**EXHIBIT 10.4**

 

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**CREDITAGREEMENT**

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**BY ANDBETWEEN**

**HGFACQUISITION, LLC**

**AND**

 

**KRUSE INVESTMENT COMPANY, INC**

**FEBRUARY12, 2007**

 

 

 

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**TABLE OF CONTENTS**
| ARTICLE I DEFINITIONS 1                            |   |                                                                         |
|----------------------------------------------------|--------|------------------------------------------------------------------------------|
|                                               |   |                                                                         |
| Section 1.1                                        |   | Definitions                                                                  |   | 1 |
| Section 1.2                                        |   | Other Definitional Terms; Rules of Interpretation                            |   | 4 |
|                                               |   |                                                                         |   |   |
| ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY |   | 4                                                                            |
|                                               |   |                                                                         |
| Section 2.1                                        |   | Advances                                                                     |   | 4 |
| Section 2.2                                        |   | Procedures for Requesting Advances                                           |   | 5 |
| Section 2.3                                        |   | Interest; Principal; Default Interest Rate; Usury                            |   | 5 |
| Section 2.4                                        |   | Origination Fee                                                              |   | 6 |
| Section 2.5                                        |   | Time for Interest Payments; Computation of Interest  and Fees                |   | 6 |
| Section 2.6                                        |   | Voluntary Prepayment; Termination of the Credit  Facility by the Borrower    |   | 6 |
|                                               |   |                                                                         |   |   |
| ARTICLE III CONDITIONS OF LENDING                  |   | 6                                                                            |
|                                               |   |                                                                         |
| Section 3.1                                        |   | Conditions Precedent to the Initial Advance                                  |   | 6 |
| Section 3.2                                        |   | Conditions Precedent to All Advances                                         |   | 7 |
|                                               |   |                                                                         |   |   |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES          |   | 7                                                                            |
|                                               |   |                                                                         |
| Section 4.1                                        |   | Existence and Power                                                          |   | 7 |
| Section 4.2                                        |   | Authorization of Borrowing; No Conflict as to Law or  Agreements             |   | 8 |
| Section 4.3                                        |   | Legal Agreements                                                             |   | 8 |
| Section 4.4                                        |   | Litigation                                                                   |   | 8 |
| Section 4.5                                        |   | Taxes                                                                        |   | 8 |
| Section 4.6                                        |   | Default                                                                      |   | 8 |
|                                               |   |                                                                         |   |   |
| ARTICLE V COVENANTS                                |   | 9                                                                            |
|                                               |   |                                                                         |   |
| Section 5.1                                        |   | Compliance with Laws                                                         |   | 9 |
| Section 5.2                                        |   | Payment of Taxes and Other Claims                                            |   | 9 |
| Section 5.3                                        |   | Preservation of Existence                                                    |   | 9 |
| Section 5.4                                        |   | Sale or Transfer of Assets; Suspension of Business  Operations               |   | 9 |
| Section 5.5                                        |   | Consolidation and Merger; Asset Acquisitions                                 |   | 9 |
|                                               |   |                                                                         |   |   |
| ARTICLE VI EVENTS OF DEFAULT, RIGHTS AND REMEDIES  |   | 10                                                                           |
|                                               |   |                                                                         |
| Section 6.1                                        |   | Events of Default                                                            |   | 10 |
| Section 6.2                                        |   | Rights and Remedies                                                          |   | 11 |
|                                               |   |                                                                         |   |   |
| ARTICLE VII MISCELLANEOUS                          |   | 12                                                                           |
|                                               |   |                                                                         |
| Section 7.1                                        |   | No Waiver; Cumulative Remedies; Compliance with Laws                         |   | 12 |
| Section 7.2                                        |   | Amendments, Etc.                                                             |   | 12 |
| Section 7.3                                        |   | Notices; Communication of Confidential Information;  Requests for Accounting | 12 |
| Section 7.4                                        |   | Further Documents                                                            |   | 12 |
| Section 7.5                                        |   | Costs and Expenses                                                           |   | 13 |
| Section 7.6                                        |   | Execution in Counterparts; Telefacsimile Execution                           |   | 13 |
| Section 7.7                                        |   | Binding Effect; Assignment; Complete Agreement;  Sharing Information         |   | 13 |
| Section 7.8                                        |   | Severability of Provisions                                                   |   | 13 |
| Section 7.9                                        |   | Headings                                                                     |   | 13 |
| Section 7.10                                       |   | Governing Law; Jurisdiction, Venue; Waiver of Jury  Trial                    |   | 13 |
|                                                    |        |                                                                              |  |  |  |  |

 
| EXHIBITS  |   |                                  |
|-----------|--------|---------------------------------------|
|      |   |                                  |
| Exhibit A |   | Form of Note                          |
| Exhibit B |   | Form of Security Agreement            |
| Exhibit C |   | Form of Consent to Security Agreement |

 

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**CREDIT AGREEMENT**

Dated as ofFebruary 12, 2007

HGF ACQUISITION,LLC, a Delaware limited liability company (the “Borrower”), and KRUSE INVESTMENT COMPANY, INC, aCalifornia corporation (the “Lender”), hereby agree as follows:

**ARTICLE I**

**DEFINITIONS**

Section 1.1            Definitions.  For all purposes of this Agreement, except asotherwise expressly provided, the following terms shall have the meaningsassigned to them in this Section or in the Section referenced aftersuch term:

“Advance” has themeaning set forth in Section 2.1.

