EXHIBIT 10.2 


 


Execution Copy


 




 





SECURITY AND ESCROW AGREEMENT


 


dated as of December 17, 2004


 


among


 


AVENTINE RENEWABLE ENERGY HOLDINGS, INC.


 


as Pledgor,


 


WELLS FARGO BANK, N.A.,


 


as Trustee and Collateral Agent,


 


and


 


JPMORGAN CHASE BANK, N.A.


 


as Escrow Agent and as Securities Intermediary 




 





 

















 


SECURITY AND ESCROW AGREEMENT


 


This
SECURITY AND ESCROW AGREEMENT (this “Agreement”)
is made and entered into as of December 17, 2004 by AVENTINE RENEWABLE
ENERGY HOLDINGS, INC., a Delaware corporation (“Aventine”), having an office at 1300 South Second Street, P.O. Box
10, Pekin, Illinois 61555-0010, WELLS FARGO BANK, N.A., as trustee (in such
capacity, the “Trustee”) and
collateral agent (in such capacity, the “Collateral
Agent”) under the Indenture referred to below, and JPMORGAN CHASE
BANK, N.A., a national banking association, as securities intermediary (in such
capacity, the “Securities Intermediary”)
and escrow agent (in such capacity, the “Escrow
Agent”) with respect to the Escrow Account (as hereinafter defined).



 


W I T N E S S E T H


 


WHEREAS,
Aventine and certain other guarantors named therein, and Morgan Stanley &
Co., Incorporated, J.P. Morgan Securities, Inc., Banc of America
Securities LLC and Bear, Steams & Co., Inc., each acting as a
Placement Agent (collectively, the “Placement
Agents”), are parties to a Purchase Agreement dated December 17,
2004 (the “Purchase Agreement”),
pursuant to which Aventine is issuing and selling to the Placement Agents
$160,000,000 aggregate principal amount of Senior Secured Floating Rate Notes
due 2011 (the “Notes”); and 


 


WHEREAS,
Aventine and the Trustee have entered into that certain indenture, dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from
time to time, the “Indenture”), pursuant
to which Aventine is issuing the Notes on the date hereof; 


 


WHEREAS,
pursuant to the Purchase Agreement and the Indenture, Aventine is required to
deposit into the Escrow Account (as defined below) on December 17, 2004
(the “Closing Date”) $62.5 million
(the “Deposit Amount”) of the net
proceeds from the offering of the Notes to be held by the Escrow Agent pending
application of the funds therein to the construction of the planned expansion
of Aventine Renewable Energy, Inc.’s Pekin, Illinois facility, and to
provide a security interest therein for the benefit of the Secured Parties, to
secure the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration, or otherwise) of the Notes, the Indenture and
the Security Documents (such obligations being the “Obligations”); and 


 


WHEREAS,
Aventine has opened a collateral account, Account No. 10209533.1 (the “Escrow Account”) with JPMorgan Chase Bank,
N.A. at its office at 600 Travis Street, Suite 1150, Houston, Texas 77002,
in the name of Aventine; and 


 

















 


WHEREAS,
it is a condition precedent to the initial purchase of the Notes by the
Placement Agents pursuant to the Purchase Agreement that Aventine shall have
granted the security interest and made the pledge contemplated by this
Agreement; and 


 


WHEREAS,
unless otherwise defined herein or in the Indenture, terms defined in Articles
8 or 9 of the Uniform Commercial Code as in effect in the State of New
York (“UCC”) are used in this
Agreement as such terms are defined in such Article 8 or 9. 


 


NOW,
THEREFORE, in consideration of the mutual promises herein contained, and in
order to induce the Holders of the Notes to purchase the Notes, Aventine hereby
agrees with the Escrow Agent, the Securities Intermediary, and the Collateral
Agent, for the ratable benefit of the Secured Parties, as follows: 


 


ARTICLE 1

CERTAIN DEFINITIONS; APPOINTMENT OF THE ESCROW AGENT; PLEDGE AND

GRANT OF SECURITY INTEREST; DEPOSIT OF DEPOSIT AMOUNT. 


 


Section 1.01. Certain Definitions. Capitalized terms
used herein will have the respective meanings described to them below: 


 


“Additional Provisions” has the meaning
given to it in the seventh Whereas clause hereof. 


 


“Aventine” has the meaning given to it in
the introductory paragraph hereof.


 


“Business Day” means any day of the year,
excluding Saturday, Sunday and any other day on which national banks are
required or authorized to close in Houston, Texas, New York, New York, or
Minneapolis, Minnesota. 


 


“Closing Date” has the meaning given to it
in the third Whereas clause hereof.


 


“Collateral” has the meaning specified in Section 1.03.



 


“Collateral Agent” has the specified in the
introductory paragraph hereof.


 


“Collateral Investments” means (i) Treasury
Securities, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing not later than one year, in each
case, entitled to U.S. Federal deposit insurance for the full amount thereof or
issued by a bank or trust company (including the Escrow Agent or the Collateral
Agent or an Affiliate of the Escrow Agent or the Collateral Agent) that is
organized under the laws of the United States of America or any State thereof
having capital, surplus and undivided 


 


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profits aggregating in
excess of $500.0 million, and (iii) investments in commercial paper
maturing not later than 270 days and having, at the date of acquisition, a
rating no lower than A-1 from Standard & Poor’s Ratings Service, P-1
from Moody’s Investors Service, Inc. or F-1 from Fitch Ratings Ltd. 


 


“Completion
Certificate”
has the meaning specified in Article 6. 


 


“Deposit Amount” has the meaning specified
in the third Whereas clause hereof.


 


“Disbursement Request Certificate” has the
meaning specified in Article 6.


 


“Entitlement Order” has the meaning
specified in Article 5. 


 


“Escrow Account” has the meaning specified
in the fifth Whereas clause hereof.


 


“Escrow Agent” has the meaning specified in
the introductory paragraph hereof.


 


“Events of Default” means an Event of
Default as defined in the Indenture. 


 


“Federal Book-Entry Regulations” has the
meaning given to it in the seventh Whereas clause hereof. 


 


“Holders” means the registered holders of
the Notes. 


 


“Indenture” has the meaning specified in the
second Whereas clause hereof.


 


“JPMorgan Chase Money Market Account” means
an interest bearing account at JPMorgan Chase Bank, N.A. 


 


“Lien” means any mortgage, lien, pledge,
claim, charge, security interest or encumbrance of any kind, whether or not filed,
recorded or otherwise perfected under applicable law. 


 


“Material Adverse Effect” means a material
adverse effect on Aventine and its subsidiaries, taken as a whole. 


 


“Notes” has the meaning specified in the
first Whereas clause hereof.


 


“Obligations” has the meaning specified in
the third Whereas clause hereof.


 


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“Offering Memorandum” means the Offering
Memorandum, dated December 10, 2004, relating to the offering of the Notes
issued on the Closing Date. 


 


“Officer” means the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Treasurer or the Secretary of Aventine,
the Trustee or the Collateral Agent, as applicable. 


