EXHIBIT 10.1 - Master Loan Agreement


MLA No. RI0457


MASTER LOAN AGREEMENT


          THIS
MASTER LOAN AGREEMENT is entered into as of January 30, 2007, between FARM CREDIT SERVICES OF AMERICA, FLCA (“Farm
Credit”) and EAST FORK BIODIESEL, LLC, ALGONA,
IOWA (the
“Company”).


BACKGROUND


          From
time to time Farm Credit may make loans to the Company. In order to reduce the
amount of paperwork associated therewith, Farm Credit and the Company would
like to enter into a master loan agreement.
For that reason, and in consideration of Farm Credit making one or more loans
to the Company, Farm Credit and the Company
agree as follows:


          SECTION
1. Supplements. In
the event the Company desires to borrow from Farm Credit and Farm Credit is willing to lend to the Company,
or in the event Farm Credit and the Company desire to consolidate any existing loans hereunder, the
parties will enter into a Supplement to this agreement (a “Supplement”). Each Supplement will set forth the
amount of the loan, the purpose of the loan, the interest rate or rate options applicable to that loan, the repayment
terms of the loan, and any other terms and conditions applicable to that
particular loan. Each loan will be governed by the terms and conditions contained in this agreement and in the Supplement
relating to the loan.


          SECTION
2. Sale of Participation Interests and Appointment of Administrative Agent. The Company acknowledges that concurrent with
the execution of this Master Loan Agreement and related Supplements, Farm Credit is selling a participation interest in
this Master Loan Agreement and Supplements
executed concurrently herewith to CoBank, ACB (“CoBank”) (up to and including a
100% interest). Pursuant to an Administrative Agency Agreement dated
January 30, 2007, (“Agency Agreement”),
Farm Credit and CoBank appointed CoBank to act as Administrative Agent (“Agent”)
to act in place of Farm Credit hereunder and under the Supplements and
any security documents to be executed
thereunder. All funds to be advanced hereunder shall be made by Agent, all
repayments by the Company hereunder
shall be made to Agent, and all notices to be made to Farm Credit hereunder
shall be made to Agent. Agent shall
be solely responsible for the administration of this agreement, the Supplements and the security documents to be
executed by the Company thereunder and the enforcement of all rights and remedies of Farm Credit
hereunder and thereunder. Company acknowledges the appointment of the Agent and consents to such
appointment.


          SECTION
3. Availability. Loans will be made available on any day on which Agent
and the Federal Reserve Banks are open for business upon the telephonic or
written request of the Company. Requests for loans must be received no later
than 12:00 Noon Company’s local time on the date the loan is desired. Loans
will be made available by wire transfer of immediately available funds to such
account or
accounts as may be authorized by the Company. The Company shall furnish to
Agent a duly completed
and executed copy of a CoBank Delegation and Wire and Electronic Transfer
Authorization Form of the Agent, and Agent shall be entitled to rely on (and
shall incur no liability to the Company in acting on) any request or direction furnished in
accordance with the terms thereof.


          SECTION
4. Repayment. The Company’s obligation to repay each loan shall be
evidenced by the
promissory note set forth in the Supplement relating to that loan or by such
replacement note as Agent







	
 

	
 


	
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shall
require. Agent shall maintain a record of all loans, the interest accrued
thereon, and all payments made with respect thereto, and such record shall, absent
proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans. All payments
shall be made by wire transfer of immediately
available funds, by check, or by automated clearing house or other similar cash
handling processes as specified by
separate agreement between the Company and Agent. Wire transfers shall be made
to ABA No. 307088754 for advice to and credit of Agent (or to such other
account as Agent may direct by
notice). The Company shall give Agent telephonic notice no later than 12:00
Noon Company’s local time of its
intent to pay by wire and funds received after 3:00 p.m. Company’s local time
shall be credited on the next business day. Checks shall be mailed to CoBank,
ACB, Department 167, Denver, Colorado 80291-0167 (or to such other place
as Agent may direct by notice). Credit for payment by check will not be given
until the later of: (a) the day on which Agent receives immediately available funds; or (b) the next business day after receipt
of the check.


          SECTION
5. Capitalization. The Company agrees to purchase voting (Class D) or
non-voting (Class E) stock in Farm Credit Services of America, ACA, (currently
a minimum of $1,000.00 worth of stock consisting of at least 200 shares of $5.00 par
value stock) as required under the policy of Farm Credit at the time of acquisition. Farm
Credit policy may change from time to time. Farm Credit shall have a first lien on the stock for payment of any
liability of the Company to Farm Credit. Said stock shall be owned as follows:


	
 

	
 


	
Owner Name: East Fork Biodiesel, LLC

	
SSN/TIN:20-4195009 





The
Company authorizes and appoints the following to act on behalf of all owners,
to vote the Class D stock, and to accept, receive and receipt for any
dividends declared on the stock:


