EXHIBIT 10.3

 

 

BOND TRUST INDENTURE

 

Between

 

Brown County, South Dakota

 

And

 

Wells Fargo Bank, National Association

 

as Bond Trustee

 

 

Dated as of October 1, 2007

 

 

$19,000,000

 

Brown County, South Dakota
Subordinate Solid Waste Facilities Revenue Bonds
(Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

GRANTING CLAUSES

3

 

 

 

ARTICLE I

DEFINITIONS

5

Section 1.1

Definitions

5

Section 1.2

Interpretation

28

 

 

 

ARTICLE II

THE SERIES 2007A BONDS

29

Section 2.1

Authorized Amount of Series 2007A Bonds

29

Section 2.2

Issuance of Series 2007A Bonds

29

Section 2.3

Execution; Limited Obligation

30

Section 2.4

Authentication

31

Section 2.5

[Intentionally Deleted]

32

Section 2.6

Form of Bonds and Temporary Bonds

32

Section 2.7

Delivery of Series 2007A Bonds

32

Section 2.8

Mutilated, Lost, Stolen or Destroyed Series 2007A Bonds

33

Section 2.9

Bond Register; Transfer and Exchange of Series 2007A Bonds; Persons Treated as
Owners

33

Section 2.10

Cancellation

34

Section 2.11

Book-Entry Only System

34

Section 2.12

Successor Securities Depository; Transfers Outside Book-Entry Only System

36

Section 2.13

Payments and Notices to Cede & Co

36

 

 

 

ARTICLE III

APPLICATION OF SERIES 2007A BOND PROCEEDS AND REQUIRED FUND DEPOSITS; EXPENSE
FUND; PROJECT FUND; REBATE FUND

37

Section 3.1

Deposit of Funds

37

Section 3.2

Expense Fund

37

Section 3.3

Project Fund

37

Section 3.4

Rebate Fund

39

 

 

 

ARTICLE IV

REVENUES AND FUNDS

40

Section 4.1

Source of Payment of Series 2007A Bonds

40

Section 4.2

Revenue Fund

40

Section 4.3

Interest Fund

40

Section 4.4

Bond Sinking Fund

40

Section 4.5

Debt Service Reserve Fund

41

Section 4.6

Redemption Fund

43

Section 4.7

Investment of Funds

43

Section 4.8

Trust Funds

44

Section 4.9

Excluded Funds; Transfers to Rebate Fund

44

 

i

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

 

 

 

Page

 

 

 

ARTICLE V

REDEMPTION OF SERIES 2007A BONDS

45

Section 5.1

Redemption Dates and Prices

45

Section 5.2

Bond Sinking Fund Deposits - Mandatory Deposits

47

Section 5.3

Notice of Redemption

47

 

 

 

ARTICLE VI

GENERAL COVENANTS

49

Section 6.1

Payment of Principal and Interest

49

Section 6.2

Performance of Covenants; Legal Authorization

49

Section 6.3

Ownership; Instruments of Further Assurance

49

Section 6.4

Recording and Filing

49

Section 6.5

Books and Records

50

Section 6.6

Bond Register

50

Section 6.7

Rights Under the Loan Agreement

50

Section 6.8

Designation of Additional Paying Agents

50

Section 6.9

Arbitrage; Compliance with Tax Exemption Agreement

50

 

 

 

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

51

Section 7.1

Extension of Payment; Penalty

51

Section 7.2

Events of Default

51

Section 7.3

Acceleration

52

Section 7.4

Remedies; Rights of Bondholders

52

Section 7.5

Direction of Proceedings by Bondholders

53

Section 7.6

Appointment of Receivers

53

Section 7.7

Application of Moneys

53

Section 7.8

Remedies Vested in Bond Trustee

55

Section 7.9

Rights and Remedies of Bondholders

55

Section 7.10

Termination of Proceedings

56

Section 7.11

Waiver of Events of Default

56

Section 7.12

Borrower’s Rights of Possession and Use of Its Property

56

Section 7.13

Waiver of Redemption; Effect of Sale of Trust Estate

56

Section 7.14

Notice of Default

57

 

 

 

ARTICLE VIII

THE BOND TRUSTEE

58

Section 8.1

Acceptance of the Trusts

58

Section 8.2

Fees, Charges and Expenses of Bond Trustee and any Additional Paying Agent

60

Section 8.3

Notice to Issuer and the Bondholders if Default Occurs

61

Section 8.4

Good Faith Reliance

61

Section 8.5

Dealings in Series 2007A Bonds

61

Section 8.6

Several Capacities

61

Section 8.7

Intervention by Bond Trustee

61

Section 8.8

Successor Bond Trustee by Merger or Consolidation

62

Section 8.9

Bond Trustee Required; Eligibility

62

 

ii

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

 

 

 

Page

 

 

 

Section 8.10

Resignation by the Bond Trustee

62

Section 8.11

Removal of the Bond Trustee

62

Section 8.12

Appointment of Successor Bond Trustee by the Bondholders; Temporary Bond Trustee

63

Section 8.13

Judicial Appointment of Successor Trustee

63

Section 8.14

Concerning Any Successor Bond Trustees

63

Section 8.15

Bond Trustee Protected in Relying Upon Resolution, Etc

64

Section 8.16

Successor Bond Trustee as Trustee of Funds, Paying Agent and Bond Registrar

64

 

 

 

ARTICLE IX

SUPPLEMENTAL BOND INDENTURES

65

Section 9.1

Supplemental Bond Indentures Not Requiring Consent of Bondholders

65

Section 9.2

Supplemental Bond Indentures Requiring Consent of Bondholders

66

 

 

 

ARTICLE X

AMENDMENTS TO THE LOAN AGREEMENT

68

Section 10.1

Amendments, Etc. to Loan Agreement Not Requiring Consent

68

Section 10.2

Amendments, Etc. to Loan Agreement Requiring Consent of the Bondholders

68

 

 

 

ARTICLE XI

SATISFACTION OF THIS BOND INDENTURE

70

Section 11.1

Defeasance

70

Section 11.2

Liability of Issuer Not Discharged

71

Section 11.3

Provision for Payment of Portion of the Series 2007A Bonds

71

Section 11.4

When Advance Refunding is Not Permitted and Special Conditions for Refundings

72

 

 

 

ARTICLE XII

MANNER OF EVIDENCING OWNERSHIP OF SERIES 2007A BONDS

73

Section 12.1

Proof of Ownership

73

 

 

 

ARTICLE XIII

MISCELLANEOUS

74

Section 13.1

Limitation of Rights

74

Section 13.2

Unclaimed Moneys

74

Section 13.3

Severability

74

Section 13.4

Notices

75

Section 13.5

Bond Trustee as Paying Agent and Registrar

75

Section 13.6

Counterparts

75

Section 13.7

Applicable Law

75

Section 13.8

Immunity of Officers, Employees and Members of Issuer

75

Section 13.9

Parties Interested Hereunder

76

Section 13.10

Continuing Disclosure

76

Section 13.11

The Intercreditor Agreement

76

 

iii

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

 

EXHIBIT A (FORM OF SERIES 2007A BOND)

A-1

 

 

EXHIBIT B PROJECT DESCRIPTION

B-1

 

 

EXHIBIT C INTEREST PAYMENT SCHEDULE

C-1

 

iv

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

 

THIS BOND TRUST INDENTURE (this “Bond Indenture”), dated as of October 1, 2007,
between the BROWN COUNTY, SOUTH DAKOTA, a public body corporate and politic and
a political subdivision, created and existing under the laws of the State of
South Dakota (the “Issuer”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
trustee (the “Bond Trustee”), duly established, existing and authorized to
accept and execute trusts of the character herein set out under and by virtue of
the laws of the United States of America. Capitalized terms used but not defined
in the following recitals and granting clauses shall have the meanings given
such terms in Article I hereof.

 

W I T N E S S E T H:

 

WHEREAS, the Issuer is a public body corporate and politic and a political
subdivision duly and validly created and existing under the laws and
constitution of the State of South Dakota and has all powers granted under the
provisions of South Dakota Codified Laws Chapter 9-54, as supplemented and
amended (the “Act”); and

 

WHEREAS, pursuant to the Act, the Issuer is authorized and empowered, among
other things, to issue its revenue bonds for the purpose of financing “pollution
control facilities” (within the meaning of the Act) within the territorial
jurisdiction of the Issuer; and

 

WHEREAS, simultaneously with the execution and delivery of this Bond Indenture,
the Issuer and Heartland Grain Fuels, L.P., a limited partnership organized and
existing under the laws of the State of Delaware (the “Borrower”) which operates
an ethanol production facility (the “Facility”) located in Brown County at
38469-133nd  Street, Aberdeen, South Dakota 57401, have entered into a Loan
Agreement (the “Loan Agreement”), pursuant to which the Borrower covenants,
among other things, to make loan repayments in amounts and at times which will
be sufficient to pay when due the principal of, premium, if any, and interest on
the revenue bonds herein authorized; and

 

WHEREAS, the Borrower has requested the Issuer to issue its revenue anticipation
certificates and lend the proceeds thereof to the Borrower for the purpose of
providing funds which will be used, together with certain funds of the Borrower,
to provide the amounts necessary to (i) pay the cost of the acquisition,
construction and equipping of improvements to and expansion of the Facility
consisting of certain Solid Waste Disposal Facilities (as herein defined which
constitute a project within the meaning of the Act (the “Project”), including
reimbursement to the Borrower of certain moneys previously spent with respect to
the Project, (ii) fund a debt service reserve, (iii) pay interest on the revenue
bonds during construction of the Project and (iv) pay certain expenses incurred
in connection with the issuance of said revenue bonds; and

 

WHEREAS, the Issuer is authorized under the Act to issue its revenue bonds for
the aforesaid purposes and the Issuer has determined that the public interest
will be best served by the issuance of its revenue bonds in order to lend funds
to the Borrower for such purposes; and

 

WHEREAS, the Issuer has determined that it will issue its revenue anticipation
certificates, to be known as Brown County, South Dakota Subordinate Solid Waste
Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project),
Series 2007A (the “Series

 

1

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

 

2007A Bonds”), pursuant to the provisions of this Bond Indenture, for the
purpose of providing the amounts necessary, together with certain funds of the
Borrower, to (i) pay the costs of the Project, (ii) fund a debt service reserve,
(iii) pay interest on the Series 2007A Bonds during construction of the Project
and (iv) pay certain expenses incurred in connection with the issuance of the
Series 2007A Bonds; and

 

WHEREAS, the execution and delivery of this Bond Indenture and the issuance of
the Series 2007A Bonds have been in all respects duly and validly authorized by
a resolution duly adopted by the Issuer; and

 

WHEREAS, the Series 2007A Bonds will be issued in substantially the form set
forth in Exhibit A hereto, with necessary and appropriate variations, omissions
and insertions as permitted or required by this Bond Indenture; and

 

WHEREAS all things necessary to make the Series 2007A Bonds, when authenticated
by the Bond Trustee and issued as in this Bond Indenture provided, the valid,
binding and legal obligations of the Issuer according to the import thereof, and
to constitute this Bond Indenture a valid assignment and pledge of the payments
and prepayments of the Borrower under the Loan Agreement to be applied to the
payment of the principal of, premium, if any, and interest on the Series 2007A
Bonds and a valid assignment of the rights of the Issuer under the Loan
Agreement (excluding Unassigned Rights), have been done and performed, and the
creation, execution and delivery of this Bond Indenture, and the creation,
execution and issuance of the Series 2007A Bonds, subject to the terms hereof,
have in all respects been duly authorized;

 

NOW, THEREFORE, THIS BOND INDENTURE WITNESSETH:

 

That the Issuer in consideration of the premises and of the purchase of the
Series 2007A Bonds and of other good and lawful consideration, the receipt of
which is hereby acknowledged, and to secure the payment of the principal of,
premium, if any, and interest on the Series 2007A Bonds and the performance and
observance of all of the covenants and conditions herein or therein contained,
has executed and delivered this Bond Indenture and has conveyed, granted,
assigned, transferred, pledged, set over and confirmed, and by these presents
does hereby convey, grant, assign, transfer, pledge, set over and confirm, unto
the Bond Trustee, its successor or successors and its or their assigns forever,
a security interest in the property hereinafter described (said property being
herein sometimes referred to as the “Trust Estate”) to wit:

 

2

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

 

GRANTING CLAUSES

 

DIVISION I

 

All right, title and interest of the Issuer in and to the Loan Agreement and the
amounts payable to the Issuer thereunder (excluding Unassigned Rights);

 

DIVISION II

 

All right, title and interest of the Bond Trustee in and to the Bond Collateral
Documents and all amounts realized from the enforcement thereof (excluding with
respect to Unassigned Rights);

 

DIVISION III

 

Any and all other property of every kind and nature from time to time hereafter,
by delivery or by writing of any kind, conveyed, pledged, assigned or
transferred as and for additional security hereunder by the Issuer, the
Borrower, or anyone on their behalf to the Bond Trustee, subject to the terms
thereof, including without limitation funds of the Borrower held by the Bond
Trustee in any of the funds and accounts established hereunder or otherwise as
security for the Series 2007A Bonds and the Bond Proceeds Sub-Account
established pursuant to the Accounts Agreement;

 

EXCEPTED PROPERTY

 

There is, however, expressly excepted and excluded from the lien and operation
of this Bond Indenture amounts held by the Bond Trustee in the Rebate Fund
established by this Bond Indenture;

 

TO HAVE AND TO HOLD, all and singular, the properties and the rights and
privileges hereby conveyed, assigned and pledged by the Issuer or intended so to
be, unto the Bond Trustee and its successors and assigns forever, in trust,
nevertheless, for the equal and pro rata benefit and security of each and every
holder of the Series 2007A Bonds issued and to be issued hereunder, without
preference, priority or distinction as to participation in the benefit and
protection hereof of one Series 2007A Bond over or from the others, by reason of
priority in the issue or negotiation or maturity thereof, or for any other
reason whatsoever, except as herein otherwise expressly provided, so that each
and all of such Series 2007A Bonds shall have the same right, lien and privilege
under this Bond Indenture and shall be equally secured hereby with the same
effect as if the same had all been made, issued and negotiated simultaneously
with the delivery hereof and were expressed to mature on one and the same date;

 

PROVIDED, NEVERTHELESS, and these presents are upon the express condition that
if the Issuer or its successors or assigns shall well and truly pay or cause to
be paid the principal of such Series 2007A Bonds with interest according to the
provisions set forth in the Series 2007A Bonds and each of them or shall provide
for the payment or redemption of such Series 2007A Bonds by depositing or
causing to be deposited with the Bond Trustee the entire amount of funds or
securities requisite for payment or redemption thereof when and as authorized by
the provisions hereof, and shall also pay or cause to be paid all other sums
payable hereunder by the

 

3

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

 

Issuer, then these presents and the estate and rights hereby granted shall
cease, determine and become void, and thereupon the Bond Trustee, on payment of
its lawful charges and disbursements then unpaid, on demand of the Issuer and
upon the payment of the cost and expenses thereof, shall duly execute,
acknowledge and deliver to the Issuer such instruments of satisfaction or
release as may be necessary or proper to discharge this Bond Indenture,
including if appropriate any required discharge of record, and if necessary
shall grant, convey, reassign and deliver to the Issuer, its successors or
assigns, all and singular the property, rights, privileges and interests by it
hereby granted, conveyed, assigned and delivered, and all substitutes therefor,
or any part thereof, not previously disposed of or released as herein provided;
otherwise this Bond Indenture shall be and remain in full force.

 

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties
hereto that all Series 2007A Bonds are to be issued, authenticated and
delivered, and that all the trust estate is to be held and applied, subject to
the further covenants, conditions, releases, uses and trusts hereinafter set
forth, and the Issuer, for itself and its successors, does hereby covenant and
agree to and with the Bond Trustee and its respective successors in said trust,
for the benefit of those who shall hold the Series 2007A Bonds, or any of them
as follows:

 

4

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                         Definitions. The following words and terms
as used herein shall have the following meanings herein and in the Loan
Agreement, unless the context or use indicates another or different meaning or
intent:

 

“ABE Pledge Agreement” means that certain Pledge and Security Agreement, dated
as of October 1, 2007 among, Advanced BioEnergy, ABE Heartland, LLC, and the
Bond Trustee, as amended or supplemented from time to time.

 

“Aberdeen Expansion” means the expansion of the Aberdeen Facility financed in
part by the Senior Credit Facilities and the Series 2007A Bonds and includes the
Project.

 

“Aberdeen Facility” means the existing ethanol production facility owned by the
Borrower in the City of Aberdeen, Brown County, South Dakota.

 

“Aberdeen Grain Elevator Lease” means that certain Lease Agreement, dated as of
October 1, 2007, between the Borrower and South Dakota Wheat Growers
Association, relating to the grain elevator for the Aberdeen Facility.

 

“Aberdeen Senior Mortgage” means that certain Mortgage — Collateral Real Estate
Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment
of Leases, Rents and Security Deposits made by the Borrower to the collateral
agent specified therein for the benefit of the Senior Lenders relating to the
Aberdeen Facility.

 

“Aberdeen Subordinate Mortgage” means that certain Subordinate Mortgage —
Collateral Real Estate Mortgage, Security Agreement, Financing Statement,
Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the
Borrower to the Bond Trustee relating to the Aberdeen Facility.

 

“Aberdeen Subordination, Non-Disturbance and Attornment Agreement” means that
certain Subordination, Non-Disturbance and Attornment Agreement, dated as of
October 1, 2007 among the Bond Trustee as mortgagee, the Borrower as lessee and
South Dakota Wheat Growers Association as mortgagor, in relation to the Aberdeen
Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“Accounts Agreement” means that certain Accounts Agreement by and among the
Borrower, the Accounts Bank, the collateral agent as set forth therein, the
administrative agent as set forth therein and the Bond Trustee.

 

“Accounts Bank” means Amarillo National Bank, not its individual capacity, but
solely as depository bank and securities intermediary under the Accounts
Agreement, and includes each other Person that may, from time to time, be
appointed as successor Accounts Bank pursuant to and in accordance with the
Accounts Agreement.

 

5

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

 

“Act” means South Dakota Codified Laws Chapter 9-54 as supplemented and amended.

 

“Additional Facility Document” means each contract, agreement, letter agreement
or other instrument to which the Borrower becomes a party after the date hereof,
other than any document under which the Borrower (a) could not reasonably be
expected to have obligations or liabilities in the aggregate in excess of two
million Dollars ($2,000,000), or be entitled to receive revenues in the
aggregate in excess of two million Dollars ($2,000,000), in either case in value
in any twelve (12) month period and (b) a termination of which could not
reasonably be expected to result in a Material Adverse Effect; provided, that
for the purposes of this definition, any series of related transactions (other
than transactions, including hedging transactions, relating to the sale of
Products or the purchase of corn and natural gas and Interest Rate Protection
Agreements) shall be considered as one transaction, and all contracts,
agreements, letter agreements or other instruments in respect of such
transactions shall be considered as one contract, agreement, letter agreement or
other instrument, as applicable.

 

“Administrative Agent”  means West LB, not in its individual capacity but solely
as administrative agent for the Senior Lenders under the Senior Credit Agreement
and the other Financing Documents, and includes each other Person that may, from
time to time, be appointed as successors Administrative Agent pursuant to the
Senior Credit Agreement.

 

“Advanced BioEnergy” means Advanced BioEnergy, LLC a Delaware limited liability
company, which currently owns 100% of the Equity Interests in the Parent
Company, and its successors and assigns and any surviving, resulting or
transferee entity.

 

“Affiliate” of any Person means any other Person that, directly or indirectly,
controls, is controlled by or is under common control with such Person. A Person
shall be deemed to be “controlled by” any other Person if such other Person (a)
possesses, directly or indirectly, power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise or (b)
owns at least ten percent (10%) of the Equity Interests in such Person.

 

“Ancillary Documents” means, with respect to each Additional Facilities
Document, the following;

 

(i)                                    each security instrument and agreement
necessary or desirable to grant to the Bond Trustee a perfected Lien (subject
only to Permitted Liens) in such Additional Facilities Document and all property
interests received by the Borrower in connection therewith;

 

(ii)                                 all recorded UCC financing statements and
other filings required to perfect such Lien;

 

(iii)                              if reasonably requested by the Bond Trustee,
opinions of counsel for the Borrower addressing such matters relating to such
document, each applicable Bond Collateral Document and Lien;

 

(iv)                             certified evidence of the authorization of such
Additional Facility Document by the Borrower.

 

6

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

 

“Authorized Investments” means any of the following investments which at the
time are legal investments under the laws of the State:

 

(v)                               Government Obligations;

 

(vi)                            Obligations of agencies of the United States
government issued by the Federal Land Banks, the Federal Home Loan Bank, the
Federal Intermediate Credit Bank, and the Central Bank for Cooperatives;

 

(vii)                         Direct obligations of, and obligations fully
guaranteed by, any of the fifty states of the United States of America rated a
minimum of “A1” or “AA” by S&P or any equivalent rating by any equivalent rating
service (such rating requirement can be met by an attached letter of credit from
any bank meeting the requirements stated in clause (e) below or by municipal
bond insurance);

 

(viii)                      Indebtedness of any county or other local government
body within the United States of America rated at least “A1” or “AA” by S&P or
any equivalent rating by any equivalent rating service (such rating requirement
can be met by an attached letter of credit from any bank meeting the
requirements stated in clause (e) below or by municipal bond insurance);

 

(ix)                              Indebtedness of any corporation rated “A1” or
“AA” by S&P or any equivalent rating by any equivalent rating service;

 

(x)                                 Certificates of deposit, banker’s
acceptances, trust deposits, demand deposits, including interest bearing money
market accounts, or time deposits of any commercial bank, branch or Edge Act (12
USC 611 et seq.) branch which is a member of the Federal Reserve System,
including the Trustee or any of its affiliates, has a net worth of at least $100
million and whose short term bank deposits have an “A” prefix by S&P or any
equivalent rating by any equivalent rating service;

 

(xi)                              Repurchase agreements or reverse repurchase
agreements with financial institutions whose commercial paper is “A1” or whose
debt rating is “AA” by S&P or an equivalent rating by an equivalent rating
service or any bank who meets the requirements as stated in clause (e) above,
provided that in all cases the market value of the collateral used for such
transactions must be adequate to insure safety, liquidity and preservation of
capital: “AAA” 102%, “AA” 110%;

 

(xii)                          Securities and Exchange Commission Rule 2a 7
money market funds with a net asset value of one dollar and a parent company
rating of “A1” or better by S&P or any equivalent rating by any equivalent
rating service, including, without limitation, any mutual fund for which the
Bond Trustee or an affiliate of the Bond Trustee serves as investment manager,
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (a) the Bond Trustee or an affiliate of the Bond Trustee
receives fees from such funds for services rendered, (b) the Bond Trustee
charges and collects fees for services rendered pursuant to the Bond Indenture,
which fees are separate from the fees received from such

 

7

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

 

funds, and (c) services performed for such funds and pursuant to this Indenture
may at times duplicate those provided to such funds by the Trustee or its
affiliates; and

 

(xiii)                       any other obligations or securities permitted by
the Senior Credit Facilities.

 

“Authorized Officer” means (i) with respect to any Person that is a corporation,
the chief executive officer, the chief operating officer, the president, any
vice president, the treasurer or the chief financial officer of such Person,
(ii) with respect to any Person that is a partnership, an Authorized Officer of
a general partner of such Person, (iii) with respect to any Person that is a
limited liability company, any manager, the president, any vice president, the
treasurer or the chief financial officer of such Person, or an Authorized
Officer of the managing member of such Person, or (iv) with respect to any
Person, such other representative of such Person who, in each such case, has
been named as an Authorized Officer on a certificate of incumbency of such
Person delivered to the Bond Trustee on or after the date hereof.

 

“Blocked Account Agreement” means the “Blocked Account Agreement” as defined in
the Senior Credit Agreement.

 

“Bond Accounts” means the funds and accounts established and maintained under
the Bond Indenture.

 

“Bond Collateral Documents” means the Bond Indenture, the Subordinate Mortgage,
the Subordinate Security Agreement, the Subordinate Equity Pledge, the ABE
Pledge Agreement and any other documents granting, or relating to the grant, of
security for the payment of amounts due under the Loan Agreement and the Series
2007A Bonds.

 

“Bond Documents” means the Series 2007A  Bonds, the Loan Agreement, the Bond
Collateral Documents, the Bond Resolution and any other documents entered into
in connection with, or relating to, the Series 2007A Bonds and the transactions
contemplated by the issuance thereof.

 

“Bond Proceeds Withdrawal Certificate”  means a certificate substantially in the
form of the “Bond Proceeds Withdrawal Certificate” attached as Exhibit K to the
Accounts Agreement.

 

“Bond Resolution” means the resolution of the Issuer authorizing the issuance of
the Series 2007A Bonds and the related transactions and documents.

 

“Bondholder”, “Holder”, “Owner” and “Registered Owner” mean with respect to the
Series 2007A Bonds the registered owner of any Series 2007A Bond and does not
mean any beneficial owner of the Series 2007A Bonds whether through the
book-entry only system of DTC or otherwise.

 

“Bond Counsel” means Briggs and Morgan, Professional Association or any other
nationally recognized municipal bond counsel selected by the Issuer or by the
Borrower with the consent of the Issuer.

 

8

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

 

“Bond Indenture” means this Bond Trust Indenture between the Issuer and the Bond
Trustee, as it may from time to time be amended or supplemented.

 

“Bond Proceeds Sub-Account” means the account so named established pursuant to
the Accounts Agreement solely for the deposit of proceeds of the Series 2007A
Bonds, and interest earnings thereon, from the Project Fund as permitted or
directed by the Bond Indenture held under the Accounts Agreement solely for the
payment of Costs of the Project as defined in the Bond Indenture and the Tax
Exemption Agreement.

 

“Bond Register” means the registration books of the Issuer kept by the Bond
Trustee (in its capacity as Registrar) to evidence the registration and transfer
of the Series 2007A Bonds.

 

“Bond Sinking Fund” means the fund created in Section 4.4 hereof.

 

“Bond Trustee” means Wells Fargo Bank, National Association, as trustee, or any
successor trustee under this Bond Indenture.

 

“Bond Year” means any twelve-month period beginning January 1 of a calendar year
and ending on December 31 of the succeeding calendar year. For the purpose of
calculating debt service on the Series 2007A Bonds payable in any Bond Year,
principal and interest payable on the Series 2007A Bonds on January 1 of any
Bond Year shall be deemed to be payable during the preceding Bond Year.

 

“Borrower” means Heartland Grain Fuels, L.P., a Delaware limited partnership and
its successors and assigns and any surviving, resulting or transferee entity.

 

“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday
on which banking institutions in the State, the State of New York or the state
in which the principal corporate trust office of the Bond Trustee is located are
authorized by law or executive order to close or (b) a day on which the New York
Stock Exchange is authorized or obligated by law or executive order to close.

 

“Capitalized Lease Liabilities” of any Person means all monetary obligations of
such Person under any leasing or similar arrangement that, in accordance with
GAAP, would be classified as capitalized leases on a balance sheet of such
Person or otherwise disclosed as such in a note to such balance sheet and, for
purposes of the Financing Documents, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.

