EXHIBIT 10.1


 


 


LOAN AGREEMENT


 


by and among


 


BADGER STATE ETHANOL, LLC


 


 


and


 


 


AGSTAR FINANCIAL SERVICES, PCA


 


 


 


dated


as of


June 22, 2005


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I.
  DEFINITIONS AND ACCOUNTING MATTERS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 1.01

  	
  Certain
  Defined Terms

  	
   

  
	
   

  	
  Section 1.02

  	
  Accounting
  Matters

  	
   

  
	
   

  	
  Section 1.03

  	
  Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.
  AMOUNTS AND TERMS OF THE TERM LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.01

  	
  Term Loan

  	
   

  
	
   

  	
  Section 2.02

  	
  Convertible
  Loan

  	
   

  
	
   

  	
  Section 2.03

  	
  Disbursement
  of Convertible Loan

  	
   

  
	
   

  	
  Section 2.04

  	
  Conversion
  of Convertible Loan Into Term Loan

  	
   

  
	
   

  	
  Section 2.05

  	
  Excess
  Cash Flow

  	
   

  
	
   

  	
  Section 2.06

  	
  Revolving
  Loan

  	
   

  
	
   

  	
  Section 2.07

  	
  Making
  the Revolving Advances

  	
   

  
	
   

  	
  Section 2.08

  	
  Letters
  of Credit

  	
   

  
	
   

  	
  Section 2.09

  	
  Adjustments
  to Interest Rate

  	
   

  
	
   

  	
  Section 2.10

  	
  Participation
  Fee

  	
   

  
	
   

  	
  Section 2.11

  	
  Default
  Interest

  	
   

  
	
   

  	
  Section 2.12

  	
  Prepayment
  of Term Loan

  	
   

  
	
   

  	
  Section 2.13

  	
  Changes
  in Law Rendering Certain LIBOR Rate Loans Unlawful

  	
   

  
	
   

  	
  Section 2.14

  	
  Payments
  and Computations

  	
   

  
	
   

  	
  Section 2.15

  	
  Maximum
  Amount Limitation

  	
   

  
	
   

  	
  Section 2.16

  	
  Lender
  Records

  	
   

  
	
   

  	
  Section 2.17

  	
  Loan
  Payments

  	
   

  
	
   

  	
  Section 2.18

  	
  Purchase
  of Equity Interests in AgStar Financial Services, PCA

  	
   

  
	
   

  	
  Section 2.19

  	
  Compensation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.01

  	
  Conditions
  Precedent to Funding

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01

  	
  Representations
  and Warranties of the Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.
  COVENANTS OF THE BORROWER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.01

  	
  Affirmative
  Covenants

  	
   

  
	
   

  	
  Section 5.02

  	
  Negative Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.01

  	
  Events of Default

  	
   

  



 


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  Section 6.02

  	
  Remedies

  	
   

  
	
   

  	
  Section 6.03

  	
  Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01

  	
  Amendments, etc

  	
   

  
	
   

  	
  Section 7.02

  	
  Notices, etc

  	
   

  
	
   

  	
  Section 7.03

  	
  No Waiver; Remedies

  	
   

  
	
   

  	
  Section 7.04

  	
  Costs, Expenses and Taxes

  	
   

  
	
   

  	
  Section 7.05

  	
  Right of Set-off

  	
   

  
	
   

  	
  Section 7.06

  	
  Severability of Provisions

  	
   

  
	
   

  	
  Section 7.07

  	
  Binding Effect; Successors and Assigns; Participations

  	
   

  
	
   

  	
  Section 7.08

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  Section 7.09

  	
  Governing Law

  	
   

  
	
   

  	
  Section 7.10

  	
  Execution in Counterparts

  	
   

  
	
   

  	
  Section 7.11

  	
  Survival

  	
   

  
	
   

  	
  Section 7.12

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
  Section 7.13

  	
  Entire Agreement

  	
   

  



 


LIST OF SCHEDULES AND EXHIBITS


 


	
  Schedule 3.01(c)

  	
   

  	
  Real
  Property

  	
   

  
	
  Schedule 4.01(a)

  	
   

  	
  Description
  of Certain Transactions Related to the Borrower’s Stock

  	
   

  
	
  Schedule 4.01(f)

  	
   

  	
  Description
  of Certain Threatened Actions, etc.

  	
   

  
	
  Schedule 4.01(j)

  	
   

  	
  Location of
  Inventory and Farm Products; Third Parties in Possession; Crops

  	
   

  
	
  Schedule 4.01(k)

  	
   

  	
  Office
  Locations; Fictitious Names; Etc.

  	
   

  
	
  Schedule 4.01(n)

  	
   

  	
  Intellectual
  Property

  	
   

  
	
  Schedule 4.01(p)

  	
   

  	
  Environmental
  Compliance

  	
   

  
	
  Schedule 5.01(n)

  	
   

  	
  Management

  	
   

  
	
  Schedule 5.02(a)

  	
   

  	
  Description
  of Certain Liens, Lease Obligations, etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Compliance
  Certificate

  	
   

  
	
  Exhibit B

  	
   

  	
  Project
  Sources and Uses Statement

  	
   

  
	
  Exhibit C

  	
   

  	
  Sworn
  Construction Statement

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of
  Opinion Letter

  	
   

  
	
  Exhibit E

  	
   

  	
  Form of
  Letter of Credit

  	
   

  



 


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LOAN AGREEMENT


 


THIS Loan Agreement between BADGER STATE ETHANOL, LLC, a Wisconsin
limited liability company (the “Borrower”), and AGSTAR FINANCIAL SERVICES, PCA,
an United States corporation (the “Lender”) is made and executed as of this 22nd
day of June, 2005.


 


RECITALS


 


A.                                   The
Borrower has requested the Lender extend to the Borrower a term loan in the
amount of $15,491,086.94, for the purpose of refinancing the existing senior
debt owed to the First National Bank of Omaha.


 


B.                                     The
Borrower has also requested the Lender extend to the Borrower a Convertible
Loan in the amount of $20,000,000.00, for the purposes of adding corn
processing equipment and fixtures to the Borrower’s existing facility located
near Monroe, Green County, Wisconsin (the “Project”).


 


C.                                     The
Borrower has also requested the Lender extend to the Borrower a revolving loan
in the amount of $9,000,000.00 for operating capital and cash management
purposes.


 


D.                                    The
Borrower has also requested additional financing facilities be available to it
in the form of Letters of Credit.


 


D.                                    The
Lender is willing to extend such financing to the Borrower upon the terms and
subject to the conditions set forth in this Agreement.


 


AGREEMENT


 


IN CONSIDERATION of the foregoing premises and the mutual covenants
contained in this Loan Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the Borrower,
the parties agree as follows:


 


ARTICLE I.


DEFINITIONS AND ACCOUNTING MATTERS


 


Section 1.01.                             Certain
Defined Terms.  As used in
this Agreement, the following terms shall have the following meanings.  Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial
Code, as amended from time to time.  All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.


 


“Advances” means the Loans or Letters of Credit provided the
Borrower pursuant to  Sections 2.01, 2.02, 2.06 and 2.08.


 


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“Affiliate” means, as to any Person, any other Person:  (a) that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, such Person; (b) that directly or indirectly beneficially
owns or holds five percent (5%) or more of any class of voting stock of such
Person; or (c) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in
question.  The term “control” means the
possession, directly or indirectly, of the power to direct or cause direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise; provided,
however, in no event shall the Lender or any Bank be deemed an
Affiliate of the Borrower or any of their subsidiaries.


 


“Agreement” means this Loan Agreement,
as this Loan Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Loan Agreement from time to
time.


 


“Borrower” means Badger State Ethanol,
LLC, a Wisconsin limited liability company.


 


“Business Day” means any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized to close under the Laws of,
or are in fact closed in, the state where the Lender’s Office is located and,
if such day relates to any LIBOR Rate, means any such day on which dealings in
dollar deposits are conducted by and between banks in the applicable offshore
dollar interbank market.


 


“Capital Expenditures” means, for any period, the sum of all
amounts that would, in accordance with generally accepted accounting principles
consistently applied, be included as additions to property, plant and equipment
on a statement of cash flows for the Borrower during such period, with respect
to:  (a) the acquisition,
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds; or (b) other
capital expenditures and other uses recorded as capital expenditures having
substantially the same effect.


 


“Closing Date” means June 22, 2005.


 


“CERCLA” means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended.


 


“Collateral” means and includes,
without limitation, all property and assets granted as collateral security for
the Loans or Indebtedness, whether real or personal property, whether granted
directly or indirectly, whether granted now or in the future, and whether
granted in the form of a security interest, mortgage, assignment of rents, deed
of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien,
equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract or
otherwise.


 


2





















 


“Commitment” means the respective amounts
committed to by Lender under the Notes.


 


“Completion Date” means the earlier of April 30, 2006, or
the date a Completion Certificate is issued for the Project executed by the
Borrower and General Contractor, whichever shall first occur.


 


“Completion Certificate” means a certificate executed by the
Borrower and General Contractor stating that the Project is completed and that
the corn processing equipment and fixtures are completely operational.


 


“Compliance Certificate” means a certificate of the Treasurer,
or any other officer acceptable to the Lender, of the Borrower, in the form
attached hereto as Exhibit A, setting forth the calculations of current
financial covenants and stating:  (a) the
Financial Statements are true and correct and have been prepared in accordance
with generally accepted accounting principles consistently applied; (b) whether
they have knowledge of the occurrence of any Event of Default under this
Agreement, and if so, stating in reasonable detail the facts with respect
thereto; and (c) reaffirm and ratify the representations and warranties,
as of the date of the certificate, contained in this Agreement.


 


“Construction Contracts”  means any and all contracts, written
or oral, between the Borrower and any Contractor and any subcontractor and
between any of the foregoing and any other person or entity relating in any way
to the construction of the Project, including the performing of labor or the
furnishing of standard or specially fabricated materials in connection
therewith.


 


“Convertible Loan” means the loan from the Lender to the
Borrower in the amount of $20,000,000.00 and pursuant to the terms and
conditions provided for in Section 2.02, below.


 


“Convertible Note” means that certain promissory note of even
date herewith executed and delivered to the Lender by the Borrower in the
amount of $20,000,000.00.


 


“Convertible Loan Maturity Date” means five years from the
Conversion Date.


 


“Contractor” means and includes any person or entity, including
the General Contractor, engaged to work on or to furnish materials or supplies
for the Project.


 


“Conversion Date” means 60 days after the Completion Date.


 


“Current Portion of Long Term Debt” means that portion of Funded
Debt payable within one year from the date of such determination, determined in
accordance with generally accepted accounting principles, consistently applied.


 


3





















 


“Debt” means:  (A) indebtedness
for borrowed money or for the deferred purchase price of property or services; (B) obligations
as lessee under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases; (C) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clause (A) or (B) above or (E) through (G) below;
(D) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA; (E) indebtedness in respect of mandatory
redemption or mandatory dividend rights on equity interests but excluding
dividends payable solely in additional equity interests; and (F) all obligations
of a Person, contingent or otherwise, for the payment of money under any
noncompete, consulting or similar agreement entered into with the seller of a
company or its assets or any other similar arrangements providing for the
deferred payment of the purchase price for an acquisition permitted hereby or
an acquisition consummated prior to the date hereof.


 


“Default Rate” has the meaning specified in Section 2.11.


 


“Disbursing Agent”  means Lender, its successors and
assigns.


 


“Disbursing Agreement” means the Disbursing Agreement, of even
date herewith, executed by the Title Company, the Borrower, and the Lender, as
the same may be from time to time amended, modified, or supplemented.


 


“Disbursement Expiration Date” means the date thirty (30) days
subsequent to the Completion Date, unless extended in writing by the Lender and
the Borrower for an additional, quantified term.


 


“Distribution” means any dividend, distribution, payment, or
transfer of property to any member of the Borrower.


 


“Draw Request” means a request for an advance against the
Revolving Note, or the Convertible Note prior to the Conversion Date, submitted
by the Borrower to the Lender and the Disbursing Agent, in accordance with the
terms and conditions of the Disbursing Agreement.


 


“Environmental Laws” means all laws and regulations relating to
environmental, health, safety and land use matters applicable to any property.


 


“EBITDA” means for any period, the total of the following each
calculated without duplication for the Borrower for such period:  (i) net income from operations; plus (ii) any
provision for (or less any benefit from) income taxes included in determining
such net income; plus (iii) Interest Expense deducted in determining such
net income; plus (iv) amortization and depreciation expense deducted in
determining such net income.


 


4





















 


“ERISA” means the Employee Retirement Income Security Act
of 1974.


 


“Events of Default” has the meaning specified in Section 6.01.


 


“Excess Cash Flow” means EBITDA, less the sum of:  (i) required payments in respect of Funded
Debt; (ii) Maintenance Capital Expenditures and (iii) Tax
Distributions.


 


“Extraordinary Items” means items which are material and
significantly different from the Borrower’s typical business activities,
determined in accordance with generally accepted accounting principles,
consistently applied.


 


“Fixed Charge Coverage Ratio” means the ratio of (EBITDA +/-
Extraordinary Items) divided by the sum of Current Portion of Long Term Debt + Interest
Expense + Dividends + Distributions + Tax Distributions + Maintenance Capital
Expenditures).


 


“Food Security Act” means the Food Security Act of 1985, 7
U.S.C. §1631, as amended, and the regulations promulgated thereunder.


 


“Funded Debt” means the principal amount of all Debt of the
Borrower having a final maturity of more than one year from the date of origin
thereof (or which is renewable or extendible at the option of the obligor for a
period or periods more than one year from the date of origin) excluding,
however, the principal amount due under the Revolving Note or any other line of
credit used by Borrower for working capital purposes, all determined in
accordance with generally accepted accounting principles, consistently applied
for the period in question.


 


“General Contractor” means AMG / GCI, LLC, an Iowa limited
liability company, and its successors and assigns.


 


“Governmental Authority” means and includes any and all courts,
boards, agencies, commissions, offices, or authorities of any nature whatsoever
for any governmental unit (federal, state, county, district, municipal, city,
or otherwise) whether now or hereafter in existence.


 


“Grantor” means and includes each and all of the persons or
entities granting a Security Interest in any Collateral for the Indebtedness,
including without limitation the Borrower.


 


“Income Taxes” means the applicable state, local or federal tax
on the net income of the Borrower.


 


“Intellectual Property” has the meaning specified in Section 4.01(n).


 


“Interest Expense” means for any period, the total interest
expense of the Borrower calculated on a consolidated basis.


 


5





















 


“Interest Period” means the period commencing on the date of an
Advance and ending on the numerically corresponding day in the first calendar
month thereafter, except that each such Interest Period which commences on the
last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month.  Notwithstanding the
foregoing:  (a) each Interest Period
which would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day or if such succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day; (b) any
Interest Period which would otherwise extend beyond the Maturity Date shall end
on the Maturity Date; and (c) no Interest Period shall have a duration of
less than one (1) month.


 


“Inventory” means all of the Borrower’s inventory, as such term
is defined in the UCC, whether now owned or hereafter acquired, whether
consisting of whole goods, spare parts or components, supplies or materials,
whether acquired, held or furnished for sale, for lease or under service
contracts or for manufacture or processing, and wherever located.


 


“Lender” means AgStar Financial
Services, PCA, and its successors and assigns.


 


“Letter of Credit” has the meaning specified in Section 2.08(a).


 


“Letter of Credit Liabilities” means, at any time, the aggregate
maximum amount available to be drawn under all outstanding Letters of Credit
(in each case, determined without regard to whether any conditions to drawing
could then be met) and all unreimbursed drawings under Letters of Credit.


 


“LIBOR Rate” (London Interbank Offered Rate) shall mean the London Interbank offered rate per
annum for one-month deposits in United States dollars, as determined by the
British Banker’s Association average of interbank offered rates for United
States dollar deposits in the London market based on quotations at 16 major
banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date;
provided, if Lender determines that the foregoing source is unavailable
for the applicable Interest Period, Lender shall determine LIBOR based on a new
index which is based on comparable information.


 


“Loan and Carrying Charges” means all commitment fees to the
Lender, brokerage fees, standby fees, interest charges, service fees, attorneys’
fees, contractors’ fees, developers’ fees, funding fees, title insurance fees
and charges, recording fees, registration taxes, real estate taxes, special
assessments, insurance premiums, utility charges incurred by the Borrower in
the construction of the Project and issuance of the Notes, all costs incurred
in acquisition of the Real Property and any other costs incurred in the
development of the Project.


 


“Loan Documents” means this Agreement, the Notes, Letters of
Credit, the Security Agreement, the Mortgage and all other agreements,
documents, instruments, and certificates


 


6





















 


of the Borrower
delivered to, or in favor of, the Lender under this Agreement or in connection
herewith or therewith, including, without limitation, all agreements,
documents, instruments, certificates and delivered in connection with the
extension of Advances by the Lender.


 


“Loan Obligations” means all obligations, indebtedness, and
liabilities of the Borrower to the Lender arising pursuant to any of the Loan
Documents, whether now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, without limitation, the obligation of
the Borrower to repay the Advances, interest on the Advances, and all fees,
costs, and expenses (including attorneys’ fees and expenses) provided for in
the Loan Documents.