“Affiliate” or “Affiliates”means any Person controlled by, controlling or under common control with theBorrower, including any Subsidiary of the Borrower.  For purposes of this definition, “control,”when used with respect to any specified Person, means the power to direct themanagement and policies of such Person, directly or indirectly, whether throughthe ownership of voting securities, by contract or otherwise.

“Agreement” meansthis Credit Agreement.

“Availability”means the amount, if any, by which the Maximum Line Amount exceeds theoutstanding principal balance of the Note.

“Business Day”means a day on which the Federal Reserve Bank of New York is open for business.

“Commitment” meansthe Lender’s commitment to make Advances to the Borrower pursuant toArticle II.

“Consent toSecurity Interest” means the Consent to Security Interest executed by Borrower,Heartland Grain Fuels, L.P., and the other partners of Heartland Grain Fuels,L.P. substantially in the form of Exhibit C hereto, as the same may be amendedfrom time to time.

“ConstituentDocuments” means with respect to any Person, as applicable, such Person’scertificate of incorporation, articles of incorporation, by-laws, certificateof formation, articles of organization, limited liability company agreement,management agreement, operating agreement, shareholder agreement, partnershipagreement or similar document or agreement governing such Person’s existence,organization or management or concerning disposition of ownership interests ofsuch Person or voting rights among such Person’s owners.

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“Credit Facility”means the credit facility under which Advances may be made available to theBorrower by the Lender under Article II.

“Default” means anevent that, with giving of notice or passage of time or both, would constitutean Event of Default.

“Default Period”means any period of time beginning on the date an Event of Default occurs andending on the date identified by the Lender in writing as the date that suchEvent of Default has been cured or waived.

“Default Rate”means an annual interest rate in effect during a Default Period or followingthe Termination Date, which interest rate shall be equal to 18%.

“Director” means adirector if the Borrower is a corporation, a governor or manager if theBorrower is a limited liability company, or a general partner if the Borroweris a partnership.

“Event of Default”has the meaning set forth in Section 6.1.

“GAAP” meansgenerally accepted accounting principles, applied on a consistent basis.

“Interest PaymentDate” has the meaning set forth in Section 2.5(a).

“Interest Rate”means 12% per annum.

“Lien” means anysecurity interest, mortgage, deed of trust, pledge, lien, charge, encumbrance,title retention agreement or analogous instrument or device, including theinterest of each lessor under any capitalized lease and the interest of anybondsman under any payment or performance bond, in, of or on any assets orproperties of a Person, whether now owned or hereafter acquired and whether arisingby agreement or operation of law.

“Loan Documents”means this Agreement, the Note, the Security Agreement and the Consent toSecurity Interest, together with every other agreement, note, document,contract or instrument to which the Borrower now or hereafter is a party andthat is required by the Lender.

“Material AdverseEffect” means any of the following:

(i)           Amaterial adverse effect on the business, operations, results of operations,prospects, assets, liabilities or financial condition of the Borrower;

(ii)          Amaterial adverse effect on the ability of the Borrower to perform itsobligations under the Loan Documents;

(iii)         Amaterial adverse effect on the ability of the Lender to enforce the Obligationsor to realize the intended benefits of the Security Documents, 

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including a material adverse effect on the validity or enforceabilityof any Loan Document, or on the status, existence, perfection, priority orenforceability of any Lien securing payment or performance of the Obligations;or

(iv)         Anyclaim against the Borrower or overt threat of litigation which if determinedadversely to the Borrower would cause the Borrower to be liable to pay anamount exceeding $200,000 or would be an event described in clauses (i), (ii)and (iii) above.

“Maturity Date”means July 1, 2007.

“Maximum LineAmount” means $5,000,000.

“Note” means theBorrower’s promissory note, payable to the order of the Lender in substantiallythe form of Exhibit A hereto, as same may be renewed and amended from timeto time, and all replacements thereto.

“Obligations”means the Note and each and every other debt, liability and obligation of everytype and description which the Borrower may now or at any time hereafter owe tothe Lender, whether such debt, liability or obligation now exists or ishereafter created or incurred, whether it arises in a transaction involving theLender alone or in a transaction involving other creditors of the Borrower, andwhether it is direct or indirect, due or to become due, absolute or contingent,primary or secondary, liquidated or unliquidated, or sole, joint, several orjoint and several, and including all indebtedness of the Borrower arising underany Loan Document, whether now in effect or hereafter entered into.

“Officer” meanswith respect to the Borrower, an officer if the Borrower is a corporation, amanager if the Borrower is a limited liability company, or a partner if theBorrower is a partnership.

“Owner” means withrespect to the Borrower, each Person having legal or beneficial title to anownership interest in the Borrower or a right to acquire such an interest.

“Person” means anyindividual, corporation, partnership, joint venture, limited liability company,association, joint-stock company, trust, unincorporated organization orgovernment or any agency or political subdivision thereof.

“SecurityAgreement” means the Security Agreement executed by Borrower and Lendersubstantially in the form of Exhibit B hereto, as the same may be amended fromtime to time.

“Subsidiary” meansany corporation of which more than 50% of the outstanding shares of capitalstock having general voting power under ordinary circumstances to elect amajority of the board of Directors of such corporation, irrespective of whetheror not at the time stock of any other class or classes shall have or might havevoting power by reason of 

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the happening of anycontingency, is at the time directly or indirectly owned by the Borrower, bythe Borrower and one or more other Subsidiaries, or by one or more otherSubsidiaries.

“Termination Date”means the earliest of (i) the Maturity Date, (ii) the date theBorrower terminates the Credit Facility, or (iii) the date the Lenderdemands payment of the Obligations (or the Obligations are automaticallyaccelerated), following an Event of Default, pursuant to Section 6.2.