 


“Officers’ Certificate” means a certificate
signed by two Officers of Aventine. 


 


“Pekin Expansion” means the expansion of
annual ethanol production capacity of Aventine Renewable Energy, Inc.’s,
ethanol production facility in Pekin, Illinois, by 56.5 million gallons
(utilizing a dry milling process). 


 


“Placement Agents” has the meaning specified
in the first Whereas clause hereof.


 


“Pledged Financial Assets” has the meaning
specified in Section 1.03.


 


“Pledged Security Entitlements” has the
meaning specified in Section 1.03.


 


“Purchase Agreement” has the meaning
specified in the first Whereas clause hereof. 


 


“Secured Parties” has the meaning specified
in Section 1.03.


 


“Securities Intermediary” has the meaning
specified in the introductory paragraph hereof. 


 


“Special Offer to Purchase Notice” means a
written notice provided by Aventine or the Trustee to the Escrow Agent that
Aventine will consummate a Special Offer to Purchase (as defined in the
Indenture) on the Payment Date (as defined in the Indenture), which notice
shall expressly set forth the calendar date of the Payment Date, the name,
address and wiring instructions for the Paying Agent and the amount required to
be paid. 


 


“Treasury Securities” means any investment
in obligations issued or guaranteed by the United States government or agency
thereof, in each case, maturing not later than one year. 


 


“Trustee” has the meaning specified in the
introductory paragraph hereof.


 


“UCC” has the meaning specified in the sixth
Whereas clause hereof. 


 


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Capitalized terms used but
not defined herein shall have the meanings assigned thereto in the Indenture. 


 


Section 1.02. Appointment of the Escrow Agent. The
Trustee and Aventine hereby appoint JPMorgan Chase Bank, N.A., as Escrow Agent
in accordance with the terms and conditions set forth herein and the Escrow
Agent hereby accepts such appointment. 


 


Section 1.03. Grant of Security Interest. Aventine
hereby assigns and transfers to the Collateral Agent and hereby grants to the
Collateral Agent for the benefit of the Trustee and the Holders (the Holders,
Trustee and Collateral Agent, collectively the “Secured Parties”) a continuing security interest in and to all
of Aventine’s right, title and interest in, to and under the following
(collectively, the “Collateral”)
as collateral security for the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations: 


 


(a) the
Escrow Account, all funds and financial assets (collectively, the “Pledged Financial Assets”) credited to the
Escrow Account from time to time (including any Collateral Investments) and all
security entitlements of Aventine with respect to the Pledged Financial Assets
(all such security entitlements collectively the “Pledged Security Entitlements”), including, without
limitation, all dividends, if any, interest, cash, instruments, if any, and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Pledged Security
Entitlements or such Pledged Financial Assets; and 


 


(b) all
proceeds of the property and assets described in clause (a) of this Section 1.03
and cash proceeds). 


 


Section 1.04. Deposit of Deposit Amount. On the
Closing Date, Aventine shall deposit the Deposit Amount into the Escrow
Account. 


 


ARTICLE 2 

DELIVERY OF SECURITY COLLATERAL


 


All
securities, financial assets or other property credited to the Escrow Account
shall be registered in the name of the Securities Intermediary, indorsed to the
Securities Intermediary or in blank. In no case will any financial asset
credited to the Escrow Account be registered in the name of Aventine, payable
to the order of Aventine or specially indorsed to Aventine unless the foregoing
have been specially indorsed to the Securities Intermediary or in blank. All
financial assets delivered to the Securities Intermediary pursuant to this
Agreement will be promptly credited to the Escrow Account. 


 


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ARTICLE 3

CREATION AND MAINTENANCE OF THE ESCROW ACCOUNT


 


(a) Concurrently
with or prior to the Closing Date, Aventine shall have established (and at all
times until the Obligations shall have been paid in full and this Agreement shall
have been terminated, or the escrow terminates pursuant to Section 13.07,
the Securities Intermediary shall maintain and administer in accordance with
this Agreement), the Escrow Account with JPMorgan Chase Bank, N.A. at its
office at 600 Travis Street, Suite 1150, Houston, Texas 77002 Attn.: ITS -
Houston Escrow, Attn: Ms. Ruth Chipongian. 


 


(b) The
Securities Intermediary shall cause the Escrow Account to be, and the Escrow
Account shall be, separate from all other accounts (including any other escrow
account). 


 


(c) The
Securities Intermediary shall deposit all other property, assets and items in,
and credit such other assets, property and items, in each case belonging to
Aventine, to, the Escrow Account. 


 


ARTICLE 4

INVESTING OF AMOUNTS IN THE ESCROW ACCOUNT


 


As
long as the Collateral is deposited in the Escrow Account, the Collateral will
be invested by the Escrow Agent at the instruction of Aventine in Treasury
Securities and other Collateral Investments. Unless directed otherwise, the
Collateral will be invested and reinvested in the JPMorgan Chase Money Market
Account to the extent that such account is or contains exclusively a Collateral
Investment. The Escrow Agent or any of its Affiliates may receive
compensation with respect to any investment directed hereunder. 


 


ARTICLE 5 

SECURITIES INTERMEDIARY


 


The
Securities Intermediary, and with respect to subsection (d) below,
Aventine, represent and warrant to, and agree with each of the other parties
hereto as follows: 


 


(a) Collateral
held by the Securities Intermediary for the account of Aventine is, and will
continue to be, credited to the Escrow Account. 


 


(b) The
Escrow Account is a “securities account” as defined in Section 8-501 of
the UCC. The Securities Intermediary is acting as a “securities intermediary”
as defined in Section 8-102 of the UCC with respect to the Escrow Account.
Aventine is the entitlement holder with respect to the property credited from
time to time to the Escrow Account. 


 


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(c) The
Securities Intermediary has credited and will continue to credit such assets,
property and items to the Escrow Account in accordance with instructions given
in accordance with the terms and conditions of this Agreement. 


 


(d) For
the purposes of Section 8-102(a)(9)(iii) of the UCC, all assets,
property and items from time to time carried in the Escrow Account shall
constitute “financial assets” under Article 8 of the UCC, and the
Securities Intermediary and Aventine agree to treat all such assets, property
and items as financial assets. 


 


(e) The
Securities Intermediary’s jurisdiction with respect to the Escrow Account for
purposes of Section 8-1 10(e) of the UCC is, and will continue to be
for so long as the security interest hereunder shall be in effect, the State of
New York. 


 


(f) The
Securities Intermediary will comply with all notifications it receives
directing it to transfer or redeem any property in the Escrow Account (each an “Entitlement Order”) or other directions
concerning the Escrow Account (including, without limitation, Entitlement
Orders, directions to distribute to the Escrow Agent proceeds of any such
transfer or redemption or interest or dividends on property in the Escrow
Account) originated by the Collateral Agent without further consent by Aventine
or any other Person. The Collateral Agent hereby instructs the Securities
Intermediary to follow instructions of (i) the Escrow Agent pursuant to Article 6,
and (ii) subject to Article 5(g), Aventine pursuant to Article 4,
until such time as the Collateral Agent has delivered a written notice of
exclusive control (a “Notice of Exclusive
Control”) to the Securities Intermediary, with a copy to the Escrow
Agent, at which time the Collateral Agent will be deemed to have the exclusive
ability to direct the Collateral. The Collateral Agent hereby agrees with
Aventine that it will not deliver a Notice of Exclusive Control unless an Event
of Default (as defined in the Indenture) has occurred and is continuing, and
shall rescind any such notice if any such Event of Default is cured or waived. 


