders; (e) liens securing the
interests of Broker in any Margin Account; (f) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of Borrower’s real
property, and other liens, security interests and encumbrances on property which
are subordinate to the liens and security interests of the Lenders and which do
not, in the Agent’s sole determination: (i) materially impair the use of such
property, or (ii) materially lessen the value of

 

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such property for the purposes for which the same is held by Borrower; and
(g) purchase money security interests securing amounts relating to such items of
equipment as are specifically consented to by the Agent (provided that no such
purchase money security interests shall extend to or cover other property of
Borrower other than the items of equipment so acquired).

8.2  Consolidations, Mergers or Acquisitions. Borrower shall not recapitalize or
consolidate with, merge with, or otherwise acquire (including by the formation
or acquisition of a subsidiary) all or substantially all of the assets or
properties of any other Person.

8.3  Deposits, Investments, Advances or Loans. Borrower shall not make or permit
to exist deposits, investments, advances or loans (other than loans existing on
the date of the execution of this Agreement and disclosed to the Agent in
writing on or prior to such date) in or to Affiliates or any other Person,
except: (a) investments in short term direct obligations of the United States
Government; (b) investments in negotiable certificates of deposit issued by a
bank satisfactory to the Agent in the Agent’s reasonable determination, made
payable to the order of Borrower or to bearer; (c) loans to officers, directors,
employees, Owners or Affiliates as and when permitted by Section 8.8; (d) demand
deposits not to exceed $100,000 in the aggregate, and (e) deposits and
investments set forth in part 12 of Exhibit 5A. Borrower shall not permit to
exist any other depository account for the receipt of payments in respect of
Collateral of any type whatsoever, except the account referred to in
Section 5.6, or Borrower’s general operating account if no account for the
receipt of proceeds is referred to in Section 5.6.

8.4  Indebtedness. Except for those obligations and that indebtedness presently
in existence and reflected in Borrower’s financial statements referred to in
Section 6.14 or referred to in Section 6.7, Borrower shall not incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any obligations or indebtedness, direct or indirect fixed or contingent,
including obligations under capitalized leases, except: (a) the Liabilities;
(b) obligations secured by liens or security interests permitted under
Section 8.1 or contingent obligations permitted under Section 8.5; (c) unsecured
indebtedness of the Borrower for borrowed money in an aggregate principal amount
not to exceed $4,000,000 at any time which is subordinated, pursuant to a
subordination agreement reasonably satisfactory to the Agent in its sole
discretion, in right of payment to the payment in full in cash of all
Liabilities; and (d) trade obligations, Producer Payables and normal accruals in
the ordinary course of Borrower’s business not yet due and payable, or with
respect to which Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings, and then only to the extent that Borrower
has set aside on Borrower’s books adequate reserves therefor, if appropriate
under GAAP.

8.5  Guarantees and Other Contingent Obligations. Except as permitted under
Section 8.4, Borrower shall not guarantee, endorse or otherwise in any way
become or be responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of such Person or through the purchase of
Goods, supplies or services, or maintenance of working capital or other balance
sheet covenants or conditions, or by way of stock purchase, capital
contribution, advance or loan for the purpose of paying or discharging any
indebtedness or obligation of such Person or otherwise, except: (a) for
endorsements of negotiable Instruments for collection in the ordinary course of
business; and (b) that Borrower

 

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may indemnify Borrower’s officers, directors and managers to the extent
permitted under the laws of the State in which Borrower is organized and may
indemnify (in the customary manner) underwriters and any selling shareholders in
connection with any public offering of Borrower’s securities.

8.6  Disposition of Property. Except as set forth on Exhibit 7A, as permitted by
Section 5.14, and except for the disposition of obsolete or worn out property in
the ordinary course of business, Borrower shall not sell, lease, transfer or
otherwise dispose of any of Borrower’s properties, assets or rights.

8.7  Capital Investment Limitations. Borrower shall not incur Net Capital
Expenditures in any fiscal year in an amount in excess of 125% of depreciation
expense during such fiscal year, excluding, however, the Net Capital
Expenditures relating to the Iowa Project and the Michigan Project.

8.8  Loans to Affiliates. Except (i) for advances for travel and expenses to
Borrower’s officers, directors, managers, general partners or employees in the
ordinary course of Borrower’s business, and (ii) loans up to the aggregate
amount outstanding not to exceed $75,000, Borrower shall not make any loans to
any Affiliates or Owners of Borrower.

8.9  Distributions in Respect of Equity, Prepayment of Debt. Borrower shall not
directly or indirectly: (a) make any distributions in respect of or redeem any
of Borrower’s equity interests, except that Borrower may, provided that no
Default or Matured Default has occurred and is continuing or would result
therefrom, make such distributions not exceeding the greater of (i) fifty
percent (50%) of net income, or (ii) amounts as are necessary to reflect the
amount of income tax liability passed through to Borrower’s Owners; or
(b) prepay any principal, interest or other payments on or in connection with
any indebtedness of Borrower other than the Liabilities and any subordinated
debt permitted under Section 8.4(c) above.

8.10  Formation of Subsidiaries; Amendment of Organizational Documents. Borrower
shall not acquire or create any subsidiaries or amend Borrower’s articles or
certificate of incorporation, bylaws, operating agreement or any other
agreement, instrument or document affecting Borrower’s organization, management
or governance.

8.11  Lease Limitations. Borrower’s payments due under all leases of any kind,
including operating leases, synthetic leases, capital leases and similar
agreements, shall not exceed $5,000,000 in the aggregate for any fiscal year of
Borrower. In addition, Borrower’s payments due under all leases of any kind
(including operating leases, synthetic leases, capital leases and similar
agreements) which are not leases of rail cars shall not exceed $500,000 in the
aggregate for any fiscal year of Borrower. With respect to leases of rail cars,
Borrower (a) shall not enter into any rail car lease which has a term in excess
of seven (7) years, (b) shall not have more than seven hundred (700) rail cars
under lease at any time, and (c) shall have at all times not less than forty
percent (40%) of its leased rail cars subject to leases which have five
(5) years or less remaining on their lease terms.

8.12  Use of Names or Trademarks. Borrower shall not use any trademarks or trade
names other than those referred to in Section 6.3. Borrower shall not use any
trademarks or trade

 

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names with respect to Inventory except for such trademarks or trade names as
have been properly licensed to the Agent for the ratable benefit of the Lenders.

8.13  Limitation of Total Project Cost of Michigan Project. The Borrower shall
not permit the total project cost for the Michigan Project (including, without
limitation, all costs under the Construction Contract for the Michigan Project,
all costs of the Borrower’s Work on the Michigan Project and all other costs
related to or associated with the Michigan Project) to exceed $85,600,000;
provided, however, the total project cost of Michigan Project (including,
without limitation, all costs under the Construction Contract for the Michigan
Project, all costs of the Borrower’s Work on the Michigan Project and all other
costs related to and associated with the Michigan Project shall not exceed
$91,000,000 in the aggregate to the extent that all such increased costs above
$85,600,000 shall be paid with additional equity and non-refundable grants in
excess of the $20,000,000 of equity and non-refundable grants required under
Section 4.6 of this Agreement.

 

  9

DEFAULT AND RIGHTS AND REMEDIES; THE AGENT.

9.1  Liabilities. Upon a Matured Default, the Agent may with the consent of the
Required Lenders, and shall at the request of the Required Lenders, (i) by
notice to Borrower, declare the Commitments to be terminated, whereupon such
obligations and the Commitments of each Lender shall terminate, (ii) by notice
to Borrower, declare all of the Liabilities to be due and payable, whereupon the
Liabilities shall become and be due and payable, without presentment, demand,
protest or further notice (including without limitation, notice of intent to
accelerate and notice of acceleration) of any kind, all of which are expressly
waived by Borrower, (iii) by notice to Borrower, demand payment by Borrower of
funds with respect to each outstanding Letter in an amount sufficient to fully
cash collateralize each such Letter, which cash collateral will be held by the
Agent (or its designee) in a pledged cash collateral account and applied to the
reimbursement of any draft drawn under any such Letter, (iv) without notice to
Borrower and without further action, apply any and all monies owing by any
Lender to Borrower to the payment of the Liabilities, (v) exercise and enforce
the rights and remedies available to Agent or any Lender under any Financing
Agreement; and (vi) exercise any other rights and remedies available to the
Agent or any Lender by law or agreement. Anything herein to the contrary
notwithstanding, it is understood that (i) no Lender shall have the individual
right upon the occurrence of a Default or a Matured Default to terminate or
suspend the funding of its Commitments or accelerate any Liabilities owed to, it
(such termination, suspension of funding and/or acceleration to occur, if at
all, only upon action by the Agent as provided in this Agreement), and (ii) no
Lender shall have the right to individually enforce any Financing Agreement
which is entered into with or for the Agent, such enforcement residing with the
Agent as contemplated by the following Section 9.2 of this Agreement and by the
applicable provisions of the other Financing Agreements.