 


“Loan/Loans” means and includes the Term Loan, the Convertible
Loan and the Revolving Loan.


 


“Long Term Debt” means indebtedness that matures more than one
year after the date of determination thereof.


 


“Long Term Marketing Agreement” means any contract, agreement or
understanding of the Borrower having a term of one year or more after the date
of determination thereof relating to the sale of any raw materials, inventory,
products or by-products of the Borrower.


 


“Maintenance Capital Expenditures” means
all Capital Expenditures made in the ordinary course of business to maintain
existing business operations of the Borrower in any fiscal year, determined in
accordance with generally accepted accounting principles, consistently applied.


 


“Make Whole Amount” means any amounts in addition to outstanding
principal and interest payable under the Notes or this Agreement in the event
of a prepayment thereof.


 


“Material Adverse Effect” means any set of circumstances or
events which:  (i) has or could
reasonably be expected to have any material adverse effect upon the validity or
enforceability of any Loan Documents or any material term or condition
contained therein; (ii) is or could reasonably be expected to be material
and adverse to the condition (financial or otherwise), business assets,
operations, or property of the Borrower; or (iii) materially impairs or
could reasonably be expected to materially impair the ability of the Borrower
to perform the obligations under the Loan Documents.


 


“Maturity Date” means July 1, 2010.


 


“Maximum Rate” means the rate set forth in Section 2.01(b).


 


“Monthly Payment Date” means the first day of each calendar
month.


 


7





















 


“Mortgage” means that certain Mortgage of even date herewith,
pursuant to which a mortgage interest shall be given by the Borrower to the
Lender in the Real Property to secure payment to the Lender of the Loan
Obligations.


 


“Net Worth” means the excess of total assets over total
liabilities, total assets and total liabilities each to be determined in
accordance with generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred to in Section 4.01(e) for
the Borrower.


 


“Net Income” means income after all operating expenses including
salaries and bonuses.


 


“Note/Notes” means and includes the Term Notes, Convertible Note
and the Revolving Note evidencing the loans being made hereunder.


 


“Ordinary Trade Payable Dispute” means trade accounts payable,
in an aggregate amount  not in excess of $50,000.00 with
respect to the Borrower, with respect to which: 
(a) there exists a bona  fide dispute between Borrower
and the vendor; (b) the Borrower is contesting the same in good faith by
appropriate proceedings; and (c) the Borrower has established appropriate
reserves on its financial statements.


 


“Outstanding Credit” means, at any time of determination, the
aggregate amount of Advances then outstanding.


 


“Outstanding Revolving Advances” means the total Outstanding
Credit under the Revolving Note.


 


“Owner Equity Ratio” means Tangible Net Worth divided by total
assets, measured annually at the end of each fiscal year.


 


“Participation Fee” shall have the meaning specified in Section 2.10.


 


“Person” means any individual, corporation, business trust,
association, company, partnership, joint venture, governmental authority, or
other entity.


 


“Personal Property” means all buildings, structures, equipment,
fixtures, improvements, building supplies and materials and personal property
now or hereafter attached to, located in, placed in or necessary to the use of
the improvements on the Real Property including, but without being limited to,
all machinery, fixtures, equipment, furnishings, and appliances, as well as all
renewals, replacements, additions, and substitutes thereof, and all products
and proceeds thereof, and including without limitation all accounts,
instruments, chattel paper, other rights to payment, money, deposit accounts,
insurance proceeds and general intangibles of the Borrower, whether now owned
or hereafter acquired.


 


8





















 


“Plans and Specifications” means the final plans and
specifications for the construction of the Project, to be prepared by the General
Contractor, and approved by the Lender, and all amendments and modifications
thereof approved by Lender.


 


“Project” means any and all buildings, structures, fixtures, and
other improvements made to the Real Property and other uses identified in the
Project Sources and Uses Statement as part of the acquisition and construction
of an ethanol production facility in Monroe, Wisconsin, for which the Loans to
Borrower are being made hereunder.


 


“Project Costs” means the total of all costs of acquiring the Real
Property and constructing the Project as identified in the Project Sources and
Uses Statement, together with all Loan and Carrying Charges.


 


“Project Sources and Uses Statement” means the statement
attached hereto as Exhibit B which identifies the sources and uses of
monies in a total amount of $                             
related to the Project.


 


“Real Property” means that real property located in the County
of Green, State of Wisconsin, owned by the Borrower, upon which the Project is
to be constructed and which is described in Schedule 3.01(c).


 


“Reimbursement Obligation” means the obligation of the Borrowers
to reimburse the Lender for any demand for payment or drawing under a Letter of
Credit.


 


“Related Documents” means and includes without limitation all
promissory notes, credit agreements, loan agreements, guaranties, security
agreements, mortgages, deeds of trust, assignments and all other instruments,
agreements and documents, whether now or hereafter existing, executed in
connection with the Indebtedness.


 


“Request for Advance” has the meaning specified in Section 2.07(a).


 


“Revolving Advance” means an advance under the Revolving Note.


 


“Revolving Loan” means the loan from the Lender to the Borrower
in the amount of $9,000,000.00 and pursuant to the terms and conditions
provided for in Sections 2.06 and 2.07, below.


 


“Revolving Note” means that certain promissory note to be executed
and delivered to the Lender by the Borrower on the Closing Date in the amount
of $9,000,000.00.


 


“SARA” means the Superfund Amendment
and Reauthorizations Act of 1986, as amended.


 


“Security Agreement” means and includes, without limitation, any
agreements, promises, covenants, arrangements, understandings, or other
agreements, whether created by law,


 


9





















 


contract, or otherwise, which evidence, govern, represent, or create a
Security Interest, as the same has been and may hereafter be amended or
otherwise modified.


 


“Security Interest” means and includes without limitation any
type of collateral security, whether in the form of a lien, charge, mortgage,
assignment of rents, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.


 


“Subordinated Debt” means all Debt held by:  (i) the City of Monroe, Wisconsin; and (ii) debt
owed Wisconsin Power and Light Company or its agencies.


 


“Sworn Construction Statement” means a sworn construction
statement, sworn to by the Borrower and the General Contractor, and of a form
and substance acceptable to the Lender, a sample of which is attached hereto as
Exhibit C.


 


“Tangible Net Worth” means the excess of total assets over total
liabilities except Subordinated Debt, total assets and total liabilities each
to be determined in accordance with generally accepted accounting principles consistent
with those applied in the preparation of the financial statements referred to
in Section 5.01(c) for the Borrower, excluding, however, from the
determination of total assets:  (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, and other similar intangibles; (ii) treasury stock; (iii) securities
which are not readily marketable; (iv) cash held in a sinking or other
analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Debt; (v) any write-up in the book value of
any asset resulting from a revaluation thereof subsequent to the Closing Date; (vi) amortized
start-up costs; and (vii) any items not included in clauses (i) through (vi) above
which are treated as intangibles in conformity with generally accepted
accounting principles.


 


“Tax Distributions” has the meaning specified in Section 5.02(b).


 


“Term Loans” means the loans from the Lender to the Borrower in
the amount of $15,491,086.94 and pursuant to the terms and conditions provided
for in Section 2.01, below.


 


“Term Notes” means those certain promissory notes of even date
herewith executed and delivered to the Lender by the Borrower in the following
amounts:  (i) $5,891,086.94 and (ii) $9,600,000.00


 


“Title Company” means Old Republic National Title Insurance
Company, a Minnesota corporation, and its successors
and assigns.


 


10





















 


“Title Insurance” means a lender’s title insurance policy, in
form and substance satisfactory to the Lender and containing no exceptions
(printed or otherwise) which are unacceptable to Lender, issued by a title
insurer acceptable to the Lender, in the face amount of the Note, insuring that
Lender has a first and prior lien on the Real Property and containing such
endorsements as Lender may require.


 


“Unused Commitment Fee” shall have the meaning specified in Section 2.06(c).


 


“Working Capital” means current assets of the Borrower less
current liabilities of the Borrower.


 


Section 1.02.                             Accounting Matters.  All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, except as otherwise stated herein.  To enable the ready and consistent
determination of compliance by the Borrower with its obligations under this
Agreement, the Borrower will not change the manner in which either the last day
of its fiscal year or the last days of the first three fiscal quarters of its
fiscal years is calculated.


 


Section 1.03.                             Construction.  Wherever herein the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.  The headings, captions or arrangements used
in any of the Loan Documents are, unless specified otherwise, for convenience
only and shall not be deemed to limit, amplify or modify the terms of the Loan
Documents, nor affect the meaning thereof.


 


ARTICLE II


AMOUNTS AND TERMS OF THE TERM LOANS


 


Section 2.01.                             Term Loan.  Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties set forth in this Agreement, the Lender agrees to lend to Borrower
and Borrower agrees to borrow from Lender $15,491,086.94 to refinance existing obligations
owed to 1st National Bank of Omaha, a national banking  association established in Omaha, Nebraska.  Said amount shall be loaned pursuant to the
terms and conditions set forth in this Agreement.


 


(a)                                  Term Notes.  The Term Loan shall be evidence by two
promissory notes in the following amounts: 
(i) $5,891,086.94; and (ii)  $9,600,000.00.


 


(b)                                 Interest Rate.  Subject to the provisions of Section 2.09
and 2.11, the Term Loan shall bear interest at rates as stated in the
promissory notes.  The computation of
interest, amortization, maturity and other terms and conditions of the Term
Loan shall be as provided in the promissory notes, provided, however, in no
event shall the applicable rate exceed the maximum nonusurious interest rate,
if any, that at any time, or from time to time, may be contracted for, taken,
reserved, charged, or received under applicable state or federal laws (the “Maximum
Rate”).


 


11





















 


(c)                                  Term Loan Term.  The Term Loan term shall run for a period
beginning on the date of this Agreement and ending on the Maturity Date.


 


Section 2.02.                             Convertible Loan.


 


(a)                                  Convertible Loan.  Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties set forth in
this Agreement, the Lender agrees to lend to Borrower and Borrower agrees to
borrow from Lender $20,000,000.00.  Said
amount shall be loaned pursuant to the terms and conditions set forth in this
Agreement.


 


(b)                                 Advances.  The Convertible Loan shall be funded by
Advances on the Convertible Note to be used for the payment of Project Costs.


 


(c)                                  Interest Rate.  Subject to the provisions of Section 2.09
and 2.11, the Convertible Loan shall bear interest at a rate equal to the LIBOR
Rate plus 325 basis points.  The
computation of interest, amortization, maturity and other terms and conditions
of the Convertible Loan shall be as provided in the Convertible Note, provided,
however, in no event shall the applicable rate exceed the Maximum Rate.


 


(d)                                 Convertible Loan Term.  The Convertible Loan term shall run for a
period beginning on the date of this Agreement and ending on the Conversion
Date.  On the Conversion Date, the Convertible
Loan shall become fully due and payable, except for that part, if any, of the Convertible
Loan which is converted into a Term Loan pursuant to the terms of this
Agreement.


 


(e)                                  Conversion to Term Loan.  The Lender agrees to convert the Convertible
Loan into a Term Loan, provided all of the terms, conditions, warranties,
representations, and covenants of the Borrower set forth in this Agreement are
satisfied. The computation of interest, amortization, maturity and other terms
and conditions of the Term Loan, upon conversion, shall be as provided in the Convertible
Note.


 


Section 2.03.                             Disbursement of Convertible Loan.


 


(a)                                  Deposit Account.  Disbursements of the Convertible Loan will be
made by the Lender in the manner provided in the Disbursing Agreement.  Subject to Section 2.02(b) below,
all disbursements will be made by  wire
transferring such funds to the deposit account of the Disbursing Agent in the
amount of each Draw Request which is approved pursuant to the Disbursing
Agreement.  All Convertible Loan funds
will be considered to have been advanced to and received by the Borrower upon,
and interest on such funds will be payable by the Borrower from and after,
their deposit in such deposit account.


 


(b)                                 Lender’s Application of Loan Proceeds.   Notwithstanding the provisions of Section 2.02(a),
above, the Lender may elect, upon ten (10) days’ notice to the Borrower,
to use the Convertible Loan funds to pay, as and when due, any Convertible Loan
fees owing to Lender, interest on the Construction Loan, release charges under
prior mortgages on the Property, and legal


 


12





















 


fees and
disbursements of the Lender’s attorneys which are payable by the Borrower,
unless Borrower causes such amount(s) to be paid within said ten (10) days.  Such payments may be made, at the option of
the Lender, by debiting or charging the Convertible Loan funds in the amount of
such payments.


 


(c)                                  Cost Information.  All disbursements will be based upon a
detailed breakdown of the Project Costs. 
The Sworn Construction Statement, as approved by the Lender, is attached
as Exhibit C to this Agreement.  In
the event that the Borrower becomes aware of any change in the approved Project
Costs, which would increase the total cost in excess of $25,000.00 above the
amount shown on the attached Sworn Construction Statement, the Borrower shall
immediately notify the Lender in writing and promptly submit to the Lender for
its approval a revised Sworn Construction Statement.  No further disbursements need be made by the Disbursing
Agent unless and until the revised Sworn Construction Statement is
approved.  The Lender reserves the right
to approve or disapprove any revised Sworn Construction Statement in its
reasonable discretion.


 


(d)                                 Loan in Balance, Deposit of Funds by Borrower.  The Borrower shall keep the Loan in balance
as provided in this Section.  If the
Lender at any time reasonably determines that the amount of the undisbursed
Loan proceeds will not be sufficient fully to pay for all costs required to
complete the construction of the Project in accordance with the approved Plans
and Specifications and for all Project Costs to be incurred by the Borrower,
whether such deficiency is attributable to changes in the work of construction
or in the Plans and Specifications or to any other cause, the Lender may make
written demand on the Borrower to deposit in an escrow fund to be established
with the Lender an amount equal to the amount of the shortage reasonably
determined by the Lender. The Borrower shall then deposit the required funds
with the Lender within ten (10) days after the date of the Lender’s
written demand.  No further disbursements
shall be made by the Disbursing Agent until those funds are deposited by the
Borrower in the escrow fund.  Whenever
the Lender has any such funds on deposit in such escrow fund, it shall make all
future advances for Project Costs from the escrow fund before making any
further advances under the Loan.


 


(e)                                  Additional Security.  The Borrower irrevocably assigns to the
Lender and grants to the Lender a security interest in, as additional security
for the performance of the Borrower’s obligations under this Agreement and the
Related Documents, its interest in all funds held by the Disbursing Agent,
whether or not disbursed, all funds deposited by the Borrower with the Lender
under this Agreement, all governmental permits obtained for the lawful
construction of the Project, and all reserves, deferred payments, deposits,
refunds, cost savings, and payments of any kind relating to the construction of
the Project.  Upon any default of the
Borrower, the Lender may use any of the foregoing for any purpose for which the
Borrower could have used them under this Agreement or with respect to the
construction or financing of the Project. 
The Lender will also have all other rights and remedies as to any of the
foregoing which are provided under applicable law or in equity.


 


13





















 


(f)                                    Conditions Precedent to All Advances.  The Lender’s obligation to make each Advance
under the Convertible Note shall be subject to the terms, conditions and
covenants set forth in this Agreement, including, without limitation, the
following further conditions precedent:


 


(i)                                     Loan in Balance.  The Loan is in balance, as required by the
provisions of Section 2.03(d), above;


 


(ii)                                  Draw
Request.  The Borrower has submitted
to the Lender and the Disbursing Agent a Draw Request for each such Advance,
which such Draw Request shall comply with the requirements contained in this
Agreement and the Disbursing Agreement;


 


(iii)                               Compliance
With Disbursing Agreement.  All of the terms and conditions of the
Disbursing Agreement have been satisfied with respect to each such Advance;


 


(iv)                              Government
Action.  No license, permit,
permission or authority necessary for the construction of the Project has been
revoked or challenged by or before any Governmental Authority;


 


(v)                                 Sworn
Construction Statement. If required by the Lender, the Borrower shall
furnish to the Lender an updated Sworn Construction Statement setting forth the
Contractor(s) providing services or materials with respect to specific portions
of the construction of the Project and setting forth the amounts actually
incurred and paid, or to be incurred, in completing construction of the
Project.  Such updated Sworn Construction
Statement shall be sworn to by the Borrower and the General Contractor to be a
true, complete and accurate account of all costs actually incurred and an
accurate estimate of all costs to be incurred in the future;


 


(vi)                              No
Defaults.  The Borrower is not in
default under the terms of this Agreement, the Related Documents or any other
agreement to which the Borrower is a party and which relates to the construction
or operation of the Project;


 


(viii)                        Marketing
Agreements. The Borrower has executed marketing agreements for all ethanol
and DDGS to be produced at the Project and provided Lender with collateral
assignments of all such agreements in form and content which is satisfactory to
Lender and its counsel and acknowledged by the non-Borrower party to all such
agreements;


 


(g)                                 Suspension of Construction.  If the Lender in reasonably good faith
determines that any work or materials do not materially conform to the approved
Plans and Specifications or sound building practice, or otherwise materially departs
from any of the requirements of this Agreement, the Lender may require the work
to be stopped and withhold disbursements until the matter is corrected. In such
event, the Borrower will promptly correct the work to the Lender’s reasonable satisfaction.  Provided Lender’s actions were reasonable, in
good faith, and the work or materials did not conform to the approved Plans and
Specifications or sound building practice, no such action by the Lender will
affect the Borrower’s obligation to complete the Project on or before the
Completion Date.