 


(g) If
the Securities Intermediary receives conflicting Entitlement Orders or
directions from the Collateral Agent and Aventine, it will follow the
Entitlement Orders and directions from the Collateral Agent and not from
Aventine. 


 


(h) The
Securities Intermediary has not entered into and will not enter into any
agreement with any other Person relating to the Escrow Account and/or any
financial assets credited thereto pursuant to which it has agreed to comply
with Entitlement Orders of such Person. The Securities Intermediary has not
entered into any other agreement with Aventine or any other Person purporting
to limit or condition the obligation of the Securities Intermediary to comply
with Entitlement Orders originated by the Collateral Agent as set forth in
paragraph (f) above. 


 


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(i) The
Securities Intermediary hereby waives and releases any Lien, right of set-off
or other right it may have against the Escrow Account or any financial
asset carried in the Escrow Account or any credit balance in the Escrow Account
and agrees that it will not assert any such Lien or right against the Escrow
Account or any financial asset carried in the Escrow Account or any credit
balance in the Escrow Account. 


 


(j)
Anything herein to the contrary notwithstanding, the Securities Intermediary
will not be required to follow any instruction that would violate any
applicable law, decree, regulation or order of any government or governmental
body (including any court or tribunal). 


 


(k)
The Securities Intermediary does not know of any claim to or interest in the
Escrow Account or any property credited to the Escrow Account, except for
claims and interests of the parties referred to in this Agreement. 


 


(l)
When the Securities Intermediary has received any written notice of any claim
or interest in the Escrow Account or any property credited to the Escrow
Account other than the claims and interests of the parties referred to in this Agreement,
the Securities Intermediary will promptly notify the Escrow Agent, the
Collateral Agent, the Trustee and Aventine of such claim or interest. 


 


ARTICLE 6 

DISBURSEMENTS


 


Prior
to the receipt of a Notice of Exclusive Control, the Escrow Agent shall
instruct the Securities Intermediary to hold the assets in the Escrow Account
and release the same, or a portion thereof, as follows: 


 


(a) If
the Escrow Agent receives, prior to 12:00 p.m., New York City time, on any
Business Day, or if after 12:00 p.m., New York City time, the next
preceding Business Day, a resolution from the Board of Directors of Aventine
set forth in an Officers’ Certificate (a “Completion
Certificate”) certifying that, as of the date of such certificate, (i) the
Pekin Expansion has been completed, (ii) such expansion has increased
production capacity by approximately 56.5 million gallons of ethanol annually,
and (iii) all material consents, approvals and licenses necessary for the
commercial operation of such expansion have been obtained from the relevant
governmental authorities, with a copy sent to the Trustee, the Escrow Agent
shall instruct the Securities Intermediary to liquidate, by the close of
business on such date, all funds and/or Cash Equivalents and/or Collateral
Investments from the Escrow Account and to cause the disbursement of such funds
and/or Collateral Investments as directed by Aventine. 


 


(b) If
at any time prior to the presentation by Aventine of a Completion Certificate
the Escrow Agent receives, prior to 12:00 p.m., New York City time, on any
Business Day, or if after 12:00 p.m., New York City time, the next 


 


9

















 


preceding Business Day, a
request by Aventine for the disbursement of funds from the Escrow Account set forth
in an Officers’ Certificate (a “Disbursement
Request Certificate”) (i) indicating in reasonable detail the
purpose or purposes to which such funds will be applied and (ii) certifying
that (x) the use of such funds for such purpose or purposes will not violate
the terms of the Indenture, and (y) such funds will be applied as set forth in
clause (i) within no more than seven days after their release from the
Escrow Account, with a copy sent to the Trustee, the Escrow Agent shall
instruct the Securities Intermediary to liquidate, by the close of business on
such date, the funds and/or Collateral Investments from the Escrow Account in
an amount equal to the amount specified in the Disbursement Request Certificate
and to cause the disbursement of such amount of funds and/or Collateral
Investments as directed by Aventine; provided,
however, that in the event that
the amount requested by Aventine under a Disbursement Request Certificate is
equal to or greater than $10 million or such requested amount is less than $10
million but, when added to all other amounts released pursuant to this Article 6(b) during
the preceding 30 days, would aggregate to $25 million or more, the Escrow Agent
shall not honor such Disbursement Request Certificate unless such Certificate
is accompanied by a resolution of the Board of Directors of Aventine approving
such disbursement request. 


 


(c) In
the event that the Escrow Agent receives a Special Offer to Purchase Notice,
the Escrow Agent shall instruct the Securities Intermediary to liquidate and
release to the Paying Agent (as defined in the Special Offer to Purchase
Notice), not later than the last Business Day prior to the Payment Date (as set
forth in the Special Offer to Purchase Notice), the funds and/or Collateral
Investments from the Escrow Account in an amount equal to the lesser of (I) the
amount required to pay the purchase price, plus accrued and unpaid interest to
the date of purchase, for all notes tendered pursuant to a Special Offer to
Purchase Notice and (II) the amount of funds and/or Collateral Investments then
in the Escrow Account. Concurrently with the release of funds to the Paying
Agent, the Escrow Agent will release any excess of escrowed funds over the
purchase price to Aventine, and Aventine will be permitted to use the excess
funds for any purpose not otherwise prohibited by the Indenture. 


 


(d) Upon
the release of any Collateral from the Escrow Account in accordance with the
terms of this Agreement, the security interest evidenced by this Agreement in
such released Collateral will automatically terminate and be of no further
force and effect. 


 


(e) The
Escrow Agent shall not be required to instruct the Securities Intermediary to
liquidate any Collateral Investment in order to make any payment hereunder
except as required under Article 6(a), (b) or (c). 


 


(f) Aventine
acknowledges, confirms and agrees that the Collateral Agent holds the Pledged
Security Entitlements to the Collateral Investments solely as Collateral Agent
for the Trustee and the Holders of the Notes and not as a securities
intermediary or financial intermediary. 


 


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(g) Nothing
in this Article 6 shall affect the Escrow Agent’s rights, upon instruction
from the Collateral Agent, to instruct the Securities Intermediary to release
Collateral for application thereof to payment of amounts due on the Notes upon
acceleration thereof. 