 

“Cash Equivalents” means:

 

(a)                                  readily marketable direct obligations of
the government of the United States or any agency or instrumentality thereof, or
obligations unconditionally guaranteed by the full faith and credit of the
government of the United States, in each case maturing within one (1) year from
the date of acquisition thereof;

 

(b)                                 securities issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition thereof and, at the time of acquisition,

 

9

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

 

having a rating of AA- or higher from S&P or Aa3 or higher from Moody’s (or, if
at any time neither S&P nor Moody’s shall be rating such obligations, an
equivalent rating from another nationally recognized rating service);

 

(c)                                  investments in commercial paper maturing
within one hundred eighty (180) days from the date of acquisition thereof and
having, at such date of acquisition, a rating of at least A-1 or P-1 from either
S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such
obligations, an equivalent rating from another nationally recognized rating
service);

 

(d)                                 investments in certificates of deposit,
banker’s acceptances and time deposits maturing within two hundred and seventy
(270) days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, the
Administrative Agent or any domestic office of any commercial bank organized
under the laws of the United States of America, any State thereof, any country
that is a member of the Organization for Economic Co-Operation and Development
or any political subdivision thereof, that has a combined capital and surplus
and undivided profits of not less than five hundred million Dollars
$(500,000,000);

 

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

 

(f)                                    investments in “money market funds”
within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as
amended, substantially all of whose assets are invested in investments of the
type described in clauses (a) through (e) of this definition.

 

“Cash Flow” means, for any period, the sum (without duplication) of the
following:  (i) all cash paid to the Borrower during such period in connection
with the Ethanol Marketing Agreement, Co-Product Marketing Agreement and any
other sales of Products, (ii) all interest and investment earnings paid to the
Borrower or the Project Accounts during such period on amounts on deposit in the
Project Accounts, (iii) all cash paid to the Borrower during such period as
business interruption insurance proceeds, and (iv) all other cash paid to the
Borrower during such period; provided, however, that Cash Flow shall not include
any proceeds of the Senior Credit Facilities or any other Indebtedness incurred
by the Borrower; insurance proceeds; condemnation proceeds; the any equity
contribution; proceeds from any disposition of assets of the Facilities or the
Borrower (other than Products); tax refunds; amounts received, whether by way of
a capital contribution or otherwise, from any holders of Equity Interests of the
Borrower; and any other extraordinary or non-cash income or receipt of the
Borrower under GAAP.

 

“Cash Flow Available for Debt Service” means, for any period, an amount equal to
the amount of Cash Flow deposited in the “Revenue Account” established under the
Accounts Agreement during such period minus all amounts paid during such period
pursuant to priorities first and second of Section 6.01(c) of the Accounts
Agreement so long as the Accounts Agreement is in effect and thereafter means,
for any period, an amount equal to Cash Flow minus all amounts paid by the
Borrower for Operation and Maintenance Expenses and Maintenance Capital
Expenses.

 

10

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

 

“Change Order” means, with respect to an Expansion, each “Change Order” (if any)
as described in the respective Design-Build Agreement.

 

“Closing Date” means the date on which all the conditions set forth in the
Senior Credit Facilities as to closing and first funding have been satisfied or
waived.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
Each reference to the Code herein shall be deemed to include the United States
Treasury Regulations, including temporary and proposed regulations relating to
the Code or the sections thereof specifically referenced.

 

“Collateral” means all assets of and Equity Interests in the Borrower, whether
now owned or hereafter acquired, upon which a Lien is purported to be created by
any Bond Collateral Document then in effect or contemplated to be in effect.

 

“Collateral Agent” means WestLB, not in its individual capacity but solely in
its capacity as collateral agent for the Senior Secured Parties under the
Financing Documents, and includes each other Person that may, from time to time,
be appointed as successor Collateral Agent pursuant to Section 9.06 (Resignation
or Removal of Agent) of the Credit Agreement.

 

“Commodity Hedging Arrangements” means any arrangement to hedge the price of
corn purchases, ethanol sales, Distillers Grains sales or natural gas purchases.

 

“Commodity Risk Management Plans” means risk management plans prepared by the
Borrower setting forth terms and conditions relating to any Commodity Hedging
Arrangements from time to time proposed to be entered into by the Borrower,
including any updates made to such risk management.

 

“Construction Budget” means the budget attached the Senior Credit Facilities
that sets forth all categories of costs and expenses required in connection with
the development, construction, start-up, and testing of the Aberdeen Expansion,
including all construction costs, all costs under the Design-Build Agreement,
all interest, taxes and other carrying costs related to the construction loans,
and costs related to the construction of the facilities described under the
Aberdeen Expansion Documents, as updated from time to time in accordance the
Senior Credit Facilities.

 

“Contest” means, with respect to any matter or claim involving any Person, that
such Person is contesting such matter or claim in good faith and by appropriate
proceedings timely instituted; provided that the following conditions are
satisfied:  (a) such Person has posted a bond or cash collateral (or other
security acceptable to the Senior Lenders so long as the Senior Credit
Facilities are in effect or, thereafter, the Bond Trustee) for the full amount
of such claim (or such lower amount as is acceptable to the Senior Lenders so
long as the Senior Credit Facilities are in effect or, thereafter, the Bond
Trustee); (b) during the period of such contest, the enforcement of any
contested item is effectively stayed; (c) none of such Person or any of its
officers, directors or employees, or any Senior Lender, the Bond Trustee, the
Issuer or nay Bondholder or their respective officers, directors or employees,
is or would reasonably be expected to become subject to any criminal liability
or sanction in connection with such contested items; and (d) such contest and
any resultant failure to pay or discharge the claimed or assessed amount during
the

 

11

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

 

pendency of such contest does not, and could not reasonably be expected to (i)
result in a Material Adverse Effect or (ii) involve a material risk of the sale,
forfeiture or loss of, or the creation, existence or imposition of any Lien on,
any of the Collateral.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Conversion Date” means the Business Day upon which (i) all the conditions
precedent set forth in the Senior Credit Facilities for the conversion from a
construction loan to a term loan shall have been satisfied (or waived in
accordance with the terms of the Senior Credit Facilities) and (ii) the
construction loans are converted to term loans.

 

“Co-Product Marketing Agreement” means that certain Co-Product Marketing
Agreement, dated as of May 9, 2007, between the Borrower and Dakotaland Feeds,
LLC.

 

“Costs of the Project” means all costs of acquiring, constructing and equipping
the Project which are permitted by the Act and consist of Solid Waste Disposal
Facilities, and, without intending to limit or restrict any proper definition of
such costs under any applicable law, shall include:

 

(a)                                  subject to the reimbursement restrictions
contained in the Code, payment to the Borrower of such amounts, if any, as are
necessary to reimburse the Borrower in full for all advances and payments made
by it or for its account, with respect to the Project for expenditures in
connection with the acquisition of any property required for the Project, the
preparation of the plans and specifications (including any preliminary study or
planning of the Project), or any aspect thereof and any reports or analyses
concerning the Project, and all real or personal property deemed necessary in
connection with the Project, or any one or more of said expenditures (including
architectural, engineering and supervisory services);

 

(b)                                 payment for labor, services, materials and
supplies used or furnished in the acquisition, construction and equipping of the
Project, all as provided in the plans and specifications, payment for the cost
of the acquisition, construction and installation of facilities, and all real
and personal property deemed necessary in connection with the Project and
payment for the miscellaneous expenses incidental to any of the foregoing items;

 

(c)                                  payment of any other costs and expenses
relating to the acquisition, construction and equipping of the Project,
including interest on the Series 2007A Bonds during construction of the Project,
or the authorization, issuance and sale of the Series 2007A Bonds;

 

(d)                                 the cost of any indemnity and surety bonds
to secure deposits in the Project Fund, taxes or other municipal or governmental
charges lawfully levied or assessed during construction upon the Project or any
property acquired therefor, and premiums on insurance, if any, in connection
with the Project, during construction; and

 

12

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

 

(e)                                  any obligation or expense hereafter
incurred by the Borrower for any of the foregoing purposes.

 

“Dakota Fuels” means Dakota Fuels, Inc., a Delaware corporation, which is the
general partner of the Borrower.

 

“Date of Taxability” means the date on which a Determination of Taxability
exists by expiration of any appeal period or unsuccessful conclusion of any
appeal or contest.

 

“Debt Service” means, for any period, with respect to the Senior Credit
Facilities or the Loan Agreement, as the case may be, the sum of (i) all fees
and (iii) principal payments of the Loans (excluding the Required Cash Sweep and
any other mandatory prepayments) scheduled to become due and payable during such
period to the Senior Lenders or the Bond Trustee as the case may be and ,with
respect to the Senior Credit Facilities only, all payments due by the Borrower
pursuant to Section 4.03 (Increased Eurodollar Loan Costs) and Section 4.07(a)
(Taxes) of the Senior Credit Facilities with respect to such scheduled
principal, interest and fees.

 

“Debt Service Requirements” means, with respect to the period of time for which
calculated, the aggregate of the payments required to be made during such period
in respect of principal (whether at maturity, as a result of mandatory sinking
fund redemption, a mandatory prepayment or otherwise) and interest on
Outstanding Series 2007A Bonds.

 

“Debt Service Reserve Fund” means the fund created by Section 4.5 hereof.

 

“Debt Service Reserve Requirement” means an amount equal to the lesser of (i)
the Maximum Annual Debt Service Requirement on the Series 2007A Bonds, (ii) 10%
of the Proceeds of the Series 2007A Bonds or (iii) 125% of the average annual
debt service on the Series 2007A Bonds.

 

“Defaulted Interest” means interest on the Series 2007A Bonds which is payable
but not duly paid on the date due.

 

“Deferred Approvals” has the meaning provided in the Senior Credit Agreement.

 

“Design-Build Agreement” means each of the design build agreements for the
Aberdeen Expansion specified in the Senior Credit Facilities.

 

“Distillers Grains” means any form of distillers grain products (including
syrup) marketed by the Borrower from time to time.

 

“Determination of Taxability” means the issuance of a statutory notice of
deficiency by the Internal Revenue Service, or ruling of the National Office or
any District Office, or a final decision by any court of competent jurisdiction
that interest on the Series 2007A Bonds is includible in the gross income of the
recipient under Section 103 and related sections of the Code and regulations
thereunder as in effect at the date of issuance of the Series 2007A Bonds, for
any reason other than a change of law or that the Holder is a substantial user
or a related person under Section 147(a), provided that the period for a contest
or appeal, if any, of such action,

 

13

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

 

ruling or decision has expired without any such appeal or contest having been
instituted, or, if instituted, such contest or appeal has been unsuccessfully
concluded.

 

“DTC” means The Depository Trust Company, a New York corporation, and its
successors and assigns.

 

“DTC Participant” or “DTC Participants” means securities brokers and dealers,
banks, trust companies, clearing corporations and certain other corporations
which have access to the DTC system.

 

“Environmental Affiliate” means any Person, only to the extent of, and only with
respect to matters or actions of such Person for which, the Borrower could
reasonably be expected to have liability as a result of the Borrower retaining,
assuming, accepting or otherwise being subject to liability for Environmental
Claims relating to such Person, whether the source of the Borrower’s obligation
is by contract or operation of Law.

 

“Environmental Approvals” means any Governmental Approvals required under
applicable Environmental Laws.

 

“Environmental Claim” means any written notice, claim, demand or similar written
communication by any Person alleging potential liability or requiring or
demanding regulatory compliance or remedial or responsive measures (including
potential liability for investigatory costs, cleanup, remediation and mitigation
costs, governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties) in each such case (x) either (i) with
respect to environmental contamination-related liabilities or obligations with
respect to which the Borrower could reasonably be expected to be responsible
that are, or could reasonably be expected to be, in excess of two hundred
thousand Dollars ($200,000) in the aggregate, or (ii) that has or could
reasonably be expected to result in a Material Adverse Effect and (y) arising
out of, based on or resulting from (i) the presence, release or threatened
release into the environment, of any Materials of Environmental Concern at any
location, whether or not owned by such Person; (ii) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Laws or
Environmental Approvals; or (iii) personal injury or damage to property as a
result of exposure to Materials of Environmental Concern.

 

“Environmental Laws” means all Laws applicable to the Facilities relating to
pollution or protection of human health, safety or the environment (including
ambient air, surface water, ground water, land surface or subsurface strata),
including Laws relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise applicable to the
Facilities relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, management, remediation or handling of
Materials of Environmental Concern.

 

“Environmental Site Assessment Report” means, a Phase I environmental site
assessment report prepared by an environmental consulting firm reasonably
acceptable to the Administrative Agent, which report shall comply with ASTM
standard 1527-05 (with such modifications thereto as may reasonably be requested
by the Borrower and are reasonably acceptable to the Administrative Agent), and
a Phase II environmental site assessment

 

14

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

 

reasonably acceptable to the Senior Lenders, addressing any recognized
environmental conditions or other areas of concern identified in the relevant
Phase I report if in the reasonable determination of the Senior Lenders, acting
in consultation with the Independent Engineer, a Phase II assessment is
warranted.

 

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination,
in each such case including all voting rights and economic rights related
thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA also refer to any successor sections.

 

“ERISA Affiliate” means any Person, trade or business that, together with the
Borrower, is or was treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA.

 

“Escrow Obligations” means (i)  Government Obligations, (ii) certificates
evidencing a direct ownership interest in Government Obligations or in future
interest or principal payments thereon held in a custody account by a custodian
satisfactory to the Bond Trustee, and (iii) obligations of any state of the
United States of America or any political subdivision, public instrumentality or
public Issuer of any such state which are fully secured by and payable solely
from Government Obligations held pursuant to an escrow agreement satisfactory to
the Bond Trustee.

 

“Ethanol Marketing Agreement” means that certain Ethanol Marketing Agreement
dated as of November 30, 2000, between the Borrower and Williams Ethanol
Services, Inc. D/B/A  Williams Bio-Energy, N/K/A Aventine Renewable Energy,
Inc., as amended March 31, 2003 and December 1, 2006.

 

“Event of Abandonment” means any of the following shall have occurred: (i) the
abandonment by the Borrower of the development, construction, operation or
maintenance of the Facilities for a period of more than sixty (60) consecutive
days (other than as a result of force majeure, an any taking, exercise of rights
of eminent domain, public improvement, inverse condemnation, condemnation or
similar action of or proceeding by any Governmental Authority relating to any
material part of the Project with, any Equity Interests of the Borrower, or any
other assets thereof, or any event that causes the Facilities, or any materials
portion thereof, to be damaged, destroyed, or rendered unfit for normal use for
any reason), (ii) the suspension of all or substantially all of the Borrower’s
activities with respect to the Facilities, other than as the result of such
force majeure, taking or casualty, for a period of more than sixty (60)
consecutive days,

 

15

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

 

or (iii) any written acknowledgement by the Borrower of a final decision to take
any of the foregoing actions.

 

“Expansions” means the Aberdeen Expansion and the Huron Expansion.

 

“Expense Fund” means the fund created in Section 3.2 hereof.

 

“Facilities” means the Aberdeen Facility, the Aberdeen Expansion, the Huron
Facility and the Huron Expansion, if undertaken.

 

“Facilities Documents” means the documents related to the Facilities defined as
the “Project Documents” in the Senior Credit Facilities.

 

“Facilities Parties” means each Person (other than the Borrower or the Parent
Company) who is a party to a Facilities Document.

 

“Final Completion Date” means with respect to the Aberdeen Expansion, the date
(which shall occur on or before the Conversion Date Certain) on which the
conditions in the Senior Credit Agreement have been satisfied, as certified by
each of the Borrower and the Independent Engineer in a Final Completion
Certificate.

 

“Final Completion Certificate” means (a) a certificate of the Independent
Engineer, (b) a certificate of the Borrower, in each case in the form required
by the Senior Credit Facilities and confirming that the Final Completion Date
has occurred.

 

“Financial Model” means the pro forma financial statements and projections of
revenue and expenses and cash flows with respect to the Borrower and the
Facilities for the period from September 1, 2007 through the Fiscal Year ended
December 31, 2022, attached to the Senior Credit Facilities, as the same may be
updated by the Borrower.

 

“Financial Officer” means, with respect to any Person, the controller, treasurer
or chief financial officer of such Person.

 

“Financing Documents” means the “Financing Documents” relating to the Senior
credit Facilities as defined in the Senior Credit Agreement together with the
Bond Documents.

 

“First Lien Agent” has the meaning provided in the Intercreditor Agreement.

 

“First Lien Claimholders” means, at any relevant time, the holders of First Lien
Obligations at such time, including the First Lien Lenders, the First Lien
Administrative Agent, the First Lien Agent, the Accounts Bank and Counterparties
under the First Lien Hedge Agreements as defined in the Intercreditor Agreement.

 

“Fiscal Year” means any period of twelve (12) consecutive calendar months ending
on September 30.

 

“Fiscal Quarter” means any quarter of a Fiscal Year.

 

16

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

 

“Funding Notice” means a request for funding of the Senior Credit Facilities for
a construction or working capital or upon conversion to the term loan as further
defined in the Senior Credit Agreement.

 

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

 

“Government Obligations” means direct obligations of the United States of
America and obligations on which the timely payment of principal and interest is
fully guaranteed by the United States of America.

 

“Governmental Approval” means any authorization, consent, approval, license,
lease, ruling, permit, certification, exemption, filing for registration by or
with any Governmental Authority.

 

“Governmental Authority” means any nation, state, sovereign, or government, any
federal, regional, state, local or political subdivision and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).

 

“Historical Debt Service Coverage Ratio” or “HDSCR” means, as of any Quarterly
Payment Date, for the four (4) Fiscal Quarters immediately preceding (and not
including the then-current Fiscal Quarter) such Quarterly Payment Date (or, if
less than four (4) Fiscal Quarters have elapsed since the Conversion Date, for
such number of full Fiscal Quarters that has elapsed since the Conversion Date),
the ratio of (i) Cash Flow Available for Debt Service during such period to (ii)
Debt Service on the Senior Credit Facilities or the Loan Agreement, as the case
may be, during such period.

 

“Huron Expansion” means the expansion of the Huron Facility if undertaken and if
financed in part by the Senior Lenders.

 

17

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

 

“Huron Facility” means the existing ethanol production facility owned by the
Borrower in Huron, South Dakota.

 

“Huron Grain Elevator Lease” means that certain Lease Agreement, dated as of
October 1, 2007, between the Borrower and South Dakota Wheat Growers
Association, relating to the grain elevator for the Huron Facility.

 

“Huron Ground Lease” means that certain Ground Lease, dated as of May 1, 1998,
between the Borrower as Lessee and Farmland Industries, Inc. as Lessor, as
assigned to Land O’Lakes Farmland Feed LLC (n/k/a Land O’Lakes Purina Feed LLC)
pursuant to an Assignment and Assumption of Ground Lease dated July 16, 2004,
and as amended by the First Amendment to Lease dated as of February 10, 2006,
between Land O’Lakes Purina Feed, LLC and the Borrower.

 

“Huron Senior Mortgage” means that certain Mortgage – One Hundred Eighty Day
Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits
made by the Borrower to the Collateral Agent for the benefit of the Senior
Lenders relating to the Huron Facility.

 

“Huron Subordinate Mortgage” means that certain, Subordinate Mortgage – One
Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents
and Security Deposits made by the Borrower to the Bond Trustee relating to the
Huron Facility.

 

“Huron Subordination, Non-Disturbance and Attornment Agreement” means that
certain Subordination, Non-Disturbance and Attornment Agreement, dated as of
October 1, 2007, among the Bond Trustee as mortgagee, the Borrower as lessee and
South Dakota Wheat Growers Association as mortgagor, in relation to the Huron
Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(g)                                 all obligations of such Person for or in
respect of moneys borrowed or raised, whether or not for cash by whatever means
(including acceptances, deposits, discounting, letters of credit, factoring, and
any other form of financing which is recognized in accordance with GAAP in such
Person’s financial statements as being in the nature of a borrowing or is
treated as “off-balance sheet” financing);

 

(h)                                 all obligations of such Person evidenced by
bonds, debentures, notes, loan agreements or other similar instruments;

 

(i)                                     all obligations of such Person for the
deferred purchase price of property or services;

 

(j)                                     all obligations of such Person under
conditional sale or other title retention agreements relating to property or
assets acquired by such Person (even though the

 

18

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

 

rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property or are otherwise
limited in recourse);

 

(k)                                  the maximum amount of all direct or
contingent obligations of such Person arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;

 

(l)                                     all Capitalized Lease Liabilities;

 

(m)                               net obligations of such Person under any Swap
Contract;

 

(n)                                 all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Equity
Interests in such Person or any other Person or any warrants, rights or options
to acquire such Equity Interests, valued, in the case of redeemable preferred
interests, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; and

 

(o)                                 all Guarantees of such Person in respect of
any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.

 

“Independent Engineer” means the engineer or other expert selected by the Senior
Lenders to review construction of the Aberdeen Expansion and draw requests for
proceeds of the Senior Loan and draw request for the proceeds of the Series
2007A Bonds.

 

“Independent Engineer Certificate” means a certificate of the Independent
Engineer substantially in the form of the “Independent Engineer’s Certificate
attached as Exhibit L to the Accounts Agreement.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
October 1, 2007 by and between the Borrower, the Parent Company, the
Administrative Agent and the Bond Trustee.

 

“Interest Fund” means the fund created in Section 4.3 hereof.

 

“Interest Payment Date” means with respect to the Series 2007A Bonds each
January 1 and July 1, commencing January 1, 2008; provided that, if such day
shall not be a Business Day, payment shall be made on the next succeeding
Business Day with the same force and effect as if made on the date such payment
was due.

 

“Interest Rate Protection Agreement” means each interest rate swap, collar, put,
or cap, or other interest rate protection arrangement, with a Qualified
Counterparty, in each such

 

19

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

 

case that is reasonably satisfactory to the Administrative Agent and is entered
into in accordance with the Senior Credit Facilities.

 

“Law” means, with respect to any Governmental Authority, any constitutional
provision, law, statute, rule, regulation, ordinance, treaty, order, decree,
judgment, decision, common law, holding, injunction, Governmental Approval or
requirement of such Governmental Authority. Unless the context clearly requires
otherwise, the term “Law” shall include each of the foregoing (and each
provision thereof) as in effect at the time in question, including any
amendments, supplements, replacements, or other modifications thereto or
thereof, and whether or not in effect as of the date of this Agreement.

 

“Leased Premises” means those certain leased premises described in the Huron
Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator
Lease.

 

“Letter of Representations” means the Blanket Issuer Letter of Representations
from the Issuer to DTC.

 

“Lien” means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, bailment, conditional sales or title retention
agreement, lien (statutory or otherwise), charge against or interest in
property, in each case of any kind, to secure payment of a debt or performance
of an obligation.

 

“Loan Agreement” means the Loan Agreement relating to the Series 2007A Bonds,
dated as of the date hereof, between the Borrower and the Issuer, as it may from
time to time be amended or supplemented.

 

“Local Account” means any local bank account (other than the Project Accounts
and the Bond Accounts) in the name of the Borrower.

 

“Maintenance Capital Expenses” means all expenditures by the Borrower for
regularly scheduled (or reasonably anticipated) major maintenance of the
Facilities, Prudent Ethanol Operating Practice and vendor and supplier
requirements constituting major maintenance (including teardowns, overhauls,
capital improvements, replacements and/or refurbishments of major components of
the Facilities).

 

“Mandatory Sinking Fund Redemption” has the meaning given such term in Section
5.1 hereof.

 

“Material Adverse Effect” means any event, development or circumstance that has
had or could reasonably be expected to have a material adverse effect on (i) the
business, assets, property, condition (financial or otherwise), prospects, or
operations of the Borrower or the Facilities taken as a whole, (ii) the ability
of the Borrower, any Pledgor, any Project Party or any party (other than a
Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement to
perform its material obligations under any Transaction Document to which it is a
party, (iii) creation, perfection or priority of the Liens granted, or purported
to be granted, in favor, or for the benefit, of the Collateral Agent pursuant to
the Security Documents or (iv) the rights or remedies of any Senior Secured
Party under any Financing Document.

 

20

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

 

“Materials of Environmental Concern” means chemicals, pollutants, contaminants,
wastes, toxic substances and hazardous substances, any toxic mold, radon gas or
other naturally occurring toxic or hazardous substance or organism and any
material that is regulated in any way, or for which liability is imposed,
pursuant to an Environmental Law.

 

“Maximum Annual Debt Service Requirement” means the largest total Debt Service
Requirements for the current or any succeeding Bond Year.

 

“Mortgaged Property” means all real property right, title and interest of the
Borrower that is subject to the Subordinate Mortgage.

 

“Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.

 

“Necessary Project Approvals” has the meaning set forth in the Senior Credit
Facilities.

 

“Net Worth” of any Person means, as of any given date, the aggregate of capital,
surplus and retained earnings (including any cumulative translation adjustment)
of such Person as would be shown on a consolidated balance sheet of such Person
prepared as of such date in accordance with generally accepted accounting
principles which may be in part established with respect to asset value by an
appraisal firm established in accordance with generally accepted accounting
principles.

 

“Obligations” means and includes all loans, advances, debts, liabilities,
Indebtedness and obligations, howsoever arising, owed to the Agents, the Lender
or any Senior Secured Party of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against the
Borrower of any Insolvency or Liquidation Proceeding naming the Borrower as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such (including the Interest Rate Protection Agreement),
proceeding, pursuant to the terms of this Agreement or any of the other
Financing Documents including all principal, interest, fees, charges, expenses,
attorneys’ fees, costs and expenses, accountants’ fees and Consultants’ fees
payable by the Borrower hereunder or thereunder.

 

“Officer’s Certificate” means a certificate signed, in the case of a certificate
delivered by a corporation, by the President, any Vice-President or any other
officer authorized to sign by resolution of the governing body of such
corporation or, in the case of a certificate delivered by any other Person, the
chief executive or chief financial officer of such other Person, in either case
whose authority to execute such Certificate shall be evidenced to the
satisfaction of the Bond Trustee for the purpose of this Bond Indenture.

 

“Operating Budget” means the operating budget required to be prepared pursuant
to the Senior Credit Facilities or the Loan Agreement, as the case may be.

 

“Operating Budget Category” means, at any time with respect to each Operating
Budget, each line item set forth in such Operating Budget in effect at such
time.

 

21

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

 

“Operating Statement” means an operating statement with respect to the
Facilities, in substantially the form required by the Senior Credit Facilties.

 

“Operation and Maintenance Expenses” means, for any period, the sum without
duplication of all (i) reasonable and necessary expenses of administering,
managing and operating, and generating Products for sale from, the Facilities
and maintaining it in good repair and operating condition, (ii)  costs
associated with the supply and transportation of all corn, natural gas,
electricity and other supplies and raw materials to the Facilities and
distribution and sale of Products from the Facilities that the Borrower is
obligated to pay, (iii) all reasonable and necessary insurance costs (other than
insurance premiums that are paid as costs of the Aberdeen Expansion), (iv)
property, sales and franchise taxes to the extent that the Borrower is liable to
pay such taxes to the taxing authority (other than taxes imposed on or measured
by income or receipts) to which the Facilities, may be subject (or payment in
lieu of such taxes to which the Facilities may be subject), (v) reasonable and
necessary costs and fees incurred in connection with obtaining and maintaining
in effect the Necessary Project Approvals, (vi) reasonable and arm’s-length
legal, accounting and other professional fees attendant to any of the foregoing
items during such period, (vii) the reasonable costs of administration and
enforcement of the Transaction Documents, (viii) costs incurred pursuant to the
Permitted Commodity Hedging Arrangements, and (ix) all other costs and expenses
included in the then-current Operating Budget. In no event shall cost of
Aberdeen Expansion or Maintenance Capital Expenses be considered Operation and
Maintenance Expenses.

 

“Outstanding” means, with respect to the Series 2007A Bonds, all Series 2007A
Bonds which have been duly authenticated and delivered by the Bond Trustee under
this Bond Indenture, except:

 

(a)                                  Series 2007A Bonds cancelled after purchase
in the open market or because of payment at or redemption prior to maturity;

 

(b)                                 Series 2007A Bonds for the payment or
redemption of which cash or Government Obligations shall have been theretofore
deposited with the Bond Trustee (whether upon or prior to the maturity or
redemption date of any such Series 2007A Bonds) in accordance with this Bond
Indenture; provided that if such Series 2007A Bonds are to be redeemed prior to
the maturity thereof, notice of such redemption shall have been given or
arrangements satisfactory to the Bond Trustee shall have been made therefor, or
waiver of such notice satisfactory in form to the Bond Trustee shall have been
filed with the Bond Trustee;

 

(c)                                  Series 2007A Bonds in lieu of which others
have been authenticated under this Bond Indenture; and

 

(d)                                 Series 2007A Bonds owned by the Borrower,
the Parent Company or affiliate thereof.