9.2  Rights and Remedies. Upon the occurrence and during the continuance of any
Matured Default, the Agent may with the consent of the Required Lenders (subject
to the provisions of the other Financing Agreements), and shall at the direction
of the Required Lenders, proceed to protect and enforce the rights of the
Lenders as set forth in this Section 9.2.

 

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(a)        Rights and Remedies Generally. The Agent may proceed by suit in
equity, by action at law or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any other Financing
Agreement or in aid of the exercise of any power granted in this Agreement or
any other Financing Agreement, (i) to enforce the payment of the Liabilities, or
(ii) to foreclose upon any liens, claims, security interests and/or encumbrances
granted pursuant to this Agreement or the other Financing Agreements in the
manner set forth therein; it being intended that no remedy conferred herein or
in any of the other Financing Agreements is to be exclusive of any other remedy,
and each and every remedy contained herein or in any other Financing Agreement
shall be cumulative and shall be in addition to every other remedy given
hereunder and under the other Financing Agreements, or at any time existing at
law or in equity or by statute or otherwise. Agent shall have, in addition to
any other rights and remedies contained in this Agreement or in any of the other
Financing Agreements, all of the rights and remedies of a secured party under
the Code or other applicable laws. In addition to all such rights and remedies,
the sale, lease or other disposition of all or any part of the Collateral by the
Agent after a Matured Default, may be for cash, credit or both, and the Agent
may purchase all or any part of the Collateral at public or, if permitted by
law, private sale, and in lieu of actual payment of such purchase price, may
setoff the amount of such purchase price against the Liabilities then owing. Any
sales of the Collateral may involve the sale of portions of the Collateral at
different times, and at different locations, and may, at the Agent’s option, be
held at a site or sites different from the site at which all or any part of the
Collateral is located. Any such sales, at the Agent’s option, may be in
conjunction with or separate from the foreclosure of any mortgage or deed of
trust on any Collateral consisting of real property, and may be adjourned from
time to time with or without notice. The Agent may, in its sole discretion,
cause the Collateral to remain on Borrower’s premises, at Borrower’s expense,
pending sale or other disposition of the Collateral. The Agent shall have the
right to conduct such sales on Borrower’s premises, at Borrower’s expense, or
elsewhere, on such occasion or occasions as the Agent may see fit. In addition
to, or in concert with, the other remedies referred to above, the Agent may take
over and complete the Iowa Project and/or the Michigan Project in accordance
with the Plans (as defined in the Construction Lending Protocol), with such
changes as the Agent may, in its sole discretion, deem appropriate, all at the
risk, cost and expense of Borrower. The Agent may assume or reject any contracts
entered into by Borrower in connection with the Iowa Project or the Michigan
Project, may enter into additional or different contracts for work, services,
labor and materials required, in the sole discretion of the Agent, to complete
the Iowa Project and/or the Michigan Project, and may pay, compromise and settle
all claims in connection with the Iowa Project and/or the Michigan Project. All
sums, including without limitation, reasonable attorneys’ fees, and charges or
fees for supervision and inspection of the construction and for any other
necessary or desirable purpose in the sole discretion of the Agent expended by
the Agent in completing or attempting to complete the Iowa Project (whether
aggregating more or less than the amount of the Term Loan Commitments), shall be
deemed Term Loan Advances made by

 

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the Lenders to Borrower, and Borrower shall be liable to the Lenders, on demand,
for the repayment of such sums, together with interest on such sums from the
date of their expenditure at the rates provided herein. All sums, including
without limitation, reasonable attorneys’ fees, and charges or fees for
supervision and inspection of the construction and for any other necessary or
desirable purpose in the sole discretion of the Agent expended by the Agent in
completing or attempting to complete the Michigan Project (whether aggregating
more or less than the amount of the Revolving Term Loan Commitments), shall be
deemed Revolving Term Loan Advances made by the Lenders to Borrower, and
Borrower shall be liable to the Lenders, on demand, for the repayment of such
sums, together with interest on such sums from the date of their expenditure at
the rates provided herein. The Agent may at any time abandon work on the Iowa
Project and/or the Michigan Project, after having commenced such work, and may
recommence such work at any time, it being understood that nothing in this
Section 9.2 shall impose any obligation on the Agent or the Lenders either to
complete or not to complete the Iowa Project or the Michigan Project. For the
purpose of carrying out the provisions of this Section 9.2, Borrower designates,
makes, constitutes and appoints the Agent (and all Persons designated by the
Agent) as Borrower’s true and lawful attorney-in-fact, with power to execute and
deliver all such documents, to pay and receive such funds, and to take such
actions as may be necessary, in the sole discretion of the Agent, to complete
the Iowa Project and/or the Michigan Project. The foregoing power of attorney is
coupled with an interest and is therefore irrevocable. Neither the Agent nor the
Lenders, however, shall have any obligation to undertake any of the foregoing
for the benefit of Borrower, and if the Agent does undertake any of the same,
neither the Agent nor the Lenders shall have any liability for the adequacy,
sufficiency or completion thereof.

(b)        Entry upon Premises. The Agent shall have the right to enter upon the
premises of Borrower at which any of the Collateral is located (or is believed
to be located) without incurring any obligation to pay rent to Borrower, or any
other place or places where the Collateral is located (or is believed to be
located) and kept, and remove the Collateral therefrom to the premises of the
Agent or any agent of the Agent, for such time as the Agent may desire, in order
to effectively collect or liquidate the Collateral, or the Agent may require
Borrower to assemble the Collateral and make it available to the Agent at a
place or places to be designated by the Agent which is reasonably convenient to
both parties. Borrower expressly agrees that the Agent may, if necessary to gain
occupancy to the premises at which Collateral is located (or is believed to be
located), without further notice to Borrower: (a) hire Borrower’s employees to
assist in the loading and transportation of such Collateral; (b) utilize
Borrower’s equipment for use in such operation; (c) cut or otherwise temporarily
move or remove any barbed wire or other fencing or similar boundary-maintenance
devices; and (d) pick or otherwise render inoperative any locks on any property
not customarily inhabited by people. Borrower agrees that any such actions
authorized by this Section shall be authorized and not a breach of the peace if
the Agent takes reasonable efforts to safeguard all of Borrower’s property.

(c)        Sale or Other Disposition of Collateral. Any notice required to be
given by the Agent of a sale, lease or other disposition or other intended
action by the Agent with respect to any of the Collateral which is deposited in
the United States mail, postage prepaid and duly addressed to Borrower at the
address specified in Section 10.19, at least ten (10) business days prior to
such proposed action, shall constitute fair and commercially reasonable notice
to Borrower of any such action. The net proceeds realized by the Agent upon any
sale or other disposition of any Collateral, after deduction for the expense of
retaking, holding, preparing for sale, selling or the like, and the reasonable
legal fees and expenses and other proper fees and expenses incurred by the Agent
in connection therewith, shall be applied toward satisfaction of the Liabilities
as follows:

 

  (i)

the proceeds of all Term Loan Collateral shall be distributed and applied
(a) first to the Lenders with Term Loan Commitments and Revolving Term Loan

 

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Commitments in accordance with their respective Pro Rata Percentage thereof, to
be applied to Liabilities owed to each such Lender in respect of its Term Loan
Commitment and Revolving Term Loan Commitment, in such order of application as
such Lender shall determine and (b) second, to the Lenders with Line of Credit
Commitments in accordance with their respective Pro Rata Percentage thereof, to
be applied to Liabilities owed to each such Lender in respect of its Line of
Credit Commitment (including without limitation LC Obligations), in such order
of application as such Lender shall determine; and

 

  (ii)

the proceeds of Line of Credit Collateral shall be applied (a) first to the
Lenders with Line of Credit Commitments in accordance with their respective Pro
Rata Percentage thereof, to be applied to Liabilities owed to each such Lender
in respect of its Line of Credit Commitment (including without limitation LC
Obligations), in such order of application as such Lender shall determine and
(b) second, to the Lenders with Term Loan Commitments and Revolving Term Loan
Commitments in accordance with their respective Pro Rata Percentage thereof, to
be applied to Liabilities owed to each such Lender in respect of its Term Loan
Commitment and Revolving Term Loan Commitment, in such order of application as
such Lender shall determine

The Agent shall account to Borrower for any surplus realized upon such sale or
other disposition, and Borrower shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency, shall not affect the Agent’s security interest in
the Collateral until the Liabilities shall have been paid in full.

9.3  Waiver of Demand. Borrower expressly waives demand, presentment, protest,
and notice of nonpayment, notice of intent to accelerate and notice of
acceleration. Borrower also waives the benefit of all valuation, appraisal and
exemption laws.

9.4  Waiver of Notice. Upon the occurrence and during the continuance of any
Matured Default, Borrower waives, to the fullest extent permitted by applicable
law, all rights to notice and hearing of any kind prior to the exercise by the
Agent of the Agent’s rights to repossess the Collateral without judicial process
or to replevy, attach or levy upon the Collateral.