 


ARTICLE 7 

REPRESENTATIONS AND WARRANTIES


 


To
induce the Secured Parties to purchase the Notes and to induce the Escrow Agent
and the Securities Intermediary to enter into this Agreement, Aventine hereby
represents and warrants that: 


 


(a) The
execution and delivery by Aventine and the performance by Aventine of its
obligations under this Agreement will not contravene (i) any provision of
applicable law or the certificate of incorporation or by-laws of Aventine, (ii) any
material agreement or other material instrument binding upon Aventine or any of
its subsidiaries or (iii) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over Aventine or any of
its subsidiaries, or result in the creation or imposition of any Lien on any
assets of Aventine, except for the security interests granted under this
Agreement and except, in the case of the foregoing clauses (ii) and (iii),
such contraventions as would not, singly or in the aggregate, have a Material
Adverse Effect. 


 


(b) No
consent of any other Person and no approval, authorization, order of,
declaration or qualification with, any governmental body or agency or other
third party is required (i) for the execution, delivery or performance by
Aventine of its obligations under this Agreement or (ii) for the pledge by
Aventine of the Collateral pursuant to this Agreement or for the perfection and
maintenance of such pledge, except for (A) those already obtained which
are in full force and effect, (B) any such consents, approvals,
authorizations or orders as may be required to be obtained by the
Collateral Agent (or the Holders) for the exercise by the Collateral Agent of
the rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement and (iii) as would not, singly or in
the aggregate, have a Material Adverse Effect. 


 


(c) Aventine
is the legal and beneficial owner of the Collateral, free and clear of any Lien
or claims of any Person (except for the security interests created by this
Agreement). No financing statement or instrument similar in effect covering all
or any part of Aventine’s interest in the Collateral is on file in any
public or recording office. 


 


(d) This
Agreement has been duly authorized, validly executed and delivered by Aventine
and constitutes a valid and binding agreement of Aventine, enforceable against
Aventine in accordance with its terms, except as the enforceability hereof may be
limited by (i) applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally, or (ii) general principles of 


 


11

















 


equity, whether considered
at law or at equity, including, without limitation, concepts or materiality,
reasonableness, good faith and fair dealing. 


 


(e) Upon
the filing of all necessary Uniform Commercial Code financing statements
in the proper filing offices and all other actions necessary or desirable to
perfect a security interest in the Escrow Account, the security interests in
the Escrow Account granted to the Collateral Agent, for the ratable benefit of
the Secured Parties, will constitute a valid and perfected first priority
security interest in the Escrow Account, securing the Obligations, subject only
to Permitted Liens and other Liens expressly permitted under the Indenture. As
of the Closing Date, except for the filing of all necessary Uniform Commercial
Code financing statements in the proper filing offices and the other filings
and actions contemplated hereby and by the Indenture, all other filings and
other actions necessary or desirable to perfect the security interest in the
Escrow Account will have been duly made or taken and will be in full force and
effect. 


 


(f) There
are no legal or governmental proceedings pending or, to the best of Aventine’s
knowledge, threatened to which Aventine or any of its subsidiaries is a party
or to which any of the properties of Aventine or any such subsidiary is subject
that would materially adversely affect the power or ability of Aventine to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby. 


 


(g) The
pledge of the Collateral pursuant to this Agreement is not prohibited by law or
governmental regulation (including, without limitation, Regulations T, U and X
of the Board of Governors of the Federal Reserve System) applicable to
Aventine. 


 


(h) No
Event of Default exists. 


 


(i) Aventine’s
exact legal name, as defined in Section 9-503(a) of the UCC, is “Aventine
Renewable Energy Holdings, Inc.”. The chief place of business and chief
executive office of Aventine are located at 1300 South 2nd Street, P.O. Box
10, Pekin, Illinois 61555-0010, and Aventine keeps its records concerning the
Collateral at such location. 


 


(j)
Aventine is the sole account holder of the Escrow Account and Aventine has not
consented to, and is not otherwise aware of any Person (other than the
Collateral Agent) having “control” (within the meaning of Section 9-104 of
the UCC) over the Escrow Account or any money or other property deposited
therein. 


 


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ARTICLE 8

POWER OF ATTORNEY; COLLATERAL AGENT MAY PERFORM


 


Subject
to the terms of this Agreement, Aventine hereby appoints and constitutes the
Collateral Agent as Aventine’s attorney-in-fact (with full power of
substitution), with full authority in the place and stead of Aventine and in
the name of Aventine or otherwise, from time to time to take any action and to
execute any instrument that is necessary or advisable or that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation: 


 


(a) to
ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral, 


 


(b) to
receive, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) above, 


 


(c) to
file any claims or take any action or institute any proceedings that are
necessary or desirable or that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Trustee with respect to any of the Collateral, 


 


(d) to
pay or discharge taxes or Liens levied or placed upon the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same to
be determined by the Collateral Agent, and such payments made by the Collateral
Agent to become part of the Obligations of Aventine to the Trustee, due
and payable immediately upon demand, and 


 


(e) to
convey any item of Collateral to any purchaser thereof and give any notices or
recordings of any Liens under Article 11 hereof; 


 


provided, however,
that the Collateral Agent shall have no duty or obligation to perform any
of the foregoing actions. The Collateral Agent’s authority under this Article 8
shall include, without limitation, the authority to execute or endorse (a) any
checks or instruments representing proceeds of Collateral in the name of
Aventine, (b) any receipts for any certificate of ownership or any
document constituting Collateral or transferring title to any item of
Collateral, (c) any financing statements (to the extent permitted by
applicable law) or (d) any other documents deemed necessary or appropriate
by the Collateral Agent or otherwise to preserve, protect or perfect the security
interest in the Collateral and to file the same, prepare, file and sign
Aventine’s name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Collateral Agent in this
Agreement. This power of attorney, which will terminate upon the termination of
this Agreement, is coupled with an interest and is irrevocable by Aventine. 


 


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ARTICLE 9

NO ASSUMPTION OF DUTIES; REASONABLE CARE


 


The
rights and powers conferred on the Collateral Agent hereunder are solely to
preserve and protect the security interest of the Secured Parties in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties or obligations on the Collateral Agent in connection therewith other
than those expressly provided herein or imposed under applicable law. Except as
provided by applicable law or by the Indenture, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords similar property
held by the Collateral Agent for its own account, it being understood that the
Collateral Agent in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters, (b) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral or (c) investing or reinvesting any of the Collateral or any
loss on any investment. 


 


ARTICLE 10

INDEMNITY; ESCROW AGENT’S LIMITATION OF LIABILITY TO AVENTINE


 


(a) Aventine
shall indemnify, reimburse, hold harmless and defend the Escrow Agent, the
Collateral Agent and the Securities Intermediary and their affiliates and their
directors, officers, agents and employees, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, and reasonable legal fees and
damages arising from the Escrow Agent’s or Securities Intermediary’s or
Collateral Agent’s performance or lack of performance as Escrow Agent or
Securities Intermediary or Collateral Agent, respectively, under this
Agreement, except to the extent that such claim, action, obligation, liability
or expense is directly caused by the bad faith, gross negligence or willful
misconduct of such indemnified person; provided,
however, that the Securities
Intermediary (i) shall not be excused from, and shall not be excused from
liability for, acting or refraining from acting and (ii) shall not be
indemnified or held harmless under this Article 10 for the taking or the
failure to take any action, in each case, hereunder in its capacity as
Securities Intermediary to the extent the taking or the failure to take any
such action violates the duties and obligations expressly imposed upon the
Securities Intermediary under the Federal Book-Entry Regulations or Article 8,
Part 5 of the UCC. This indemnity shall be a continuing obligation of
Aventine, its respective successors and assigns, notwithstanding the
termination of this Agreement and the resignation or removal of the Escrow
Agent or the Securities Intermediary or the Collateral Agent. 