Kenneth M. Clark, voter


          SECTION
6. Security. The Company’s obligations under this agreement, all
Supplements (whenever
executed), and all instruments and documents contemplated hereby or thereby,
shall be secured
by a statutory first lien on all equity which the Company may now own or
hereafter acquire in Farm Credit. In addition, the Company agrees to grant to Farm Credit,
by means of such instruments and documents as Agent shall reasonably require, a first lien
(subject only to exceptions approved in writing by Agent) on all personal property of the
Company, and on all real property of the Company, whether now existing or
hereafter acquired. As additional security for those obligations: (i) the
Company agrees to grant to Farm Credit, by means of such instruments and documents as Agent
shall reasonably require, a first priority lien on such of its other assets, whether
now existing or hereafter acquired, as Agent may from time to time require; and (ii) the Company agrees to grant to Farm
Credit, by means of such instruments and documents
as Agent shall require, a first priority lien on all realty which the Company may from time to time acquire after the date
hereof. Farm Credit may at its discretion assign collateral to the Agent under the Agency Agreement.


          SECTION
7. Conditions Precedent.


                    (A)     
Conditions to Initial Supplement. Farm Credit’s obligation to extend credit under
the initial
Supplement hereto is subject to the conditions precedent that Agent receive, in
form and content satisfactory to Agent, each of the following:







	
 

	
 


	
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                              (i)     
This Agreement, Etc. A duly executed copy of this agreement and all instruments and
documents contemplated hereby.


                              (ii)    
Security Agreement. A security agreement granting to Farm Credit a first
lien (subject only to exceptions
approved in writing by Agent) on all personal property of the Company, whether now owned or hereafter acquired.


                              (iii)   
Mortgage/Deed of Trust. A mortgage or deed of trust granting to Farm Credit a first lien (subject
only to exceptions approved in writing by Agent) on the Company’s owned
Property (as that term is defined in the applicable Supplements) located near
Algona, Iowa.


                              (iv)   
Title Commitment/Policy. A commitment from a title insurance company acceptable to Agent to
issue an ALTA lender’s policy of title insurance in the face amount of $36,500,000.00 insuring
the Company’s Mortgage or Deed of Trust to Farm Credit as a first priority lien
on the property encumbered
thereby, subject only to exceptions approved in writing by Agent. The Company
agrees to pay the cost of such commitment and the related policy, together with
such endorsements as may be reasonably requested by Agent, and also agrees that
if, for any reason, a final policy is not
issued by the date that is ninety (90) days after the date of this agreement or
such later date as may be agreeable to Agent, then an “Event of Default”
shall be deemed to have occurred under this agreement.


                              (v)   
Project Budget and Schedule, Contracts and Plans. Project budget,
schedule, contracts and plans as follows: (i) a budget setting forth the total
estimated direct costs for construction (including real property acquisition, site
preparation, railroad siding, sales taxes related to construction, capitalized interest and
contingencies, but excluding working capital) not to exceed an aggregate total
of $63,600,000.00 for the Improvements (as that term is defined in the
applicable Supplements), including line item cost breakdowns for all direct costs by trade,
job, and subcontractor, and a schedule of all sources of funds to pay such costs (the “Project
Budget”); (ii) a schedule setting forth, by trade, job, and subcontractor, the
estimated dates of commencement and completion of construction of the
Improvements (the
“Project Schedule”); (iii) a schedule of the amounts and times of advances
anticipated to be requisitioned by the Company from time to time during the term of
construction of the Improvements (the “Disbursement Schedule”); (iv) a list of all
subcontractors and materialmen who have been, or, to the extent then determined by
the Company, will be supplying labor, materials or goods for the Improvements; (v) two
sets of the Plans with a certification from the Company and from the Company’s architect or engineer,
or with other evidence satisfactory to Agent as to the following matters: (a)
that the Improvements
can be completed by December 16, 2007, (the “Completion Date”); (b) that the
Project Budget,
Project Schedule, Disbursement Schedule and the Plans satisfactorily provide
for the construction of the Improvements; and (c) that the Improvements upon completion will
comply with all Laws (as defined in Section 9(B) hereof), including, without
limitation, all Laws relating to the environment, and all approvals, consents,
permits and licenses required under such Laws (the “Project Approvals”) which have been obtained or
are to be obtained by the Company relating in any way to the acquisition, construction or the
contemplated operation of the Improvements (including, without limitation,
those relating
to zoning, building, use and occupancy, fire prevention and health); and (vi) a
list of the Project Approvals indicating those Project Approvals obtained and
to be obtained (and a schedule for obtaining such Project Approvals).







	
 

	
 


	
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                              (vi)     
Evidence of Capital. Such
evidence as Agent may require that the Company has obtained equity capital and non-repayable grants, or acceptable
binding commitments thereof, in an amount
no less than $41,075,000.00.