Section 1.2            Other Definitional Terms;Rules of Interpretation.  The words “hereof”,“herein” and “hereunder” and words of similar import when used in thisAgreement shall refer to this Agreement as a whole and not to any particularprovision of this Agreement.  Allaccounting terms not otherwise defined herein have the meanings assigned tothem in accordance with GAAP.  Referencesto Articles, Sections, subsections, Exhibits, Schedules and the like, are toArticles, Sections and subsections of, or Exhibits or Schedules attachedto, this Agreement unless otherwise expressly provided.  The words “include”, “includes” and “including”shall be deemed to be followed by the phrase “without limitation”.  Unless the context in which used hereinotherwise clearly requires, “or” has the inclusive meaning represented by thephrase “and/or”.  Defined terms includein the singular number the plural and in the plural number the singular.  Reference to any agreement (including theLoan Documents), document or instrument means such agreement, document orinstrument as amended or modified and in effect from time to time in accordancewith the terms thereof (and, if applicable, in accordance with the terms hereofand the other Loan Documents), except where otherwise explicitly provided, andreference to any promissory note includes any promissory note which is anextension or renewal thereof or a substitute or replacement therefor.  Reference to any law, rule, regulation,order, decree, requirement, policy, guideline, directive or interpretationmeans as amended, modified, codified, replaced or reenacted, in whole or inpart, and in effect on the determination date, including rules and regulationspromulgated thereunder.

**ARTICLE II**

**AMOUNTAND TERMS OF THE CREDIT FACILITY**

Section 2.1            Advances.  The Lender agrees, subject to the terms andconditions of this Agreement, to make advances (“Advances”) to the Borrowerfrom time to time after the later of (a) the date that all of the conditionsset forth in Section 3.1 are satisfied and (b) February 19, 2007 to and until(but not including) the Termination Date in an amount not in excess of theMaximum Line Amount.  Notwithstanding theforegoing, the Lender shall make an Advance on the date hereof in the amount of$100,000 to permit Borrower to pay the fee required by Section 2.4.  The Lender shall have no obligation to makean Advance to the extent that the amount of the requested Advance exceedsAvailability.  The proceeds of eachAdvance under this Section 2.1 shall be used to make loans to HeartlandGrain Fuels, L.P., pay the fee required by Section 2.4, and to pay transactioncosts and expenses.  Each Advance underthis Section 2.1 shall be in an amount equal to an integral multiple of$100,000..  Borrower may only request oneAdvance in any period of 30 days.  The 

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Borrower’s obligation topay the Advances shall be evidenced by the Note and shall be secured by theSecurity Agreement.  The Note shall bearinterest on the unpaid principal amount thereof from the date thereof untilpaid as set forth in Section 2.3.

Section 2.2            Procedures for RequestingAdvances.  The Borrower shall requesteach Advance (other than the Advance on the date hereof to pay the fee requiredby Section 2.4) at least 18 days prior to the day on which the Advance is to bemade.  Each request that conforms to theterms of this Agreement shall be effective upon receipt by the Lender.  Such request shall specify the principalamount of the requested Advance, shall be in writing or by telephone ortelecopy transmission, and shall be confirmed in writing by the Borrower by(i) an Officer of the Borrower; or (ii) a Person designated as theBorrower’s agent by an Officer of the Borrower in a writing delivered to theLender; or (iii) a Person whom the Lender reasonably believes to be anOfficer of the Borrower or such a designated agent.  Any request for an Advance, whether writtenor telephonic, shall be deemed to be a representation by the Borrower that theconditions set forth in Section 3.2 have been satisfied as of the time of therequest.  Upon fulfillment of theapplicable conditions set forth in Article III, the Lender shall disbursethe proceeds of the requested Advance by crediting the same to the Borrower’sdemand deposit account specified in writing by Borrower from time to timeunless the Lender and the Borrower shall agree in writing to another manner ofdisbursement.

Section 2.3            Interest; Principal;Default Interest Rate; Usury.

(a)          Interest.  Except as provided in Section 2.3(c),the principal amount of each Advance shall bear interest at the Interest Rate.

(b)          Principal.The principal balance of the Note shall be due and payable in full on theTermination Date, or if such day is not a Business Day, on the next succeedingBusiness Day.

(c)          DefaultInterest Rate.  At any time duringany Default Period or following the Termination Date, in the Lender’s solediscretion and without waiving any of its other rights or remedies, theprincipal of the Note shall bear interest at the Default Rate or such lesserrate as the Lender may determine, effective as of the first day of any DefaultPeriod through the last day of such Default Period, or any shorter time periodthat the Lender may determine.  Thedecision of the Lender to impose a rate that is less than the Default Rate orto not impose the Default Rate for the entire duration of the Default Periodshall be made by the Lender in its sole discretion and shall not be a waiver ofany of its other rights and remedies, including its right to retroactivelyimpose the full Default Rate for the entirety of any such Default Period orfollowing the Termination Date.