 


14





















 


(h)                                 Inspections.  The Borrower  shall be responsible for making inspections of
the Project during the course of construction and shall determine to their own
satisfaction that the work done or materials supplied by the Contractors to
whom payment is to be made out of each Advance has been properly done or
supplied in accordance with the applicable contracts with such
Contractors.  If any work done or
materials in excess of $25,000.00 supplied by a Contractor are not satisfactory
to the Borrower, the Borrower will immediately notify the Lender in writing of
such fact.  It is expressly understood
and agreed that the Lender or its authorized representative may conduct such
inspections of the Project as it may deem necessary for the protection of the
Lender’s interest, and, specifically, an architectural or engineering firm
acceptable to the Lender may, at the option of the Lender and at the expense of
the Borrower, conduct such periodic inspections of the Project, prepare such
written progress reports during the period of construction, prepare such
written reports upon completion of the Project and sign such Draw Requests, as
the Lender may request, provided that no inspection shall unreasonably delay
progress on the Project.  Any inspections
which may be made of the Project by the Lender or its representative will be
made, and all certificates issued by the Lender’s representative will be
issued, solely for the benefit and protection of the Lender, and that Borrower
will not rely thereon.  The Lender is
under no duty to supervise or inspect construction or examine any books and
records.  Any inspection or examination
by the Lender is for the sole purpose of protecting the Lender’s security and
preserving the Lender’s rights under this Agreement.  No default of the Borrower will be waived by
any inspection by the Lender.  In no
event will any inspection by the 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.


 


(i)                                     No Waiver.  Any waiver by the Lender of any condition of
disbursement must be expressly made in writing. 
The making of a disbursement prior to fulfillment of one or more
conditions thereof shall not be construed as a waiver of such conditions, and
the Lender reserves the right to require their fulfillment prior to making any
subsequent disbursements.


 


Section 2.04.                             Conversion
of Convertible Loan Into Term Loan.   Pursuant to the terms and conditions contained
in this Agreement, the Convertible Loan may be converted into a Term Loan.


 


(a)                                  Conditions Precedent.  In addition to the terms and conditions of
disbursement set forth in this Agreement and as incorporated from the
Disbursing Agreement, the Lender shall not be obligated to convert any part of
the Convertible Loan into a Term Loan unless and until:


 


(i)                                     Amount
of Term Loan.  The maximum amount of
the Convertible Loan which is converted to a Term Loan shall be $20,000,000.00;


 


(ii)                                  Convertible
Loan Exceeds Term  Loan.  In the event that the amount of the Convertible
Loan advanced by Lender exceeds the amount of the Term Loan to be made by the
Lender, the Borrower shall immediately repay the amount of the Convertible Loan
which is not being converted into a Term Loan; and


 


15





















 


(b)                                 Conversion to Fixed Rate Loan.  On
the Conversion Date, the Borrower shall have the right to convert all or any
part of the Convertible Loan into a fixed rate loan, with the consent of the
Lender, which shall bear interest at a rate equal to the most recent ten-year
fixed rate bonds sold by the Federal Farm Credit Banks Funding Corporation
prior to the Conversion 
Date, plus 225 basis points.


 


Section 2.05.                             Excess Cash Flow.   In addition to all other payments of
principal and interest required under this Agreement or the Notes, the Borrower
shall annually remit to Lender an amount equal to 25% of the Borrower’s Excess
Cash Flow on or before April 30th of the succeeding fiscal year (the “Excess
Cash Flow Payment”).  Such payment shall
be applied to the Term Loans or the Convertible Loan at the Lender’s discretion.  Notwithstanding the foregoing, the Excess
Cash Flow Payment is not required when the Borrower’s Owner Equity at each
fiscal year end is greater than or equal to 50%.


 


Section 2.06.                             Revolving Loan.


 


(a)                                  Revolving Loan.  The Lender agrees, on the terms and
conditions set forth in this Agreement, to extend credit to the Borrower from
time to time during the period from the Closing Date through and including the
Maturity Date by making loans to the Borrower on a revolving basis from time to
time provided, however, that at no time shall
the sum of the Outstanding Revolving Advances plus the outstanding Letters of
Credit exceed $9,000,000.00.


 


(b)                                 Interest Rate.  Subject to the provisions of Section 2.09
and 2.11, the Revolving Loan shall bear interest at a rate equal to the LIBOR
Rate plus 300 basis points.  The
computation of interest, amortization, maturity and other terms and conditions
of the Revolving Loan shall be as provided in the Revolving Note, provided,
however, in no event shall the applicable rate exceed the Maximum Rate.


 


(c)                                  Unused Commitment Fee.  In addition
to the commitment fee payable on the Closing Date, Borrower agrees to pay to
the Lender an Unused Commitment Fee on the average daily unused portion of such
Lender’s Commitment under the Revolving Loan from the Closing
 Date until the Maturity Date at
the rate of 0.25% per annum, payable in arrears in quarterly installments
payable on the first day of each third month after the Conversion Date.


 


Section 2.07.                             Making the Revolving Advances.


 


(a)                                  Revolving Advances.  Each Revolving Advance shall be made, on
notice from the Borrower (a “Request for Advance”)
to the Lender delivered before 12:00 Noon (Minneapolis, Minnesota time) on
a Business Day which is at least three (3) Business Days prior to the date
of such Revolving Advance specifying the amount of such Revolving Advance,  provided that, Lender will not be obligated
to make Revolving Advance while an Event of Default exists or if the interest
rate for such LIBOR Rate Accounts would exceed the Maximum Rate.  Any Request for Advance applicable to a
Revolving Advance received after 12:00 Noon (Minneapolis, Minnesota time)
shall be deemed to have been received and be effective on the next Business
Day.  The amount


 


16





















 


so requested from the Lender shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by:  (i) depositing the same, in same day
funds, in an account of the Borrower; or (ii) wire transferring such funds
to a Person or Persons designated by the Borrower in writing.  To the extent that a Revolving Advance is
used for payment of Project Costs, the disbursement of the advance will be
subject to the same conditions as an advance under the Convertible Loan as
provided in Section 2.03 of this Loan Agreement.


 


(b)                                 Requests for Advances Irrevocable.  Each Request for Advance shall be irrevocable
and binding on the Borrower and the Borrower shall indemnify the Lender against
any loss or expense it may incur as a result of any failure to borrow any
Advance after a Request for Advance (including any failure resulting from the
failure to fulfill on or before the date specified for such Advance the
applicable conditions set forth in Article III of this Agreement),
including, without limitation, any loss (including loss of anticipated profits)
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund such Advance when such Advance, as a
result of such failure, is not made on such date.


 


(c)                                  Minimum Amounts.  Each Revolving Advance shall be in a minimum
amount equal to $10,000.00.


 


(d)                                 Use of Proceeds.  The proceeds of the Revolving Advances shall
be used by the Borrower to finance its working capital requirements in the
ordinary course of business and to fund Project Costs.


 


Section 2.08.                             Letters of Credit. 


 


(a)                                  Commitment to Issue.  The Borrower may request Revolving Advances
by the Lender, and the Lender, subject to the terms and conditions of this
Agreement, may, in its sole discretion, issue letters of credit for any
Borrower’s account (such letters of credit, being hereinafter referred to
collectively as the “Letters of Credit”);
provided, however, that:


 


(i)                                     the aggregate amount of outstanding Letter of Credit
Liabilities shall not at any time exceed the amount of $1,000,000.00;


 


(ii)                                  the sum of the outstanding Letters of Credit plus the
Outstanding Revolving Advances shall not at any time exceed the Revolving Loan
amount.


 


(b)                                 Letter of Credit Request Procedure.  The Borrower shall give the Lender
irrevocable prior notice (effective upon receipt) on or before 3:00 P.M.
(Minneapolis, Minnesota time) on the Business Day three Business Days prior to
the date of the requested issuance of a Letter of Credit specifying the
requested amount, expiry date and issuance date of each Letter of Credit to be
issued and the nature of the transactions to be supported thereby.  Any such notice received after 3:00 P.M.
(Minneapolis, Minnesota time) on a Business Day shall be deemed to have been
received and be effective on the next Business Day.  Each Letter of Credit shall be in the form of
Exhibit E, have an expiration date that occurs on or before the Maturity
Date, shall be payable in U.S. dollars,


 


17





















 


must be satisfactory in form and substance to the Lender, and shall be
issued pursuant to such documentation as the Lender may require, including,
without limitation, the Lender’s standard form letter of credit request and
reimbursement agreement; provided that,
in the event of any conflict between the terms of such agreement and the other
Loan Documents, the terms of the other Loan Documents shall control.


 


(c)                                  Letter of Credit Fees.  The Borrower shall pay to the Lender for (i) all
fees, costs, and expenses of the Lender arising in connection with any Letter
of Credit, including the Lender’s customary fees for amendments, transfers, and
drawings on Letters of Credit and (ii) on the date of the issuance of the
Letter of Credit, and at the anniversary date of issuance of such Letter of
Credit, an issuance fee equal to one and one-half (1.5%) percent, on an
annualized basis, of the maximum amount available to be drawn under the Letter
of Credit.


 


(d)                                 Funding of Drawings.  Upon receipt from the beneficiary of any
Letter of Credit of any demand for payment or other drawing under such Letter
of Credit, the Issuer shall promptly notify the Borrower as to the amount to be
paid as a result of such demand or drawing and the respective payment
date.  Any notice pursuant to the
forgoing sentence shall specify the amount to be paid as a result of such
demand or drawing and the respective payment date.


 


(e)                                  Reimbursements.  After receipt of the notice delivered
pursuant to clause (d) of this Section 2.08 with respect to a
Letter of Credit, the Borrower shall be irrevocably and unconditionally
obligated to reimburse the Lender for any amounts paid by the Lender upon any
demand for payment or drawing under the applicable Letter of Credit, without
presentment, demand, protest, or other formalities of any kind other than the
notice required by clause (d) of this Section 2.08.  Such  reimbursement shall occur no later
than 3:00 P.M. (Minneapolis, Minnesota time) on the date of payment under
the applicable Letter of Credit if the notice under clause (d) of
this Section 2.08 is received by 2:00 P.M. (Minneapolis, Minnesota
time) on such date or by 11:00 A.M. (Minneapolis, Minnesota time) on the
next Business Day, if such notice is received after 2:00 P.M.
(Minneapolis, Minnesota time).  All
payments on the Reimbursement Obligations (including any interest earned
thereon) shall be made to the Lender for the account of the Lender in U.S.
dollars and in immediately available funds, without set-off, deduction, or
counterclaim.


 


(f)                                    Reimbursement Obligations
Absolute.  The Reimbursement Obligations of the
Borrower under this Agreement shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
the Loan Documents under all circumstances whatsoever and the Borrower hereby
waives any defense to the payment of the Reimbursement Obligations based on any
circumstance whatsoever, including, without limitation, in any case, the
following circumstances:  (i) any
lack of validity or enforceability of any Letter of Credit or any other Loan
Document; (ii) any amendment or waiver of or any consent to departure from
any Loan Document; (iii) the existence of any claim, set-off,
counterclaim, defense, or other rights which any Borrower or any other Person
may have at any time against any beneficiary of any Letter of Credit, the
Lender or any other Person, whether in connection with any Loan Document or any
unrelated transaction; (iv) any statement, draft, or other documentation
presented under any Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being


 


18





















 


untrue or inaccurate in any respect whatsoever; (v) payment by the
Lender under any Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit; or (vi) any
other circumstance whatsoever, whether or not similar to any of the foregoing; provided that Reimbursement Obligations with respect to a
Letter of Credit may be subject to avoidance by a Borrower if the Borrower
proves in a final non-appealable judgment that it was damaged and that such
damage arose directly from the Lender’s willful misconduct or gross negligence
in determining whether the documentation presented under the Letter of Credit
in question complied with the terms thereof.


 


(g)                                 Issuer Responsibility.  Borrower assumes all risks of the acts or
omissions of any beneficiary of any Letter of Credit with respect to its use of
such Letter of Credit.  Neither the
Lender, nor any of its respective officers or directors shall have any
responsibility or liability to the Borrower or any other Person for:  (a) the failure of any draft to bear
adequate reference to any Letter of Credit, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents (other than
the Letter of Credit) apart from drafts as required by the terms of any Letter
of Credit, or the failure of any Person to note the amount of any instrument on
any Letter of Credit, each of which requirements, if contained in any Letter of
Credit itself, it is agreed may be waived by the Lender; (b) errors,
omissions, interruptions, or delays in transmission or delivery of any
messages; (c) the validity, sufficiency, or genuineness of any draft or
other document, or any endorsement(s) thereon, even if any such draft, document
or endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent, or forged or any statement therein is untrue or
inaccurate in any respect; (d) the payment by the Lender to the
beneficiary of any Letter of Credit against presentation of any draft or other
document that does not comply with the terms of the Letter of Credit; or (e) any
other circumstance whatsoever in making or failing to make any payment under a
Letter of Credit; provided that Borrower will not be liable pursuant to this section 2.08(g) for
the willful misconduct of the Lender. 
The Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.


 


Section 2.09.                             Adjustments
to Interest Rate.    Notwithstanding any other provision of this
Agreement or the Related Documents, the rate of interest under the Term Loan,
the Construction  Loan or the Revolving
Loan shall vary according to the following schedule should the Owner’s
Equity in the Borrower achieve the levels set forth below:


 


	
  Owner’s Equity

  	
   

  	
  Interest
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 39.99%

  	
   

  	
  Applicable LIBOR Rate plus 325 basis points

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  40.00%—59.99%

  	
   

  	
  Applicable LIBOR Rate plus 300 basis points

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater Than 60.00%

  	
   

  	
  Applicable LIBOR Rate plus 275 basis points

  	
   

  



 


19





















 


Upon delivery of the monthly financial statements and the Compliance
Certificate pursuant to Section 5.01(c)(iii) for
each month that corresponds with each month end, the rate of interest for any month
shall automatically be adjusted in accordance with the Owner’s Equity set forth
therein and the rates set forth above. 
Such automatic adjustment to the rate of interest shall take effect as
of the first Business Day of the month in which the Lender received the related
Compliance Certificate.  The term “Adjustment Date” shall mean each such Business Day when such
rates, margins or fees change pursuant to the immediately prior sentence or the
next following sentence.  If the Borrower
fails to deliver such Compliance Certificate which so sets forth the Owner’s
Equity within the period of time required by Section 5.01(c)(iii) hereof
or if any Event of Default occurs and is continuing, the rate of interest shall
automatically be adjusted to a rate equal to the applicable LIBOR Rate plus 325
basis points, plus the default rate adjustment provide in Section 2.11,
such automatic adjustments:  (a) to
take effect as of the first Business Day after the last day on which the
Borrower were required to deliver the applicable Compliance Certificate in
accordance with Section 5.01(c)(ii) hereof or in the case of an Event
of Default, on the date the written notice is given to the Borrower; and (b) to
remain in effect until subsequently adjusted in accordance herewith upon the delivery
of such Compliance Certificate or, in the case of an Event of Default, when
such Event of Default has been cured to the satisfaction of the Lender.


 


Section 2.10.                             Participation Fees.  The Borrower agrees to pay to the Lender on
the Closing Date a Participation Fee of  $150,000.00.


 


Section 2.11.                             Default
Interest.  Upon the
occurrence of an Event of Default, all past due principal and, to the extent
permitted by applicable law, interest, fees, and other amounts owing hereunder,
shall bear interest, from the date of such Event of Default until the date the Lender,
in writing, acknowledge that such Event of Default is waived or cured or all Loan
Obligations are paid in full, at the Default Rate.  The term “Default Rate”,
as used herein, means the lesser of:  (a) the
Maximum Rate (which shall mean the maximum nonusurious interest rate, if any,
at any time, or from time to time, that may be contracted for, taken, reserved,
charged or received under applicable state or federal laws); or (b) the
rate per annum which shall from day-to-day be equal to two percent (2%) in
excess of the then applicable rate of interest. 
Interest payable at the Default Rate shall be payable from time to time
on demand or, if not sooner demanded, on the last day of each calendar month.


 


Section 2.12.                             Prepayment of Term Loan.  The Borrower may, by
notice to the Lender, prepay the outstanding amount of the Term Loan in whole
or in part with accrued interest to the date of such prepayment on the amount
prepaid, without penalty or premium, except as provided in this Section 2.12.  In the event any one or all of the Loans are
converted to a fixed rate loan, the Borrower shall pay the prepayment penalty
applicable to that fixed interest rate, if any.


