exv10w1



 





Exhibit 10.1




FORM 6281 (6-2006)

Page 1 of 39

39




Farm Credit Services of America




CREDIT AGREEMENT



This Credit Agreement (“Agreement”) dated as of August 25, 2006 by and between Farm Credit
Services of America, FLCA and Farm Credit Services of America, PCA (“Lender”) and E Energy Adams,
LLC (“Borrower”), in consideration of credit extended by Lender under the terms and conditions set
forth below, the parties hereto agree as follows:




ARTICLE 1 — DEFINITIONS



As used in this Agreement, the following terms shall have the meanings set forth below (and such
meaning shall be equally applicable to both the singular and plural form of the terms defined, as
the context may require):



‘Advance’ shall mean funds advanced to the Borrower under the Credit Facility(ies) described in
Article 2 herein.



‘Affiliate’ shall mean any person, firm or corporation (other than a Subsidiary) which directly or
indirectly, is in control of, is controlled by, or is under common control with, any other person,
firm or corporation.



‘Business Day’ shall mean a day, other than a Saturday or Sunday, on which commercial banks are
open for business in Omaha, Nebraska.



‘Capital Expenditures’ means, for any period, without duplication, (a) the additions to property,
plant and equipment and other capital expenditures of Borrower that are (or would be) set forth on
a statement of cash flows of Borrower for such period prepared in accordance with GAAP and (b)
Capital Lease Obligations incurred by Borrower during such period.



‘Closing Date’ shall mean that date on which the Lender and Borrower have executed all Loan
Documents to which they are parties and on which all conditions in Article 3 have been met.



‘Code’ means the Internal Revenue Code of 1986, as amended and in effect from time to time.



‘Collateral’ shall mean the property described in Article 4, together with any other personal or
real property in which the Lender may be granted a lien or security interest to secure payment of
the Loan and together with the Assignment of all Contracts or Agreements required herein.



‘Construction Contract’ shall mean that principal contract between Borrower and any third parties
and any addenda thereto for construction of the Facility.



‘Control’ shall mean possession, directly or indirectly, of power to direct or cause the direction
of management or policies, whether through ownership of voting securities, by contract or
otherwise.



‘Debt’ or ‘Indebtedness’ shall mean (i) indebtedness of such Borrower for borrowed money, (ii)
indebtedness of such Borrower for the deferred purchase price of property or services (except trade
payables arising in the ordinary course of business), (iii) guarantees, endorsements (other than
for collection in the ordinary course of business) and other contingent obligations of such
Borrower to purchase, to provide funds for payment, to supply funds to invest in any person,
corporation or other entity or otherwise to assure a creditor against loss, (iv) obligations of
such Borrower under leases which shall have been or should be in accordance with GAAP, recorded as
capital leases, (v) Unfunded Benefit Liabilities of such Borrower and (vi) any liability that would
be classified as indebtedness in accordance with GAAP.



‘Default Rate’ shall mean a rate which is 4 percent per annum higher than the highest rate of
interest otherwise then accruing on all or any portion of the Loan.



‘Deposit Accounts’ means all demand, time, savings, passbook or similar depository accounts of
Borrower with financial institutions, including but not limited to Borrower’s operating, payroll
and other bank or depository accounts.



‘Disbursing Agent’ is initially Union Title Company, and in the event Union Title Company ceases to
act as Disbursing Agent, the Disbursing Agent will be a Person selected by Lender who succeeds to
such duties.



‘Dollar’ and ‘$’ shall mean dollars in lawful currency of the United States of America.




 









 








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‘Earnings Before Interest and Taxes’ shall mean the sum of net income of the Borrower on a
consolidated basis, plus interest expense and all charges against such income for such period for
federal, state, and local taxes actually paid or provided for as a dividend declared but unpaid.



‘Environmental Laws’ shall mean any and, all federal, state, and local statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.



‘ERISA’ shall mean the Employee Retirement Income Security Act of 1974, as amended from time to
time, including any rules and regulations promulgated thereunder.



‘ERISA Affiliate’ means any trade or business which, together with Borrower, is treated as a single
employer under Section 414 of the Code.



‘ERISA Event’ means (a) any reportable event, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a plan; (b) the existence of an “accumulated funding
deficiency”; (c) the filing of an application for a waiver of the minimum funding standard with
respect to any plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any liability
with respect to the termination of any plan; (e) the receipt by Borrower or the ERISA Affiliate of
any notice relating to an intention to terminate any plan or to appoint a trustee to administer any
plan (f) the incurrence by Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any plan; or (g) the receipt by Borrower or any ERISA
Affiliate of any notice concerning the imposition of withdrawal liability.



‘Event of Default’ shall have the meaning set forth in Article 8 and the term “Potential Default”
shall mean any event or condition, which, with the lapse of time, or giving of notice, or both,
would constitute an Event of Default.



‘Excess Cash Flow’ shall mean net income for the fiscal year, plus depreciation and amortization
expenses minus permitted Capital Expenditures, distributions and withdrawals, both as defined in
Section 7.12, and regularly scheduled payments under the Loans and other term loan payments to
other long-term creditors if permitted by Lender.



‘Facility’ shall mean the ethanol facilities to be constructed or operated by Borrower on the real
estate described in Exhibit “A” attached hereto.



‘GAAP’ shall mean those generally accepted accounting principles set forth in Statements of the
Financial Accounting Standards Board and in Opinions of the Accounting Principles Board of the
American Institute of Certified Public accountants or which have other substantial authoritative
support in the United States of America and are applicable in the circumstances, as applied on a
consistent basis. “Consistent basis” shall, however, mean not only that the accounting principles
observed in the current period are comparable in all material respects to those applied in the
preceding period, but that, in the case of Financial Statements furnished to Banks, the methods of
calculation, aggregation and presentation of the balance sheet, statements of income and retained
earnings and statements of cash flows shall be substantially the same as those used for the Initial
Financial Statements.



‘Investment Accounts’ means all securities or investment accounts of Borrower with brokerage firms
and others.



‘Lien’ shall mean any mortgage, deed of trust, pledge, charge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of any financing
statement under the UCC (other than any such financing statement filed for informational purposes
only) or comparable law or any jurisdiction to evidence any of the foregoing.



‘Loan’ or ‘Loans’ shall mean the Loan Facility(ies) identified in Article 2 herein.




 









 








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‘Loan Documents’ shall mean this Agreement, and any other document or instrument executed in
connection with or evidencing the Loan.



Management Contracts’ means all agreements and contracts, if any, which are material to the
management of Borrower’s business in effect presently and entered into from time to time hereafter,
as the same may be amended, restated, supplemented or otherwise modified from time to time.



‘Material Adverse Effect’ shall mean any event, occurrence or circumstance that has a material
negative effect on (i) the business, operations, property, and financial condition of the Borrower,
or (ii) the validity or enforcement of any of the Loan Documents or the rights or remedies of the
Lender hereunder, or (iii) the ability of the Borrower to perform its obligations under any of the
Loan Documents.



‘Material Contracts’ means (a) the Construction Contract, other prime, subcontractor and materials
contracts, Management Contracts, Supply Contracts, Sales and Marketing Contracts, Transportation
Contracts, Utility Contracts, process and performance guarantees, and any license agreement; and
(b) such other agreements and contracts to which Borrower is or becomes a party that are material
to the operation of Borrower’s business.



‘Obligations’ shall mean any Advances and other amounts due to Lender under the Loan Documents,
including without limitation, principal, interest, fees, costs, and expenses, together with all
renewals, extensions, or refinancing and also all other indebtedness and/or liabilities of Borrower
to Lender.



‘Permitted Investments’ shall mean:




     (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States), in each case
maturing within one year from the date of acquisition thereof;



     (b) commercial paper having the highest rating, at the time of acquisition thereof, of S&P or
Moody’s and in either case maturing within six months from the date of acquisition thereof;



     (c) certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days
of the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any state thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000;



     (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above;



     (e) mutual funds investing solely in any one or more of the Permitted Investments described in
clauses (a) through (d) above;



     (f) Hedging Agreements entered into in the ordinary course of business solely to hedge or
mitigate risks to which Borrower is exposed in the conduct of its business or management of its
liabilities; and the Lender Stock.


‘Permitted Liens’ shall mean: (i) liens and security interests securing indebtedness owed by the
Borrower to the Lender; (ii) liens for taxes, assessments or similar charges not yet due; (iii)
liens of material men, mechanics, warehousemen, or carriers or other like liens arising in the
ordinary course of business and securing obligations which are not yet delinquent; (iv) purchase
money liens or purchase money security interests upon or in any property acquired or held by the
Borrower in the ordinary course of business to secure indebtedness outstanding on the date hereof;
(v) liens and security interests which, as of the date hereof, have been disclosed to and approved
by the Lender in writing or as set forth in an attached Schedule hereto; and (vi) those liens and
security interests which in the aggregate constitute an immaterial and insignificant monetary
amount with respect to the net value of the Borrower’s assets.



‘Person’ shall mean any individual, corporation, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government.




 









 








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‘Request’ shall mean a communication (by telephone, letter, fax or otherwise) from a person
reasonably believed by Lender to be the Borrower or an authorized officer or manager of Borrower
making the Request upon which Lender shall be entitled to rely.



‘Sales and Marketing Contracts’ means all agreements and contracts in effect presently and entered
into from time to time hereafter which are material to the sale or disposal of products and
by-products produced by Borrower, as such agreements and contracts are amended, restated,
supplemented or otherwise modified from time to time.



‘Subordinated Debt’ shall mean such liabilities of the Borrower which have been subordinated to
those owed to the Lender in a manner acceptable to the Lender.



‘Subsidiary’ shall mean any corporation, partnership, association, joint venture, limited liability
company, or other unincorporated organization or entity with respect to which Borrower has voting
power to elect a board of directors (or other similar governing body), or has the power under
ordinary circumstances to directly or indirectly control the management thereof.



‘Substantial Completion’ shall be deemed to occur on the date on which the Construction Contract is
sufficiently complete so that Borrower can occupy and use the Facility for its intended purposes.
Substantial Completion shall be attained at the point in time when the Facility is ready to grind
corn and begin operation for its intended use as a 50 MGY fuel ethanol production plant.



‘Supply Contracts’ means all agreements and contracts related to the supply of inputs material to
the operation of Borrower’s business in effect presently and entered into from time to time
hereafter, as the same such agreements and contracts are amended, restated, supplemented or
otherwise modified from time to time.



‘Transportation Contracts’ means all agreements and contracts in effect presently and entered into
from time to time hereafter related to the provision of transportation or shipping services which
are material to the operation of Borrower’s business as the same such agreements and contracts are
amended, restated, supplemented or otherwise modified from time to time.



‘Utility Contracts’ means all contracts and agreements in effect presently and entered into from
time to time hereafter which are material to the provision to Borrower of necessary electricity,
natural gas, water, fuel oil, coal and other energy resources in connection with the operation of
Borrower’s facility, equipment and offices, as the same such agreements and contracts are amended,
restated, supplemented or otherwise modified from time to time.




ARTICLE 2 — CREDIT FACILITIES



Subject to the terms and conditions set forth in this Agreement, Lender agrees to make Advances to
Borrower on any Business Day from the date hereof to, but excluding the Final Advancement Date
identified for said Advances, so long as no Event of Default or Potential Default has occurred.
Lender agrees to advance sums to Borrower not to exceed the lesser of 65% of the Facility appraised
value, and $49,500,000.00, as represented by Credit Facility A, Credit Facility B and Credit
Facility C described below.



Section 2.1. Credit Facility A. Lender agrees to advance sums to Borrower up to the
amount of $35,000,000.00 (Maximum Principal Balance) until April 1, 2008 (Term Loan Final
Advancement Date). Each Advance made will reduce the funds available for future advances by the
amount of the Advance. Repayments of principal will not be available for subsequent Advances. The
proceeds of said Loan will be used by Borrower for financing the construction of a 50 million
gallon dry mill ethanol plant (Purpose) and Borrower agrees not to request or use such proceeds for
any other purpose.





	 	(a)	 	Interest. Borrower hereby promises to pay interest on the principal indebtedness
outstanding from time to time on each Advance from and including the date of such Advance
and otherwise in accordance with statements issued by Lender. Interest shall be payable on
the following dates, each such date an “Interest Payment Date”, provided that interest
accruing at the Default Rate, if applicable, shall be payable on demand.
	 
	 	 	 	Said interest shall be payable on the 1st day of each month, commencing the
first day of the month following the first Advance through and including the Term Loan
Final Advancement Date. Commencing on the First Principal Payment Date, as set forth in
Section 2.1(b), said interest shall be payable on the principal payment installment due
dates at the following rate per annum.




 









 











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Libor Rate Libor Rate interest shall accrue from the date of each Advance at a variable rate per
annum equivalent to the Libor Short Term Index Rate plus 3.05% (the ‘Variable Rate’). Interest
rate shall be adjusted higher or lower on September 15, 2006, and every month thereafter with any
change in the Libor Rate and this higher or lower rate will thereafter apply to the outstanding
principal indebtedness and remain in effect until a different rate of interest is established. The
amount of any subsequent payments will be increased or decreased accordingly to reflect the
different rate of interest without in any manner changing the due date of the payments. There is
no limitation on the frequency or the amount of the change in the interest rate.



The Variable Rate shall be adjusted to the Libor Short Term Index Rate Index listed below for any
year after the first year of operations in which, at the end of the preceding year, Borrower’s
Owner Equity (defined as net worth to total tangible assets) is equal to or greater than the
percentages given, provided the Borrower is not otherwise in default.




Owner Equity >/=60%      Libor + 280 basis points



The Libor Short Term Index Rate is the three-month London InterBank Offered Rates in the London
market based on the Libor rate published on the last business day of the month as published in the
Wall Street Journal, rounded to the nearest 0.05%.




     (b) Principal. Borrower hereby promises to pay principal plus all accrued interest as
follows: in 29 equal installments of $1,237,500.00 plus accrued interest commencing on the first of
the month which is six months following Substantial Completion, but no later than April 1, 2008,
(the “First Principal Payment Date”) and continuing on the 1st of each quarter
thereafter until the entire unpaid principal, plus all accrued interest and any unpaid fees, costs
or expenses is paid in full, and no later than October 1, 2015 (Maturity Date). The actual payment
amount of all other payments may vary according to the interest rate then in effect and the
outstanding principal balance.