(d)          Usury.  In any event no rate change shall be put intoeffect which would result in a rate greater than the highest rate permitted bylaw.  Notwithstanding anything to thecontrary contained in any Loan Document, all agreements which either now are orwhich shall become agreements between the Borrower and the 

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Lender are hereby limited so that in no contingency or event whatsoevershall the total liability for payments in the nature of interest, additionalinterest and other charges exceed the applicable limits imposed by anyapplicable usury laws.  If any paymentsin the nature of interest, additional interest and other charges made under anyLoan Document are held to be in excess of the limits imposed by any applicableusury laws, it is agreed that any such amount held to be in excess shall beconsidered payment of principal hereunder, and the indebtedness evidencedhereby shall be reduced by such amount so that the total liability for paymentsin the nature of interest, additional interest and other charges shall notexceed the applicable limits imposed by any applicable usury laws, incompliance with the desires of the Borrower and the Lender.  This provision shall never be superseded orwaived and shall control every other provision of the Loan Documents and allagreements between the Borrower and the Lender, or their successors andassigns.

Section 2.4            Origination Fee.  The Borrower shall pay the Lender a fullyearned and non-refundable origination fee of $100,000, due and payable upon theexecution of this Agreement.

Section 2.5            Time for Interest Payments;Computation of Interest and Fees.

(a)     Time For Interest Payments.  Accrued and unpaid interest shall be due andpayable on the Termination Date or if such day is not a Business Day, on thenext succeeding Business Day (the “Interest Payment Date”).  Interest will accrue from the date of eachAdvance to the Interest Payment Date.

(b)     Computation of Interest and Fees.  Interest accruing on the outstandingprincipal balance of the Advances and fees hereunder outstanding from time totime shall be computed on the basis of actual number of days elapsed in a yearof 360 days.

Section 2.6            Voluntary Prepayment;Termination of the Credit Facility by the Borrower.  The Borrower may prepay the Advances in whole(but not in part) at any time.  TheBorrower may terminate the Credit Facility at any time.  If the Borrower terminates the CreditFacility, all Obligations shall be immediately due and payable.

**ARTICLE III**

**CONDITIONSOF LENDING**

Section 3.1            Conditions Precedent to theInitial Advance.  The Lender’sobligation to make the initial Advance shall be subject to the conditionprecedent that the Lender shall have received all of the following, eachproperly executed by the appropriate party and in form and substancesatisfactory to the Lender:

### (a)     This Agreement.

### (b)     The Note.

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### (c)     The Security Agreement.

### (d)     The Consent to SecurityInterest.

### (e)     A certificate of the Borrower’s Secretaryor Assistant Secretary certifying that attached to such certificate are(i) the resolutions of the Borrower’s Directors and, if required, Owners,authorizing the execution, delivery and performance of the Loan Documents,(ii) true, correct and complete copies of the Borrower’s ConstituentDocuments, and (iii) examples of the signatures of the Borrower’s Officersor agents authorized to execute and deliver the Loan Documents and otherinstruments, agreements and certificates, including Advance requests, on theBorrower’s behalf.

### (f)      A current certificate issued by theSecretary of State of Delaware, certifying that the Borrower is in goodstanding in the State of Delaware.

### (g)     Payment of the fees due under Section 2.4and expenses incurred by the Lender through such date and required to be paidby the Borrower under Section 7.5, including all legal expenses incurredthrough the date of this Agreement.

### (h)     Such other documents as the Lender in itsreasonable discretion may require.

Section 3.2            Conditions Precedent to AllAdvances.  The Lender’s obligation tomake each Advance shall be subject to the further conditions precedent that:

### (a)     the representations and warrantiescontained in Article IV are correct on and as of the date of such Advance asthough made on and as of such date, except to the extent that suchrepresentations and warranties relate solely to an earlier date; and

### (b)     no event has occurred and is continuing, orwould result from such Advance which constitutes a Default or an Event ofDefault.

**ARTICLE IV**

**REPRESENTATIONSAND WARRANTIES**

The Borrowerrepresents and warrants to the Lender as follows:

Section 4.1             Existence and Power.  The Borrower is a limited liability company,duly organized, validly existing and in good standing under the laws of theState of Delaware and is duly licensed or qualified to transact business in alljurisdictions where the character of the property owned or leased or the natureof the business transacted by it makes such licensing or qualificationnecessary.  The Borrower has allrequisite power and authority to conduct its business, to own its propertiesand to execute and deliver, and to perform all of its obligations under, theLoan Documents. 

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## Section 4.2            Authorization of Borrowing;No Conflict as to Law or Agreements. The execution, delivery and performance by the Borrower of the LoanDocuments and the borrowings from time to time hereunder have been dulyauthorized by all necessary limited liability company action and do not andwill not (i) require any consent or approval of the Borrower’s Owners;(ii) require any authorization, consent or approval by, or registration,declaration or filing with, or notice to, any governmental department, commission,board, bureau, agency or instrumentality, domestic or foreign, or any thirdparty, except such authorization, consent, approval, registration, declaration,filing or notice as has been obtained, accomplished or given prior to the datehereof; (iii) violate any provision of any law, rule or regulation or ofany order, writ, injunction or decree presently in effect having applicabilityto the Borrower or of the Borrower’s Constituent Documents; (iv) result ina breach of or constitute a default under any indenture or loan or creditagreement or any other material agreement, lease or instrument to which theBorrower is a party or by which it or its properties may be bound or affected;or (v) result in, or require, the creation or imposition of any Lien(other than the Lien of the Security Agreement) upon or with respect to any ofthe properties now owned or hereafter acquired by the Borrower.

## Section 4.3            Legal Agreements.  This Agreement constitutes and, upon dueexecution by the Borrower, the other Loan Documents will constitute the legal,valid and binding obligations of the Borrower, enforceable against the Borrowerin accordance with their respective terms, subject to applicable bankruptcy,reorganization, insolvency, moratorium, and other similar laws affectingcreditors rights generally from time to time in effect and to generalprinciples of equity.