 


Notwithstanding the foregoing, no prepayment fee shall be required if
such prepayment is made pursuant to Section 2.05 of this Agreement.


 


20





















 


Section 2.13.                             Changes in Law Rendering Certain LIBOR Rate Loans
Unlawful.  In the
event that any change in any applicable law (including the adoption of any new
applicable law) or any change in the interpretation of any applicable law by
any judicial, governmental or other regulatory body charged with the
interpretation, implementation or administration thereof, should make it (or in
the good-faith judgment of the Lender should raise a substantial question as to
whether it is) unlawful for the Lender to make, maintain or fund LIBOR Rate
Loans, then:  (a) the Lender shall
promptly notify each of the other parties hereto; and (b) the obligation
of the Lender to make LIBOR rate loans of such type shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness.  During the period of any
suspension, Lender shall make loans to Borrower that are deemed lawful and that
as closely as possible reflect the terms of this Agreement.


 


Section 2.14.                             Payments and Computations.


 


(a)                                  Method of Payment.  Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by
the Borrower under the Loan Documents shall be made to the Lender in U.S.
dollars and in immediately available funds, without set-off, deduction, or
counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next
succeeding Business Day).  The Borrower
shall, at the time of making each such payment, specify to the Lender the sums
payable under the Loan Documents to which such payment is to be applied and in
the event that the Borrower fail to so specify or if an Event of Default
exists, the Lender  may
apply such payment and any proceeds of any Collateral to the Loan Obligations
in such order and manner as it may elect in its sole discretion, subject to Section 2.14(c).


 


(b)                                 Payments on a Non-Business Day.  Whenever any payment under any Loan Document
shall be stated to be due on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of the payment of interest and
fees, as the case may be.


 


(c)                                  Proceeds of Collateral.  All proceeds received by the Lender from the
sale or other liquidation of the Collateral when an Event of Default exists
shall first be applied as payment of the accrued and unpaid fees and expenses
of the Lender hereunder, including, without limitation, under Section 7.04
and then to all other unpaid or unreimbursed Loan Obligations (including
reasonable attorneys’ fees and expenses) owing to the Lender and then any
remaining amount of such proceeds shall be applied to the unpaid amounts of
Loan Obligations, until all the Loan Obligations have been paid and satisfied
in full or cash collateralized.  After
all the Loan Obligations (including without limitation, all contingent Loan
Obligations) have been paid and satisfied in full, all Commitments terminated
and all other obligations of the Lender to the Borrower otherwise satisfied,
any proceeds of Collateral shall be delivered to the Person entitled thereto as
directed by the Borrower or as otherwise determined by applicable law or
applicable court order.


 


(d)                                 Computations.  Except as expressly provided otherwise
herein, all computations of interest and fees shall be made on the basis of
actual number of days lapsed over a


 


21





















 


year of 365 or
366 days, as appropriate.  Interest shall
accrue from and include the date of borrowing, but exclude the date of payment.


 


Section 2.15.                             Maximum Amount Limitation.  Anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, Borrower shall not be required to
pay unearned interest on any Note or any of the Loan Obligations, or ever be
required to pay interest on any Note or any of the Loan Obligations at a rate
in excess of the Maximum Rate, if any. 
If the effective rate of interest which would otherwise be payable under
this Agreement, any Note or any of the other Loan Documents would exceed the
Maximum Rate, if any, then the rate of interest which would otherwise be
contracted for, charged, or received under this Agreement, any Note or any of
the other Loan Documents shall be reduced to the Maximum Rate, if any.  If any unearned interest or discount or
property that is deemed to constitute interest (including, without limitation,
to the extent that any of the fees payable by Borrower for the Loan Obligations
to the Lender under this Agreement, any Note, or any of the other Loan
Documents are deemed to constitute interest) is contracted for, charged, or
received in excess of the Maximum Rate, if any, then such interest in excess of
the Maximum Rate shall be deemed a mistake and canceled, shall not be collected
or collectible, and if paid nonetheless, shall, at the option of the holder of
such Note, be either refunded to the Borrower, or credited on the principal of
such Note.  It is further agreed that,
without limitation of the foregoing and to the extent permitted by applicable
law, all calculations of the rate of interest or discount contracted for,
charged or received by the Lender under its Note, or under any of the Loan
Documents, that are made for the purpose of determining whether such rate exceeds
the Maximum Rate applicable to the Lender, if any, shall be made, to the extent
permitted by applicable laws (now or hereafter enacted), by amortizing,
prorating and spreading during the period of the full terms of the Advances
evidenced by the Notes, and any renewals thereof all interest at any time
contracted for, charged or received by Lender in connection therewith.  This Section 2.15 shall control every
other provision of all agreements among the parties to this Agreement
pertaining to the transactions contemplated by or contained in the Loan
Documents, and the terms of this Section 2.15 shall be deemed to be
incorporated in every Loan Document and communication related thereto.


 


Section 2.16.                             Lender Records.  All advances and all payments or prepayments
made thereunder on account of principal or interest may be evidenced by the
Lender in accordance with its usual practice in an account or accounts
evidencing such advances and all payments or prepayments thereunder from time
to time and the amounts of principal and interest payable and paid from time to
time thereunder; in any legal action or proceeding in respect of the Notes, the
entries made in such account or accounts shall be prima  facie
evidence of the existence and amounts of all advances and all payments or
prepayments made thereunder on account of principal or interest.  Lender shall provide monthly statements of
such entries to Borrower for the purpose of confirming the accuracy of such
entries.


 


Section 2.17.                             Loan Payments.  During the continuance of an Event of
Default, the Lender may deduct any obligations due or any other amounts due and
payable by the Borrower under the Loan Documents from any accounts maintained
with the Lender.


 


22





















 


Section 2.18.                             Purchase of Equity Interests in AgStar Financial
Services, PCA. 
Besides (and not in lieu of) the other amounts payable by Borrower under
this Agreement, Borrower shall purchase $1,000.00 of equity interests in AgStar
Financial Services, PCA.  The purchase
price for the equity interests shall be payable in full on or prior to the date
hereof.  Such purchases of equity
interests shall comply with AgStar Financial Services, PCA’s respective by-laws
and capital plans applicable to borrowers generally.  Borrower hereby acknowledge receipt of the
following information and materials pertaining to AgStar Financial Services, PCA
prior to the execution of this Agreement: (i) copies of the by-laws of
AgStar Financial Services, PCA; (ii) a written description of the terms
and conditions under which the equity interests are issued; (iii) a copy
of the most recent annual reports of AgStar Financial Services, PCA; and (iv) if
more recent than the latest annual reports, the latest quarterly reports of
AgStar Financial Services, PCA.  AgStar
Financial Services, PCA shall possess a statutory security interest in its
equity interests.  AgStar Financial
Services, PCA reserves the right to sell participations on a non-patronage
basis.


 


Borrower acknowledges and agrees that: 
(a) only the portions of the Loans provided to Borrower by AgStar
Financial Services, PCA are entitled to patronage distributions in accordance
with the bylaws of AgStar Financial Services, PCA and its practices and
procedures; and (b) any patronage or similar payments to which Borrower is
entitled as a result of its ownership of the equity interests in AgStar
Financial Services, PCA will not be based on any of the Loans not belonging to
AgStar Financial Services, PCA or in which AgStar Financial Services, PCA has
granted a participation interest at any time.


 


Section 2.19.                             Compensation.  Upon the request of
the Lender, the Borrower shall pay to the Lender such amount or amounts as
shall be sufficient (in the reasonable opinion of the Lender) to compensate it
for any loss, cost, or expense (excluding loss of anticipated profits incurred
by it) as a result of: (i) any payment, prepayment, or conversion of a
LIBOR rate loan for any reason on a date other than the last day of the
Interest Period for such Loan; or (ii) any failure by the Borrower for any
reason (including, without limitation, the failure of any condition precedent
specified in Section 3.01 to be satisfied) to borrow, extend, or prepay a
LIBOR rate loan on the date for such borrowing, extension, or prepayment
specified in the relevant notice of borrowing, extension or prepayment under
this Agreement.


 


Such indemnification may include any amount equal to the excess, if
any, of:  (a) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed,
converted or extended, for the period from the date of such prepayment or of
such failure to borrower, convert or extend to the last day of the applicable
Interest Period (or in the case of a failure to borrow, convert or extend, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such loan as provided for herein;
over (b) the amount of interest (as reasonably determined by the Lender)
which would have accrued to the Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank LIBOR
market. The covenants of the Borrower set forth in this Section 2.19 shall
survive the repayment of the Loans and other obligations under the Loan
Documents hereunder.


 


23





















 


ARTICLE III.


CONDITIONS PRECEDENT


 


Section 3.01.                             Conditions Precedent to Funding.  The effectiveness of this Agreement and
obligations of the Lender to fund the Loans are subject to the condition
precedent that the Lender shall have received the following, in form and
substance satisfactory to the Lender:


 


(a)                                  This
Agreement, duly executed by the Borrower and the Lender;


 


(b)                                 The
Notes, duly executed by the Borrower;


 


(c)                                  The
Mortgage, fully executed and notarized, to secure the Loans encumbering on a
first Lien basis the fee interest and/or leasehold interest of the Borrower in
the Real Property and the fixtures thereon described in Schedule 3.01(c);


 


(d)                                 A
Security Agreement duly executed by the Borrower and in a form as provided by
the Lender by which security agreement the Lender is granted a security
interest by the Borrower in the Collateral;


 


(e)                                  A
copy of the Construction Contract(s) and a complete set of the Plans and
Specifications, together with copies of all permits and government approvals
relating to the construction and use of the Project;


 


(f)                                    An
assignment of contract for each of the Construction Contracts and the Plans and
Specifications, duly executed by the Borrower and pursuant to which the
Borrower shall have assigned to the Lender all of the Borrower’s right, title
and interest in and to each such Construction Contract, and which assignment
shall have been consented to and certified in writing by the other party(ies) to each such Construction Contract;


 


(g)                                 A
deposit account control agreement;


 


(h)                                 Copies
of all other agreements between Borrower and third parties used in the normal
operations of Borrower, including but not limited to management agreements,
marketing agreements, and corn delivery agreements;


 


(i)                                     Assignments
of the contracts between Borrower and third parties identified above, duly
executed by the Borrower and pursuant to which the Borrower shall have assigned
to the Lender all of the Borrower’s right, title and interest in and to each
such contracts, and which assignment shall have been consented to and certified
in writing by the other party(ies) to each such
contract;


 


(j)                                     Financing
Statements in form and content satisfactory to the Lender and in proper form
under the Uniform Commercial Code of all jurisdictions as may be necessary or,
in the opinion of the Lender, desirable to perfect the security interests created
by the Security Agreement;


 


24





















 


(k)                                  Copies
of UCC, tax and judgment lien search reports listing all financing statements
and other encumbrances which name the Borrower (under its present name and any
previous name) and which are filed in the jurisdictions in which the Borrower
is located, organized or maintains collateral, together with copies of such
financing statements (none of which shall cover the collateral purported to be
covered by the Security Agreement);


 


(l)                                     Evidence
that all other actions necessary or, in the opinion of the Lender, desirable to
enable the Lender to perfect and protect the security interests created by the
Security Agreement have been taken;


 


(m)                               An
ALTA mortgagee title insurance policy issued by a title insurance company
acceptable to Lender, with respect to the Real Property, assuring the Lender
that the Mortgage creates a valid and enforceable encumbrance on the Real
Property, free and clear of all defects and encumbrances except Permitted Liens
and containing:  (i) a comprehensive
endorsement (ALTA form 9); (ii) a zoning endorsement (ALTA form 3.1)
specifying an ethanol production facility as a permitted use for all of the
parcels included in the Real Property; and (iii) such endorsements as the
Lender shall reasonably require.  All
such title insurance policies shall be in form and substance reasonably
satisfactory to the Lender and shall provide for affirmative insurance and such
reinsurance as the Lender may reasonably request, all of the foregoing in form
and substance reasonably satisfactory to the Lender;


 


(n)                                 Maps
or plats of the Real Property certified to the Lender and the title insurance
company issuing the policy referred to in Subsection 3.01(n) (the “Title
Insurance Company”) in a manner reasonably satisfactory to each of the Lender
and the Title Insurance Company, dated a date reasonably satisfactory to each
of the Lender and the Title Insurance Company by an independent professional
licensed land surveyor, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey exception
contained in the applicable title policy and be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following:  (i) the locations on
such sites of all the buildings, structures and other improvements and the
established building setback lines; (ii) the lines of streets abutting the
sites and width thereof; (iii) all access and other easements appurtenant
to the sites necessary to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a
filed map, a legend relating the survey to said map;


 


(o)                                 Evidence
as to:  (i) whether any portion of
the Real Property is in an area designated by the Federal Emergency Management
Agency as having special flood or mud slide hazards (a “Flood Hazard
Property”); and (ii) if any portion of the Real Property is a Flood
Hazard Property:  (A) whether the
community in which such Real Property is located is participating in the
National


 


25





















 


Flood Insurance Program; (B) the Borrower’s written acknowledgment
of receipt of written notification from the Lender (1) as to the fact that
such Real Property is a Flood Hazard Property and (2) as to whether the
community in which each such Flood Hazard Property is located is participating
in the National Flood Insurance Program; and (C) copies of insurance
policies or certificates of insurance of the Borrower evidencing flood
insurance satisfactory to the Lender and naming the Lender as sole loss payee
on behalf of the Lender;


 


(p)                                 Evidence reasonably satisfactory to the
Lender that the Real Property and the contemplated use of the Real Property,
are in compliance in all material respects with all applicable Laws including
without limitation health and Environmental Laws, including, but not limited to
all concentrated animal feedlot operations rules and regulations, erosion
control ordinances, storm drainage control laws, doing business and/or
licensing laws, zoning laws (the evidence submitted as to zoning should include
the zoning designation made for the Real Property, the permitted uses of the
Real Property under such zoning designation and zoning requirements as to
parking, lot size, ingress, egress and building setbacks) and laws regarding
access and facilities for disabled persons including, but not limited to, the
Federal Architectural Barriers Act, the Fair Housing Amendments Act of 1988,
the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990;


 


(q)                                 A
certificate of the secretary of the Borrower together with true and correct
copies of the following:  (i) the
Articles of Organization of the Borrower, including all amendments thereto,
certified by the Department of Financial Institutions of the state of its
incorporation and dated within 30 days prior to the date hereof; (ii) the
Operating Agreement of the Borrower, including all amendments thereto; (iii) the
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, the other Loan
Documents, and all documentation executed and delivered in connection therewith
to which the Borrower is a party; (iv) certificates of the appropriate
government officials of the state of organization of the Borrower as to its
existence and good standing, and certificates of the appropriate government
officials in each state where each corporate Borrower does business and where
failure to qualify as a foreign corporation would have a material adverse
effect on the business and financial condition of the Borrower, as to its good
standing and due qualification to do business in such state, each dated within
30 days prior to the date hereof; and (v) the names of the officers of the
Borrower authorized to sign this Agreement and the other Loan Documents to be
executed by each corporate Borrower, together with a sample of the true
signature of each such officer;


 


(r)                                    Favorable
opinion of Michael Best & Friedrich, LLP, legal counsel for the
Borrower, in the form attached hereto as “Exhibit D”;


 


(s)                                  The
Participation Fee due pursuant to Section 2.09 has been paid;


 


(t)                                    An
Intercreditor Agreement between the Lender and City of Monroe, Wisconsin. as to the priority of the Lender’s security interests in the
Collateral, rights to payment following an Event of Default, and as to such
other matters as requested by the Lender. 
Such Intercreditor Agreement shall, among other things, provide that in
the event Lender does not receive required principal reduction from Borrower,
or Borrower does not meet all loan covenants,  no payments are to be


 


26





















 


made on
subordinated debt by Borrower to City of Monroe.  Instead, any such missed payments shall be
added to the end of the amortization schedule for the subordinated debt
owed to City of Monroe;


 


                                                (u)                                 An
Intercreditor Agreement between the Lender and Wisconsin Power and Light
Company. as to the priority of the Lender’s security interests
in the Collateral, rights to payment following an Event of Default, and as to
such other matters as requested by the Lender. 
Such Intercreditor Agreement shall, among other things, provide that in
the event Lender does not receive required principal reduction from Borrower,
or Borrower does not meet all loan covenants,  no payments are to be made on
subordinated debt by Borrower to Wisconsin Power and Light Company.  Instead, any such missed payments shall be
added to the end of the amortization schedule for the subordinated debt
owed to Wisconsin Power and Light Company.


