Exhibit
10.1


 


SECURITY
AGREEMENT


 


THIS SECURITY AGREEMENT,
dated as of December 17, 2004, is made by AVENTINE
RENEWABLE ENERGY, INC., a Delaware corporation (“Aventine”), AVENTINE RENEWABLE ENERGY, LLC, a Delaware limited liability
company (“Parent” and, together
with Aventine and any other entity that may become a party hereto, the “Grantors” and, each individually, a “Grantor”), in favor of WELLS FARGO BANK, N.A., as the Collateral
Agent (in such capacity, the “Collateral
Agent”) for the ratable benefit of each of the trustee (the “Trustee”) under the Indenture, dated as
of December 17, 2004 (as amended, supplemented or otherwise modified from time
to time, the “Indenture”),
among Aventine Renewable Energy Holdings, Inc., the Grantors, the Trustee and
the holders of the senior secured notes issued thereunder (the “Holders”; together with the Trustee,
and the Collateral Agent, the “Secured
Parties”)


 


WITNESSETH:


 


WHEREAS, Aventine Renewable
Energy Holdings, Inc. (“Holdings”)
has issued $160 million aggregate principal amount of Senior Secured Floating
Rate Notes due 2011 (the “Notes”),
and may make further issuances of Notes, under the Indenture. In connection
therewith, the Grantors have agreed to guarantee the payment and performance of
Holding’s obligations under the Indenture, the Notes and the Security Documents
(collectively, the “Indenture Documents”);


 


WHEREAS, as a condition to
the effectiveness of the Indenture and to secure the obligations of Holdings
and the Grantors under and in connection with the Indenture Documents, the
Grantors have executed and delivered this Agreement; and


 


WHEREAS, the Grantors will
derive substantial direct and indirect benefit from the making of the
extensions of credit under the Indenture.


 


NOW, THEREFORE, in
consideration of the premises and to induce the Collateral Agent and the
Trustee to enter into the Indenture and to induce the Holders to purchase the
Notes, each Grantor hereby agrees as follows:


 


ARTICLE 1 

DEFINED TERMS


 


Section 1.1
Definitions.


 


(a) Unless otherwise defined
herein, terms defined in the Indenture and used herein shall have the meanings
given to them in the Indenture, and the following terms which are defined in
the UCC are used herein as so defined: Accounts, Chattel Paper, Certificated
Securities, Commercial Tort Claims, Commodity Accounts, Commodity Contracts,
Commodity


 

















 


Intermediary, Deposit Accounts, Documents, Electronic Chattel Paper,
Equipment, Farm Products, Financial Assets, Fixtures, Goods, Health Care
Insurance Receivable, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Money, Payment Intangibles, Proceeds, Promissory
Notes, Records, Security, Securities Accounts, Security Certificate, Security
Entitlements, Securities Intermediary, Software, Supporting Obligations,
Uncertificated Securities and Tangible Chattel Paper.


 


(b) The following terms
shall have the following meanings:


 


“Administrative Agent” shall mean the
administrative agent under the credit agreement dated as of May 30, 2003, as
amended or otherwise modified from time to time, by and among Aventine, Parent,
and JPMorgan Chase Bank, individually as a lender, as the issuing bank and as
the administrative agent, and any successors or replacement thereof.


 


“Agreement” shall mean this Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.


 


“Blocked Account” shall mean Account No.
801 804 701 established by Aventine with the Administrative Agent and any other
account hereafter established by Aventine or any other Grantor with
Administrative Agent which Aventine or such Grantor and Administrative Agent
jointly designate as the “Blocked Account,” into which all cash receipts of
Aventine or any other Grantor from whatever source shall be deposited.


 


“Collateral” shall have the meaning
provided in Article 2 hereof.


 


“Collateral Account” shall mean any
collateral account established by the Collateral Agent as provided in Section
5.2 hereof.


 


“Copyright Licenses” shall mean any and
all agreements, whether written or oral, providing for the grant by or to
Grantor of any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.


 


“Copyright Security Agreement” means the
Copyright Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex III hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.


 


“Copyrights” shall mean (i) any and all
other copyrights, in the United States or any other country, whether registered
or unregistered, or published or unpublished, all registrations and recordings
thereof and all applications in connection therewith, and (ii) the right to obtain
all renewals of the foregoing.


 


“General Intangibles” shall mean all
“general intangibles” as such term is defined in the UCC and, in any event,
including, without limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which


 


2

















 


such Grantor is a party or under which such Grantor has any right,
title or interest or to which such Grantor or any property of such Grantor is
subject (to the extent that a grant of a security interest in such general
intangible is not prohibited by applicable law or by the terms of any contract,
agreement, instrument, indenture or other document creating, evidencing or
relating to such general intangibles), as the same may from time to time be
amended, supplemented or otherwise modified, including, without limitation (but
limited as aforesaid), (i) all rights of such Grantor to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights of
such Grantor to damages arising thereunder, (iii) all equity that constitutes
“general intangibles” and (iv) all rights of such Grantor to perform and to
exercise all remedies thereunder. The exclusion of any general intangible from
this definition as a result of any restrictions on the grant of a security
interest in such general intangible does not restrict the grant of the security
interest contemplated hereby in any Account, Payment Intangible, Chattel Paper
or other right to payment arising under or pursuant to such general intangible.


 


“Insurance” shall mean (i) all insurance
policies covering any or all of the Collateral (regardless of whether the
Collateral Agent is the loss payee thereof) and (ii) any key man life insurance
policies.


 


“Intellectual Property” shall mean all
rights, priorities and privileges provided under United States, multinational
and foreign law relating to intellectual property, including without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trade Secrets, the Trade Secret Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.


 


“Intercreditor Agreement” shall mean
that certain agreement by and between JPMorgan Chase Bank, N.A. as ABL agent
and the Collateral Agent, as term agent, dated as of December 17, 2004, and
acknowledged and consented to by Holdings, the Parent and Aventine, as such
agreement may be amended, modified, restated, supplemented or replaced from
time to time.


 


“Issuer” shall mean, with reference to
any Security, the issuer of such Security.


 


“Patent License” shall mean any and all
agreements, whether written or oral, providing for the grant by or to any
Grantor of any right to manufacture, use or sell any invention covered in whole
or in part by a Patent to the extent that a grant of a security interest in
such patent license is not prohibited by applicable law or the applicable
patent agreement.


 


“Patent Security Agreement” means the
Patent Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex IV hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.


 


“Patents” shall mean (i) all letters
patent of the United States or any other country and all reissues and
extensions thereof, (ii) all applications for letters patent of the United States


 


3

















 


or any other country and all divisions, continuations and
continuations-in-part thereof, and (iii) all rights to obtain any reissues or
extensions of the foregoing.


 


“Pekin Property” shall mean all of
Aventine’s Property and Equipment located at 1300 South Second Street, Pekin,
Illinois 61554-5402 and commonly referred to as Aventine’s Pekin, Illinois
facility.


 


“Pledged Securities” shall mean the
Securities of any Person that may be issued or granted to, or held by, any
Grantor.


 


“Receivable” shall mean any right to
payment for goods sold or leased or for services rendered, whether or not such
right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).


 


“Securities Act” shall mean the
Securities Act of 1933, as amended.


 


“Secured Obligations” shall mean the
obligations under the Indenture and the Notes.


 


“Secured Parties” has the meaning
specified in the introductory paragraph hereof.


 


“Trade Secret Licenses” shall mean any
and all agreements, whether written or oral, providing for the grant by or to
any Grantor of any right in or to Trade Secrets, to the extent that a grant of
a security interest in such Trade Secret License is not prohibited by
applicable law or the applicable Trade Secret License.


 


“Trade Secrets” shall mean all trade
secrets and all other confidential or proprietary information and know-how
whether or not such trade secret has been reduced to a writing or other
tangible form, including all documents and things embodying, incorporating, or
referring in any way to such trade secret, including but not limited to: (i)
the right to sue for past, present and future misappropriation or other violation
of any trade secret, and (ii) all Proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.


 


“Trademark License” shall mean any and
all agreements, whether written or oral, providing for the grant by or to any
Grantor of any right to use any Trademark, to the extent that a grant of a
security interest in such Trademark License is not prohibited by applicable law
or the applicable Trademark License.


 


“Trademark Security Agreement” means the
Trademark Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex V hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.


 


4

















 


“Trademarks” shall mean (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, whether in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, and (ii) the right to
obtain all renewals thereof.


 


“Vehicles” shall mean all cars,
railcars, trucks, trailers, construction and earth moving equipment and other
vehicles covered by a certificate of title law of any state and, in any event,
shall include, without limitation, all tires and other appurtenances to any of
the foregoing.


 


Section 1.2
Other Definitional Provisions.


 


(a) The words “hereof,”
“herein”, “hereto” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.