## Section 4.4            Litigation.  There are no actions, suits or proceedingspending or, to the Borrower’s knowledge, threatened against or affecting theBorrower or any of its Affiliates or the properties of the Borrower or any ofits Affiliates before any court or governmental department, commission, board,bureau, agency or instrumentality, domestic or foreign, which, if determinedadversely to the Borrower or any of its Affiliates, would have a MaterialAdverse Effect on the financial condition, properties or operations of theBorrower or any of its Affiliates.

## Section 4.5            Taxes.  The Borrower and its Affiliates have paid orcaused to be paid to the proper authorities when due all federal, state andlocal taxes required to be withheld by each of them.  The Borrower and its Affiliates have filedall federal, state and local tax returns which to the knowledge of the Officersof the Borrower or any Affiliate, as the case may be, are required to be filed,and the Borrower and its Affiliates have paid or caused to be paid to therespective taxing authorities all taxes as shown on said returns or on anyassessment received by any of them to the extent such taxes have become due.

## Section 4.6            Default.  The Borrower is in compliance with allprovisions of all agreements, instruments, decrees and orders to which it is aparty or by which it or its property is bound or affected, the breach ordefault of which could have a Material Adverse Effect.

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** **

**ARTICLE V**

**COVENANTS**

So long as theObligations shall remain unpaid, or the Credit Facility shall remainoutstanding, the Borrower will comply with the following requirements, unlessthe Lender shall otherwise consent in writing:

## Section 5.1            Compliance with Laws.  The Borrower shall (a) comply with therequirements of applicable laws and regulations, the non-compliance with whichwould materially and adversely affect its business or its financial conditionand (b) use and keep its assets, only for lawful purposes, withoutviolation of any federal, state or local law, statute or ordinance.

## Section 5.2            Payment of Taxes and OtherClaims.  The Borrower will pay ordischarge, when due, (a) all taxes, assessments and governmental chargeslevied or imposed upon it or upon its income or profits, upon any propertiesbelonging to it (including the Collateral, as defined in the SecurityAgreement) or upon or against the creation, perfection or continuance of theSecurity Interest (as defined in the Security Agreement), prior to the date onwhich penalties attach thereto, (b) all federal, state and local taxesrequired to be withheld by it, and (c) all lawful claims for labor,materials and supplies which, if unpaid, might by law become a Lien upon anyproperties of the Borrower; provided, that the Borrower shall not be requiredto pay any such tax, assessment, charge or claim whose amount, applicability orvalidity is being contested in good faith by appropriate proceedings and forwhich proper reserves have been made.

## Section 5.3            Preservation of Existence.  The Borrower will preserve and maintain itsexistence and all of its rights, privileges and franchises necessary ordesirable in the normal conduct of its business and shall conduct its businessin an orderly, efficient and regular manner.

## Section 5.4            Sale or Transfer of Assets;Suspension of Business Operations. The Borrower will not sell, lease, assign, transfer or otherwise disposeof (a) the stock of any Subsidiary, the limited partnership interest inHeartland Grain Fuels, L.P., or the common stock of Dakota Fuels, Inc. or(b) all or a substantial part of its assets, (whether in one transactionor in a series of transactions) to any other Person, and will not liquidate,dissolve or suspend business operations.

## Section 5.5             Consolidation and Merger; AssetAcquisitions.  The Borrower will notconsolidate with or merge into any Person, or permit any other Person to mergeinto it, or acquire (in a transaction analogous in purpose or effect to aconsolidation or merger) all or substantially all the assets of any otherPerson; provided that Borrower may acquire additional limited partnershipinterests in Heartland Grain Fuels, L.P. and additional common stock in DakotaFuels, Inc.

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**ARTICLE VI**

**EVENTS OFDEFAULT, RIGHTS AND REMEDIES**

## Section 6.1            Events of Default.  “Event of Default”, wherever used herein,means any one of the following events:

(a)             Defaultin the payment of any principal or interest on the loan when it becomes due andpayable;

(b)            Defaultin the payment of any fees, costs or expenses to be paid by Borrower under thisAgreement or any other Loan Document and the continuation of such default formore than 5 Business Days after written notice thereof has been given to theBorrower by Lender;

(c)             Defaultin the performance, or breach, of any covenant or agreement of the Borrowercontained in this Agreement (other than a covenant or agreement a default inwhose performance or whose breach is elsewhere in this Section 6.1 specificallydealt with) or in any other Loan Document and the continuation of such defaultor breach for a period of 30 calendar days after written notice thereof hasbeen given to the Borrower by Lender;

(d)            TheBorrower shall be or become insolvent, or admit in writing its inability to payits debts as they mature, or make an assignment for the benefit of creditors;or the Borrower shall apply for or consent to the appointment of any receiver,trustee, or similar officer for it or for all or any substantial part of itsproperty; or such receiver, trustee or similar officer shall be appointedwithout the application or consent of the Borrower; or the Borrower shallinstitute (by petition, application, answer, consent or otherwise) anybankruptcy, insolvency, reorganization, arrangement, readjustment of debt,dissolution, liquidation or similar proceeding relating to it under the laws ofany jurisdiction; or any such proceeding shall be instituted (by petition,application or otherwise) against the Borrower; or any judgment, writ, warrantof attachment or execution or similar process shall be issued or levied againsta substantial part of the property of the Borrower;

(e)             Apetition shall be filed by or against the Borrower under the United StatesBankruptcy Code naming the Borrower as debtor, and, if such petition is aninvoluntary petition filed against the Borrower, such involuntary petition isnot dismissed within 60 days after its filing;