 

“Parent Company” means ABE Heartland, LLC, a Delaware limited liability company,
which currently owns, directly or indirectly, 100% of the Equity Interests in
the Borrower and its successors and assigns and any surviving, resulting or
transferee entity.

 

22

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

 

“Paying Agent” means the Bond Trustee and the bank or banks, if any, designated
pursuant to this Bond Indenture to receive and disburse the principal of and
interest and premium, if any, on the Series 2007A Bonds.

 

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.

 

“Permitted Commodity Hedging Arrangements” means those Commodity Hedging
Arrangements entered into by the Borrower in accordance with the provisions of
the Senior Credit Facilities.

 

“Permitted Liens” means Liens identified in the Senior Credit Facilities as
“Permitted Liens”.

 

“Permitted Tax Distribution” means, with respect to any distributee that is
required to pay tax as a result of its direct or indirect ownership of the
Borrower, an amount equal to forty percent (40%) of such distributee’s estimated
share of the taxable income of the Borrower (after netting or otherwise taking
account of a distributee’s shares of the income, loss, deduction and credit
associated with the distributee’s interest in the Borrower) that the distributee
is reasonably expected to have to report for income tax purposes for the Fiscal
Quarter distributed to the extent necessary to fund a distributee’s timely
payment to a Governmental Authority of tax liability (including estimated
payments thereof) and subject to correction as described below.

 

“Person” means any natural person, firm, joint venture, association,
partnership, business trust, corporation, public body, agency or political
subdivision thereof or any other separately existing agency.

 

“Plan” means an employee pension benefit plan (as defined in Section 3(3) of
ERISA) subject to Title IV of ERISA or Section 412 of the Code that is sponsored
or maintained by the Borrower or any ERISA Affiliate, or in respect of which the
Borrower or any ERISA Affiliate has any obligation to contribution or liability.

 

“Proceeds” means (a) if the first offering price of the Series 2007A Bonds minus
the compensation paid to the underwriter (the “Net Price”) is equal to or
greater than 98% of the aggregate principal amount of the Series 2007A Bonds, an
amount equal to the original aggregate principal amount of the Series 2007A
Bonds or (b) if the net price is less than 98% of the original aggregate
principal amount of the Series 2007A Bonds, an amount equal to the net price.

 

“Products” means ethanol, Distillers Grains, and any other co product or
by-product produced in connection with the production of ethanol at the Project.

 

“Project” means the improvements, modifications, expansions and equipment
purchases to be made for the Aberdeen Facility which constitute Solid Waste
Facilities, the cost of which are to be financed, in whole or in part, with a
portion of the proceeds of the Series 2007A Bonds, the plans and specifications
for which are on file with the Borrower.

 

23

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

 

“Project Accounts” has the meaning provided in Section 1.01 of the Accounts
Agreement.

 

“Project Fund” means the fund created in Section 3.3 hereof.

 

“Prospective Debt Service Coverage Ratio” or “PDSCR” means, for any Quarterly
Payment Date, for the Fiscal Quarter including such Quarterly Payment Date and
the three (3) Fiscal Quarters immediately following such Quarterly Payment Date,
the ratio of (i) Cash Flow Available for Debt Service projected for such period
to (ii) Debt Service on the Senior Credit Facilities or the Loan Agreement, as
the case may be, projected for such period, in each case based on the
then-current Operating Budget approved in accordance with the Senior Credit
Facilities, as the same has been updated (if necessary) to reflect the
then-current projections for commodity prices.

 

“Prudent Ethanol Operating Practice” means those reasonable practices, methods
and acts that (i) are commonly used in the region where the Facilities is
located to manage, operate and maintain ethanol production, distribution,
equipment and associated facilities of the size and type that comprise the
Facilities safely, reliably, and efficiently and in compliance with applicable
Laws, manufacturers’ warranties and manufacturers’ and licensor’s
recommendations and guidelines, and (ii) in the exercise of reasonable judgment,
skill, diligence, foresight and care are expected of an ethanol plant operator,
in order to efficiently accomplish the desired result consistent with safety
standards, applicable Laws, manufacturers’ warranties, manufacturers’
recommendations and, in the case of the Facilities, the Project Documents.
Prudent Ethanol Operating Practice does not necessarily mean one particular
practice, method, equipment specifications or standard in all cases, but is
instead intended to encompass a broad range of acceptable practices, methods,
equipment specifications and standards.

 

“Quarterly Payment Date” means each March 31, June 30, September 30 and December
31.

 

“Purchase Contract” means the contract for the purchase of the Series 2007A
Bonds among the Issuer, the Borrower and the purchasers named therein.

 

“Rebate Fund” means the Rebate Fund created by Section 3.4 of this Bond
Indenture.

 

“Record Date” means the fifteenth day of the month (whether or not a Business
Day) next preceding an Interest Payment Date.

 

“Redemption Fund” means the fund created in Section 4.6 hereof.

 

“Registrar” means the Bond Trustee as bond registrar for the Series 2007A Bonds.

 

“Required Cash Sweep” means each mandatory prepayment of the Loans made pursuant
to Section 3.10 (Mandatory Prepayment) of the Senior Credit Facilities.

 

“Restricted Payments” means any (a) dividend or other distribution (whether in
cash, securities or other property), or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption,

 

24

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

 

retirement, defeasance, acquisition, cancellation or termination of any Equity
Interests of the Borrower, or on account of any return of capital to any holder
of any such Equity Interest in, or any other Affiliate of, the Borrower, or any
option, warrant or other right to acquire any such dividend or other
distribution or payment, (b) any payment of fees (other than corporate overhead
costs, expenses or any other payments pursuant to the Administrative Services
Agreement) for any management, consultancy or administrative services, to any
Person who owns, directly or indirectly, any Equity Interest in the Borrower, or
any Affiliate of any such Person, or (c) any payment of indemnification
obligations pursuant to the Borrower L.P. Agreement; provided that any Permitted
Tax Distributions shall not constitute Restricted Payments.

 

“Revenue Fund” means the fund created by Section 4.2 of this Bond Indenture.

 

“Senior Credit Agreement” means that certain Credit Agreement, dated as of
October 1, 2007, among the Borrower, each of the lenders from time to time party
thereto, the Administrative Agent, WestLB AG, New York Branch, as collateral
agent, issuing bank, lead arranger, sole book runners and syndicate agent.

 

“Senior Credit Facilities” means the construction loan, the term loan, and the
working capital loan to be made by the Senior Lenders to the Borrower to finance
a portion of the Expansions and to refinance certain existing debt of the
Borrower relating to the Facilities, which are secured by the Senior Mortgage,
the Senior Security Agreement and the Senior Equity Pledge Agreement.

 

“Senior Equity Pledge Agreement” means that certain Pledge and Security
Agreement dated as of October 1, 2007 by and among the Parent Company, ABE
Heartland, LLC and the collateral agent set forth therein, as amended or
supplemented from time to time.

 

“Senior Lenders” means WestLB and the other lenders from time to time party to
the loan agreement in respect of the Senior Credit Agreement.

 

“Senior Mortgage” means the Aberdeen Senior Mortgage and the Huron Senior
Mortgage.

 

“Senior Secured Parties” means the Lenders, the Agents and any Interest Rate
Protection Provider as defined in the Credit Agreement.

 

“Senior Security Agreement” means that certain Assignment and Security Agreement
dated September, 2007 from the Borrower to the Senior Lenders, as amended or
supplemented from time to time.

 

“Series 2007A Bonds” means the Brown County, South Dakota Subordinate Solid
Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant
Project), Series 2007A, to be issued by the Issuer pursuant to the terms and
conditions of this Bond Indenture.

 

“Site” means, with respect to each Facility those certain parcels described in
the Senior Credit Facilities with respect to such Facility.

 

25

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

 

“SNDAs” means each of the Aberdeen Subordination, Non-Disturbance and Attornment
Agreement and the Huron Subordination, Non-Disturbance and Attornment Agreement.

 

“Solid Waste Disposal Facilities” means “Solid Waste Disposal Facilities” as
defined by the Code and regulations thereunder for the purposes of Section
142(a)(6) of the Code.

 

“S&P” means Standard &Poor’s Rating Group.

 

“Special Interest Payment Date” means the date, which need not be an Interest
Payment Date, fixed by the Bond Trustee pursuant to the Bond Indenture for the
payment of Defaulted Interest to Holders as of the Special Record Date.

 

“Special Record Date” means the fifteenth day (whether or not a Business Day)
before a Special Interest Payment Date.

 

“State” means the State of South Dakota.

 

“Subordinate Equity Pledge Agreement” means that certain Subordinate Pledge and
Security Agreement dated as of October 1, 2007 among the Parent Company, Dakota
Fuels, the Borrower and the Bond Trustee as amended or supplemented from time to
time.

 

“Subordinate Mortgage” means the Aberdeen Subordinate Mortgage and the Huron
Subordinate Mortgage.

 

“Subordinate Security Agreement” means that certain Subordinate Assignment and
Security Agreement dated as of October 1, 2007 from the Borrower to the Bond
Trustee as amended or supplemented from time to time.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, (b) any and all transactions of
any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement, including any such
obligations or liabilities under any such master agreement and (c) for the
avoidance of doubt, includes the Permitted Commodity Hedging Arrangements and
any Interest Rate Protection Agreements and excludes any contract for the
physical sale or purchase of any commodity.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts
(including any Permitted Commodity Hedging Arrangements or any Interest Rate
Protection Agreements), after taking into account the effect of any legally
enforceable netting agreement

 

26

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

 

relating to such Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, in accordance with the terms of the applicable
Swap Contract, or, if no provision is made therein, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

 

“Tax” or “Taxes” means any present or future taxes (including income, gross
receipts, license, payroll, employment, excise, severance, stamp, documentary,
occupation, premium, windfall profits, environmental, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration,
value-added, ad valorem, alternative or add-on minimum, estimated, or other tax
of any kind whatsoever), levies, imposts, duties, fees or charges (including any
interest, penalty, or addition thereof) imposed by any government or any
governmental agency or instrumentality or any international or multinational
agency or commission.

 

“Tax Exemption Agreement” means that certain Tax Exemption Agreement and
Certificate, dated the date of delivery of the Series 2007A Bonds, among the
Borrower, the Issuer, the Bond Trustee and the Accounts Bank.

 

“Taxable Rate” means that variable rate of interest which adjusts the first day
of each calendar quarter in each year (January 1, April 1, July 1 and October 1)
and is equal to the sum of (i) the rate of interest published as the London
Interbank Offered Rate (LIBOR) with a term of three (3) months as of the first
day of each calendar quarter or following Business Day if such first day is not
a Business Day, and (ii) plus 350 basis points.

 

“Termination Event” means (i) a reportable event within the meaning of Section
4043(c) of ERISA with respect to any Plan, (ii) the initiation of any action by
the Borrower, any ERISA Affiliate or any Plan fiduciary to terminate any Plan
(other than a standard termination under Section 4041(b) of ERISA) or the
treatment of an amendment to any Plan as a termination under Section 4041(e) of
ERISA, (iii) the institution of proceedings by the PBGC under Section 4042 of
ERISA to terminate any Plan or to appoint a trustee to administer any Plan,
(iv) the withdrawal of the Borrower or any ERISA Affiliate from any
Multiemployer Plan during a plan year in which the Borrower or such ERISA
Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA
or the cessation of operations which results in the termination of employment of
twenty percent (20%) of any Multiemployer Plan participants who are employees of
the Borrower or any ERISA Affiliate, (v) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from any Multiemployer Plan, or (vi) the
Borrower or any ERISA Affiliate is in default (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to any Multiemployer Plan.

 

“Title Continuation” means a written notice issued by the title insurance
company (including their local title insurance abstractors) confirming the
status of title as set forth in the Title Insurance Policy, which indicates
that, there has been no change in the title of title to the Mortgaged Property
and no Liens or survey exceptions (in the case of any updated or “as-built”
survey that has been issued) not theretofore approved by the Senior Lenders,
which written

 

27

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

 

notice shall contain no recorded mechanic’s liens except as approved by the
Required Lenders or as otherwise subject to a Contest.

 

“Transaction Documents” means, collectively, the Financing Documents and the
Facilities Documents.

 

“Trust Estate” means the trust estate defined in the granting clauses hereof.

 

“Unassigned Rights” means the right of the Issuer to receive payment of its fees
and expenses, the Issuer’s right to indemnification under the Loan Agreement,
the Issuer’s right to execute and deliver supplements and amendments to the Loan
Agreement.

 

“Unfunded Benefit Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all accrued benefits
calculated on an accumulated benefit obligation basis and based upon the
actuarial assumptions used for accounting purposes (i.e., those determined in
accordance with FASB statement No.35 and used in preparing the Plan’s financial
statements) exceeds (ii) the fair market value of all Plan assets allocable to
such benefits, determined as of the then most recent actuarial valuation report
for such Plan.

 

“Written Request” means, with respect to the Issuer, a request in writing by the
Chairman, County Auditor or other authorized officer of the Issuer; with respect
to the Bond Trustee, a request in writing signed by an authorized officer of the
Bond Trustee; with respect to the Borrower or the Parent Company, a request in
writing signed by the Chief Executive Officer, President, Chief Financial
Officer or any Vice President of the Borrower or the Parent Company, and with
respect to the issuer, the Bond Trustee, the Borrower and the Parent Company, as
the case may be, any other officers designated to sign such requests by official
action of the appropriate entity.

 

Section 1.2                         Interpretation. Words of the masculine
gender shall be deemed and construed to include correlative words of the
feminine and neuter genders. Unless the context shall otherwise indicate, words
importing the singular number shall include the plural and vice versa. All
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles. Headings of
articles and sections herein and the table of contents hereof are solely for
convenience of reference, do not constitute a part hereof and shall not affect
the meaning, construction or effect hereof. All references in this Bond
Indenture to designated “Articles”, “Sections” and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Bond Indenture as
originally executed. The words “herein”, “hereof” and “hereunder” and other
words of similar import refer to this Bond Indenture as a whole and not to any
particular Article, Section or other subdivision unless the context indicates
otherwise.

 

28

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

 

ARTICLE II

 

THE SERIES 2007A BONDS

 

Section 2.1                         Authorized Amount of Series 2007A Bonds. No
bonds may be issued under the provisions of this Bond Indenture except in
accordance with this Article. The total principal amount of Series 2007A Bonds
that may be issued is hereby expressly limited to $19,000,000

 

Section 2.2                         Issuance of Series 2007A Bonds. The Series
2007A Bonds shall be designated “Brown County, South Dakota Subordinate Solid
Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant
Project), Series 2007A”.

 

The Series 2007A Bonds shall be issuable only as registered bonds in the
denominations of $5,000 and integral multiples thereof. Unless the Issuer shall
otherwise direct, the Series 2007A Bonds shall be numbered from R-1 upward. The
CUSIP number of 115433AA2 shall be set forth on the Bond.

 

The Series 2007A Bonds shall be dated as of the date of issuance and delivery
thereof, shall bear interest at the rate of eight and one-quarter percent
(8.25%) per annum (except to the extent to which the Bonds bear interest at the
Taxable Rate pursuant to Section 5.1 hereof), calculated on the basis of a
360-day year of twelve 30-day months, payable on each Interest Payment Date, and
shall mature on January 1, 2017 and be subject to Mandatory Sinking Fund
Redemption as set forth in Section 5.2 hereof on January 1 in the years and in
the amounts as follows:

 

Principal
Amount

 

Due in
the Year

 

$

5,840,000.00

 

2016

 

6,320,000.00

 

2017

 

6,840,000.00

 

2018

*

 

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

* Final Maturity

 

Each Series 2007A Bond shall, except as provided in this Section 2.2, bear
interest from the Interest Payment Date next preceding the date of
authentication of such Series 2007A Bond to which interest on the Series 2007A
Bonds has been paid, unless (i) such date of authentication is an Interest
Payment Date to which interest has been paid, in which case from such Interest
Payment Date, (ii) such date of authentication is after the Record Date with
respect to an Interest Payment Date and prior to such Interest Payment Date, in
which case from such Interest Payment Date or (iii) no interest has been paid on
the Series 2007A Bonds, in which case from the date of issuance and delivery
thereof.

 

The person in whose name any Series 2007A Bond is registered at the close of
business on any Record Date with respect to any Interest Payment Date shall be
entitled to receive the

 

29

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

 

interest payable on such Interest Payment Date notwithstanding any registration
of transfer or exchange subsequent to such Record Date and prior to such
Interest Payment Date.

 

The principal of and interest on the Series 2007A Bonds shall be payable in any
currency of the United States of America which, at the respective dates of
payment thereof, is legal tender for the payment of public and private debts and
such principal shall be payable upon presentation at the principal corporate
trust office of the Bond Trustee. Payment of the interest on any Series 2007A
Bond shall be made to the Person appearing on the Bond Register as the
Registered Owner thereof as of the close of business of the Bond Trustee on the
Record Date for such interest payment and shall be paid (i) by check or draft of
the Bond Trustee mailed on the applicable Interest Payment Date to the
registered owner at such owner’s address as it appears on the Bond Register or
at such other address as is furnished to the Bond Trustee in writing by such
Owner not less than 15 days prior to the Interest Payment Date or (ii) as to any
Owner of $1,000,000 or more in aggregate principal amount of the Series 2007A
Bonds who so elects, by wire transfer of funds to such wire transfer address
within the continental United States as the Registered Owner shall have
furnished in writing to the Bond Trustee no later than the Record Date, which
wire instructions shall remain in effect until Bond Trustee is notified to the
contrary.

 

Defaulted Interest with respect to any Series 2007A Bond shall cease to be
payable to the Owner of such Series 2007A Bond on the relevant Record Date and,
except as hereinafter provided, shall be payable to the Owner in whose name such
Series 2007A Bond is registered at the close of business of the Bond Trustee on
the Special Record Date for the payment of such Defaulted Interest, which
Special Record Date shall be fixed in the following manner. The Borrower shall
notify the Bond Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Series 2007A Bond and the date of the proposed payment (which
date shall be such, as will enable the  Bond Trustee to comply with the next
sentence hereof) and, at the same time, the Borrower or the Obligated Group
shall deposit with the Bond Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Bond Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for the
benefit of the owners of the Series 2007A Bonds entitled to such Defaulted
Interest as provided in this Section. Following receipt of such funds, the Bond
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which date will be fifteen (15) days prior to the date of the proposed
payment. The Bond Trustee shall promptly notify the Borrower of such Special
Record Date and, in the name and at the expense of the Borrower, shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, not less than 10 days
prior to such Special Record Date to each Owner of a Series 2007A Bond entitled
to such notice at the address of such Owner as it appears on the Bond Register.
Such Defaulted Interest shall be paid to the Owners of the Series 2007A Bonds in
whose names the Series 2007A Bonds on which such Defaulted Interest is to be
paid are registered on such Special Record Date.

 

Section 2.3                         Execution; Limited Obligation. The Series
2007A Bonds shall be executed on behalf of the Issuer by the manual or facsimile
signature of the Chair of the County Commission and attested by the manual or
facsimile signature of (or such other officer as may be designated by the
Issuer), shall have impressed or printed by facsimile thereon the corporate seal
of the Issuer, if required by law, and shall be countersigned by an attorney
actually residing in

 

30

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

 

the State and duly licensed to practice in the State. The facsimile signatures
of said officers shall have the same force and effect as if such officers had
manually signed each of said Series 2007A Bonds. In case any officer whose
signature or facsimile signature shall appear on the Series 2007A Bonds shall
cease to be such officer before the delivery of such Series 2007A Bonds, such
signature or facsimile signature shall nevertheless be valid and sufficient for
all purposes, the same as if he had remained in office until delivery.

 

The Series 2007A Bonds shall be limited obligations of the Issuer payable solely
from (a) amounts payable under the Loan Agreement (except for Unassigned
Rights), (b) amounts derived from the enforcement of the Bond Collateral
Documents (except for amounts with respect to Unassigned Rights) amounts on
deposit in the funds to the extent herein provided and (c) income from the
temporary investment of any of the foregoing. So long as the Senior Credit
Facilities are outstanding, all funds available to the Borrower to make loan
repayments (including Unassigned Rights) and all amounts derived from the
enforcement of the Bond Collateral Documents are subject to prior liens in favor
of the Senior Lenders and are subject to the provisions of the Accounts
Agreements ant the Intercreditor Agreement. The Series 2007A Bonds shall be a
valid claim of the respective Owners thereof only against the funds established
under this Bond Indenture and other moneys held by the Bond Trustee for the
benefit of the Series 2007A Bonds and the payments  due or to become due upon or
under the Loan Agreement (except for Unassigned Rights), all of which are hereby
assigned and pledged hereunder for the equal and ratable payment of the Series
2007A Bonds and shall be used for no other purpose than to pay the principal of,
premium, if any, and interest on the Series 2007A Bonds, except as may be
otherwise expressly authorized in this Bond Indenture. The Series 2007A Bonds do
not constitute a debt or liability of the State or of any political subdivision
thereof or a pledge of the faith and credit of the State or any political
subdivision thereof. The issuance of the Series 2007A Bonds under the provisions
of the Act does not, directly, indirectly or contingently, obligate the State or
any political subdivision thereof to levy any form of taxation for the payment
thereof or to make any appropriation for their payment, and such Series 2007A
Bonds and interest payable thereon do not now and shall never constitute a debt
of the State or any political subdivision thereof within the meaning of the
Constitution or the statutes of the State and do not now and shall never
constitute a charge against the credit or taxing power of the State or any
political subdivision thereof. Neither the State nor any political subdivision
thereof shall in any event be liable for the payment of the principal of or
interest on the Series 2007A Bonds or for the performance of any pledge,
obligation or agreement of any kind whatsoever which may be undertaken by the
Issuer. No breach by the Issuer of any such pledge, obligation or agreement may
impose any liability, pecuniary or otherwise, upon the State or any political
subdivision thereof. No covenant or agreement in the Series 2007A Bonds or in
this Bond Indenture and no obligation herein imposed upon the Issuer and no
breach thereof shall constitute or give rise to or impose upon the Issuer a
general liability or a charge upon its general credit or property other than the
trust estate, as provided herein.

 

Section 2.4                         Authentication. No Series 2007A Bond shall
be valid or obligatory for any purpose or entitled to any security or benefit
under this Bond Indenture unless and until a certificate of authentication on
such Series 2007A Bond shall have been duly executed by the Bond Trustee, and
such executed certificate of the Bond Trustee upon any such Series 2007A Bond
shall be conclusive evidence that such Series 2007A Bond has been authenticated
and delivered under this Bond Indenture. The Bond Trustee’s certificate of
authentication on any

 

31

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

 

Series 2007A Bond shall be deemed to have been executed by it if signed by an
authorized officer or signatory of the Bond Trustee, but it shall not be
necessary that the same officer or signatory sign the certificate of
authentication on all of the Series 2007 Bonds issued hereunder.

 

Section 2.5                         [Intentionally Deleted]

 

Section 2.6                         Form of Bonds and Temporary Bonds. The
Series 2007A Bonds shall be substantially in the form set forth in Exhibit A
hereto with such appropriate variations, omissions and insertions as are
permitted or required by this Bond Indenture or deemed necessary by the Bond
Trustee and the Issuer.

 

Series 2007A Bonds may be initially issued in temporary form exchangeable for
definitive Series 2007A Bonds when ready for delivery. The temporary Series
2007A Bonds shall be of such denomination or denominations as may be determined
by the Issuer and may contain such reference to any of the provisions of this
Bond Indenture as may be appropriate. Every temporary Series 2007A Bond shall be
executed by the Issuer and be authenticated by the Bond Trustee upon the same
conditions and in substantially the same manner as the definitive Series 2007A
Bonds. If the Issuer issues temporary Series 2007A Bonds, it will execute and
furnish definitive Series 2007A Bonds without delay and thereupon the temporary
Series 2007A Bonds may be surrendered for cancellation in exchange therefor at
the principal corporate trust office of the Bond Trustee, and the Bond Trustee
shall authenticate and deliver in exchange for such temporary Series 2007A Bonds
an equal aggregate principal amount of definitive Series 2007A Bonds of the same
Series and maturity of authorized denominations. Until so exchanged, the
temporary Series 2007A Bonds shall be entitled to the same benefits under this
Bond Indenture as definitive Series 2007A Bonds authenticated and delivered
hereunder.

 

Section 2.7                         Delivery of Series 2007A Bonds. Upon the
execution and delivery of this Bond Indenture, the Issuer shall execute and
deliver to the Bond Trustee and the Bond Trustee shall authenticate the Series
2007A Bonds and deliver them to the purchasers as may be directed by the Issuer
as hereinafter in this Section 2.7 provided.

 

Prior to the delivery by the Bond Trustee of any of the Series 2007A Bonds there
shall be filed with or delivered to the Bond Trustee and the Issuer:

 

(a)                                  a copy, duly certified by the Chair of the
County Commission or the County Auditor of the Issuer, of the resolutions
adopted and approved by the Issuer authorizing the execution and delivery of the
Purchase Contract, the Loan Agreement, this Bond Indenture, and the Tax
Exemption Agreement and the issuance and sale of the Series 2007A Bonds;

 

(b)                                 copies, duly certified by the Secretary or
an Assistant Secretary of the Borrower of the resolutions adopted and approved
by the Borrower authorizing the execution of or approving the, the Loan
Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the
Subordinate Equity Pledge Agreement and the Tax Exemption Agreement and
approving this Bond Indenture and the issuance and sale of the Series 2007A
Bonds;

 

(c)                                  an original executed counterpart of this
Bond Indenture, the Loan Agreement, the Subordinate Mortgage, the Subordinate
Security Agreement, the Subordinate Equity Pledge Agreement and the Tax
Exemption Agreement;

 

32

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

 

(d)                                 a request and authorization to the Bond
Trustee on behalf of the Issuer and signed by its Chair (or such other officer
as may be designated by the Issuer) to authenticate and deliver the Series 2007A
Bonds to the purchasers therein identified upon payment to the Bond Trustee, but
for the account of the Issuer, of the net proceeds from the sale of the Series
2007A Bonds;

 

(e)                                  the approving opinion of Bond Counsel;

 

(f)                                    an opinion of counsel to the Borrower as
to the valid authorization, execution and delivery of the Loan Agreement and
other related documents and as to such other matters as reasonably requested;
and

 

(g)                                 such other closing documents and opinions of
counsel as the Bond Trustee or the Issuer may reasonably specify.

 

Section 2.8                         Mutilated, Lost, Stolen or Destroyed Series
2007A Bonds. In the event any temporary or definitive Series 2007A Bond is
mutilated, lost, stolen or destroyed, the Issuer may execute and the Bond
Trustee may authenticate a new Series 2007A Bond of like form, date, maturity
and denomination as that mutilated, lost, stolen or destroyed; provided that, in
the case of any mutilated Series 2007A Bond, such mutilated Series 2007A Bond
shall first be surrendered to the Bond Trustee, and in the case of any lost,
stolen or destroyed Series 2007A Bond, there shall be first furnished to the
Issuer and the Bond Trustee evidence of such loss, theft or destruction
satisfactory to the Issuer and the Bond Trustee, together with indemnity
satisfactory to them. In the event any such Series 2007A Bond shall have
matured, instead of issuing a replacement Series 2007A Bond the Issuer may pay
the same without surrender thereof. The Issuer and the Bond Trustee may charge
the holder or owner of such Series 2007A Bond with their reasonable fees and
expenses in this connection.