Section 2.2 Credit Facility B. Lender agrees to advance sums to Borrower up to the amount
of $14,500,000.00 (Maximum Principal Balance) becoming available September 1, 2007 until the
expiration of 30 months after Credit Facility A has been repaid, but not later than April 1, 2018
(The Revolving Loan Final Advancement Date). Each Advance made will reduce the funds available for
future advances by the amount of the Advance. Repayments of principal will be available for
subsequent Advances, however until the Revolving Loan Final Advancement Date, the Maximum Principal
Balance available for subsequent Advances shall be reduced by $1,450,000.00 on each installment due
date. The proceeds of said Loan will be used by Borrower for financing construction of a 50
million gallon dry mill ethanol plant and to provide working capital (Purpose) and Borrower agrees
not to request or use such proceeds for any other purpose.




     (a) Interest. Borrower hereby promises to pay interest on the principal indebtedness
outstanding from time to time on each Advance from and including the date of such Advance and
otherwise in accordance with statements issued by Lender. Interest shall be payable on the
following dates, each such date an “Interest Payment Date”, provided that interest accruing at the
Default Rate, if applicable, shall be payable on demand.


Said interest shall be payable on the 1st day of each month, commencing the first day of
the month following the first Advance. Commencing on the First Principal Revolving Loan Payment
Date, as set forth in Section 2.2(b), said interest shall be payable on the principal payment
installment due dates at the following rate per annum.



Libor Rate Libor Rate interest shall accrue from the date of each Advance at a variable rate per
annum equivalent to the Libor Short Term Index Rate plus 3.05% (the ‘Variable Rate’). Interest
rate shall be adjusted higher or lower on September 15, 2006, and every month thereafter with any
change in the Libor Rate and this higher or lower rate will thereafter apply to the outstanding
principal indebtedness and remain in effect until a different rate of interest is established. The
amount of any subsequent payments will be increased or decreased accordingly to reflect the
different rate of interest without in any manner changing the due date of the payments. There is
no limitation on the frequency or the amount of the change in the interest rate.



The Variable Rate shall be adjusted to the Libor Short Term Index Rate Index listed below for any
year after the first year of operations in which, at the end of the preceding year, Borrower’s
Owner Equity (defined as net worth to total tangible assets) is equal to or greater than the
percentages given, provided the Borrower is not otherwise in default.




Owner Equity >/=60%      Libor + 280 basis points




 









 





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The Libor Short Term Index Rate is the three-month London InterBank Offered Rates in the London
market based on the Libor rate published on the last business day of the month as published in the
Wall Street Journal, rounded to the nearest 0.05%.




     (b) Principal. Borrower hereby promises to pay principal plus all accrued interest
as follows: in 10 equal installments of $1,450,000.00 plus accrued interest, the first of said
installments due January 1, 2016 or the first day of the first month which is three months
following full repayment of Credit Facility A, whichever occurs first (the “First Principal
Revolving Loan Payment Date”), and continuing on the 1st of each calendar quarter
thereafter, up to and including April 1, 2018 when the entire unpaid principal, plus all accrued
interest and any unpaid fees, costs and expenses shall be due and payable in full. The actual
payment amount of all payments may vary according to the interest rate then in effect and the
outstanding principal balance.


Section 2.3 Credit Facility C. Lender agrees to advance sums to Borrower up to the amount
of $3,000,000.00 (Maximum Principal Balance) becoming available November 1, 2007 until November 1,
2008 (Final Advancement Date). Each Advance made will reduce the funds available for future
advances by the amount of the Advance. Repayments of principal will be available for subsequent
Advances. The proceeds of said Loan will be used by Borrower for the financing of eligible grain
inventory, receivables and margin account equity (Purpose) and Borrower agrees not to request or
use such proceeds for any other purpose.




     (a) Interest. Borrower hereby promises to pay interest on the principal indebtedness
outstanding from time to time on each Advance from and including the date of such Advance and
otherwise in accordance with statements issued by Lender. Interest shall be payable on the
following dates, each such date an “Interest Payment Date”, provided that interest accruing at the
Default Rate, if applicable, shall be payable on demand.


Said interest shall be payable on the 1st day of each month at the following rate per
annum.



Libor Rate Libor Rate interest shall accrue from the date of each Advance at a variable rate per
annum equivalent to the Libor Short Term Index Rate plus 3.05% (the ‘Variable Rate’). Interest
rate shall be adjusted higher or lower on September 15, 2006, and every month thereafter with any
change in the Libor Rate and this higher or lower rate will thereafter apply to the outstanding
principal indebtedness and remain in effect until a different rate of interest is established. The
amount of any subsequent payments will be increased or decreased accordingly to reflect the
different rate of interest without in any manner changing the due date of the payments. There is
no limitation on the frequency or the amount of the change in the interest rate.



The Libor Short Term Index Rate is the three-month London InterBank Offered Rates in the London
market based on the Libor rate published on the last business day of the month as published in the
Wall Street Journal, rounded to the nearest 0.05%.




     (b) Principal. Borrower hereby promises to pay principal, plus all accrued
interest and any unpaid fees, costs or expenses in full on November 1, 2008.


Section 2.4 Computation. Interest shall be computed on the basis of a 360 day year, but
charged on the actual number of days elapsed. If interest is not paid as and when it is due, it
may be added to the principal, become and be treated as a part thereof, and shall thereafter bear
like interest.



Section 2.5 Fees. Borrower agrees to pay the following fees, in addition to those costs
and expenses referenced in Section 9.5 of this Agreement.





Section 2.5.1 Origination Fee. Borrower agrees to pay Lender for structuring the
Loan the fee set forth in the separate fee letter agreement executed by the Borrower and the
Lender dated [?November 14, 2005?]. Borrower shall receive credit towards any fees for any
amounts previously paid to Lender.




Section 2.5.2 Administrative Fee. Borrower agrees to pay Lender an annual,
non-refundable, non-prorated fee in an amount of $25,000.00, in arrears annually with the
first such payment due at the end of the second quarter following Substantial Completion and
thereafter on each annual anniversary of the payment of the administrative fee.



 









 





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Section 2.5.3 Non-Use Fee. Borrower agrees to pay Lender an additional fee in the
event that the average outstanding principal balance on Credit Facility B or Credit Facility
C is less than the Maximum Principal Balance of said facilities. This fee will be equal to .5% per annum of the difference between the Maximum Principal Balance and the actual usage.
The actual usage will be calculated as the average outstanding principal balance for each 3
month period beginning September 1, 2007 for Credit Facility B and November 1, 2007 for
Credit Facility C (Beginning Dates). The fee shall be due and payable on the first calendar quarter
following the Beginning Date and on the first of each quarter thereafter.


Section 2.6 Repayment. Borrower agrees to pay Lender, at the location identified by
Lender, the entire unpaid principal balance, plus interest, fees and other Lender’s costs and
reasonable expenses in U.S. dollars in accordance with this Agreement and the following provisions.
If any payment of principal or interest falls due on a day that is not a Business Day, then such
due date shall be extended to the next following Business Day. On loans not in default, other than
loans with revolving credit, all payments received will first be applied to protective advances and
fees, then to accrued interest, and finally to principal. On Loans with revolving credit, unless
the payment is designated by Borrower as an interest payment, payments shall first be applied to
protective advances and fees, then to reduce principal and finally to accrued interest. Upon the
occurrence and continuance of an Event of Default, payments shall first be applied to default
interest, then to protective advances and fees, then to accrued interest, and finally to principal.



Funds received by Lender will be applied to reduce principal the day received, if before 5:00 p.m.,
Central Standard Time, unless received on a holiday or weekend, in which case said funds will be
credited the next Business Day. Wire transfers will be given credit the day received only if
received before 3:00 p.m., Central Standard Time.



Funds received by Lender on a revolving credit facility shall be immediately available for
re-advance under the provisions of this Agreement if made by wire transfer, cash or other method of
ensuring funds immediately available to Lender. Payment made in funds not immediately available to
Lender, shall not be available to Borrower for re-advance for two business days thereafter or until
Lender has confirmed the availability of funds whichever is the last to occur.





Section 2.6.1 Notes Evidencing Advances. The Advances of Lender shall be evidenced
by promissory notes of Borrower substantially in the form set forth in Exhibit B, payable to
the order of Lender, due on the Term Loan Final Advancement Date for Credit Facility A, and
due on the Revolving Loan Final Advancement Date for Credit Facility B and Credit Facility C
each, in the principal amount of the Loans. Lender shall record in its records the date and
amount of each Advance made by Lender, each repayment of principal thereon, and, if
applicable, the dates on which the interest for each such Advance is payable. The aggregate
unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on such Note. The failure to so record any such amount shall not,
however, limit or otherwise affect the obligations of Borrower hereunder or under any Note to
repay the principal amount of the Advances, together with all interest accruing thereon.


Section 2.7 Prepayment. This provision applies to all prepayments of principal, whether
mandatory or voluntary (except for excess cash flow payments), which prepay the Loan in full or
which exceed any scheduled principal payments.





Section 2.7.1 Voluntary Prepayments. Subject to the payment of any applicable
prepayment fees or funding losses as provided herein, Borrower may prepay the Loan in full
before its maturity or make additional principal payments on a term Loan in any amount on any
Business Day, specifying the Loan upon which any prepayment is made. Such additional
principal payment shall not, however, defer, postpone or alter the amount or due date of any
scheduled payments required under this Agreement.




Section 2.7.2 Mandatory Prepayments. If, at any time, the outstanding unpaid
principal amount on any Loan shall exceed the Maximum Principal Balance on said Loan,
Borrower shall immediately repay Advances in an amount sufficient to reduce the outstanding
unpaid principal to the Maximum Principal Balance.



 









 





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Section 2.7.3 Excess Cash Flow. In addition to the scheduled principal payments
required herein, Borrower agrees to make special principal payments equal to 65% of available
Excess Cash Flow to the extent that such payment(s) do not cause default of any of the
covenants in this Agreement. Said mandatory prepayments shall be limited to a maximum of
$2,000,000.00 per fiscal year and the aggregate total of all such payments shall not exceed
$8,000,000.00. Such payments shall be applied to scheduled principal installments of Credit
Facility A in inverse order of maturity. Any mandatory payments from Excess Cash Flow shall
be made within 120 days of the end of each fiscal year based on the Borrower’s audited
financial statements for the year just ended.




Section 2.7.4 Prepayment fees. Borrower will pay to Lender a prepayment premium in
connection with any prepayment of the Loans as a result of a refinance or payoff through
sources other than from Borrower’s operations as follows (prepayment penalties shall not
apply to any Excess Cash Flow payment made pursuant to Section 2.7.3 of this Agreement):




	 	(1)	 	3.0% of the outstanding indebtedness during the first year following the First Principal
Term Loan Payment Date and the First Principal Revolving Note Payment Date; and
	 
	 	(2)	 	2.0% of the outstanding indebtedness during the second year following the First Principal
Term Loan Payment Date and the First Principal Revolving Note Payment Date; and
	 
	 	(3)	 	1.0% of the outstanding indebtedness during the third year following the First Principal
Term Loan Payment Date and the First Principal Revolving Note Payment Date; and
	 
	 	(4)	 	0.0% thereafter.





ARTICLE 3 — CONDITIONS PRECEDENT



Section 3.1 Lender Stock. Borrower agrees to own or purchase if necessary, such stock in
Farm Credit Services of America, ACA, as is from time to time required by Lender’s policies and
bylaws. Capitalization requirements are met by stock owned by E Energy Adams, LLC. That Jack
Alderman is the authorized voter on behalf of the owner(s) of voting stock.



Section 3.2 Conditions Precedent to Closing. The obligations of Lender to close the Loans
shall be subject to the conditions precedent that Lender shall have received on or before the
Closing Date all of the following in form and substance satisfactory to Lender.





Section 3.2.1 Organizational Documents. Copies of the organizational documents of
Borrower and any Subsidiary, including certificates of good standing in their State of
organization, and copies of all resolutions, incumbency certificates or other authorizations
of Borrower and any Subsidiary, certified by the appropriate officers of such entity as being
in full force and effect authorizing, as applicable, the Loans as herein provided, and for
the execution, delivery and performance of this Agreement and the other Loan Documents or any
instruments or agreements required hereunder to which such entity is a party.




Section 3.2.2 Evidence of Insurance. Insurance certificates and such other
evidence, in form or substance satisfactory to Lender, of all insurance required to be
maintained under this Agreement and the Loan Documents.




Section 3.2.3 Loan Documents. All duly executed originals of the Loan Documents.




Section 3.2.4 Payment of Fees and Expenses. Evidence that Borrower has paid all
fees and expenses then due and payable under this Agreement.




Section 3.2.5 Title and Lien Verification. In connection with all real property
included in the Collateral, Lender shall have received either a preliminary title opinion
from an attorney acceptable to Lender or a title insurance commitment in an amount and from a
title insurance company in form, scope and substance satisfactory to Lender to assure Lender
of its lien priority as required by this Agreement and with no exceptions contained therein
except as are approved in writing by attorneys for Lender. Further, that evidence
satisfactory to Lender and the title company be obtained by Borrower establishing that all
labor and material bills have been paid and that there is no possibility of a lien for such
items which might be prior to Lender’s lien on the Collateral. In connection with all
personal property included in the Collateral, Lender shall have received searches of
appropriate filing offices showing no liens filed against the



 









 





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Collateral, except those to be
released prior to disbursement or otherwise acceptable to Lender to assure Lender of its lien
priority as required by this Agreement.




Section 3.2.6 No Material Change. No change shall have occurred in the condition,
financial or otherwise, or operation of Borrower since the Loan was approved based on
information known to Lender at time of Loan approval, which could reasonably be expected to
result in a Material Adverse Effect.




Section 3.2.7 Further Assurances. Borrower shall have provided and/or executed and
delivered to Lender such further assignments, documents or financing statements, in form and
substance satisfactory to the Lender, that Borrower is to execute and/or deliver pursuant to
the terms of the Loan Documents, this Agreement, or as Lender may otherwise reasonably
require.