 


(b) The meanings given to
terms defined herein or in the UCC or in the Indenture shall be equally
applicable to both the singular and plural forms of such terms.


 


(c) Where the context
requires, terms relating to the Collateral or any part thereof, when used in
relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant
part thereof.


 


ARTICLE 2

GRANT OF SECURITY INTEREST


 


Each Grantor hereby assigns
and transfers to the Collateral Agent, and hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties a security interest in,
all of the following assets and Property, tangible and intangible now owned or
at any time hereafter acquired by such Grantor or in which such Grantor now has
or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Secured Obligations under the Indenture Documents:


 


(a) all Accounts (including
Health Care Insurance Receivables);


 


(b) all books and Records
pertaining to the Collateral or otherwise;


 


(c) all Chattel Paper (including
all Tangible Chattel Paper and Electronic Chattel Paper);


 


5

















 


(d) all Commercial Tort
Claims described on Schedule 6;


 


(e) all Commodity Accounts;


 


(f) all Commodity Contracts;


 


(g) all Deposit Accounts;


 


(h) all Documents;


 


(i) all General Intangibles
(but subject to the limitations set forth in the definition of such term);


 


(j) all Goods (including,
without limitation, all Equipment and Inventory);


 


(k) all Instruments
(including, without limitation, all promissory notes);


 


(l) all Insurance;


 


(m) all Intellectual
Property;


 


(n) all Investment Property;


 


(o) all Letter of Credit
Rights;


 


(p) all Money;


 


(q) all Pledged Securities;


 


(r) all Receivables, to the
extent not otherwise described above;


 


(s) all Securities;


 


(t) all Securities Accounts;


 


(u) all Securities
Entitlements;


 


(v) all Supporting
Obligations;


 


(w) all Vehicles; and


 


(x) to the extent not
otherwise included, all Proceeds, products, accessions, rents and profits of or
in respect of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing; provided
that the Collateral shall not include (i) the Capital Stock held by any Grantor
of any Marketing Alliance Partner which is a Marketing Alliance Partner on the
Closing Date to the


 


6

















 


extent that the granting of such Lien is prohibited pursuant to the
terms of the organizational documents of such Marketing Alliance Partner on the
date hereof, (ii) the Capital Stock in NELLC unless and until either (A) Parent
or Aventine obtain the consent of the requisite holders of Capital Stock in
NELLC to the grant of the Security Interest in such Capital Stock of NELLC, or
(B) Parent and Aventine collectively hold at least 80% of the Capital Stock of
NELLC, (iii) the Capital Stock held by any Grantor in Fluid Technologies PLC
and (iv) any Capital Stock of any Subsidiary of any Grantor if and to the
extent that the inclusion of such Capital Stock in the Collateral shall mean
that the par value, book value as carried by Holdings or such Grantor or market
value, whichever is greatest, of such Capital Stock exceeds 20% of the
aggregate principal amount of the Notes outstanding; provided further, that
upon the occurrence of either event described in clause (ii), the Capital Stock
of NELLC shall immediately and without any further action on the part of any
Grantor become “Collateral” for purposes of this Agreement and the security
interest provided for herein shall immediately attach to such Capital Stock. In
the event that Rule 3-16 or Rule 3-10 of Regulation S-X under the Securities
Act requires (or is replaced with another rule or regulation, or any other law,
rule or regulation is adopted, which would require) the filing with the
Securities and Exchange Commission (or any other governmental agency) of
separate financial statements of any Subsidiary of Holdings due to the fact
that such Subsidiary’s capital stock or other securities of such Subsidiary
secure the Secured Obligations or any guarantees by Holdings’ Subsidiaries of
the Notes, then the capital stock or other securities of such Subsidiary shall
automatically be deemed not to be included in the “Collateral”, but only to the
extent necessary to not be subject to such requirement.


 


ARTICLE 3

REPRESENTATIONS AND WARRANTIES


 


To induce the Collateral
Agent and the Trustee to enter into the Indenture and to induce the Holders to
purchase the Notes, each Grantor hereby represents and warrants to the
Collateral Agent, the Trustee and each Holder that:


 


Section 3.1
Title; No Other Liens. Except for the security interest granted to the Collateral Agent for
the ratable benefit of the Secured Parties pursuant to this Agreement and the
Permitted Liens such Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of
record in any public office, except (a) such as have been filed in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties pursuant to
this Agreement and (b) such as are expressly permitted by the Indenture.


 


Section 3.2
Perfected Priority Liens. The security interests granted pursuant to this Agreement, the
Copyright Security Agreement, the Patent Security Agreement and the Trademark
Security Agreement (a) upon completion of the filings and other actions
specified on Schedule 1 hereto (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered to the
Collateral Agent in completed and duly executed form) will constitute valid
perfected security interests in the Collateral to the extent that a security
interest therein may be perfected by filing pursuant to the UCC in favor of the
Collateral Agent, for the


 


7

















 


ratable benefit of the Secured Parties, as collateral security the
Secured Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor subject to (1) bankruptcy, insolvency, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, and (2) general principles of equity (regardless
of whether considered in a proceeding at law or in equity), and (b) subject to
the terms of the Intercreditor Agreement, are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens. Any
reference in this Agreement or the other Indenture Documents to Permitted Liens
is not intended to and should not be interpreted as subordinating or
postponing, or as any agreement to subordinate or postpone, any Lien created
herein or by any of the other Indenture Documents to any Permitted Lien, except
to the extent explicitly set forth in the Intercreditor Agreement.


 


Section 3.3
Organization.
Such Grantor’s jurisdiction of incorporation, formation or organization (as
applicable), organizational identification number and federal tax identification
number are specified on Schedule 2 hereto.


 


Section 3.4
Inventory and Equipment.


 


(a) No part of the Equipment
of any Grantor constitutes a Fixture or has otherwise become permanently
attached to, affixed to or otherwise incorporated into any real property or
improvements of any Person other than real property and improvements owned in
fee by such Grantor and with respect to which such Grantor has delivered to the
Collateral Agent a Mortgage granting to the Collateral Agent (i) with respect
to the Pekin Property, a first and prior mortgage Lien on such real property
and improvements (subject to Permitted Liens) to secure the Secured Obligations
and (ii) with respect to all other property not related to the Pekin Property,
a second mortgage Lien on such real property and improvements (subject to
Permitted Liens) to secure the Secured Obligations.


 


(b) No Inventory or
Equipment of any Grantor is or at any time evidenced by a negotiable Document.


 


Section 3.5
Farm Products.
None of the Collateral constitutes, or is the Proceeds of, Farm Products.


 


Section 3.6
Securities and Securities Accounts.


 


(a) All Securities in which
a Grantor holds any beneficial or record interest are accurately listed and
described in Schedule 3 hereto.


 


(b) Each Grantor is the sole
entitlement holder of each such Securities Account, and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the
Administrative Agent) having “control” (within the meanings of Sections 8-106
and 9-106 of the UCC) over, or any other interest in, any such Securities
Account or securities or other property credited thereto.


 


8

















 


(c) Except as described in Schedule
3, hereto, the Pledged Securities represent one hundred percent (100%) of
the issued and outstanding Securities of every class of the applicable Issuer.


 


(d) The applicable Grantor
has delivered to the Collateral Agent an Acknowledgement and Consent to Pledge
substantially in the form of Annex II hereto duly executed by such
Issuer of Pledged Securities.


 


(e) All of the Pledged
Securities have been duly and validly issued and are fully paid and
nonassessable.


 


(f) Each Grantor is the
record and beneficial owner of, and has good and marketable title to, the
Pledged Securities pledged by it hereunder, free of any and all Liens,
restrictions on transfer, voting agreements, options or claims of, any other
Person, other than Permitted Liens.


 


(g) To the extent any of the
Pledged Securities are Certificated Securities, subject to the Intercreditor
Agreement, the applicable Grantor has delivered the Security Certificates
evidencing such Securities, duly endorsed in blank, or accompanied by
appropriate transfer powers executed in blank, to the Collateral Agent.


 


Section 3.7
Commodity Accounts and Commodity Contracts.


 


(a) Each Grantor is the sole
entitlement holder of each such Commodity Account, and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the
Administrative Agent) having “control” (within the meanings of Sections 8-106
and 9¬106 of the UCC) over, or any other interest in, any such Commodity
Account or securities or other property credited thereto.


 


Section 3.8
Intellectual Property


 


(a) All Intellectual
Property owned or licensed by each Grantor or in which any Grantor holds an
interest are accurately listed and described in Schedule 4 hereto.