 


14

















 


(b) If
at any time the Escrow Agent is served with any judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative
process which in any way affects Collateral (including, but not limited to,
orders of attachment or garnishment or other forms of levies or injunctions or
stays relating to the transfer of Collateral), the Escrow Agent is authorized
to comply therewith in any manner as it or its legal counsel of its own
choosing deems appropriate and if the Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to
Aventine even though such order, judgment, decree, writ or process may be
subsequently modified or vacated or otherwise determined to have been without
legal force or effect. 


 


(c) Should
any controversy arise involving the parties hereto or any of them or any other
person, firm or entity with respect to this Agreement or the Collateral, or
should a substitute escrow agent fail to be designated as provided in Section 13.14
hereof, or if Escrow Agent should be in doubt as to what action to take, Escrow
Agent shall have the right, but not the obligation, either to (a) withhold
delivery of the Collateral until the controversy is resolved, the conflicting
demands are withdrawn or its doubt is resolved or (b) institute a petition
for interpleader in any court of competent jurisdiction to determine the rights
of the parties hereto. In the event Escrow Agent is a party to any dispute,
Escrow Agent shall have the additional right to refer such controversy to
binding arbitration. Should a petition for interpleader be instituted, or
should Escrow Agent be threatened with litigation or become involved in
litigation or binding arbitration in any manner whatsoever in connection with
this Escrow Agreement or the Collateral, Aventine agrees to reimburse Escrow
Agent for its attorneys’ fees and any and all other expenses, losses, costs and
damages incurred by Escrow Agent in connection with or resulting from such
threatened or actual litigation or arbitration prior to any disbursement
hereunder. 


 


(d) The
Escrow Agent, the Securities Intermediary and the Collateral Agent shall not
incur any liability to Aventine for not performing any act or fulfilling any
duty, obligation or responsibility hereunder by reason of any occurrence beyond
the control of the Escrow Agent or the Collateral Agent (including, but not
limited to, any act or provision or any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication facility). 


 


(e) The
Escrow Agent, the Securities Intermediary and the Collateral Agent shall not be
responsible in any respect for the form, execution, validity, value or
genuineness of documents or securities deposited hereunder, or for any
description therein, or for the identity, authority or rights of persons
executing or delivering or purporting to execute or deliver any such document,
security or endorsement. In no event shall the Escrow Agent, the Securities
Intermediary or the Collateral Agent be liable for special, indirect or
consequential loss or damage 


 


15

















 


of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent, the
Securities Intermediary or the Collateral Agent have been advised of the
likelihood of such loss or damage and regardless of the form of action. 


 


ARTICLE 11 

REMEDIES UPON EVENTS OF DEFAULT


 


If
any Event of Default shall have occurred and be continuing:


 


(a) The
Collateral Agent may exercise, in addition to all other rights given by
law or by this Agreement or the Indenture, all of the rights and remedies with
respect to the Collateral of a secured party under the UCC at that time and
also may without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at any broker’s board or at public
or private sale, in one or more sales or lots, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable. The
Collateral Agent will give Aventine reasonable notice of the time and place of
any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The purchaser of any or all Collateral so sold shall thereafter hold
the same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through Aventine. Any sale of the Collateral conducted
in conformity with reasonable commercial practices of banks, insurance
companies, commercial finance companies, or other financial institutions
disposing of property similar to the Collateral shall be deemed to be
commercially reasonable. The Trustee, the Collateral Agent or any Holder of
Notes may, in its own name or in the name of a designee or nominee, buy any of
the Collateral at any public sale and, if permitted by applicable law, at any
private sale. All expenses (including court costs and reasonable attorneys’
fees, expenses and disbursements) of, or incident to, the enforcement of any of
the provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral. 


 


(b) All
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied to, all or any part of the Obligations in such order as the Collateral
Agent shall elect consistent with Section 10.3(c) of the Indenture
and the Security Agreement. Any surplus of such 


 


16

















 


cash or cash proceeds held
by the Collateral Agent and remaining after payment in full of all the
Obligations shall be paid over to Aventine. 


 


(c) Aventine
further agrees to use its reasonable best efforts to do or cause to be done all
such other acts as may be necessary to ensure that such sale or sales of
all or any portion of the Collateral pursuant to this Article 11 are valid
and binding and in compliance with any and all other applicable requirements of
law. Aventine further agrees that a breach of any of the covenants contained in
this Article 11 will cause irreparable injury to the Trustee and the
Holders of the Notes, that the Trustee and the Holders of the Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Article 11 shall be specifically
enforceable against Aventine, and Aventine hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred. 


 


(d) The
Collateral Agent may but is not obligated to exercise any and all rights
and remedies of Aventine in respect of the Collateral. 


 


(e) Subject
to and in accordance with the terms of this Agreement, all payments received by
Aventine in respect of the Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of
Aventine and shall be forthwith paid over to the Collateral Agent in the same form as
so received (with any necessary endorsement). 


 


ARTICLE 12

EXPENSES


 


Aventine
agrees to pay to the Escrow Agent the reasonable fees as may be agreed
upon from time to time in accordance with the Escrow Agent’s fee schedule attached
hereto as Schedule I, as such Schedule I may be amended from
time to time in the ordinary course of the Escrow Agent’s business. Aventine
will pay to the Trustee, the Collateral Agent and the Escrow Agent the amount
of any and all reasonable expenses, including, without limitation, the
reasonable fees, expenses and disbursements of its counsel, experts and agents
retained by the Trustee, the Escrow Agent and the Collateral Agent, that the
Trustee, the Escrow Agent and the Collateral Agent may incur in connection
with (a) the review, negotiation and administration of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (c) the exercise or enforcement
of any of the rights of the Trustee, the Escrow Agent, the Collateral Agent or
the Secured Parties hereunder or (d) the failure by Aventine to perform or
observe any of the provisions hereof. Aventine will pay all such fees and
expenses within thirty (30) days of receipt of an invoice therefor. 


 


17

















 


ARTICLE 13 

MISCELLANEOUS PROVISIONS


 


Section 13.01. Notices. Any notice, direction or
communication given hereunder and any deliveries made hereunder shall be
sufficiently given if in writing and delivered in person or mailed by first class mail,
commercial courier service or telecopier communication, addressed as follows: 


 


If
to Aventine:


 


Aventine
Renewable Energy Holdings, Inc.

1300 South 2nd Street;

P.O. Box 10

Pekin, Illinois 61555-0010

Facsimile: 309-347-8541

Attention: Chief Financial Officer 


 


With
copies to:


 


Davis
Polk & Wardwell 

450 Lexington Avenue 

New York, New York 10017 

Facsimile: 312-407-0411 

Attention: Richard D. Truesdell, Jr., Esq.