Section 3.2.8 Opinion of Counsel. Borrower shall have provided a favorable opinion
of its counsel addressed to the Lender covering such matters as the Lender may reasonably
require, including, without limitation, due organization, authorization and execution of all
of the Loan Documents, enforceability, and other opinions as Lender may reasonably request.




Section 3.2.9 Secretary Certificate. A certificate of the Secretary or an Assistant
Secretary of E Energy Adams, LLC, dated as of the Closing Date, certifying: (i) true and
complete copies of the articles of organization and operating agreement (or equivalent
documents);(ii) the names and true signatures of the officers and/or directors authorized to
sign this Agreement and the other documents to be delivered hereunder; (iii) true and
complete copies of the resolutions of the board of directors of the Borrower or other
documentation providing authority for the transactions and documents contemplated hereunder;
(iv) that there is no proceeding for the dissolution or liquidation of the Borrower or
threatening its existence; and (v) that the schedules attached to the Loan Documents are true
and complete as of the Closing Date.




Section 3.2.10 Risk Management. Within 180 days of the date of this Agreement,
Borrower shall have provided Lender with their risk management policies regarding the
procurement of feedstock and marketing of ethanol and ethanol coproducts, acceptable to
Lender.




Section 3.2.11 Invested Equity. Borrower shall have provided Lender with evidence
of funding from invested equity capital, non-repayable grants and tax increment financing of
at least $53,600,000.00.




Section 3.2.12 Disbursing Agreement. A Disbursing Agreement, in a form acceptable
to Lender, shall have been executed and delivered to Lender with respect to the process by
which Advances are made of proceeds of the Loans.




Section 3.2.13 Appraisal. Lender shall have received an as-built appraisal in form
and amount satisfactory to Lender for the Facility.




Section 3.2.14 Boundary Survey. Lender shall have received in a form satisfactory
to Lender, a boundary survey of the real estate certified to Lender and the Title Company
issuing the title insurance, dated a date reasonably satisfactory to each of Lender and the
Title Company by an independent professional licensed land surveyor, which boundary survey is
sufficient to delete any standard printed survey exception contained in the title insurance
policy.




Section 3.2.15 Flood Hazard Determination. Lender shall have received a Federal
Emergency Management Agency Standard Flood Hazard Determination Certificate certifying, among
other things, whether any of the real estate Collateral is located within a flood hazard area
and, if so located, Borrower shall have provided Lender with evidence of insurance
satisfactory to Lender.




Section 3.2.16 Phase I Environmental Site Assessment. Lender shall have received a
Phase I Environmental Site Assessment Report on all of the real estate, along with such
further environmental review and audit reports as Lender requests (which may include Phase II
reports), and letters by the firm preparing such environmental reports authorizing Lender to
rely on such reports.




Section 3.2.17 Construction Documents. Lender shall have received an executed copy
of the Construction Contract and each agreement with a subcontractor (to the extent
separately requested by Lender), together with



 









 





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(A) a copy of the site plan, (B) a schedule
listing all subcontracts relating to the project, and such other contracts, subcontracts and
schedules as Lender may request, (C) a work progress schedule showing estimated completion
time for each phase of the project construction, (D) a sworn construction cost statement,
duly executed by Borrower, including a reconciliation of actual costs incurred to-date
against budgeted amounts, (E) a copy of each permit and each other building permit, license
and other agreement that Borrower is required by law to obtain in connection with the
project, together with a schedule of all other necessary licenses and permits which must be
obtained in order to occupy and operate a dry mill ethanol production facility (at maximum
capacity in accordance with the construction plans) on the real estate where the Facility
will be built, and (F) a soil report related to the real estate where the Facility will be
built, certified by a registered engineer acceptable to Lender, including structural design
recommendations in form and substance satisfactory to Lender.




Section 3.2.18 Consents and Approvals. Certified copies of all material consents,
approvals, authorizations, registrations, filings and orders required or advisable to be made
or obtained under any requirement of law or by any material contractual obligation of
Borrower, in connection with the project or operation of Borrower’s business, including the
production of ethanol and by-products thereof, and such consents, approvals, authorizations,
registrations, filings and orders must be in full force and effect and all applicable waiting
periods must have expired.




Section 3.2.19 Financial Statements. Lender shall have received copies of
Borrower’s internally prepared financial statements as of the last day of the immediately
preceding calendar quarter, and any and all prior year audited financial statements.




Section 3.2.20 Representations and Warranties. The representations and
warranties contained in this Agreement and the Loan Documents are true as of the Closing
Date.




Section 3.2.21 Material Contracts. Collateral Assignments of all Material Contracts
in existence as of the Closing Date, together with copies of such Material Contracts.




Section 3.2.22 Borrowing Base Certificate. A Borrowing Base Certificate, dated as
of the Closing Date and substantially in the form of Exhibit D hereto, dated as of the
Closing Date.


Section 3.3 Conditions Precedent to Initial Advance. The obligation of Lender to make an
initial Advance shall be subject to the conditions precedent that Lender shall have received on or
before the initial Advance all of the following in form and substance satisfactory to Lender.





Section 3.3.1 No Default. As of the Advance date, no Event of Default or Potential
Default shall have occurred and be continuing and disbursing the amount of the Advance
requested shall not result in an Event of Default or Potential Default.




Section 3.3.2 Representations and Warranties. The following statements shall be
true and the giving of a Request for an Advance by any Borrower shall be deemed to be a
representation and warranty by the Borrower that the following statements are true both on
the date of such Request and on the date of such Advance: (i) the representations and
warranties contained in Article 5 hereof and in the other documents to be delivered hereunder
are true and complete on and as of the date of such Advance as though made on and as of such
date; (ii) no event has occurred and is continuing, or would result from such Advance, which
constitutes an Event of Default or Potential Default; (iii) no Material Adverse Effect has
occurred and is continuing; (iv) the Total Lender Indebtedness does not exceed the Maximum
Principal Balance; and (v) no order, judgment or decree of any court, arbitrator or
Governmental Authority that does, or seeks to, enjoin or restrain any Lender from making any
Advance is pending or threatened.




Section 3.3.3 No Intervening Liens. Lender’s liens, security interests and
assignments have been perfected, are first priority liens, security interests and
assignments, and there are no intervening or conflicting liens (including lis pendens) on or
claims to Collateral.




Section 3.3.4 No Notice. No notice has been received from Borrower requesting
Advances under the Loan be restricted.



 









 





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Section 3.3.5 All Other Requirements Met. All other requirements precedent to
disbursal of loan funds as required by this Agreement have been met.




Section 3.3.6 Consents, Licenses and Approvals. Evidence satisfactory to Lender
that all consents, licenses and approvals of governmental authorities and third parties have
been obtained which are necessary for, or required as a condition of the validity and
enforceability of the Loan Documents.




Section 3.3.7 Engineer’s Opinion. Lender shall have received an opinion from its
engineer that all necessary permits for construction and operation have been obtained and
that there is adequate water and sanitary waste, gas and electric service available based on
needs assessment determined by Facility designers.




Section 3.3.8 Expenditure of Equity and Other Funds. Borrower has provided
documents evidencing Borrower’s expenditure of a minimum of $53,600,000.00 equity, grants,
seed capital with respect to the cost of land acquisition, construction costs, organization
costs, financing costs, and pre-production period costs.




Section 3.3.9 Confirmation of Project Costs. Borrower has provided documents and
evidence satisfactory to Lender that equity funds, seed capital, grant proceeds, tax
increment financing and the Loans are sufficient to complete construction and commence
operations in accordance with Borrower’s sworn construction cost statement and projections
for operations.




Section 3.3.10 Title Insurance. The title insurance company is willing to issue an
endorsement to the title insurance policy providing title insurance coverage for all prior
and current advances without any exceptions for liens or claims of any other Person.


Section 3.4 Conditions Precedent to Subsequent Advances. The obligation of Lender to fund
subsequent Advances is subject to Lender’s satisfaction of each of the following as well as those
in Section 3.3 and each request by Borrower for an Advance shall constitute a representation by
Borrower that all conditions precedent in this Article have been satisfied and the amount of the
Advance does not exceed the limits set forth in Article 2 hereof, or violate or exceed any other
provision of this Agreement:.





Section 3.4.1 No Default. As of the Advance date, no Event of Default or Potential
Default shall have occurred and be continuing and disbursing the amount of the Advance
requested shall not result in an Event of Default or Potential Default.




Section 3.4.2 Representations and Warranties. The following statements shall be
true, and the giving of a Request for an Advance by any Borrower shall be deemed to be a
representation and warranty by the Borrower that the following statements are true both on
the date of such Request and on the date of such Advance: (i) the representations and
warranties contained in Article 5 hereof and in the other documents to be delivered hereunder
are true and complete on and as of the date of such Advance as though made on and as of such
date; (ii) no event has occurred and is continuing, or would result from such Advance, which
constitutes an Event of Default or Potential Default; (iii) no Material Adverse Effect has
occurred and is continuing; (iv) the total Lender Indebtedness does not exceed the Maximum
Principal Balance; and (v) no order, judgment or decree of any court, arbitrator or
governmental authority that does, or seeks to, enjoin or restrain Lender from making any
Advance is pending or threatened.




Section 3.4.3 No Intervening Liens. There are no intervening or conflicting liens
(including lis pendens) on or claims to Collateral.




Section 3.4.4 No Notice. No notice has been received from Borrower requesting
Advances under the Loan be restricted.




Section 3.4.5 All Other Requirements Met. All other requirements precedent to
disbursal of loan funds as required by this Agreement have been met.


Section 3.5 Post Closing Requirements. Prior to funding any Advances on the Loan,
Borrower must deliver to Lender: assignments of all commodity hedging accounts established and all
Material Contracts Borrower shall have entered into, at the time such Advance is requested.




 









 






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Section 3.6 Post Construction Requirements, Following Substantial Completion, and prior
to the First Principal Term Loan Payment Date and the First Principal Revolving Loan Payment Date,
Borrower shall satisfy the following conditions and requirements:



Section 3.6.1
Satisfaction of Conditions Precedent. All of the conditions
precedent set forth in Section 3.2, 3.3, 3.4 and 3.5 shall have been satisfied in full.





Section 3.6.2 Appraisal. Lender shall have received, in form satisfactory to
Lender, an appraisal, or an update to the as-built appraisal obtained prior to construction
of the Facility, confirming that the appraised value of the Facility will result in the
Maximum Principal Balance not exceeding 65% of the appraised value of the Facility.




Section 3.6.3 ALTA Survey. Lender shall receive, in form satisfactory to Lender, an
ALTA as-built survey of the Facility.




Section 3.6.4 Warranties. Lender shall receive upon request, in form satisfactory
to Lender, copies of all warranties from suppliers and contractors covering materials,
equipment, appliances and the Facility.




Section 3.6.5 Completion of Construction. Lender shall receive, in form
satisfactory to Lender, a certificate from an officer of Borrower, certifying that
construction of the Facility is final and complete in accordance with the plans and
specifications provided to Lender.




Section 3.6.6 Other Documentation. Lender shall have received from Borrower such
other documents, instruments and certificates as Lender may reasonably request.


Section 3.7 Revolving Advance Requirements. As of and subsequent to completion of
construction of the Facility, requests for Advances shall be made directly to Lender and not
through the Disbursing Agent. The obligation of Lender to make Advances shall be subject to the
conditions precedent set forth in Sections 3.2, 3.3, 3.4, 3.5 and 3.6.




ARTICLE 4 — SECURITY



Section 4.1 Collateral. As security for the payment and performance of all obligations of
Borrower to Lender, including all obligations of Borrower under Article 2 hereof, any future and
additional loans or advances made to or on behalf of Borrower by Lender for any purpose, including
advances for the protection of Collateral, all attorney fees, costs, and expenses incurred by
Lender in the collection of the Loan or in the enforcement or preservation of the rights of Lender
in and to the Collateral, Borrower hereby grants to Lender a security interest in certain real or
personal property, including the following described property wherever located in which Borrower
has or claims an interest, and in all increases, additions, accessions and substitutions
(Collateral):





(a) A security interest in the following:




Accounts, General Intangibles, and Other Rights to Payment. All accounts, deposit accounts,
contract rights, general intangibles, chattel paper, investment property, documents,
instruments, money and other rights to payment now existing and hereafter acquired, from any and
all sources.




Crops. All crops now growing or hereafter planted or grown, whether harvested, unharvested or
stored; all products of crops and all seed, fertilizer, chemicals and supplies used or produced
in connection with any crop.




Feed and Grain. All feed and grain from whatever source, stored, used or to be used, whether
grown, purchased, or otherwise acquired.




Inventory. All inventory owned by or consigned to debtor of whatever nature.




Machinery and Equipment. All equipment, machinery, nontitled motor vehicles, tools, tanks, and
removable structures used or useful in farming or ranching operations, all fuel, parts,
accessories, and improvements thereto.




Fixtures. All fixtures and irrigation equipment located on the real estate upon which the
Facilities are located.



 









 





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This security interest is in addition to any security interest or other lien granted to Lender
under the terms of any Mortgage, Trust Deed or Security Agreement executed by Borrower or by any
third party or any other document or agreement. Said security interest or other lien is
continuing and shall include the proceeds and products of the Collateral, including, but limited
to, the proceeds of any insurance thereon.




(b) A lien in Borrower’s real estate, as identified in Exhibit A, pursuant to the terms of a
trust deed in form satisfactory to Lender.




(c) Assignments of Borrower’s Material Contracts.




(d) Security interests in Borrower’s Investment Accounts and Hedging Account, pursuant to
account control agreements in forms satisfactory to Lender.