 


(b) The Copyrights and
Copyright applications listed on Schedule A to the Copyright Security Agreement
executed and delivered in connection with this Agreement constitute all of the
Copyrights and Copyright applications owned and currently in use by the
Company. The Patents and Patent applications listed on Schedule A to the Patent
Security Agreement executed and delivered in connection with this Agreement
constitute all of the Patents and Patent applications owned and currently in
use by the Company. The Trademarks and Trademark applications listed on
Schedule A to the Trademark Security Agreement executed and delivered in
connection with this Agreement constitute all of the Trademarks and Trademark
applications owned and currently in use by the Company.


 


9

















 


(c) All Intellectual
Property of each Grantor is valid, subsisting, unexpired, enforceable, has not
been abandoned, and does not infringe the Intellectual Property rights of a
third party.


 


(d) Except as set forth in Schedule
4 hereto, none of the Intellectual Property is the subject of any licensing
or franchise agreement pursuant to which such Grantor is the licensor or
franchisor.


 


(e) No holding, decision or
judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of, or such Grantor’s rights in, any
Intellectual Property.


 


(f) No action or proceeding
is pending or, to the knowledge of such Grantor, threatened on the date hereof
seeking to limit, cancel or question the validity, or such Grantor’s ownership,
of any Intellectual Property.


 


Section 3.9
Deposit Accounts.
Each Grantor is the sole account holder of each such Deposit Account and such
Grantor has not consented to, and is not otherwise aware of, any Person (other
than the Administrative Agent) having either sole dominion and control (within
the meaning of common law) or “control” (within the meaning of Section 9-104 of
the UCC) over, or any other interest in, any such Deposit Account or any money
or other property deposited therein.


 


Section
3.10 Instruments and Chattel Paper. Subject to the terms of the Intercreditor
Agreement, each Grantor has taken all actions reasonably requested by the
Collateral Agent to establish control (as defined in the UCC) by the Collateral
Agent of all electronic Chattel Paper included in the Collateral and all
“transferable records” as defined in Section 201 of the Federal Electronics
Signatures in Global and National Commerce Act or in Section 16 of Uniform
Electronic Transactions Act as in effect in all relevant jurisdictions. Without
limiting the foregoing, each Grantor represents and warrants that all
conditions necessary to establish the Collateral Agent’s control over any
electronic chattel paper included in the Collateral under Section 9.105 of the
UCC have been satisfied.


 


Section
3.11 Aircraft.
No Grantor owns or holds any interest in aircraft.


 


Section
3.12 Commercial Tort Claims. All Commercial Tort Claims of each Grantor or in which any Grantor
holds an interest are accurately listed and described in Schedule 6 hereto.


 


ARTICLE 4 

COVENANTS


 


Each Grantor covenants and
agrees that, from and after the date of this Agreement until the Notes shall
have been paid in full and the Indenture shall have terminated such Grantor
shall:


 


10

















 


Section 4.1
Covenants in Indenture and other Indenture Documents. Take, or refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that each covenant and agreement applicable to such Grantor contained in
the Indenture and the other Indenture Documents is completed and no Default or
Event of Default is caused by the failure to take such action or to refrain
from taking such action by such Grantor or any of its Subsidiaries.


 


Section 4.2
Application of Cash Proceeds. Cause each invoice issued by such Grantor to provide for payment of
such invoice (a) if by check, by remitting the same to the Lock Box, and (b) by
wire transfer, automated checking transaction or other electronic funds
transfer by remitting the same directly to the Blocked Account, and otherwise
take all action necessary to cause all cash Proceeds of the Collateral,
including, without limitation, all cash Proceeds of Receivables to be remitted
to the Blocked Account. If, notwithstanding the foregoing, any Grantor shall
receive any cash Proceeds of the Collateral, subject to the Intercreditor
Agreement, such Grantor shall hold such Proceeds in trust for the benefit of
the Collateral Agent, and not later than the first (1st) Business Day following
the date of receipt, deposit the same directly into the Blocked Account in the
exact form received.


 


Section 4.3
Electronic Chattel Paper. Subject to the terms of the Intercreditor Agreement, in the event
that such Grantor shall at any time hold or acquire an interest in any
electronic chattel paper or any “transferable record” (as such term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction), such Grantor shall promptly notify the
Collateral Agent thereof in writing, and such Grantor shall take, or cause to
be taken, such actions as the Collateral Agent may request to give the
Collateral Agent control of such Electronic Chattel Paper under Section 9-314
of the UCC and control of such transferable record under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in
effect in such jurisdiction.


 


Section 4.4
Maintenance of Perfected Security Interest; Further Documentation.


 


(a) Maintain the security
interest created by this Agreement as a perfected security interest to the
extent and having at least the priority described in Section 3.2 hereof
and, subject to the Intercreditor Agreement, shall defend such security
interest against the claims and demands of all Persons whomsoever; provided that
the Collateral Agent shall release liens and security interests in any
Collateral which is sold or otherwise disposed of in accordance with the terms
of the Indenture and the other Indenture Documents and the Intercreditor
Agreement.


 


(b) Furnish to the
Collateral Agent and the other Secured Parties from time to time, at such
Grantor’s sole cost and expense, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may request, all in such detail as the
Collateral Agent may request.


 


11

















 


(c) Subject to the
Intercreditor Agreement, at any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute (as required by applicable law), deliver
and/or have recorded with appropriate agencies such further instruments and
documents and take such further actions as the Collateral Agent may request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.


 


(d) This Section 4.5
and the obligations imposed on each Grantor by this Section 4.5 shall be
interpreted as broadly as possible in favor of the Collateral Agent and the
Secured Parties in order to effectuate the purpose and intent of this
Agreement.


 


Section 4.5
Changes in Locations, Name, etc. Not, except upon five (5) Business Days’ prior written notice to the
Collateral Agent and delivery to the Collateral Agent of all additional
financing statements and other documents reasonably requested by the Collateral
Agent to maintain the validity, perfection and priority of the security
interests provided for herein:


 


(a) change its jurisdiction
of incorporation, formation, or organization, as applicable; or


 


(b) change its name,
identity or organizational structure.


 


Each notice delivered
pursuant to this Section 4.6 shall specify in reasonable detail any
change in the jurisdiction of incorporation, organization, formation, name,
identity or corporate structure as applicable.


 


Section 4.6
Notices.
Advise the Collateral Agent promptly, in reasonable detail, of any Lien (other
than Permitted Liens) on any of the Collateral.


 


Section 4.7
Pledged Securities; Securities Accounts.


 


(a) Notify the Collateral
Agent promptly in writing upon the acquisition by any Grantor of any Pledged Securities,
which notice shall (i) set forth all information with respect to such Pledged
Securities as is set forth on Schedule 3 hereto with respect to the
Pledged Securities owned by the Grantors on the date hereof, and (ii) be
accompanied by an Acknowledgment and Consent to Pledge duly executed by the
Issuer of such Securities (unless such Issuer is also a Grantor). Nothing
contained in this Section 4.8 shall permit any Grantor to invest in or
hold any Security to the extent such investment is prohibited pursuant to the
Indenture.


 


(b) If any Grantor shall
become entitled to receive or shall receive any Security Certificate
(including, without limitation, any certificate representing a stock dividend
or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the


 


12

















 


Securities of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Pledged Securities, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Collateral Agent, the Secured Parties, hold the same in trust for the
Collateral Agent, the Secured Parties and, subject to the Intercreditor
Agreement, deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by such Grantor in blank or accompanied by an undated
stock power covering such certificate duly executed in blank by such Grantor
and with, if the Collateral Agent so requests, signature guaranteed, to be held
by the Collateral Agent, subject to the terms hereof, as additional Pledged
Securities.


 


(c) Any sums paid upon or in
respect of the Pledged Securities including any dividend or distribution or any
amount paid upon the liquidation or dissolution of any Issuer shall be paid
deposited directly into the Blocked Account in accordance with Section 4.2
hereof. Subject to the terms of the Intercreditor Agreement, in case any
distribution of property upon or with respect to the Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, such non-cash Proceeds so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Collateral Agent for the ratable benefit of the Secured Parties,
be delivered to the Collateral Agent to be held by it hereunder as additional
collateral security for the Secured Obligations.


 


(d) Without the prior
written consent of the Collateral Agent, such Grantor will not (i) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Securities or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Indenture), (ii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Pledged Securities or Proceeds thereof, or any interest
therein, except for Permitted Liens, or (iii) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the Collateral
Agent to dispose of any of the Pledged Securities or Proceeds thereof (except
for restrictions that exist on the date hereof which are expressly set forth in
the organizational documents of Marketing Alliance Partners in which any
Grantor owns Capital Stock as of the Closing Date).


 


(e) If such Grantor is an
Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Securities issued by it and will comply with
such terms insofar as such terms are applicable to it, (ii) it will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 4.8(a) hereof with respect to the Pledged
Securities issued by it, and (iii) the terms of Section 5.1 hereof shall
apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section
6.1 hereof with respect to the Pledged Securities issued by it.