 


If
to the Trustee or the Collateral Agent:


 


Wells
Fargo Bank, N.A. 

Corporate Trust Services 

Sixth Street & Marquette Avenue

Minneapolis, MN 55479 

Attn.: Jeffery T. Rose 

Telephone: (612) 667-0337 

Facsimile: (612) 667-9825 


 


If
to the Escrow Agent or the Securities Intermediary:


 


JPMorgan
Chase Bank, N.A.

600 Travis Street, Suite 1150

Houston, Texas 77002 

Attn: Ruth Chipongian 

Telephone: (713) 216-6337 

Facsimile: (713) 216-6927 


 


     With
copies to:


 


Vinson &
Elkins L.L.P. 

3700 Trammell Crow Center


 


18

















 


2001
Ross Avenue 

Dallas, Texas 75201 

Facsimile: 214-999-7994 

Attention: William D. Young, Esq.


 


or, as to any such party, at
such other address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section 13.01.
All such notices and other communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt is confirmed, if telecopied; and on the next Business Day if timely
delivered to an air courier guaranteeing overnight delivery. 


 


Section 13.02. Severability. The provisions of this
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect
such clause or provision in any other jurisdiction or any other clause or
provision of this Agreement in any jurisdiction. 


 


Section 13.03. Headings. The headings in this Agreement
have been inserted for convenience of reference only, are not to be considered
a part hereof and shall in no way modify or restrict any of the terms or
provisions hereof. 


 


Section 13.04. Counterpart Originals. This
Agreement may be signed in separate counterparts, each of which shall be
deemed an original, but all of which shall together constitute one and the same
agreement. All signatures of the parties to this agreement may be
transmitted by facsimile, and such facsimile will, for all purposes, be deemed
to be the original signature of such party whose signature it reproduces, and
will be binding upon such party. 


 


Section 13.05. Benefits of Agreement. Nothing in this
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Agreement. 


 


Section 13.06. Amendments, Waivers and Consents. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance with Article IX of
the Indenture and pursuant to a written instrument executed by all the parties
hereto. None of the Trustee, the Escrow Agent, the Securities Intermediary, the
Collateral Agent or any Holder of Notes shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or remedy hereunder
or to have acquiesced in any default or Event of Default or in any breach of
any of the terms and conditions hereof. Failure of the Trustee, the Escrow
Agent, the Securities Intermediary, the Collateral Agent or any Holder of Notes
to exercise, or delay in 


 


19

















 


exercising, any right, power
or privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the
Trustee, the Escrow Agent, the Collateral Agent, the Securities Intermediary or
any Holder of Notes of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that the Trustee, the Escrow
Agent, the Securities Intermediary, the Collateral Agent or such Holder of
Notes would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law. 


 


Section 13.07. Continuing Security Interest; Termination. (a) This
Agreement shall create a continuing security interest in and to the Collateral
and shall, unless otherwise provided in this Agreement, remain in full force
and effect until the earlier of (i) the discharge or defeasance of all
obligations of Aventine under the Indenture pursuant to Article VIII of
the Indenture or (ii) disbursement of all of the Collateral pursuant to Article 6.
This Agreement shall be binding upon Aventine and its transferees, successors
and assigns, and shall inure, together with the rights and remedies of the
Trustee and the Collateral Agent hereunder, to the benefit of the Trustee, the
Collateral Agent, the Holders of the Notes and their respective successors,
transferees and assigns. 


 


(b) This
Agreement (other than Aventine’s obligations under Articles 10 and 12) shall
terminated upon the earlier of (i) the discharge or defeasance of all
obligations of Aventine under the Indenture pursuant to Article VIII of
the Indenture or (ii) disbursement of all of the Collateral pursuant to Article 6.



 


(c) At
such time as set forth in (a) or (b) above, the Collateral Agent
shall, pursuant to a written order of Aventine, reassign and redeliver to
Aventine all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Collateral Agent in accordance with the terms of
this Agreement and the Indenture and take all actions requested by Aventine
that are necessary to release the security interest created by this Agreement
in and to the Collateral, including the filing of all termination statements
provided to it necessary to terminate any financing or continuation statements
filed with respect to the Collateral. Such reassignment and redelivery shall be
without warranty by or recourse to the Collateral Agent or the Trustee in its
capacity as such and shall be at the reasonable expense of Aventine. 


 


Section 13.08. Survival of Representations and Covenants. All
representations, warranties and covenants of Aventine contained herein shall
survive the execution and delivery of this Agreement, and shall terminate only
upon the termination of this Agreement. The obligations of Aventine under
Sections 10 and 12 hereof shall survive the termination of this Agreement. 


 


Section 13.09. Waivers. Aventine waives presentment and
demand for payment of any of the Obligations, protest and notice of dishonor or
default with respect to any of the Obligations, and all other notices to which
Aventine might 


 


20

















 


otherwise be entitled,
except as otherwise expressly provided herein or in the Indenture. 


 


Section 13.10. Authority of the Collateral Agent and the Escrow
Agent. (a) The Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Collateral
Agent by the terms hereof, together with such powers as are reasonably incident
thereto but no duties, obligations or powers shall be inferred or implied. The
Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents, attorneys, experts,
accountants, advisors or employees and the exculpatory provisions provided
herein shall be equally applicable to such Persons. The Collateral Agent shall
be entitled to retain counsel and to act in reliance upon the advice of counsel
concerning any matters arising hereunder. Except as otherwise expressly
provided in this Agreement or the Indenture, neither the Collateral Agent nor
any director, officer, employee, attorney or agent of the Collateral Agent
shall be liable to Aventine for any action taken or omitted to be taken by the
Collateral Agent, in its capacity as Collateral Agent, hereunder, except for
its own bad faith, gross negligence or willful misconduct. The Collateral Agent
and its directors, officers, employees, attorneys and agents shall be entitled
to conclusively rely on any communication, instrument or document (whether in
its original or facsimile form) believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons. 


 


(b) Aventine
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the Holders of
the Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and Aventine, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and Aventine shall not be obligated
or entitled to make any inquiry respecting such authority. 


 


(c) The
Escrow Agent shall have and be entitled to exercise all powers hereunder that
are specifically granted to the Escrow Agent by the terms hereof, together with
such powers as are reasonably incident thereto but no duties, obligations or
powers shall be inferred or implied. The Escrow Agent may perform any
of its duties hereunder or in connection with the Collateral by or through
agents, attorneys, experts, accountants, advisors or employees and the
exculpatory provisions provided herein shall be equally applicable to such
Persons. The Escrow Agent shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning any matters arising hereunder.
Except as otherwise expressly provided in this Agreement or the Indenture,
neither the Escrow Agent nor any director, officer, employee, attorney or agent
of the Escrow Agent shall be liable to Aventine for any action taken or omitted
to be 


 


21

















 


taken by the Escrow Agent,
in its capacity as Escrow Agent, hereunder, except for its own bad faith, gross
negligence or willful misconduct. The Escrow Agent and its directors, officers,
employees, attorneys and agents shall be entitled to conclusively rely on any
communication, instrument or document (whether in its original or facsimile
form) believed by it or them to be genuine and correct and to have been signed
or sent by the proper person or persons. 