(f)             Anyrepresentation or warranty made by the Borrower in this Agreement, or by theBorrower (or any of its Officers) in any Loan Document, agreement, certificate,instrument or financial statement or other statement contemplated by or made ordelivered pursuant to or in connection with this Agreement shall prove to havebeen incorrect in any material respect when deemed to be effective;

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(g)            Therendering against the Borrower of an arbitration award, final judgment, decreeor order for the payment of money in excess of $500,000 and the continuance ofsuch arbitration award, judgment, decree or order unsatisfied and in effect forany period of 30 consecutive days without a stay of execution;

(h)            Adefault under any bond, debenture, note or other evidence of indebtedness ofthe Borrower for borrowed money exceeding $500,000 in principal amount owed toany Person other than the Lender, or under any indenture or other instrumentunder which any such evidence of indebtedness has been issued or by which it isgoverned, and the expiration of the applicable period of grace, if any, specifiedin such evidence of indebtedness, indenture or other instrument; or

(i)              TheBorrower shall liquidate, dissolve, terminate or suspend its businessoperations or otherwise fail to operate its business in the ordinary course,merge with another Person unless the Borrower is the surviving entity; or sellor attempt to sell all or substantially all of its assets, without the Lender’sprior written consent.

## Section 6.2            Rights and Remedies.  During any Default Period, the Lender mayexercise any or all of the following rights and remedies:

(a)             TheLender may, by notice to the Borrower, declare the Commitment to be terminated,whereupon the same shall forthwith terminate;

(b)            TheLender may, by notice to the Borrower, declare the Obligations to be forthwithdue and payable, whereupon all Obligations shall become and be forthwith dueand payable, without presentment, notice of dishonor, protest or further noticeof any kind, all of which the Borrower hereby expressly waives;

(c)             TheLender may, without notice to the Borrower and without further action, applyany and all money owing by the Lender to the Borrower to the payment of theObligations;

(d)            TheLender may exercise and enforce its rights and remedies under the LoanDocuments; and

(e)             TheLender may exercise any other rights and remedies available to it by law oragreement.

## Notwithstandingthe foregoing, upon the occurrence of an Event of Default described in Section6.1(d) or (e), the Obligations shall be immediately due and payableautomatically without presentment, demand, protest or notice of any kind.

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**ARTICLE VII**

**MISCELLANEOUS**

## Section 7.1            No Waiver; CumulativeRemedies; Compliance with Laws.  Nofailure or delay by the Lender in exercising any right, power or remedy underthe Loan Documents shall operate as a waiver thereof; nor shall any single orpartial exercise of any such right, power or remedy preclude any other orfurther exercise thereof or the exercise of any other right, power or remedyunder the Loan Documents.  The remediesprovided in the Loan Documents are cumulative and not exclusive of any remediesprovided by law.

## Section 7.2            Amendments, Etc.  No amendment, modification, termination orwaiver of any provision of any Loan Document or consent to any departure by theBorrower therefrom shall be effective unless the same shall be in writing andsigned by the Lender, and then such waiver or consent shall be effective onlyin the specific instance and for the specific purpose for which given.  No notice to or demand on the Borrower in anycase shall entitle the Borrower to any other or further notice or demand insimilar or other circumstances.

## Section 7.3            Notices; Communication ofConfidential Information; Requests for Accounting.  Except as otherwise expressly providedherein, all notices, requests, demands and other communications provided forunder the Loan Documents shall be in writing and shall be (a) personallydelivered, (b) sent by first class United States mail, (c) sent byovernight courier of national reputation, (d) transmitted by telecopy, or(e) sent as electronic mail, in each case delivered or sent to the partyto whom notice is being given to the business address, telecopier number, or email address set forth below next to its signature or, as to each party, atsuch other business address, telecopier number, or e mail address as it mayhereafter designate in writing to the other party pursuant to the terms of thisSection.  All such notices, requests,demands and other communications shall be deemed to be an authenticated recordcommunicated or given on (a) the date received if personally delivered,(b) when deposited in the mail if delivered by mail, (c) the datedelivered to the courier if delivered by overnight courier, or (d) thedate of transmission if sent by telecopy or by e mail, except that notices orrequests delivered to the Lender pursuant to any of the provisions ofArticle II of this Agreement shall not be effective until received by theLender.  All notices, financial information,or other business records sent by either party to this Agreement may betransmitted, sent, or otherwise communicated via such medium as the sendingparty may deem appropriate and commercially reasonable; provided, however,that the risk that the confidentiality or privacy of such notices, financialinformation, or other business records sent by the Borrower may be compromisedshall be borne exclusively by the Borrower.

## Section 7.4            Further Documents.  The Borrower will from time to time execute,deliver, endorse and authorize the filing of any and all instruments,documents, conveyances, assignments, security agreements, financing statements,control agreements and other agreements and writings that the Lender mayreasonably request in order to secure, protect, perfect or enforce the Lender’srights under the Loan Documents (but any failure to request 

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## or assure that the Borrower executes,delivers, endorses or authorizes the filing of any such item shall not affector impair the validity, sufficiency or enforceability of the Loan Documents, regardlessof whether any such item was or was not executed, delivered or endorsed in asimilar context or on a prior occasion).

## Section 7.5            Costs and Expenses.  The Borrower shall pay on demand all costsand expenses, including reasonable attorneys’ fees, incurred by the Lender inconnection with the Obligations, this Agreement, the Loan Documents, and thetransactions contemplated hereby, including all such costs, expenses and feesincurred in connection with the negotiation, preparation, execution, amendment,administration, performance, collection and enforcement of the Obligations andall such documents and agreements.