Section 4.2 Collateral Matters. Until all obligations have been fully satisfied, Lender’s
security interest in the Collateral, and all proceeds and products thereof, shall continue in full
force and effect. During the term of this Agreement, Borrower shall not permit any lien, claim or
encumbrance (other than those granted to Lender and those subordinated and/or approved in writing
by Lender) to remain against any of the Collateral and Borrower shall perform any and all steps
requested by Lender to perfect, maintain and protect Lender’s security interest in the Collateral
in which a security interest is granted to Lender under this Agreement or any other agreement,
including, without limitation, executing and filing financing and continuation statements in form
and substance satisfactory to Lender. Lender may file one or more financing statements disclosing
Lender’s security agreement under this Agreement and Borrower shall pay any costs of, or incidental
to, any recording or filing of any financing statements concerning the Collateral. Borrower hereby
expressly agrees that a carbon, photographic, photostatic, or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement. And further that wherever and whenever available and allowed
by law Secured Party is authorized to file electronically all documents allowed or required by the
Uniform Commercial Code, the Federal Food Security Act, or other applicable law, including but not
limited to financing statements, effective financing statements, and continuations, amendments,
assignments, or terminations thereof, WITHOUT the physical signature of Borrower and/or this
authorization shall be deemed a digital signature, and/or this authorization shall be deemed a
limited power of attorney appointing Secured Party as Borrower’s agent and attorney-in-fact for the
express purpose of signing and executing the aforesaid documents on Borrower’s behalf. Borrower
shall pay or cause to be paid, unless contested in good faith, all taxes, assessments and
governmental charges levied, assessed or imposed upon or with respect to the Loan, the Collateral,
any part thereof, or the Lender by virtue of the Loan transaction. Unless contested in good faith,
if Borrower fails to pay such taxes, assessments and governmental charges, Lender may (but shall
not be required to) pay the same and charge the cost to the Borrower payable on demand and secured
by the Collateral.



Section 4.3 Sale of Collateral. Without Lender’s prior written consent, except for
Inventory sold in the ordinary course of business and except for Collateral with a value of less
than $75,000, Borrower will not sell, transfer, or dispose of the Collateral without applying all
proceeds of such transaction to payment of the Loan secured hereby within 10 days after the
transaction. Borrower will not take or attempt to take the Collateral from the state where kept
without the prior written consent of Lender. Upon request, Borrower will provide Lender with a
current list of all collateral and its location.




ARTICLE 5 — REPRESENTATIONS AND WARRANTIES



Borrower warrants and represents that on the Closing Date and on and after each Advance occurring
hereunder:



Section 5.1 Organization and Qualification. Borrower is duly incorporated or organized
and is validly existing as a corporation or other legal entity in good standing in the jurisdiction
of its incorporation or organization; has the power and authority to own or lease its properties
and to conduct the business in which it is now engaged or proposed to be conducted; is duly
qualified to do business and is in good standing in each jurisdiction in which the transaction of
its business makes such qualification necessary.



Section 5.2 Authorization and Consent. The execution, delivery and performance by
Borrower of the Loan Documents to which it is or is to be a party have been duly authorized by all
required corporate or limited liability company action and do not and will not (i) require any
consent or approval of the stockholders or members of Borrower, (ii) violate any provisions of any
federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Borrower or of the charter,
articles of incorporation or organization, operating agreement or bylaws of Borrower, (iii) result
in a breach of or constitute a default under any indenture or loan or credit agreement, or any

 









 









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other agreement, lease or instrument to which Borrower is a party or by which it or its properties
may be bound or affected or (iv) result in, or require, the creation or imposition of any mortgage,
deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature (other
than as created by the Collateral Agreements — defined?) upon or with respect to any of the
properties now owned or hereafter acquired by Borrower, and Borrower is not in default under any
such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, agreement, lease or instrument.



Section 5.3 Binding Agreement. Each of the Loan Documents to which Borrower is a party is
a legal, valid and binding obligation of Borrower, enforceable in accordance with its terms,
subject only to limitations on enforceability imposed by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally and by general
principles of equity.



Section 5.4 Compliance with Laws. Borrower is in compliance in all material respects with
all federal, state and local laws, rules, regulations, ordinances, codes and orders, including,
without limitation, ERISA, all Environmental Laws, all licensing laws and has filed all federal,
state and local tax returns and has paid all federal, state and local taxes, assessments and
governmental charges imposed upon it or upon its property, except to the extent the same are
contested in good faith and by appropriate proceedings and for which adequate reserves have been
established, and Borrower has no knowledge of any deficiency or additional assessment in connection
therewith.



Section 5.5 Litigation. There is no pending or threatened legal or governmental actions,
proceedings or investigations to which Borrower is a party or to which any property of Borrower is
subject, which may result in a Material Adverse Effect, except as previously disclosed to Lender in
writing.



Section 5.6 Financial Statements. All financial statements, information and other data
which may have been or which may hereafter be submitted by the Borrower to the Lender are true,
accurate and correct and have been or will be prepared in accordance with GAAP consistently applied
or by other method acceptable to Lender and accurately represent the financial condition or, as applicable, the other information disclosed therein.
Since the most recent submission of such financial information or data to the Lender, the Borrower
represents and warrants that no Material Adverse Effect has occurred.



Section 5.7 Assets. Borrower has good and marketable title to and is the record and
beneficial owner of all the Collateral covered by the Collateral Agreements to which Borrower is or
is to be a party, free and clear of all mortgages, deeds of trust, pledges, liens, security
interests and other charges or encumbrances, except for (i) those created by the Collateral
Agreements [?Loan Documents?], and (ii) Permitted Liens, and all such Collateral is in all
material respects in good order and repair (ordinary wear and tear excepted) and covered by the
insurance required under Section 6.5.



Section 5.8 ERISA. If the Borrower has a pension, profit sharing or retirement plan
subject to ERISA, such Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS
and to the best knowledge of the Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 4.12 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 4.12 of the Code has been made with respect to any
Plan.



There are no pending or threatened claims, actions or lawsuits, or action by any Governmental
Authority with respect to any Plan, which has resulted or could reasonably be expected to result in
a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan, which has resulted or could reasonably be expected
to result in a Material Adverse Effect and no ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect



Section 5.9 Environmental Compliance. All known sources of existing or potential
environmental contamination on or near any property owned or operated by Borrower has been fully
disclosed to Lender; the operations of the Borrower comply in all material respects, and during the
term of this Agreement will at all times comply in all material respects, with all environmental
laws; the Borrower has obtained all licenses, permits, authorizations and registrations required
under any environmental law and necessary for its ordinary course operations, all such
environmental permits are in good standing, and the Borrower is in compliance with all material
terms and conditions of such environmental permits; neither the Borrower nor any of its present
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with any governmental authority or subject to any judicial or docketed administrative proceeding, respecting
any environmental law, environmental claim or hazardous material; there are no hazardous materials
or other conditions or circumstances existing, or arising from operations prior to the date of this
Agreement, with respect to any property of the Borrower that would reasonably be expected to give
rise to material environmental claims. In addition, Borrower shall hold Lender harmless from any
liability for environmental waste or contamination on any property owned or operated by Borrower or
liability imposed as a consequence by reason of Borrower’s activities and will indemnify Lender
against all claims, losses, liabilities, and expenses incurred by Lender as a result thereof. This
covenant will survive cancellation or termination of this Agreement.



Section 5.10 No Default. Borrower is not in an Event of Default in the payment of any
indebtedness representing any borrowing or financing or is in an Event of Default, or aware of any
third party default, in respect to the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement to which Borrower is a party.



Section 5.11 Receipt and Verification. Borrower has received a copy of the “Customer
Information and Disclosure Handbook” and that all the information provided by Borrower to Lender is
true and correct.



Section 5.12 Margin Stock. Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.



Section 5.13 Security Interest. Each of the Collateral Agreements constitutes a valid and
perfected first priority security interest and lien, in and to the Collateral purported to be
covered by each thereof, except as otherwise provided therein, enforceable against all third
parties in all jurisdictions securing the payment of all obligations purported to be secured
thereby (except for Permitted Liens), and all action required to perfect fully such security
interests and liens so constituted have been taken and completed.



Section 5.14 Contractual Restrictions. Borrower is not a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject to any charter or
corporate restriction, which would result in a Material Adverse Effect.



Section 5.15 Approvals and Licenses. Borrower possesses all the franchises, permits and
licenses necessary or required in the conduct of its business, and the same are valid, binding and
enforceable and all authorizations, consents, approvals or licenses of, or filings or registrations
with, any court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any specifically granted exemptions from any of the foregoing, necessary to
the valid execution, delivery or performance by Borrower of this Agreement and the Loan Documents
to which it is or is to be a party have been obtained and are in full force and effect.



Section 5.16 No Untrue Statements. No information, exhibit, schedule or report furnished
by Borrower to Lenders contained or contains any untrue statement of material fact or omitted or
omits to state any material fact necessary to make the statements contained therein, in light of
the circumstances under which such statements are made, misleading.



Section 5.17 Solvency. Borrower is and, after consummation of the transactions
contemplated by this Agreement and the other Loan Documents, shall be, solvent. For the purposes
of this paragraph, “solvent” means (i) the fair value of the property of Borrower is greater than
the total amount of liabilities, including contingent liabilities of Borrower, (ii) the amount that
will be required to pay the probable liabilities of Borrower on its debts as they become absolute
and matured shall not be greater than the fair value of the assets of Borrower at such time, (iii)
Borrower is able to realize upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of business, (iv) Borrower
does not intend to, and does not believe it shall, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (v) Borrower is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for which Borrower’s
property would constitute unreasonably small capital after giving due consideration to prevailing
practices in the industry in which Borrower is engaged. In computing the amount of any contingent
liability at any time, it is intended that such liability shall be computed at the amount that, in
light of all the facts and circumstances existing at such time, represents the amount that might
reasonably be expected to become an actual or matured liability.





 










 





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Section 5.18 Taxes. Borrower and each other Person for whose taxes Borrower could
become liable have timely filed or caused to be filed all federal income tax returns and all other
material tax returns that are required to be filed by any of them, and have paid all taxes shown to
be due and payable (or with respect to real estate taxes, have paid all taxes prior to the time the
same become delinquent) on such returns or on any assessments made against it or its property and
all other taxes, fees or other charges imposed on it or any of its property by any governmental
authority, except (a) to the extent the failure to do so would not have a Material Adverse Effect
or (b) where the same are currently being contested in good faith by appropriate proceedings and
for which Borrower has set aside adequate reserves on its books. The charges, accruals and
reserves on the books of Borrower in respect of such taxes are adequate, and no tax liabilities
that could be materially in excess of the amount so provided are anticipated.



Section 5.19 Projections. As of the Closing Date, the projections fairly present
Borrower’s reasonable forecast of the results of operations and changes in cash flows for the
periods covered thereby, based on the assumptions set forth therein, which assumptions are
reasonable based on historical experience and presently known facts. Since the date of such
projections, there have been no changes with respect to Borrower or its Subsidiaries which could
reasonably be expected to result in, singly or in the aggregate, a material discrepancy between
such projections and Borrower’s actual results for the periods stated.



Section 5.20 Material Contracts. As of the Closing Date, there are no Material Contracts
other than those which have been disclosed to Lender and subject to assignment to Lender.




ARTICLE 6 — AFFIRMATIVE COVENANTS



The Borrower covenants and agrees that during the term of this Agreement and so long as any
Indebtedness remains unpaid or any amounts drawn hereunder remain unreimbursed, each such Borrower
shall comply with the following requirements:



Section 6.1 Preservation of Existence. Borrower shall maintain and preserve its existence
and good standing in the jurisdiction in which such qualification and good standing are necessary
in order for Borrower to lawfully conduct its business and own its property in said jurisdiction.



Section 6.2 Compliance with Laws. Borrower shall comply with all laws, rules, regulations
and orders of any Government Authority applicable to it or its property, such compliance to
include, without limitation, ERISA and Environmental Laws and paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or upon its property,
unless contested in good faith.



Section 6.3 Books and Records. Borrower shall at all times keep proper books of record
and account in which correct and complete entries shall be made of all its dealings, in accordance
with generally accepted accounting principles or other method acceptable to Lender.



Section 6.4 Inspection of Properties and Books. Borrower shall, upon reasonable notice
and at any reasonable time and from time to time, permit Lender, upon request, to visit and inspect
any of the Collateral or properties of Borrower and to examine the books, accounts and other
records of the Borrower and to take abstracts therefrom and to discuss the affairs, finances, loans
and accounts of the Borrower with Borrower’s representatives. If the Borrower shall maintain any
records in the possession of a third party, the Borrower authorizes such third party to provide
Lender with copies of any records which it may request.



Section 6.5 Maintenance of Property; Insurance. Borrower shall maintain all of its
properties necessary or useful in its business in good condition, repair and working order, normal
wear and tear excepted, and shall maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated. Borrower shall maintain casualty insurance
on the Collateral for not less than its full replacement value and shall name Lender as mortgagee
on all casualty insurance and shall provide Lender with evidence of such insurance upon request.
Except for insurance proceeds from losses of less than $100,000 (which shall be paid directly to
Borrower), all proceeds of any insurance will be held by Lender as additional collateral and shall
be used to pay for reconstruction, repair, or replacement of the Collateral, or applied to payment
of the Loans. In addition, to the extent that any real property interests which constitute a part
of the Collateral lie within a designated flood plain, Borrower must maintain flood insurance with
respect to such real property interest. In addition, Borrower shall maintain commercial general
liability insurance, business automobile liability insurance, workers’ compensation insurance,
business interruption insurance of 3 months of projected expenses for the




 









 








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Facility, directors and officers liability insurance, and such other insurance coverages as
shall be required by Lender, all with terms and conditions satisfactory to Lender. Insurance will
be obtained from companies reasonably satisfactory to Lender and said policies shall name Lender as
an additional insured. The policies shall provide that there be no cancellation or modification
without 30 days advance notification to Lender.



Section 6.6 Notice of Material Events. Borrower agrees to give Lender prompt written
notice of any and all (i) Events of Default or Potential Default; (ii) litigation, arbitration or
administrative proceedings to which the Borrower is a party and, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; (iii) default under any note,
indenture, loan agreement, mortgage, lease, contract, deed or other similar agreement to which
Borrower is a party or by which Borrower is bound, which relates to borrowed money, or of any other
default under any other note, indenture, loan agreement, mortgage, lease, contract, deed or other
similar agreement to which any Borrower is a party or by which Borrower is bound if such other
default may result in a Material Adverse Effect; (iv) violation of environmental laws or permits
and (v) other development that results in, or could reasonably be expected to result in, a Material
Adverse Effect. Each notice delivered under this Section shall be accompanied by a statement of an
officer of the Borrower setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.