                              (vii)   
Appraisal. An appraisal of the Property by a licensed, independent appraiser satisfactory to Agent,
such appraisal to include a value for the proposed biodiesel facility and rail
spur to be located on the Company’s real property located near Algona, Iowa.


                              (viii)   
Environmental Audit. Such
environmental audit or report as Agent may require.


                              (ix)     
Flood Insurance. A flood zone determination on all real property security
and evidence
of flood insurance if such determination requires flood insurance.


                              (x)      
Opinion of Counsel. An opinion of the Company’s counsel (in form and substance acceptable to
Agent) confirming due authorization and execution of the loan documents.


                              (xi)    
Engineering and Construction Contracts. Copies of all engineering and construction contracts with warranty provisions
acceptable to Agent.


                              (xii)   
Process/Yield Guarantee. Acceptable Process/Yield Guarantee from the
design engineer
and contractor, acceptable to Agent, as well as a minimum one-year warranty on
all work performed.


                              (xiii)  
Insurance. Certificates from the insurance carrier for the general contractor or contractors (and if the
Company is not adequately insured therein, from the Company’s insurance
carrier) evidencing
workers’ compensation and liability insurance (including contractual liability)
carried during the course of
construction, with liability limits for death of or injury to persons and for
damages to property in amounts acceptable
to Agent or such other limits if any are established under the construction contract(s). Without limiting the provision in
Section 9(D) herein or the foregoing, the Company agrees to obtain Builder’s
Risk casualty insurance covering fire and other casualty with extended coverage
including vandalism and malicious
mischief.


                              (xiv)   
Utilities; Access. A certificate from the Company or the Company’s engineer, a report from Agent’s
inspection engineer or other evidence satisfactory to Agent, as to the methods
of access to and egress from the property and the availability of water supply,
electricity, natural gas, and other utilities, and for the disposal of
wastewater, all in locations and capacities sufficient to meet the reasonable requirements
of the property and the improvements and otherwise satisfactory to Agent.


                              (xv)    
Escrow Agreement. An
escrow agreement for distribution of loan funds acceptable to Agent specifically providing for a Title/Abstract Company
to distribute all loan proceeds. Costs
of said agreement are to be paid by the Company.


                    (B)     
Conditions to Each Supplement. Farm Credit’s obligation to extend credit under each Supplement,
including the initial Supplement, is subject to the conditions precedent that
Agent receive,
in form and content satisfactory to Agent, each of the following:







	
 

	
 


	
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                              (i)     
Supplement. A duly executed copy of the Supplement and all instruments and documents contemplated
thereby.


                              (ii)     
Evidence of Authority. Such certified board resolutions, certificates of incumbency, and other
evidence that Agent may require that the Supplement, all instruments and documents executed in
connection therewith, and, in the case of initial Supplement hereto, this
agreement and
all instruments and documents executed in connection herewith, have been duly
authorized and executed.


                              (iii)    
Fees and Other Charges. All fees and
other charges provided for herein or in the Supplement.


                              (iv)    
Evidence of Perfection, Etc. Such evidence as Agent may require that Farm Credit has a duly
perfected first priority lien on all security for the Company’s obligations,
and that the Company
is in compliance with Section 9(D) hereof.


                    (C)     
Conditions to Each Loan. Farm Credit’s obligation under each Supplement to
make any
loan to the Company thereunder is subject to the condition that no “Event of
Default” (as defined in Section 12 hereof) or event which with the giving of
notice and/or the passage of time would become an Event of Default
hereunder (a “Potential Default”), shall have occurred and be continuing.


          SECTION
8. Representations and Warranties.


                    (A)     
This Agreement. The Company represents and warrants to Farm
Credit and Agent that as of the date of this Agreement:


                              (i)     
Compliance. The Company and, to the extent contemplated hereunder,
each “Subsidiary”
(as defined below), is in compliance with all of the terms of this agreement,
and no Event of Default or Potential Default exists hereunder.


                              (ii)     
Subsidiaries. The
Company has no “Subsidiary(ies)” (as defined below). For purposes hereof, a “Subsidiary” shall mean a
corporation of which shares of stock having ordinary voting power to elect a majority of the board of
directors or other managers of such corporation are owned, directly or indirectly, by the Company.


                    (B)     
Each Supplement. The execution by the Company of each Supplement
hereto shall constitute
a representation and warranty to Agent that:


                              (i)     
Applications. Each representation and warranty and all information set
forth in any
application or other documents submitted in connection with, or to induce Farm
Credit to enter into, such Supplement, is correct in all material respects as
of the date of the Supplement.


                              (ii)     
Conflicting Agreements, Etc. This agreement, the Supplements, and all security and other
instruments and documents relating hereto and thereto (collectively, at any
time, the “Loan Documents”), do not conflict with, or require the consent of
any party to, any other agreement to which the Company is a party or by which it or
its property may be bound or affected, and do not conflict







	
 

	
 


	
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with any
provision of the Company’s operating agreement, articles of organization, or other
organizational
documents.