9.5  Authorization and Action. Each Lender appoints the Agent as its Agent
under, and irrevocably authorizes the Agent (subject to Section 9.11) to take
such action on its behalf and to exercise such powers under any Financing
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. Without limitation of the
foregoing, each Lender expressly authorizes the Agent to execute, deliver, and
perform its obligations under each of the Financing Agreements to which the
Agent is a party, and to exercise all rights, powers, and remedies that the
Agent may have thereunder. As to any matters not expressly provided for by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act, or to refrain from acting (and shall
be fully protected in so acting or refraining from acting), upon the
instructions of the Required Lenders, and such instructions shall be binding
upon all the Lenders and all holders of any Note; provided however, that the
Agent shall not be required to take any action which exposes the

 

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Agent to personal liability or which is contrary to this Agreement or applicable
law. The Agent agrees to give to each Lender prompt notice of each notice given
to it by Borrower pursuant to the terms of any Financing Agreement.

9.6  Agent’s Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any Lender for any action taken
or omitted to be taken by it or them under or in connection with any Financing
Agreement, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent: (a) may treat the
original or any successor holder of any Note as the holder thereof until it
receives notice from the Lender which is the payee of such Note concerning the
assignment of such Note; (b) may employ and consult with legal counsel
(including counsel for Borrower), independent public accountants, and other
experts selected by it and shall not be liable to any Lender for any action
taken, or omitted to be taken, in good faith by it or them in accordance with
the advice of such counsel, accountants, or experts received in such
consultations and shall not be liable for any negligence or misconduct of any
such counsel, accountants or other experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
opinions, certifications, statements, warranties or representations made in or
in connection with any Financing Agreement; (d) shall not have any duty to any
Lender to ascertain or to inquire as to the performance or observance of any of
the terms, covenants, or conditions of any Financing Agreement or any other
instrument or document furnished pursuant thereto or to satisfy itself that all
conditions to and requirements for any Loan have been met or that Borrower is
entitled to any Loan or to inspect the property (including the books and
records) of Borrower; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Financing Agreement or any other instrument or document furnished
pursuant thereto; and (f) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate, or other instrument
or writing (which may be by telegram, cable, telex, or otherwise) believed by it
to be genuine and signed or sent by the proper party or parties.

9.7  Notices of Defaults. Except as provided in this Section 9.7, the Agent
shall not be deemed to have knowledge of the occurrence of a Default or a
Matured Default unless the Agent has received written notice from a Lender or
Borrower specifying such Default or Matured Default and stating that such notice
is a “Notice of Default”. Notwithstanding the foregoing, the Agent shall be
deemed to have knowledge of the occurrence of a Default or a Matured Default:
(a) consisting of the non-payment of principal or interest, on the due date of
such principal or interest, (b) on the date the Agent has received a Compliance
Certificate of Borrower as required by Section 7.1, which Compliance Certificate
discloses (without review of any financial statements attached thereto) the
existence of any Default or Matured Default, and (c) ten (10) Business Days
after the date the Agent has received a Compliance Certificate of Borrower as
required by Section 7.1, which Compliance Certificate (after review of any
financial statements attached thereto) would disclose the existence of any
Default or Matured Default. In the event that the Agent obtains such knowledge
of the occurrence of a Default or a Matured Default, the Agent shall within
three (3) Business Days thereafter, give prompt notice thereof to the Lenders.
The Agent shall (subject to Sections 9.1 and 9.2) take such action with respect
to such Default or Matured Default as may be directed by the Required Lenders;
provided that, unless and until the Agent shall have received the directions
referred to in Sections 9.1 and 9.2, the Agent may (but

 

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shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Matured Default as it shall deem advisable and
in the best interest of the Lenders.

9.8  The Agent as a Lender, Affiliates. With respect to its Commitments, any
Loans made by it, and the Notes issued to it, the Agent shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include the Agent in its individual
capacity. The Agent and its affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, Borrower, any of its respective Affiliates and any Person who may do
business with or own securities of Borrower or any such Affiliate, all as if the
Agent were not the Agent and without any duty to account therefor to the
Lenders.

9.9  Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has,
independently and without reliance on the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and its decision to enter into the transactions
contemplated by the Financing Agreements and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under any Financing
Agreement. The Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any other Person of any Financing
Agreement or to inspect the properties or books of Borrower. Except for notices,
reports, and other documents and information expressly required to be furnished
to the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of Borrower (or any of
their Affiliates) which may come into the possession of the Agent or any of its
Affiliates. Notwithstanding the foregoing, the Agent will, upon the request of
any Lender, provide to such Lender, at such Lender’s expense, copies of any and
all written information provided to the Agent by Borrower.

9.10  Indemnification. Notwithstanding anything to the contrary herein
contained, the Agent shall be fully justified in failing or refusing to take any
action unless it shall first be indemnified to its satisfaction by the Lenders
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of its taking or continuing to take
any action. Each Lender agrees to indemnify the Agent (to the extent not
reimbursed by Borrower), on a pro-rata basis according to its Pro Rata
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of any
Financing Agreement or any action taken or omitted by the Agent under any
Financing Agreement; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements resulting from the gross negligence or
willful misconduct of the Agent; and provided further, that it is the intention
of each Lender to indemnify the Agent against the

 

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consequences of the Agent’s own negligence, whether such negligence be sole,
joint, concurrent, active or passive. Without limiting the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its pro-rata
share, according to such Lender’s Pro Rate Percentage of any out-of-pocket
expenses (including attorneys’ fees) incurred by the Agent in connection with
the preparation, administration, or enforcement of, or legal advice in respect
of rights or responsibilities under, any Financing Agreement, to the extent that
the Agent is not reimbursed for such expenses by Borrower.

9.11  Successor Agent. The Agent may resign at any time as Agent under the
Financing Agreements by giving written notice thereof to the Lenders and
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent with, provided that no Default or Matured
Default has occurred and is continuing hereunder, the prior written consent of
Borrower, such consent not to be unreasonably withheld. If no successor Agent
shall have been so appointed by the Required Lenders or shall have accepted such
appointment within sixty (60) days after the retiring Agent’s giving of notice
of resignation or the Required Lenders’ removal of the Agent, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent with, provided
that no Default or Matured Default has occurred and is continuing hereunder, the
prior written consent of Borrower, such consent not to be unreasonably withheld,
which shall be a commercial bank or other financial institution organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After the
retiring Agent’s resignation or removal as Agent, the provisions of Section 9.10
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

9.12  Verification of Borrowing Notices. The natural Person signing this
Agreement on behalf of Borrower (or any one of them, if more than one), or any
natural Person designated by them (or any one of them) shall be presumed to have
the authority to request Advances or request the issuance of Letters under this
Agreement. The Agent shall have no duty to verify the authenticity of the
signature appearing on any notice of borrowing or request for the issuance of a
Letter, and with respect to any oral request for an Advance or request for the
issuance of a Letter, the Agent shall have no duty to verify the identity of any
Person representing himself as one of the natural Persons authorized to make
such request on behalf of Borrower. Neither the Agent nor any Lender shall incur
any liability to Borrower in acting upon any telephonic notice referred to above
which the Agent or such Lender believes in good faith to have been given by a
duly authorized Person authorized to borrow on behalf of Borrower or for
otherwise acting in good faith.

 

  10

MISCELLANEOUS.

10.1  Timing of Payments. For purposes of determining the outstanding balance of
the Liabilities, including without limitation, the computations of interest
which may from time to time be owing to the Agent or the Lenders, the receipt by
the Agent of any check or any other

 

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item of payment whether through a blocked account or lockbox described in
Section 5.6 or otherwise, shall not be treated as a payment on account of the
Liabilities until such check or other item of payment is actually received by
the Agent and is paid to the Agent in cash or a cash equivalent. Notwithstanding
the terms of this Agreement or any other Financing Agreement, if the due date of
any payment falls on a day that is not a Business Day, such payment may be made
and shall not be considered late if made on the next succeeding Business Day.

10.2  Attorneys’ Fees and Costs. If at any time the Agent employs counsel in
connection with protecting or perfecting the Agent’s security interest in the
Collateral or in connection with any matters contemplated by or arising out of
this Agreement, whether: (a) to commence, defend, or intervene in any litigation
or to file a petition, complaint, answer, motion or other pleading; (b) to take
any other action in or with respect to any suit or proceeding (bankruptcy or
otherwise); (c) to consult with officers of the Agent to advise the Agent or to
draft documents for the Agent in connection with any of the foregoing or in
connection with any release of the Agent’s claims or security interests or any
proposed extension, amendment or refinancing of the Liabilities; (d) to protect,
collect, lease, sell, take possession of, or liquidate any of the Collateral; or
(e) to attempt to enforce or to enforce any security interest in any of the
Collateral, or to enforce any rights of the Agent to collect any of the
Liabilities; then in any of such events, all of the reasonable attorneys’ fees
arising from such services, and any related expenses, costs and charges,
including without limitation, all fees of all paralegals, legal assistants and
other staff employed by such attorneys whether outside the Agent or in the
Agent’s legal department, together with interest at the highest interest rate
then payable by Borrower under this Agreement or any other Financing Agreement,
shall constitute additional Liabilities, payable on demand and secured by the
Collateral.

