Exhibit 10.5

PARENT GUARANTY

Aventine Renewable Energy - Mt. Vernon, LLC, a Delaware company (“Owner”), and
Kiewit Energy Company, a Delaware corporation (“Contractor”) entered into an EPC
Fixed Price Contract dated May 31, 2007 (the “Agreement”).

WHEREAS, Owner is an indirect wholly-owned subsidiary of Aventine Renewable
Energy Holdings, Inc., a Delaware corporation (the “Guarantor”); and

WHEREAS, Guarantor will derive direct and indirect benefit from Owner entering
into the Agreement; and

WHEREAS, as a condition to Contractor’s entering into the Agreement Contractor
requires that Guarantor execute this Parent Guaranty

NOW THEREFORE, Guarantor agrees as follows:

1.                          Guarantor irrevocably guarantees the full and timely
performance by Owner of all its obligations, terms, provisions, conditions, and
stipulations under the Agreement, as now or hereafter amended (the
“Obligations”), and hereby undertakes that if Owner shall in any respect fail to
pay, perform and observe all of the Obligations of the Agreement, Guarantor
shall (i) pay or perform or have paid or performed all Obligations as required
by the Agreement, without any requirement that Contractor first proceed against
Owner, and (ii) reimburse Contractor for any expenses incurred in enforcing its
rights under this Parent Guaranty against Guarantor, in each case upon five (5)
business days following Guarantor’s receipt of written notice of Owner’s failure
to pay or perform an Obligation, or an itemization of such expenses incurred.
This Parent Guaranty constitutes a guarantee of payment when due and not of
collection.

2.                          The obligations of Guarantor under this Parent
Guaranty shall be primary, absolute and unconditional obligations of Guarantor,
independent of the obligations of Owner, shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension,
deferment, reduction or defense based upon any claim Guarantor may have against
Owner. To the fullest extent permitted by applicable law this Parent Guaranty
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by:

(a)                     any termination, amendment or modification of or
deletion from or addition to or other change in the Agreement or any other
instrument or agreement applicable to any of the parties to the Agreement;

(b)                    any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshaling of assets and liabilities or similar proceedings with
respect to Owner, Guarantor, Contractor or any other person or any of their
respective properties or creditors, or any action taken by any trustee or
receiver or by any court in any such proceeding;

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(c)                     any merger or consolidation of Owner or Guarantor into
or with any other corporation, or any sale, lease or transfer of any of the
assets of Owner or Guarantor to any other person;

(d)                    any change in the ownership of any interests of Owner or
any change in the relationship between Owner and Guarantor, or any termination
of such relationship;

(e)                     any failure of Owner to conform with any provision of
the Agreement or any other agreement; or

(f)                       any failure or delay on the part of Contractor to
enforce any right under the Agreement.

3.                          The Guarantor unconditionally waives, to the extent
permitted by applicable law,

(a)                     notice of any of the matters referred to in Section 2;

(b)                    notice to Guarantor of any breach or default with respect
to the Agreement or any other notice that may be required, by statute, rule of
law or otherwise, to preserve any rights of Contractor against the Guarantor;

(c)                     any requirement to exhaust any remedies;

(d)                    any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety or which might otherwise limit recourse against Guarantor.

4.                          This Parent Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part
thereof, to Contractor is rescinded, invalidated, declared to be fraudulent or
preferential, or must otherwise be returned, refunded, repaid or restored by
Contractor upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Owner or Guarantor or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for,
Owner or any substantial part of its property, or otherwise, all as though such
payments had not been made.

5.                          Guarantor agrees that any and all present and future
debts or obligations of any nature whether arising in connection herewith or
otherwise of Owner to Guarantor are subordinated to the claims of Contractor
with respect to the Agreement. Guarantor agrees to be bound by any findings of
fact or final award or judgment (rendered under arbitration or otherwise) made
against Owner under the Agreement, or any settlement reached by Contractor and
Owner.

6.                          The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor enforceable against it to
the full extent of all its assets and properties.

7.                          This Parent Guaranty shall be binding upon Guarantor
and its successors and assigns.

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8.                          This Parent Guaranty shall be governed by, and
construed and interpreted in accordance with the law of the State of New York.
Venue for any action to enforce this Parent Guaranty shall be in a court of
competent jurisdiction in New York. Both parties to this Parent Guaranty waive
all rights to a trial by jury in any action arising out of or relating to the
Parent Guaranty.

9.                          This Parent Guaranty and the terms, covenants and
conditions hereof shall be binding upon Guarantor and its successors and shall
inure to the benefit of Contractor and its successors and assigns. Guarantor
shall not be permitted to assign or transfer any of its rights or obligations
under this Parent Guaranty, except pursuant to a merger or consolidation in
which (i) Guarantor is the survivor, or (ii) the surviving entity, if not
Guarantor, is organized under the laws of the United States or a state thereof
and explicitly assumes all obligations of Guarantor under this Parent Guaranty.

10.                    Notwithstanding any other provision of this Parent
Guaranty, Guarantor’s undertakings and obligations hereunder with respect to the
Agreement are derivative of and not in excess of the Owner’s obligations under
the Agreement and the Guarantor retains all rights, claims, defenses, and
limitations of liability possessed by Owner under the terms of the Agreement or
arising from the parties’ performance or failure to perform thereunder and shall
be entitled to assert any contractual defenses that would have been available to
the Owner under the Agreement, except that no defense previously raised by Owner
which has been fully adjudicated, determined or settled in accordance with the
terms of the Agreement may be raised by Guarantor, and no cure period previously
used by Owner may be used or relied upon by Guarantor.

IN WITNESS WHEREOF, Guarantor has caused this Parent Guaranty to be signed in
the name and on behalf of Guarantor by its authorized representative as of this
            day of                 2007.

 

 

 

Aventine Renewable Energy Holdings. Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Ronald H. Miller

 

 

 

 

 

 

 

 

Name:

Ronald H. Miller

 

 

 

 

 

 

 

 

Title:

President & CEO

 

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