                              (iii)    
Compliance. The Company and, to the extent contemplated hereunder,
each Subsidiary,
is in compliance with all of the terms of the Loan Documents (including,
without limitation, Section 9(A) of this agreement on eligibility to borrow from Farm
Credit).


                              (iv)     
Binding Agreement. The Loan Documents create legal, valid, and binding obligations of the
Company which are enforceable in accordance with their terms, except to the
extent that
enforcement may be limited by applicable bankruptcy, insolvency, or similar
laws affecting creditors’ rights generally.


          SECTION
9. Affirmative Covenants. Unless otherwise agreed to in writing by Agent while this agreement is in effect, the Company agrees
to, and with respect to Subsections 9(B) through 9(G) hereof, agrees to cause each Subsidiary to:


          (A)     
Eligibility.
Maintain
its status as an entity eligible to borrow from Farm Credit.


          (B)     
Company
Existence, Licenses, Etc. (i)
Preserve and keep in full force and effect its
existence and good standing in the
jurisdiction of its formation; (ii) qualify and remain qualified to
transact business in all
jurisdictions where such qualification is required; and (iii) obtain and
maintain all
licenses, certificates, permits, authorizations, approvals, and the like which
are material to the conduct of
its business or required by law, rule,
regulation, ordinance, code, order, and the like (collectively,
“Laws”).


          (C)     
Compliance with Laws. Comply in all material respects with all applicable
Laws,
including,
without limitation, all Laws relating to environmental protection. In addition,
the Company
agrees to
cause all persons occupying or present on any of its properties, and to cause
each Subsidiary to
cause all
persons occupying or present on any of its properties, to comply in all
material respects with all
environmental
protection Laws.


          (D)     
Insurance.
Maintain insurance with
insurance companies or associations acceptable to
Agent in such amounts and covering such
risks as are usually carried by companies engaged in the same
or similar business and similarly situated, and make such increases in the type
or amount of coverage as
Agent may request. All such policies
insuring any collateral for the Company’s obligations to Farm
Credit shall have mortgagee or lender
loss payable clauses or endorsements in form and content
acceptable to Agent. At Agent’s
request, all policies (or such other proof of compliance with this
Subsection as may be satisfactory to
Agent) shall be delivered to Agent.


          (E)     
Property Maintenance. Maintain all of its property that is
necessary to or useful in the
proper conduct of its business in good
working condition, ordinary wear and tear excepted.


          (F)      Books and
Records. Keep adequate records and books of account in which complete
entries will be made in accordance
with generally accepted accounting principles (“GAAP”) consistently
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          (G)     
Inspection. Permit Agent or its agents, upon reasonable notice and
during normal business hours or at such other times as the parties may agree,
to examine its properties, books, and records, and to discuss its affairs,
finances, and accounts, with its respective officers, directors, employees,
and independent
certified public accountants.


                    (H)     
Reports and Notices. Furnish to Agent:


                              (i)     
Annual Financial Statements. As soon as available, but in no event more than 90 days after the end of each fiscal year of the
Company occurring
during the term hereof, annual consolidated
and consolidating financial statements of the Company and its consolidated
Subsidiaries, if any, prepared in accordance with GAAP consistently
applied. Such financial statements shall: (a) be audited by independent certified public accountants selected by the
Company and acceptable to Agent; (b)
be accompanied by a report of such
accountants containing an opinion thereon acceptable to Agent; (c) be
prepared in reasonable detail and in comparative form; and (d) include a
balance sheet, a statement of income,
a statement of retained earnings, a statement of cash flows, and all notes and
schedules relating thereto.


                              (ii)     
Interim Financial Statements. As soon as available, but in no event more than 30 days after the end
of each month (beginning with the earlier of plant start-up or December 16,
2007), a consolidated balance sheet of the Company and its consolidated
Subsidiaries, if any, as of the end of such month, a consolidated statement of income for the
Company and its consolidated Subsidiaries, if any for such period and for the
period year to date, and such other interim statements as Agent may
specifically request,
all prepared in reasonable detail and in comparative form in accordance with
GAAP consistently applied and, if required by written notice from Agent, certified by an
authorized officer or employee of the Company acceptable to Agent.


                              (iii)    
Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of an Event
of Default or a Potential Default.


                              (iv)    
Notice of Non-Environmental Litigation. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department, commission, board,
bureau, agency, or instrumentality affecting the Company or any Subsidiary which,
if determined adversely to the Company or any such Subsidiary, could have a material adverse effect
on the financial condition, properties, profits, or operations of the Company
or any such
Subsidiary.


                              (v)     
Notice of Environmental Litigation, Etc. Promptly after receipt thereof, notice of the receipt of all pleadings, orders,
complaints, indictments, or any other communication alleging a condition that
may require the Company or any Subsidiary to undertake or to contribute to a
cleanup or other response under
environmental Laws, or which seek penalties, damages, injunctive relief, or
criminal sanctions related to alleged violations of such Laws, or which claim
personal injury or property damage to any
person as a result of environmental factors or conditions.