In addition, if a Matured Default has occurred and is continuing, and thereafter
any Lender employs counsel: (a) in connection with, arising out of, or any way
related to, protecting, exercising or enforcing such Lender’s interest in the
Collateral or this Agreement or the other Financing Agreements; (b) to commence,
defend or intervene in any litigation or to file a petition, complaint, answer,
motion or other pleading; (c) to take any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise); (d) to protect, collect, lease,
sell, take possession of, or liquidate any of the Collateral; or (e) to attempt
to enforce or to enforce any security interest in any of the Collateral, or to
enforce any rights of such Lender to collect any of the Liabilities; then in any
of such events, all of the reasonable attorneys’ fees arising from such
services, and any expenses, costs and charges relating thereto, including
without limitation, all fees of all paralegals, legal assistants and other staff
employed by such attorneys whether outside the Lender or in the Lender’s legal
department, together with interest at the highest interest rate then payable by
Borrower under this Agreement or any other Financing Agreement, shall constitute
additional Liabilities, payable on demand and secured by the Collateral.

This Section 10.2 shall survive the termination of this Agreement.

10.3  Expenditures by the Agent. In the event that Borrower shall fail to pay
taxes, insurance, assessments, costs or expenses which Borrower is, under any of
the terms hereof or of any of the other Financing Agreements, required to pay,
or fails to keep the Collateral free from other security interests, liens or
encumbrances, except as permitted herein, the Agent may, in the

 

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Agent’s sole discretion and without obligation to do so, make expenditures for
any or all of such purposes, and the amount so expended, together with interest
at the highest interest rate then payable by Borrower under this Agreement or
any other Financing Agreement, shall constitute additional Liabilities, payable
on demand and secured by the Collateral.

10.4  The Agent’s Costs and Expenses as Additional Liabilities. Borrower shall
reimburse the Agent for all expenses and fees paid or incurred in connection
with the documentation, negotiation and closing of the Loans and other financial
accommodations described in this Agreement (including without limitation, filing
fees, recording fees, document or recording taxes, search fees, appraisal fees
and expenses, and the fees and expenses of the Agent’s attorneys, paralegals,
and legal assistants, whether outside the Agent or in the Agent’s legal
department, and whether such expenses and fees are incurred prior to or after
the Closing Date). Borrower further agrees to reimburse the Agent for all
expenses and fees paid or incurred in connection with the documentation of any
renewal or extension of the Loans, any additional financial accommodations, or
any other amendments to this Agreement. All costs and expenses incurred by the
Agent with respect to such negotiation and documentation, together with interest
at the highest interest rate then payable by Borrower under this Agreement or
any other Financing Agreement, shall constitute additional Liabilities, payable
on demand and secured by the Collateral.

10.5  Claims and Taxes. Borrower agrees to indemnify and hold the Agent and the
Lenders harmless from and against any and all claims, demands, liabilities,
losses, damages, penalties, costs, obligations, actions, judgments, suits,
disbursements and expenses (including without limitation, reasonable attorneys’
fees) relating to or in any way arising out of the possession, use, operation or
control of any of Borrower’s assets, or in any way arising out of or related to
this Agreement or the other Financing Agreements, which agreement to indemnify
and hold the Agent and the Lenders harmless shall survive the termination of
this Agreement. Borrower shall pay or cause to be paid all license fees, bonding
premiums and related taxes and charges, and shall pay or cause to be paid all of
Borrower’s real and personal property taxes, assessments and charges and all of
Borrower’s franchise, income, unemployment, use, excise, old age benefit,
withholding, sales and other taxes and other governmental charges assessed
against Borrower, or payable by Borrower, at such times and in such manner as to
prevent any penalty from accruing or any lien or charge from attaching to
Borrower’s property, provided, however, that Borrower shall have the right to
contest in good faith, by an appropriate proceeding promptly initiated and
diligently conducted, the validity, amount or imposition of any such tax, and
upon such good faith contest to delay or refuse payment thereof, if:
(a) Borrower establishes adequate reserves to cover such contested taxes; and
(b) such contest does not have a material adverse effect on the financial
condition of Borrower, the ability of Borrower to pay any of the Liabilities, or
the priority or value of the Lender’s security interests in the Collateral.

10.6  Custody and Preservation of Collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral in the Agent’s possession if the Agent takes such action for that
purpose as Borrower shall request in writing, but failure by the Agent to comply
with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by the Agent or any Lender to preserve or
protect any right with respect to such Collateral against prior parties, or to
do any act with respect to the

 

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preservation of such Collateral not so requested by Borrower, shall of itself be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.

10.7  Inspection. The Agent (by and through its officers and employees), or any
Person designated by the Agent in writing (including officers and employees of
the other Lenders), shall have the right from time to time, to call at
Borrower’s place or places of business (or any other place where Collateral or
any information as to Collateral is kept or located) during reasonable business
hours, and, without hindrance or delay, to: (a) inspect, audit, check and make
copies of and extracts from Borrower’s books, records, journals, orders,
receipts and any correspondence and other data relating to Borrower’s business
or to any transactions between the parties to this Agreement; (b) make such
verification concerning the Collateral as the Agent may consider reasonable
under the circumstances; and (c) review operating procedures, review maintenance
of property and discuss the affairs, finances and business of Borrower with
Borrower’s officers, employees or directors. Borrower agrees to pay to the Agent
annual audit fees as set forth in the Agent’s Letter, on the date of this
Agreement and on each Anniversary Date as long as Advances are available or
outstanding hereunder, which fees shall be fully earned on each date they become
payable and which fees shall be paid by an Agent initiated Advance without prior
demand by the Agent.

10.8  Examination of Banking Records. Borrower consents to the examination by
the Agent (by and through its officers and employees), or any Person designated
by the Agent in writing (including officers and employees of the other Lenders),
whether or not there shall have occurred a Default or a Matured Default, of any
and all of Borrower’s banking records, wherever they may be found, and directs
any Person which may be in control or possession of such records (including
without limitation, any bank, other financial institution, accountant or lawyer)
to provide such records to the Agent and the Agent’s officers, employees and
agents, upon their request. Such examination may be conducted by the Agent with
or without notice to Borrower at the option of the Agent, any such notice being
waived by Borrower.

10.9  Governmental Reports. Borrower will furnish to the Agent, upon the
reasonable request of the Agent, copies of the reports of examinations or
inspections of Borrower by all Governmental Authorities, and if Borrower fails
to furnish such copies to the Agent, Borrower authorizes all such Government
Authorities to furnish to the Agent copies of their reports of examinations or
inspections of Borrower.

10.10  Reliance by the Agent, the Issuer and the Lenders. All covenants,
agreements, representations and warranties made herein by Borrower shall,
notwithstanding any investigation by the Agent or any of the Lenders, be deemed
to be material to and to have been relied upon by the Agent, the Issuer and the
Lenders.

10.11  Parties. Whenever in this Agreement there is reference made to any of the
parties, such reference shall be deemed to include, wherever applicable, a
reference to the respective successors and assigns of Borrower, the Agent, the
Lenders and the Issuer. Borrower shall not assign any of it rights or delegate
any of its duties under this Agreement or any of the other Financing Agreements
without the prior written consent of the Lenders.

 

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10.12  Applicable Law; Severability. This Agreement shall be construed in all
respects in accordance with, and governed by, the laws and decisions of the
State of Colorado and the laws, regulations and decisions of the United States
applicable to national banks. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.

10.13  SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL BY JURY. WITH
RESPECT TO ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, DEMANDS, DEBTS,
DAMAGES, COSTS AND EXPENSES, WHATSOEVER, WHETHER BASED ON STATUTE, COMMON LAW,
PRINCIPLES OF EQUITY OR OTHERWISE, ARISING OUT OF ANY MATTER, THING OR EVENT
WHICH IS DIRECTLY OR INDIRECTLY RELATED TO THIS AGREEMENT, BORROWER CONSENTS TO
THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN THE CITY
AND COUNTY OF DENVER, COLORADO AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR
MESSENGER DIRECTED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 10.19.
SERVICE, SO MADE, SHALL BE DEEMED TO BE COMPLETE UPON THE EARLIER OF ACTUAL
RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED. AT THE OPTION
OF THE AGENT, BORROWER WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY,
AND WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF THE AGENT.