 


(v)                                 Evidence
that the costs and expenses (including, without limitation, attorney’s fees)
referred to in Section 7.04, to the extent incurred and invoiced, shall
have been paid in full;


 


(w)                               The
results of the Lender’s inspection of the Collateral, and the Lender’s receipt
of an appraisal of the Collateral acceptable to Lender in its sole discretion;


 


(x)                                   Satisfactory
review by the Lender of any pending litigation relating to the Borrower;


 


(y)                                 A
Phase I Environmental Assessment in form and substance acceptable to the Lender;


 


(z)                                   The
Borrower shall have ordered the General Contractor to begin construction of the
Project, and construction shall have commenced;


 


(aa)                            A schedule, certified by
Borrower as accurate and complete, setting forth:  (i) the necessary licenses, permits and
consents required by applicable federal, state, and local governmental entities
required for the lawful construction and operation of the Project; and (ii) the
deadlines to obtain such licenses, permits and consents so that the Completion
Date occurs as scheduled;


 


(bb)                          The Borrower shall have
provided to Lender evidence of ownership indicating that at least 50% of the
owners of Borrower are eligible borrowers;


 


(cc)                            The
Borrower shall notify Lender of any changes in plant management or any decision
to excuse management;


 


(dd)                          The Borrower shall have
obtained authorization from the 1st National Bank of Omaha to
terminate the bank’s UCC financing statements;


 


(ee)                            A satisfaction of mortgage
shall have been obtained to satisfy that certain mortgage to 1st
National Bank of Omaha recorded on August 29, 2001, as Document No. 419200,
in Vol. 686, page 018.


 


27





















 


(ff)                                A release of rent
assignments shall have been obtained to release that certain rent assignments
to 1st National Bank of Omaha recorded on August 29, 2001, as
Document No. 419201.


 


ARTICLE IV.


REPRESENTATIONS
AND WARRANTIES


 


Section 4.01                                Representations and Warranties of the Borrower.  The Borrower represents and warrants as
follows:


 


(a)                                  Borrower.  The Borrower is a limited liability company
duly organized and validly existing and in current status under the laws of the
State of Wisconsin and is qualified to do business in all jurisdictions in
which the nature of its business makes such qualification necessary and where
failure to so qualify would have a Material Adverse Effect on its financial
condition or operations.  The Borrower
has the power and authority to execute, deliver, and perform its obligations
under the Loan Documents to which it is or may become a party. The Borrower has
had no subsidiaries.  There are no
outstanding subscriptions, options, warrants, calls, or rights (including
preemptive rights) to acquire, and no outstanding securities or instruments
convertible into, membership interests (units) of the Borrower, except for
those transactions set forth on Schedule 4.01(a);


 


(b)                                 The Loan Documents.  The execution, delivery and performance by the
Borrower of the  Loan Document are within
the  Borrower’s powers, have been duly
authorized by all necessary action, do not contravene:  (i) the 
Borrower’s articles or operating agreements; or (ii) any law or any
contractual restriction binding on or affecting the Borrower, and do not result
in or require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant to the terms thereof) upon or with respect to
any of its properties;


 


(c)                                  Governmental Approvals.  No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Borrower of any Loan Documents, except for such approvals and consents which
have been made or obtained;


 


(d)                                 Enforceability.  This Agreement is, and each other Loan
Document to which the Borrower is a party when delivered will be, legal, valid
and binding obligations of the Borrower enforceable against the Borrower in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditor’s rights generally and by general principles of equity;


 


(e)                                  Financial Condition and Operations.  The balance sheets of the Borrower as of December 31,
2004, and the related statements of income and, with respect to the period
ended December 31, 2004, the related statement of cash flow of the
Borrower for the fiscal period then ended, copies of which have been furnished
to the Lender, fairly present in all material respects the financial condition
of the Borrower as at such date and the results of the operations of the
Borrower for the period ended on such dates, all in accordance with generally
accepted accounting principles


 


28





















 


consistently
applied, and since December 31, 2004, there has been no material adverse
change in such condition or operations;


 


(f)                                    Litigation.  Except as described on Schedule 4.01(f),
there is no pending or threatened action or proceeding affecting the Borrower
or any of the transactions contemplated hereby before any court, governmental
agency or arbitrator, which may materially adversely affect the financial
condition or operations of the Borrower. 
As of the Closing Date there are no outstanding judgments against the
Borrower;


 


(g)                                 Use of Proceeds of Advances, etc.  (i) No proceeds of the Loans will be
used to acquire any security in any transaction which is subject to
Sections 13 and 14 of the Securities Exchange Act of 1934 (provided,
however, that this provision shall not prohibit Borrower from investing in
certain value added cooperatives for the purposes of carrying out their overall
business operations); (ii) the 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 issued by the Board of Governors of the
Federal Reserve System); and (iii) no proceeds of the Loans 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;


 


(h)                                 Liens.  There is no lien, security interest or other
charge or encumbrance, and no other type of preferential arrangement, upon or
with respect to any of the properties or income of the Borrower, which secures
Debt of any Person, except as described in Schedule 5.02(a);


 


(i)                                     Solvency.  As of and from and after the date of this
Agreement, the Borrower:  (i) owns
and will own assets the fair saleable value of which are: (A) greater than
the total amount of liabilities (including contingent liabilities); and (B) greater
than the amount that will be required to pay the probable liabilities of its
then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to it; (ii) has
capital that is not unreasonably small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (iii) does
not intend to incur and does not believe that it will incur debts beyond its
ability to pay such debts as they become due;


 


(j)                                     Location of Inventory and Farm Products; Third
Parties in Possession; Crops. 
The Borrower’s inventory and farm products pledged as collateral under
the Security Agreement are located at the places (or, as applicable,
jurisdictions) specified in Schedule 4.01(j) for the Borrower, except to
the extent any such inventory and farm products are in transit.  Schedule 4.01(j) correctly identifies,
as of the date hereof, the landlords or mortgagees, if any, of each of its
locations identified in Schedule 4.01(j) currently leased or owned by the
Borrower.  Except for the Persons
identified on Schedule 4.01(j), no Person other than the Borrower and the
Lender has possession of any of the Collateral. 
Except as described in above, none of its Collateral has been located in
any location within the past four months other than as set forth on Schedule 4.01(j)
for the Borrower;


 


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(k)                                  Office Locations; Fictitious Names; Predecessor
Companies; Tax I.D. Number. 
The Borrower’s chief place of business, its chief executive office, and
its jurisdiction of organization is located at the place identified for the
Borrower on Schedule 4.01(k). 
Within the last four months it has not had any other chief place of
business, chief executive office, or jurisdiction of organization.  Schedule 4.01 (k) also sets forth all
other places where the Borrower keeps its books and records and all other
locations where the Borrower has a place of business.  The Borrower does not do business nor has the
Borrower done business during the past five (5) years under any
trade-name or fictitious business name except as disclosed on Schedule 4.01(k).  Schedule 4.01(k) sets forth an accurate
list of all names of all predecessor companies of the Borrower including the
names of any entities it acquired (by stock purchase, asset purchase, merger or
otherwise) and the chief place of business and chief executive office of each
such predecessor company.  For purposes
of the foregoing, a “predecessor company” shall mean any Person whose assets or
equity interests are acquired by the Borrower or who was merged with or into the  Borrower within
the last four months prior to the date hereof. 
The Borrower’s United States Federal Income Tax I.D. Number and state
organizational identification number is identified on Schedule 4.01(k);


 


(l)                                     Disclosure.  All factual information furnished by or on
behalf of the  Borrower in writing to the
Lender (including, without limitation, all factual information contained in the
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information hereafter furnished by or on behalf of the
Borrower to the Lender, will be true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information not misleading
in any material respect at such time in light of the circumstances under which
such information was provided;


 


(m)                               Operation of Business.  The Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and tradenames, or rights thereto,
necessary to conduct its business substantially as now conducted and will
obtain all such licenses, permits, franchises, patents, copyrights, trademarks,
and tradenames, or rights thereto necessary to conduct its business as
presently proposed to be conducted except those that the failure to so possess
could not reasonably be expected to have a Material Adverse Effect on its
financial condition or operations, and the 
Borrower is not in violation of any valid rights of others with respect
to any of the foregoing except violations that could not reasonably be expected
to have such a Material Adverse Effect;


 


(n)                                 Intellectual Property.    The 
Borrower owns, or has the legal right to use, all patents, trademarks,
tradenames, copyrights, technology, know-how and processes (the “Intellectual Property”) necessary for it to conduct its
business as currently conducted except for those the failure to own or have
such legal right to use could not reasonably be expected to have a Material
Adverse Effect.  As of the Closing Date,
set forth in Schedule 4.01(n) is a list of all Intellectual Property
registered with the United States Copyright Office or the United States Patent
and Trademark Office and owed by the Borrower or that the Borrower has the
right to use.  Except as provided in Schedule 4.01(n),
no claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor


 


30





















 


does the Borrower know of any such claim, and, to the knowledge of the
Borrower, the use of such Intellectual Property by the Borrower does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect;


 


(o)                                 Investment Company Act.  The Borrower is not required to be registered
as an “investment company” within the meaning of the Investment Company Act of
1940, as amended; and


 


(p)                                 Environmental Compliance. 
The Borrower, except as set forth in Schedule 4.01(p), is in material compliance with all applicable
Environmental Laws.


 


ARTICLE V.


COVENANTS OF THE BORROWER


 


Section 5.01.                             Affirmative Covenants.  So
long as any Loan Obligations remain unpaid or the Lender shall have any
commitment hereunder, the Borrower will, unless the Lender shall otherwise consent
in advance in writing:


 


(a)                                  Compliance with Laws, etc.  Comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, (i) all applicable zoning and land use laws; (ii) all
employee benefit and Environmental Laws, and (iii) paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property except to the extent contested in good faith;


 


(b)                                 Visitation Rights; Field Examination.  At any reasonable time and from time to time,
permit the Lender or representatives thereof 
to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, and conduct unannounced field
examinations and collateral inspections 
at least annually of the Borrower and to discuss the affairs, finances
and accounts of the Borrower with any of its officers or directors, provided, however, upon and during the occurrence of an
Event of Default or in the event that there are deemed by the Lender to be any
material inconsistencies and/or material noncompliance with respect to any
financial or other reporting on the part of the Borrower, any and all visits
and inspections deemed necessary or desirable on account of such Event of
Default, inconsistency and/or noncompliance shall be at the expense of the
Borrower.  In addition to the foregoing,
at any reasonable time and from time to time, the Borrower also shall permit
the Lender or representatives thereof, at the expense of the Lender, to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower, and to discuss the affairs, finances and
accounts of the Borrower with any of their respective officers or directors;


 


(c)                                  Reporting Requirements.  Furnish to the Lender:


 


(i)                                     Beginning
with Borrower’s fiscal year ending December 31, 2005, as soon as available
and in any event within 120 days after the end of each fiscal year of the
Borrower, a


 


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copy of the audited financial statements (including balance sheet,
statements of income and cash flows, all accompanying notes thereto and any
management letter), for such year for the Borrower, certified, without qualification,
in an opinion acceptable to the Lender by independent public accountants
acceptable to the Lender;


 


(ii)                                  Beginning
with the first (1st) month following the Closing Date, as soon as
available and in any event within 30 days after the end of each month,
balance sheets of the Borrower as of the end of such month and statement of
income of the Borrower for the period commencing at the end of the previous
fiscal year and ending with the end of such month, certified by an authorized
officer of the Borrower;


 


(iii)                               Beginning
with first fiscal quarter end following the Closing Date, and continuing with
every fiscal quarter, as soon as available and in any event within 30 days
after the end of each fiscal quarter, balance sheets of the Borrower as of the
end of such month and statement of income of the Borrower for the period
commencing at the end of the previous fiscal year and ending with the end of
such fiscal quarter, certified by an authorized officer of the Borrower,
together with a Compliance Certificate which: (A) states that no Event of
Default, and no event or condition that but for the passage of time, the giving
of notice or both would constitute an Event of Default, has occurred or is in
existence; and (B) shows in detail satisfactory to the Lender the
calculation of, and the Borrower’ compliance with, each of the covenants
contained in Sections 5.01(d), 5.01(e), 5.01(f), and 5.01(g);


 


(iv)                              promptly
upon the Lender’s request therefor, copies of all reports and notices which the
Borrower or any of its subsidiaries files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the U.S. Department of
Labor or which the  Borrower or any its
subsidiary receives from such Corporation;


 


(v)                                 by
December 1 of each fiscal year of the Borrower, an annual (with monthly
break out) operating plan and budget of the Borrower for the immediately
succeeding fiscal year containing, among other things, pro forma financial
statements and forecasts for all planned lines of business;


 


(vi)                              as
soon as available but in any event not more than 30 days after the end of
each month, production reports for the immediately preceding calendar month
setting forth corn inputs, ethanol output, DDGS output, natural gas usage and
CO2 output, together with such additional production information as requested
by Lender;


 


(vii)                           promptly, upon the occurrence of an Event of Default or an
event or condition that but for the passage of time or the giving of notice or
both would constitute an Event of Default, notice of such Event of Default or
event;


 


(viii)                        promptly after the receipt thereof, a copy of any management
letters or written reports submitted to the Borrower by its independent
certified public accountants with respect to the business, financial condition
or operation of the Borrower;


 


32





















 


(ix)                                promptly
after the receipt thereof, a copy of any notice of default under any Long-Term
Marketing Agreement;


 


(x)                                   furnish to the
Lender, promptly after transmittal or filing thereof by the Borrower, copies of
all proxy statements, notices and reports as it shall send to its stockholders
and copies of all registration statements (without exhibits) and all reports
which it files with the Securities and Exchange Commission (or any governmental
body or agency succeeding to the functions of the Securities and Exchange
Commission), and promptly after the receipt thereof by the Borrower, copies of
all management letters or similar documents submitted to the Borrower by
independent certified public accountants in connection with each annual and any
interim audit of the accounts of the Borrower or of the Borrower and any of its
Subsidiaries.


 


(xi)                                such
other information respecting the condition or operations, financial or
otherwise, of the Borrower or any of their respective subsidiaries as the
Lender may from time to time reasonably request;


 


(d)                                 Working
Capital.  Achieve and
maintain Working Capital of at least $ 4.0 million at the time of closing and
continually thereafter;


 


(e)                                  Tangible
Net Worth.  Achieve and
maintain Tangible Net Worth of at least  $30,000,000.00 at the time of closing
and continually thereafter.


 


(f)                                    Owner Equity Ratio.  Maintain at all times during the term of
this Agreement, an Owner Equity Ratio of at least 0.40;


 


(g)                                 Fixed
Charge Coverage Ratio. 
Achieve and maintain a Fixed Charge Coverage Ratio of not less than 1.25
to 1.00, measured initially at the time of closing and continually thereafter;


 


(h)                                 Liens.  There shall be no lien, security interest or
other charge or encumbrance, and no other type of preferential arrangement,
upon or with respect to any of the properties or income of the Borrower, which
secures Debt of any Person, except for the security interests of the Security
Agreement and except as described in Schedule 5.02(a);


 


(i)                                     Landlord and Mortgagee Waivers.  Obtain and furnish to the Lender as soon as
available, waivers, acknowledgments and consents, duly executed by each:  (i) real property owner, landlord and
mortgagee having an interest in any of the premises owned or leased by the
Borrower or in which any Collateral of the Borrower is located or to be located
(and if no Collateral of Borrower is located at a parcel of property not owned
or leased by a Borrower, no such waivers, acknowledgments or consents will be
required); and (ii) each third party holding any Collateral, all in form
and substance acceptable to the Lender, except as otherwise agreed to by the
Lender;


 


33





















 


(j)                                     Insurance.  Maintain insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as are
usually carried by entities engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower operate, provided
that in any event the Borrower will maintain and cause each of its subsidiaries
to maintain workers’ compensation insurance, property insurance and
comprehensive general liability insurance reasonably satisfactory to the
Lender.  Each insurance policy covering
Collateral shall be in compliance with the requirements of the Security
Agreement;


 


(k)                                  Keeping
Books and Records. 
Maintain and cause each of its subsidiaries to, maintain proper books of
record and account in which full, true, and correct entries in conformity with
generally accepted accounting principles shall be made of all dealings and
transactions in relation to its business and activities;


 


(l)                                     Food Security Act Compliance.  If the Borrower acquires any Collateral which
may have constituted farm products in the possession of the seller or supplier
thereof, such Borrower shall, at its own expense, use its best efforts to take
such steps to insure that all Liens (except the liens granted pursuant hereto)
in such acquired Collateral are terminated or released, including, without
limitation, in the case of such farm products produced in a state which has
established a Central Filing System (as defined in the Food Security Act),
registering with the Secretary of State of such state (or such other party or
office designated by such state) and otherwise take such reasonable actions
necessary, as prescribed by the Food Security Act, to purchase farm products
free of liens (except the liens granted pursuant hereto); provided, however,
that such Borrower may contest and need not obtain the release or termination
of any lien asserted by any creditor of any seller of such farm products, so
long as it shall be contesting the same by proper proceedings and maintain
appropriate accruals and reserves therefor in accordance with the generally
accepted accounting principles.  Upon the
Lender’s request made, the Borrower agrees to forward to the Lender promptly
after receipt copies of all notices of liens and master lists of Effective
Financing Statements delivered to the Borrower pursuant to the Food Security
Act, which notices and/or lists pertain to any of the Collateral.  Upon the Lender’s request, the Borrower
agrees to provide the Lender with the names of Persons who supply the Borrower
with such farm products and such other information as the Lender may reasonably
request with respect to such Persons;


 


(m)                               Warehouse
Receipts.  If any
warehouse receipt or receipts in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, then the Borrower:  (i) will not permit such warehouse
receipt or receipts in the nature thereof to be “negotiable” as such term is
used in Article 7 of the Uniform Commercial Code; and (ii) will
deliver all such receipts to the Lender (or a Person designated by the Lender)
within five (5) days of the Lender’s request and from time to time
thereafter.  If no Event of Default
exists, the Lender agrees to deliver to such Borrower any receipt so held by
the Lender upon such Borrower’s request in connection with such Borrower’s sale
or other disposition of the underlying inventory, if such disposition is in
ordinary course of such Borrower’s business;


 


34





















 


(n)                                 Management of
Borrower.  Management of
the Borrower shall be maintained as set forth on Schedule 5.01(n) hereto,
unless otherwise approved in Lender’s reasonable discretion;


 


(o)                                 Compliance
with SEC.  Borrower has
complied in all material respects with the Order of the Securities and Exchange
Commission (the “SEC”) dated June 27, 2002 (No. 4-460) requiring the
filing of sworn statements pursuant to Section 21(a)(1) of
the Securities Exchange Act of 1934, as amended, and Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002, as amended, and the rules of the SEC
promulgated thereunder.  This
representation shall be deemed to be repeated at all times until the
termination of this Agreement.