 

Section 2.9                         Bond Register; Transfer and Exchange of
Series 2007A Bonds; Persons Treated as Owners. The Bond Register shall be kept
by the Bond Trustee at its principal corporate trust office. At reasonable times
and under reasonable regulations established by the Bond Trustee, the Bond
Register may be inspected and copied by the Issuer.

 

Upon surrender for registration of transfer of any Series 2007A Bond at the
principal corporate trust office of the Bond Trustee, the Issuer shall execute
and the Bond Trustee shall authenticate and deliver in the name of the
transferee or transferees a new fully registered Series 2007A Bond or Series
2007A Bonds of the same maturity and of authorized denomination for the
aggregate principal amount which the Registered Owner is entitled to receive.
Any Series 2007A Bond or Series 2007A Bonds may be exchanged at said office of
the Bond Trustee for a like aggregate principal amount of Series 2007A Bond or
Series 2007A Bonds of the same maturity of other authorized denominations. The
execution by the Issuer of any Series 2007A Bond shall constitute full and due
authorization of such Series 2007A Bond, and the Bond Trustee shall thereby be
authorized to authenticate, date and deliver such Series 2007A Bond.

 

All Series 2007A Bonds presented for registration of transfer or exchange shall
be accompanied by a written instrument or instruments of transfer or
authorization for exchange, in

 

33

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

 

form and with guaranty of signature satisfactory to the Bond Trustee, duly
executed by the Registered Owner or by such Owner’s duly authorized attorney.

 

No service charge shall be imposed for any exchange or registration of transfer
of Series 2007A Bonds. The Issuer and the Bond Trustee may, however, require
payment by the person requesting an exchange or registration of transfer of
Series 2007A Bonds of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto, except in the case
of the issuance of a Series 2007A Bond or Series 2007A Bonds for the unredeemed
portion of a Series 2007A Bond surrendered for redemption.

 

The Issuer and the Bond Trustee shall not be required to register the transfer
of or exchange any Series 2007A Bond after notice calling such Series 2007A Bond
or portion thereof for redemption has been given or during the 15-day period
next preceding the first mailing of such notice of redemption of Series 2007A
Bonds of the same maturity.

 

New Series 2007A Bonds delivered upon any registration of transfer or exchange
shall be valid obligations of the Issuer, evidencing the same debt as the Series
2007A Bonds surrendered, shall be secured by this Bond Indenture and shall be
entitled to all of the security and benefits hereof to the same extent as the
Series 2007A Bond surrendered.

 

The Issuer and the Bond Trustee may treat the Registered Owner of any Series
2007A Bond as the absolute owner thereof for all purposes, whether or not such
Series 2007A Bond shall be overdue, and shall not be bound by any notice, actual
or constructive, to the contrary. All payments of or on account of the principal
of and premium, if any, and interest on any such Series 2007A Bond as  herein
provided shall be made only to or upon the written order of the registered owner
thereof or his legal representative, but such registration may be changed as
herein provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Series 2007A Bond to the extent of the sum or
sums so paid.

 

Section 2.10                  Cancellation. Any Series 2007A Bond surrendered
for the purpose of payment or retirement or for exchange or registration of
transfer or for replacement pursuant to Section 2.8 or Section 2.9 hereof, shall
be cancelled upon surrender thereof to the Bond Trustee or any Paying Agent. If
the Issuer or the Borrower shall acquire any of the Series 2007A Bonds, the
Issuer or the Borrower shall deliver such Series 2007A Bonds to the Bond Trustee
for cancellation and the Bond Trustee shall cancel the same. Any such Series
2007A Bonds cancelled by any Paying Agent other than the Bond Trustee shall be
promptly transmitted by such Paying Agent to the Bond Trustee. A certificate
identifying all Series 2007A Bonds so cancelled shall be delivered by the Bond
Trustee to the Issuer and to the Borrower. Cancelled Series 2007A Bonds may be
destroyed by the Bond Trustee unless instructions to the contrary are received
from the Issuer or the Borrower.

 

Section 2.11                  Book-Entry Only System. The Series 2007A Bonds
shall be initially issued in the form of a separate single fully registered Bond
for each of the maturities thereof. Upon initial issuance, the ownership of each
such Series 2007A Bond shall be registered in the Bond Register in the name of
Cede & Co., as nominee of DTC, and except as provided in Section 2.12 hereof,
all of the outstanding Series 2007A Bonds shall be registered in the Bond
Register in the name of Cede & Co., as nominee of DTC.

 

34

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

 

With respect to Series 2007A Bonds registered in the Bond Register in the name
of Cede & Co., as nominee of DTC, the Issuer, the Bond Trustee and the Borrower
shall have no responsibility or obligation to any DTC Participant or to any
person on behalf of whom such a DTC Participant holds an interest in the Series
2007A Bonds. Without limiting the immediately preceding sentence, the Issuer,
the Bond Trustee and the Borrower shall have no responsibility or obligation
with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC
Participant with respect to any ownership interest in the Series 2007A Bonds,
(ii) the delivery to any DTC Participant or any other Person, other than a
Bondholder, as shown in the Bond Register, of any notice with respect to the
Series 2007A Bonds, including any notice of redemption, (iii) the payment to any
DTC Participant or any other Person, other than a Bondholder, as shown in the
Bond Register, of any amount with  respect to principal of or interest on, the
Series 2007A Bonds or (iv) any consent given by DTC as registered owner. So long
as the certificates for the Series 2007A Bonds are not issued pursuant to
Section 2.12 hereof, the Issuer and the Bond Trustee may treat DTC or any
successor securities depository as, and deem DTC or any successor securities
depository to be, the absolute owner of the Series 2007A Bonds for all purposes
whatsoever, including without limitation (i) the payment of principal, premium,
if any, and interest on the Series 2007A Bonds, (ii) giving notice of redemption
and other matters with respect to the Series 2007A Bonds, (iii) registering
transfers with respect to the Series 2007A Bonds and (iv) the selection of
Series 2007A Bonds for redemption. Notwithstanding any other provision of this
Bond Indenture to the contrary, the Issuer, the Bond Trustee and any Paying
Agent shall be entitled to treat and consider the Person in whose name each
Series 2007A Bond is registered in the Bond Register as the absolute owner of
such Series 2007A Bond for the purpose of payment of principal, premium, if any,
and interest with respect to such Series 2007A Bond, for the purpose of giving
notices of redemption and other matters with respect to such Series 2007A Bond,
for the purpose of registering transfers with respect to such Series 2007A Bond,
and for all other purposes whatsoever. The Bond Trustee and any Paying Agent
shall pay all principal of, premium, if any, and interest on the Series 2007A
Bonds only to or upon the order of the respective Bondholders, as shown in the
Bond Register as provided in this Bond Indenture, or their respective attorneys
duly authorized in writing, and all such payments shall be valid and effective
to fully satisfy and discharge the Issuer’s obligations with respect to payment
of principal of and interest on the Series 2007A Bonds to the extent of the sum
or sums so paid. No Person other than a Bondholder, as shown in the Bond
Register, shall receive a Series 2007A Bond certificate evidencing the
obligation of the Issuer to make payments of principal, premium, if any, and
interest pursuant to this Bond Indenture. Upon delivery by DTC to the Bond
Trustee of written notice to the effect that DTC has determined to substitute a
new nominee in place of Cede & Co., and subject to the provisions in this Bond
Indenture with respect to interest checks or drafts being mailed to the
registered owner at the close of business on the Record Date, the word “Cede &
Co.” in this Bond Indenture shall refer to such new nominees of DTC; and upon
receipt of such a notice the Bond Trustee shall promptly deliver a copy of the
same to any Paying Agent. Except as provided in Section 2.12 hereof, the Series
2007A Bonds may be transferred, in whole but not in part, only to DTC or to Cede
& Co., or to a successor securities depository selected or approved by the
Issuer or to a nominee of such successor securities depository. If at any time
DTC notifies the Issuer that it is unwilling or unable to continue as securities
depository with respect to the Series 2007A Bonds, or if at any time DTC shall
no longer be registered or in good standing under the Securities  Exchange Act
of 1934, as amended, or other applicable statute or regulation and a

 

35

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

 

successor securities depository is not appointed by the Issuer within 90 days
after the Issuer receives notice or becomes aware of such condition, as the case
may be, then the Issuer shall execute and the Bond Trustee shall authenticate
and deliver certificates representing the Series 2007A Bonds as provided in
Section 2.12.

 

Section 2.12                  Successor Securities Depository; Transfers Outside
Book-Entry Only System. The Bondholders have no right to a depository for the
Series 2007A Bonds. The Issuer or the Bond Trustee may remove DTC or any
successor thereto for cause at any time. In such event, the Issuer shall (i)
appoint a successor securities depository, qualified to act as such under
Section 17A of the Securities and Exchange Act of 1934, as amended, notify DTC
and DTC Participants of the appointment of such successor securities depository
and transfer one or more separate Series 2007A Bond certificates to such
successor securities depository or (ii) notify DTC and DTC Participants of the
availability through DTC of Series 2007A Bond certificates and transfer one or
more separate Series 2007A Bond certificates to DTC Participants having Series
2007A Bonds credited to their DTC accounts. In such event, the Series 2007A
Bonds shall no longer be restricted to being registered in the Bond Register in
the name of Cede & Co., as nominee of DTC, but may be registered in the name of
the successor securities depository, or its nominee, or in whatever name or
names Bondholders transferring or exchanging Series 2007A Bonds shall designate,
in accordance with the provisions of this Bond Indenture.

 

The Issuer has executed the Letter of Representations in connection with the
issuance of its bonds. The Letter of Representations is for the purpose of
effectuating the book-entry only system of DTC and shall not be deemed to amend,
supersede or supplement the terms of this Bond Indenture which are intended to
be complete without reference to the Letter of Representations. In the event of
any conflict between the terms of the Letter of Representations and the terms of
this Bond Indenture, the terms of this Bond Indenture shall control. DTC may
exercise the rights of a Bondholder hereunder only in accordance with the terms
hereof applicable to the exercise of such rights.

 

Section 2.13                  Payments and Notices to Cede & Co. Notwithstanding
any other provision of this Bond Indenture to the contrary, so long as a Series
2007A Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of, premium, if any, and interest on such
Series 2007A Bond and all notices with respect to such Bond shall be made and
given, respectively, in the manner provided in the Letter of Representations.
The Bond Trustee shall request in each notice sent to Cede & Co. pursuant to the
terms of this Bond Indenture that Cede & Co. forward or cause to be forwarded
such notice to the DTC Participants.

 

36

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

 

ARTICLE III

 

APPLICATION OF SERIES 2007A BOND PROCEEDS
AND REQUIRED FUND DEPOSITS; EXPENSE FUND; PROJECT FUND;
REBATE FUND

 

Section 3.1                         Deposit of Funds. The Issuer, for and on
behalf of, and as a loan to, the Borrower, shall deposit with the Bond Trustee
all amounts required to be paid to the Bond Trustee by the Borrower from its
available funds other than the Series 2007A Bond proceeds and all of the net
proceeds from the sale of the Series 2007A Bonds, and the Bond Trustee shall,
out of such proceeds, as may be further specified by a Written Request of the
Borrower delivered to the Bond Trustee upon delivery of the Series 2007A Bonds:

 

(a)                                  Deposit $366,000.00 from monies paid to the
Bond Trustee by the Borrower consisting of available funds of the Borrower other
than proceeds of the Series 2007A Bonds and $380,000.00 from the proceeds of the
Series 2007A Bonds to the credit of the Expense Fund; provided that, pursuant to
a Written Request of the Borrower delivered to the Bond Trustee, all or any
portion of said amount may be paid directly from bond proceeds for payment of
any item which is authorized by Section 3.2 to be paid from the Expense Fund;
provided, however, no more than two percent (2%) of the proceeds of the Series
2007A Bonds shall be used to pay cots of issuance of the Series 2007A Bonds.

 

(b)                                 Deposit to the credit of the Debt Service
Reserve Fund the sum of $1,900,000.00 which will be sufficient to satisfy the
Debt Service Reserve Requirement; and

 

(c)                                  Deposit the balance ($16,720,000.00) of the
proceeds of the Series 2007A Bonds (including $1,136,437.50 representing
capitalized interest on the Series 2007A Bonds) to the Project Fund.

 

Section 3.2                         Expense Fund. The Issuer hereby establishes
with the Bond Trustee a separate account to be known as the “Series 2007A
Expense Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project” (the “Expense
Fund”). A deposit to the credit of the Expense Fund will be made pursuant to
Section 3.1(a) hereof. Amounts on deposit in the Expense Fund shall be disbursed
upon the Written Request of the Borrower for the payment of expenses for any
recording, trustee’s fees and expenses, accounting and legal fees, financing
costs (including costs of acquiring investments for the funds and escrows), and
other fees and expenses incurred or to be incurred by or on behalf of the Issuer
or the Borrower in connection with or incident to the issuance and sale of the
Series 2007A Bonds. At such time as the Bond Trustee is furnished with a Written
Request stating that all such fees and expenses have been paid, and in no event
later than December 31, 2007, the Bond Trustee shall transfer any moneys
remaining in the Expense Fund to the Project Fund.

 

Section 3.3                         Project Fund. The Issuer hereby establishes
with the Bond Trustee a separate account to be known as the “Series 2007A
Project Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Project
Fund”). Proceeds of the Series 2007A Bonds shall be deposited to the credit in
the Project Fund pursuant to Section 3.1(c) hereof. Immediately upon deposit of
such proceeds, the Bond Trustee shall transfer the amount of $15,583,562.50 to
the

 

37

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

 

Accounts Bank for deposit to the Bond Proceeds Sub-Account held by the Accounts
Bank pursuant to the terms of the Accounts Agreement. The Bond Trustee shall
retain $1,136,437.50 in the Project Fund to be applied to the payment of
interest on the Series 2007A Bonds as set forth in (a) below of this Section 3.3
The Bond Trustee shall direct the disbursement of funds by the Accounts Bank
from the Bond Proceeds Sub-Account upon the procedures set forth in (a) below.

 

(a)                                  Disbursements from the Project Fund. In
order to obtain disbursement of amounts in the Bond Proceeds Sub-Account, the
Borrower shall submit a separate Bond Proceeds Withdrawal Certificate to the
Bond Trustee and shall request the certificate of the Independent Engineer as
required below. Upon review and execution, the Bond Trustee shall submit the
Bond Proceeds Withdrawal Certificate to the Administrative Agent and the
Independent Engineer to authorize and direct the withdrawal of the amount set
forth in the Bond Proceeds Withdrawal Certificate by the Accounts Bank, from the
Bond Proceeds Sub-Account. If there are insufficient funds in the Bond Proceeds
Sub-Account, the Bond Trustee may, so long as all requirements for disbursement
from the Bond Proceeds Sub-Account have been met, disburse moneys on deposit in
the Project Fund in order to pay the Costs of the Project set forth in such Bond
Proceeds Withdrawal Certificate. The Bond Trustee may not disburse amounts in
the Project Fund required to pay interest for other Costs of the Project.

 

To the extent that the Borrower leases from third parties or otherwise provides
equipment for the Project from sources other than funds on deposit in the
Project Fund or the Bond Proceeds Sub-Account, the costs thereof shall not be
included in the costs referred to above.

 

In addition, on December 25, 2007 and on June 25, 2008, the Bond Trustee shall
transfer from the Project Fund to the Interest Fund the amount of capitalized
interest set forth on Exhibit C hereto with respect to the applicable Interest
Payment Date, which transferred amount shall be applied to pay interest on the
Series 2007A Bonds on the applicable Interest Payment Date pursuant to Section
4.3 hereof. The amount of $1,136,437.50 shall be reserved for and used solely to
pay interest on the Series 2007A Bonds. Investment earning on such amount may be
used to pay other Costs of the Project under the disbursement procedures set
forth above

 

(b)                                 Completion Certificate. Within 120 days
after the substantial completion of the Facilities, the Borrower has agreed in
the Loan Agreement to cause a completion certificate of an Independent Engineer
to be delivered to the Bond Trustee, which certificate shall state that based
upon periodic visits to the site, such Independent Engineer has generally become
familiar with the progress and quality of the work on the Project and has
determined that in general the work on the Project and the Facilities have been
completed in compliance with the contract documents relating thereto, and to
deliver to the Bond Trustee a completion certificate of the Borrower, which
certificate shall state that substantial completion has occurred and that all
Costs of the Project to be paid from the Project Fund have been included in
Written Requests previously submitted to the Bond Trustee which have been paid
by the Bond Trustee and directing the Bond Trustee to apply any amount remaining
in the Project Fund to the mandatory redemption of Series 2007A Bonds upon
completion as required by Section 5.1 hereof.

 

38

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

 

Substantial completion of the Project shall be deemed to have occurred when the
Borrower is able to occupy and utilize all portions of the Facilities in the
manner in which and for the purposes for which the same were intended, with no
significant impairment of the utility thereof to the Borrower for such purposes.

 

(c)                                  Disposition of Project Fund Moneys After
Completion. If after payment by the Bond Trustee of all orders theretofore
tendered to the Bond Trustee under the provisions of subparagraph (a) of this
Section 3.3 and after receipt by the Bond Trustee of the completion certificates
described in subparagraph (b) of this Section 3.3 there shall remain any balance
of moneys in the Project Fund, such moneys shall be transferred to the Bond
Sinking Fund; provided, however, that the Borrower shall have obtained an
opinion of Bond Counsel that such transfer will not impair the exclusion from
federal income taxation of the interest on any of the Series 2007A Bonds.

 

Section 3.4                         Rebate Fund. There is hereby established
with the Bond Trustee a “Series 2007A Rebate Fund- Heartland Grain Fuels, L.P.
Ethanol Plant Project.” (the “Rebate Fund”) which shall be held separate and
apart from all other moneys of the Bond Trustee. Moneys in the Rebate Fund are
neither pledged to nor available to be used to pay debt service on the Series
2007 Bonds. Deposits to be made to the Rebate Fund and other provisions relating
thereto are set forth in the Tax Exemption Agreement.

 

39

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

 

ARTICLE IV

REVENUES AND FUNDS

 

Section 4.1                         Source of Payment of Series 2007A Bonds. The
Series 2007A Bonds herein authorized and all payments to be made by the Issuer
thereon and into the various funds established under this Bond Indenture are not
general obligations of the Issuer but are limited obligations payable solely
from (i) amounts payable under the Loan Agreement pledged hereunder (other than
Unassigned Rights), (ii) amounts on deposit in the Funds created hereunder to
the extent herein provided and (iii) certain income from the temporary
investment of any of the foregoing.

 

Section 4.2                         Revenue Fund. The Issuer hereby establishes
with the Bond Trustee, and agrees to maintain so long as any of the Series 2007A
Bonds are outstanding, a separate account to be known as the “Series 2007A
Revenue Fund – Heartland Grain Fuels, L.P. Revenue Fund” (the “Revenue Fund”).
The Bond Trustee shall deposit all amounts received for payment of the Series
2007A Bonds to the Revenue Fund for transfer to the Interest Fund, the Bond
Sinking Fund, the Debt Service Reserve Fund and the Redemption Fund as set forth
in this Article.

 

Section 4.3                         Interest Fund. The Issuer hereby establishes
with the Bond Trustee, and agrees to maintain so long as any of the Series 2007A
Bonds are outstanding, a separate account to be known as the “Series 2007A
Interest Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the
“Interest Fund”).

 

On or before December 31, 2007 the Bond Trustee shall deposit in the Interest
Fund from amounts on deposit in the Revenue Fund, an amount which, (after taking
into account the amount to be transferred from the Project Fund to the Interest
Fund on the twenty-fifth day of the month preceding each Interest Payment Date
representing that portion of the capitalized interest which is to be applied to
the payment of interest on the Series 2007A Bonds on the next succeeding
Interest Payment Date, as such amount is set forth on Exhibit C hereto) will be
sufficient to pay the interest to become due on the series 2007A Bonds on
January 1, 2008. On or before each Quarterly Payment date after December 31,
2007, commencing March 31, 2008, the Bond Trustee shall deposit in the Interest
Fund from amounts on deposit in the Revenue Fund, an amount which (after taking
into account said available amount of capitalized interest) will be equal to not
less than one-half of the interest to become due on the Series 2007A Bonds on
the next succeeding Interest Payment Date. No such deposit need be made,
however, to the extent that there is a sufficient amount already on deposit and
available for such purpose in the Interest Fund. If any such Quarterly Payment
Day is not a Business Day, the deposit herein required to be made shall be made
on the next preceding Business Day or so long as the Accounts Agreement is in
effect, such Business Day as directed in the Accounts Agreement. Moneys on
deposit in the Interest Fund, other than income earned thereon which is to be
transferred to other funds created under this Bond Indenture, shall be applied
by the Bond Trustee to pay interest on the Series 2007A Bonds as it becomes due.

 

Section 4.4                         Bond Sinking Fund. The Issuer hereby
establishes with the Bond Trustee and agrees to maintain so long as any of the
Series 2007A Bonds are outstanding, a separate

 

40

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

 

account to be known as the “Series 2007A Bond Sinking Fund – Heartland Grain
Fuels, L.P. Ethanol Plant Project.” (the “Bond Sinking Fund”).

 

On or before each Quarterly Payment Date, commencing March 31, 2015, after
making the required deposits into the Interest Fund, the Bond Trustee shall
deposit in the Bond Sinking Fund, from amounts on deposit in the Revenue Fund,
an amount which is not less than one-fourth of the principal of the Series 2007A
Bonds next to become due, whether at maturity or by Mandatory Sinking Fund
Redemption. No such deposit need be made, however, to the extent that there is a
sufficient amount already on deposit and available for such purpose in the Bond
Sinking Fund. If any such Quarterly Payment Date day is not a Business Day, the
deposit herein required to be made shall be made on the next preceding Business
Day.

 

Moneys on deposit in the Bond Sinking Fund, other than income earned thereon
which is to be transferred to other funds created under this Bond Indenture,
shall be applied by the Bond Trustee to pay principal on the Series 2007A Bonds
as it becomes due whether at maturity or by Mandatory Sinking Fund Redemption.
In lieu of such payment, the Bond Trustee may, at the written request of the
Borrower, purchase in the open market an equal principal amount of Series 2007A
Bonds of the maturity to be paid or which is subject to Mandatory Sinking Fund
Redemption at prices not exceeding the principal amount of the Series 2007A
Bonds being purchased plus accrued interest, with such interest portion of the
purchase price to be paid from the Interest Fund and the principal portion of
such purchase price to be paid from the Bond Sinking Fund. In addition, the
amount of Series 2007A Bonds to be paid or redeemed on any date shall be reduced
by the principal amount of Series 2007A Bonds of the maturity required to be
paid or redeemed which are acquired by the Borrower and delivered to the Bond
Trustee for cancellation.

 

Section 4.5                         Debt Service Reserve Fund. The Issuer hereby
establishes with the Bond Trustee and agrees to maintain so long as any of the
Series 2007A Bonds are Outstanding, a separate account to be known as the
“Series 2007A Debt Service Reserve Fund – Heartland Grain Fuels, L.P. Ethanol
Plant Project.” (the “Debt Service Reserve Fund”). An initial deposit to the
credit of the Debt Service Reserve Fund is to be made under the provisions of
Section 3.1(b) hereof.

 

The Debt Service Reserve Fund shall be maintained in an amount equal to the Debt
Service Reserve Requirement. Funds on deposit in the Debt Service Reserve Fund
shall be used to make up any deficiencies in the Interest Fund and Bond Sinking
Fund (in the order listed). The amount of any deficiency created pursuant to
such use of said funds shall be restored to the Debt Service Reserve Fund from
loan repayments to be made by the Borrower in not more than 4 consecutive
substantially equal quarterly installments (the first such installment to be
made on the Quarterly Payment Date following the month in which such deficiency
is created) as provided in Article IV of the Loan Agreement.

 

On the first business day of January, 2008, and on the first business day of
each January thereafter (each a “Valuation Date”), while any Series 2007A Bonds
are Outstanding, the Trustee shall determine the aggregate value on such date of
the Authorized Investments then held in the Debt Service Reserve Fund on the
basis of the lower of cost or market value plus accrued interest. If such value,
together with any cash then held in said Fund, is less than the Debt

 

41

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

 

Service Reserve Requirement, the Trustee shall immediately notify the Issuer and
the Borrower of the amount of such deficiency, and subject to the express terms
of the Accounts Agreement and the Intercreditor Agreement, the Borrower shall
restore the amount of said deficiency to the Debt Service Reserve Fund from loan
repayments to be made by the Borrower not later than one month after the date of
such valuation in one monthly deposit pursuant to Article IV of the Loan
Agreement. If the value of the securities on deposit in the Debt Service Reserve
Fund on any Valuation Date, together with any cash then held therein, exceeds
such requirement, such excess shall be transferred to the Bond Sinking Fund at
the direction of the Borrower but, in any event, not less than annually. No
deficiency shall be deemed to have occurred within the meaning of this paragraph
if moneys have been transferred to the Bond Sinking Fund from the Debt Service
Reserve Fund and the Borrower is repaying the same pursuant to the provisions of
the second paragraph of this Section 4.5.

 

In lieu of the deposit of moneys in the Debt Service Reserve Fund, the Issuer,
at the direction of the Borrower, may cause to be so credited a surety bond, an
insurance policy or a letter of credit payable to the Issuer for the benefit of
the owners of the Series 2007A Bonds in an amount equal to the Debt Service
Reserve Requirement or the difference between the Debt Service Reserve
Requirement and the amounts then on deposit in the Debt Service Reserve Fund
with respect to the Series 2007A Bonds. The surety bond, insurance policy or
letter of credit shall be payable (upon the giving of notice as required
thereunder) on any date on which moneys will be required to be withdrawn from
the Debt Service Reserve Fund and applied to the payment of the principal of or
interest on the Series 2007A Bonds and such withdrawals cannot be made by
amounts credited to the Debt Service Reserve Fund. The insurer providing such
surety bond or insurance policy shall be an insurer whose municipal bond
insurance policies insuring the payment, when due, of the principal of and
interest on municipal bond issues results in such issues being rated in the
highest rating category by either Standard & Poor’s Rating Services, a Division
of The McGraw Hill Companies (“S&P”), or Moody’s Investors Service, Inc.
(“Moody’s”), or their successors, or any insurer who holds the highest
policyholder ratings accorded insurers by A. M. Best & Co. or any comparable
service. The letter of credit issuer shall be a bank or trust company which is
rated not lower than the highest rating category by S&P and Moody’s, or their
successors, and the letter of credit itself shall be rated in the highest
category of either such rating agency. If a disbursement is made pursuant to a
surety bond, an insurance policy or a letter of credit provided pursuant to this
paragraph, the Borrower shall be obligated either (i) to reinstate the maximum
limits of such surety bond, insurance policy or letter of credit or (ii) to
deposit funds into the Debt Service Reserve Fund in accordance with the first
paragraph of this Section 4.5, or a combination of such alternatives, as shall
result in the amount credited to the Debt Service Reserve Fund equaling the Debt
Service Reserve Requirement for the Series 2007A Bonds.

 

If the issuer of a surety bond, insurance policy or letter of credit on deposit
in the Debt Service Reserve Fund shall cease to have a rating described in the
immediately preceding paragraph, the Borrower shall use reasonable efforts to
replace such surety bond, insurance policy or letter of credit with one issued
by an issuer having a rating so described, but shall not be obligated to pay, or
commit to pay, increased fees, expenses or interest in connection with such
replacement or to make deposits in the Debt Service Reserve Fund in lieu of
replacing such surety bond, insurance

 

42

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

 

policy or letter of credit with another, and such surety bond, insurance policy
or letter of credit shall fully satisfy the Debt Service Reserve Requirement
notwithstanding such decrease in rating.