 


(d) The
Escrow Agent shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and Aventine shall not be obligated or entitled to make any inquiry respecting
such authority. 


 


Section 13.11. Removal of Escrow Agent and Securities
Intermediary; Successor Escrow Agent and Securities Intermediary by Merger,
Etc. (a) Aventine and the Trustee may remove both the
Escrow Agent and the Securities Intermediary at any time by giving to the
Escrow Agent and the Securities Intermediary thirty calendar days’ prior notice
in writing signed by both Aventine and the Trustee. 


 


(b) Within
twenty calendar days after giving the foregoing notice of removal to the Escrow
Agent and the Securities Intermediary, Aventine and the Trustee shall jointly
agree on and appoint a successor Escrow Agent and Securities Intermediary. If a
successor Escrow Agent has not accepted such appointment by the end of such
twenty-day period, the Escrow Agent and Securities Intermediary may, in their
sole discretion, apply to a court of competent jurisdiction for the appointment
of a successor Escrow Agent and Securities Intermediary or for other
appropriate relief. 


 


(c) Upon
receipt of the notice of identity of the successor Escrow Agent, the Escrow
Agent shall deliver the Collateral then held hereunder to the successor Escrow
Agent. 


 


(d) If
the Escrow Agent consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Escrow
Agent. 


 


Section 13.12. Resignation. The Escrow Agent may resign
hereunder upon sixty (60) days’ prior notice to the Aventine and Trustee. Upon
the effective date of such resignation, the Escrow Agent shall deliver the
Collateral to any substitute escrow agent designated by Aventine and Trustee in
writing. If Aventine and Trustee fail to designate a substitute escrow agent
within sixty (60) days after the giving of such notice, the Escrow Agent may institute
a petition for interpleader. The Escrow Agent’s sole responsibility after such
60-day notice period expires shall be to hold the Deposit (without any
obligation to reinvest the same) and to deliver the same to a designated
substitute escrow agent, if any, or in accordance with the directions of a
final order or judgment of a court of 


 


22

















 


competent jurisdiction, at
which time of delivery the Escrow Agent’s obligations hereunder shall cease and
terminate. 


 


Section 13.13. Tax Matters. Each of Aventine and the
Trustee and the Collateral Agent shall provide the Escrow Agent with its
taxpayer identification number documented on the signature page hereto.
Failure so to provide such forms may prevent or delay disbursements from
the Collateral and may also result in the assessment of a penalty and
Escrow Agent’s being required to withhold tax on any interest or other income
earned on the Collateral. Any payments of income shall be subject to applicable
withholding regulations then in force in the United States or any other
jurisdiction, as applicable. 


 


Section 13.14. Funds Transfer. (a) In the event
funds transfer instructions are given (other than in writing at the time of
execution of the Escrow Agreement), whether in writing, by telefax, or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or person designated on Schedule II
hereto, and the Escrow Agent may rely upon the confirmations of anyone
purporting to be the person or persons so designated. If the Escrow Agent is
unable to contact any of the authorized representatives identified in Schedule II,
the Escrow Agent is hereby authorized to seek confirmation of such instructions
by telephone call-back to any one or more of your Officers, as the Escrow Agent
may select. Such Officer shall deliver to the Escrow Agent a fully
executed Incumbency Certificate, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be any such Officer. The persons and
telephone numbers for call-backs may be changed only in writing actually
received and acknowledged by the Escrow Agent. The parties to this Escrow
Agreement acknowledge that such security procedure is commercially reasonable. 


 


(b) It
is understood that the Escrow Agent and the beneficiary’s bank in any funds
transfer may rely solely upon any account numbers or similar identifying
number provided by either of the other parties hereto to identify (i) the
beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary
bank. The Escrow Agent may apply any of the escrowed funds for any payment
order it executes using any such identifying number, even where its use may result
in a person other than the beneficiary being paid, or the transfer of funds to
a bank other than the beneficiary’s bank or an intermediary bank, designated. 


 


Section 13.15. Final Expression. This Agreement,
together with the Indenture and any other agreement executed in connection
herewith, is intended by the parties as a final expression of this Agreement
and is intended as a complete and exclusive statement of the terms and
conditions thereof. 


 


Section 13.16. Rights of Holders of The Notes. No
Holder of Notes shall have any independent rights hereunder other than those
rights granted to individual Holders of the Notes pursuant to Article VI
of the Indenture; provided 


 


23

















 


that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture. 


 


Section 13.17. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial; Waiver of Damages. (a) This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New
York, and any dispute arising out of, connected with, related to, or incidental
to the relationship established between Aventine, the Trustee, the Escrow
Agent, the Collateral Agent, the Securities Intermediary, and the Holders of
the Notes in connection with this Agreement, and whether arising in contract,
tort, equity or otherwise, shall be resolved in accordance with the laws of the
State of New York. 


 


(b) Aventine
hereby waives personal service of process in any suit, action or proceeding
with respect to this Agreement and for actions brought under the U.S. Federal
or state securities laws brought in any Federal or state court located in the
City of New York (each a “New York Court”)
and consents that all service of process in any such suit, action or proceeding
shall be made by registered mail, return receipt requested, directed to
Aventine at the address indicated in Section 13.01. Each of the parties
hereto submits to the jurisdiction of any New York Court and to the courts of
its corporate domicile with respect to any actions brought against it as
defendant in any suit, action or proceeding arising out of, connected with,
related to, or incidental to the relationship established among Aventine, the
Trustee, the Collateral Agent, the Securities Intermediary, the Escrow Agent
and the Holders in connection with this Agreement, and each of the parties
hereto waives any objection that it may have to the laying of venue,
including any pleading of forum non
conveniens, with respect to any such action and waives any right to
which it may be entitled on account of place of residence or domicile. 


 


(c) Aventine
agrees that neither any Holder of Notes nor (except as otherwise provided in
this Agreement or the Indenture) the Escrow Agent in its capacity as Escrow
Agent nor the Securities Intermediary nor the Collateral Agent shall have any
liability to Aventine (whether arising in tort, contract or otherwise) for
losses suffered by Aventine in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
this Agreement, or any act, omission or event occurring in connection
therewith, unless such losses were the result of acts or omissions on the part of
the Escrow Agent, the Securities Intermediary, or the Collateral Agent or such
Holders of Notes, as the case may be, constituting bad faith, gross
negligence or willful misconduct. 


 


[REMAINDER OF PAGE INTENTIONALLY BLANK]


 


24

















 


IN
WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly
executed and delivered as of the date first above written.