 


(p)                                 Compliance
with Other Agreements. 
Borrower will perform in all material respects all obligations and abide
in all material respects by all covenants and agreements contained in the
following agreements:  (i) that
certain Surety Agreement dated August 21, 2001 by and between the City of
Monroe, a municipal corporation organized and existing under and by virtue of
the laws of the State of Wisconsin and Borrower;  (ii) that certain Carbon Dioxide Purchase
and Sale Agreement dated February 24, 2004, by and between Borrower and
EPCO CarbonDioxide Products, Inc., an Illinois corporation; (iii) that
certain Non-Exclusive CO2 Facility Site License Agreement dated February 24,
2004, by and between Borrower and EPCO CarbonDioxide Products, Inc.; (iv) any
and all Long Term Marketing Agreements; and (v) that certain Energy
Services Agreement dated August 22, 2001, by and between Wisconsin Power
and Light Company, a Wisconsin corporation and Borrower.


 


(q)                                 Additional
Assurances.  Make, execute
and deliver to Lender such promissory notes, mortgages, deeds of trust,
financing statements, control agreements, instruments, documents and other
agreements as Lender or its counsel may reasonably request to evidence and
secure the Loans and to perfect all Security Interests.


 


(r)                                    Construction of Project.  Borrower shall:


 


(i)                                     diligently
proceed with construction of the Project in accordance with the Plans and
Specifications and in accordance with all applicable laws and ordinance and
will complete the Project on or before the Completion Date;


 


(ii)                                  use
the proceeds of all Advances solely to pay the Project Costs as specified in
the Project Sources and Uses Statement;


 


(iii)                               use
its best efforts to require the Contractor(s) to comply with all rules,
regulations, ordinances and laws relating to work on the Project;


 


(iv)                              obtain the
Lender’s prior written approval of any change in the Plans and Specifications
for the Project approved by the Lender which might materially adversely affect
the value of the Lender’s security, and has a cost of $25,000.00 or
greater.  The Lender will have a
reasonable time to evaluate any requests for its approval of any changes
referred to in this paragraph.


 


35





















 


The Lender may approve or disapprove changes
in its discretion, subject to the foregoing provisions of this Section 5.01(q)(iv).  If it
reasonably appears to the Lender that any change may increase the Project
Costs, the Lender may require the Borrower to deposit additional funds with the
Lender pursuant to the provisions of this Agreement in an amount sufficient to
cover the increased costs as a condition to giving its approval;


 


(v)                                 comply in all
material respects with and keep in effect all necessary permits and approvals
obtained from any Governmental Authority relating to the lawful construction of
the Project.  The Borrower will comply in
all material respects with all applicable existing and future laws,
regulations, orders, and requirements of any Governmental Authority, judicial,
or legal authorities having jurisdiction over the Real Property or Project, and
with all recorded restrictions affecting the Real Property;


 


(vi)                              furnish
to the Lender from time to time on request by the Lender, in a form acceptable
to the Lender, correct lists of all contractors and subcontractors employed in
connection with construction of the Project and true and correct copies of all
executed contracts and subcontracts.  The
Lender may contact any contractor or subcontractor to verify any facts
disclosed in the lists, Borrower must consent to the disclosure of such
information by the contractors and subcontractors to Lender or its agents upon
Lender’s request, and Borrower must assist Lender or its agents in obtaining
such information upon Lender’s request;


 


(vii)                           upon completion of the
building foundation of the Project, deliver to the Lender an “as-built” survey
of the Real Property which:  (a) sets
forth the location and exterior lines and egress and other improvements
completed on the Real Property and demonstrates compliance with all applicable
setback requirements; (b) demonstrates that the Project is entirely within
the exterior boundaries of the Real Property and any building restriction lines
and does not encroach upon any easements or rights-of-way; and (c) contains
such other information as the Lender may reasonably request;


 


(viii)                        not purchase any materials,
equipment, fixtures, or articles of personal property placed in the Project
prior to the Conversion Date under any security agreement or other agreement
where the seller reserves or purports to reserve title or the right of removal
or repossession, or the right to consider them personal property after their
incorporation in the work of construction, unless authorized by the Lender in
writing;


 


(ix)                                provide
the Lender and its representatives with access to the Real Property and the
Project at any reasonable time and upon reasonable notice to enter the Real
Property and inspect the work or construction and all materials, plans,
specifications, and other matters relating to the construction.  The Lender will also have the right to, at
any reasonable time and upon reasonable notice, examine, copy, and audit the books,
records, accounting data, and other documents of the Borrower and its
contractors relating to the Real Property or construction of the Project;


 


36





















 


(x)                                   pay
and discharge all claims and liens for labor done and materials and services
furnished in connection with the construction of the Project.  The Borrower will have the right to contest
in good faith any claim or lien, provided that it does so diligently and
without prejudice to the Lender or the ability to obtain title insurance in the
manner required by this Agreement and the Disbursing Agreement.  Upon the Lender’s request, the Borrower will
promptly provide a bond, cash deposit, or other security reasonably
satisfactory to the Lender to protect the Lender’s interest and security should
the contest be unsuccessful;


 


(xi)                                at
the Lender’s request and expense, post signs on the Real Property for the
purpose of identifying the Lender as the “Lender.”  At the request of the Lender, or the
participating local community banks, the Borrower will use its best efforts to
identify the Lender as the lender in publicity concerning the Project;


 


(xii)                             maintain
in force until full payment of the Loan all insurance required by law, public
liability insurance, and property insurance. 
The policies must be approved by the Lender as to amounts, form, risk
coverage, deductibles, insurer, and loss payable and cancellation
provision.  The Lender’s approval,
however, will not be a representation of the solvency of any insurer or the
sufficiency of any amount of insurance;


 


(xiii)                          cooperate at all times with
the Lender in bringing about the timely completion of the Project, and resolve
all disputes arising during the work of construction in a manner which will
allow work to proceed expeditiously. 
With respect to such disputes, the Borrower will have the right to
contest in good faith claims resulting in disputes, provided that it does so
diligently and without prejudice to the Lender. 
Upon the Lender’s request, the Borrower will promptly provide a bond,
cash deposit, or other security reasonably satisfactory to the Lender to
protect the Lender’s interest and security should the contest be unsuccessful;


 


(xiv)                         pay the Lender’s and the
Disbursing Agent’s out-of-pocket costs and expenses incurred in connection with
the making or disbursement of the Loans or in the exercise of any of its rights
or remedies under this Agreement, including but not limited to title insurance
and escrow charges, disbursing agent fees, recording charges, and mortgage
taxes, reasonable legal fees and disbursements, and reasonable fees and costs
for services which are not customarily performed by the Lender’s salaried
employees and are not specifically covered by the fees charged to originate the
Loan, if any.  The provision of this
paragraph will survive the termination of this Agreement and the repayment of
the Loan;


 


(xv)                            keep
true and correct financial books and records on a cash basis for the
construction of the Project and maintain adequate reserves for all
contingencies.  If required by the
Lender, the Borrower will submit to the Lender at such times as it requires
(which will in no event be more often than monthly) a statement which
accurately shows the application of all funds expended to date for construction
of the Project and the source of those funds as well as the Borrower’s best
estimate of the funds needed to complete the Project and the source of those
funds.  The Borrower will promptly supply
the Lender with any financial statements or other information concerning its
affairs and properties as the Lender may reasonably request, and will promptly
notify


 


37





















 


the
Lender of any material adverse change in its financial condition or in the
physical condition of the Property or Project;


 


(xvi)                         comply with the requirements
of any commitment or agreement entered into by Borrower with any Governmental
Authority to assist the construction or financing of the Real Property and/or
Project and with the terms of all applicable laws, regulations, and requirements
governing such assistance;


 


(xvii)                      indemnify and hold the Lender
harmless from and against all liabilities, claims, damages, reasonable costs,
and reasonable expenses (including but not limited to reasonable legal fees and
disbursements) arising out of or resulting from any defective workmanship or
materials occurring in the construction of the Project.  Upon demand by the Lender, the Borrower will
defend any action or proceeding brought against the Lender alleging any
defective workmanship or materials, or the Lender may elect to conduct its own
defense at the reasonable expense of the Borrower.  The provisions of this paragraph will survive
the termination of this Agreement and the repayment of the Loan; and


 


(xviii)                   obtain and
deliver to the Lender copies of all necessary occupancy certificates relating
to the Project.


 


Section 5.02.                             Negative Covenants.  So long as any of the Loan Obligations remain
unpaid or the Lender shall have any commitment hereunder, the Borrower will
not, without the prior written consent of the Lender:


 


(a)                                  Liens, etc.  Create
or suffer to exist, or permit any of its subsidiaries to create or suffer to
exist, any lien, security interest or other charge or encumbrance, or any other
type of preferential arrangement, upon or with respect to any of its
properties, whether now owned or hereafter acquired, or assign, or permit any
of its subsidiaries to assign, any right to receive income, in each case to
secure any Debt (as defined below) of any Person, other than:


 


(i)                                     those
described on Schedule 5.02(a) hereto and renewals and extensions on
the same or substantially the same terms and conditions and at no increase in
the debt or obligation; or


 


(ii)                                  liens
or security interests which are subject to an intercreditor agreement in form
and substance acceptable to Lender in Lender’s sole discretion; or


 


(iii)                               the
liens or security interests of the Security Agreement; or


 


(iv)                              liens (other than liens
relating to environmental liabilities or ERISA) for taxes, assessments, or
other governmental charges that are not more than 30 days overdue or, if
the execution thereof is stayed, which are being contested in good faith by
appropriate proceedings diligently pursued and for which adequate reserves have
been established; or


 


38





















 


(v)                                 liens of warehousemen,
carriers, landlords, mechanics, materialmen, or other similar statutory or
common law liens securing obligations that are not yet due and are incurred in
the ordinary course of business or, if the execution thereof is stayed, which
are being contested in good faith by appropriate proceedings diligently pursued
and for which adequate reserves have been established in accordance with
generally accepted accounting principles; or


 


(vi)                              liens resulting from good
faith deposits to secure payments of workmen’s compensation unemployment
insurance, or other social security programs or to secure the performance of
tenders, leases, statutory obligations, surety, customs and appeal bonds, bids
or contracts (other than for payment of Debt); or


 


(vii)                           any
attachment or judgment lien not constituting an Event of Default; or


 


(viii)                        liens
arising from filing UCC financing statements regarding leases not prohibited by
this Agreement; or


 


(ix)                                customary
offset rights of brokers and deposit banks arising under the terms of
securities account agreements and deposit agreements; or


 


(x)                                   any
real estate easements and easements, covenants and encumbrances that
customarily do not affect the marketable title to real estate or materially
impair its use; or


 


(b)                                 Dividends, etc.  Declare
or pay any dividends, purchase or otherwise acquire for value any of its
membership interests (units) now or hereafter outstanding, or make any
distribution of assets to its stockholders, members or general partners as
such, or permit any of its subsidiaries to purchase or otherwise acquire for
value any stock, membership interest or partnership interest of the Borrower,
provided, however, the Borrower may:  (i) declare
and pay dividends and distributions payable in membership interests (units); (ii) purchase
or otherwise acquire shares of the membership interests (units) of the Borrower
with the proceeds received from the issuance of new membership interests
(units); (iii) so long as the Borrower first provides such supporting
documentation as the Lender may request with respect to any fiscal year of the
Borrower, the Borrower may pay aggregate cash dividends/distributions, during
such fiscal year in an amount not to exceed the amount necessary for the
members of the Borrower to pay their Income Taxes on such member’s allocable
share of the taxable income of the Borrower for such taxable year or fiscal
year, as applicable (“Tax Distributions”);
(iv) pay redemptions, dividends or distributions in an amount not to
exceed, in the aggregate, 65% of the Borrower’s Net Income (“Allowed Dividends”); (v) pay dividends or
distributions which are immediately reinvested in the Borrower (“Reinvestment Dividends”) provided, however, that immediately
prior to the proposed payment of any such dividends or distributions, or after
giving effect thereto, no Default or Event of Default shall exist; and (vi) complete
the transactions reflected on Schedule 4.01(a); or


 


39





















 


(c)                                  Capital
Expenditures.  Except for
costs identified in the Project Costs and Uses Statement, make any investment
in fixed assets in the aggregate amount of $1,000,000.00 during any fiscal year
during  the term of this Agreement; or


 


(d)                                 Consolidation, Merger,
Dissolution, Etc.  Directly or indirectly, merge or
consolidate with any other Person or permit any other Person to merge into or
with or consolidate with the Borrower; or


 


(e)                                  Indebtedness, etc.  Create, incur, assume or suffer to exist any
Debt or other indebtedness, liabilities or obligations, whether matured or
unmatured, liquidated or unliquidated, direct or contingent, joint or several,
except:  (i) the liabilities of the
Borrower to the Lender hereunder; (ii) trade accounts payable and accrued
liabilities (other than Debt) arising in the ordinary course of the Borrower’s
business; (iii) Subordinated Debt; and (iv) the liabilities of the
Borrower described on Schedule 5.02(a); or


 


(f)                                    Organization; Name; Chief Executive Office.  Change its state of organization, name or the
location of its chief executive office without the prior written consent  of the Lender, except that the principal
office shall be moved to the plant site when construction of the administration
office is substantially complete; or


 


(g)                                 Loans, Guaranties, etc.  Make
any loans or advances to (whether in cash, in-kind, or otherwise) any Person,
or directly or indirectly guaranty or otherwise assure a creditor against loss
in respect of any indebtedness, obligations or liabilities (contingent or
otherwise) of any Person; or


 


(h)                                 Subsidiaries;
Affiliates.   Form or otherwise acquire any subsidiary
or affiliated business, or acquire the assets of or acquire any equity or
ownership interest in any Person, unless such subsidiary, affiliate or Person
executes and delivers to the Lender:  (i) a
guaranty of all of the Loan Obligations, in form and substance acceptable to
the Lender in its sole discretion; (ii) security agreements in form
substantially similar to the to the Security Agreement; and (iii) such
other documents and amendments to this Agreement and the other Loan Documents
as the Lender shall require; or


 


(i)                                     Transfer of Assets.  Sell, lease, assign, transfer, or otherwise
voluntarily dispose of any of its assets, or permit any of its subsidiaries to
sell, lease, assign, transfer, or otherwise voluntarily dispose of any of its
assets except:  (i) dispositions of
inventory in the ordinary course of business; and (ii) dispositions of: (A) obsolete
or worn out equipment; (B) equipment or real property not necessary for
the operation of its business; or (C) equipment or real property which is
replaced with property of equivalent or greater value as the property which is
disposed; or


 


(j)                                     Lines of Business.  Engage in any line or lines of business
activity other than the production of ethanol and DDGS.


 


40





















 


ARTICLE VI.