## Section 7.6            Execution in Counterparts;Telefacsimile Execution.  ThisAgreement and other Loan Documents may be executed in any number ofcounterparts, each of which when so executed and delivered shall be deemed tobe an original and all of which counterparts, taken together, shall constitutebut one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimileshall be equally as effective as delivery of an original executed counterpartof this Agreement.  Any party deliveringan executed counterpart of this Agreement by telefacsimile also shall deliveran original executed counterpart of this Agreement but the failure to deliveran original executed counterpart shall not affect the validity, enforceability,and binding effect of this Agreement.

## Section 7.7            Binding Effect; Assignment;Complete Agreement; Sharing Information. The Loan Documents shall be binding upon and inure to the benefit of theBorrower and the Lender and their respective successors and assigns, exceptthat the Borrower shall not have the right to assign its rights thereunder orany interest therein without the Lender’s prior written consent.  To the extent permitted by law, the Borrowerwaives and will not assert against any assignee any claims, defenses orset-offs which the Borrower could assert against the Lender.  This Agreement shall also bind all Personswho become a party to this Agreement as a borrower.  This Agreement, together with the LoanDocuments, comprises the complete and integrated agreement of the parties onthe subject matter hereof and supersedes all prior agreements, written or oral,on the subject matter hereof.  To theextent that any provision of this Agreement contradicts other provisions of theLoan Documents, this Agreement shall control.

## Section 7.8            Severability of Provisions.  Any provision of this Agreement which isprohibited or unenforceable shall be ineffective to the extent of suchprohibition or unenforceability without invalidating the remaining provisionshereof.

## Section 7.9            Headings.  Article, Section and subsection headingsin this Agreement are included herein for convenience of reference only andshall not constitute a part of this Agreement for any other purpose.

## Section 7.10          Governing Law; Jurisdiction,Venue; Waiver of Jury Trial.  TheLoan Documents shall be governed by and construed in accordance with thesubstantive laws (other than conflict laws) of the State of Minnesota.  The parties hereto hereby (i) consent to

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## the personal jurisdiction of the state andfederal courts located in the State of Minnesota in connection with anycontroversy related to this Agreement or the other Loan Documents;(ii) waive any argument that venue in any such forum is not convenient;(iii) agree that any litigation initiated by the Lender or the Borrower inconnection with this Agreement or the other Loan Documents may be venued ineither the state or federal courts located in the City of Minneapolis,Minnesota, County of Hennepin, Minnesota; and (iv) agree  that a final judgment in any such suit,action or proceeding shall be conclusive and may be enforced in other jurisdictionsby suit on the judgment or in any other manner provided by law.  **THE BORROWERAND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OROTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THISAGREEMENT AND THE NOTE OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.**

*(SignaturePage Follows)*

 

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INWITNESS WHEREOF, the parties hereto have caused this Agreement to be executedby their respective officers thereunto duly authorized as of the date firstabove written.
| Kruse Investment Company, Inc.           | ** ** | **KRUSE INVESTMENT  COMPANY, INC.** | ** **                  |
|------------------------------------------|------------|-------------------------------------|-----------------------------|
| P.O. Box 1029                            | ** ** | ** **                          | ** **                  | ** ** | ** ** |
| 31120 West Street                        | ** ** | By:                                 | /s/ Ejnar Knudsen           | ** ** |
| Goshen, CA 93227                         | ** ** | ** **                          | Name:                       | Ejnar Kudsen | ** ** |
| Telecopier: 559-380-2800                 | ** ** | ** **                          | Title:                      | EVP | ** ** |
| Attention: Mark Labounty                 | ** ** | ** **                          | ** **                  | ** ** | ** ** |
| e-mail:                                  | ** ** | ** **                          | ** **                  | ** ** | ** ** |
|                                          | ** ** | ** **                          | ** **                  | ** ** | ** ** |
|                                | ** ** | ** **                          | ** **                  | ** ** | ** ** |
| HGF Acquisition                     | ** ** | **HGF ACQUISITION, LLC**            | ** **                  |
| 10201 Wayzata Blvd, Suite 250            | ** ** | ** **                          | ** **                  | ** ** | ** ** |
| Minneapolis, MN 55305                    | ** ** | By:                                 | /s/ Revis L. Stephenson III | ** ** |
| Telecopier: 763-226-2725                 | ** ** |                                | Name:                       | ** ** | ** ** |
| Attention: Revis L. Stephenson III       | ** ** | ** **                          | Title:                      | ** ** | ** ** |
| e-mail:rstephenson@advancedbioenergy.com | ** ** | ** **                          | ** **                  | ** ** | ** ** |
|                                     | ** ** | ** **                          | ** **                  | ** ** | ** ** |
|                                          |            |                                     |                             |  |  |  |  |  |

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*(SignaturePage to Credit Agreement)*

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**Exhibit Ato Credit Agreement**

**PROMISSORYNOTE**

 

$5,000,000                                                                                                                                                               February12, 2007

 

                For value received, the undersigned, HGF ACQUISITION,LLC, a Delaware limited liability company (the “Borrower”), hereby promises topay on the Termination Date under the Credit Agreement (defined below), to theorder of KRUSE INVESTMENT COMPANY, INC., a California Corporation (the “Lender”),at its office in Goshen, California, or at any other place designated at anytime by the holder hereof, in lawful money of the United States of America andin immediately available funds, the principal sum of Five Million Dollars($5,000,000) or, if less, the aggregate unpaid principal amount of all Advances(as defined in the Credit Agreement) made by the Lender to the Borrower underthe Credit Agreement (defined below) together with interest on the outstandingprincipal amount hereunder remaining unpaid from time to time, computed on thebasis of the actual number of days elapsed and a 360-day year, from the datehereof until this Note is fully paid at the rate from time to time in effectunder the Credit Agreement dated the same date as this Note (the “CreditAgreement”) by and between the Lender and the Borrower.  The outstanding principal hereof and interestaccruing thereon shall be due and payable as provided in the CreditAgreement.  This Note may be prepaid onlyin accordance with the Credit Agreement.