                              (vi)    
Formation Documents. Promptly after any change in the Company’s operating
agreement or articles of organization (or like documents), copies of all such
changes, certified by the Company’s Secretary.







	
 

	
 


	
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                              (vii)    
Budgets. As soon as available, but in no event more than 90 days after the end of any fiscal year of
the Company occurring during the term hereof, copies of the Company’s board-approved annual budgets
and forecasts of operations and capital expenditures.


                              (viii)   
Compliance Certificate. Together with each set of financial statements furnished to Agent pursuant to Section 9(H)
hereof, a certificate of an officer or employee of the Company acceptable to Agent setting forth calculations showing
compliance with the financial covenants set forth in Section 11 hereof.


                              (ix)    
Other Information. Such other information regarding the condition or operations, financial or
otherwise, of the Company or any Subsidiary as Agent may from time to time
reasonably request, including but not limited to copies of all pleadings,
notices, and communications referred to in Subsections 9(H)(iv) and (v) above.


                    (I)     
Policies/Contracts. Enter into on or before April 30, 2007: (i) risk
management policies
and programs/strategies acceptable to Agent pertaining to soybean oil
procurement and marketing of biodiesel and related byproducts; and (ii) biodiesel
and related byproducts marketing plans and retention of marketing organizations acceptable
to Agent experienced in marketing these products.


                    (J)     
Performance Bonds. Provide performance bonds, in form and content acceptable
to Agent,
for construction and related contracts upon request by Agent.


          SECTION 10. Negative Covenants. Unless otherwise agreed
to in writing by Agent, while this agreement is in effect the Company will not:


                    (A)     
Borrowings.
Create,
incur, assume, or allow to exist, directly or indirectly, any indebtedness or
liability for borrowed money (including trade or bankers’ acceptances), letters
of credit, or the deferred purchase price of property or services (including
capitalized leases), except for: (i) debt to Farm Credit; (ii) accounts payable to trade
creditors incurred in the ordinary course of business; (iii) current operating
liabilities (other than for borrowed money) incurred in the ordinary course of business; and (iv) debt
of the Company to miscellaneous creditors in an aggregate amount not to exceed $500,000.00, provided that such debt is on
terms and conditions, and with a lien priority acceptable to Agent.


                    (B)    
Liens. Create, incur,
assume, or allow to exist any mortgage, deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any
of its property, real or personal (collectively, “Liens”). The foregoing
restrictions shall not apply to: (i) Liens in favor of Farm Credit; (ii) Liens
for taxes, assessments, or governmental charges that are not past due; (iii)
Liens and deposits under workers’ compensation, unemployment insurance, and social security Laws; (iv) Liens and deposits to
secure the performance of bids, tenders, contracts (other than contracts for
the payment of money), and like obligations arising in the ordinary course of
business, as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like persons that secure
obligations that are not past due; (vi) easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property
or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto; and (vii) Liens in
favor of miscellaneous creditors to secure
indebtedness permitted hereunder with lien priority acceptable to Agent.







	
 

	
 


	
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                    (C)     Mergers,
Acquisitions, Etc. Merge or consolidate with any other entity or
acquire all or a material part of the assets of any person or entity, or form or
create any new Subsidiary or affiliate, or commence operations under any other
name, organization, or entity, including any joint venture.


                    (D)     Transfer
of Assets. Sell, transfer, lease, or otherwise dispose
of any of its assets, except in the ordinary course of business.


                    (E)     Loans.
Lend or advance money, credit, or property to any person or entity, except for
trade credit extended in the ordinary course of business.


                    (F)     Contingent
Liabilities. Assume, guarantee, become liable as a
surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of the Company’s business.


                    (G)     Change
in Business. Engage in any business activities or
operations substantially different from or unrelated to the Company’s present
business activities or operations.


                    (H)     Capital
Expenditures. During any fiscal year of the Company
after commencement of operations, the Company will not, without prior Agent
consent, expend more than $500,000.00 in aggregate for the acquisition of
assets, including leases which are capitalized in accordance with GAAP.


                    (I)     Dividends,
Etc. Company will not declare or pay any dividends, or
make any distribution of assets to the stockholders, or purchase, redeem,
retire or otherwise acquire for value any of its capital stock, or allocate or
otherwise set apart any sum, except that in any fiscal year of the Company a
distribution may be made to the Company’s members/owners of up to 40% of the
net profit (according to GAAP) for each fiscal year after receipt of the
audited financial statements for the pertinent fiscal year, provided that the
Company is and will remain in compliance with all loan covenants, terms and
conditions. Furthermore, with respect to each fiscal of the Company, a
distribution may be made in excess of 40% of the net profit for such fiscal year
if the Company has made the required “Free Cash Flow” payment to Agent for such
fiscal year, and provided that the Company is and will remain in compliance
with all loan covenants, terms and conditions on a pro forma basis net of said
additional payment.