 


Section 4.8
Receivables.


 


(a) Other than in the
ordinary course of business, not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable or (v) amend,


 


13

















 


supplement or modify any Receivable in any manner that could adversely
affect in any material respect the value thereof.


 


(b) Subject to the terms of
the Intercreditor Agreement, if at any time the aggregate amount owing to such
Grantor on all Accounts as to which a Governmental Authority is an obligor
exceeds 5% of the aggregate amount owing to the Grantor on all Accounts, such
Grantor shall so notify the Collateral Agent and, if requested by the
Collateral Agent, at such Grantor’s sole cost and expense, from and after the
date on which such aggregate amount first exceeds such percentage, deliver to
the Collateral Agent such assignments, notices of assignment and other
documents or information as shall be necessary or otherwise requested by the
Collateral Agent to permit the assignment hereunder of all Accounts as to which
a Governmental Authority is an obligor pursuant to all applicable Governmental
Requirements (including, without limitation, the Assignment of Claims Act of
1940, as amended).


 


(c) Subject to the terms of
the Intercreditor Agreement, upon the request of the Collateral Agent at any
time after the occurrence and during the continuance of an Event of Default,
each Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the Collateral Agent for the ratable benefit of the Secured
Parties and that payments in respect thereof shall be made directly to the
Collateral Agent.


 


(d) Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
Receivables to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. No Secured Party shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Party of any payment relating thereto, nor shall the
Collateral Agent or any other Secured Party he obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party thereunder, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.


 


Section 4.9
Intellectual Property.


 


(a) Notify the Collateral
Agent promptly, in writing upon the acquisition by Grantor of any Intellectual
Property which notice shall set forth (i) all information with respect to such
Intellectual Property as is set forth on Schedule 4 hereto with respect
to Intellectual Property owned by the Grantors on the date hereof, and (ii)
shall be accompanied by a Copyright Security Agreement, Patent Security
Agreement and/or Trademark Security Agreement, as applicable, duly executed and
completed by the applicable Grantor.


 


(b) Grantor (either itself
or through licensees) will, with respect to each Trademark which is material to
the operation of its business, (i) continue to use such Trademark


 


14

















 


on each and every trademark class of goods applicable to its current
line as reflected in its then-current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain the quality of products and services
offered under such Trademark, (iii) use such Trademark with all notices and
legends required by applicable law or regulations, and (iv) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby such Trademark may become invalidated or impaired in any way.


 


(c) No Grantor will, and no
Grantor will permit any licensee to do any act, whereby any Patent which is
material to the operation of its business may become forfeited, abandoned or
dedicated to the public.


 


(d) No Grantor will, and no
Grantor will permit any licensee to do any act or omit to do any act whereby
any portion of any Copyright which is material to the operation of its business
may become invalidated or otherwise impaired. Such Grantor will not (either
itself or through licensees) do any act whereby any of the Copyrights may fall
into the public domain.


 


(e) No Grantor will, and no
Grantor will permit any licensee to do any act that results in any Intellectual
Property held by such Grantor infringing on the Intellectual Property rights of
a third party.


 


(f) Such Grantor will
promptly notify the Collateral Agent immediately if it knows, or has reason to
know, that any application or registration relating to any Patent, Copyright or
Trademark may become abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding Grantor’s ownership of, or the
validity of, any Intellectual Property or such Grantor’s right to register the
same or to own and maintain the same.


 


(g) To the extent any
Grantor, either by itself or through an authorized agent, employee, licensee or
designee, shall file an application for any Patent or Trademark with the United
States Patent and Trademark Office or any Copyright in the U.S. Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the Collateral
Agent within five Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Collateral Agent, such Grantor
shall execute and deliver, and have recorded, a Copyright Security Agreement, a
Patent Security Agreement, a Trademark Security Agreement and any and all other
agreements, instruments, documents, and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in any Copyright,
Patent or Trademark and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby.


 


(h) Grantor will take all
commercially reasonable and necessary steps, including, without limitation, in
any proceeding before the United States Patent and Trademark Office, the U.S.
Copyright Office or any similar office or agency in any other country or any


 


15

















 


political subdivision thereof, to maintain each registration of
Patents, Trademarks and Copyrights held by, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability, to the extent such Patents, Trademarks or Copyrights are
material to the operation of its business.


 


(i) In the event that any
Intellectual Property of any Grantor which is material to the operation of its
business is infringed, misappropriated or diluted by a third party, such
Grantor shall take such actions as such Grantor shall reasonably deem
appropriate under the circumstances, or as otherwise requested by the
Collateral Agent, to protect such Intellectual Property.


 


(j) Take all steps
reasonably necessary to protect the secrecy of all Trade Secrets, including,
without limitation, entering into confidentiality agreements with employees
with access to such Trade Secrets and labeling and restricting access to secret
information and documents.


 


Section
4.10 Commercial Tort Claims. Notify the Collateral Agent promptly, in writing in the event that
any Grantor shall at any time after the date hereof hold any Commercial Tort
Claims which notice shall set forth (i) all information with respect to such
Commercial Tort Claims as is set forth on Schedule 6 hereto with respect
to Commercial Tort Claims held by the Grantors on the date hereof, and (ii)
shall include the express grant by such Grantor to the Collateral Agent of a
security interest in such Commercial Tort Claim (and the proceeds thereof). In
the event that such notice does not include such grant of a security interest,
the sending thereof by such Grantor to the Collateral Agent shall be deemed to
constitute such grant to the Collateral Agent. Upon the sending of such notice,
any Commercial Tort Claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of the Collateral Agent provided in the Indenture or otherwise
arising by such Grantor’s execution of this Agreement or any of the other
Indenture Documents, the Collateral Agent is hereby irrevocably authorized from
time to time and at any time to file such financing statements naming the
Collateral Agent or its designee as secured party and such Grantor as debtor,
or any amendments to any financing statements, covering any such Commercial
Tort Claim as Collateral. In addition, such Grantor shall promptly upon the
Collateral Agent’s request, execute and deliver, or cause to be executed and
delivered, to the Collateral Agent such other agreements, documents and
instruments as the Collateral Agent may require in connection with such
Commercial Tort Claim.


 


Section
4.11 Negotiable Documents. No Grantor shall permit any Inventory or other Property of such
Grantor to be evidenced by a negotiable Document. If, notwithstanding the
foregoing, any such Inventory or other Property is or becomes evidenced by a
negotiable Document, the Grantor shall cause such negotiable Document, subject
to the terms of the Intercreditor Agreement, to be duly negotiated to the
Collateral Agent.


 


16

















 


Section
4.12 Inventory and Equipment.


 


(a) Take all actions
necessary or advisable to maintain the continuous validity, perfection and the
same or better priority of the Collateral Agent’s security interest in such
Inventory and Equipment intended to be granted and agreed to hereby, or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder, subject to the terms of the Intercreditor Agreement, with respect to
such Equipment and Inventory.


 


(b) Keep materially correct
and accurate records of the Inventory, itemizing and describing the kind, type
and quantity of Inventory, such Grantor’s cost therefor and (where applicable)
the current list prices for the Inventory, in each case, in reasonable detail.


 


(c) Not deliver any Document
evidencing any Equipment and Inventory to any Person other than to the issuer
of such Document to claim the Goods evidenced therefor, or to the
Administrative Agent.


 


(d) Take commercially
reasonable measures to maintain, keep and preserve the Inventory in good and
merchantable condition, maintain and preserve each item of Equipment in good
operating condition, ordinary wear and tear and immaterial impairments of value
and damage by the elements excepted, and provide all maintenance, service and
repairs necessary for such purpose.


 


(e) Prevent any Equipment
from becoming attached to real estate in such a manner that the same may become
a Fixture or otherwise becomes permanently attached to, affixed to or otherwise
incorporated into any real property or improvements of any Person other than
real property and improvements owned in fee by such Grantor and with respect to
which such Grantor has delivered to the Collateral Agent a Mortgage granting to
the Collateral Agent (i) with respect to the Pekin Property, a first and prior
mortgage Lien on such real property and improvements (subject to Permitted
Liens) to secure the Secured Obligations and (ii) with respect to all other
Property not related to the Pekin Property, a second mortgage Lien on such real
property and improvements (subject to Permitted Liens) to secure the Secured
Obligations.


 


ARTICLE 5

REMEDIAL PROVISIONS


 


Section 5.1
Pledged Securities.


 


(a) Unless an Event of
Default shall have occurred and be continuing, each Grantor shall be permitted
to exercise all voting and corporate rights with respect to the Pledged
Securities; provided, however, that subject to the terms of the
Intercreditor Agreement, no vote shall be cast or corporate right exercised or
other action taken which, in the Collateral Agent’s reasonable judgment, would
be inconsistent with or result in any violation of any provision of the
Indenture, this Agreement or any other Indenture Document.