10.14  Application of Payments; Waiver. Payments made by Borrower under this
Agreement prior to the occurrence of a Matured Default shall be applied first to
any costs or fees owing by Borrower to the Agent or any Lender, second to any
interest payments owing hereunder which are due and unpaid, third to any
outstanding principal owing hereunder, and fourth to interest accrued but not
yet due. Unless otherwise specified in this Agreement, prepayments of principal
made by Borrower on any Loans repayable in installments shall be applied to the
most remote installment then due (which shall be deemed to include, as
applicable, any balloon payment due at maturity) and shall not reduce the amount
of any remaining installments (or commitment reductions) becoming due and
payable thereafter. Notwithstanding any contrary provision contained in this
Agreement or in any of the other Financing Agreements, Borrower irrevocably
waives the right to direct the application of any and all payments at any time
received by the Agent from Borrower or with respect to any of the Collateral
after the occurrence and during the continuance of a Matured Default, and
Borrower irrevocably agrees that the Agent shall have the continuing exclusive
right to apply and reapply any and all payments received at any time, whether
with respect to the Collateral or otherwise, against the Liabilities, in such
manner as the Agent may deem advisable subject to other express terms of this
Agreement requiring a certain application of proceeds, notwithstanding any entry
by the Agent upon any of

 

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the Agent’s books and records. Provided, however, this Section 10.14 shall not
apply to any transactions unrelated to this Agreement in which the Agent or its
affiliates may have accepted deposits from, lent money to, acted as trustee
under indentures of, or generally engaged in business with Borrower, any
Affiliates or any Person who may do business with or own securities of Borrower
or any such Affiliate.

10.15  Marshaling; Payments Set Aside. The Agent shall be under no obligation to
marshal any assets in favor of Borrower or against or in payment of any or all
of the Liabilities. To the extent that Borrower makes a payment or payments to
the Agent or the Agent receives any payment or proceeds of the Collateral for
Borrower’s benefit or enforces the Agent’s security interests or exercises the
Agent’s rights of setoff, and such payment or payments or the proceeds of such
Collateral, enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

10.16  Section Titles. The section titles contained in this Agreement shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties.

10.17  Continuing Effect. This Agreement, the Agent’s security interests in the
Collateral, and all of the other Financing Agreements shall continue in full
force and effect so long as any Liabilities shall be owed to the Agent and/or
any of the Lenders and (even if there shall be no Liabilities outstanding) so
long as the Agent and/or any of the Lenders remains committed to make Loans or
issue Letters under this Agreement.

10.18  No Waiver. The Agent’s or the Required Lenders’ failure, at any time or
times hereafter, to require strict performance by Borrower of any provision of
this Agreement or the other Financing Agreements shall not waive, affect or
diminish any right of the Agent or the Required Lenders thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by the
Agent or the Required Lenders of any Default or Matured Default under this
Agreement or any of the other Financing Agreements, shall not suspend, waive or
affect any other Default or Matured Default under this Agreement or any of the
other Financing Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different kind or character. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Financing Agreements and no
Default or Matured Default under this Agreement or any of the other Financing
Agreements, shall be deemed to have been suspended or waived by the Agent or the
Required Lenders unless such suspension or waiver is in writing signed by an
officer of the Agent or each of the Required Lenders (as applicable) and is
directed to Borrower specifying such suspension or waiver.

10.19  Notices. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered pursuant to this Agreement
shall be in writing, and shall

 

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be sent by manual delivery, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to the party to be notified as follows:

 

(a)

    

If to the Agent at:

 

CoBank, ACB

    

11422 Miracle Hills Drive, Suite 300

Omaha, NE 68154-4404

Attn: Douglas E. Jones

    

Fax: (402) 492-2001

Email: djones@cobank.com

(b)

    

If to Borrower at:

 

Midwest Grain Processors, LLC

    

1660 428th Street

Lakota, IA 50451

Attn: Pat Samuelson

    

Midwest Grain Processors Cooperative

1660 428th Street

Lakota, IA 50451

    

Attn: Pat Samuelson

or, as to each party, addressed to such other address as shall be designated by
such party in a written notice to the other parties. All such notices shall be
deemed given on the date of delivery if manually delivered, on the date of
sending if sent by facsimile transmission, on the first business day after the
date of sending if sent by overnight courier, or three (3) days after the date
of mailing if mailed.

10.20  Regulatory Changes. In the event any Governmental Authority (i) subjects
the Lenders or any of them or any of their respective lending offices to any new
or additional charge, fee, withholding, duty or tax of any kind with respect to
any Loans, Letters, LC Obligations or other Liabilities hereunder, (ii) changes
the method or basis of taxation of such Loans, Letters, LC Obligations or other
Liabilities, except for changes in the rate of tax on the overall net income of
such Lender or its lending office imposed by the jurisdiction in which such
Lender’s principal executive office or lending office is located, or
(iii) changes the reserve or deposit requirements applicable to such Loans,
Letters, LC Obligations or other Liabilities (including, without limitation, the
imposition, modification or deemed application of any reserve, special deposit
or similar requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, including any
such requirement with respect to any LIBOR Rate Loans or Quoted Rate Loans)
against assets of, deposits with or for the account of any Lender, or its
lending office, and including without limitation, the issuance of a request or
directive regarding capital adequacy (whether or not having the force of law)
that has the effect of reducing the rate of return on such Lender’s capital as a
consequence of its obligations under this Agreement to a level below that which
such Lender could have achieved

 

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but for such adoption, change or compliance (taking into consideration such
Lender’s policies with respect to capital adequacy)), then in any such event,
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such costs or lost income resulting thereby as reasonably
determined by such Lender.

10.21  LIBOR Rate Loans. Without limiting the generality of Section 10.20,
anything in this Agreement to the contrary notwithstanding, if any Lender shall
notify the Agent that: (i) the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful to fund or
maintain LIBOR Rate Loans (whether or not such assertion carries the force of
law), (ii) deposits in U.S. Dollars (in the applicable amounts) are not being
offered to it in the interbank eurodollar market for any requested Interest
Period, (iii) by reason of circumstances affecting the interbank eurodollar
market adequate and reasonable means do not exist for ascertaining the
applicable LIBOR Rate; (iv) that the applicable LIBOR Rate will not adequately
and fairly reflect the cost to such Lender of funding their LIBOR Rate Loans for
such Interest Period or (v) that the making or funding of LIBOR Rate Loans is
impracticable for such Lender, the obligation of such Lender to make, rollover
or to convert Loans into LIBOR Rate Loans shall be suspended until such Lender
shall notify the Agent and Borrower that the circumstances causing such
suspension no longer exist, and the existing LIBOR Rate Loans of such Lender
shall automatically convert, on and as of the date of such notification, into
Base Rate Loans; provided that each Lender represents and warrants to Borrower
that as of the later of (i) the Closing Date or (ii) the date on which it shall
have executed an Assignment and Acceptance pursuant to Section 10.23, it has no
actual knowledge that any of the circumstances set forth above exist.

10.22  Taxes. Without limiting the generality of Section 10.20:

(a)        Except as otherwise provided in Section 10.22, any and all payments
by Borrower hereunder or under the Notes shall be made free and clear of and
without deduction for any and all present or future taxes, deductions, charges
or withholdings, and all liabilities with respect thereto, including without
limitation, such taxes, deductions, charges, withholdings or liabilities
whatsoever imposed, assessed, levied or collected by any taxing authority and
all (other than to the extent due to the gross negligence or willful misconduct
of any Lender) interest, penalties, expenses or similar liabilities with respect
thereto (“Taxes”), excluding, however, from the definition of Taxes, in the case
of each Lender and the Agent, taxes imposed on its income (including penalties
and interest payable in respect thereof), and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender or the Agent (as the case
may be) is organized or any political subdivision thereof. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent (other than payments for
which taxes are withheld pursuant to the last sentence of Section 10.22(d)),
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 10.22) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made and (ii) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law, less any credits due to Borrower.

 

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(b)        In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter included within the definition of “Taxes”).

(c)        Borrower will indemnify each Lender and the Agent for the full amount
of Taxes (including without limitation, any Taxes imposed by any jurisdiction on
amounts payable under this Section 10.22) paid by such Lender or the Agent (as
the case may be) and any liability arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within five (5) days from the date such Lender or
the Agent (as the case may be) makes written demand therefor; provided however,
to the extent that any Lender is reimbursed for any Taxes that were incorrectly
or illegally asserted with respect to Borrower, such Lender shall promptly
return to Borrower the amount of such reimbursement net of any costs of recovery
incurred by such Lender and/or the Agent, together with any interest that may
have been paid by the taxing jurisdiction with respect thereto, to the extent
Borrower has actually paid such Lender with respect thereto.

(d)        Prior to the date of any Lender becoming a Lender hereunder, and from
time to time thereafter if requested by Borrower or the Agent each Lender
organized outside the United States shall provide the Agent and Borrower with
the forms prescribed by the Internal Revenue Service of the United States
(including, without limitation, Form W-8 BEN, Form W-8 EC1, or Form W-8 IMY)
certifying such Lender’s exemption from United States withholding taxes with
respect to all payments to be made to such Lender hereunder and under the Notes.
Unless Borrower and the Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any Note are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, Borrower or the Agent shall withhold
taxes from such payments for the account and benefit of Borrower at the
applicable statutory rate in the case of payments to or for any Lender organized
under the laws of a jurisdiction outside the United States; provided however,
that all such withholding for such Lender shall cease upon delivery by such
Lender of the applicable forms to Borrower and Agent.