                    (K)     Changes
to Operating Agreements, Etc. Amend or otherwise make
any material changes to the Company’s Articles of Organization, Operating
Agreement, management contracts, biodiesel and related byproducts marketing
contracts, or other contracts required herein without prior written consent
of Agent.


          SECTION
11. Financial Covenants. Unless otherwise agreed to in
writing, while this agreement is in effect:


                    (A)     Working
Capital. Beginning with the earlier of plant start-up
or December 16, 2007, the Company will have at the end of each period for which
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furnished
pursuant to Section 9(H) hereof, an excess of current assets over current
liabilities (both as determined in accordance with GAAP consistently applied)
of not less than $11,000,000.00, except that in determining current assets, any
amount available under the Revolving Term Loan Supplement hereto (less the
amount that would be considered a current liability under GAAP if fully
advanced) may be included.


                    (B)     Net
Worth. The Company will have at the end of
each period for which financial statements are required to be furnished
pursuant to Section 9(H) hereof, an excess of total assets over total
liabilities (both as determined in accordance with GAAP consistently applied)
of not less than: (i) $39,500,000.00; and (ii) increasing to $41,075,000.00 at
fiscal year ending 2008 and continuing thereafter.


                    (C)     Debt
Service Coverage Ratio. The Company will have at the
end of each fiscal year of the Company, effective with the fiscal year ending
2008, a “Debt Service Coverage Ratio” (as defined below) for that year of not
less than 1.25 to 1.00. For purposes hereof, the term “Debt Service Coverage
Ratio” shall mean the following (all as calculated for the most current
year-end in accordance with GAAP consistently applied): (i) net income (after
taxes), plus depreciation and amortization; divided by (ii) all current portion
of long term debt for the prior period (all scheduled long term debt payments,
but not to include any Free Cash Flow payments as defined in Section 6 of the
applicable Supplement).


          SECTION
12. Events of Default. Each of the following shall
constitute an “Event of Default” under this agreement:


                    (A)     Payment
Default. The Company should fail to make any payment
to Agent, or purchase any equity in Farm Credit, when due.


                    (B)     
Representations and Warranties. Any representation or
warranty made or deemed made by the Company herein or in any Supplement,
application, agreement, certificate, or other document related to or furnished
in connection with this agreement or any Supplement, shall prove to have been
false or misleading in any material respect on or as of the date made or deemed
made.


                    (C)     
Certain Affirmative Covenants. The Company or, to the
extent required hereunder, any Subsidiary should fail to perform or comply with
Sections 9(A) through 9(H)(ii), 9(H)(vi) through 9(H)(viii) or any reporting
covenant set forth in any Supplement hereto, and such failure continues for 15
days after written notice thereof shall have been delivered by Agent to the
Company.


                    (D)     Other
Covenants and Agreements. The Company or, to the
extent required hereunder, any Subsidiary should fail to perform or comply with
any other covenant or agreement contained herein or in any other Loan Document
or shall use the proceeds of any loan for an unauthorized purpose.


                    (E)     Cross-Default.
The Company should, after any applicable grace period, breach or be in default
under the terms of any other agreement between the Company and Farm Credit.


                    (F)     Other
Indebtedness. The Company or any Subsidiary should
fail to pay when due any indebtedness to any other person or entity for
borrowed money or any long-term obligation for the deferred purchase price of
property (including any capitalized lease), or any other event occurs which,
under any agreement or instrument relating to such indebtedness or obligation,
has the effect of







	
 

	
 


	
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accelerating
or permitting the acceleration of such indebtedness or obligation, whether or
not such indebtedness or obligation is actually accelerated or the right to
accelerate is conditioned on the giving of notice, the passage of time, or
otherwise.


                    (G)     Judgments.
A judgment, decree, or order for the payment of money shall be rendered against
the Company or any Subsidiary and either: (i) enforcement proceedings shall have
been commenced, (ii) a Lien prohibited under Section 10(B) hereof shall have
been obtained, or (iii) such judgment, decree, or order shall continue
unsatisfied and in effect for a period of 20 consecutive days without being
vacated, discharged, satisfied, or stayed pending appeal.


                    (H)     Insolvency,
Etc. The Company or any Subsidiary shall: (i) become
insolvent or shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they come due; or (ii) suspend its
business operations or a material part thereof or make an assignment for the
benefit of creditors; or (iii) apply for, consent to, or acquiesce in the
appointment of a trustee, receiver, or other custodian for it or any of its
property or, in the absence of such application, consent, or acquiescence, a
trustee, receiver, or other custodian is so appointed; or (iv) commence or have
commenced against it any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation Law of any
jurisdiction.


                    (I)     Material
Adverse Change. Any material adverse change occurs, as
reasonably determined by Agent, in the Company’s financial condition, results
of operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.