 


(b) Subject to the terms of
the Intercreditor Agreement, if an Event of Default shall occur and be
continuing and upon the written request of the Collateral Agent, any or all of


 


17

















 


the Pledged Securities shall be registered in the name of the
Collateral Agent or its nominee, and the Collateral Agent or its nominee may
thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Securities at any meeting of shareholders or members of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the night to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the applicable Grantor or the
Collateral Agent of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Collateral Agent may determine), all without liability except to account
for property actually received by it, but the Collateral Agent and the other
Secured Parties shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.


 


(c) Each Grantor hereby authorizes
and instructs each Issuer of Pledged Securities pledged by such Grantor
hereunder to, subject to the Intercreditor Agreement (i) comply with any
instruction received by such Issuer from the Collateral Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and such Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) pay any dividends or
other payments with respect to the Pledged Securities directly to the
Collateral Agent.


 


Section 5.2
Application of Proceeds. Subject to the terms of the Intercreditor Agreement, at any time
after the occurrence and during the continuance of an Event of Default, at the
Collateral Agent’s election, the Collateral Agent may apply all or any part of
Proceeds, including, without limitation, any such Proceeds held in any
Collateral Account in payment of the Secured Obligations. Any balance of such
Proceeds remaining after the Notes shall have been paid in full, and the
Indenture shall have terminated shall be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive the same.


 


Section 5.3
UCC and Other Remedies. Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall occur and be continuing, the Collateral Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Notes, all rights and remedies of a
secured party under the UCC or any other applicable law. Without limiting the
generality of the foregoing and subject to the Intercreditor Agreement, the
Collateral Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind, including, without limitation,
notice of intent to accelerate or notice of acceleration, (except any notice
required by law as referred to below) to or upon the Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate


 


18

















 


and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker’s board or office of the Collateral Agent or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Collateral Agent’s request, to assemble the Collateral and make
it available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere. Subject to
the Intercreditor Agreement, the Collateral Agent shall apply the net proceeds
of any action taken by it pursuant to this Section 5.3, after deducting
all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Collateral Agent
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Notes and to any other
Person legally entitled thereto in accordance with the terms of the
Intercreditor Agreement and the Indenture. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Collateral Agent or any other Secured Party arising out of
the exercise by them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least ten days before such sale or
other disposition.


 


Section 5.4
Registration Rights.


 


(a) Subject to the terms of
the Intercreditor Agreement, if the Collateral Agent shall determine to
exercise its right to sell any or all of the Pledged Securities pursuant to Section
5.3 hereof, and if in the opinion of the Collateral Agent it is necessary
or advisable to have the Pledged Securities, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause any Issuer thereof to: (i) execute and deliver, and cause
the directors, members, managers and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Collateral Agent, necessary or
advisable to register the Pledged Securities, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Securities, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Collateral Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause any Issuer to comply with the provisions of the securities or “Blue Sky”
laws of any and all jurisdictions which the Collateral Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.


 


19

















 


(b) Each Grantor recognizes
that the Collateral Agent may be unable to effect a public sale of any or all
the Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any of the Pledged Securities for the period of time necessary to
permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.


 


(c) Each Grantor agrees to
use its best efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the Pledged
Securities pursuant to this Section 5.4 valid and binding and in
compliance with any and all other applicable Governmental Requirements. Each
Grantor further agrees that a breach of any of the covenants contained in this Section
5.4 will cause irreparable injury to the Collateral Agent and the other
Secured Parties, that the Collateral Agent and the other Secured Parties have
no adequate remedy at law in respect of such breach and as a consequence, that
each and every covenant contained in this Section 5.4 shall be
specifically enforceable against such Grantor, and such Grantor 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 under the Indenture.


 


Section 5.5
Waiver; Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Collateral Agent or any other Secured Party to collect such deficiency.


 


ARTICLE 6

THE COLLATERAL AGENT


 


Section 6.1
The Collateral Agent’s Appointment as Attorney-in-Fact etc.


 


(a) Each Grantor hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, such Grantor hereby
gives the Collateral


 


20

















 


Agent the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, to do any or all of the following, subject to the
terms of the Intercreditor Agreement:


 


(1) in the name of such
Grantor or its own name, or otherwise, take possession of and indorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Collateral Agent
for the purpose of collecting any and all such moneys due under any Receivable
or with respect to any other Collateral whenever payable;


 


(2) in the case of any
Copyright, Patent or Trademark, execute, deliver and have recorded, any and all
agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in such Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;


 


(3) pay or discharge Taxes
and Liens levied or placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;


 


(4) execute, in connection
with any sale provided for in Section 6.3 or 6.4 hereof, any
endorsements, assignments or other instruments or documents of conveyance or
transfer with respect to the Collateral; and


 


(5) (A) direct any party
liable for any payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to the Collateral Agent or
as the Collateral Agent shall direct; (B) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (C) sign and indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents (including, without limitation, any
negotiable Documents) in connection with any of the Collateral; (D) commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (E) defend
any suit, action or proceeding brought against such Grantor with respect to any
Collateral; (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as
the Collateral Agent may deem appropriate; (G) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Collateral Agent shall in its sole
discretion determine; and (H) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Collateral Agent were the absolute owner thereof
for all


 


21

















 


purposes, and do, at the
Collateral Agent’s option and such Grantor’s expense, at any time, or from time
to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.


 


Anything in this Section 6.1(a) to the contrary notwithstanding,
the Collateral Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 6.1 (a) unless an Event
of Default shall have occurred and be continuing.


 


(b) The Collateral Agent may
(but without any obligation to do so) (i) perform or satisfy any of the
Grantor’s and any other Obligated Party’s obligations under or pursuant to this
Agreement and the other Indenture Documents which remain unsatisfied (after
providing any notice and opportunity to cure to which such Grantor or other
Obligated Party is entitled under any other provision of any Indenture
Document, if any), and (ii) take all other actions and pay such amounts and
claims as Collateral Agent determines in its sole but reasonable discretion, is
necessary or appropriate to protect the rights and interests of the Collateral
Agent and the other Secured Parties under this Agreement and the other
Indenture Documents and otherwise with respect to the Notes or to preserve and
protect the Collateral or any part thereof from loss.


 


(c) The expenses of the
Collateral Agent incurred in connection with actions undertaken as provided in
this Section 6.1 , together with interest thereon at a rate per annum
equal to the rate per annum at which interest would then be payable under the
Indenture on past due amounts, from the date of payment by the Collateral Agent
to the date reimbursed by any Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.


 


(d) Each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done pursuant
to the powers granted in this Section 6.1. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.


 


Section 6.2
Duty of the Collateral Agent. Subject to the terms of the Intercreditor Agreement, the Collateral
Agent’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under the UCC or otherwise,
shall be to deal with it in the same manner as the Collateral Agent deals with
similar property for its own account. None of the Collateral Agent, any other
Secured Party, nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent
hereunder are solely to protect the Collateral Agent’s interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any other
Secured Party to exercise any such powers. The Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Grantor or any other Credit


 


22

















 


Party for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.


 


Section 6.3
Financing Statements. Subject to the terms of the Intercreditor Agreement and pursuant to
the UCC and any other applicable laws, each Grantor authorizes the Collateral
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral in such form and in
such offices as the Collateral Agent reasonably determines appropriate to
perfect the security interests of the Collateral Agent under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.


 


Section 6.4
Authority of the Collateral Agent. Each Grantor 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, voting 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 other Secured Parties,
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 such Grantor, the Collateral Agent shall be conclusively presumed to be
acting as Collateral Agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and such Grantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.


 


ARTICLE 7

MISCELLANEOUS


 


Section 7.1
Amendments in Writing. 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 in accordance with the Intercreditor Agreement.


 


Section 7.2
Notices. All
notices, requests and demands to or upon the Collateral Agent, any other
Secured Party, or any Grantor hereunder shall be effected in the manner
provided for in Section 13.2 of the Indenture.


 


Section 7.3
No Waiver; Remedies Cumulative. No failure or delay on the part of any Grantor or the Collateral
Agent in exercising any right or remedy under this Agreement or any other
Indenture Document and no course of dealing between such Grantor and the
Collateral Agent or any Secured Party shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy under this
Agreement or any other Indenture Document preclude any other or further
exercise thereof or the exercise of any other right or remedy under this
Agreement or any other Indenture Document. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which any Grantor, the Collateral Agent or any Secured Party would otherwise
have. No notice to or demand on any Grantor not required under this Agreement
or any other Indenture Document in any case shall entitle such


 


23

















 


Grantor or any other Grantor to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Collateral Agent or the Secured Parties to any other or further action in any
circumstances without notice or demand.