 

To the extent the Issuer or the Borrower deposits funds in the Debt Service
Reserve Fund, other funds on deposit therein may be transferred to the Bond
Sinking Fund, so long as the Debt Service Reserve Fund is maintained in an
amount which is not less than the Debt Service Reserve Requirement.

 

Section 4.6                         Redemption Fund. The Issuer hereby
establishes with the Bond Trustee and agrees to maintain so long as any of the
Series 2007A Bonds are outstanding a separate account to be known as the “Series
2007A Redemption Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the
“Optional Redemption Fund”). In the event of (i) prepayment by or on behalf of
the Borrower of amounts payable on the Loan Agreement or (ii) deposits with the
Bond Trustee by the Borrower or the Issuer of moneys from any other source for
redeeming Series 2007A Bonds (other than a Mandatory Sinking Fund Redemption),
except as otherwise provided in this Bond Indenture, such moneys shall be
deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall
be used first, to make up any deficiencies existing in the Interest Fund and the
Bond Sinking Fund (in that order) and second, for the redemption or purchase of
Series 2007A Bonds in accordance with the provisions of Article V hereof.

 

Section 4.7                         Investment of Funds. (a)  Upon receipt of a
Written Request of the Borrower filed with the Bond Trustee, moneys consisting
of proceeds of the Series 2007A Bonds, if any, and all investment earnings
thereon in the Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund,
Project Fund, Expense Fund and Redemption Fund shall be invested in Authorized
Investments, and all remaining moneys in said funds shall be invested in
Qualified Investments specified by the Borrower. Such investments shall be made
so as to mature on or prior to the date or dates that moneys therefrom are
reasonably anticipated to be required. If the Borrower fails to give such
direction and file such written request with the Bond Trustee, moneys in such
funds shall be invested in Government Obligations, maturing not more than
fourteen days after the day such investment is made. As and when any amounts
invested pursuant to this Bond Indenture may be needed for disbursements from
the Bond Sinking Fund, the Interest Fund, the Debt Service Reserve Fund, the
Expense Fund, the Project Fund or the Redemption Fund, the Bond Trustee shall
cause a sufficient amount of such investments to be sold or otherwise converted
into cash to the credit of such fund. The Bond Trustee may rely upon an
Officer’s Certificate of the Borrower in determining whether any investments
constitute Authorized Investments and comply with the investment restrictions in
this Bond Indenture and the Tax Exemption Agreement. The Bond Trustee, when
authorized by the Borrower, may trade with itself in the purchase and sale of
securities for such investment; provided, however, that in no case shall any
investment be otherwise than in accordance with the investment limitations
contained herein and in the Tax Exemption Agreement. The Bond Trustee shall not
be liable or responsible for any loss resulting from any such investments. Gains
from investments shall be credited to and held in, and losses shall be charged
to, the fund or account from which the investment is made.

 

(b)                                 All investment earnings on amounts in the
Project Fund shall be credited to the Project Fund. Other than the Project Fund,
all income in excess of the

 

43

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

 

requirements of the funds specified in subsection (a) of this Section derived
from the investment of moneys on deposit in any such funds shall be deposited in
the following funds, in the order listed:

 

(i)                                The Debt Service Reserve Fund to the extent
necessary to maintain the amount required therein.

 

(ii)                             The Bond Sinking Fund and the Interest Fund (in
that order) to the extent, with respect to the Bond Sinking Fund, of the amount
required to be deposited in the Bond Sinking Fund to make the next required
principal payment on the Series 2007A Bonds if such payment is scheduled to
occur within 13 months of the date of such deposit, and to the extent, with
respect to the Interest Fund, of the amounts required to be deposited in the
Interest Fund necessary to make any interest payments on the Series 2007A Bonds
occurring within 13 months of the date of such deposit; and

 

(iii)                          The balance, if any, in the Redemption Fund.

 

Section 4.8                         Trust Funds. All moneys received by the Bond
Trustee under the provisions of this Bond Indenture shall, except as provided in
Section 4.9 hereof, be trust funds under the terms hereof for the benefit of all
Series 2007A Bonds outstanding hereunder (except as otherwise provided) and
shall not be subject to lien or attachment of any creditor of the Issuer or the
Borrower. Such moneys shall be held in trust and applied in accordance with the
provisions of this Bond Indenture.

 

Section 4.9                         Excluded Funds; Transfers to Rebate Fund.
The foregoing provisions of this Article IV notwithstanding, (i) the Rebate Fund
shall not be considered a part of the “trust estate” created by this Bond
Indenture and (ii) the Bond Trustee shall be permitted to transfer moneys on
deposit in any of the trust funds established under this Article IV to the
Rebate Fund in accordance with the provisions of the Tax Exemption Agreement.

 

44

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

 

ARTICLE V

 

REDEMPTION OF SERIES 2007A BONDS

 

Section 5.1                         Redemption Dates and Prices. The Series
2007A Bonds are callable for redemption prior to maturity (herein  referred to
as “Extraordinary Optional Redemption”) pursuant to this Section 5.1 in the
event of damage to or destruction of the Facilities or any part thereof or
condemnation or sale consummated under threat of condemnation of the Facilities
or any part thereof, if the Net Proceeds of insurance, condemnation or sale
received in connection therewith exceed $5,000,000, but only to the extent of
funds provided for in Section 4.7 of the Loan Agreement; and pursuant to the
Loan Agreement the Borrower elects to have all or a portion of such Net Proceeds
applied to the prepayment of the Series 2007A Bonds. If so called for
redemption, Series 2007A Bonds shall be subject to redemption by the Issuer at
the direction of the Borrower, in whole or in part at any time, and if in part
by maturities designated by the Borrower (less than all of a single maturity to
be selected by lot in such manner as may be determined by the Bond Trustee) at
the principal amount thereof plus accrued and unpaid interest thereon to the
redemption date and without premium from the Net Proceeds from such insurance,
or condemnation award or such sale, but not in excess of the amount of such Net
Proceeds applied to such purpose.

 

Outstanding Series 2007A Bonds are also subject to redemption prior to maturity
(herein referred to as “Optional Redemption”) on or after January 1, 2015 at the
option of the Issuer upon direction of the Borrower out of amounts prepaid under
the Loan Agreement and deposited in the Redemption Fund, in whole or in part at
any time, and if in part by maturities designated by the Borrower (and if less
than all of a single maturity is being redeemed, by lot within a maturity or in
such manner as may be reasonably determined by the Bond Trustee), at a
redemption price of 100% (expressed as percentages of the principal amount of
the Series 2007A Bonds to be redeemed), plus accrued interest, if any,  thereon
to the date of redemption.

 

January 1, 2015 through December 31, 2015

 

106

%

January 1, 2016 through December 31, 2016

 

104

 

January 1, 2017 and thereafter

 

102

 

 

No Extraordinary Redemption or Optional Redemption of less than all of the
Series 2007A Bonds Outstanding at the time of such redemption shall be made
pursuant to the foregoing provisions of this Section 5.1 unless the aggregate
principal amount of Series 2007A Bonds to be redeemed is equal to or greater
than $100,000.

 

Series 2007A Bonds may be called for Extraordinary Redemption or Optional
Redemption by the Bond Trustee pursuant to this Section 5.1 upon receipt by the
Bond Trustee at least 60 days prior to the redemption date of a Written Request
of the Borrower requesting such redemption. Such Written Request shall specify
the principal amount of the Series 2007A Bonds to be called for redemption, the
redemption date, the applicable redemption price or prices, the provision or
provisions above specified pursuant to which such Series 2007A Bonds are to be
called for redemption and if the Series 2007A Bonds are to be redeemed in part,
the

 

45

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

 

maturities of such Series 2007A Bonds, and the amounts within each such maturity
to be redeemed. If for any reason the Bond Trustee has not received a Written
Request as to the maturities of the Series 2007A Bonds or the amounts within any
maturity to be redeemed, it shall apply the funds available for redemption to
redeem the Series 2007A Bonds in inverse order of maturity.

 

Following the occurrence of the Determination of Taxability, the Series 2007A
Bonds are subject to mandatory redemption, in whole ,as soon as practicable but
in any event no later than ninety (90) days after the occurrence of a
Determination of Taxability. The Series 2007A Bonds are subject to mandatory
redemption as prepayment upon a Determination of Taxability from a prepayment by
the Company of all Loan Payments. The redemption price of the Series 2007A Bonds
upon a Determination of Taxability will be equal to one hundred eight percent
(108%) of the principal amount of the Bonds to be redeemed and prepaid plus
interest accrued, if any, to the mandatory redemption date following the
Determination of Taxability. In addition, upon occurrence of a Determination of
Taxability, the interest rate on the Bonds shall be adjusted as of the Date of
Taxability to the Taxable Rate. The Taxable Rate is equal to a fluctuating
interest rate adjusted on the first day of each calendar quarter to a rate equal
to the sum of the London Interbank Offered Rates (LIBOR) with a term of three
months plus 350 basis points.

 

The Bonds are subject to mandatory redemption in part by lot (or such other
random means selected by the Bond Trustee) at a redemption price equal to the
principal amount thereof, together with accrued interest to the date of
redemption, from proceeds of the Series 2007A Bonds available therefore after
the Completion Date.

 

In addition to Extraordinary Optional Redemption, Optional Redemption, mandatory
redemption upon Determination of Taxability and mandatory redemption upon
completion, the Series 2007A Bonds are subject to mandatory sinking fund
redemption pursuant to and in the manner specified in Section 5.2 (herein
referred to as “Mandatory Sinking Fund Redemption”).

 

In lieu of redeeming Series 2007A Bonds pursuant to this Section 5.1 or Section
5.2, the Bond Trustee may, at the Written Request of the Borrower, use such
funds otherwise available hereunder for redemption of Series 2007A Bonds to
purchase for cancellation Series 2007A Bonds in the open market at a price not
exceeding the redemption price then applicable hereunder. It is understood that
in the case of any such redemption or purchase and cancellation of Series 2007A
Bonds, the Issuer shall receive credit against its required Bond Sinking Fund
deposits with respect to the Series 2007A Bonds of such maturity, which in the
case of Series 2007A Bonds subject to Mandatory Sinking Fund Redemption shall be
applied to the mandatory deposits with respect to Mandatory Sinking Fund
Redemption which the Borrower elects or, if no election is made, in the inverse
order thereof.

 

The portion of any Series 2007A Bonds of a denomination of more than $5,000 to
be redeemed shall be in the principal amount of $5,000 or a multiple thereof,
and in selecting portions of such Series 2007A Bonds for redemption, the Bond
Trustee shall treat each such Series 2007A Bond as representing that number of
Series 2007A Bonds of $5,000 denominations which is obtained by dividing the
principal amount of such Series 2007A Bond by $5,000.

 

46

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

 

Section 5.2                         Bond Sinking Fund Deposits - Mandatory
Deposits. With respect to the payment of Series 2007A Bonds, whether at maturity
or by Mandatory Sinking Fund Redemption, the Issuer shall have on deposit in the
Bond Sinking Fund moneys in the amounts and at the times, respectively, as
follows:

 

January 1
of the Year

 

Principal
Amount

 

2016 

 

$

5,840,000.00

 

2017 

 

6,320,000.00

 

2018*

 

6,840,000.00

 

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

*Final Maturity

 

provided, that such amounts shall be reduced (a) by the amount of Series 2007A
Bonds of the applicable maturity acquired and delivered in accordance with
Section 4.4 hereof in satisfaction of such Bond Sinking Fund requirements and
(b) in connection with a partial redemption of Series 2007A Bonds if the
Borrower elects to reduce Mandatory Sinking Fund Redemptions for the Series
2007A Bonds of the applicable maturity in the manner provided in the penultimate
paragraph of Section 5.1.

 

Moneys on deposit in the Bond Sinking Fund on January 1 of any year shall be
applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds next
maturing in the amount set forth above. Payment of the Series 2007A Bonds
through the Bond Sinking Fund shall be without premium. If less than all Series
2007A Bonds of a particular maturity are subject to Mandatory Sinking Fund
Redemption on a particular date, the Series 2007A Bonds to be redeemed shall be
selected by lot in such manner as may be designated by the Bond Trustee. The
Series 2007A Bonds shall be paid by the Bond Trustee pursuant to the provisions
of this paragraph without any notice from or direction by the Issuer or the
Borrower.

 

Section 5.3                         Notice of Redemption. Notice of the call for
any redemption of the Series 2007A Bonds shall state the following:  (i) the
name of the Series 2007A Bonds, (ii) the CUSIP number and bond certificate
number of the Series 2007A Bonds to be redeemed, (iii) the original dated date
of the Series 2007A Bonds, (iv) the interest rate and maturity date of the
Series 2007A Bonds to be redeemed, (v) the date of the redemption notice, (vi)
the redemption date, (vii) the redemption price and (viii) the address and
telephone number of the principal office of the Bond Trustee. Such notice shall
further state that on the redemption date for such Series 2007A Bonds there
shall become due and payable upon each Series 2007A Bond to be redeemed the
redemption price thereof, or the redemption price of the specified portion of
the principal amount thereof in the case of a Series 2007A Bond to be redeemed
in part only, with interest accrued and unpaid to such date, and that from and
after such date, interest thereon shall cease to accrue and be payable. The
redemption notice shall be given by mailing a copy of such notice of redemption
by first class mail, postage prepaid, to the Issuer, and the registered owners
of the Series 2007A Bonds to be redeemed at the address shown on the Bond
Register not less than 30 or more than 60 days prior to the redemption date;
provided, however, that failure to give such notice by mailing or a defect in
the notice or the mailing as to any Series 2007A Bond will not affect the
validity of any proceedings for redemption as to any other Series 2007A Bond
with

 

47

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

 

respect to which notice was properly given. Said notice shall also be given by
the Bond Trustee by certified mail, return receipt requested, at least thirty
days prior to the date fixed for redemption, to each securities depository
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to the national information services which
disseminate redemption notices. Except for a mandatory sinking fund redemption
pursuant to Section 5.2 hereof, prior to the date that the redemption notice is
first mailed as aforesaid, funds shall be placed with the Bond Trustee to pay
the principal and redemption premium, if any, of such Series 2007A Bonds and the
accrued interest thereon to the redemption date. In the case of an optional
redemption, at the option of the Borrower, funds need not be deposited prior to
the mailing of the notice of redemption, provided that the notice of redemption
states that if funds are not on deposit with the Bond Trustee on or prior to the
redemption date, the redemption shall be cancelled and the Series 2007A Bonds so
called for redemption shall remain Outstanding and continue to bear interest.
Upon the happening of the above conditions, the Series 2007A Bonds, or portions
thereof, thus called for redemption shall not bear interest after the applicable
redemption date, shall no longer be protected by this Bond Indenture and shall
not be deemed to be outstanding under the provisions of this Bond Indenture. The
Bond Trustee shall redeem or purchase, in the manner provided in this Article V,
such an aggregate principal amount of Series 2007A Bonds at the principal amount
thereof plus accrued interest to the redemption date as will exhaust as nearly
as practicable such funds. At the Written Request of the Borrower, such funds
may be invested in Government Obligations until needed for redemption.

 

48

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

 

ARTICLE VI

 

GENERAL COVENANTS

 

Section 6.1                         Payment of Principal and Interest. Subject
to the limited source of payment hereinafter referred to, the Issuer covenants
that it will promptly pay the principal of premium, if any, and interest on
every Series 2007A Bond issued under this Bond Indenture at the place, on the
dates and in the manner provided herein and in said Series 2007A Bonds according
to the true intent and meaning thereof. The principal of premium, if any, and
interest on the Series 2007A Bonds are payable solely from payments or
prepayments by the Borrower under the  Loan Agreement, which Loan Agreement and
payments thereon are hereby specifically assigned and pledged to the payment of
the Series 2007A Bonds in the manner and to the extent herein specified, and
nothing in the Series 2007A Bonds or in this Bond Indenture shall be considered
as assigning or pledging any funds or assets of the Issuer except the moneys and
the Loan Agreement (other than Unassigned Rights) pledged under this Bond
Indenture.

 

Section 6.2                         Performance of Covenants; Legal
Authorization. The Issuer covenants that it will faithfully perform at all times
any and all covenants, undertakings, stipulations and provisions contained in
this Bond Indenture, in any and every Series 2007A Bond executed, authenticated
and delivered hereunder and in all proceedings of its members pertaining
thereto. The Issuer represents that it is duly  authorized under the
Constitution and laws of the State to issue the Series 2007A Bonds authorized
hereby and to execute this Bond Indenture and to assign the Loan Agreement and
payments thereon in the manner and to the extent herein set forth, that all
action on its part for the issuance of the Series 2007A Bonds and the execution
and delivery of this Bond Indenture has been duly and effectively taken, and
that the Series 2007A Bonds in the hands of the owners thereof are and will be
valid and enforceable obligations of the Issuer according to the import thereof.

 

Section 6.3                         Ownership; Instruments of Further Assurance.
The Issuer represents that the assignment of the Loan Agreement to the Bond
Trustee hereby made are valid and lawful. The Issuer covenants that it will
defend its interest in the Loan Agreement and the assignment thereof to the Bond
Trustee, for the benefit of the holders and owners of the Series 2007A Bonds,
against the claims and demands of all persons whomsoever. The Issuer covenants
that it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental hereto and such further
acts, instruments and transfers as the Bond Trustee may reasonably require for
the better assuring, transferring, mortgaging, conveying, pledging, assigning
and confirming unto the Bond Trustee, the Loan Agreement and all payments
thereon and thereunder (except for Unassigned Rights) pledged hereby to the
payment of the principal of, premium, if any, and interest on the Series 2007A
Bonds.

 

Section 6.4                         Recording and Filing. The Issuer covenants
that, solely from additional amounts payable as provided in Section 7.11 of the
Loan Agreement, it will, if requested to do so in writing, cause this Bond
Indenture and all supplements hereto and the Loan Agreement and all supplements
thereto, and all related financing statements, to be kept, recorded and filed in
such manner and in such places as may be so requested in order to preserve and
protect fully the security of the holders of the Series 2007A Bonds and the
rights of the Bond Trustee hereunder.

 

49

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

 

The Bond Trustee, at the expense of the Borrower, agrees to file all
continuation statements with respect to such related financing statements as
required from time to time by law.

 

Section 6.5                         Books and Records. The Issuer covenants that
so long as any Series 2007A Bonds are outstanding and unpaid, to the extent of
its financial dealings or transactions in relation to the Property of the
Borrower and the amounts derived from the Loan Agreement, it will keep, or cause
to be kept, proper books of record and account including such records as are
required by the Tax Exemption Agreement. Such books shall at all times be open
for any lawful purpose to the inspection of the Bond Trustee and such
accountants or other agencies as the Bond Trustee may from time to time
designate.

 

Section 6.6                         Bond Register. The Bond Trustee shall keep
on file at its office the Bond Register. At reasonable times and under
reasonable regulations established by the Bond Trustee, said Bond Register may
be inspected and copied by the Borrower or the Issuer.

 

Section 6.7                         Rights Under the Loan Agreement. The Issuer
agrees that the Bond Trustee in its own name or in the name of the Issuer may
enforce all rights of the Issuer and all obligations of the Borrower under and
pursuant to the Loan Agreement for and on behalf of the Bondholders (other than
Unassigned Rights), whether or not the Issuer is in default hereunder.

 

Section 6.8                         Designation of Additional Paying Agents. The
Issuer shall (upon the written direction of the Borrower) cause the necessary
arrangements to be made through the Bond Trustee and to be thereafter continued
for the designation of additional Paying Agents, if any, and for the making
available of funds hereunder for the payment of such of the Series 2007A Bonds
as shall be presented when due at the principal corporate trust office of the
Bond Trustee, or its successor in trust hereunder, or at the principal office of
said additional Paying Agents.

 

Section 6.9                         Arbitrage; Compliance with Tax Exemption
Agreement. The Issuer covenants and agrees that it will not take any action, or
fail to take any action which may be requested of it, with respect to the
investment of the proceeds of the Series 2007A Bonds or with respect to the
payments derived from the Loan Agreement or any other moneys regardless of
source or where held which may result in constituting the Series 2007A Bonds
“arbitrage bonds” within the meaning of such term as used in Section 148 of the
Code. The Issuer further covenants and agrees that it will comply with and take
all actions required by the Tax Exemption Agreement.

 

50

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

 

ARTICLE VII

 

EVENTS OF DEFAULT; REMEDIES

 

Section 7.1                         Extension of Payment; Penalty. In case the
time for the payment of principal of or the interest on any Series 2007A Bonds
shall be extended, whether or not such extension be by or with the consent of
the Issuer, such principal or such interest so extended shall not be entitled in
case of default hereunder to the benefit or security of this Bond Indenture
except subject to the prior payment in full of the principal of all Series 2007A
Bonds then outstanding and of all interest thereon, the time for the payment of
which shall not have been extended.

 

Section 7.2                         Events of Default. Each of the following
events is hereby declared an “event of default,” that is to say, if:

 

(a)                                  payment of any installment of interest
payable on any of the Series 2007A Bonds shall not be made when the same shall
become due and payable; or

 

(b)                                 payment of the principal of, or the premium,
if any, on the Series 2007A Bonds shall not be made when the same shall become
due and payable, either at maturity, by proceedings for redemption, or upon
acceleration; or

 

(c)                                  any event of default as defined in Section
6.1 of the Loan Agreement shall occur and such event of default shall be
continuing for a period of 15 days from and after the date the Issuer is
entitled under the Loan Agreement to request that the Bond Trustee declare the
Series 2007A Obligation to be immediately due and payable or such event of
default shall be continuing for a period of 15 days from and after the date on
which the Bond Trustee is entitled under the Bond Indenture to declare the
Series 2007A Bonds immediately due and payable, or the Bond Trustee shall
declare the Series 2007A Bonds due and payable; or

 

(d)                                 the Issuer shall default in the due and
punctual performance of any other of the covenants, conditions, agreements and
provisions contained in the Series 2007A Bonds, in this Bond Indenture, or in
any indenture supplemental hereto to be performed on the part of the Issuer, and
such default shall continue for the period of 30 days after written notice
specifying such default and requiring the same to be remedied shall have been
given to the Issuer and the Borrower by the Bond Trustee; provided, that the
Bond Trustee may give such notice in its discretion and shall give such notice
at the written request of the owners of not less than ten percent (10%) in
aggregate principal amount of the Series 2007A Bonds then outstanding hereunder;
provided further that if such default cannot with due diligence and dispatch be
wholly cured within 30 days but can be wholly cured, the failure of the Issuer
to remedy such default within such 30-day period shall not constitute a default
hereunder if the Issuer shall immediately upon receipt of such notice commence
with due diligence and dispatch the curing of such default and, having so
commenced the curing of such default, shall thereafter prosecute and complete
the same with due diligence and dispatch; or

 

(e)                                  the Issuer or the Borrower shall default in
the performance of any covenant, condition, agreement or provision of the Tax
Exemption Agreement, and such default

 

51

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

 

shall continue for the period of 30 days after written notice specifying such
default and requiring the same to be remedied shall have been given to the party
in default and the Borrower by the other party; provided that if such default
cannot with due diligence and dispatch be wholly cured within 30 days but can be
wholly cured, the failure of the Issuer or the Borrower to remedy such default
within such 30-day period shall not constitute a default hereunder if any of the
foregoing shall immediately upon receipt of such notice commence with due
diligence and dispatch the curing of such default and, having so commenced the
curing of such default, shall thereafter prosecute and complete the same with
due diligence and dispatch.

 

If on the date payment of principal of or interest on the Series 2007A Bonds is
due sufficient moneys are not available to make such payment, the Bond Trustee
shall give telephonic notice, confirmed in writing, of such insufficiency to the
Issuer and the Borrower.

 

Section 7.3                         Acceleration. The Bond Trustee may, upon the
happening of any event of default specified in paragraphs (c) through (e) of
Section 7.2 and the continuance of the same for the period, if any, specified in
said paragraphs, without any action on the part of the Bondholders, and the Bond
Trustee shall, upon the happening of an event of default specified in paragraph
(a) or (b) of Section 7.2 or upon the happening and continuance of any other
event of default (other than those specified in paragraph (a) or (b) of Section
7.2) and the written request of the owners of not less than twenty-five percent
in aggregate principal amount of the Series 2007A Bonds then outstanding
hereunder (exclusive of Series 2007A Bonds then owned by the Issuer or the
Borrower) and upon being indemnified to its satisfaction, by notice in writing
delivered to the Issuer and the Borrower, declare the entire principal amount of
the Series 2007A Bonds then outstanding hereunder and the interest accrued
thereon, immediately due and payable, and the entire principal and interest
shall thereupon become and be  immediately due and payable, subject, however, to
the provisions of Section 7.11 hereof with respect to waivers of events of
default.

 

Section 7.4                         Remedies; Rights of Bondholders. Upon the
occurrence of any event of default, the Bond Trustee may pursue any available
remedy including a suit at law or in equity to enforce the payment of the
principal of, premium, if any, and interest on the Series 2007A Bonds
outstanding hereunder.

 

If an event of default shall have occurred, and if it shall have been requested
so to do by the holders of not less than twenty-five percent in aggregate
principal amount of Series 2007A Bonds then outstanding and if it shall have
been indemnified as provided in Section 8.1 hereof, the Bond Trustee shall be
obligated to exercise such one or more of the rights and powers conferred by
this Article VII as the Bond Trustee shall deem most expedient in the interests
of the holders of Series 2007A Bonds; provided, however, that the Bond Trustee
shall have the right to decline to comply with any such request if the Bond
Trustee shall be advised by counsel (who may be its own counsel) that the action
so requested may not lawfully be taken or the Bond Trustee in good faith shall
determine that such action would be unjustly prejudicial to the holders of
Series 2007A Bonds not parties to such request.

 

No remedy by the terms of this Bond Indenture conferred upon or reserved to the
Bond Trustee (or to the holders of Series 2007A Bonds) is intended to be
exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to any other

 

52

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

 

remedy given to the Bond Trustee or to the holders of Series 2007A Bonds
hereunder now or hereafter existing at law or in equity or by statute.

 

No delay or omission to exercise any right or power accruing upon any default or
event of default shall impair any such right or power or shall be construed to
be a waiver of any such default or event of default, or acquiescence therein;
and every such right and power may be exercised from time to time and as often
as may be deemed expedient.

 

No waiver of any default or event of default hereunder, whether by the Bond
Trustee or by the holders of Series 2007A Bonds, shall extend to or shall affect
any subsequent default or event of default or shall impair any rights or
remedies consequent thereon.

 

In the event that the Bondholders direct the Bond Trustee to take any action
under the Bond Indenture or act on behalf of the Bond Trustee or seek to enforce
any right of the Bond Trustee, the Bondholders, and each Bondholder shall be
subject to the express terms and conditions of the Intercreditor Agreement to
the same extent and with the same effect as if the Bond Trustee took such action
without direction from the Bondholders or took such action directly itself, as
the case may be.

 

Section 7.5                         Direction of Proceedings by Bondholders. The
owners of a majority in aggregate principal amount of Series 2007A Bonds then
outstanding shall have the right at any time, by an instrument or instruments in
writing executed and delivered to the Bond Trustee, to direct the method  and
place of conducting all proceedings to be taken in connection with the
enforcement of the terms and conditions of this Bond Indenture, including the
enforcement of the rights of the Issuer under the Loan Agreement or the
appointment of a receiver or any other proceedings hereunder; provided, that
such direction shall not be otherwise than in accordance with the provisions of
law and of this Bond Indenture.