Section 6.7 Reports. Borrower shall provide to Lender the following financial reports and
such other reports with respect to the financial condition and operations of Borrower as Lender may
from time to time reasonably request:





Section 6.7.1 Annual Financial Statements and Budget Projections. As soon as
available, but in no event later than 120 days after the end of the fiscal year of Borrower,
an audit report in accordance with GAAP and prepared by an accountant acceptable to Lender
for such year and accompanying financial statements (including all footnotes thereto)
including a consolidated balance sheet, a consolidated statement of income and retained
earnings and, within 30 days prior to the end of the fiscal year of Borrower, a pro-forma
budget projection, including proposed capital expenditures, for the next fiscal year in form
and content acceptable to Lender, both of which shall be an Event of Default if not provided
within 30 days after said report and projection is due.




Section 6.7.2 Periodic Financial Statements. As soon as available, beginning with
the month in which ethanol production commences, and in no event later than 30 days after the
end of each month thereafter (excluding the last month of Borrower’s fiscal year) a
consolidated balance and consolidated income statement and production report of all
Borrower’s production of ethanol for that month and for year-to-date since the last fiscal
year end, such report certified complete and correct from a source acceptable to Lender,
which shall be an Event of Default if not provided within 30 days after said report is due.




Section 6.7.3 Additional Information. Such other information respecting the
condition or operations, financial or otherwise of Borrower or such other information
relating to Borrower as any Lender may from time to time reasonably request.


Section 6.8 Account Authorization. Borrower will require the financial or other
institutions with which it maintains or has maintained depository and operating accounts to
promptly provide such information concerning the Borrower, its financial condition and any
transactions as Lender may from time to time request. Borrower hereby authorizes such institutions
to directly provide to Lender such information as Lender may request.



Section 6.9 Execution of Supplemental Instruments. Execute and deliver to Lender from
time to time, upon demand, such supplemental agreements, statements, transfers, assignments,
authorizations to release information, or documents relating to the Collateral, and such other
instruments or documents as Lender may request, in order that the full intent of this Agreement may
be carried into effect.



Section 6.10 Financial Covenants. Borrower agrees to maintain sufficient capital
resources, as determined by Lender’s market valuation of Borrower’s assets and full disclosure of
Borrower’s liabilities such as to maintain the following financial covenants. In the event that
Borrower fails to comply with said covenants and said failure continues for 30 days after
notification from Lender, Lender may deem said failure an Event of Default.





Section 6.10.1 Working Capital. Beginning with the month in which Substantial
Completion occurs, Borrower agrees to maintain working capital (current assets, plus the
unadvanced portion of Loan Facility B and Facility C, minus current liabilities) of not less
than $5,000,000.00, increasing to $5,500,000.00 at fiscal year end 2008 and thereafter.



 









 





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Section 6.10.2 Debt Coverage Ratio. Beginning with the first fiscal year end
that occurs over six months after Substantial Completion and annually thereafter, Borrower
agrees to maintain a Debt Coverage Ratio, defined as net income plus depreciation and
amortization minus extraordinary gain(loss) minus after tax income(expense) minus gain(loss)
on assets sale to current principal of long-term debt, of not less than 1.50:1.00 .




Section 6.10.3 Tangible Net Worth. Beginning with the month in which Substantial
Completion occurs, Borrower agrees to maintain minimum Tangible Net Worth (total tangible
assets minus total liabilities) of not less than $49,000,000.00, increasing to not less than
$50,000,000.00 at fiscal year end 2008 and increasing to not less than $52,000,000.00 at
fiscal year end 2009 and thereafter.


Section 6.11 Compliance Certificate. Beginning with last day of the month in which
ethanol production commences, Borrower agrees to provide Lender with a Compliance Certificate
showing or certifying compliance with the aforesaid reporting and financial requirements and as of
the last day of each month (Reporting Period) thereafter, in form and content acceptable to Lender.
Such Certificate shall be provided to Lender within 20 days following the end of each Reporting
Period, and in default after 30 days.



Section 6.12 Construction Covenants.





Section 6.12.1 Insurance/Bonds. In addition to the insurance requirements set forth
in this Agreement, Borrower agrees to procure and maintain at Borrower’s expense insurance
coverage from reputable companies for builder’s risk, fire and extended coverage in an amount
equal to the completed value of the Facility with Lender named as mortgagee together with
such other property insurance on Borrower’s business as Lender may require; and public
liability coverage and insurance against loss under any workman’s compensation laws. Proof of
insurance in compliance with this provision will be provided Lender during the term of this
Agreement as Lender may require.




Borrower shall retain the services of an inspecting engineer to monitor comparisons with
reports and applications for payment received from the general contractor and shall also
require the project design engineer to procure a professional liability policy insuring said
engineer and shall furnish Lender a copy of said policy [? Will Fagen do this?].




Section 6.12.2 Compliance with Law. Borrower will obtain and keep in force all
permits or certificates required for completion of the work under the Construction Contract,
and will comply with all applicable zoning, building or other laws or regulations applicable
to the Facility and its operations, and will provide Lender with proof of compliance prior to
construction and thereafter during the term of this Agreement as Lender may require.




Section 6.12.3 Construction Contract. Borrower agrees to bring the Facility into
production no later than December 1, 2007 and agrees to complete construction according to
the plans and specifications furnished to Lender and pursuant to the Construction Contract no
later than April 1, 2008. Borrower will obtain Lender’s prior written approval of any change
to the plans and specifications that might adversely affect Lender’s security or any change
to the terms and conditions of the Construction Contract that exceeds $3,600,000.00 or
exceeds Borrower’s budgeted costs for construction of the Facility, as approved by Lender.
Borrower will also obtain all approvals of any changes in plans, specifications, work,
materials or contracts that are required by law or any covenants or agreements relating to
the Facility. The project budget, plans and specifications, cost breakdowns, disbursement
schedules, completion reports and other construction information currently or in the future
submitted to Lender fairly and accurately present the matters contained therein as of the
date thereof, there are no omissions from the information so submitted or other facts and
circumstances not reflected in such information which are or may be material and there have
been no material or adverse changes in the information so supplied without notice of the same
by Borrower to Lender.




Borrower will furnish to Lender, at Lender’s request, correct lists of all contractors,
subcontractors and suppliers employed in connection with construction of the Facility and
true and correct copies of all executed contracts and subcontracts.




Section 6.12.4 During Construction Draws. Lender, Lender’s inspecting engineer and
Disbursing Agent shall have the right to inspect the construction work at all reasonable
times. Any inspection of the work, books, or the review, examination, or approval of any
contract, document, insurance policy or other matters shall be for the sole



 









 





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benefit of Lender and not for the benefit of the Borrower, contractor, or others.
Lender is under no duty to supervise or inspect construction or examine any books and
records. No default of Borrower will be waived by any inspection by Lender. In no event will
any inspection by Lender be a representation that there has been or will be compliance with
the plans or specifications or that the construction is free from defective materials or
workmanship.




(a) Disbursements for construction shall be made at Borrower’s request no more frequently
than monthly solely to pay costs incurred under the Construction Contract for work completed
under the terms of said Construction Contract and to the extent such costs are in conformity
with the cost estimate provided to Lender. Borrower shall be required, under the terms of
this Agreement, to pay certain of the initial costs of construction before any disbursements
are made by Lender for the balance of the costs of construction. An Advance for construction
and non-construction purposes until Substantial Completion, pursuant to a Draw Request, shall
be made in accordance with the terms and conditions of a disbursing agreement in a form
acceptable to Lender (the “Disbursing Agreement”).




(b) Each Advance on a Loan shall be made only upon Borrower’s written (or telephonic notice
promptly confirmed in writing) request to Disbursing Agent and Lender substantially in the
form of Exhibit ‘C’ attached hereto (“Draw Request”). Each Draw Request will
constitute a certification, representation and warranty that the conditions precedent for an
Advance under this Agreement have been satisfied and that no Material Contract has been
entered into other than those which are subject to a collateral assignment in favor of Lender
or which Lender has agreed in writing that no collateral assignment will be required.




(c) Disbursement shall be made only if this documentation and any inspection shows that
construction is proceeding in accordance with the plans and specifications approved by Lender
and the Borrower is not otherwise in default. If there is a material deviation from the
Construction Contract, a deficiency in the materials or workmanship, a termination or
abandonment of the contract, an uninsured loss or damage to the completed work or failure to
comply with the terms of this Agreement, Lender may declare default and among other remedies,
refuse to make further disbursement until default is cured. The making of disbursement prior
to fulfillment of any or all of these loan conditions, however, shall not be construed as a
waiver of these conditions. Lender reserves the right to require their fulfillment prior to
making any subsequent disbursements. Final disbursement of the loan shall only be made when
the Construction Contract is fully completed and upon receipt of a certificate signed by the
Borrower and contractor certifying that all work has been completed satisfactorily and in
accordance with the Construction Contract (Completion Certificate). Lender will retain the
sum of not less than $3,291,309.00 pending satisfaction of the construction lending
conditions set forth herein.




(d) If Lender reasonably determines at any time that the amount of the undisbursed Loan
proceeds will not be sufficient to pay for all costs required to complete acquisition and
construction of the Facility in accordance with the approved plans and specifications,
whether that deficiency is attributable to changes in the construction work, in the plans and
specifications, or to any other cause, Lender may demand in writing that the Borrower deposit
with Lender non-interest bearing funds equal to the amount of the shortage reasonably
determined by Lender. The Borrower must then deposit the required funds with lender within
ten (10) days after the date of Lender’s written demand. No further disbursements need be
made by Lender until those funds are deposited by the Borrower with Lender. Whenever Lender
has any of those funds on deposit, all disbursements will be considered to be made by Lender
first from those funds until they are exhausted.




Section 6.12.5 Post-Construction Draws. (b) Each Advance on a Loan following
Substantial Completion shall be made only upon Borrower’s written (or telephonic notice
promptly confirmed in writing) request to Lender substantially in the form of Exhibit ‘C’
attached hereto (“Draw Request”) not later than 1:00 P.M. (Omaha time) on any Business
Day from disbursal of immediately available funds that same day. Any request for Advances
received after 1:00 P.M. may be made on the next Business Day. Each Draw Request will
constitute a certification, representation and warranty that the conditions precedent for an
Advance under this Agreement have been satisfied and that no Material Contract has been
entered into other than those which are subject to a collateral assignment in favor of Lender
or which Lender has agreed in writing that no collateral assignment will be required. After
Substantial Completion, the principal amount of each Draw Request must be at least
$100,000.00 and in multiples of $100,000.00.



 









 





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Section 6.12.6 Construction Cost Reconciliation. Until Substantial Completion,
as soon as available, but in no event later than 30 days after the end of each month,
Borrower agrees to provide a reconciliation of actual versus projected construction costs of
the Facility for that month and for year-to-date.




Section 6.12.7 No Third Party Right. This agreement is between Borrower and Lender
only and does not create any rights inuring to the benefit of a contractor, subcontractor or
any other third party.




Section 6.12.8 Assignment of Construction Contract. Borrower assigns and grants to
Lender, as additional security for the loan, Borrower’s interest in the Construction Contract
and any other contracts, drawings, plans, specifications or permits pertinent to the
construction of the Facility. In the event of Borrower default on the Loans, Borrower agrees
that Lender may elect to complete construction under the terms of said Construction Contract,
although Lender shall not be bound by said contract to do so, or may contract to employ other
parties to proceed with the work until completed. If Lender elects to complete the Facility,
Borrower agrees not to hold Lender liable for the manner or quality of said construction.
Such disbursements for completion after Borrower default shall be considered to have been
disbursed to the Borrower and will be secured by the trust deed executed in connection with
this Agreement. If such disbursements exceed the Maximum Principal Balance of the Loans,
they will be considered to be an additional loan to the Borrower, bearing interest at the
highest rate provided in the note.




Section 6.12.9 Indemnification. In consideration for said Loans, Borrower agrees to
indemnify Lender and hold it harmless from any losses, costs or damages, including attorneys’
fees, arising by reason of defective workmanship or materials occurring in the construction
or operation of the Facility, or occurring by reason of any breach or default of this
Agreement or the Construction Contract. The provisions of this Section will survive the
termination of this Agreement.




Section 6.12.10 Assignment of Material Contracts. Borrower agrees to notify Lender
of the existence of any Material Contract promptly upon entering into the same. Borrower
agrees to assign to Lender all Material Contracts and take such other actions as Lender
requests to perfect Lender’s security interest in Borrower’s rights under such Material
Contracts




Section 6.12.11 Grain Hedging. Borrower agrees to execute a Security Agreement and
Assignment of Hedging Account on a form provided or approved by Lender to be acknowledged by
all brokers involved in Borrower’s hedging program.




Section 6.12.12 Account Control Agreements. Borrower agrees to notify Lender of any
new Investment Account and/or hedging account promptly upon creating the same. Borrower
agrees to assign the Lender all investment accounts and hedging accounts, and take such other
actions as Lender requests to perfect Lender’s security interest in Borrower’s right to the
accounts.



ARTICLE 7 — NEGATIVE COVENANTS



The Borrower covenants and agrees that as long as the Loan remains unpaid, they will comply with
the following requirements, unless the Lender shall otherwise consent in writing.



Section 7.1 No Material Change. The Borrower will not adopt any material change in
accounting method or principles, unless approved by Lender; will not adopt, permit or consent to
any change in its fiscal year; and will not enter into any contract, agreement or transaction
affecting the Collateral or the Loan which would have a Material Adverse Effect.



Section 7.2 No Other Business. The Borrower will not engage in any material respects in
any business activity or operations materially different from that presently engaged in by the
Borrower and will not purchase, lease or otherwise acquire assets not related to or used in its
business.



Section 7.3 Transactions with Subsidiaries. Borrower will not purchase, acquire, provide,
or sell any equipment, other personal property, real property or services from or to any
Subsidiary, except in the ordinary course and pursuant to the reasonable requirements of Borrower’s
business.



Section 7.4 Transactions with Affiliates. The Borrower will not enter into any
transaction, including without limitation, the purchase, sale, lease or exchange of any property,
or the rendering of any service, with any Affiliate of the Borrower, except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower’s business and upon fair




 









 








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and reasonable terms no less favorable to the Borrower than would be obtained in a comparable
arms-length transaction with a person not an Affiliate of the Borrower.