                This Note is issued pursuant,and is subject, to the Credit Agreement, which provides, among other things,for acceleration hereof.  This Note isthe Note referred to in the Credit Agreement. This Note is secured pursuant to the Security Agreement as thereindefined, and may now or hereafter be secured by one or more other securityagreements, mortgages, deeds of trust, assignments or other instruments oragreements.

                The Borrower shall pay all costsof collection, including reasonable attorneys’ fees and legal expenses if thisNote is not paid when due, whether or not legal proceedings are commenced.

                Presentment or other demand forpayment, notice of dishonor and protest are expressly waived.
|            | **HGF ACQUISITION, LLC** | ** ** |
|------------|--------------------------|------------|
| ** ** | ** **               | ** ** |
| ** ** | ** **               | ** ** |
| ** ** | By:                      | ** ** |
| ** ** | Name:                    | ** ** |
| ** ** | Its:                     | ** ** |
| ** ** |                     | ** ** |
|            |                          |            |  |

 

 

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AMENDMENT NO. 1

Dated as of July 1, 2007

to

CREDIT AGREEMENT

Dated as of February 12, 2007

THIS AMENDMENT NO. 1 (“Amendment”)is made as of July 1, 2007 by and among HGF ACQUISITION, LLC (the “Borrower”),and KRUSE INVESTMENT COMPANY, INC. (the “Lender”), under that certain CreditAgreement dated as of February 12, 2007 between the Borrower and the Lender(the “Credit Agreement”).  Defined termsused herein and not otherwise defined herein shall have the respective meaningsgiven to them in the Credit Agreement.

WHEREAS, the Borrower andthe Lender have agreed to amend the Credit Agreement on the terms andconditions set forth herein;

NOW, THEREFORE, inconsideration of the premises set forth above, the terms and conditionscontained herein, and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Borrower and the Lender haveagreed to the following amendments to the Credit Agreement.

# 1.             Amendments to Credit Agreement.  The Credit Agreement is hereby amended asfollows:

## (a)           Thedefinition of “Maturity Date” is amended and restated in its entirety to readas follows:

“Maturity Date” means theearlier of (i) September 30, 2007 or (ii) the closing by Heartland Grain Fuels,L.P. (or its successor) of a credit facility in the amount of approximately$135 Million with WestLB AG, New York Branch.

(b)          The definition of “Interest Rate” isamended and restated in its entirety to read as follows:

“Interest Rate”means (i) from February 12, 2007 through July 1, 2007, 12% per annum, and (ii)after July 1, 2007, 15% per annum.

# 2.             Representations and Warrantiesof the Borrower.  The Borrower herebyrepresents and warrants that this Amendment and the Credit Agreement as amendedhereby constitute legal, valid and binding obligations of the Borrower and areenforceable against the Borrower in accordance with their terms.

  

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# 3.             Reference to and Effect on theCredit Agreement.

## (a)           Uponthe effectiveness of Section 1 hereof, each reference to the Credit Agreementin the Credit Agreement or any other Loan Document shall mean and be areference to the Credit Agreement as amended hereby.

## (b)           Exceptas specifically amended above, the Credit Agreement and all other documents,instruments and agreements executed and/or delivered in connection therewithshall remain in full force and effect and are hereby ratified and confirmed.

## (c)           Theexecution, delivery and effectiveness of this Amendment shall not operate as awaiver of any right, power or remedy of the Lender, nor constitute a waiver ofany provision of the Credit Agreement or any other documents, instruments andagreements executed and/or delivered in connection therewith (including theLoan Documents).

# 4.             Governing Law.  This Amendment shall be governed by andconstrued in accordance with the laws of the State of Minnesota.

# 5.             Headings.  Section headings in this Amendment areincluded herein for convenience of reference only and shall not constitute apart of this Amendment for any other purpose.

# 6.             Counterparts. This Amendment may be executed by one or more of the parties hereto onany number of separate counterparts, and all of said counterparts takentogether shall be deemed to constitute one and the same instrument.

[Signature PageFollows]

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IN WITNESSWHEREOF, this Amendment has been duly executed as of the day and year firstabove written.
| ** ** | **HGF ACQUISITION, LLC**           |
|------------|------------------------------------|
| ** ** | ** **                         |   |
| ** ** | ** **                         |   |
|       | By:                                |   /s/ Revis L. Stephenson III |   |
|       | Name:                              |   Revis L. Stephenson III |   |
|       | Title:                             |   Chairman |   |
|       |                               |   |
|       |                               |   |
| ** ** | **KRUSE INVESTMENT COMPANY, INC.** |
| ** ** | ** **                         |   |
| ** ** | ** **                         |   |
|       | By:                                |   /s/ Ejnar Knudsen |   |
|       | Name:                              |   Ejnar Knudsen |   |
|       | Title:                             |   EVP |   |
|            |                                    |  |  |  |  |  |

 

*(Signature Page to Amendment No. 1 to CreditAgreement)*

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