                    (J)     Revocation
of Guaranty. Any guaranty, suretyship, subordination
agreement, maintenance agreement, or other agreement furnished in connection
with the Company’s obligations hereunder and under any Supplement shall, at any
time, cease to be in full force and effect, or shall be revoked or declared
null and void, or the validity or enforceability thereof shall be contested by
the guarantor, surety or other maker thereof (the “Guarantor”), or the
Guarantor shall deny any further liability or obligation thereunder, or shall
fail to perform its obligations thereunder, or any representation or warranty
set forth therein shall be breached, or the Guarantor shall breach or be in
default under the terms of any other agreement with Agent (including any loan
agreement or security agreement), or a default set forth in Subsections (F)
through (H) hereof shall occur with respect to the Guarantor.


          SECTION
13. Remedies. Upon the occurrence and during the
continuance of an Event of Default or any Potential Default, Farm Credit shall have
no obligation to continue to extend credit to the Company and may discontinue
doing so at any time without prior notice. For all purposes hereof, the term
“Potential Default” means the occurrence of any event which, with the passage
of time or the giving of notice or both would become an Event of Default. In
addition, upon the occurrence and during the continuance of any Event of
Default, Farm Credit or Agent may, upon notice to the Company, terminate any
commitment and declare the entire unpaid principal balance of the loans, all
accrued interest thereon, and all other amounts payable under this agreement,
all Supplements, and the other Loan Documents to be immediately due and
payable. Upon such a declaration, the unpaid principal balance of the loans and
all such other amounts shall become immediately due and payable, without
protest, presentment, demand, or further notice of any kind, all of which are
hereby expressly waived by the Company. In addition, upon such an acceleration:







	
 

	
 


	
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                         (A)     Enforcement.
Farm Credit or Agent may proceed to protect, exercise, and enforce such rights
and remedies as may be provided by this agreement, any other Loan Document or
under Law. Each and every one of such rights and remedies shall be cumulative
and may be exercised from time to time, and no failure on the part of Farm
Credit or Agent to exercise, and no delay in exercising, any right or remedy
shall operate as a waiver thereof, and no single or partial exercise of any
right or remedy shall preclude any other or future exercise thereof, or the
exercise of any other right. Without limiting the foregoing, Agent may hold
and/or set off and apply against the Company’s obligations to Farm Credit cash
collateral held by Farm Credit or Agent, or any balances held by Farm Credit or
Agent for the Company’s account (whether or not such balances are then due).


                         (B)     Application
of Funds. Agent may apply all payments received by it
to the Company’s obligations to Farm Credit in such order and manner as Agent
may elect in its sole discretion.


In addition to
the rights and remedies set forth above: (i) if the Company fails to purchase
any equity in Farm Credit when required or fails to make any payment to Agent
when due, then at Agent’s option in each instance, such payment shall bear
interest from the date due to the date paid at 4% per annum in excess of the
rate(s) of interest that would otherwise be in effect on that loan; and (ii)
after the maturity of any loan (whether as a result of acceleration or
otherwise), the unpaid principal balance of such loan (including without
limitation, principal, interest, fees and expenses) shall automatically bear
interest at 4% per annum in excess of the rate(s) of interest that would
otherwise be in effect on that loan. All interest provided for herein shall be
payable on demand and shall be calculated on the basis of a year consisting of
360 days.


          SECTION
14. Broken Funding Surcharge. Notwithstanding any
provision contained in any Supplement giving the Company the right to repay any
loan prior to the date it would otherwise be due and payable, the Company
agrees that in the event it repays any fixed rate balance prior to its
scheduled due date or prior to the last day of the fixed rate period applicable
thereto (whether such payment is made voluntarily, as a result of an
acceleration, or otherwise), the Company will pay to Agent a surcharge in an
amount equal to the greater of: (i) an amount which would result in Farm
Credit, Agent, and all subparticipants being made whole (on a present value
basis) for the actual or imputed funding losses incurred by Farm Credit, Agent,
and all subparticipants as a result thereof; or (ii) $300.00. Notwithstanding the
foregoing, in the event any fixed rate balance is repaid as a result of the
Company refinancing the loan with another lender or by other means, then in
lieu of the foregoing, the Company shall pay to Agent a surcharge in an amount
sufficient (on a present value basis) to enable Farm Credit, Agent, and all
subparticipants to maintain the yield they would have earned during the fixed
rate period on the amount repaid. Such surcharges will be calculated in
accordance with methodology established by Farm Credit, Agent, and all
subparticipants (copies of which will be made available to the Company upon
request).


          SECTION
15. Complete Agreement, Amendments. This agreement,
all Supplements, and all other instruments and documents contemplated hereby
and thereby, are intended by the parties to be a complete and final expression
of their agreement. No amendment, modification, or waiver of any provision
hereof or thereof, and no consent to any departure by the Company herefrom or
therefrom, shall be effective unless approved by Agent and contained in a
writing signed by or on behalf of Agent, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. In the event this agreement is amended or restated, each such
amendment or restatement shall be applicable to all Supplements hereto.