EVENTS OF
DEFAULT AND REMEDIES


 


Section 6.01.                             Events of Default.  Each of the following events shall be an “Event of Default”:


 


(a)                                  The
Borrower shall fail to pay any installments of principal or interest, fees,
expenses, charges or other amounts payable hereunder or under the other Loan
Documents or to make any deposit of funds required under this Agreement when
due; or


 


(b)                                 Any
representation or warranty made by the Borrower, or any of its officers or
directors under or in connection with any Loan Document shall prove to have
been incorrect in any material respect when made; or


 


(c)                                  The Borrower shall
fail to perform or observe any term, covenant or agreement contained in
Sections 5.01(d), (e), (f) or (g) or take any action as prohibited by
Section 5.02; or


 


(d)                                 The Borrower shall
fail to deliver the financial statements or Compliance Certificate under Section 5.01(c) within
5 days of the date due; or


 


(e)                                  The Borrower shall
fail to perform or observe any term, covenant or agreement contained in any
Loan Document (other than those listed in clauses (a) through (d) of
this Section 6.01) on its part to be performed or observed (other than the
covenants to pay the Loan Obligations) and any such failure shall remain
unremedied for ten (10) days after written notice thereof shall have been
given to the Borrower by the Lender, provided, however, that no Event of
Default shall be deemed to exist if, within said ten (10) day period,
Borrower have commenced appropriate action to remedy such failure and shall
diligently and continuously pursue such action until such cure is completed,
unless such cure is or cannot be completed within thirty (30) days after
written notice shall have been given; or


 


(f)                                    The Borrower shall
fail to pay any indebtedness in an amount in excess of $50,000.00 (either in
any individual case or in the aggregate) excluding indebtedness evidenced by
the Notes and excluding Ordinary Trade Payable Disputes, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such indebtedness; or any other default under any agreement or
instrument relating to any such indebtedness, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such indebtedness
(excluding Ordinary Trade Payable Disputes); or any such indebtedness shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof
(excluding Ordinary Trade Payable Disputes); or


 


41





















 


(g)                                 The Borrower shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property, and, in
the case of any such proceeding instituted against it (but not instituted by
it) either such proceeding shall remain undismissed or unstayed for a period of
30 days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against it or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property) shall occur; or the Borrower shall take any
corporate action to authorize any of the actions set forth above in this
subsection; or


 


(h)                                 Any one or more judgment(s)
or order(s) for the payment of money in excess of $50,000.00 in the aggregate
shall be rendered against the Borrower and either:  (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order; or (ii) there
shall be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or


 


(i)                                     Any provision of
any Loan Document shall for any reason cease to be valid and binding on the
Borrower or the Borrower shall so state in writing; or


 


(j)                                     The Mortgage or
the Security Agreement shall for any reason, except to the extent permitted by
the terms thereof, cease to create a valid lien, encumbrance or security
interest in any of the property purported to be covered thereby; or


 


(k)                                  The termination of
any Long Term Marketing Agreement prior to its stated expiration date, unless
such Long Term Marketing Agreement is replaced by another Long Term Marketing
Agreement acceptable to the Lender, within thirty (30) days of the termination
of such Long Term Marketing Agreement; or


 


(l)                                     The Borrower
dissolves, suspends, or discontinues doing business; or


 


(m)                               Construction of the
Project is halted or abandoned prior to completion for any period of thirty
(30) consecutive days for any cause which is not beyond the reasonable control
of the Borrower, its contractors and subcontractors; or


 


(n)                                 The construction of
the Project shall be delayed for any reason and for such period that, in the
reasonable judgment of the Lender, the Project will not be completed by the
Completion Date.  If such delay is
curable and if Borrower has not been given a notice of a similar breach within
the preceding twelve (12) months, it may be cured (and no Event of Default will
have occurred) if Borrower cures the failure within thirty (30) days, which
shall include advancing the


 


42





















 


progress
of the Project to the point that, in the reasonable judgment of the Lender, the
Project will be completed by the Completion Date.


 


Section 6.02.                             Remedies.  Upon the occurrence of an Event of Default,
the Lender:


 


(a)                                  may, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, notice of intent to accelerate or notice of
acceleration, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; 
provided, however, that in the event of
an actual or deemed entry of an order for relief with respect to any of the
Borrower or any of its subsidiaries under the Federal Bankruptcy Code, the
Notes, all such interest and all such amounts shall automatically become due
and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower;


 


(b)                                 may withhold or direct
the Disbursing Agent to withhold any one or more Advances in its discretion,  and terminate the
Lender’s obligations, if any, under this Agreement to make any Advances
whereupon the commitment and obligations of the Lender to extend credit or to
make Advances hereunder shall terminate, and no disbursement of Loan funds by
the Lender will cure any default of the Borrower, unless the Lender agrees
otherwise in writing;


 


(c)                                  may, by notice to the Borrower, obtain the appointment of a
receiver to take possession of all Collateral of the Borrower, including, but
not limited to all personal property, including all fixtures and equipment
leased, occupied or used  by any of the
Borrower.  Borrower  hereby irrevocably consent to the appointment
of such receiver and agree to cooperate and assist any such receiver as
reasonably requested to facilitate the transfer of possession of  the Collateral to such receiver and to
provide such receiver access to all books, records, information and documents
as requested by such receiver;


 


(d)                                 in
its discretion, enter the Real Property and take any and all actions necessary
in its judgment to complete construction of the Project, including but not
limited to making changes in Plans and Specifications, work or materials, and
entering into, modifying, or terminating any contractual arrangements, subject
to the Lender’s right at any time to discontinue any work without
liability.  If the Lender elects to
complete the Project, it will not assume any liability to the Borrower or any
other person for completing the Project or for the manner or quality of
construction of the Project, and the Borrower expressly waives any such
liability.  The Borrower irrevocably
appoints the Lender as its attorney-in-fact, with full power of substitution,
to complete the Project in the Borrower’s name, or the Lender may elect to
complete construction in its own name. 
In any event, all sums expended by the Lender in completing construction
will be considered to have been disbursed to the Borrower and will be secured
by the Mortgage and any other instruments or documents securing the Loans, and
any such sums that cause the principal amount of the Loans to exceed the face
amount of the Notes will be considered to be an additional loan to the Borrower
bearing interest at the rate provided in the Notes and will be secured by the
Mortgage  and any other instrument or
documents securing the Loans.  The Lender
will not have any obligation under the


 


43





















 


Plans and Specifications prepared for the
Project, any studies, data, and drawings with respect thereto prepared by or
for Borrower, or the contracts and agreements relating to the Plans and
Specifications, or the aforesaid studies, data, and drawings, or to the
construction of the Project unless it expressly hereafter agrees in
writing.  The Lender will have the right
to exercise any rights of the Borrower under those contracts and agreements or
with respect to such Plans and Specifications, studies, data, and drawings upon
any default by the Borrower under this Agreement, and shall have such other
rights and remedies with respect thereto as are afforded a secured creditor
under applicable law; and


 


(e)                                  may, by notice to the
Borrower, require the Borrower to pledge to the Lender as security for the Loan
Obligations an amount in immediately available funds equal to the then
outstanding Letter of Credit Liabilities, such funds to be held in an interest
bearing cash collateral account at the Lender without any right of withdrawal
by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower or any of its subsidiaries under the Federal Bankruptcy Code, the
Borrower shall, without notice, pledge to the Lender as security for the Loan
Obligations an amount in immediately available funds equal to the then
outstanding Letter of Credit Liabilities, such funds to be held in such an
interest bearing cash collateral account at the Lender; and


 


(f)                                    may
exercise all other rights and remedies afforded to the Lender under the Loan
Documents or by applicable law or equity.


 


Section 6.03.                             Remedies Cumulative.  Each and every power or remedy herein
specifically given shall be in addition to every other power or remedy,
existing or implied, given now or hereafter existing at law or in equity, and
each and every power and remedy herein specifically given or otherwise so
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by Lender, and the exercise or the beginning of the
exercise of one power or remedy shall not be deemed a waiver of the right to
exercise at the same time or thereafter any other power or remedy. No delay or
omission of Lender in the exercise of any right or power accruing hereunder
shall impair any such right or power or be construed to be a waiver of any
default or acquiescence therein.


 


ARTICLE VII.


MISCELLANEOUS


 


Section 7.01.                             Amendments, etc.  No
amendment or waiver of any provision of any Loan Document to which the Borrower
is a party, nor any consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be agreed or consented to by
the Lender and the Borrower, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.


 


Section 7.02.                             Notices, etc.  All
notices and other communications provided for under any Loan Document shall be
in writing  and mailed, faxed, or
delivered at the addresses set forth below, or at such other address as such
party may specify by written notice to the other parties hereto:


 


44





















 


	
  If to the Borrower:

  	
   

  	
  Badger State Ethanol, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  820 W. 17th St.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Monroe, WI 53566

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Telephone: (608) 329-3900

  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fax: (608) 329-3866

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: James Leitzinger

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Badger State Ethanol, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  820 W. 17th St.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Monroe, WI 53566

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Telephone: (608) 329-3900

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fax: (608) 329-3866

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Gary L. Kramer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Michael Best & Friedrich, LLP

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  One South Pinckney

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  P.O. Box 1806

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Madison, WI 53701-1806

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Telephone: (608) 283-0116

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fax: (608) 283-2275

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Porter J. Martin

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If
  to the Lender:

  	
   

  	
  AgStar Financial Services, PCA

  	
   

  	
   

  
	
   

  	
   

  	
  1921 Premier Drive

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box 4249

  	
   

  	
   

  
	
   

  	
   

  	
  Mankato, MN 56002-4249

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone: (507) 386-4242

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (507) 344-5088

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Mark Schmidt

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Gray, Plant, Mooty, Mooty, &
  Bennett, P.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1010 West St. Germain, Suite 600

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  St. Cloud, MN 56301

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Telephone: (320) 252-4414

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (320) 252-4482

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Phillip L. Kunkel

  	
   

  	
   

  



 


All such notices and
communications shall have been duly given and shall be effective:  (a) when delivered; (b) when
transmitted via facsimile to the number set forth above; (c) the Business
Day following the day on which the same has been delivered prepaid (or pursuant
to an invoice arrangement) to a reputable national overnight air courier
service; or (d) the third Business Day following the day on which the same
is sent by certified or registered mail, postage prepaid.   Any


 


45





















 


confirmation sent
by the Lender to the Borrower of any borrowing under this Agreement shall, in
the absence of manifest error, be conclusive and binding for all purposes


 


Section 7.03.                             No
Waiver; Remedies.  No failure on the part
of the Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under any Loan Document preclude
any other or further exercise thereof or the exercise of any other right.  The remedies provided in the Loan Documents
are cumulative and not exclusive of any remedies provided by law.


 


Section 7.04.                             Costs, Expenses and Taxes.


 


(a)                                  The Borrower agrees,
jointly and severally, to pay on demand all costs and expenses in connection
with the preparation, execution, delivery, filing, recording and administration
of the Loan Documents and the other documents to be delivered under the Loan
Documents, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Lender (who may be in-house counsel), and local
counsel who may be retained by said counsel, with respect thereto and with
respect to advising the Lender as to its respective rights and responsibilities
under the Loan Documents, and all costs and expenses (including reasonable
counsel fees and expenses) for the Lender in connection with the filing of the
Financing Statements and the enforcement of the Loan Documents and the other
documents to be delivered under the Loan Documents, including, without
limitation, in the context of any bankruptcy proceedings.  In addition, the Borrower agrees to pay on
demand the expenses described in Section 5.01(b).  In addition, the Borrower shall pay any and
all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of the Loan
Documents and the other documents to be delivered under the Loan Documents, and
agrees to save the Lender harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.


 


(b)                                 If, due to payments
made by the Borrower pursuant to Section 2.06 or due to acceleration of
the maturity of the Advances pursuant to Section 6.01 or due to any other
reason, the Lender receives payments of principal of any Loan other than on the
last day of an Interest Period relating thereto, the Borrower shall pay to the
Lender on demand any amounts required to compensate the Lender for any
additional losses, costs or expenses which it may incur as a result of such
payment, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Lender to fund or maintain such
Loan.


 


Section 7.05.                             Right of Set-off.  The Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
Loan Obligations, irrespective of whether or not the Lender shall have made any
demand under such Loan Document and although deposits, indebtedness or such
obligations may be unmatured or contingent. 
The Lender agrees promptly to notify the Borrower after any such set-off


 


46





















 


and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. 
The rights of the Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Lender may have.


 


Section 7.06.                             Severability of Provisions.  Any provision of this Agreement or of any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof or thereof or affecting the validity or unenforceability of such
provision in any other jurisdiction.


 


Section 7.07.                             Binding Effect; Successors and Assigns;
Participations.


 


(a)                                  This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign or otherwise transfer its rights hereunder or any interest
herein without the prior written consent of the Lenders.  Upon the request of Borrower, Lender shall
provide copies of all invoices for costs and expenses to be reimbursed by
Borrower under this Agreement or under any of the Loan Documents.


 


(b)                                 Borrower agrees and
consents to Lender’s sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether related
or unrelated to Lender.  Lender may
provide, without any limitation whatsoever, to any one or more purchasers, or
potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loans, and Borrower hereby
waives any rights to privacy it may have with respect to such matters;
provided, however, that any information received by any such purchaser or
potential purchaser under this provision which concerns the personal, financial
or other affairs of the Borrower shall be received and kept by the purchaser or
potential purchaser in full confidence and will not be revealed to any other
persons, firms or organizations nor used for any purpose whatsoever other than
for determining whether or not to participate in the Loans and in accord with
the rights of Lender if a participation interest is acquired.  Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any repurchase
of such  participation
interest.  Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests.  Borrower
further waives all rights of offset or counterclaim that it may have now or
later against Lender or against any purchaser of such a participation interest
arising out of or by virtue of the participation and unconditionally agrees
that either Lender or such purchaser may enforce Borrower’s obligation under
the Loans irrespective of the failure or insolvency of any holder of any
interests in the Loans.  Borrower further
agrees that the purchaser of any such participation interests may enforce its
interests irrespective of any personal claims or defenses that Borrower may
have against Lender.


 


47





















 


Section 7.08.                             Consent to Jurisdiction.


 


(a)                                  The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this
Agreement, the Note and any instrument, agreement or document related hereto or
thereto, and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Minnesota
state court 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 Borrower at its address specified in Section 7.02.  The Borrower agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.


 


(b)                                 Nothing in this Section 7.08
shall affect the right of the Lender to serve legal process in any other manner
permitted by law or affect the right of the Lender to bring any action or
proceeding against the Borrower or its property in the courts of other
jurisdictions.


 


Section 7.09.                             Governing Law.  THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF MINNESOTA.


 


Section 7.10.                             Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and on telecopy counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall
constitute but one and the same agreement.


 


Section 7.11.                             Survival.  All covenants, agreements, representations
and warranties made by the Borrower in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Advances and issuance of
any Letters of Credit, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that Lender may have had notice or
knowledge of any Event of Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as any Loan Obligations are outstanding and unpaid and so long
as the Lender has any unexpired commitments under this Agreement or the Loan
Documents.  The expense reimbursement,
additional cost, capital adequacy and indemnification provisions of this
Agreement shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the Loan
Obligations or the termination of this Agreement or any provision hereof.


 


Section 7.12.                             WAIVER OF JURY TRIAL.  THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN


 


48





















 


DOCUMENT
TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.


 


Section 7.13.                             Entire Agreement.  THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES THERETO.


 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective officers and duly
authorized, as of the date first above written.


 


BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
CONSTRUCTION AND REVOLVING LOAN AGREEMENT, AND BORROWER AGREES TO ITS
TERMS.  THIS AGREEMENT IS DATED AS OF THE
DATE FIRST ABOVE STATED.


 


[SIGNATURE
PAGE ON FOLLOWING PAGE]


 


49





















 


SIGNATURE PAGE TO:


CONSTRUCTION AND REVOLVING LOAN
AGREEMENT


by
and among


BADGER STATE ETHANOL, LLC


and


AGSTAR FINANCIAL SERVICES, PCA


 


	
  BORROWER:

  	
  LENDER:

  
	
   

  	
   

  
	
  BADGER STATE ETHANOL, LLC, a

  Wisconsin limited liability company

  	
  AGSTAR FINANCIAL SERVICES, PCA

  an United States corporation

  
	
   

  	
   

  
	
  /s/ Gary L. Kramer

  	
   

  	
  /s/ Mark Schmidt

  	
   

  
	
  By Gary L. Kramer

  	
  By Mark Schmidt

  
	
  Its
  President and General Manager

  	
  Its Vice
  President

  
				



 


50





















 


EXHIBITS
AND SCHEDULES OMITTED


 


51





















 


CONVERTIBLE
NOTE


 


	
  $20,000,000.00

  	
   

  	
  June 22,
  2005

  



 


1.                                       FOR VALUE
RECEIVED, BADGER STATE ETHANOL, LLC, a Wisconsin limited liability company (the
“Borrower”), hereby promises to pay to the order of AGSTAR FINANCIAL SERVICES,
PCA., an United States instrumentality (the “Lender”), the principal sum of
Twenty  Million and No/100ths
($20,000,000.00) Dollars, or so much thereof as may be advanced to, or for the
benefit of, the Borrower and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein
pursuant to that certain Loan Agreement of even date herewith by and between
the Lender and the Borrower (the “Loan Agreement”), and which remains unpaid,
in lawful money of the United States and immediately available funds. This
Convertible Note is issued pursuant to the terms and provisions of the Loan
Agreement and is entitled to all of the benefits provided for in such Loan
Agreement.  All capitalized terms used
and not defined herein shall have the meanings assigned to them in the Loan
Agreement.


 


2.                                       Unless the Borrower shall
elect to convert the loan evidenced by this Convertible Note to a Fixed Rate
Loan on the Conversion Date, the outstanding principal balance of this
Convertible Note shall bear interest on the outstanding principal balance
accruing as of the date hereof at a variable rate determined by Lender to be
three percent (3.00%) above the LIBOR Rate in effect on the first Advance
pursuant to this Convertible Note.