Section 7.5 Consolidation and Merger. The Borrower will not, and will not permit any
Subsidiary to, consolidate with or merge with any entity, or acquire all or substantially all of
the assets of any person or entity, nor shall Borrower change its business form, provided that
Borrower or any Subsidiary may acquire the assets of any person or entity if there has been no
Event of Default or Potential Default and shall not be after giving effect to said acquisition, and
that said acquisition shall not result in a Material Adverse Effect .



Section 7.6 Transfer of Assets. The Borrower will not sell, assign (by operation of law
or otherwise) transfer, exchange, lease or otherwise dispose of any of the Collateral, nor will
Borrower deliver actual or constructive possession of the Collateral to any other person or entity,
other than in the ordinary course of business as presently conducted and at fair market value and
which are either replaced or are no longer necessary or useful for the business conducted by
Borrower.



Section 7.7 Liens; Negative Pledge. The Borrower will not create, incur, assume or permit
to exist any lien, mortgage, pledge, charge or other encumbrance on, or any security interest in,
any of its real or personal properties, except liens in favor of Lender; liens existing prior to
the date of this Agreement that have been disclosed in writing to Lender; liens for taxes and other
governmental charges which are not delinquent or the validity of which is being contested in good
faith; liens of carriers, warehousemen, mechanics and other like liens arising in the ordinary
course of business; and except Permitted Liens.



Section 7.8 Indebtedness. The Borrower will not create, incur, assume, guaranty, permit
or suffer to exist any indebtedness or otherwise become liable with respect to the obligations or
liabilities of any person or entity except: indebtedness of Borrower arising under this Credit
Agreement; indebtedness existing prior to the date of this Agreement that has been disclosed in
writing to Lender; debt subordinated in form and substance reasonably acceptable to Lender; trade
payables of Borrower incurred in the ordinary course of business; and except such additional debt
obligations or annual capitalized lease payments as may be listed herein or which do not exceed in
the aggregate the sum of $500,000.00.



Section 7.9 Loans, Advances and Guarantees. The Borrower will not make, or permit any
Subsidiary to make, any loans or advances to, or guarantees of, or otherwise become liable, or
permit any Subsidiary to become liable, with respect to (other than guarantees by endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of
business), or permit to exist, or allow any Subsidiary to permit to exist, any loans or advances
to, or such guarantees or other such liabilities with respect to, any Person, except: loans,
advances and guarantees existing as of the date hereof and listed on Schedule 7.9; and trade credit
extended in the ordinary course of business.



Section 7.10 Subordinated Debt. The Borrower will not make payments on account of any
existing subordinated debt and shall not incur any additional subordinated debt except to the
extent permissible under the agreement by which such subordinated debt is subordinated to the Loan.
Borrower shall not amend, supplement, or otherwise modify any provisions of the subordinated debt
agreement, and shall not refinance any portion of the subordinated debt, except on terms no less
favorable to Borrower and Lender.



Section 7.11 Capital Spending. Other than for construction of the Facility, Borrower will
not make Capital Expenditures during any fiscal year from any source of funds available which
exceed $500,000.00 in the aggregate.



Section 7.12 Distribution and Withdrawals. Borrower will not distribute any profits, make
any loans, declare or pay any dividends, distribute earnings, allow any draws, or make other
distributions to its members of Borrower or apply any assets to the redemption, retirement,
purchase or other acquisition of any such equity interests; however if no Event of Default or
Potential Default shall exist following completion of Borrower’s audit, Borrower may pay dividends
and distributions within 120 days following the close of the prior fiscal year, not to exceed 40%
of the net profit for said previous fiscal year, so long as Borrower remains in compliance with
required financial covenants on a post distribution basis. For fiscal years ending 2008 and
thereafter, Borrower may pay dividends and distributions which exceed 40% of the net profit if
Borrower has made the Excess Cash Flow payment for said fiscal year and so long as Borrower remains
in compliance with required financial covenants on a post distribution basis.




 









 








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Section 7.13 No Change in Management, Ownership or Control. Borrower will not make
any change in present Control of its business or of the Collateral; provided, however, this Section
7.13 does not in any manner apply to the election of the board of directors of the Borrower as
provided for in the Operating Agreement of Borrower.



Section 7.14 Deposit and Investment Accounts. Borrower will not maintain, deposit or
invest funds into any Deposit Account or Investment Account other than those listed on Schedule
7.14.



Section 7.15 Investments. Borrower will not purchase, hold or acquire any common stock,
evidence of indebtedness or other securities (including any option, warrant, or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any
obligations of, or make or permit to exist any investment or any other interest in, any other
Person (all of the foregoing being collectively called “Investments”), or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other Person that
constitute a business unit, or create or form any Subsidiary, except:





	 	(a)	 	Investments (other than Permitted Investments) existing on the date hereof and
set forth on Schedule 7.15;
	 
	 	(b)	 	Permitted Investments in which Lender maintains a first priority, perfected security
interest therein;
	 
	 	(c)	 	loans or advances to employees, officers or directors of Borrower in the ordinary
course of business for travel, relocation and related expenses; provided,
however, that the aggregate amount of all such loans and advances does not exceed
$100,000 at any time;
	 
	 	(d)	 	Investments in other business organizations whose primary business is the
production of ethanol and byproducts related thereto and in which Lender maintains a
first priority, perfected security interest in such Investments; provided, at the time
any such Investment is made, the aggregate book value of the sum of all such Investments
may not, without the prior written consent of Lender, exceed five percent (5.0%) of the
net worth of Borrower; and
	 
	 	(e)	 	other Investments which in the aggregate do not exceed $200,000.00 in any fiscal
year of Borrower.




Section 7.16 Amendments. Borrower will not amend or terminate their Articles of
Organization, Operating Agreement, or Material Contracts, without Lender’s prior written consent,
which consent shall not be unreasonably withheld.



Section 7.17 Construction. Borrower will not become a party to any contract for the
performance of any work related to the project or for the supplying of any labor, materials or
services for the construction of improvements that would have the effect of increasing the costs of
the project more than $3,600,000.00 (in the aggregate with previous such cost increases) above
those set forth in the sworn construction cost statement, except in such amounts and upon such
terms and with such parties as are approved in writing by Lender (which approval will not be
unreasonably withheld). No approval by Lender of any contract or change order will make Lander
responsible for the adequacy, form or content of such contract or change order. Borrower will
expeditiously complete and fully pay for the development and construction of the project in a good
and workmanlike manner and in accordance with the contracts, subcontracts and construction plans
submitted to Lender and in compliance with all applicable requirements of all governmental
authorities, and any covenants, conditions, restrictions and reservations applicable thereto, so
that Substantial Completion occurs on or before the required completion date. Borrower assumes
full responsibility for the compliance of the construction plans and the project with all
requirements of all governmental authorities and with sound building and engineering practices, and
notwithstanding any approvals by Lender, Lender has no obligation or responsibility whatsoever for
the Construction Plans or any other matter incident to the project or construction related to the
project. Borrower will correct or cause to be corrected (a) any defect in improvements related to
the project, (b) any departure from the construction plans or any requirements of any governmental
authorities, and (c) any encroachment by any part of any structure located on the real estate on
any building line, easement, property line or restricted area. Borrower will cause all roads
necessary for the efficient operation of the plant contemplated by the project to be completed and
dedicated (if dedication thereof is required by any governmental authority), the bearing capacity
of the soil on the real estate to be made sufficient to support all improvements thereon, and
sufficient local utilities to be made available to the project and installed at costs (if any) set
out in the sworn construction cost statement, on or before the required completion date. No work
may be performed pursuant to any change order or pending change order to the construction plans
prior to delivery thereof to Lender.




ARTICLE 8 — EVENTS OF DEFAULT




 









 








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Section 8.1 Events of Default. The occurrence of any of the following events shall
constitute an event of default (“Event of Default”) hereunder:





Section 8.1.1 Failure to Make Payments. Borrower shall fail to pay, in accordance
with the terms of this Agreement, (i) any principal on any Loan on the date that such is due,
(ii) any interest on such Loan within 5 days from the date that such is due, or (iii) any fee
or other cost owing to Lender under the Agreement within 15 days after the date that such sum
is due.




Section 8.1.2 Breach of Warranty or Representation. Any representation or warranty
made by Borrower under or in connection with this Agreement or any financial statement given
by Borrower, which shall prove to have been materially misrepresented on or as of the date
made or given.




Section 8.1.3 Insolvency. Borrower shall: (i) become insolvent or be unable to pay
its debts as they mature; (ii) make an assignment for the benefit of creditors or to an agent
authorized to liquidate any substantial amount of its properties and assets; (iii) file a
voluntary petition in bankruptcy or seeking reorganization or to effect a plan or other
arrangement with creditors; (iv) file an answer admitting the material allegations of an
involuntary petition relating to bankruptcy or reorganization or join in any such petition;
(v) become or be adjudicated a bankrupt; or (vi) apply for or consent to the appointment of,
or consent that an order be made, appointing any receiver, custodian or trustee, for itself
or any of its properties, assets or businesses, or (vii) have an involuntary bankruptcy
petition filed against Borrower, and such petition remains undismissed for more than 30 days.




Section 8.1.4 Execution. Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower and shall not be discharged or bonded
against or released within 30 days after the issuance or attachment of such writ or lien.




Section 8.1.5 Suspension. Borrower shall voluntarily suspend, without just cause,
the transaction of business or allow to be suspended, terminated, revoked or expired any
permit, license or approval of any governmental body necessary to conduct the Borrower’s
business resulting in a Material Adverse Effect.




Section 8.1.6 Due on Sale. Except as permitted under Article 4 herein, there shall
occur, without Lender’s prior written consent, the sale, transfer or further encumbrance of
any material item of Collateral, other than in the ordinary course of business.




Section 8.1.7 Material Adverse Change. If there occurs a Material Adverse Effect in
the Borrower’s business or financial condition that would likely cause an event of Default
within the following 30 days, or if there is a material impairment of the prospect of
repayment of any portion of the Loan or there is a material impairment of the value or
priority of the Lender’s security interest in the Collateral.




Section 8.1.8 Change in Ownership. There shall occur a change affecting the Control
of the Borrower which shall mean for purposes of this Section 8.1.8 the transfer of a
majority of the outstanding membership interests (units) of the Borrower within a 180 day
period.




Section 8.1.9 Impairment of Collateral. There shall occur any injury or damage to
all or any part of the Collateral or all or any part of the Collateral shall be lost, stolen
or destroyed resulting in a Material Adverse Effect.




Section 8.1.10 Performance Under This Agreement. The Borrower shall fail in any
material respect to perform or observe any other term, covenant or agreement contained in
this Agreement or in any of the Loan Documents or any other document or agreement executed by
Borrower with or in favor of Lender, not specifically mentioned above and capable of being
remedied by Borrower and any such failure shall continue unremedied for more than 30 days
after written notice from the Lender to the Borrower of the existence and character of such
Event of Default.


Section 8.2 Cross Default/Cross Collateralization. The Loans and Loan Documents, as well
as any other contract obligation or Debt Borrower may now or in the future have with Lender, are
expressly cross-defaulted. Declaration of default under any Loan described herein or any other
contract obligation or Debt Borrower may have with Lender or Lender’s Affilitate may, at Lender’s
option, cause all Loans and such other contract obligations to be declared in default,




 









 








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charged interest at the default rate and become immediately due and payable. The Collateral,
whether real or personal property, and whether secured by mortgage, deed of trust, or by security
agreement/financing statement, shall secure payment of all the Loans, or any of them. The Loans
are hereby cross-collateralized and none of the Collateral shall be released until all of said
Loans are paid in full.



Section 8.3 Remedies on Default. Upon the occurrence of any Event of Default, Lender may,
at its sole discretion, do any of the following:





Section 8.3.1 Acceleration. Declare any or all of the Borrower’s Loans, whether
under this Agreement or any other document, instrument or agreement, immediately due and
payable, whether or not otherwise due and payable.




Section 8.3.2 Default Interest. If any principal, interest, or Advance is past due,
regardless of the length of time, or if there is any failure to comply with any covenant,
condition, or agreement contained in this Agreement subject to cure periods, or in any
mortgage, trust deed, security agreement, or other document, given to secure payment of the
Loan, then, at the election of the Lender, all principal, all accrued interest thereon and
all advances will become immediately due and payable without demand and the whole will bear
interest at the Default Rate from and including the date of election to but excluding the
date paid. Any reasonable attorney fees (to the extent allowed by law), costs, or expenses
incurred and advanced by Lender to enforce collection of the Loan will be added to the
principal and bear interest at the Default Rate from the date of advance to but excluding the
date paid. At Lender’s option, any Event of Default may allow Lender to charge interest on
all principal, all accrued interest thereon, and all advances at the Default Rate without
declaring the Loan immediately due and payable.




Section 8.3.3 Cease Extending Credit. Cease making advances or otherwise extending
additional credit to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower and Lender.




Section 8.3.4 Termination. Terminate this Agreement as to any future obligation of
the Lender without affecting the Borrower’s Obligations to the Lender or the Lender’s rights
and remedies under this Agreement or under any other document, instrument or agreement.




Section 8.3.5 Protection of Security Interest. Make additional or protective
advances and do such acts as the Lender, in its sole judgment, considers necessary and
reasonable to protect its security interest or lien in the Collateral. Such additional or
protective advances may be made to protect the Collateral, including but not limited to,
payment of insurance premiums and taxes, as well as payments to protect the Collateral from
claims of other creditors, diminution in value, waste, destruction or abandonment. Such
advances may be added to the Loan and will, at Lender’s option, be immediately due and
payable and bear interest at the Default Rate from the date advanced to but excluding the
date paid. The Borrower hereby irrevocably authorizes the Lender to pay, purchase, contest
or compromise any encumbrance, lien or claim which the Lender, in its sole and reasonable
judgment, deems to be prior or superior to its security interest. Further, the Borrower
hereby agrees to pay to the Lender, upon demand, all expenses (including reasonable
attorney’s fees) incurred in connection with the foregoing.