	
 

	
 


	
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          SECTION
16. Other Types of Credit. From time to time, Farm
Credit may extend other types of credit to or for the account of the Company. In
the event the parties desire to do so under the terms of this agreement, such
extensions of credit may be set forth in any Supplement hereto and this
agreement shall be applicable thereto.


          SECTION
17. Applicable Law. Except to the extent governed by
applicable federal law, this agreement and each Supplement shall be governed by
and construed in accordance with the laws of the State of Colorado, without
reference to choice of law doctrine.


          SECTION
18. Notices. All notices hereunder shall be in writing
and shall be deemed to be duly given upon delivery if personally delivered or
sent by telegram or facsimile transmission, or three days after mailing if sent
by express, certified or registered mail, to the parties at the following
addresses (or such other address for a party as shall be specified by like
notice):


	
 

	
 


	
If to
 Agent, as follows:

	
If to the
 Company, as follows:


	
 

	
 


	
For general
 correspondence purposes:

 CoBank, ACB

 P.O. Box 5110

 Denver, Colorado 80217-5110

	
East Fork
 Biodiesel, LLC 

 P.O. Box 21

 Algona, Iowa 50511


	
 

	
 


	
For direct
 delivery purposes, when desired:

 CoBank, ACB

 5500 South Quebec Street

 Greenwood Village, Colorado 80111-1914

	
Attention:
 President

 Fax No.: (515) 395-8891


	
 

	
 


	
Attention:
 Credit Information Services

 Fax No.: (303) 224-6101

	
 





          SECTION
19. Taxes and Expenses. To
the extent allowed by law, the Company agrees to pay all reasonable
out-of-pocket costs and expenses (including the fees and expenses of counsel
retained or employed by Agent, including expenses of in-house counsel of Agent)
incurred by Agent and any participants from Farm Credit in connection with the
origination, administration, collection, and enforcement of this agreement and
the other Loan Documents, including, without limitation, all costs and expenses
incurred in perfecting, maintaining, determining the priority of, and releasing
any security for the Company’s obligations to Farm Credit, and any stamp,
intangible, transfer, or like tax payable in connection with this agreement or
any other Loan Document.


          SECTION
20. Effectiveness and Severability. This agreement shall continue in effect until: (i) all indebtedness and
obligations of the Company under this agreement, all Supplements, and all other
Loan Documents shall have been paid or satisfied; (ii) Agent has no commitment
to extend credit to or for the account of the Company under any Supplement; and
(iii) either party sends written notice to the other terminating this
agreement. Any provision of this agreement or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof.







	
 

	
 


	
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          SECTION
21. Successors and Assigns. This agreement, each
Supplement, and the other Loan Documents shall be binding upon and inure to the
benefit of the Company and Farm Credit and their respective successors and assigns,
except that the Company may not assign or transfer its rights or obligations
under this agreement, any Supplement or any other Loan Document without the
prior written consent of Agent.


          SECTION
22. Participations, Etc. From time to time, Farm
Credit may sell to one or more banks, financial institutions or other lenders a
participation in one or more of the loans or other extensions of credit made
pursuant to this agreement. However, no such participation shall relieve Farm
Credit of any commitment made to the Company under any Supplement hereto. In
connection with the foregoing, Farm Credit may disclose information concerning
the Company and its Subsidiaries to any participant or prospective participant,
provided that such participant or prospective participant agrees to keep such
information confidential. Farm Credit agrees that all Loans that are made by
Farm Credit and that are retained for its own account or repurchased may be
entitled to patronage distributions in accordance with the bylaws of Farm
Credit and its practices and procedures related to patronage distribution.
Accordingly, all Loans that are included in a sale of participation interest
and not retained or repurchased shall not be entitled to patronage
distributions from Farm Credit. A sale of participation interest may include
certain voting rights of the participants regarding the loans hereunder
(including without limitation the administration, servicing and enforcement
thereof). Farm Credit agrees to give written notification to the Company of any
sale of participation interests.


          SECTION
23. Counterparts. This agreement, each Supplement and
any other Loan Document may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and shall be binding upon all
parties and their respective permitted successors and assigns, and all of which
taken together shall constitute one and the same agreement.


          SECTION
24. Administrative Fee. The Company agrees to pay to
Agent on November 30, 2007, and on each November 30 thereafter, for as long as
the Company has commitments from Farm Credit, an administrative fee in the
amount of $25,000.00.


          IN WITNESS WHEREOF, the parties have caused this
agreement to be executed by their duly authorized officers as of the date shown
above.


	
 

	
 

	
 


	
 

	
EAST FORK BIODIESEL, LLC


	
 

	
 

	
 


	
 

	
By:

	



	
 

	
 

	



	
 

	
 

	
 


	
 

	
Title:

	
        President