 


Section 7.4
Enforcement Expenses; Indemnification.


 


(a) Each Grantor agrees to
pay or reimburse the Collateral Agent for all of its costs and expenses
incurred in enforcing or preserving any rights under this Agreement and the
other Indenture Documents to which such Grantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the Collateral
Agent.


 


(b) Each Grantor agrees to
pay, and to save the Collateral Agent and the Secured Parties harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.


 


(c) Each Grantor agrees to
pay, and to save the Collateral Agent and the Secured Parties harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, to the same extent each Grantor would be
required to do so pursuant to Sections 7.7 and 10.1(a) of the Indenture.


 


(d) The agreements in this Section
7.4 shall survive repayment of the Notes and all other amounts payable
under the Indenture and the other Indenture Documents.


 


Section 7.5
Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Grantor may assign or otherwise transfer any
of its rights or obligations hereunder except in accordance with the terms of
the Indenture (and any attempted assignment or transfer by such Grantor without
such consent shall be null and void).


 


Section 7.6
Set-Off.
Subject to the terms of the Intercreditor Agreement, in addition to and not in
limitation of all rights of offset that the Collateral Agent, the Trustee or
any Holder may have under applicable law, the Trustee and each Holder shall,
upon the occurrence of any Event of Default and at any time during the
continuance thereof and whether or not such Holder or the Trustee has made any
demand or the Notes are matured, have the right at any time and from time to
time, without notice to any Grantor (any such notice being expressly waived by
each Grantor) to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by any Holder or the Trustee to or for the credit or the
account of any Grantor against any and all of the Notes owing to such Holder or
the Trustee.


 


24

















 


Section 7.7
Counterparts.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original but all of which shall together
constitute one and the same instrument.


 


Section 7.8
Severability.
In the event that any one or more of the provisions contained in this Agreement
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, (a) each Grantor agrees that such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement and (b)
each Grantor and the Collateral Agent (acting on behalf and at the direction of
the Trustee and the Holders) will negotiate in good faith to amend such
provision so as to be legal, valid, and enforceable.


 


Section 7.9
ENTIRE AGREEMENT.
THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE COLLATERAL AGENT, THE TRUSTEE, THE OTHER HOLDERS,
THE GRANTORS AND THE OTHER RESPECTIVE PARTIES HERETO AND THERETO AND SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.


 


Section
7.10 Governing Law; Submission to Jurisdiction; etc.


 


(a) Governing Law. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND, TO
THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY OTHER STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED NECESSARILY GOVERN THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY OF, OR THE EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE, IN WHICH CASE THE LAWS OF SUCH OTHER STATE SHALL GOVERN
SUCH VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY AND SUCH EXERCISE OF
REMEDIES.


 


(b) SUBMISSION TO JURISDICTION. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE OTHER
INDENTURE DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY


 


25

















 


IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.


 


(c) WAIVER OF JURY TRIAL & CONSEQUENTIAL DAMAGES.
TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, EACH OF THE GRANTORS, THE
COLLATERAL AGENT, THE TRUSTEE, AND THE OTHER HOLDERS: (1) IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY INDENTURE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN;
(2) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (3) CERTIFIES THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (IV)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
INDENTURE DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BASED
UPON, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS SECTION.


 


(d) Service of Process. Each party hereto
irrevocably consents to service of process by notice delivered in accordance
with Section 8.2 hereof. Nothing herein or in any other Indenture
Document shall affect the right of the Collateral Agent, the Trustee or any
other Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Grantor in any
other jurisdiction.


 


Section
7.11 Acknowledgments. Each Grantor hereby acknowledges that:


 


(a) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the
other Indenture Documents;


 


(b) neither the Collateral
Agent nor the Trustee nor any other Holder has any fiduciary relationship with
or duty to such Grantor arising out of or in connection with this Agreement or
any of the other Indenture Documents, and the relationship between the
Collateral Agent, the Trustee and the other Holders, on one hand, and such
Grantor, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and


 


(c) no joint venture is
created hereby or by the other Indenture Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Holder or among the
Grantor and the Holders.


 


26

















 


Section
7.12 Section Headings. The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.


 


Section
7.13 Additional Grantors. Each Subsidary of the Parent that is required to become a party to
this Agreement pursuant to Sections 4.15 or 10.2(c) of the Indenture shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex I
hereto.


 


Section
7.14 Releases


 


(a) At such time as the
obligations of Holdings and the Guarantors shall have been defeased or
discharged in accordance with the provisions of Article VIII of the Indenture,
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such termination)
of the Collateral Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the applicable Grantor. At the request
and joint and several expense of the Grantors following any such termination,
the Collateral Agent shall promptly deliver to the appropriate Grantor any
Collateral held by the Collateral Agent hereunder, and promptly execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.


 


(b) If any of the Collateral
shall be sold, transferred or otherwise disposed of by any Grantor in a
transaction permitted by the Indenture, then the Collateral Agent, at the
request and sole expense of such Grantor, shall promptly execute and deliver to
such Grantor all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral.


 


(c) At such time as (1) the
First Priority Lien Obligations have been satisfied in full in cash in
accordance with the terms thereof and all commitments and letters of credit
thereunder have been terminated or (2) the holders of the First Priority Liens
have released their First Priority Liens on all or any portion of the
Collateral, the Liens will also be automatically released to the same extent;
provided, however, that (A) in the case of clause (1) of this sentence, in the
event that an Event of Default under the Indenture exists as of the date on
which the First Priority Lien Obligations are repaid in full and terminated as
described in clause (1), the Liens on the Collateral will not be released,
except to the extent the Collateral or any portion thereof was disposed of in
order to repay the First Priority Lien Obligations secured by the Collateral,
and the Collateral Agent (acting at the director of the Holders of a majority
of outstanding principal amount of Notes) will have the right to foreclose upon
the Collateral (but in such event the Liens will be released when such Event of
Default and all other Events of Defaults under the Indenture cease to exists);
or (B) if the First Priority Lien Obligations are thereafter secured by assets
that would constitute Collateral, the Notes and the Note Guarantees will then
be secured by second priority Lines on such assets to the same extent provided
pursuant to the Security Documents. If Aventine subsequently incurs obligations
under other First Priority Lien Obligations which are secured by assets of Aventine
and its Subsidiaries of the type constituting Collateral, then the


 


27

















 


Notes and the Note Guarantees will be secured at such time by second
priority Liens on the collateral securing such First Priority Lien Obligations
pursuant to the Security Documents.


 


(d) Additional releases of
Collateral shall be provided as set forth in the Intercreditor Agreement.


 


Section
7.15 Reinstatement. The provisions of this Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Grantor for liquidation or reorganization, should such Grantor become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any part of such Grantor’s assets or should any
other financial impairment occur, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Notes, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned to any obligee of
the Notes, whether as a “voidable preference”, “fraudulent conveyance”, or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored,
or returned, the Notes shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.


 


Section
7.16 Avoidance of Conflict.


 


Notwithstanding anything in
this Agreement to the contrary, to the extent the provisions contained herein
conflict with the terms of the Guaranty and Security Agreement among Holdings,
Aventine and certain of its Subsidiaries and the Administrative Agent dated as
of May 30, 2003 (as amended, the “ABL Security Agreement”) with respect to ABL
Priority Collateral (as defined in the Intercreditor Agreement), the terms of
the ABL Security Agreement shall govern except as otherwise provided in the
Intercreditor Agreement.


 


[signature page to follow]


 


28

















 


IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be duly executed and delivered as of
the date first above written.


 


	
  GRANTORS:

  	
  AVENTINE RENEWABLE ENERGY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Brennan

  	
   

  
	
   

  	
  Name:

  	
   William J. Brennan

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVENTINE RENEWABLE ENERGY,

  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Brennan

  	
   

  
	
   

  	
  Name:

  	
   William J. Brennan

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  COLLATERAL AGENT:

  	
  WELLS FARGO BANK, N.A., as

  Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 


Signature Page


 

















 


IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be duly executed and delivered as of
the date first above written.


 


	
  GRANTORS: 

  	
  AVENTINE RENEWABLE ENERGY, 

  INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


	
   

  	
  AVENTINE RENEWABLE ENERGY, 

  LLC 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
						



 


	
  COLLATERAL AGENT: 

  	
  WELLS FARGO BANK, N.A., as 

  
	
   

  	
  Collateral 

  
	
   

  	
  Agent 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey Rose

  	
   

  
	
   

  	
  Name: 

  	
  Jeffrey Rose

  	
   

  
	
   

  	
  Title: 

  	
  Corporate [     ] Officer

  	
   

  
						



 


Signature Page


 

















 


ANNEX I

TO SECURITY AGREEMENT


 


ASSUMPTION
AGREEMENT


 


THIS ASSUMPTION AGREEMENT,
dated as of                                          
, 200  , by                                          
, a                                              (the
“Additional Grantor”), in
favor of WELLS FARGO BANK, N.A.,
as the Collateral Agent (in such capacity, the “Collateral Agent”) for the Trustee and Holders party to
the Indenture referred to below. All capitalized terms not defined herein shall
have the meaning ascribed to them in such Indenture.