 

Section 7.6                         Appointment of Receivers. Upon the
occurrence of an event of default, and upon the filing of a suit or other
commencement of judicial proceedings to enforce the rights of the Bond Trustee
and the holders of Series 2007A Bonds under this Bond Indenture, the Bond
Trustee shall be entitled, as a matter of right, to the appointment of a
receiver or receivers of the rights and properties pledged hereunder and of the
revenues, issues, payments and profits thereof, pending such proceedings, with
such powers as the court making such appointment shall confer.

 

Section 7.7                         Application of Moneys. All moneys received
by the Bond Trustee pursuant to any right given or action taken under the
provisions of this Article shall, after payment of the cost and expenses
(including the fees and expenses of counsel, which may be its in-house legal
counsel) of the proceedings resulting in the collection of such moneys and of
the expenses, liabilities and advances incurred or made by the Bond Trustee, and
all moneys in the funds maintained by the Bond Trustee under Articles III and
IV, be applied as follows:

 

(a)                                  Unless the principal of all the Series
2007A Bonds shall have become or shall have been declared due and payable, all
such moneys shall be applied:

 

First:  To the payment to the Persons entitled thereto of all installments of
interest then due on the Series 2007A Bonds, in the order of the maturity of the
installments of

 

53

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

 

such interest, and, if the amount available shall not be sufficient to pay in
full any particular installment, then to the payment ratably, according to the
amounts due on such installment, to the Persons entitled thereto without any
discrimination or privilege;

 

Second:  To the payment to the Persons entitled thereto of the unpaid principal
of any of the Series 2007A Bonds which shall have become due (other than Series
2007A Bonds called for redemption for the payment of which moneys are held
pursuant to the provisions of this Bond Indenture), in the order of their due
dates, and, if the amount available shall not be sufficient to pay in full
Series 2007A Bonds due on any particular date, then to the payment ratably,
according to the amount of principal due on such date, to the Persons entitled
thereto without any discrimination or privilege;

 

Third:  To the payment to the Persons entitled thereto of unpaid principal and
interest due and owing on any Series 2007A Bonds, the payment of principal and
interest of which has been extended in the manner described in Section 7.1; and

 

Fourth:  To the payment of amounts, if any, payable pursuant to the Tax
Exemption Agreement.

 

(b)                                 If the principal of all the Series 2007A
Bonds shall have become due or shall have been declared due and payable, all
such moneys shall be applied:

 

First:  To the payment of the principal and interest then due and unpaid upon
the Series 2007A Bonds, without preference or priority of principal or interest
over the other, or of any installment of interest over any other installment of
interest, or of any Series 2007A Bond over any other Series 2007A Bond, ratably,
according to the amounts due respectively for principal and interest, to the
Persons entitled thereto without any discrimination or privilege;

 

Second:  To the payment of the principal and interest then due and unpaid upon
Series 2007A Bonds with respect to which the payment of principal and interest
has been extended as described in Section 7.1; and

 

Third: To the payment of amounts, if any, payable pursuant to the Tax Exemption
Agreement.

 

(c)                                  If the principal of all the Series 2007A
Bonds shall have been declared due and payable, and if such declaration shall
thereafter have been rescinded and annulled under the provisions of this
Article, then, subject to the provisions of paragraph (b) of this Section in the
event that the principal of all the Series 2007A Bonds shall later become due or
be declared due and payable, the moneys shall be applied in accordance with the
provisions of paragraph (a) of this Section.

 

Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions
of this Section, such moneys shall be applied by it at such times, and from time
to time, as the Bond Trustee shall determine, having due regard for the amount
of such moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Bond Trustee
shall apply such moneys, it shall fix the date (which shall

 

54

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

 

be an Interest Payment Date unless it shall  deem another date more suitable,
or, with respect to payments of Defaulted Interest, shall be such date as is
required by the last paragraph of Section 2.2 hereof) upon which such
application is to be made and upon such date interest on the amounts of
principal to be paid on such dates shall cease to accrue. The Bond Trustee shall
give such notice as it may deem appropriate of the deposit with it of any such
moneys and of the fixing of any such date and of the Special Record Date by
mailing a copy of such notice by first class mail, postage prepaid, to the
registered owners of the Series 2007A Bonds, at least 10 days prior to the
Special Record Date. The Bond Trustee shall not be required to make payment to
the holder of any Series 2007A Bond until such Series 2007A Bond shall be
presented to the Bond Trustee for appropriate endorsement or for cancellation if
fully paid.

 

Whenever all Series 2007A Bonds and interest thereon have been paid under the
provisions of this Section 7.7 and all expenses and charges of the Bond Trustee
have been paid, any balance remaining shall be paid to the Persons entitled to
receive the same; if no other Person shall be entitled thereto, then the balance
shall be paid to the Borrower.

 

Section 7.8                         Remedies Vested in Bond Trustee. All rights
of action including the right to file proof of claims under this Bond Indenture
or under any of the Series 2007A Bonds may be enforced by the Bond Trustee
without the possession of any of the Series 2007A Bonds or the production
thereof in any trial or other proceedings relating thereto and any such suit or
proceeding instituted by the Bond Trustee shall be brought in its name as Bond
Trustee without the necessity of joining as plaintiffs or defendants any holders
of the Series 2007A Bonds, and any recovery of judgment shall be for the equal
benefit of the holders of the outstanding Series 2007A Bonds.

 

Section 7.9                         Rights and Remedies of Bondholders. No
holder of any Series 2007A Bond shall have any right to institute any suit,
action or proceeding in equity or at law for the enforcement of this Bond
Indenture or for the execution of any trust hereof or for the appointment of a
receiver or any other remedy hereunder, unless (i) a default shall have become
an event of default, (ii) the holders of twenty-five percent in aggregate
principal amount of Series 2007A Bonds then outstanding shall have made written
request to the Bond Trustee and shall have offered it reasonable opportunity
either to proceed to exercise the powers hereinbefore granted or to institute
such action, suit or proceeding in its own name, and unless also they have
offered to the Bond Trustee indemnity as provided in Section 8.1, and (iii)
unless the Bond Trustee shall thereafter fail or refuse to exercise the power
hereinbefore granted, or to institute such action, suit or proceeding in its own
name; and such notification, request and offer of indemnity are hereby declared
in every case at the option of the Bond Trustee to be conditions precedent to
the  execution of the powers and trusts of this Bond Indenture and to any action
or cause of action for the enforcement of this Bond Indenture, or for the
appointment of a receiver or for any other remedy hereunder; it being understood
and intended that no one or more holders of the Series 2007A Bonds shall have
any right in any manner whatsoever to affect, disturb or prejudice the lien of
this Bond Indenture by any action or to enforce any right hereunder except in
the manner herein provided, and that all proceedings at law or in equity shall
be instituted, had and maintained in the manner herein provided and for the
equal benefit of the holders of all Series 2007A Bonds outstanding. Nothing in
this Bond Indenture contained shall, however, affect or impair the right of any
holder to enforce the payment of the principal of and interest on any Series
2007A Bond at and after the maturity thereof, or the obligation of the Issuer to
pay the

 

55

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

 

principal of and interest on each of the Series 2007A Bonds issued hereunder to
the respective holders thereof at the time and place, from the source and in the
manner in said Series 2007A Bonds expressed.

 

Section 7.10                  Termination of Proceedings. In case the Bond
Trustee shall have proceeded to enforce any right under this Bond Indenture by
the appointment of a receiver, or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to the Bond Trustee, then and in every case the Issuer and the Bond
Trustee shall, subject to any determination in such proceeding, be restored to
their former positions and rights hereunder with respect to the property pledged
and assigned hereunder, and all rights, remedies and powers of the Bond Trustee
shall continue as if no such proceedings had been taken.

 

Section 7.11                  Waiver of Events of Default. The Bond Trustee may
in its discretion waive any event of default hereunder and its consequences and
rescind any declaration of maturity of principal upon written request of the
holders of (1) at least 51% in aggregate principal amount of all the Series
2007A Bonds outstanding in respect of which default in the payment of principal
and/or interest exists, or (2) at least 51% in aggregate principal amount of all
the Series 2007A Bonds outstanding. The foregoing notwithstanding, in no event
shall there be waived (a) any event of default in the payment when due (other
than with respect to principal becoming due as a result of acceleration of the
Series 2007A Bonds) of the principal of any outstanding Series 2007A Bonds
whether by Mandatory Sinking Fund Redemption or at the dates of maturity
specified therein or (b) any default in the payment when due of the interest on
any such Series 2007A Bonds, unless prior to such waiver or rescission all
arrears of interest, with interest thereon (to the extent permitted by law) at
the rate borne by the Series 2007A Bonds in respect of which such default shall
have occurred on overdue installments of interest or all  arrears of payments of
principal when due, as the case may be, and all expenses of the Bond Trustee and
any Paying Agent in connection with such default shall have been paid or
provided for. In case of any such waiver or rescission or in case any proceeding
taken by the Bond Trustee on account of any such default shall have been
discontinued or abandoned or determined adversely, then and in every such case
the Issuer, the Bond Trustee and the Bondholders shall, subject to any
determination in such proceeding, be restored to their former positions and
rights hereunder respectively, but no such waiver or rescission shall extend to
any subsequent or other default, or impair any right consequent thereon.

 

Section 7.12                  Borrower’s Rights of Possession and Use of Its
Property. So long as the Borrower is in full compliance with the terms and
provisions of the Loan Agreement, the Borrower shall be suffered and permitted
to possess, use and enjoy its Property and appurtenances thereto free of claims
of the Issuer and the Bond Trustee.

 

Section 7.13                  Waiver of Redemption; Effect of Sale of Trust
Estate. The Issuer, to the extent permitted by law, shall not claim any rights
under any stay, valuation, exemption or extension law, and hereby waives any
right of redemption which it may have in respect of any sale or other
disposition of the Borrower’s Property pursuant to the rights and remedies
granted under this Article VII. Upon the institution of any foreclosure
proceedings or upon such sale or other disposition of the Borrower’s Property,
or any acceleration of the principal of all Series

 

56

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

 

2007A Bonds then outstanding hereunder, if not previously due and payable shall
without more become immediately due and payable.

 

Section 7.14                  Notice of Default. Upon the occurrence of an Event
of Default hereunder, the Bond Trustee will promptly give written notice thereof
to the Issuer and the Borrower setting forth the nature of such Event of
Default.

 

57

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

 

ARTICLE VIII

 

THE BOND TRUSTEE

 

Section 8.1                         Acceptance of the Trusts. The Issuer
initially appoints the Bond Trustee as Paying Agent and Registrar. The Bond
Trustee accepts and agrees to execute the trusts imposed upon it by this Bond
Indenture and to act as the Bond Trustee  under the Tax Exemption Agreement, but
only upon the terms and conditions set forth herein, to all of which the Issuer
agrees and the respective owners of the Series 2007A Bonds agree by their
acceptance of delivery of any of the Series 2007A Bonds. The Bond Trustee, prior
to the occurrence of an event of default hereunder and after the curing of all
events of default hereunder which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Bond Indenture
and to perform such trusts as an ordinarily prudent trustee under a corporate
indenture and no other implied covenants or obligations should be read into this
Bond Indenture against the Bond Trustee. If an event of default has occurred and
is continuing, the Bond Trustee shall exercise such of the rights and powers
vested in it by this Bond Indenture and shall use the same degree of care as a
prudent person would exercise in the circumstances in the conduct of such
person’s own affairs. The Bond Trustee agrees to perform such trusts only upon
and subject to the following expressed terms and conditions:

 

(a)                                  The Bond Trustee may execute any of the
trusts or powers hereof and perform any of its duties by or through attorneys,
agents or receivers and shall not be responsible for the misconduct or
negligence of any such attorneys, agents or receivers appointed in the exercise
of care, and shall be entitled to advice of counsel concerning all matters of
trusts hereof and duties hereunder, and may in all cases pay and be reimbursed
for such reasonable compensation to any attorney, agent, receiver or employee
retained or employed by it in connection herewith. The Bond Trustee may act upon
the opinion or advice of an attorney, surveyor, engineer or accountant selected
by it in the exercise of reasonable care. The Bond Trustee shall not be
responsible for any loss or damage resulting from any action or nonaction based
on its good faith reliance upon such opinion or advice.

 

(b)                                 The Bond Trustee shall not be responsible
for any recital herein, or in the Series 2007A Bonds (except with respect to the
certificate of the Bond Trustee endorsed on the Series 2007A Bonds), or for the
investment of moneys as herein permitted (except that no investment shall be
made except in compliance with Section 4.7 hereof and the Tax Exemption
Agreement), or for the recording or re-recording, filing or re-filing of this
Bond Indenture, or any supplement or amendment thereto, or the filing of
financing statements(other than continuation statements), or for the validity of
the execution by the Issuer of this Bond Indenture, or of any supplemental
indentures or instruments of further assurance, or for the sufficiency of the
security for the Series 2007A Bonds issued hereunder or intended to be secured
hereby, or for the value or title of the property herein conveyed or otherwise
as to the maintenance of the security hereof. The Bond Trustee may (but shall be
under no duty to) require of the Issuer and the Borrower full information and
advice as to the performance of the covenants, conditions and agreements in the
Loan Agreement. Except as otherwise provided in Section 7.4 hereof, the Bond
Trustee shall have no obligation to perform any of the duties of the Issuer
under the Loan Agreement.

 

58

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

 

(c)                                  The Bond Trustee shall not be accountable
for the investment, use or application by the Issuer or the Borrower of any of
the Series 2007A Bonds or the proceeds thereof or for the use or application of
any money paid over by the Bond Trustee in accordance with the provisions of
this Bond Indenture or for the use and application of money received by any
Paying Agent. The Bond Trustee may become the owner of Series 2007A Bonds
secured hereby with the same rights it would have if not Bond Trustee.

 

(d)                                 The Bond Trustee shall be protected in
acting upon any notice, order, requisition, request, consent, certificate,
order, opinion (including an opinion of Independent Counsel), affidavit, letter,
telegram or other paper or document in good faith deemed by it to be genuine and
correct and to have been signed or sent by the proper person or persons. Any
action taken by the Bond Trustee pursuant to this Bond Indenture upon the
request or Issuer or consent of any person who at the time of making such
request or giving such Issuer or consent is the owner of any Series 2007A Bond,
shall be conclusive and binding upon all future owners of the same Series 2007A
Bond and upon Series 2007A Bonds issued in exchange therefor or in place
thereof.

 

(e)                                  As to the existence or non-existence of any
fact or as to the sufficiency or validity of any instrument, paper or
proceeding, the Bond Trustee shall be entitled to rely upon a certificate signed
on behalf of the Issuer by its Chair or County Auditor as sufficient evidence of
the facts therein contained and prior to the occurrence of a default of which
the Bond Trustee has been notified as provided in subsection (g) of this
Section, or of which by said subsection it is deemed to have notice, may accept
a similar certificate to the effect that any particular dealing, transaction or
action is necessary or expedient, but may at its discretion secure such further
evidence deemed necessary or advisable, but shall in no case be bound to secure
the same. The Bond Trustee may accept a certificate of the Chair or County
Auditor of the Issuer to the effect that a resolution in the form therein set
forth has been adopted by the Issuer as conclusive evidence that such resolution
has been duly adopted, and is in full force and effect.

 

(f)                                    The permissive right of the Bond Trustee
to do things enumerated in this Bond Indenture shall not be construed as a duty
and the Bond Trustee shall not be answerable for other than its gross negligence
or willful default.

 

(g)                                 The Bond Trustee shall not be required to
take notice or be deemed to have notice of any default hereunder, other than an
event of default under clause (a) or (b) of Section 7.2 hereof unless the Bond
Trustee shall be specifically notified in writing of such default by the Issuer
or by the holders of at least twenty-five percent in aggregate principal amount
of all Series 2007A Bonds then outstanding, and all notices or other instruments
required by this Bond Indenture to be delivered to the Bond Trustee must, in
order to be effective, be delivered at the principal corporate trust office of
the Bond Trustee, and in the absence of such notice so delivered the Bond
Trustee may conclusively assume there is no default except as aforesaid.

 

(h)                                 The Bond Trustee shall not be personally
liable for any debts contracted or for damages to persons or to personal
property injured or damaged, or for salaries or nonfulfillment of contracts
during any period in which it may be in possession of or managing

 

59

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

 

the Property of the Borrower and shall have no obligation to expend its own
funds for any purpose whatsoever.

 

(i)                                     At any and all reasonable times, the
Bond Trustee, and its duly authorized agents, attorneys, experts, engineers,
accountants and representatives, shall have the right fully to inspect any and
all books, papers and records of the Issuer pertaining to the Series 2007A
Bonds, and to take such memoranda from and in regard thereto as may be desired.

 

(j)                                     The Bond Trustee shall not be required
to give any bond or surety in respect of the execution of the said trusts and
powers or otherwise in respect of the premises.

 

(k)                                  Notwithstanding anything contained
elsewhere in this Bond Indenture, the Bond Trustee shall have the right, but
shall not be required, to demand, in respect of the authentication of any Series
2007A Bonds, the withdrawal of any cash, the release of any Property, or any
action whatsoever within the purview of this Bond Indenture, any showings,
certificates, opinions, appraisals or other information, or corporate action or
evidence thereof, in addition to that by the terms hereof required as a
condition of such action by the Bond Trustee deemed reasonably necessary for the
purpose of establishing the right of the Issuer to the authentication of any
Series 2007A Bonds, the withdrawal of any cash, the release of any property or
the taking of any other action by the Bond Trustee.

 

(l)                                     Before taking any action under Articles
VII or VIII of this Bond Indenture other than an acceleration when required
pursuant to Section 7.3 hereof, the Bond Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses to which it
may be put and to protect it against all liability, except liability which is
adjudicated to have resulted from its gross negligence or willful default in
connection with any action so taken.

 

(m)                               All moneys received by the Bond Trustee or any
Paying Agent shall, until used or applied or invested as provided in this Bond
Indenture or in the Tax Exemption Agreement, be held in trust for the purposes
for which they were received but need not be segregated from other funds except
to the extent required by law or by this Bond Indenture or by the Tax Exemption
Agreement. Neither the Bond Trustee nor any Paying Agent shall be under any
liability for interest on any moneys received hereunder except such as may be
agreed upon.

 

Section 8.2                         Fees, Charges and Expenses of Bond Trustee
and any Additional Paying Agent. The Bond Trustee shall be entitled to payment
and/or reimbursement for reasonable fees and for its services rendered hereunder
and all advances, counsel fees and other expenses reasonably and necessarily
made or incurred by the Bond Trustee in connection with such services. The Bond
Trustee shall be entitled to payment and/or reimbursement for the reasonable
fees and charges of the Bond Trustee as Paying Agent and Registrar for the
Series 2007A Bonds as hereinabove provided. Any additional Paying Agent shall be
entitled to payment and/or reimbursement for its reasonable fees and charges as
additional Paying Agent for the Series 2007A Bonds. Upon an event of default
hereunder, but only upon an event of default hereunder, the Bond Trustee and any
additional Paying Agent shall have a right of payment prior to payment on
account of interest or principal of, or premium, if any, on any Series 2007A
Bond for the foregoing advances, fees, costs and expenses incurred; provided,
however, that in no

 

60

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

 

event shall the Bond Trustee or any such additional Paying Agent have any such
prior right of payment or claim therefor against moneys or obligations deposited
with or paid to the Bond Trustee for the  redemption or payment of Series 2007A
Bonds which are deemed to have been paid in accordance with Article XI hereof.

 

Section 8.3                         Notice to Issuer and the Bondholders if
Default Occurs. If a default occurs of which the Bond Trustee is by subsection
(g) of Section 8.1 hereof required to take notice or if notice of default is
given as in said subsection (g) provided, then the Bond Trustee shall give
written notice thereof by first class mail, postage prepaid, to the Issuer and
the registered owners of all Series 2007A Bonds then outstanding.

 

Section 8.4                         Good Faith Reliance. The Bond Trustee and
any additional Paying Agent shall be protected and shall incur no liability in
acting or proceeding in good faith upon any resolution, notice, telegram, telex
or facsimile transmission, request, consent, waiver, certificate, statement,
affidavit, voucher, bond, requisition or other paper or document which it shall
in good faith believe to be genuine and to have been passed or signed by the
proper board, body or person or to have been prepared and furnished pursuant to
any of the provisions of this Bond Indenture or the Loan Agreement, or upon the
written opinion of any attorney, engineer, accountant or other expert believed
by the Bond Trustee and any additional Paying Agent, as the case may be, to be
qualified in relation to the subject matter, and the Bond Trustee and any
additional Paying Agent shall be under no duty to make any investigation or
inquiry as to any statements contained or matters referred to in any such
instrument, but may accept and rely upon the same as conclusive evidence of the
truth and accuracy of such statements. Neither the Bond Trustee nor any Paying
Agent shall be bound to recognize any person as an owner of Series 2007A Bonds
or to take any action at such person’s request unless satisfactory evidence that
such person is the registered owner of such Series 2007A Bond shall be furnished
to such entity.

 

Section 8.5                         Dealings in Series 2007A Bonds. The Bond
Trustee and any additional Paying Agent, in its individual capacity, may in good
faith buy, sell, own, hold and deal in any of the Series 2007A Bonds issued
hereunder, and may join in any action which any owner may be entitled to take
with like effect as if it did not act in any capacity hereunder. The Bond
Trustee and any additional Paying Agent, in its individual capacity, either as
principal or Agent, may also engage in or be interested in any financial or
other transaction with the Borrower, and may act as depository, trustee or Agent
for any committee or body of owners of Series 2007A Bonds secured hereby or
other obligations of the Issuer or the Borrower as freely as if it did not act
in any capacity hereunder.

 

Section 8.6                         Several Capacities. Anything in this Bond
Indenture to the contrary notwithstanding, the same entity  may serve hereunder
as the Bond Trustee, the Paying Agent and the Registrar, and in any other
combination of such capacities, to the extent permitted by law.

 

Section 8.7                         Intervention by Bond Trustee. In any
judicial proceeding to which the Issuer is a party and which in the opinion of
the Bond Trustee and its counsel has a substantial bearing on the interests of
owners of the Series 2007A Bonds, the Bond Trustee may intervene on behalf of
Bondholders and, subject to the provisions of Section 8.1(1), shall do so if
requested in writing by the owners of at least twenty-five percent in aggregate
principal amount of all

 

61

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

 

Series 2007A Bonds then outstanding. The rights and obligations of the Bond
Trustee under this Section are subject to the approval of a court of competent
jurisdiction.

 

Section 8.8                         Successor Bond Trustee by Merger or
Consolidation. Any corporation or association into which the Bond Trustee may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its corporate trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a party,
provided such corporation or association is otherwise eligible under Section 8.9
hereof, shall be and become successor Bond Trustee hereunder and vested with all
of the title to the whole property or trust estate and all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

 

Section 8.9                         Bond Trustee Required; Eligibility. There
shall at all times be a Bond Trustee hereunder which shall be a bank or trust
company in good standing under the law of the State and organized under the laws
of the United States of America or any state, authorized to exercise corporate
trust powers, subject to supervision or examination by federal or state
authorities, and having a reported combined capital and surplus of not less than
$75,000,000. If at any time the Bond Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner provided in Section 8.10 hereof. No resignation or removal of the
Bond Trustee and no appointment of a successor Bond Trustee shall become
effective until the successor Bond Trustee has accepted its appointment under
Section 8.13 hereof.

 

Section 8.10                  Resignation by the Bond Trustee. Subject to
Section 8.9, the Bond Trustee and any successor Bond Trustee may at any time
resign from the trusts created by this  Bond Indenture and the Tax Exemption
Agreement by executing any instrument in writing resigning such trusts and
specifying the date when such resignation shall take effect, and filing the same
with the Issuer and the Borrower, not less then 45 days before the date
specified in such instrument when such resignation shall take effect, and by
giving notice of such resignation by first class mail, postage prepaid, not less
than 20 days prior to such resignation date, to each registered owner of Series
2007A Bonds then outstanding, as shown by the Bond Register.

 

Section 8.11                  Removal of the Bond Trustee. Subject to Section
8.9, the owners of not less than fifty-one percent in aggregate principal amount
of the Series 2007A Bonds which are outstanding at the time, may remove the Bond
Trustee for “cause” by notice to the Issuer, the Bond Trustee and the Borrower.
The Bond Trustee shall continue to act as Bond Trustee hereunder and have the
right to proceed to cure any gross negligence, willful misconduct or failure or
unwillingness to perform its duties (any of which shall be deemed to constitute
“cause”), for a period of two weeks. If such cure is not effected within such
time, the Bond Trustee’s functions hereunder will be terminated immediately upon
the appointment of a successor bond trustee by the Borrower pursuant to Section
8.12 hereof. Subject to Section 8.9, the Bond Trustee may be removed by filing
with the Bond Trustee so removed, and with the Issuer and the Borrower, an
instrument or instruments in writing by the owners of not less than fifty-one
percent in aggregate principal amount of the Series 2007A Bonds which are
outstanding hereunder at the time of execution of such instrument, appointing a
successor, or an

 

62

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

 

instrument or instruments in writing by the owners of not less than fifty-one
percent in aggregate principal amount of the Series 2007A Bonds which are
outstanding hereunder at the time of execution of such instrument, consenting to
the appointment by the Issuer of a successor and accompanied by an instrument of
appointment by the Issuer of such successor.

 

Section 8.12                  Appointment of Successor Bond Trustee by the
Bondholders; Temporary Bond Trustee. Subject to Section 8.9 in case the Bond
Trustee hereunder shall resign or be removed, or be dissolved, or shall be in
the process of dissolution or liquidation, or otherwise becomes incapable of
acting hereunder, or in case it shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor may be
appointed, by the owners of a majority in aggregate principal amount of Series
2007A Bonds then outstanding, by an instrument or concurrent instruments in
writing signed by such owners, or by their attorneys in fact, duly authorized;
provided, nevertheless, that in case of such vacancy the Borrower by an
instrument executed and signed by a duly authorized officer, may appoint a
temporary Bond Trustee to fill such vacancy until a successor Bond Trustee shall
be appointed by the Bondholders in the manner above provided; provided further,
that if no permanent successor Bond Trustee shall have been appointed by the
Bondholders within the six calendar months next succeeding the month during
which the Issuer appoints such a temporary Bond Trustee, such temporary Bond
Trustee shall without any further action on the part of the Issuer or the
Bondholders become the permanent successor Bond Trustee. The foregoing
notwithstanding, any such temporary Bond Trustee so appointed by the Issuer
shall immediately and without further act be superseded by any successor Bond
Trustee so appointed by such Bondholders within the six calendar months next
succeeding the month during which such temporary Bond Trustee is appointed.

 

Section 8.13                  Judicial Appointment of Successor Trustee. In case
at any time the Bond Trustee shall resign and no appointment of a successor Bond
Trustee shall be made pursuant to the foregoing provisions of this Article VIII
prior to the date specified in the notice of resignation as the date when such
resignation is to take effect, the resigning Bond Trustee may forthwith apply to
a court of competent jurisdiction for the appointment of a successor Bond
Trustee. If no appointment of a successor Bond Trustee shall be made pursuant to
the foregoing provisions of this Article VIII within 30 days after a vacancy
shall have occurred in the office of Bond Trustee, any owner of Series 2007A
Bonds may apply to any court of competent jurisdiction to appoint a successor
Bond Trustee. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, appoint a successor Bond Trustee.