(e)        Promptly after the date on which payment of any Taxes are due
pursuant to applicable law, Borrower will, at the request of the Agent or any
Lender, furnish to the Agent or such Lender evidence in form and substance
satisfactory to the Agent or such Lender, that Borrower has met its obligations
under this Section 10.22.

(f)        Without prejudice to the survival of any other agreement of Borrower,
the agreement and obligations of Borrower contained in this Section 10.22 shall
survive the payment in full of the Liabilities.

10.23  Assignments and Participation.

(a)        After the Closing Date each Lender may assign to any Person (the
“Assignee”) all or a portion of its rights and obligations under this Agreement
(including without limitation, all or a portion of its Commitments and the Notes
held by it); provided however, that (i) so long as

 

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no Default or Matured Default has occurred and is continuing, the Borrower shall
have provided its prior written consent, which consent shall not be unreasonably
withheld, (ii) the Agent shall have provided its prior written consent, which
consent shall not be unreasonably withheld, (iii) each such assignment shall be
of a constant, and not a varying, percentage of all of the assigning Lender’s
rights and obligations under this Agreement, (iv) the total amount of the
Commitment or Commitments (based on the original Commitment or Commitments
without giving effect to any repayments or prepayments) so assigned to an
Assignee or to an Assignee and its affiliates taken as a whole shall equal or
exceed the lesser of the total amount of the Commitment or Commitments held by
the assigning Lender or $5,000,000, (v) the remaining Commitment or Commitments
(based on the original Commitment or Commitments without giving effect to any
repayments or prepayments) held by the assigning Lender and its affiliates after
giving effect to any such assignment shall equal or exceed $5,000,000, (vi) the
assignment will not cause Borrower to incur any additional liability or expense
and (vii) the parties to each such assignment shall execute and deliver to the
Agent for its acceptance an Assignment and Acceptance in substantially the form
attached as Schedule C (“Assignment and Acceptance”), together with any Note or
Notes subject to such assignment and a processing and recordation fee of $3,500.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be the date on which such Assignment and Acceptance is accepted by the
Agent, (x) the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender under the
Financing Agreements and (y) the Lender assignor thereunder shall be deemed to
have relinquished its rights and to be released from its obligations under the
Financing Agreements, to the extent (and only to the extent) that its rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under the
Financing Agreements, such Lender shall cease to be a party thereto).

(b)        By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Financing Agreements or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance by Borrower of
any of its obligations under the Financing Agreements or any other instrument or
document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of the Financing Agreements, together with copies of the
financial statements referred to in Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as the Agent

 

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on its behalf and to exercise such powers under the financing Agreements as are
delegated to the Agent by the terms thereof; together with such powers as are
reasonably incidental thereto; and (vi) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Financing Agreements are required to be performed by it as a Lender.

(c)        The Agent shall maintain at its address referred to in Section 10.19
a copy of each Assignment and Acceptance delivered to and accepted by it.

(d)        Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with any Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed,
(i) accept such Assignment and Acceptance and (ii) give prompt notice thereof to
Borrower. Within five (5) Business Days after its receipt of such notice,
Borrower, at its own expense, shall execute and deliver to the Agent in exchange
for the surrendered Note or Notes, a new Note or new Notes to the order of such
Assignee in an amount equal to the Commitment or Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment or Commitments, a portion of which has been assigned, a
new Note or New Notes to the order of the assigning Lender in an amount equal to
the Commitment or Commitments retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit 2A. Upon receipt by the Agent of such new Note or Notes conforming to
the requirements set forth in the preceding sentences, the Agent shall return to
Borrower such surrendered Note or Notes, marked to show that such surrendered
Note or Notes has (have) been replaced, renewed and extended by such new Note or
Notes.

(e)        Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including without limitation, all or a portion of its Commitments and
the Note held by it); provided however, that (i) such Lender’s obligations under
this Agreement (including without limitation, its Commitments to Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the sale of the participation will not cause Borrower to
incur any additional liability, and (v) Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.

(f)        Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 10.23, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to Borrower furnished to such Lender by or on behalf of Borrower;
provided that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree in writing to preserve the
confidentiality of any confidential information relating to Borrower received by
it from such Lender.

 

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(g)        Any Lender may assign and pledge all or any of the instruments held
by it as collateral security; provided that any payment made by Borrower for the
benefit of such assigning and/or pledging Lender in accordance with the terms of
the Financing Agreements shall satisfy Borrower’s obligations under the
Financing Agreements in respect thereof to the extent of such payment. No such
assignment and/or pledge shall release the assigning and/or pledging Lender from
its obligations hereunder.

10.24  Maximum Interest. No agreements, conditions, provisions or stipulations
contained in this Agreement or in any of the other Financing Agreements, or any
Default or Matured Default, or any exercise by the Agent of the right to
accelerate the payment of the maturity of principal and interest, or to exercise
any option whatsoever, contained in this Agreement or any of the other Financing
Agreements, or the arising of any contingency whatsoever, shall entitle the
Agent to collect, in any event, interest exceeding the maximum authorized by
law, and in no event shall Borrower be obligated to pay interest exceeding such
rate, and all agreements, conditions or stipulations, if any, which may in any
event or contingency whatsoever operate to bind, obligate or compel Borrower to
pay a rate of interest exceeding the maximum allowed by law, shall be without
binding force or effect, at law or in equity, to the extent only of the excess
of interest over such maximum interest allowed by law. In the event any interest
is charged in excess of the maximum allowed by law (“Excess”), Borrower
acknowledges and stipulates that any such charge shall be the result of an
accidental and bona-fide error, and such Excess shall be, first, applied to
reduce the principal of any Liabilities due, and, second, returned to Borrower,
it being the intention of the parties not to enter at any time into a usurious
or otherwise illegal relationship. Borrower and the Agent both recognize that,
with fluctuations of index rates and applicable margins, such an unintentional
result could inadvertently occur. By the execution of this Agreement, Borrower
covenants that: (a) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess; and (b) Borrower shall not seek or pursue
any other remedy, legal or equitable, against the Agent based, in whole or in
part, upon the charging or receiving of any interest in excess of the maximum
authorized by law. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by the Agent, all interest at any time
contracted for, charged or received by the Agent in connection with the
Liabilities shall be amortized, prorated, allocated and spread in equal parts
during the entire term of this Agreement.

10.25  Additional Advances. All fees, charges, expenses, costs, expenditures,
obligations, liabilities, losses, penalties and damages incurred or suffered by
the Agent and for which Borrower is bound to indemnify or reimburse the Agent
under this Agreement (other than those which may be paid without demand
therefor, by the Agent initiated Advances pursuant to Section 2.1) may, at the
option of the Agent, be paid by Agent-initiated Advances pursuant to Section 2.1
if such amounts remain unpaid for a period of ten (10) days after the Agent has
made demand therefor.

10.26  Loan Agreement Controls. If there are any conflicts or inconsistencies
among this Agreement and any of the other Financing Agreements, the provisions
of this Agreement shall prevail and control.

 

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10.27  Obligations Several. The obligations of each Lender under each Financing
Agreement to which it is a party are several, and no Lender shall be responsible
for any obligation or Commitment of any other Lender under any Financing
Agreement to which it is a party. Nothing contained in any Financing Agreement
to which it is a party, and no action taken by any Lender pursuant thereto,
shall be deemed to constitute the Lenders to be a partnership, an association, a
joint venture, or any other kind of entity.

10.28  Pro Rata Treatment. All Loans under, and all payments and other amounts
received in connection with, this Agreement (including, without limitation,
amounts received as a result of the exercise by any Lender of any right of
set-off), shall be effectively shared by the Lenders in accordance with their
respective Pro Rata Percentages. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of the principal of, or interest on, or fees in respect
of, any Note held by it (other than pursuant to Section 2.3(c), 2.5(a), 10.20,
10.21or 10.22 or the normal and customary processing fees charged by an Issuer
in connection with the issuance of or drawings under a Letter) in excess of its
Pro Rata Percentage of payments on account of similar Notes obtained by all the
Lenders, such Lender shall purchase from the other Lenders such participation in
the Notes or Loans made by them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender’s ratable
share (according to the proportion of (a) the amount of such Lender’s required
repayment to (b) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Disproportionate payments of interest shall be
shared by the purchase of separate participation in unpaid interest obligations,
disproportionate payments of fees shall be shared by the purchase of separate
participation in unpaid fee obligations, and disproportionate payments of
principal shall be shared by the purchase of separate participation in unpaid
principal obligations. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 10.28 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
Notwithstanding the foregoing, a Lender may receive and retain an amount in
excess of its Pro Rata Percentage to the extent, but only to the extent, that
such excess results from such Lender’s Highest Lawful Rate exceeding another
Lender’s Highest Lawful Rate.