Section 8.3.6 Foreclosure. Enforce any security interest or lien given or provided
for under this Agreement or under any security agreement, mortgage, deed of trust or other
document, in such manner and such order, as to all or any part of the properties subject to
such security interest or lien, as the Lender, in its sole judgment, deems to be necessary or
appropriate and the Borrower hereby waives any and all rights, obligations or defenses now or
hereafter established by law relating to the foregoing. In the enforcement of its security
interest or lien, the Lender is authorized to enter upon the premises where any Collateral is
located and take possession of the Collateral or any part thereof, together with the
Borrower’s records pertaining thereto, or the Lender may require the records be made
available to the Lender at a place reasonably designated by the Lender. If any part of the
Collateral is accounts receivable, Lender may notify at any time the account debtor to make
payment thereon directly to Lender and may take control of the cash and noncash proceeds of
any such accounts. The Lender may sell the Collateral or any portions thereof, together with
all additions, accessions and accessories thereto, giving only such notices and following
only such procedures as are required by law, at either a public or private sale, or both,
with or without having the Collateral present at the time of the sale, which sale shall be on
such terms and conditions and conducted in such manner as the Lender determines in its sole
judgment to be



 









 





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commercially reasonable. Any deficiency that exists after the disposition or
liquidation of the Collateral shall be a continuing liability of the Borrower to the Lender
and shall be immediately paid by the Borrower to the Lender.




Section 8.3.7 Non-Exclusivity of Remedies. Exercise one or more of the Lender’s
rights set forth herein or exercise any and all rights or remedies granted to it under any
Loan Document, by applicable law, or otherwise, including the right to accelerate the
maturity of the Loan and to proceed against all or any portion of the Collateral, in any
order. In addition, the Lender may hold and set off and apply against the Loan any and all
accounts or other property in the possession of or under the control of Lender. All rights
and remedies granted to the Lender under the Loan Documents or this Agreement or available
under applicable law shall be deemed concurrent and cumulative and not alternative remedies,
and the Lender may proceed with any number of such remedies at the same time until
obligations of the Borrower to the Lender are paid and satisfied in full. The exercise of
any one right or remedy shall not be deemed a waiver or release of any other right or remedy,
and the Lender, upon the occurrence of any Event of Default, may proceed against the Borrower
at any time, with any available remedy and in any order.




Section 8.3.8 Application of Proceeds. All amounts received by the Lender as
proceeds from the disposition or liquidation of the Collateral shall be applied to the Loan
as follows: first, to the costs and expenses of collection, enforcement, protection and
preservation of the Lender’s lien in the Collateral, including court costs and reasonable
attorney’s fees, whether or not suit is commenced by the Lender; next, to those costs and
expense incurred by the Lender in protecting, preserving, enforcing, collecting, liquidating,
selling or disposing of the Collateral; next, to the payment of accrued and unpaid interest
on all of the Loans; next, to the payment of the outstanding principal balance of the Loan;
and last, to the payment of any other indebtedness owed by the Borrower to the Lender.



ARTICLE 9 — MISCELLANEOUS



Section 9.1 Entire Agreement and Amendments. This Agreement and all documents and
agreements mentioned herein constitute the entire and complete understanding of the parties hereto
and supercede all prior agreements and understandings relative to the subject matter hereof. It
may not be effectively amended, changed, altered or modified, except in writing executed by all
parties. To the extent the provisions contained in this Agreement are inconsistent with those
contained in any other document, instrument or agreement executed pursuant hereto, the terms and
provisions contained herein shall control. Otherwise, such provisions shall be considered
cumulative.



Section 9.2 Survival. All representations, warranties, covenants and agreements herein
contained on the part of Borrower shall survive the termination of this Agreement and shall be
effective until the Loan is repaid and performed in full.



Section 9.3 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of any such provision.



Section 9.4 No Waiver; Cumulative Remedies. If Lender shall waive any power, right or
remedy arising hereunder or under any applicable law, such waiver shall not be deemed to be a
waiver upon the later occurrence or recurrence of any of said events. No failure or delay on the
part of Lender in exercising any right, power or remedy under the Loan Documents, or in extending
time for payment, accepting partial payment or release of any Collateral or proceeds of any
Collateral, or failure to enforce strict compliance with any covenant or condition contained
herein, shall operate as a waiver; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.



Section 9.5 Costs and Expenses. Borrower shall pay Lender’s out-of-pocket costs and
expense incurred in connection with the making or disbursement of the Loan or in the exercise of
any of its rights or remedies under this Agreement, including, but not limited to, title insurance,
legal fees, appraisal fees, architect or consultant’s fees, Lender inspection fees and any other
reasonable fees and costs for services that are not customarily performed by Lender’s salaried
employees and are not specifically covered by any commitment fee for the Loan. All such costs and
expenses constitute obligations secured by the Collateral. The provisions of this Section shall
survive the termination of this Agreement and the repayment of the Loan.




 









 








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Section 9.6 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile transmission) and,
unless otherwise expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or three days after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when received, or, in the case of delivery by a nationally recognized
overnight courier, when received, addressed to one or more of the individuals executing this
Agreement on behalf of such party at the address appearing below the signature of such party, or to
such other address as such party may designate for itself by like notice.



Section 9.7 Assignments and Participations. The terms of this Agreement shall bind and
benefit the heirs, legal representatives, successors, and assigns of the parties; provided,
however, that the Borrower may not assign this Agreement, or any Advances made hereunder, or assign
or delegate any of its rights or obligations, without the prior written consent of Lender. Lender
shall have the right to sell participations in the Loan to any other entities without the consent
of, or notice to, the Borrower, provided that no such action by Lender shall relieve Lender of its
obligations to make advances under the Loan when required by this Agreement. Lender may disclose
to any participants or prospective participants any information or other data or material in
Lender’s possession relating to the Borrower, and matters pertinent to the Loan, without the
consent of, or notice to, the Borrower.





Section 9.7.1 Patronage. For purposes of Lender’s patronage program, the Loans will
be treated as a patronage transaction and Borrower will be eligible to receive any patronage
under such patronage program on that portion of the Loans retained by Lender. Lender further
agrees that any patronage paid to Lender with respect to any participation interest sold to
others shall be paid to Borrower.


Section 9.8 Advice from Independent Counsel. The parties hereto understand that this
Agreement is a legally binding agreement that may affect such party’s rights. Each party hereto
represents to the other that it has received legal advice from counsel of its choice regarding the
meaning or legal significance of this Agreement and that it is satisfied with its legal counsel and
the advice received.



Section 9.9 Governing Law; Jurisdiction; Waiver of Jury Trial.





Section 9.9.1 Governing Law. The Loan Documents shall be governed by, and construed
in accordance with, the laws of the State of Nebraska, except to the extent that the law of
any other jurisdiction applies as to the perfection or enforcement of the Lender’s security
interest in or lien on any Collateral and except to the extent expressly provided to the
contrary in any Loan Document.




Section 9.9.2 Jurisdiction. Each Lender and Borrower hereby irrevocably submits to
the jurisdiction of any state or federal court sitting in the State of Nebraska, in any
action or proceeding arising out of or relating to this Agreement or any of the other Loan
Documents, and agrees that all claims in respect of such action or proceeding may be heard
and determined in such state or federal court. The Borrower hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrower irrevocably consents to the service
of copies of the summons and complaint and any other process which may be served in any such
action or proceeding by the mailing of copies of such process to the Borrower at its address
specified herein. The Borrower agrees that a final judgment in any such action or proceeding
may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section shall affect the right of Lender to service legal
process in any other manner permitted by law or affect the right of Lender to bring any
action or proceeding against the Borrower or their property in the courts of other
jurisdictions.




Section 9.9.3 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT.


Section 9.10 Headings. The headings herein are for convenience only and in no way define,
limit or describe the scope or intent of any provisions or sections of this Agreement.



Section 9.11 Counterparts. This Agreement may be executed in several counterparts and
such counterparts together shall constitute one and the same instrument.




 









 








FORM 6281 (6-2006)

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Section 9.12 Non-Business Day. If any payment of principal or interest shall fall
due on a day which is not a Business Day, interest at the rate such Loan bears for the period prior
to maturity shall continue to accrue on such principal from the stated due date thereof to and
including the next succeeding Business Day on which the same is payable.



Section 9.13 No Third Party Beneficiaries. This Agreement, the Loan Documents and the
advances and disbursements hereunder and thereunder are for the sole benefit of Lender and
Borrower, and no third parties shall have any rights or benefits hereunder or thereunder, whether
pursuant to any theory of third party beneficiary or otherwise.



Section 9.14 Set Off. Any funds of Borrower held by Lender in any account are subject to
applicable policies and procedures as may be adopted by Lender from time to time. Borrower grants
Lender a security interest in all of said funds and may exercise the right to apply these funds
against any Loan.



Section 9.15 Disbursement Authorization. Any person executing this Agreement on behalf of
the Borrower is authorized to request, accept, receive, and receipt for all or any portion of the
proceeds of the Loans or of any refinance, conversion, extension, additional loan, reamortization
or revision of the same and to execute and approve all agreements required by Lender in the
disbursement of Loan proceeds. Such person, and/or authorized personnel as disclosed on Schedule
9.15, may initiate/request either by phone, in person or in writing disbursements in the form of
check, wire or electronic transfer to the account specified by requestor. Lender is authorized to
disburse or retain any amounts required to: purchase stock in Lender; pay any fees or charges
required to be paid to Lender: pay other services provided by or through Lender; obtain any
evidence of title to Collateral; satisfy any title requirements required to clear title or obtain
Lender’s required lien position on Collateral; and pay any letters of credit issued for or on
behalf of Borrower.



Upon any verbal or written request of Borrower, or their authorized representative, for a wire
transfer (“Payment Order”) Lender shall wire transfer funds through AgriBank, FCB or other
commercial bank chosen by Lender and qualified to execute the transfer, to an account identified in
the verbal or written instructions. Wire instructions are to be sufficiently complete to allow
Lender to execute the Payment Order and will include, at a minimum, the name and number of
beneficiary financial institution, any intermediary financial institutions as applicable, and a
beneficiary name and account number. Every receiving or beneficiary financial institution may rely
on the identifying number to make payment even if it identifies a financial institution, person, or
account other than the one named. Lender will accept the wiring instructions as provided to it and
is under no obligation to verify the authenticity or accuracy of the instructions.



Borrower is liable for all losses relating to unauthorized transactions which do not result solely
from the gross negligence or intentional misconduct by Lender.



All wire transfers will be made in U.S. dollars unless otherwise specified in the wiring
instructions. For wire transfers requested by Borrower in a foreign currency, Borrower agrees to
accept and bear the foreign exchange risk for converted currency. Borrower acknowledges delays in
beneficiary’s receipt of wire transfers to foreign banks and agrees to hold harmless Lender against
such delays.



Borrower agrees to repay all Payment Orders made by wire transfer in accordance with the terms and
conditions of the Credit Agreement and other Loan Documents. Lender will have no obligation to
execute wire transfer payment order at the request of Borrower or an authorized representative of
Borrower if such disbursement would result in any indebtedness of Borrower being in excess of Loan
to Borrower.



Section 9.16 Confidentiality; Sharing Information. Lender shall hold all non-public
information obtained by Lender pursuant to the requirements of this Agreement in accordance with
Lender’s customary procedures for handling confidential information of this nature; provided,
however, Lender may disclose such confidential information (i) to its examiners, affiliates,
outside auditors, counsel and other professional advisors, (ii) to any prospective purchasers under
Section 9.7 herein, (iii) as required under the Regulations of the Farm Credit Administration, (iv)
to any guarantors of the Loan or third parties pledging collateral as security for the Loan, and
(v) to any officers, managers, members, partners, personal representatives, employees, agents or
other persons authorized by Borrower to receive confidential information as set out in the Schedule
of Authorized Persons attached to this Agreement as Schedule 9.16 or as otherwise authorized in
writing by Borrower on a form approved by Lender. Such authorization shall survive the repayment
of the Loan(s) and the termination of this Agreement and can only be revoked by written notice to
Lender.



Section 9.17 Anti-Terrorism Laws. To the best of its knowledge, neither Borrower nor any
of its Affiliates is in violation of (i) any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto, (ii) Executive Order No. 13,224, 66 Fed




 









 








FORM 6281 (6-2006)

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Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism) (the “Executive Order”) or (iii) the anti-money laundering provisions of the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001) amending the Bank
Secrecy Act, 31 U.S.C. Section 5311 et seq (collectively, “Anti-Terrorism Laws”).



Section 9.18 Payer of Record. E Energy Adams, LLC is identified as the primary
customer/payer of record as Borrower under this Agreement to accept and receive tax notices and any
dividend, patronage, or other distributions declared by Lender.



Section 9.19 IRS Declaration. The Internal Revenue Service does not require your consent
to any provision of this document other than the following certification required to avoid backup
withholding. Under penalties of perjury, I/we certify that the Taxpayer Identification Number
shown herein is correct and that I/we am/are not subject to backup withholding either because I/we
are exempt, have not been notified that I/we are subject to backup withholding due to failure of
reporting interest or dividends, or the Internal Revenue Service has notified me/us that I/we
am/are no longer subject to backup withholding. I/we am/are a U.S. person (including U.S. resident
alien):




     E Energy Adams, LLC                    20-2627531


Section 9.20
Principal Headquarters. Borrower’s principal headquarters and the place
where the records required by Section 6.5 are kept is located at 510 Main Street, Adams, NE 68301.



IN WITNESS WHEREOF, the parties hereto have set their hand effective the day and year first above
written.