 


WITNESSETH:


 


WHEREAS, Holdings, the
Grantors, the Trustee and the Holders, have entered into a Indenture, dated as
of December     , 2004, (as amended, supplemented or
otherwise modified from time to time, the “Indenture”);


 


WHEREAS, the Additional
Grantor has executed an Addendum to the Indenture pursuant to which it has
become a Grantor under the Indenture;


 


WHEREAS, in connection with
the Indenture, Aventine and the other Grantors (other than the Additional
Grantor) have entered into the Security Agreement, dated as of December 17,
2004 (as amended, supplemented or otherwise modified from time to time, the “Security  Agreement”) in favor of
the Collateral Agent for the ratable benefit of the Trustee and the Holders;


 


WHEREAS, Sections 4.15 or
10.1(c) of the Indenture requires the Additional Grantor to become a party to
the Security Agreement; and


 


WHEREAS, the Additional
Grantor has agreed to execute and deliver this Assumption Agreement in order to
become a party to the Security Agreement.


 


NOW, THEREFORE, IT IS
AGREED:


 


1. Security Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 7.13 of the Security Agreement, hereby becomes a party to the Security
Agreement as a Grantor thereunder with the same force and effect as if
originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder and hereby assigns and transfers to the Collateral Agent,
and hereby grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a security interest in the Collateral now owned or hereafter
acquired by the Additional Grantor. The information set forth in Annex I-A
hereto is hereby added to the information set forth in Schedules              
* to the Security Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and


 


I-1

















 


warranties contained in Section 3 of the Security Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.


 


2. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND, TO
THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY OTHER STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED NECESSARILY GOVERN THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY OF, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN
OR SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE, IN WHICH CASE THE LAWS OF SUCH OTHER STATE SHALL GOVERN
SUCH VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY AND SUCH EXERCISE OF
REMEDIES.


 






* Refer to each Schedule which needs to be supplemented.


 


IN WITNESS WHEREOF, the
undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.


 


	
   

  	
  [ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


ACKNOWLEDGMENT BY [GRANTOR]:


 


By execution of this
Assumption Agreement in the space provided below, [INSERT RELEVANT GRANTOR] hereby acknowledges and agrees that
the Securities described on Annex I-A hereto have been issued by the Additional
Grantor identified herein and is held by [RELEVANT
GRANTOR] and constitute “Pledged Securities” comprising part of the
Pledged Securities under the Security Agreement.


 


	
  Dated:

  
	
   

  
	
  [RELEVANT GRANTOR]

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 


Signature Page


 

















 


ANNEX II TO


SECURITY AGREEMENT


 


ACKNOWLEDGMENT
AND CONSENT TO PLEDGE


 


[date]


 


[NAME OF ISSUER] 

[ADDRESS OF ISSUER]


 


Attention:


 


	
  Re:

  	
   

  	
  Pledge of                
  [describe the equity interest] (the “Pledged
  Securities”) in               ,
  a              (the “Company”), held
  by [Grantor’s Name], a                (“Grantor”)

  



 


Ladies and Gentlemen:


 


Reference is made herein to
that certain Security Agreement dated as of December 17, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Security Agreement”), by Aventine
Renewable Energy, Inc., a Delaware corporation (“Aventine”), Aventine Renewable Energy, LLC, a Delaware
limited liability company (together with any other entity that may become a
party thereto), in favor of Wells Fargo Bank, N.A., as the Collateral Agent (in
such capacity, the “Collateral Agent”)
for the ratable benefit of Trustee and the Holders party to the Indenture dated
as of December 17, 2004 (as amended, supplemented or otherwise modified from
time to time, the “Indenture”),
among Holdings, the Trustee and the Holders.


 


Pursuant to the terms of the
Security Agreement and/or the terms of the Indenture, the Trustee and the
Holders have required that Grantor grant to the Collateral Agent, for the
benefit of the Trustee and the Holders, a security interest in the Pledged Securities
to secure the Secured Obligations.


 


By executing this letter
(this “Letter Agreement”),
the Company and each shareholder/member, as may be required under the
applicable organization documents hereby (a) acknowledges and confirms that the
Pledged Securities represents all of Grantor’s Securities (as defined in the
Security Agreement) in the Company, (b) agrees to enter a notation in the stock
transfer register or other appropriate records of the Company reflecting the
pledge of the Pledged Securities pursuant to the Security Agreement, (c)
consents to the pledge by Grantor of the Pledged Securities to secure the
Secured Obligations and subject to the terms of the Intercreditor Agreement,
consents to the transfer of the Pledged Securities pursuant to the exercise of
the remedies provided for in the Security Agreement (or any transfer in lieu
thereof), (d) waives any breach or violation of the terms or provisions of the
Company’s organizational documents


 


II-1

















 


caused by such pledge or transfer, (e) agrees that it will be bound by
the terms of the Security Agreement relating to the Pledged Securities issued
by it and will comply with such terms insofar as such terms are applicable to
it, (f) agrees that it will notify the Collateral Agent promptly in writing
upon the acquisition by Grantor of any Securities (as defined in the Uniform
Commercial Code as from time to time in effect in the State of New York or,
where applicable as to specific Collateral, any other relevant state) issued by
the Company, which notice shall set forth in reasonable detail all information
with respect to such Securities, (g) agrees, subject to the Intercreditor
Agreement, to comply with any instruction received from the Collateral Agent in
writing that states that (1) an Event of Default under and as defined in the
Indenture has occurred and is continuing and (2) such instructions are
otherwise in accordance with the terms of the Indenture and Security Agreement,
without any other or further instructions from Grantor, and (h) agrees that any
sums paid upon or in respect of the Pledged Securities, including, without
limitation any dividend or distribution or any amount paid upon the liquidation
or dissolution of the Company shall be paid deposited directly into Account No.
801 804 701 established by Aventine with the Administrative Agent or such other
account hereafter established by Aventine or Grantor with the Collateral Agent
or the Administrative Agent which Aventine or Grantor and the Collateral Agent
jointly designate as the “Blocked Account.”


 


This Letter Agreement may be
executed in counterparts, and all parties need not execute the same
counterpart. This Letter Agreement shall be binding on, enforceable against and
inure to the benefit of the Collateral Agent and the Trustee and the Holders.
Facsimiles shall be effective as originals.


 


Evidence your agreement to
each of the terms and conditions set forth above by executing this Letter
Agreement in the space indicated below.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed

  
	
   

  	
  As of this                
  day of     , 20    

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF THE COMPANY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 


II-2

















 


ANNEX III
TO 

SECURITY AGREEMENT


 


COPYRIGHT
SECURITY AGREEMENT


 


THIS COPYRIGHT SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS FARGO BANK, N.A., as the Collateral
Agent (the “Collateral Agent”) for the Trustee and the Holders.
Capitalized terms not otherwise defined herein have the meanings set forth in
the Security Agreement dated as of December 17, 2004 among the Grantors and the
Collateral Agent (the “Security Agreement”).


 


WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Copyrights whether now owned or existing or
hereafter acquired or arising and wherever located, including the Copyrights
listed on Schedule A hereto (“Secured Copyrights”).


 


NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:


 


1. Grant of Security
Interest.


 


(a) Each Grantor hereby
grants to the Collateral Agent, a security interest in and continuing lien on
all of such Grantor’s right, title and interest in, to and under all the
Secured Copyrights, subject to the terms and conditions of the Security
Agreement and the Intercreditor Agreement.


 


(b) The security interest
granted hereby is granted in conjunction with the security interest granted to
the Collateral Agent under the Security Agreement. In the event of any conflict
between the terms of this Agreement and the terms of the Security Agreement,
the terms of the Security Agreement shall control.


 


2. Modification of
Agreement.


 


This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A hereto to include reference to any right, title or
interest in any existing Copyrights or any Copyrights acquired or developed by
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights in which Grantor no longer has or claims
any right, title or interest.


 


III-1

















 


3. Governing Law.


 


THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.


 


4. Successors and Assigns.


 


This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.


 


5. Counterparts.


 


This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Facsimiles shall be effective as originals.


 


III-2

















 


IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.


 


	
   

  	
  AVENTINE RENEWABLE ENERGY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						



 


	
   

  	
  WELLS FARGO BANK, N.A.,

  
	
   

  	
  as the Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


III-3

















 


SCHEDULE A


 


COPYRIGHT SECURITY AGREEMENT


 


I.     REGISTERED COPYRIGHTS


 


	
  Copyright

  	
   

  	
  Country

  	
   

  	
  Reg. No.