10.29  Confidentiality. Each of the Agent and the Lenders agrees that it will
use its best efforts to keep confidential, in accordance with its customary
procedures for handling confidential information and in accordance with safe and
sound banking practices any proprietary information of Borrower, designated in
writing by Borrower, as being proprietary and confidential; provided that the
Agent or any Lender may disclose any such information (a) to enable it to comply
with any Governmental Requirement applicable to it, (b) in connection with the
defense of any litigation or other proceeding brought against it arising out of
the transactions contemplated by this Agreement and the other Financing
Agreements, (c) in connection with the supervision and enforcement of the rights
and remedies of the Agent and Lenders under any

 

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Financing Agreement and (d) as set forth in Section 10.23. Notwithstanding
anything to the contrary in this Agreement, each Lender (or its representatives,
agents or employees) may (i) consult any tax advisor regarding the tax treatment
and tax structure of the transaction contemplated by this Agreement and (ii) may
at any time disclose to any person, without limitation of any kind, the tax
treatment and tax structure of such transaction and all materials of any kind
(including opinions or other tax analyses) that are provided relating to such
tax treatment or tax structure. The preceding sentence is intended to satisfy
the requirements for the transaction contemplated herein to avoid classification
as a “confidential transaction” for purposes of Treasury Regulations
Section 1.6011-4(b)(3) and shall be interpreted consistent with such intent.
This authorization is not intended to permit disclosure of any information that
is unrelated to the tax treatment or tax structure of any transaction
contemplated hereby, including, without limitation, any pricing or financial
information, except in each case to the extent such information is related to
the tax treatment or tax structure of any such transaction.

10.30  Independence of Covenants. All covenants under this Agreement and the
other Financing Agreements shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default or
a Matured Default if such action is taken or condition exists.

10.31  Amendments and Waivers. Any term, covenant, agreement or condition of
this Agreement or the other Financing Agreements may be amended only by a
written amendment executed by Borrower, the Required Lenders and, if the rights
or duties of the Agent are affected thereby, the Agent, or compliance therewith
only may be waived (either generally or in a particular instance and either
retroactively or prospectively), if Borrower shall have obtained the consent in
writing of the Required Lenders and, if the rights or duties of the Agent are
affected thereby, the Agent, provided however, that without the consent in
writing of the holders of all outstanding Notes and LC Obligations, or of all
Lenders if no Notes or Letters are outstanding, no such amendment or waiver
shall (a) change the amount or postpone the date of payment of any scheduled
payment or required payment of principal of the Notes or LC Obligations or
reduce the rate or extend the time of payment of interest on the Notes, or
reduce the amount of principal thereof, or modify any of the provisions with
respect to the payment or prepayment thereof, (b) give to any Note any
preference over any other Notes, (c) amend the definition of Required Lenders,
(d) alter, modify or amend the provisions of Section 10.28 or of this
Section 10.31, (e) increase the total amount or extend the term of any of the
Commitments (f) amend the definition of Borrowing Base (including any amendment
of the definitions used therein and including any amendment of the advance rates
included in that definition) that would have the effect of increasing the
Borrowing Base Limit (g) reduce the fees required under Section 2.5, (h) alter,
modify or amend the provisions of Sections 9.1 or 9.2 of this Agreement,
(i) alter, modify or amend any Lender’s right hereunder to consent to any
action, make any request or give any notice, or (j) release any Collateral or
guarantor of any of the Liabilities, unless such release is permitted by the
Financing Agreements. Without the consent in writing of the affected Lender, no
such amendment or waiver shall increase the amount of or the Pro Rata Percentage
of any Commitment of such Lender. Any such amendment or waiver shall apply
equally to all Lenders and all the holders of the Notes and/or LC Obligations
and shall be binding upon them, upon each future holder of any Note or LC
Obligation and upon Borrower, whether or not such Note or

 

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Letter shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived.

10.32  Replacement of a Lender. If a Lender (other than the Agent as a Lender)
becomes a Replacement Candidate (as defined below), Borrower shall have the
right to require such Lender to assign to another lender or other institution
selected by Borrower and reasonably satisfactory to the Agent (which may be one
or more of the Lenders) the Commitments and the Notes held by such Lender
pursuant to the terms of an appropriately completed Assignment and Acceptance in
accordance with Section 10.23; provided, that neither the Agent nor any Lender
shall have any obligation to Borrower to find any such lender or other
institution and in order for Borrower to replace a Lender, Borrower must require
such replacement within three (3) months of the date the Lender became a
Replacement Candidate. Each Lender (other than the Agent as a Lender) agrees to
its replacement at the option of Borrower pursuant to this Section 10.32;
provided, that the assignee selected by Borrower shall purchase such Lender’s
interest in the Loans and Liabilities owed to such Lender for cash in an
aggregate amount equal to the aggregate unpaid principal thereof; all unpaid
interest accrued thereon, all unpaid fees accrued for the account of such Lender
and all other amounts then owing to such Lender hereunder or under any other
Financing Agreement. A Lender will become a “Replacement Candidate” if (i) it
has made a demand under Sections 10.20, 10.21or 10.22, (ii) it has defaulted on
any obligation under this Agreement or (iii) it has become insolvent and its
assets become subject to a receiver, liquidator, trustee, custodian, or other
officer having similar powers. The rights of Borrower under this Section 10.32
shall be in addition to any other rights or remedies Borrower may have at law or
in equity as a result of the events described in the definition of “Replacement
Candidate”.

10.33  Representations by the Lenders. Each Lender represents that it is the
present intention of such Lender, as of the date of its acquisition of the
Notes, to acquire the Notes for its account or for the account of its
affiliates, and not with a view to the distribution or sale thereof that would
be in violation of any applicable laws, and, subject to any applicable laws, the
disposition of such Lender’s property shall at all times be within its control.
The Notes have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and may not be transferred, sold or otherwise disposed
of except (a) in a registered offering under the Securities Act; (b) pursuant to
an exemption from the registration provisions of the Securities Act; or (c) if
the Securities Act shall not apply to the Notes or the transactions contemplated
by the Financing Agreements. Nothing in this Section 10.33 shall affect the
characterization of the Loans and the transactions contemplated hereunder as
commercial lending transactions.

10.34  Counterparts and Facsimile Signatures. This Agreement, any other
Financing Agreement and any subsequent amendment to any of them may be executed
in several counterparts, each of which shall be construed together as one
original. Facsimile signatures on this Agreement, any other Financing Agreement
and any subsequent amendment to any of them shall be considered as original
signatures.

10.35  Set-off. Borrower gives and confirms to each Lender a right of set-off of
all moneys, securities and other property of Borrower (whether special, general
or limited) and the proceeds thereof, at any time delivered to remain with or in
transit in any manner to such Lender,

 

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its correspondent or its agents from or for Borrower, whether for safekeeping,
custody, pledge, transmission, collection or otherwise or coming into possession
of such Lender in any way, and also, any balance of any deposit accounts and
credits of Borrower with, and any and all claims of security for the payment of
the Liabilities owed by Borrower to such Lender, contracted with or acquired by
the Lender, whether such liabilities and obligations be joint, several,
absolute, contingent, secured, unsecured, matured or unmatured, and Borrower
authorizes such Lender at any time or times, without prior notice, to apply such
money, securities, other property, proceeds, balances, credits of claims, or any
part of the foregoing, to such liabilities in such amounts as it may select,
whether such Liabilities be contingent, unmatured or otherwise, and whether any
collateral security therefor is deemed adequate or not. The rights described
herein shall be in addition to any collateral security described in any separate
agreement executed by Borrower.

10.36  Equities.

(a)        CoBank Equities.  Each party hereto acknowledges that CoBank has a
statutory first lien on all of the Borrower’s stock and other equities in CoBank
(the “CoBank Equities”) pursuant to 12 USC 2131. Accordingly, and
notwithstanding any other provision of this Agreement or any other Financing
Agreement to the contrary: (i) CoBank’s statutory lien on the CoBank Equities
shall be for CoBank’s sole and exclusive benefit and shall not be subject to
this Agreement or any other Financing Agreement nor shall the CoBank Equities
(or the proceeds thereof) be subject to pro rata sharing hereunder; (ii) CoBank
shall have no obligation to retire the CoBank equities upon the Borrowers’
default or at any other time, either for application to the Liabilities or
otherwise; and (iii) the CoBank Equities shall not be offset against the
Liabilities to CoBank or otherwise taken into consideration for purposes of
determining the Lenders’ pro rata shares hereunder.

(b)        FCSA Equities.  Each party hereto acknowledges that FCSA has a
statutory first lien on all of the Borrower’s stock and other equities in FCSA
(the “FCSA Equities”) pursuant to 12 USC 2097. Accordingly, and notwithstanding
any other provision of this Agreement or any other Financing Agreement to the
contrary: (i) FCSA’s statutory lien on the FCSA Equities shall be for FCSA’s
sole and exclusive benefit and shall not be subject to this Agreement or any
other Financing Agreement nor shall the FCSA Equities (or the proceeds thereof)
be subject to pro rata sharing hereunder; (ii) FCSA shall have no obligation to
retire the FCSA equities upon the Borrowers’ default or at any other time,
either for application to the Liabilities or otherwise; and (iii) the FCSA
Equities shall not be offset against the Liabilities to FCSA or otherwise taken
into consideration for purposes of determining the Lenders’ pro rata shares
hereunder.