 




	
  Tax
  Certification:
  Taxpayer ID#: 05-0569368

  
	
   

  
	
  NOTE: The following
  certification shall be used by and for a U.S. resident only. Non-residents
  must use and provide Form W8-BEN Customer is a (check one):

  
	
   

  
	
  ý Corporation

  	
  o Municipality

  	
  o Partnership

  	
  o Non-profit or Charitable Org

  
	
   

  	
   

  	
   

  	
   

  
	
  o Individual

  	
  o REMIC

  	
  o Trust

  	
  o Other

  
	
   

  	
   

  	
   

  	
   

  
	
  Under
  the penalties of perjury, the undersigned certifies that:

  
	
   

  
	
  (1)

  	
  the
  entity is organized under the laws of the United States

  
	
   

  	
   

  
	
  (2)

  	
  the
  number shown above is its correct Taxpayer Identification Number (or it is
  waiting for a number to be issued to it); and

  
	
   

  	
   

  
	
  (3)

  	
  it is
  not subject to backup withholding because: (a) it is exempt from backup
  withholding or (b) it has not been notified by the Internal Revenue
  Service (IRS) that it is subject to backup withholding as a result of failure
  to report all interest or dividends, or (c) the IRS has notified it that
  it is no longer subject to backup withholding.

  
	
   

  	
   

  
	
  (If the
  entity is subject to backup withholding, cross out the words after the (3) above.)

  
	
   

  
	
  Investors
  who do not supply a tax identification number will be subject to backup withholding
  in accordance with IRS regulations

  
					






 


Note: The IRS does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.


 


	
   

  	
  Aventine:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Brennan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William J. Brennan

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
						



 

















 




	
  Tax
  Certification:
  Taxpayer ID#: 94-1347393

  
	
   

  
	
  NOTE: The following
  certification shall be used by and for a U.S. resident only. Non-residents
  must use and provide Form W8-BEN Customer is a (check one):

  
	
   

  
	
  o Corporation

  	
  o Municipality

  	
  o Partnership

  	
  o Non-profit or Charitable Org

  
	
   

  	
   

  	
   

  	
   

  
	
  o Individual

  	
  o REMIC

  	
  o Trust

  	
  ý Other National Association

  
	
   

  	
   

  	
   

  	
   

  
	
  Under
  the penalties of perjury, the undersigned certifies that:

  
	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
  the
  entity is organized under the laws of the United States

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  the
  number shown above is its correct Taxpayer Identification Number (or it is
  waiting for a number to be issued to it); and

  
	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
  it is
  not subject to backup withholding because: (a) it is exempt from backup
  withholding or (b) it has not been notified by the Internal Revenue
  Service (IRS) that it is subject to backup withholding as a result of failure
  to report all interest or dividends, or (c) the IRS has notified it that
  it is no longer subject to backup withholding.

  
	
   

  	
   

  	
   

  	
   

  
	
  (If the
  entity is subject to backup withholding, cross out the words after the (3) above.)

  
	
   

  	
   

  	
   

  	
   

  
	
  Investors
  who do not supply a tax identification number will be subject to backup
  withholding in accordance with IRS regulations.

  
							






 


NOTE: The following certification shall be used by and for a U.S.
resident only. Non-residents must use and Provide Form W8-BEN Customer is
a (check one): 


 


	
   

  	
  Trustee and Collateral
  Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffery Rose

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffery Rose

  
	
   

  	
   

  	
  Title:

  	
  Corporate
  [         ] Officer

  
						



 

















 


	
   

  	
  Securities Intermediary
  and Escrow Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ May Ng

  	
   

  
	
   

  	
   

  	
  Name:

  	
  May Ng

  
	
   

  	
   

  	
  Title:

  	
  Vice President Trust
  Officer

  
					



 

















 


SCHEDULE I


 

















 


Schedule I

Fee Schedule


 

















 


JPMorgan


 


Schedule of Fees

for 

Escrow Agent Services


 


Minimum Administrative Fee
     $1,500 

Payable Upon Account Opening and in Advance each year in which we act as Escrow
Agent 


 


A one (1) year Minimum
Administrative Fee will be assessed for any account that is funded. The
Administrative Fee will cover a maximum of ten (10) annual administrative
hours for the Bank’s standard Escrow services including account setup,
safekeeping of assets, investment of funds, collection of income and other
receipts, preparation of statements comprising account activity and asset
listing, and distribution of assets in accordance with the specific terms of
the Escrow Agreement. 


 


Activity Fees:


 


Activity
fees will not be assessed for any month in which fewer than three transactions
occur.


 


	
  Disbursements

  	
   

  	
   

  	
   

  
	
  Per Check

  	
   

  	
  $

  	
  35

  	
   

  
	
  Per Wire
  U.S.

  	
   

  	
  $

  	
  35

  	
   

  
	
  International

  	
   

  	
  $

  	
  100

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Receipts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Per Deposit

  	
   

  	
  $

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Investments

  	
   

  	
   

  	
   

  
	
  Per directed
  buy/sell

  	
   

  	
  $

  	
  75

  	
   

  



 


The
investments fee will be waived if JPMorgan’s Money Market Account or Cash
Escrow sweep product offered by JPMorgan’s Escrow Group is the selected
investment.


 


	
  Legal Expenses: 

  	
   

  	
  At Cost

  	
   

  



 


There will be no legal
expense for JPMorgan Chase if our standard form escrow agreement is
employed without substantive amendments. 


 

















 


Extraordinary Services and Out-of Pocket Expenses: 


 


Any additional services
beyond our standard services as specified above, such as annual administrative
activities in excess of ten (10) hours and all reasonable out-of-pocket
expenses including attorney’s fees will be considered extraordinary services
for which related costs, transaction charges, and additional fees will be
billed at the Bank’s standard rate. 


 


Modification of Fees:


 


Circumstances may arise
necessitating a change in the foregoing fee schedule. The Bank will attempt at
all times, however, to maintain the fees at a level that is fair and reasonable
in relation to the responsibilities assumed and the duties performed. 


 


Disclosure & Assumptions:


 


•                  The escrow deposit shall be continuously
invested in a JPMorgan Money Market Account or JPMorgan’s Cash Escrow sweep
product.


 


•                  The account will be invoiced in the month in
which the account is opened and annually thereafter.


 


•                  Payment of the invoice is due 30 days
following receipt.


 


•                  To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. When an account is opened, we will ask for
information that will allow us to identify relevant parties.


 


•                  This proposal is subject to (i) our
legal review and (ii) satisfactory due diligence review. 


 

















 


SCHEDULE II


 

















 


Schedule II 


 


Telephone Number(s) for Call-backs and Person(s) 


 


Designated to Confirm Funds Transfer Instructions 


 


If to Aventine: 


 


	
  Name

  	
   

  	
  Telephone
  Number

  
	
  1. William Brennan

  	
   

  	
  309-347-9200

  
	
  2. Ken Eckhardt

  	
   

  	
  309-347-9335

  



 


If to Trustee: 


 


	
  Name

  	
   

  	
  Telephone
  Number

  
	
  1. Jeffery T. Rose

  	
   

  	
  612-667-0337 

  
	
  2. Kim Nguyen

  	
   

  	
  612-667-7916

  



 


Telephone call-backs shall
be made to either Aventine or Trustee if joint instructions are required
pursuant to the Escrow Agreement. 


 


33