  (App. No.)

  	
   

  	
  Reg. Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


II.    COPYRIGHT APPLICATIONS


 


III-4

















 


	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  



 


On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                    ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                    ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.


 


WITNESS MY HAND AND/OR OFFICIAL SEAL.


 


(NOTARIAL STAMP OR SEAL)


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				



 


III-5

















 


ANNEX IV TO


SECURITY AGREEMENT


 


PATENT
SECURITY AGREEMENT


 


THIS PATENT SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS
FARGO BANK, N.A., as the Collateral Agent (the “Collateral Agent”) for
the Trustee and the Holders. Capitalized terms not otherwise defined herein
have the meanings set forth in the Security Agreement dated as of December 17,
2004 among the Grantors and the Collateral Agent (the “Security Agreement”).


 


WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Patents whether now owned or existing or hereafter
acquired or arising and wherever located, including the Patents listed on Schedule
A hereto (“Secured Patents”).


 


NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:


 


1. Grant of Security
Interest.


 


(a) Each Grantor hereby
grants to the Collateral Agent, a security interest in and continuing lien on
all of such Grantor’s right, title and interest in, to and under the Secured
Patents, subject to the terms and conditions of the Security Agreement and the
Intercreditor Agreement.


 


(b) The security interest
granted hereby is granted in conjunction with the security interest granted to
the Collateral Agent under the Security Agreement. In the event of any conflict
between the terms of this Agreement and the terms of the Security Agreement,
the terms of the Security Agreement shall control.


 


2. Modification of
Agreement.


 


This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A hereto to include reference to any right, title or
interest in any existing Patents or any Patents acquired or developed by
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights in which Grantor no longer has or claims
any right, title or interest.


 


IV-1

















 


3. Governing Law.


 


THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.


 


4. Successors and Assigns.


 


This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.


 


5. Counterparts.


 


This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.


 


IV-2

















 


IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.


 


	
   

  	
  AVENTINE RENEWABLE ENERGY,

  INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


	
   

  	
  WELLS FARGO BANK, N.A., as the

  Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


IV-3

















 


SCHEDULE A


 


PATENT SECURITY AGREEMENT


 


I.     REGISTERED PATENTS


 


	
  Patent

  	
   

  	
  Country

  	
   

  	
  Reg. No.

  (App. No.)

  	
   

  	
  Reg. Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


II.    PATENT APPLICATIONS


 


IV-4

















 


	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  



 


On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                               ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                               ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.


 


WITNESS MY HAND AND/OR OFFICIAL SEAL.


 


(NOTARIAL STAMP OR SEAL)


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				



 


IV-5

















 


ANNEX V TO

SECURITY AGREEMENT


 


TRADEMARK
SECURITY AGREEMENT


 


THIS TRADEMARK SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS
FARGO BANK, N.A., as the Collateral Agent (the “Collateral Agent”) for
the Trustee and the Holders. Capitalized terms not otherwise defined herein
have the meanings set forth in the Security Agreement dated as of December 17,
2004 among the Grantor and the Collateral Agent (the “Security Agreement”).


 


WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Trademarks whether now owned or existing or
hereafter acquired or arising and wherever located, including the Trademarks
listed on Schedule A (“Secured Trademarks”).


 


NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:


 


1. Grant of Security
Interest.


 


Section 1.1 Each Grantor
hereby grants to the Collateral Agent, a security interest in and continuing
lien on all of such Grantor’s right, title and interest in, to and under all
the Secured Trademarks, subject to the terms and conditions of the Security
Agreement and the Intercreditor Agreement.


 


Section 1.2 The security
interest granted hereby is granted in conjunction with the security interest
granted to the Collateral Agent under the Security Agreement. The rights and
remedies of the Trustee and the Holders with respect to the security interest
granted hereby are in addition to those set forth in the Security Agreement. In
the event of any conflict between the terms of this Agreement and the terms of
the Security Agreement, the terms of the Security Agreement shall control.


 


2. Modification of
Agreement.


 


This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A to include reference to any right, title or interest
in any existing Trademarks or any Trademarks acquired or developed by Grantor
after the execution hereof or to delete any reference to any


 


V-1

















 


right, title or interest in any Trademarks in which Grantor no longer
has or claims any right, title or interest.


 


3. Governing Law.


 


THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.


 


4. Successors and Assigns.


 


This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.


 


5. Counterparts.


 


This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Facsimiles shall be effective as originals.


 


[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]


 


V-2

















 


IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.


 


	
   

  	
  AVENTINE RENEWABLE ENERGY, INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


	
   

  	
  WELLS FARGO BANK, N.A., as the Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


V-3

















 


SCHEDULE A


 


TRADEMARKS SECURITY AGREEMENT


 


I.     REGISTERED PATENTS


 


	
  Trademark

  	
   

  	
  Country

  	
   

  	
  Reg.
  No.

  (App. No.)

  	
   

  	
  Reg.
  Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


II.    TRADEMARK APPLICATIONS


 


V-4

















 


	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  



 


On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                               ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                               ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.


 


WITNESS MY HAND AND/OR OFFICIAL SEAL.


 


(NOTARIAL STAMP OR SEAL)


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				



 


V-5

















 


SCHEDULE 1


 


PERFECTION
INFORMATION


 


	
  Grantor

  	
   

  	
  Filing Office

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Delaware

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Delaware

  



 

















 


SCHEDULE 2


 


ORGANIZATIONAL
INFORMATION


 


	
   

  	
   

  	
   

  	
   

  	
  Federal Tax

  	
   

  	
  Organizational

  
	
   

  	
   

  	
   

  	
   

  	
  Identification

  	
   

  	
  Identification

  
	
  Grantor

  	
   

  	
  Jurisdiction

  	
   

  	
  Number

  	
   

  	
  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aventine Renewable Energy,

  	
   

  	
  Delaware

  	
   

  	
  [AVENTINE TO

  	
   

  	
  3334328

  
	
  LLC

  	
   

  	
   

  	
   

  	
  PROVIDE]

  	
   

  	
   

  
	
  Aventine Renewable Energy,

  	
   

  	
  Delaware

  	
   

  	
  75-3108352

  	
   

  	
  2505911

  
	
  Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


SCHEDULE 3


 


SECURITIES


 


	
  Grantor

  	
   

  	
  Issuer

  	
   

  	
  Ownership Interest

  	
   

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Aventine
  Renewable Energy, Inc.

  	
   

  	
   

  	
  100

  	
  %

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Nebraska Energy, L.L.C.

  	
   

  	
   

  	
  78.42

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Ace Ethanol,
  LLC

  	
   

  	
   

  	
  7.6

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Adkins
  Energy, LLC

  	
   

  	
   

  	
  0.1

  	
   

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Fluid
  Technologies

  	
   

  	
   

  	
  1.9

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Heartland
  Grain Fuels

  	
   

  	
   

  	
  5.0

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Northeast
  Iowa Ethanol

  	
   

  	
   

  	
  22.8

  	
  %**

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  TnStates
  Ethanol Company, LLC

  	
   

  	
   

  	
  14.8

  	
  %*

  



 






* TriStates has been
liquidated in bankruptcy court, and this investment has been written down to
$0.


 


** These investments are
likely to be unrecoverable and have been written down to $0.


 

















 


SCHEDULE 4


 


INTELLECTUAL
PROPERTY


 


Copyrights


 


None.


 


Patents


 


None.


 


Trademarks


 


	
   

  	
   

  	
   

  	
   

  	
  Application

  	
   

  	
  Application

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Country

  	
   

  	
  Number

  	
   

  	
  Date

  	
   

  	
  Record Owner

  	
   

  	
  Status

  
	
  AVENTINE 

  	
   

  	
  United States

  	
   

  	
  76/513,723

   

  	
   

  	
  5/13/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Accepted and set to register in due course.

  
	
  AVENTINE & logo

  	
   

  	
  United States

  	
   

  	
  76/564,747

  	
   

  	
  12/11/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Application set for publication.

  
	
  AVENTINE RENEWABLE

  ENERGY, INC.

  & design

  	
   

  	
  United States

   

  	
   

  	
  76/564,750

   

  	
   

  	
  12/11/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Application act for publication.

  



 

















 


SCHEDULE 5


 


INSTRUMENTS
AND CHATTEL PAPER


 


None.


 

















 


SCHEDULE 6


 


COMMERCIAL
TORT CLAIMS


 


On December 11, 2002, Aventine Renewable Energy, Inc. made demand for
return of its $1,000,000 investment in Northeast Iowa Ethanol, LLC. Litigation
commenced on November 3, 2003. The action is pending in Iowa District Court,
Delaware County under case number LACV005370. The case is currently in
discovery.