BORROWER:




	 	 	 	 	 
	E Energy Adams, LLC

 	 	 
	By:  	/s/ Jack L. Alderman
 	 	 
	 	Jack L. Alderman, President 	 	 
	 	 	 
	By:  	                     /s/ Dennis L. Boesiger
 	 	 
	 	Dennis L. Boesiger, Secretary 	 	 



Address for Notice: 510 Main Street, Adams, NE 68301





 









 






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LENDER:



	 	 	 	 	 
	Farm Credit Services of America, FLCA 

Farm Credit Services of America, PCA

 	 	 
	By:  	/s/ Shane Frahm
 	 	 
	 	Shane Frahm, Vice President 	 	 



Address for Notice: 5015 South 118th Street, Omaha, NE 68137





 









 





FORM 6281 (6-2006)

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Facility




EXHIBIT A



Parcel A: The Southeast Quarter of the Southwest Quarter of Section 17, Township 6 North,
Range 8 East of the 6th P.M., Gage County, Nebraska



Parcel B: East Half of the Northwest Quarter of the Northeast Quarter; Southwest Quarter of the
Northeast Quarter; Northwest Quarter of the Southeast Quarter; Northeast Quarter of the Southwest
Quarter; and the Southeast Quarter of the Northwest Quarter, all in Section 17, Township 6 North,
Range 8 East of the 6th P.M., Gage County, Nebraska, except the railroad right-of-way of record;
and a certain Easement of record executed by M. James Platt, Trustee and individually, and Bernice
R. Platt, Trustee and individually, and Abbie Wood, Trustee and individually, on or about the 1st
day of November 1995, and filed for record in Book 78, Page 769, in the Register of Deeds’ Office,
Gage County, Nebraska on the 16th day of January, 1996 wherein a perpetual easement was granted
over the East 20 feet of the Southwest Quarter of the Southeast Quarter of Section 17, Township 6
North, Range 8 East of the 6th P.M., Gage County, Nebraska, for use as driveway for ingress and
egress in and to the premises.



Tract I: A tract of land located in part of the Northeast Quarter of the Northwest Quarter,
together with a tract of land located in part of the Northwest Quarter of the Northwest Quarter of
Section 17, Township 6 North, Range 8 East of the 6th P.M., Gage County, Nebraska, said tract lying
Westerly of the Burlington Northern Santa Fe Railroad, described as follows: Commencing at the
Southwest Corner of said Northeast Quarter of the Northwest Quarter; thence N88°57’14“E (assumed
bearing) on the South line of said Northeast Quarter of the Northwest Quarter, 255.43 feet to the
point of beginning; thence N40°29’04“W parallel with the Westerly R.O.W. line of the Burlington
Northern Santa Fe Railroad, 1135.00 feet to the center line more or less of the Little Nemaha
River; thence S66°39’28“E on said center line more or less, 152.45 feet; thence S77°24’16“E on said
centerline more or less, 221.00 feet to the Westerly R.O.W. line of the Burlington Northern Santa
Fe Railroad; thence S40°29’04“E on said Westerly R.O.W. line, 986.00 feet to the South line of said
Northeast Quarter of the Northwest Quarter; thence S88°57’14“W on said South line, 258.96 feet to
the point of beginning.



Tract III: A tract of land located in part of the Southwest Quarter of the Southeast Quarter of
Section 17, Township 6 North, Range 8 East of the 6th P.M., Gage County, Nebraska, said tract lying
Westerly of the Burlington Northern Santa Fe Railroad, described as follows: Beginning at the
Northeast corner of said Southwest Quarter of the Southeast Quarter; thence S00°02’44“W (assumed
bearing) on the East line of said Southwest Quarter of the Southeast Quarter; 331.24 feet; thence
Northwesterly on a 3469.72 foot curve to the left (chord bearing N38°47’59“W, chord distance 204.03
feet) to the point of tangency; thence N40°29’04“W parallel with the Westerly R.O.W. line of the
Burlington Northern Santa Fe Railroad, 219.15 feet to the North line of said Southwest Quarter of
the Southeast Quarter; thence N88°49’24“E on said North line, 270.44 feet to the point of
beginning.



Tract IV: A tract of land located in part of the Northeast Quarter of the Southeast Quarter of
Section 17, Township 6 North, Range 8 East of the 6th P.M., Gage County, Nebraska, said tract lying
Westerly of the Burlington Northern Santa Fe Railroad, described as follows: Beginning at the
Southwest corner of said Northeast Quarter of the Southeast Quarter; thence N00°02’44“E (assumed
bearing) on the West line of said Northeast Quarter of the Southeast Quarter, 139.63 feet to the
Westerly R.O.W. line of the Burlington Northern Santa Fe Railroad; thence S40°29’04“E on said
Westerly R.O.W. line, 153.94 feet to the point of curvature; thence Southeasterly on a 3769.72 foot
radius curve to the right (chord bearing S40°17’02“E, chord distance of 26.39 feet) to the South
line of said Northeast Quarter of the Southeast Quarter; thence S88°49’24“W on said South line,
117.16 feet to the point of beginning.



Tract V: A tract of land located in part of the Northeast Quarter of the Northeast Quarter of
Section 20, Township 6 North, Range 8 East of the 6th P.M., Gage County, Nebraska, together with
part of the Southeast Quarter of the Southeast Quarter of Section 17, Township 6 North, Range 8
East of the 6th P.M., Gage County, Nebraska; said tracts lying Westerly of the Burlington Northern
Santa Fe Railroad, described as follows: Beginning at the Southeast corner of said Northeast Quarter of the Northeast
Quarter of said Section 20; thence S88°46’05“W (assumed bearing)
on the South line


 









 








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39



of said Northeast Quarter of the Northeast Quarter, 202.08 feet; thence
N19°33’28“W parallel with the Westerly R.O.W. line of the Burlington Northern Santa Fe Railroad,
1388.00 feet to the North line of said Northeast Quarter of the Northeast Quarter of said Section
20; thence continuing N19°33’28“W, 78.81 feet to the point of curvature; thence Northwesterly on a
3569.72 foot radius curve to the left (chord bearing N29°22’14“W, chord distance 1216.80 feet) to
the West line of said Southeast Quarter of the Southeast Quarter of said Section 17; thence
N00°02’44“E on said West line, 169.54 feet to the Northwest corner of said Southeast Quarter of the
Southeast Quarter of said Section 17; thence N88°49’24“E on the North line of said Southeast
Quarter of the Southeast Quarter, 117.16 feet to the Westerly R.O.W. line of the Burlington
Northern Santa Fe Railroad; thence Southeasterly on said Westerly R.O.W. line on a 3769.72 foot
radius curve to the right (chord bearing S29°49’14“E, chord distance 1343.26 feet) to the point of
tangency; thence S19°33’28“E on said Westerly R.O.W. line, 145.04 feet to the South line of said
Southeast Quarter of the Southeast Quarter of said Section 17; thence continuing S19°33’28“E on
said Westerly R.O.W. line, 1363.44 feet to the East line of said Northeast Quarter of the Northeast
Quarter of said Section 20; thence S00°54’51“W on said East line, 23.36 feet to the point of
beginning.



Tract VI: A tract of land located in part of the Northeast Quarter of the Northeast Quarter of
Section 20, Township 6 North, Range 8 East of the 6th P.M., Gage County, Nebraska, together with
part of the Southeast Quarter of the Southeast Quarter of Section 17, Township 6 North, Range 8
East of the 6th P.M., Gage County, Nebraska; said tracts lying Westerly of the Burlington Northern
Santa Fe Railroad, described as follows: Beginning at the Southeast corner of said Northeast
Quarter of the Northeast Quarter of said Section 20; thence S88°46’05“W (assumed bearing) on the
South line of said Northeast Quarter of the Northeast Quarter, 202.08 feet to the point of
beginning; thence continuing S88°46’05“W on said South line, 105.34 feet; thence N19°33’28“W
parallel with the Westerly R.O.W. line of the Burlington Northern Santa Fe Railroad, 1388.00 feet
to the North line of said Northeast Quarter of the Northeast Quarter of said Section 20; thence
continuing N19°33’28“W, 45.70 feet to the point of curvature; thence Northwesterly on a 3469.72
foot radius curve to the left (chord bearing N28°20’11“W, chord distance 1059.07 feet) to the West
line of said Southeast Quarter of the Southeast Quarter of said Section 17; thence N00°02’44“E on
said West line, 161.70 feet; thence Southeasterly on a 3569.72 foot radius curve to the right
(chord bearing S29°22’14“E, chord distance 1216.80 feet to the point of tangency; thence
S19°33’28“E parallel with the Westerly R.O.W. line of the Burlington Northern Santa Fe Railroad,
78.81 feet to the South line of said Southeast Quarter of the Southeast Quarter of said Section 17;
thence continuing S19°33’28“E, 1388.00 feet to the point of beginning.




 









 








FORM 6281 (6-2006)

Page 32 of 39

39




Exhibit ‘B’




Promissory Note




	 	 	 
	$.00

	 	Effective Date: ___, 2006






     FOR VALUE RECEIVED, E Energy Adams, LLC (“Maker”), promises to pay to the order of Farm Credit
Services of America, FLCA (“FCSA”) at its office at 5015 South 118th St., Omaha,
Nebraska 68137, or such other place as FCSA shall direct in writing, the principal sum of >
Dollars ($.00) or, if less, the amount outstanding under this Note for Advances pursuant to the
Credit Agreement dated as of ___, 2006, by and between FCSA and Maker (as it may be amended
from time to time in the future, the “Credit Agreement”) and any indebtedness related thereto.
This Note is issued and delivered to FCSA pursuant to the Credit Agreement. All capitalized terms
used in this Note and not otherwise defined herein shall have the same meanings as set forth in the
Credit Agreement.



     The unpaid balance of this Note from time to time outstanding shall bear interest as set forth
in the Credit Agreement. Principal and interest shall be payable as provided in the Credit
Agreement. The amount of each principal and interest payment shall be determined as provided in the
Credit Agreement. This Note has been issued by Maker to FCSA pursuant to the Credit Agreement and
reference is made thereto for specific terms and conditions under which this Note is made and to
which this Note is subject.



     Upon the occurrence of an Event of Default, Maker agrees that FCSA (including its assignee,
“Holder”) shall have all rights and remedies set forth in the Credit Agreement, including without
limitation the rights of acceleration set forth in the Credit Agreement. In addition, Holder shall
have the right to recover all costs of collection and enforcement of this Note as provided in the
Credit Agreement.



     Maker and any endorser, guarantor, surety or assignor hereby waives presentment for payment,
demand, protest, notice of protest, and notice of dishonor and nonpayment of this Note, and all
defenses on the ground of delay, suretyship, impairment of collateral, or of extension of time at
or after maturity for the payment of this Note.



     This Note shall be governed in all respects by the law of the State of Nebraska.



	 	 	 	 	 
	 	Maker:



E Energy Adams, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



FORM 6281 (6-2006)

Page 33 of 39

39




Exhibit ‘C’




Form of Draw Request




Date, 2006




Farm Credit Services of America

5015 South 118th Street

Omaha, Nebraska 68137




Attention: Shane Frahm




Dear Sir:



Reference is made to the Credit Agreement dated as of Date, 2006 (as amended and in effect on the
date hereof, the “Credit Agreement”), between the undersigned, as Borrower, and Farm Credit
Services of America, as Lender. Terms defined in the Credit Agreement are used herein with the same
meanings. This notice constitutes a Draw Request, and Borrower hereby requests a Borrowing under
the Credit Agreement, and in that connection Borrower specifies the following information with
respect to the Borrowing requested hereby:





	(A)	 	Aggregate principal amount of
Borrowing1:                                             
	 
	(B)	 	Date of Borrowing (which is a Business Day):                                         




Borrower hereby represents and warrants that the conditions specified in Subsections 3.2 to 3.4,
inclusive, of the Credit Agreement are satisfied and requests that payment be made in accordance
with the Disbursement Order attached hereto.




	 	 	 	 	 
	 	Very truly yours,



E Energy Adams, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 




			
	1	 	Not less than $100,000 and an integral multiple of $100,000.




 









 










FORM 6281 (6-2006)

Page 34 of 39

39




Exhibit ‘D’




 









 








FORM 6281 (6-2006)

Page 35 of 39

39




Schedule 7.9




Loans, Advances and Guarantees



None




 









 








FORM 6281 (6-2006)

Page 36 of 39

39




Schedule 7.14




Deposit and Investment Accounts




Adams State Bank




 









 








FORM 6281 (6-2006)

Page 37 of 39

39




Schedule 7.15




Investments



None




 









 








FORM 6281 (6-2006)

Page 38 of 39

39




Schedule 9.15




Customer Disbursement Authorization for Non-Signers on Note




Customer Name: E Energy Adams, LLC




	 	 	 	 	 	 	 
	CTL3: 268

	 	CIF:
	 	Note(s):
	 	Draw(s):





I hereby authorize Farm Credit Services of America, PCA/FLCA (“Lender”) to execute request(s) to
advance funds from above stated loan(s) by wire transfer and/or check, based on instructions
provided by phone, in person, or in writing by a party authorized by me as stated below in this
agreement.




	 	 	 	 
	Name of Authorized Individual(s)

	 	Signature of Authorized Individual(s)
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 




I agree that my access to wire transfer and check disbursement services pursuant to this agreement
are also subject to all of the terms and conditions contained in the Credit Agreement and related
documents evidencing my borrowing relationship with Lender.




I further understand that any disbursement request is subject to approval by Lender and that Lender
may refuse to execute and complete a request if such request causes the loan to exceed the
available commitment.



Authorization granted by (at least one primary obligor):



	 	 	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 





Date:
                                   




 









 








FORM 6281 (6-2006)

Page 39 of 39

39




Schedule 9.16




Schedule of Authorized Persons



Pursuant to Section 9.16 Confidentiality; Sharing Information of the Credit Agreement
between E Energy Adams, LLC and Farm Credit Services of America, FLCA and Farm Credit Services of
America, PCA dated August 11, 2006, Lender may disclose such confidential information (i) to its
examiners, affiliates, outside auditors, counsel and other professional advisors, (ii) to any
prospective purchasers under Section 9.7 herein, (iii) as required under the Regulations of the
Farm Credit Administration, (iv) to any guarantors of the Loan or third parties pledging collateral
as security for the Loan, and (v) to any officers, managers, members, partners, personal
representatives, employees, agents or other persons authorized by Borrower to receive confidential
information as set out in the Schedule of Authorized Persons



I/We hereby release and agree to hold Lender, its directors, officers, employees, and agents
harmless from any liability whatsoever which might arise at any time by reason of any release,
disclosure, or publication of said information to the person(s) identified herein.




PERSON(S) AUTHORIZED TO RECEIVE INFORMATION:




(If none, please write “none”)