 

Section 8.14                  Concerning Any Successor Bond Trustees. Every
successor Bond Trustee appointed hereunder shall execute, acknowledge and
deliver to its predecessor and also to the Issuer an instrument in writing
accepting such appointment hereunder, and thereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessor;
but such predecessor shall, nevertheless, on the written request of the Issuer,
or of its successor, execute and deliver an instrument transferring to such
successor Bond Trustee all the estates, properties, rights, powers and trusts of
such predecessor hereunder; and every predecessor Bond Trustee shall deliver all
securities and moneys held by it as Bond Trustee hereunder to its successors.
Should any instrument in writing from the Issuer be required by any successor
Bond Trustee for more fully and certainly vesting in such successor the estate,
rights, powers and duties hereby

 

63

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

 

vested or intended to be vested in the predecessor, any and all such instruments
in writing shall, on request, be executed, acknowledged and delivered by the
Issuer. The resignation of any Bond Trustee and the instrument or instruments
removing any Bond Trustee and appointing a successor hereunder, together with
all other instruments provided for in this Article shall be filed and/or
recorded by the successor Bond Trustee in each recording office, if any, where
this Bond Indenture shall have been filed and/or recorded.

 

Section 8.15                  Bond Trustee Protected in Relying Upon Resolution,
Etc. The resolutions, opinions, certificates and other instruments provided for
in this Bond Indenture may be accepted by the Bond Trustee as conclusive
evidence of the facts and conclusions stated therein and shall be full warrant,
protection and Issuer to the Bond Trustee for the release of property and the
withdrawal of cash hereunder.

 

Section 8.16                  Successor Bond Trustee as Trustee of Funds, Paying
Agent and Bond Registrar. In the event of a change in the office of Bond
Trustee, the predecessor Bond Trustee which has resigned or been removed shall
cease to be trustee of the Expense Fund, Interest Fund, Bond Sinking Fund,
Project Fund, Redemption Fund and any other funds provided hereunder and
Registrar and Paying Agent for principal of, premium, if any, and interest on
the Series 2007A Bonds, and the successor Bond Trustee shall become such Bond
Trustee, Registrar and Paying Agent unless a separate Paying Agent or Agents are
appointed by the Issuer in connection with the appointment of any successor Bond
Trustee.

 

64

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

 

ARTICLE IX

 

SUPPLEMENTAL BOND INDENTURES

 

Section 9.1                         Supplemental Bond Indentures Not Requiring
Consent of Bondholders. Subject to the limitations set forth in Section 9.2
hereof with respect to this Section 9.1, the Issuer and the Bond Trustee may,
but without the consent of, or notice to, any of the Bondholders, enter into an
indenture or indentures supplemental to this Bond Indenture, as shall not be
inconsistent with the terms and provisions hereof, for any one or more of the
following purposes:

 

(a)                                  to cure any ambiguity or formal defect or
omission in this Bond Indenture;

 

(b)                                 to grant to or confer upon the Bond Trustee
for the benefit of the Bondholders any additional rights, remedies, powers or
Issuer that may lawfully be granted to or conferred upon the Bondholders and the
Bond Trustee, or either of them;

 

(c)                                  to assign and pledge under or subject to
this Bond Indenture additional revenues, properties or collateral;

 

(d)                                 to evidence the appointment of a separate
bond trustee or the succession of a new bond trustee hereunder;

 

(e)                                  to permit the qualification of this Bond
Indenture under the Trust Indenture Act of 1939, as then amended, or any similar
federal statute hereafter in effect or to permit the qualification of the Series
2007A Bonds for sale under the securities laws of any state of the United
States;

 

(f)                                    to permit continued compliance with the
Tax Exemption Agreement;

 

(g)                                 to provide for the refunding or advance
refunding of any Series 2007A Bonds, including the right to establish and
administer an escrow fund and to take related action in connection therewith;
and

 

(h)                                 to make any other change that, in the
judgment of the Bond Trustee, does not materially adversely affect the rights of
any Bondholders.

 

If at any time the Issuer or the Bond Trustee proposes to enter into an
indenture or indentures supplemental to this Bond Indenture pursuant to
subparagraph (i) above, the Bond Trustee shall cause notice of the proposed
execution of such supplemental indenture to be given to each rating agency, if
any, then maintaining a rating on the Series 2007A Bonds in the manner provided
in Section 13.4 hereof at least 30 days prior to the execution of such
supplemental indenture, which notice shall include a copy of the proposed
supplemental indenture and shall deliver to each such rating agency each such
supplemental indenture promptly after it becomes effective.

 

65

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

 

Section 9.2                         Supplemental Bond Indentures Requiring
Consent of Bondholders. In addition to supplemental indentures  covered by
Section 9.1 hereof and subject to the terms and provisions contained in this
Section, and not otherwise, the owners of not less than fifty-one percent in
aggregate principal amount of the Series 2007A Bonds which are outstanding
hereunder at the time of the execution of such supplemental indenture, shall
have the right, from time to time, anything contained in this Bond Indenture to
the contrary notwithstanding, to consent to and approve the execution by the
Issuer and the Bond Trustee of such other indenture or indentures supplemental
hereto as shall be deemed necessary and desirable by the Issuer for the purpose
of modifying altering, amending, adding to or rescinding, in any particular, any
of the terms or provisions contained in this Bond Indenture or in any
supplemental indenture; provided, however, that nothing in this Section or in
Section 9.1 hereof contained shall permit, or be construed as permitting, a
supplemental indenture effecting or providing for: (a) an extension of the
stated maturity or reduction in the principal amount of, or reduction in the
rate or extension of the time of paying interest on, or reduction of any premium
payable on the redemption of any Series 2007A Bonds, without the consent of the
owners of such Bonds; (b) a reduction in the amount or extension of the time of
any payment required to be made to or from the Interest Fund or the Bond Sinking
Fund; (c) the creation of any lien prior to or on a parity with the lien of this
Bond Indenture, without the consent of the owners of all the Series 2007A Bonds
at the time outstanding; (d) a reduction in the aforesaid aggregate principal
amount of Series 2007A Bonds the owners of which are required to consent to any
such supplemental indenture, without the consent of the owners of all the Series
2007A Bonds at the time outstanding which would be affected by the action to be
taken; or (e) a modification of the rights, duties or immunities of the Bond
Trustee, without the written consent of the Bond Trustee.

 

If at any time the Issuer shall request the Bond Trustee to enter into any such
supplemental indenture for any of the purposes of this Section, the Bond Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
notice of the proposed execution of such supplemental indenture to be mailed to
each holder of Series 2007A Bonds as shown on the Bond Register and to each
rating agency then maintaining a rating on the Series 2007A Bonds. Such notice
shall briefly set forth the nature of the proposed supplemental indenture and
shall state that copies thereof are on file at the principal corporate trust
office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee
shall not, however, be subject to any liability to any Bondholder by reason of
its failure to mail such notice, and any such failure shall not affect the
validity of such supplemental indenture when consented to and approved as
provided in this Section. If the holders of the requisite principal amount of
Series 2007A Bonds which are outstanding hereunder at the time of the execution
of any such supplemental indenture shall have consented to and approved the
execution thereof as herein provided, no holder of any Series 2007A Bond shall
have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the
execution thereof, or to enjoin or restrain the Bond Trustee or the Issuer from
executing the same or from taking any action pursuant to the provisions thereof.
Upon the execution of any such supplemental indenture as in this Section
permitted and provided, this Bond Indenture shall be and be deemed to be
modified and amended in accordance therewith and the Bond Trustee shall deliver
a copy of such supplemental indenture to each rating agency then maintaining a
rating on the Series 2007A Bonds.

 

66

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

 

Anything herein to the contrary notwithstanding, so long as the Borrower is not
in default under the Loan Agreement, a supplemental indenture under this Article
IX which adversely affects the rights of the Borrower under the Loan Agreement
shall not become effective unless and until such corporation shall have
consented in writing to the execution and delivery of such supplemental
indenture. In this regard, the Bond Trustee shall cause notice of the proposed
execution and delivery of any such supplemental indenture to which the Borrower
has not already consented, together with a copy of the proposed supplemental
indenture and a written consent form to be signed by the Borrower, to be mailed
by certified or registered mail to the Borrower at least 30 days prior to the
proposed date of execution and delivery of any such supplemental indenture.

 

67

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

 

ARTICLE X

 

AMENDMENTS TO THE LOAN AGREEMENT

 

Section 10.1                  Amendments, Etc. to Loan Agreement Not Requiring
Consent. The Issuer, the Borrower and the Bond Trustee may, but without the
consent of or notice to the owners of the Series 2007A Bonds, consent to any
amendment, change or modification of the Loan Agreement (i) as may be required
by the  provisions of this Bond Indenture or such Loan Agreement, (ii) for the
purpose of curing any ambiguity or formal defect or omission, (iii) in
connection with any other change therein which, in the judgment of the Bond
Trustee, does not materially adversely affect the rights of the Bond Trustee,
the owners of the Series 2007A Bonds or (iv) as may be required for the purpose
of complying with the provisions of the Tax Exemption Agreement; provided,
however, that nothing in this Section 10.1 shall permit, or be construed as
permitting, any amendment, change or modification of the Loan Agreement that may
result in anything described in clauses (a) through (e) of Section 9.2(a)
hereof, without the consent of each Bondholder affected. If at any time the
Borrower shall request the Issuer and the Bond Trustee to consent to any
amendment, change or modification of the Loan Agreement pursuant to clause (iii)
above, the Bond Trustee shall cause notice of the proposed execution of such
amendment, change or modification to the Loan Agreement to be given to each
rating agency, if any, then maintaining a rating on the Series 2007A Bonds at
least 30 days prior to the execution of such amendment, change or modification
to the Loan Agreement, which notice shall include a copy of the proposed
amendment, change or modification to the Loan Agreement.

 

Section 10.2                  Amendments, Etc. to Loan Agreement Requiring
Consent of the Bondholders. Except for the amendments, changes or modifications
as provided in Section 10.1 hereof, neither the Issuer nor the Bond Trustee
shall consent to any other amendment, change or modification of the Loan
Agreement without the written approval or consent, given and procured as in this
Section provided, of the owners of not less than fifty-one percent in aggregate
principal amount of the Series 2007A Bonds which are outstanding hereunder at
the time of execution of any such amendment, change or modification. If at any
time the Issuer and the Borrower shall request the consent of the Bond Trustee
to any such proposed amendment, change or modification of the Loan Agreement,
the Bond Trustee shall, upon being satisfactorily indemnified with respect to
expenses, cause notice of such proposed amendment, change or modification to be
given to each holder of the Series 2007A Bonds as shown on the Bond Register in
the same manner as provided by Section 9.2 hereof with respect to supplemental
indentures. Such notice shall briefly set forth the nature of such proposed
amendment, change or modification and shall state that copies of the instrument
embodying the same are on file at the principal office of the Bond Trustee for
inspection by all Bondholders. The Bond Trustee shall not, however, be subject
to any liability to any Bondholder by reason of its failure to give such notice,
and any such failure shall not affect the validity of such amendment, change or
modification when consented to and approved as provided in this Section. If the
holders of not less than fifty-one percent in aggregate principal amount of the
Series 2007A Bonds outstanding hereunder at the time of the execution of any
such amendment, change or modification shall have consented to and  approved the
execution thereof as herein provided, no holder of any Series 2007A Bond shall
have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the
execution thereof, or to

 

68

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

 

enjoin or restrain the Bond Trustee or the Issuer from executing the same or
from taking any action pursuant to the provisions thereof.

 

69

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

 

ARTICLE XI

 

SATISFACTION OF THIS BOND INDENTURE

 

Section 11.1                  Defeasance. If the Issuer shall pay or provide for
the payment of the entire indebtedness on all Series 2007A Bonds (including, for
the purposes of this Section 11.1, Series 2007A Bonds held by the Borrower
outstanding in any one or more of the following ways:

 

(a)                                  by paying or causing to be paid the
principal of and interest on all Series 2007A Bonds outstanding, as and when the
same become due and payable;

 

(b)                                 by depositing with the Bond Trustee, in
trust, at or before maturity, moneys in an amount sufficient to pay or redeem
(when redeemable) all Series 2007A Bonds outstanding (including the payment of
interest payable on such Series 2007A Bonds to the maturity or redemption date
thereof), provided that such moneys, if invested, shall be invested in Escrow
Obligations in an amount, without consideration of any income or increment to
accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the
indebtedness on all Series 2007A Bonds outstanding at or before their respective
maturity dates; it being understood that the investment income on such Escrow
Obligations may be used for any other purpose under the Act;

 

(c)                                  by delivering to the Bond Trustee, for
cancellation by it, all Series 2007A Bonds outstanding; or

 

(d)                                 by depositing with the Bond Trustee, in
trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall
determine will, together with the income or increment to accrue thereon, without
consideration of any reinvestment thereof, be fully sufficient to pay or redeem
(when redeemable) and discharge the indebtedness on all Series 2007A Bonds
outstanding at or before their respective maturity dates (which determination
shall be made in reliance upon an accountant’s verification report reasonably
accepted to the Bond Trustee);

 

and if the Issuer shall pay or cause to be paid or make arrangements
satisfactory to the Bond Trustee for the payment of all other sums payable
hereunder by the Issuer, and if any such Series 2007A Bonds are to be optionally
redeemed prior to the maturity thereof, irrevocable notice of such redemption
shall have been given in accordance with the requirements of this Bond Indenture
or irrevocable instructions shall have been given to the Bond Trustee of such
notice, this Bond Indenture and the estate and rights granted hereunder shall
cease, determine, and be discharged, and thereupon the Bond Trustee shall, upon
Written Request of the Issuer, and upon receipt by the Bond Trustee of an
Officer’s Certificate of the Borrower and an opinion of Independent Counsel,
each stating that in the opinion of the signers all conditions precedent to the
satisfaction and discharge of this Bond Indenture have been complied with,
forthwith execute proper instruments acknowledging satisfaction of and
discharging this Bond Indenture and the lien hereof.

 

70

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

 

The satisfaction and discharge of this Bond Indenture shall be without prejudice
to the rights of the Bond Trustee to charge and be reimbursed by the Issuer and
the Borrower for any expenditures which it may thereafter incur in connection
herewith.

 

Any moneys, funds, securities, or other property remaining on deposit in the
Expense Fund, Interest Fund, Bond Sinking Fund, Project Fund, Redemption Fund or
in any other fund or investment under this Bond Indenture (other than the Escrow
Obligations or other moneys deposited in trust as above provided) shall, upon
the full satisfaction of this Bond Indenture, forthwith be transferred, paid
over and distributed to the Issuer and the Borrower, as their respective
interests may appear.

 

The Issuer or the Borrower may at any time surrender to the Bond Trustee for
cancellation by it any Series 2007A Bonds previously authenticated and
delivered, which the Issuer or the Borrower may have acquired in any manner
whatsoever, and such Series 2007A Bonds, upon such surrender and cancellation,
shall be deemed to be paid and retired.

 

Section 11.2                  Liability of Issuer Not Discharged. Upon the
deposit with the Bond Trustee, in trust, at or before maturity, of money or
Escrow Obligations in the necessary amount to pay or redeem all outstanding
Series 2007A Bonds (whether upon or prior to their maturity or the redemption
date of such Series 2007A Bonds) and compliance with the other payment
requirements of Section 11.1, provided that if such Series 2007A Bonds are to be
redeemed prior to the maturity thereof, notice of  such redemption shall have
been given as in Article V herein provided, or provisions satisfactory to the
Bond Trustee shall have been made for the giving of such notice, and subject to
the provisions of Section 11.4, this Bond Indenture may be discharged in
accordance with the provisions hereof but the liability of the Issuer upon the
Series 2007A Bonds shall continue, but the owners thereof shall thereafter be
entitled to payment only out of the moneys or the Escrow Obligations deposited
with the Bond Trustee as aforesaid.

 

Section 11.3                  Provision for Payment of Portion of the Series
2007A Bonds. If the Issuer shall pay or provide for the payment of a portion of
the Series 2007A Bonds (including, for the purposes of this Section 11.3, any
Series 2007A Bonds held by the Borrower) in one or more of the following ways:

 

(a)                                  by paying or causing to be paid the
principal of and interest on such portion of the Series 2007A Bonds, as and when
the same shall become due and payable;

 

(b)                                 by depositing with the Bond Trustee, in
trust, at or before maturity, moneys in an amount sufficient to pay or redeem
(when redeemable) a portion of the Series 2007A Bonds outstanding (including the
payment of interest payable on such portion of the Series 2007A Bonds to the
maturity or redemption date thereof), provided that such moneys, if invested,
shall be invested in Escrow Obligations in an amount, without consideration of
any income or increment to accrue thereon, sufficient to pay or redeem (when
redeemable) and discharge the indebtedness on such portion of the Series 2007A
Bonds at or before their respective maturity dates; it being understood that the
investment income on such Escrow Obligations may be used for any other purpose
under the Act;

 

71

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

 

(c)                                  by delivering to the Bond Trustee, for
cancellation by it, such portion of the Series 2007A Bonds; or

 

(d)                                 by depositing with the Bond Trustee, in
trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall
determine (which determination shall be made in reliance on an accountant’s
verification report of an accountant reasonably acceptable to the Bond Trustee)
will, together with the income or increment to accrue thereon, without
consideration of any reinvestment thereof, be fully sufficient to pay or redeem
(when redeemable) and discharge the indebtedness on such portion of the Series
2007A Bonds at or before their respective maturity dates;

 

and if the Issuer shall also pay or cause to be paid or made arrangements
satisfactory to the Bond Trustee for the payment of all other sums payable
hereunder by the Issuer with respect to such Series 2007A Bonds, and, if such
Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as in Article V of this Bond Indenture
provided or provisions satisfactory to the Bond Trustee shall have been made for
the giving of such notice, such Series 2007A Bonds shall cease to be entitled to
any lien, benefit or security under this Bond Indenture. The liability of the
Issuer in respect of such Series 2007A Bonds shall continue, but the owners
thereof shall thereafter be entitled to payment (to the exclusion of all other
Bondholders) only out of the moneys or the Escrow Obligations deposited with the
Bond Trustee as aforesaid.

 

Section 11.4                  When Advance Refunding is Not Permitted and
Special Conditions for Refundings. The other provisions of this Bond Indenture
notwithstanding, none of the Series 2007A Bonds outstanding hereunder may be
refunded as aforesaid nor may this Bond Indenture be discharged if under any
circumstances would result in the loss of any exclusion from federal income
taxation to which the Series 2007A Bonds would otherwise be entitled. As a
condition precedent to the advance refunding of any Series 2007A Bonds
outstanding hereunder, the Bond Trustee shall receive an opinion of Bond Counsel
(which counsel and opinion, including without limitation the scope, form,
substance and other aspects thereof are acceptable to the Bond Trustee and which
opinion may be based upon a ruling or rulings of the Internal Revenue Service
and the verification report referred to in Sections 11.1 and 11.3 hereof) to the
effect that such advance refunding will not result in the loss of any exclusion
for purposes of federal income taxation to which the interest on the Series
2007A Bonds would otherwise be entitled.

 

72

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

 

ARTICLE XII

 

MANNER OF EVIDENCING OWNERSHIP OF SERIES 2007A BONDS

 

Section 12.1                  Proof of Ownership. Any request, direction,
consent or other instrument provided by this Bond Indenture to be signed and
executed by the Bondholders may be in any number of concurrent writings of
similar tenor and may be signed or executed by such Bondholders in person or by
agent appointed in writing. Proof of the execution of any such request,
direction or other instrument or of the writing appointing any such agent and of
the ownership of Series 2007A Bonds, if made in the following manner, shall be
sufficient for any of the purposes of this Bond Indenture and shall be
conclusive in favor of the Bond Trustee and the Issuer, with regard to any
action taken by them, or either of them, under such request or other instrument,
namely:

 

(a)                                  the fact and date of the execution by any
person of any such writing may be proved by the certificate of any officer in
any jurisdiction who by law has power to take acknowledgments in such
jurisdiction, that the person signing such writing acknowledged before him the
execution thereof, or by the affidavit of a witness of such execution; and

 

(b)                                 the ownership of Series 2007A Bonds and the
amounts and registration numbers of such Bonds and the date of holding the same
shall be proved by the Bond Register.

 

Any action taken or suffered by the Bond Trustee pursuant to any provision of
this Bond Indenture, upon the request or with the assent of any Person who at
the time is the owner of any Series 2007A Bond or Series 2007A Bonds, shall be
conclusive and binding upon all future owners of the same Series 2007A Bond or
Series 2007A Bonds.

 

73

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

 

ARTICLE XIII

MISCELLANEOUS

 

Section 13.1      Limitation of Rights.  With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Bond Indenture or the Series 2007A Bonds is intended or shall be construed
to give to any person other than the parties hereto and the owners of the Series
2007A Bonds any legal or equitable right, remedy or claim under or in respect to
this Bond Indenture or any covenants, conditions and provisions herein
contained; this Bond Indenture and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and the owners of the Series 2007A Bonds as herein
provided.

 

Section 13.2      Unclaimed Moneys.  Any moneys deposited with the Bond Trustee
in accordance with the terms and covenants of this Bond Indenture, in order to
redeem or pay any Series 2007A Bond in accordance with the provisions of this
Bond Indenture which remain unclaimed by the owners of the Series 2007A Bond for
four years after the redemption or maturity date, as the case may be, shall, if
the Borrower is not at the time, to the knowledge of the Bond Trustee, in
default with respect to any of the terms and conditions of this Bond Indenture
or the Series 2007A Bonds, be repaid by the Bond Trustee to the Borrower upon
its written request therefor; and thereafter the owners of the Series 2007A Bond
shall be entitled to look only to the Borrower for payment thereof.  Such moneys
may be invested in accordance with Section 4.7 hereof if the Borrower makes
arrangements satisfactory to the Bond Trustee to indemnify the Bond Trustee  for
any costs which it may incur due to the unavailability of moneys due to such
investment.  Investment income on any such unclaimed moneys received by the Bond
Trustee shall be deposited as provided in Section 4.7 hereof until the final
maturity or redemption date of the Series 2007A Bonds.  Any such income
generated after such date shall be deemed to be unclaimed moneys of the type
referred to in the first sentence of this Section and shall be disposed of in
accordance with such sentence. The Issuer hereby covenants and agrees to
indemnify and save the Bond Trustee harmless from any and all loss, costs,
liability and expense suffered or incurred by the Bond Trustee by reason of
having returned any such moneys to the Issuer as herein provided.

 

Section 13.3      Severability.  If any provision of this Bond Indenture shall
be held or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions or any constitution or statute or rule of public policy, or for any
other reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatever.

 

The invalidity of any one or more phrases, sentences, clauses or Sections in
this Bond Indenture contained shall not affect the remaining portions of this
Bond Indenture, or any part thereof.

 

74

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

 

Section 13.4      Notices.  It shall be sufficient service of any notice,
request, complaint, demand or other paper if the same shall be duly mailed by
registered or certified mail, sent by reputable registered overnight mail or
delivery service, or send by personal delivery or confirmed facsimile delivery,
and addressed as follows:

 

To the Issuer:

 

Brown County , South Dakota
25 Market Street, Suite 2

Aberdeen, South Dakota 57401

Attention: County Auditor

 

To the Borrower:

 

Heartland Grain Fuels, L.P.

10201 Wayzata Boulevard, Suite 250

Minneapolis, Minnesota 55305

Attention: General Partner

 

To the Bond Trustee:

 

Well Fargo, National Association

MAC N9311-115

625 Marquette Avenue, 11th Floor

Minneapolis, Minnesota 55479

Attention:  Corporate Trust

 

Section 13.5      Bond Trustee as Paying Agent and Registrar.  The Bond Trustee
is hereby designated and agrees to act as principal Paying Agent and Registrar
for and in respect to the Series 2007A Bonds.

 

Section 13.6      Counterparts.  This Bond Indenture may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.

 

Section 13.7      Applicable Law.  This Bond Indenture shall be governed
exclusively by the applicable laws of the State of South Dakota.

 

Section 13.8      Immunity of Officers, Employees and Members of Issuer.  No
recourse shall be had for the payment of the principal of or premium, if any, or
interest on any of the Series 2007A Bonds or for any claim based thereon or upon
any obligation, covenant or agreement in this Bond Indenture contained against
any past, present or future elected official, officer, director, member,
employee or agent of the Issuer, or of any successor political subdivision, as
such, either directly or through the Issuer or any successor political
subdivision, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of
any such elected official, officers, directors, members, employees or agents as
such is hereby expressly waived and released as a condition of

 

75

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

 

and consideration for the execution of this Bond Indenture and the issuance of
such Series 2007A Bonds.

 

Section 13.9      Parties Interested Hereunder.  Nothing in this Bond Indenture
expressed or implied is intended or shall be construed to confer upon, or to
give or grant to, any person or entity, other than the Issuer, the Bond Trustee
and the registered owners of the Series 2007A Bonds, any right, remedy or claim
under or by reason of this or any covenant, condition or stipulation hereof, and
all covenants, stipulations, promises and agreements in this Bond Indenture,
contained by and on behalf of the Issuer shall be for the sole and exclusive
benefit of the Issuer, the Bond Trustee and the registered owners of the Series
2007A Bonds.

 

Section 13.10    Continuing Disclosure.  Pursuant to Section 5.16 of the Loan
Agreement, the Borrower has agreed to undertake all responsibility for
compliance with continuing disclosure requirements pursuant to a Continuing
Disclosure Agreement, dated as of September 1, 2007 (the “Continuing Disclosure
Agreement”) between the Borrower and the Bond Trustee to be executed the date of
issuance and delivery of the Series 2007A Bonds, and the Issuer shall have no
liability to the Bondholders or any other person with respect to such disclosure
matters.  Notwithstanding any other provision of this Bond Indenture, failure of
the Borrower to comply with the Continuing Disclosure Agreement shall not be
considered an event of default, hereunder; however, any Bondholder may take such
actions as may be necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the Borrower to comply with its
obligations under Section 5.16 of the Loan Agreement.

 

Section 13.11    The Intercreditor Agreement.  In connection with the execution
and delivery of the Bond Indenture, the Bond Trustee has entered into the
Intercreditor Agreement which sets forth the relative rights and priorities of
the Bondholders and the Senior Lenders. The performance of the Bond Trustee of
its duties hereunder and all actions taken by the Bond Trustee, as trustee
hereunder, are subject to the express terms of the Intercreditor Agreement.
Notwithstanding anything in this Bond Indenture to the contrary, any right of
payment from or on behalf of the Borrower, liens or security interests granted
to the Bond Trustee (other than the liens and security interests granted
pursuant to the Granting Clauses of the Bond Indenture), the exercise of certain
rights on remedies hereunder and the ability of the Bond Trustee to perform or
enforce certain provisions of this Bond Indenture are subject to the provisions
of (but only to the extent provided in) the Intercreditor Agreement. In the
event that the express terms of the Intercreditor Agreement shall prohibit or
restrict the Bond Trustee from taking any action or enforcing any right
hereunder, the express terms of the Intercreditor Agreement shall govern and in
the event of any conflict between the express terms of the Intercreditor
Agreement and the Bond Indenture, the express terms of the Intercreditor
Agreement shall govern and control; provided, however, the terms of the
Intercreditor Agreement shall not constitute and amendment to, or waiver or
deletion of, performance of any provisions, or waive or delete or amend any
default or an Event of Default under the Bond Indenture.

 

76

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

 

IN WITNESS WHEREOF, the Brown County, South Dakota, has caused these presents to
be signed in its name and on its behalf by its Chair, and the same to be
attested by its County Auditor, and to evidence its acceptance of the trusts
hereby created, Wells Fargo Bank, National Association has caused these presents
to be signed in its name and on its behalf by one of its authorized officers,
[its official seal to be hereunto affixed], and the same to be attested by one
of its authorized officers, all as of the day and year first above written.

 

 

BROWN COUNTY, SOUTH DAKOTA

 

 

 

 

By

/s/ Mike Wiese

 

 

Its:

Chair

 

 

 

 

 

 

 

Attest:

/s/ Maxine Taylor

 

 

Its:

County Auditor

 

 

[Execution by Bond Trustee on following page.]