10.37   Patronage Distributions.

(a)        CoBank Patronage Distributions.  Notwithstanding any other provision
in this Agreement, (i) all Liabilities owing to CoBank hereunder that are
retained by CoBank for its own account and are not part of a sale of a
participation interest or the assignment of any rights or obligations under the
Financing Agreements, shall be entitled to patronage distributions in accordance
with the bylaws of CoBank and its practices and procedures related to patronage
distributions and (ii) any Liabilities owing to CoBank hereunder that are not
retained by CoBank for its own account and are part of a sale of a participation
interest or the assignment of any

 

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rights or obligations under the Financing Agreements, shall not be entitled to
any such patronage distributions.

(b)        FCSA Patronage Distributions.  Notwithstanding any other provision in
this Agreement, (i) all Liabilities owing to FCSA hereunder that are retained by
FCSA for its own account and are not part of a sale of a participation interest
or the assignment of any rights or obligations under the Financing Agreements,
shall be entitled to patronage distributions in accordance with the bylaws of
FCSA and its practices and procedures related to patronage distributions and
(ii) any Liabilities owing to FCSA hereunder that are not retained by FCSA for
its own account and are part of a sale of a participation interest or the
assignment of any rights or obligations under the Financing Agreements, shall
not be entitled to any such patronage distributions.

10.38  Bylaws and Capital Plan.

(a)        CoBank’s Bylaws and Capital Plan. Borrower acknowledges receipt of a
copy of CoBank’s bylaws and capital plan, which describe the nature of CoBank
equities and capitalization requirements. Borrower agrees to be bound by the
terms of CoBank’s bylaws and capitalization plan, including without limitation,
provisions applicable to patronage distributions. Borrower and CoBank represent
to the other parties to this Agreement that Borrower’s obligations, under the
terms of CoBank’s bylaws and capitalization plan, do not conflict with
Borrower’s obligations under this Agreement or any other Financing Agreement
(except as specifically provided in the preceding Sections10.36 and 10.37).
However, in the event such conflict is determined to exist, then to the extent
of such conflict the terms of this Agreement and any other Financing Agreement
shall govern and be controlling.

(b)        FCSA Bylaws and Capital Plan. Borrower acknowledges receipt of a copy
of FCSA’s “Customer Information and Disclosure Handbook”, which describes the
nature of FCSA’s equities and capitalization requirements. Borrower agrees to be
bound by the terms of FCSA’s bylaws and capitalization plan, including without
limitation, provisions applicable to patronage distributions. Borrower and FCSA
represent to the other parties to this Agreement that Borrower’s obligations,
under the terms of FCSA’s bylaws and capitalization plan, do not conflict with
Borrower’s obligations under this Agreement or any other Financing Agreement
(except as specifically provided in the preceding Sections 10.36 and 10.37).
However, in the event such conflict is determined to exist, then to the extent
of such conflict the terms of this Agreement and any other Financing Agreement
shall govern and be controlling.

10.39  FCSA Capital Plan. Borrower agrees to purchase voting (Class D) or
non-voting (Class E) stock in Farm Credit Services of America, ACA (currently a
minimum of $1,000.00 worth of stock consisting of at least 200 shares of $5.00
par value stock) as required under the policy of Farm Credit at the time of
acquisition. Farm Credit policy may change from time to time. Farm Credit shall
have a first lien on the stock for payment of any liability of Borrower to Farm
Credit. Said stock shall be owned as follows:

Owner Name: Midwest Grain Processors, LLC             SSN/TIN 20-1773962

 

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Borrower authorizes and appoints the following to act on behalf of all owners,
to vote the Class D stock, and to accept, receive and receipt for any dividends
declared on the stock:

  Patrick W. Samuelson, voter

10.40  Binding Effect. This Agreement and all of the other Financing Agreements
set forth the legal, valid and binding obligations of Borrower, the Agent and
the Lenders and are enforceable against Borrower in accordance with their
respective terms. The Lenders may settle, release, compromise, collect or
otherwise liquidate the obligations of any Borrower, any guarantor of such
obligations, and any security or collateral for such obligations or for any such
guaranty, in any manner, without affecting or impairing the obligations of any
Borrower.

10.41  Accommodation Party Defenses Waived. The parties intend that each
Borrower shall be fully liable, jointly and severally, for all Liabilities.
Nonetheless, in case a court finds that any Borrower is not such a primary
obligor with respect to all or any part of the Liabilities, each Borrower
expressly waives the benefit of any and all defenses and discharges available to
a guarantor, surety, endorser or accommodation party dependent on an obligor’s
character as such. Without limiting the generality of the foregoing, the
liability of each Borrower hereunder shall not be affected or impaired in any
way by any of the following acts or things (which the Agent and the Lenders are
hereby expressly authorized to do, omit or suffer from time to time without
notice to or consent of anyone): (i) any acceptance of collateral security,
guarantors, accommodation parties or sureties for Liabilities; (ii) any
extension or renewal of any Liabilities (whether or not for longer than the
original period) or any modification of the interest rate, maturity or other
terms of any Liabilities; (iii) any waiver of indulgence granted to any
Borrower, and any delay or lack of diligence in the enforcement of the
Liabilities; (iv) any full or partial release of, compromise or settlement with,
or agreement not to sue, any Borrower, guarantor or other person liable on any
Liabilities; (v) any release, surrender, cancellation or other discharge of any
Liabilities or the acceptance of any instrument in renewal or substitution for
any instrument evidencing any Liabilities; (vi) any failure to obtain collateral
security (including rights of setoff) for any Liabilities, or to see to the
proper or sufficient creation and perfection thereof, or to establish the
priority hereof, or to preserve, protect, insure, care for, exercise or enforce
any collateral security for any Liabilities; (vii) any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or other
change, impairment, limitation, loss or discharge of any collateral, guarantor
collateral or other collateral security for the Liabilities; (viii) any
assignment, sale, pledge or other transfer of any of the Liabilities; or
(ix) any manner, order or method of application of any payments or credits on
any Liabilities.

10.42  Waiver of Borrower’s Rights Under Farm Credit Law. Each Borrower
acknowledges and agrees that, to the extent the provisions of the Agricultural
Credit Act of 1987, including, without limitation, 12 U.S.C. §§ 2199 through
2202e, and the implementing Farm Credit Administration regulations, 12 C.F.R.
§ 617.7000, et seq. (collectively, the “Farm Credit Law”) apply to a Borrower or
to the transactions contemplated by this Agreement, each Borrower hereby
irrevocably waives, relinquishes and agrees not to assert at any time any and
all rights that the Borrower may be afforded under the Farm Credit Law
(“Borrower Rights”), including but not limited to all statutory or regulatory
rights of a borrower to disclosure of effective interest rates, differential
interest rates, review of credit decisions, distressed loan

 

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restructuring, and rights of first refusal. Each Borrower acknowledges and
agrees that the waiver of Borrower Rights provided by this Section 10.42 is
knowingly and voluntarily made after each Borrower has consulted with legal
counsel of its choice and has been represented by counsel of its choice in
connection with the negotiation of this Agreement and the waiver of Borrower
Rights set forth in this Section 10.42. Each Borrower acknowledges that its
waiver of Borrower Rights set forth in this Section 10.42 is based on its
recognition that such waiver is material to induce the Agent and the Lenders to
participate in the extensions of credit contemplated by this Agreement and to
provide extensions of credit to the Borrower. Nothing contained in this
Section 10.42, nor the delivery to Borrower of any summary of any rights under,
or any notice pursuant to, the Farm Credit Law shall be deemed to be, or be
construed to indicate the determination or agreement by the Borrower, the Agent,
or the Lenders that the Farm Credit Law, or any rights thereunder, are or will
be applicable to the Borrower or to the transactions contemplated by this
Agreement. It is the intent of the Borrower that the waiver of Borrower Rights
contained in this Section 10.42 complies with and meets all requirements of 12
C.F.R. § 617.7010(c).

10.43  FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER FINANCING
AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

[Signature page follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

 

MIDWEST GRAIN PROCESSORS, LLC

By

 

/s/ Patrick W. Samuelson

Its

 

Chief Financial Officer

MIDWEST GRAIN PROCESSORS COOPERATIVE

By

 

/s/ Patrick W. Samuelson

Its

 

Chief Financial Officer

COBANK, ACB, as Agent and as a Lender

By

 

/s/ Teresa L. Fountain

Its

 

Assistant Corporate Secretary

FARM CREDIT SERVICES OF

AMERICA, FLCA, as a Lender

By

 

/s/ Shane Frahm

Its

 

Vice President

METROPOLITAN LIFE INSURANCE

COMPANY, as a Lender

By

 

/s/ Steven D. Craig

Its

 

Director

[Signature Page to Amended and Restated

Loan and Security Agreement]