 

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

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION

 

AS BOND TRUSTEE

 

 

 

 

 

By

/s/ Steven R. Gubrud

 

 

 

 

 

 

Its:

Vice President

 

 

 

 

 

 

 

 

By

 

 

 

 

 

 

 

Its:

 

 

 

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

 

EXHIBIT A

(FORM OF SERIES 2007A BOND)

 

UNITED STATES OF AMERICA

 

STATE OF SOUTH DAKOTA

 

BROWN COUNTY, SOUTH DAKOTA

 

SUBORDINATE SOLID WASTE FACILITIES REVENUE BOND

 

(HEARTLAND GRAIN FUELS, L.P. ETHANOL PLANT PROJECT), SERIES 2007A

 

R-_______

 

INTEREST RATE:

 

MATURITY DATE:

 

DATED DATE:

 

CUSIP:

 

REGISTERED OWNER:

 

PRINCIPAL SUM:

 

AS PROVIDED IN THE BOND INDENTURE REFERRED TO HEREIN, UNTIL THE TERMINATION OF
THE SYSTEM OF BOOK-ENTRY-ONLY TRANSFERS THROUGH THE DEPOSITORY TRUST COMPANY,
NEW YORK, NEW YORK (TOGETHER WITH ANY SUCCESSOR SECURITIES DEPOSITORY APPOINTED
PURSUANT TO THE BOND INDENTURE, “DTC”), AND NOTWITHSTANDING ANY OTHER PROVISIONS
OF THE BOND INDENTURE TO THE CONTRARY, (A) THIS BOND MAY BE TRANSFERRED, IN
WHOLE BUT NOT IN PART, ONLY TO A NOMINEE OF DTC, OR BY A NOMINEE OF DTC TO DTC
OR A NOMINEE OF DTC, OR BY DTC OR A NOMINEE OF DTC TO ANY SUCCESSOR SECURITIES
DEPOSITORY OR ANY NOMINEE THEREOF AND (B) A PORTION OF THE PRINCIPAL AMOUNT OF
THIS BOND MAY BE PAID OR REDEEMED WITHOUT SURRENDER HEREOF TO THE PAYING AGENT. 
DTC OR A NOMINEE, TRANSFEREE OR ASSIGNEE OF DTC OF THIS BOND MAY NOT RELY UPON
THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF OUTSTANDING
AND UNPAID.  THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID SHALL FOR ALL
PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER PROVIDED IN THE BOND INDENTURE.

 

A-1

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

 

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (A) TO THE
BOND REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE OR (B) TO THE BOND
TRUSTEE FOR PAYMENT OF PRINCIPAL OR REDEMPTION PRICE, AND ANY BOND ISSUED IN
REPLACEMENT HEREOF OR SUBSTITUTION HEREFOR IS REGISTERED IN THE NAME OF DTC OR
ITS NOMINEE OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC AND ANY PAYMENT IS MADE TO DTC OR ITS NOMINEE, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE ONLY
THE REGISTERED OWNER HEREOF, CEDE & CO., AS NOMINEE OF DTC, HAS AN INTEREST
HEREIN.

 

BROWN COUNTY, SOUTH DAKOTA (the “Issuer”), a public body corporate and politic
and a political subdivision duly and validly created and existing under the laws
and constitution of the state of South Dakota and has all powers granted under
the provisions, restrictions and limitations of South Dakota Codified Laws
Chapter 9-54, as supplemented and amended (the “Act”), for value received,
hereby promises to pay in lawful money of the United States of America to the
registered owner shown above, or registered assigns, on the maturity date
specified above, unless this Bond shall be redeemable and shall have previously
been called for redemption and payment of the redemption price made or provided
for, but solely from amounts available under the Bond Indenture (hereinafter
referred to), and certain amounts payable under the Loan Agreement (hereinafter
referred to), which payments are pledged and assigned for the benefit and
payment hereof pursuant to the Bond Indenture and not otherwise, upon surrender
hereof, the principal sum set forth above, and to pay interest on such principal
amount (based on a 360-day year composed of twelve 30-day months) in like
manner, but solely from said amounts available under the Bond Indenture, and
certain amounts payable under the Loan Agreement, from the dated date hereof at
the rate  per annum specified above, payable on each January 1 and July l,
beginning January 1, 2008, until payment of such principal amount, or provision
therefor, shall have been made upon redemption or at maturity. 

 

The principal of this Bond is payable upon surrender of this Bond at the
principal corporate trust office in Minneapolis, Minnesota of Wells Fargo Bank,
National Association, as bond trustee (the “Bond Trustee”).  Except as otherwise
provided in the Bond Indenture with respect to Defaulted Interest (as defined
therein), interest payments hereon shall be made to the registered owner (the
“Holder”) hereof appearing on the registration books of the Issuer (the “Bond
Register”) maintained by the Bond Trustee, as bond registrar, as of the close of
business of the Bond Trustee on the 15th day of the month (whether or not a
business day) next preceding the interest payment date (the “Record Date”) and
shall be paid (i) by check or draft of the Bond Trustee mailed on the applicable
interest payment date to the Holder at the Holder’s address as it appears on the
Bond Register or at such other address furnished in writing by such registered
owner to the Bond Trustee no later than the Record Date or (ii) as to any Holder
of $1,000,000 or more in aggregate principal amount of the Series 2007A Bonds
who so elects, by wire transfer of funds to such wire transfer address within
the continental United States as the Holder shall have furnished in writing to
the Bond Trustee no later than the Record Date, which wire instructions shall
remain in effect until the Bond Trustee is notified to the contrary.

 

Defaulted Interest with respect to any Series 2007A Bond shall cease to be
payable to the Owner of such Series 2007A Bond on the relevant Record Date and,
except as hereinafter

 

A-2

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

 

provided, shall be payable to the Owner in whose name such Series 2007A Bond is
registered at the close of business of the Bond Trustee on the Special Record
Date for the payment of such Defaulted Interest, which Special Record Date shall
be fixed in the following manner.  The Borrower shall notify the Bond Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Series
2007A Bond and the date of the proposed payment (which date shall be such, as
will enable the  Bond Trustee to comply with the next sentence hereof) and, at
the same time, the Borrower or the Obligated Group shall deposit with the Bond
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Bond Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the owners of
the Series 2007A Bonds entitled to such Defaulted Interest as provided in this
Section.  Following receipt of such funds, the Bond Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which date will be
fifteen (15) days prior to the date of the proposed payment.  The Bond Trustee
shall promptly notify the Borrower of such Special Record Date and, in the name
and at the expense of the Borrower, shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, not less than 10 days prior to such Special Record
Date to each Owner of a Series 2007A Bond entitled to such notice at the address
of such Owner as it appears on the Bond Register. Such Defaulted Interest shall
be paid to the Owners of the Series 2007A Bonds in whose names the Series 2007A
Bonds on which such Defaulted Interest is to be paid are registered on such
Special Record Date.

 

Upon a Determination of Taxability, the interest rate on the Bonds will be
converted to the Taxable Rate as of the date of the Determination of Taxability,
regardless of the date as of which the Bonds were taxable. The Taxable Rate is a
fluctuating per annum interest rate adjusted on the first day of each calendar
quarter in a year (January 1, April 1, July, and October 1) and equal to the sum
of (i) the rate of interest published as the London Interbank Offered Rates with
a term of three months as of each adjustment date, plus (ii) 350 basis points.
If the adjustment date is not a Business Day, the rate will be adjusted on the
next Business Day. The Bond Trustee may be precluded by the terms of the
Intercreditor Agreement and the Accounts Agreement from paying interest in the
Bonds at the Taxable Rate.

 

This Bond is one of an authorized series of Bonds issued under the Bond
Indenture in the aggregate principal amount of $______________ (the “Series
2007A Bonds”) for the purpose of lending funds to Heartland Grain Fuels, L.P., a
limited partnership, organized and existing under the laws of the State of
Delaware (the “Borrower”) which funds will be used, together with certain moneys
of the Borrower, to (i) pay the cost of the acquisition, construction and
equipping of improvements and expansion of the Facility consisting of certain
Solid Waste Disposal Facilities (as herein defined which constitute a project
within the meaning of the Act) (the “Project”), which is owned by the Issuer and
operated by the Borrower, (ii) fund a debt service reserve, (iii) pay interest
on the Series 2007A Bonds during construction of the Project and (iv) pay
certain expenses incurred in connection with the issuance of the Series 2007A
Bonds.

 

The loan by the Issuer to the Borrower of the proceeds of the Series 2007A Bonds
will be made under and secured pursuant to a Loan Agreement, dated as of October
1, 2007 (the “Loan Agreement”) between the Borrower and the Issuer.

 

A-3

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

 

The Series 2007A Bonds are all issued under and equally and ratably secured by
and entitled to the security of a Bond Trust Indenture dated as of October 1,
2007 (the “Bond Indenture”) duly executed and delivered by the Issuer to the
Bond Trustee, pursuant to which Bond Indenture all of the right, title and
interest of the Issuer in and to the Loan Agreement (excluding Unassigned
Rights, as defined in the Bond Indenture) are assigned by the Issuer to the Bond
Trustee as security for the Series 2007A Bonds. The payment of principal and
interest, and redemption premium, if any, on Series 2007A Bonds will be secured
by the Bond Collateral Documents as defined in the Bond Indenture. The ability
of the Borrower to make payments under the Loan Agreement and the enforcement
thereof and of the Bond Collateral Documents, and the use of the proceeds of any
such enforcement, are subject and subordinate to the Senior Credit Facilities
between the Borrower and the Senior Lenders pursuant to the Accounts Agreement
and the Intercreditor Agreement, all as defined in the Bond Indenture. Reference
is made to the Bond Indenture, the Loan Agreement, the Bond Collateral
Documents, the Senior Credit Facilities, the Accounts Agreement, the
Intercreditor Agreement and to all amendments to any such agreements for the
provisions, among others, with respect to the nature and extent of the security,
the rights, duties and obligations of the Issuer, the Bond Trustee and the
rights of the owners of the Series 2007A Bonds and the Senior Lenders, and to
all the provisions of which the owner, by the acceptance of this Bond, assents.

 

This Bond and such other Bonds of the series of which it forms a part do not
constitute a debt or liability of the State of South Dakota (the “State”) or of
any political subdivision thereof or a pledge of the faith and credit of the
State or any political subdivision thereof.  The issuance of the Series 2007A
Bonds under the provisions of the Act does not, directly, indirectly or 
contingently, obligate the State or any political subdivision thereof to levy
any form of taxation for the payment thereof or to make any appropriation for
their payment, and such Bonds and the interest payable thereon do not now and
shall never constitute a debt of the State or any political subdivision thereof
within the meaning of the Constitution or the statutes of the State and do not
now and shall never constitute a charge against the credit or taxing power of
the State or any political subdivision thereof.  Neither the State nor any
political subdivision thereof shall in any event be liable for the payment of
the principal of or interest on the Series 2007A Bonds or for the performance of
any pledge, obligation or agreement of any kind whatsoever which may be
undertaken by the Issuer.  No breach by the Issuer of any such pledge,
obligation or agreement may impose any liability, pecuniary or otherwise, upon
the State or any political subdivision thereof.  No covenant or agreement in the
Series 2007A Bonds or in the Bond Indenture and no obligation imposed by the
Bond Indenture upon the Issuer and no breach thereof shall constitute or give
rise to or impose upon the Issuer a general liability or a charge upon its
general credit or property other than the trust estate (as described in the Bond
Indenture). 

 

This Bond and such other Bonds of the series of which it forms a part, and the
interest payable hereon and thereon, are limited obligations of the Issuer and
are payable solely from amount available under the Bond Indenture and from
payments or prepayments to be made under the Loan Agreement, which are pledged
and assigned for the payment of the Series 2007A Bonds in accordance with the
Bond Indenture, and from moneys and investments on deposit in various funds
under the Bond Indenture.

 

This Bond is registered on the Bond Register and may be transferred by the
registered owner hereof at the written request of such registered owner in
person or by his duly authorized

 

A-4

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

 

attorney, but only in the manner, subject to the limitations and upon the
payment of the charges provided in the Bond Indenture and upon surrender and
cancellation of this Bond.  Upon such transfer, a new fully registered bond or
bonds of the same maturity and of authorized denominations for the same
aggregate principal amount shall be issued to the transferee in exchange
therefor.  The Issuer and the Bond Trustee may deem and treat the person in
whose name this Bond is registered as the absolute owner hereof for the purpose
of receiving payment of, or on account of, the principal and interest due hereon
and for all other purposes, and neither the Issuer nor the Bond Trustee shall be
affected by any notice to the contrary.  The Issuer and the Bond Trustee shall
not be required to register the transfer or exchange of any Series 2007A Bond
after notice calling such Bond or portion thereof for redemption has been given
as provided in the Bond Indenture, or during the period of 15 days next
preceding the giving of such notice of redemption with respect to any Series
2007A Bonds of the same maturity.

 

The Series 2007A Bonds are issuable only as registered bonds, in denominations
of $5,000 and integral multiples thereof.

 

With respect to the payment of Series 2007A Bonds, whether at maturity or by
Mandatory Sinking Fund Redemption (as defined in the Bond Indenture), the Issuer
shall have on deposit in the Bond Sinking Fund (as defined in the Bond
Indenture), moneys in the amounts and at the times, respectively, as follows:

 

January 1
of the Year

 

Principal
Amount

 

January 1
of the Year

 

Principal
Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moneys on deposit in the Bond Sinking Fund on January 1 of each year shall be
applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds in
the amount set forth above.  Payment of the Series 2007A Bonds through the Bond
Sinking Fund shall be without premium.  If less than all Series 2007A Bonds of a
particular maturity are subject to Mandatory Sinking Fund Redemption on a
particular date, the Series 2007A Bonds to be redeemed shall be selected by lot
in such manner as may be designated by the Bond Trustee.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor
Agreement, the Series 2007A Bonds are redeemable out of proceeds received from
insurance and condemnation and from sale under threat of condemnation under
certain conditions described in the Bond Indenture (“Extraordinary Redemption”),
in whole or in part, and if in part, by maturities (less than all of a single
maturity to be selected by lot in such manner as may be determined by the Bond
Trustee) designated by the Borrower, at a redemption price equal to the
principal amount thereof plus accrued and unpaid interest thereon to the date
fixed for redemption and without premium, as provided in the Bond Indenture.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor
Agreement, outstanding Series 2007A Bonds are also subject to redemption prior
to maturity on or after

 

A-5

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

 

January 1, _____ at the option of the Issuer upon direction of the Borrower
(“Optional Redemption”) out of amounts prepaid under the Loan Agreement and
deposited in the Redemption Fund (as defined in the Bond Indenture), in whole or
in part at any time, and if in part by maturities (less than all of a single
maturity is being redeemed by, lot within a maturity or in such manner as may be
reasonably determined by the Bond Trustee) at the redemption prices (expressed
as percentages of the principal amount of the Series 2007A Bonds to be redeemed)
as set forth below plus accrued interest thereon to the date fixed for
redemption:

 

Redemption Dates
(Dates inclusive)

 

Redemption
Price

 

 

 

 

 

January 1, 20__ through December 31, 20__

 

____

%

January 1, 20__ through December 31, 20__

 

____

%

January 1, 20__ and thereafter

 

____

%

 

No Extraordinary Redemption or Optional Redemption of less than all of the
Series 2007A Bonds at the time outstanding shall be made unless the aggregate
principal amount of Series 2007A Bonds to be redeemed is equal to or greater
than $100,000.  In the case of any Extraordinary Redemption or Optional
Redemption or any purchase and cancellation of Series 2007A Bonds, the Issuer
shall receive credit against its required Bond Sinking Fund deposits with
respect to such Series 2007A Bonds.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor
Agreement, outstanding Series 2007A Bonds are also subject to mandatory
redemption prior to maturity (herein referred to as a “Determination of
Taxability Redemption”) upon a Determination of Taxability, in whole but not in
part, on the earliest redemption date for which notice can be given as required
in Section 5.3 hereof as the redemption price equal to the principal amount of
the Series 2007A Bonds to be redeemed plus accrued interest thereon to the date
of redemption, without penalty.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor
Agreement, the Bonds are subject to mandatory redemption in part by lot (or such
other random means selected by the Bond Trustee) at a redemption price equal to
the principal amount thereof, together with accrued interest to the date of
redemption, from proceeds of the Series 2007A Bonds available therefor after the
Completion Date.

 

In the event any of the Series 2007A Bonds are called for redemption as
aforesaid, notice thereof identifying the Series 2007A Bonds to be redeemed will
be given by mailing a copy of the redemption notice by mail not less than 30 or
more than 60 days prior to the date fixed for redemption to the registered 
owner of each Series 2007A Bond to be redeemed at the address shown on the Bond
Register; provided, however, that failure to give such notice by mailing, or any
defect in such notice or mailing, as to any Series 2007A Bond, shall not affect
the validity of any proceedings for redemption of any other Series 2007A Bond
with respect to which notice was properly given.  All Series 2007A Bonds so
called for redemption will cease to bear interest

 

A-6

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

 

on the specified redemption date, provided funds for their redemption are on
deposit at the place of payment at that time, and shall no longer be protected
by the Bond Indenture and shall not be deemed to be outstanding under the
provisions of the Bond Indenture.

 

The Series 2007A Bonds are subject to advance defeasance of the Bond Indenture
by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations (as
defined in the Bond Indenture) in such amount as the Bond Trustee shall
determine (such determination may be based upon an accountant’s verification
report) will, together with the income or increment to accrue thereon, without
consideration of any reinvestment thereof, be fully sufficient to pay or redeem
(when redeemable) and discharge the indebtedness on all Series 2007A Bonds
outstanding under the Bond Indenture at or before their respective maturity
dates.  The Series 2007A Bonds are also subject to advance defeasance of the
Bond Indenture by depositing with the Bond Trustee, in trust, at or before
maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all
Series 2007A Bonds outstanding (including the payment of interest payable on
such Series 2007A Bonds to the maturity or redemption date thereof), provided
that such moneys, if invested, shall be invested in Escrow Obligations (as
defined in the Bond Indenture) in an amount, without consideration of any income
or increment to accrue thereon, sufficient to pay or redeem (when redeemable)
and discharge the indebtedness on all Series 2007A Bonds outstanding under the
Bond Indenture at or before their respective maturity dates; it being understood
that the investment income on such Escrow Obligations may be used for any other
purpose under the Act.  Upon such payment or provision therefor, together with
all other payments required under the Bond Indenture, the Bond Indenture may be
discharged in accordance with the provisions thereof, but the Issuer shall
remain the obligor on all Series 2007A Bonds, although the owners thereof and
the owner hereof shall be entitled to payment solely out of such moneys or
Escrow Obligations deposited with the Bond Trustee.

 

The Issuer may also pay or provide for the payment of any portion of the Series
2007A Bonds by: (a) depositing with the Bond Trustee, in trust, moneys or Escrow
Obligations in such amount as the Bond Trustee shall determine (such
determination may be based upon an accountant’s verification report) will,
together with the income or increment to accrue thereon, without consideration
of any reinvestment thereof, be fully sufficient to pay or redeem (when
redeemable) and discharge the indebtedness on such portion of the Series 2007A
Bonds at or before their respective maturity dates; or (b) depositing with the
Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to
pay or redeem (when redeemable) a portion of the Series 2007A Bonds outstanding
(including the payment of interest payable on such portion of the Series 2007A
Bonds to the maturity or redemption date thereof), provided that such moneys, if
invested, shall be invested in Escrow Obligations in an amount, without
consideration of any income or increment to accrue thereon, sufficient to pay or
redeem (when redeemable) and discharge the indebtedness on such portion of the
Series 2007A Bonds at or before their respective maturity dates; it being
understood that the investment income on such Escrow Obligations may be used for
any other purpose under the Act. Upon such deposit, such portion of the Series
2007A Bonds shall cease to be entitled to any lien, benefit or security under
the Bond Indenture.  The Issuer shall remain the obligor on such portion of the
Series 2007A Bonds but the owners thereof shall be entitled to payment (to the
exclusion of all other Bondholders) solely out of such moneys or Escrow
Obligations deposited with the Bond Trustee.

 

A-7

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

 

The foregoing notwithstanding, none of the Series 2007A Bonds may be so refunded
nor may the Bond Indenture be discharged if under any circumstances such
refunding would result in the loss of any exclusion for purposes of federal
income taxation to which the interest on the Series 2007A Bonds would otherwise
be entitled.  As a condition precedent to the advance refunding of any Series
2007A Bonds, the Bond Indenture requires that the Bond Trustee receive an
opinion of nationally recognized municipal bond counsel (which counsel and
opinion, including without limitation the scope, form, substance and other
aspects thereof are acceptable to the Bond Trustee and which opinion may be
based upon a ruling or rulings of the Internal Revenue Service and an
accountant’s verification report) to the effect that such refunding will not
result in the loss of any exclusion for purposes of federal income taxation to
which the interest on the Series 2007A Bonds would otherwise be entitled.

 

The owner of this Bond shall have no right to enforce the provisions of the Bond
Indenture or to institute action to enforce the covenants therein, or to take
any action with respect to any event of default under the Bond Indenture, or to
institute, appear in or defend any suit or other proceedings with respect
thereto, except as provided in the Bond Indenture.  In certain events, on the
conditions, in the manner and with the effect set forth in the Bond Indenture,
the principal of the Series 2007A Bonds issued under the Bond Indenture and then
outstanding may become or may be declared due and payable before the stated
maturity thereof, together with interest accrued thereon.  Modifications or
alterations of the Bond Indenture or of any supplements thereto, may be made
only to the extent and in the circumstances permitted by the Bond Indenture.

 

It is hereby certified that all conditions, acts and things required to exist,
happen and be performed under the Act and under the Bond Indenture precedent to
and in the issuance of this Bond, exist, have happened and have been performed,
and that the issuance, authentication and delivery of this Bond have been duly
authorized by resolution of the Issuer duly adopted.

 

No recourse shall be had for the payment of the principal of, premium, if any,
or interest on any of the Series 2007A Bonds or for any claim based thereon or
upon any obligation, covenant or agreement in the Bond Indenture contained,
against any past, present or future officer, director, member, employee or agent
of the Issuer, or any incorporator, officer, director, member, trustee, employee
or agent of any successor to the Issuer or body politic, as such, either
directly or through the Issuer or any successor to the Issuer or body politic,
under any rule of law or equity, statute or constitution or by the enforcement
of any assessment or penalty or otherwise, and all such liability of any such
incorporators, officers, directors, trustees, members, employees or agents, as
such, is hereby expressly waived and released as a condition of and
consideration for the execution of the Bond Indenture and the issuance of any of
the Series 2007A Bonds.

 

This Bond shall not be valid or become obligatory for any purpose or be entitled
to any security or benefit under the Bond Indenture until the certificate of
authentication hereon shall have been duly executed by the Bond Trustee.

 

A-8

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

 

IN WITNESS WHEREOF, as provided by the Act, Brown County, South Dakota has
caused this Bond to be executed in its name and on its behalf by the manual or
facsimile signature of its Chair [and its seal to be hereunto affixed or
reproduced] and attested with the manual or facsimile signature of its County
Auditor, all as of the dated date specified above.

 

 

BROWN COUNTY, SOUTH DAKOTA

 

 

 

 

By

 

 

Its:

Chair

 

 

 

 

 

 

 

Attest:

 

 

Its:

County Auditor

(Seal)

 

 

Countersignature of Resident Attorney

 

 

 

 

Countersigned:

 

 

 

 

By

 

 

 

 

A Resident Attorney

 

 

 

A-9

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

 

CERTIFICATE OF AUTHENTICATION

 

This Bond is one of the Series 2007A Bonds described in the within-mentioned
Bond Indenture.

 

Authentication Date:

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,

 

Bond Trustee

 

 

 

 

 

By

 

 

 

 

Authorized Signatory

 

A-10

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

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

 

 

 

 

 

 

 

 

(Name and Address of Assignee)

 

 

the within Bond and does hereby irrevocably constitute and appoint
_______________________, Attorney, to transfer the said Bond on the Bond
Register thereof with full power of substitution in the premises.

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTICE: The assignor’s signature to this assignment must correspond with the
name as it appears upon the face of the within bond in every particular, without
alteration or enlargement or any change whatsoever.

 

 

Signature guaranteed:

 

 

 

NOTICE:  Signature must be guaranteed by an institution who is a participant in
the Securities Transfer Agent Medallion Program (“STAMP”) or similar program

 

 

NOTICE:

 

The signature to this assignment must correspond with the name of the registered
owner as it appears upon the face of the within Bond in every particular,
without alteration or enlargement or any change whatever.

 

A-11

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

 

EXHIBIT B

PROJECT DESCRIPTION

 

The Project consists of Solid Waste Disposal Facilities at the Aberdeen
Facility, including the following:

 

Centrifuge.  The centrifuge portion of the Project consists of (i) the stillage
pump, (ii) the whole stillage tank, (iii) centrifuges, (iv) a centrifuge
conveyor, used solely to transport stillage cake from the centrifuges to the
dryer, (v) then stillage storage tanks, used to temporarily hold then stillage
removed from the centrifuges prior to being pumped to the evaporator, and
(vi) related pipes, valves, switches, agitators, and controls.

 

Evaporator.  The evaporator portion of the Project consists of (i) a portion of
the cost of the gas-fired boiler, representing that portion of the boiler used
to produce steam for the processing of by-products, (ii) heat exchangers, which
allow heat to be transferred from the steam to the thin stillage and from the
evaporated vapor to the cooling water, (iii) evaporator recirculation pumps,
used to recirculate the syrup until proper specifications are reached, (iv) a
surge tank, used to temporarily hold the syrup before it is pumped to the dryer,
(v) a syrup feed pump, used solely to pump the syrup from the evaporator to the
dryer, and (vi) related pipes, valves, switches, agitators, small pumps and
controls.

 

Dryer.  The dryer portion of the Project consists of (i) a dryer feed conveyor,
used to convey the stillage cake to the dryer, (ii) a mixer in which the cake
and syrup are mixed, (iii) the dryer drum and its drive system, (iv) a gas-fired
burner and combustion furnace used exclusively to supply heat to the dryer, (v)
a dryer discharge conveyor system, used to convey the DDGS out of the dryer,
(vi) a recycle screw conveyor, which is used to convey a portion of the DDGS
back into the dryer to enhance drying efficiencies, (vii) a 4-cyclone
air/production separation system, (viii) a large induced draft fan, which pulls
a draft on the dryer drum and discharges water vapor up the discharge stack in
the form of steam, (ix) a stainless steel dryer discharge stack, which routes
all steam away from the dryer, and (x) related pipes, valves, switches and
controls.

 

Methanator.  The methanator portion of the Project consists of:  (i) the
digester; (ii) the biogas scrubber and the biogas flare that burns off the
cleaned gas; (iii) the decarbonator; (iv) the recycle tank; (v) tanks which
store the “food” sources for the bacteria in the digester; and (vi) related
pipes, valves, switches, and controls.

 

Storage.  The Project includes related storage to be used exclusively for the
storage of DDGS.  In addition, the storage portion of the Project includes (i) a
conveyor system used to move the DDGS from the dryer exit conveyor to the
storage building, (ii) conveyors, elevator leg, weigh system, and related
equipment used to handle weigh, and load bulk DDGS onto trucks or rail cars, and
(iii) related pipes, valves, switches, and controls.

 

B-1

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

 

EXHIBIT C

INTEREST PAYMENT SCHEDULE

 

The following amounts shall be withdrawn from the Project Fund on or before the
Interest Payment date set forth below in the amount set forth below and
transferred to the Interest Fund to pay interest on such Interest Payment Date:

 

Interest Payment
Date

 

Amount

 

January 1, 2008

 

$

357,041.67

 

 

 

 

 

 

July 1, 2008

 

779,395.83

 

 

 

 

 

Total

 

$

1,136,437.50

 

 

C-1

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