 


3.                                       The “LIBOR Rate” means the London interbank offered rate per annum
for one-month deposits in United States dollars, as determined by the British
Banker’s Association average of interbank offered rates for United States
dollar deposits in the London market based on quotations at sixteen major
banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date;
provided, if Lender determines that the foregoing source is unavailable
for the applicable Interest Period, Lender shall determine LIBOR based on a new
index which is based on comparable information.


 


4.                                       The rate of
interest due hereunder shall initially be determined as of the date hereof and
shall thereafter be adjusted, as and when, and on the same day that, the LIBOR
Rate changes. All such adjustments to the rate of interest shall be made and
become effective as of the date of any change in the LIBOR Rate and shall
remain in effect until and including the day immediately preceding the next
such adjustment (each such day hereinafter being referred to as an “Adjustment
Date”).  All such adjustments to said rate shall be made and become effective as of the
Adjustment Date, and said rate as adjusted shall remain in effect until and
including the day immediately preceding the next Adjustment Date.  Interest hereunder shall be computed on the
basis of a year of three hundred sixty-five or three hundred sixty-six (365 or
366) days, but charged for actual days principal is outstanding.


 


52





















 


5.                                       Notwithstanding any other provision of
this Convertible Note, the rate of interest due hereunder shall be adjusted by
the Lender according to the following schedule should the Owner’s Equity
in the Borrower achieve the levels set forth below:


 


	
  Owner’s Equity

  	
   

  	
  Interest Rate

  	
   

  
	
  Less than 39.99%

  	
   

  	
  Applicable
  LIBOR Rate plus 325 basis points

  	
   

  
	
  40.00%—59.99%

  	
   

  	
  Applicable
  LIBOR Rate plus 300 basis points

  	
   

  
	
  Greater Than 60.00%

  	
   

  	
  Applicable
  LIBOR Rate plus 275 basis points

  	
   

  



 


Upon delivery of the monthly financial statements and the Compliance
Certificate required by the Loan Agreement, the rate of interest for any month
shall automatically be adjusted in accordance with the Owner’s Equity set forth
therein and the rates set forth above. 
Such automatic adjustment to the rate of interest shall take effect as
of the first Business Day of the month in which the Lender receives the related
Compliance Certificate.  If the Borrower
fails to deliver such Compliance Certificate which so sets forth the Owner’s
Equity within the period of time required by the Loan Agreement or if any Event
of Default occurs and is continuing, the rate of interest shall automatically
be adjusted to a rate equal to the applicable LIBOR Rate plus 325 basis points,
plus the default rate adjustment provided in Section 2.11 of the Loan
Agreement, such automatic adjustments:  (a) to
take effect as of the first Business Day after the last day on which the
Borrower was required to deliver the applicable Compliance Certificate in
accordance with the Loan Agreement or in the case of an Event of Default, on
the date the written notice is given to the Borrower of such Event of Default;
and (b) to remain in effect until subsequently adjusted in accordance
herewith upon the delivery of such Compliance Certificate or, in the case of an
Event of Default, when such Event of Default has been cured to the satisfaction
of the Lender.


 


6.                                       Advances may
only be made under this Convertible Note until the Completion Date after which
no further advances may be made hereunder. 
No amounts may be readvanced under this Convertible Note.  Any principal repayment by the Borrower will
reduce the commitment on the loan.


 


7.                                       Notwithstanding any of the
provisions of this Convertible Note, the rate of interest under this
Convertible Note may be adjusted by Lender pursuant to the provisions of
Sections 2.11 and 2.15 of the Loan Agreement.


 


8.                                 Accrued interest prior to
the Conversion Date shall be payable quarterly, with payments due on October 1,
2005, and January 1, April 1, and July 1, 2006 (each such date,
a “Quarterly Payment Dates”), commencing on the first Quarterly Payment Date
following the date on which the first advance is made hereunder, and continuing
on each Quarterly Payment Date thereafter until the Conversion Date.


 


9.                                       On the
Conversion Date, this 
Convertible Note shall become fully due and payable, except for
that portion of the outstanding principal balance owed by the Borrower on the
Conversion Date pursuant to this Convertible Note which is converted  into a term loan as provided by Section 2.04
of the Loan Agreement.


 


53





















 


10.                                 The Lender shall not
be obligated to convert any portion of the outstanding principal balance owed
by the Borrower on the Conversion Date into a Term Loan unless and until:  (a) the Lender shall have received a
Completion Certificate in a form and substance satisfactory to the Lender in
its sole discretion; (b) there shall have no Events of Default under the
Loan Agreement or any of the Loan Documents prior to the Conversion Date; and (c) the
representations and warranties contained in the Loan Agreement are correct on
and as of the effective date of the Conversion Date.


 


11.                                 On the Conversion
Date, the Borrower shall have the right to convert all or any part of the loan
evidenced by this Convertible Note into a Fixed Rate Loan, with the consent of
the Lender, which shall bear interest at a rate equal to the most recent
ten-year fixed rate bonds sold by the Federal Farm Credit Banks Funding
Corporation prior to the Conversion  Date, plus 225 basis points.


 


12.                                 Beginning on the first (1st)
day of the month following the month in which the Conversion Date occurs, and
continuing on the first (1st) day of each succeeding month
thereafter until the Maturity Date, the Borrower shall make equal monthly
payments of principal and accrued interest in such amounts as will be required
to fully amortize the entire outstanding principal of this Convertible Note,
together with accrued interest thereon, over a period not to exceed ten (10) years
from the Conversion Date.  The amount of
said monthly payments shall be recalculated and, if necessary, adjusted as of
each Adjustment Date, as defined herein, to account for changes in the
effective rate of interest hereunder and to maintain such ten-year
amortization.


 


13.                                 In addition to all other
payments required under this Promissory Note, the Borrower shall remit to
Lender all payments required by Section 2.05 of the Loan Agreement.


 


14.                                 The outstanding principal
balance of the Convertible Note, together with all accrued interest, if not
paid sooner, shall be due and payable in full on the earlier of (a) the
fifth  (5th) annual
anniversary of the Conversion Date or (b) June 30, 2011 (the “Maturity
Date”).


 


15.                                 This Note is
secured by, among other instruments, a Mortgage,  Security Agreement and Financing Statement
(the “Mortgage”) covering various parcels of real property, fixtures, and
personal property located in Green County, Wisconsin.  In the event any such security is found to be
invalid for whatever reason, such invalidity shall constitute an event of
default hereunder.  All of the
agreements, conditions, covenants, provisions, and stipulations contained in
the Mortgage, or any instrument securing this Note are hereby made a part of
this Note to the same extent and with the same force and effect as if they were
fully set forth herein. It is agreed that time is of the essence of this Note.


 


16.                                 Upon the
occurrence at any time of an Event of Default or at any time thereafter, the
outstanding principal balance hereof plus accrued interest hereon plus all
other amounts due hereunder shall, at the option of the Lender, be immediately
due and payable, without notice or demand and Lender shall be entitled to
exercise all remedies provided in this Convertible Note, the Loan Agreement or
any of the Loan Documents.


 


54





















 


17.                                 The
occurrence at any time of an Event of Default or at any time thereafter, the
Lender shall have the right to set off any and all amounts due hereunder by the
Borrower to the Lender against any indebtedness or obligation of the Lender to
the Borrower.


 


18.                                 If any
payment of principal or interest due hereunder is not paid within ten (10) days
of the due date thereof, the Borrower shall pay to the Lender a late charge
equal to five percent (5%) of the amount of such payment.


 


19.                                 The Borrower
promises to pay all costs of collection of this Convertible Note, including,
but not limited to, attorneys’ fees paid or incurred by the Lender on account
of such collection, whether or not suit is filed with respect thereto and
whether or not such costs are paid or incurred, or to be paid or incurred,
prior to or after the entry of judgment.


 


20.                                 Demand,
presentment, protest and notice of nonpayment and dishonor of this Convertible
Note are hereby waived.


 


21.                                 This
Convertible Note shall be governed by and construed in accordance with the laws
of the State of Minnesota.


 


22.                                 The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this Note,
the Loan Agreement and any instrument, agreement or document related hereto or
thereto, and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Minnesota
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.  
Nothing in this Convertible Note shall affect the right of the Lender to
bring any action or proceeding against the Borrower or its property in the
courts of any other jurisdiction to the extent permitted by law.


 


 


	
   

  	
  BADGER STATE ETHANOL, LLC,

  
	
   

  	
  a Wisconsin limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gary L. Kramer

  	
   

  
	
   

  	
  By: Gary L. Kramer

  
	
   

  	
   Its:
  President and General Manager

  



 


55





















 


PROMISSORY
NOTE


 


	
  $9,600,000.00

  	
   

  	
  June 
  22, 2005

  



 


1.                                       FOR VALUE
RECEIVED, BADGER STATE ETHANOL, LLC, a Wisconsin limited liability company (the
“Borrower”), hereby promises to pay to the order of AGSTAR FINANCIAL SERVICES,
P.C.A., an United States corporation (the “Lender”), at its location in
Mankato, Minnesota, or at such other location as Lender may designate from time
to time, the principal sum of Nine Million Six Hundred Thousand and 00/100
DOLLARS ($9,600,000.00), in lawful money of the United States and immediately
available funds, together with interest on the unpaid balance accruing as of
the date hereof at the rates set forth in this Promissory Note. This Promissory
Note is issued pursuant to the terms and provisions of the Loan Agreement and
is entitled to all of the benefits provided for in said agreement.  All capitalized terms used and not defined
herein shall have the meanings assigned to them in the Loan Agreement.


 


2.                                       Unless the
Borrower shall elect to convert the loan evidenced by this Promissory Note to a
Fixed Rate Loan, the outstanding principal balance of this Promissory Note
shall bear interest accruing as of the date hereof at a variable rate
determined by Lender to be three percent (3.00%) above the LIBOR Rate in effect
on the date hereof.


 


3.                                       The LIBOR Rate means the London interbank offered rate per annum
for one-month deposits in United States dollars, as determined by the British
Banker’s Association average of interbank offered rates for United States
dollar deposits in the London market based on quotations at sixteen major
banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date;
provided, if Lender determines that the foregoing source is unavailable
for the applicable Interest Period, Lender shall determine LIBOR based on a new
index which is based on comparable information.


 


4.                                       The rate of
interest due hereunder shall initially be determined as of the date hereof and
shall thereafter be adjusted, as and when, and on the same day that, the LIBOR
Rate changes. All such adjustments to the rate of interest shall be made and
become effective as of the date of any change in the LIBOR Rate and shall
remain in effect until and including the day immediately preceding the next
such adjustment. All such adjustments to said rate
shall be made and become effective as of the Adjustment Date, and said rate as
adjusted shall remain in effect until and including the day immediately
preceding the next Adjustment Date. 
Interest hereunder shall be computed on the basis of a year of three
hundred sixty-five or three hundred sixty-six (365 or 366) days, but charged
for actual days principal is outstanding.


 


5.                                       Notwithstanding any other provision of
this Revolving Note, the rate of interest due hereunder shall be adjusted by
the Lender according to the following schedule should the Owner’s Equity
in the Borrower achieve the levels set forth below:


 


	
  Owner’s
  Equity

  	
   

  	
  Interest
  Rate

  	
   

  
	
  Less than 39.99%

  	
   

  	
  Applicable LIBOR Rate plus 325 basis points

  	
   

  
	
  40.00%—59.99%

  	
   

  	
  Applicable LIBOR Rate plus 300 basis points

  	
   

  
	
  Greater Than 60.00%

  	
   

  	
  Applicable LIBOR Rate plus 275 basis points

  	
   

  



 


56





















 


Upon delivery of the monthly financial statements and the Compliance
Certificate required by the Loan Agreement, the rate of interest for any month
shall automatically be adjusted in accordance with the Owner’s Equity set forth
therein and the rates set forth above. 
Such automatic adjustment to the rate of interest shall take effect as
of the first Business Day of the month in which the Lender receives the related
Compliance Certificate.  If the Borrower
fails to deliver such Compliance Certificate which so sets forth the Owner’s
Equity within the period of time required by the Loan Agreement or if any Event
of Default occurs and is continuing, the rate of interest shall automatically
be adjusted to a rate equal to the applicable LIBOR Rate plus 325 basis points,
plus the default rate adjustment provided in Section 13 of this Note, such
automatic adjustments:  (a) to take
effect as of the first Business Day after the last day on which the Borrower
was required to deliver the applicable Compliance Certificate in accordance
with the Loan Agreement or in the case of an Event of Default, on the date the
written notice is given to the Borrower of such Event of Default; and (b) to
remain in effect until subsequently adjusted in accordance herewith upon the
delivery of such Compliance Certificate or, in the case of an Event of Default,
when such Event of Default has been cured to the satisfaction of the Lender.


 


6.                                       The Borrower
shall have the right to convert all or a portion of the loan evidenced by this
Promissory Note into a Fixed Rate Loan, with the consent of the Lender, which
shall bear interest at a rate equal to the most recent ten-year fixed rate
bonds sold by the Federal Farm Credit Banks Funding Corporation prior to the
Adjustment Date, plus 225 basis points.


 


7.                                       Notwithstanding any of the
provisions of this Promissory Note, the rate of interest under this Promissory
Note may be adjusted by Lender pursuant to the provisions of Sections 2.11 and
2.15 of the Loan Agreement.


 


8.                                       Beginning on August 1,
2005, and continuing on the first (1st) day of each succeeding month
thereafter until July 1, 2010 (the “Maturity Date”), the Borrower shall
make equal monthly payments of principal and accrued interest in such amounts
as will be required to fully amortize the entire outstanding principal of this
Promissory Note, together with accrued interest thereon, over a period of ten (10) years
from the date hereof.  The amount of such
monthly payments shall be recalculated and, if necessary, adjusted as of each
payment date to account for changes in the effective rate of interest hereunder
and to maintain such ten-year amortization.


 


9.                                       In addition to all other
payments required under this Promissory Note, the Borrower shall remit to
Lender all payments required by Section 2.05 of the Loan Agreement.


 


10.                                 Notwithstanding
anything herein to the contrary, the full outstanding principal balance of this
Promissory Note, and all accrued interest hereon shall be due and payable in
full on the Maturity Date.


 


57





















 


11.                                 This Note is
secured by, among other instruments, a Mortgage,  Security Agreement and Financing Statement
(the “Mortgage”) covering various parcels of real property, fixtures, and
personal property located in Green County, Wisconsin.  In the event any such security is found to be
invalid for whatever reason, such invalidity shall constitute an event of
default hereunder.  All of the
agreements, conditions, covenants, provisions, and stipulations contained in
the Mortgage, or any instrument securing this Note are hereby made a part of
this Note to the same extent and with the same force and effect as if they were
fully set forth herein. It is agreed that time is of the essence of this Note.


 


12.                                 All payments
and prepayments shall, at the option of the Lender, be applied first to costs
of collection, if any, second to any late charges, third to accrued interest on
this Note, and lastly to principal (and, with respect to prepayments, to
installments of principal in the inverse order of maturity).


 


13.                                 Notwithstanding
anything to the contrary contained herein, if and for so long as an Event of
Default, or an event or condition which with the passage of time or the giving
of notice or both would constitute an Event of Default, has occurred and
continues or exists, the rate of interest hereunder shall be equal to two percent
(2.0%) per annum in excess of the interest rate otherwise in effect pursuant to
the terms hereof.


 


14.                                 In the event the
Borrower shall fail to pay any installment due hereunder (including, without
limitation, the final installment due on the Maturity Date) within ten (10) days
after the due date thereof, Borrower shall pay to the Lender a late payment
premium in an amount equal to five  
percent (5.0%) of the aggregate delinquent installment amount.


 


15.                                 Upon the
occurrence at any time of an Event of Default or at any time thereafter, the
outstanding principal balance hereof plus accrued interest hereon plus all
other amounts due hereunder shall, at the option of the Lender, be immediately
due and payable, without notice or demand and Lender shall be entitled to
exercise all remedies provided in this Promissory Note, the Loan Agreement or
any of the Loan Documents.


 


16.                                 Upon the occurrence at
any time of an Event of Default, and at any time thereafter, the Lender shall
have the right to set off any and all amounts due hereunder by the Borrower to
the Lender against any indebtedness or obligation of the Lender to the
Borrower.


 


17.                                 The Borrower
promises to pay all costs of collection of this Promissory Note, including, but
not limited to, attorneys’ fees paid or incurred by the Lender on account of
such collection, whether or not suit is filed with respect thereto and whether
or not such costs are paid or incurred, or to be paid or incurred, prior to or
after the entry of judgment.


 


18.                                 Demand,
presentment, protest and notice of nonpayment and dishonor of this Promissory
Note are hereby waived.


 


19.                                 This
Promissory Note shall be governed by and construed in accordance with the laws
of the State of Minnesota.


 


58





















 


20.                                 The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this Note,
the Loan Agreement and any instrument, agreement or document related hereto or
thereto, and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Minnesota
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.  
Nothing in this Promissory Note shall affect the right of the Lender to
bring any action or proceeding against the Borrower or its property in the courts
of any other jurisdiction to the extent permitted by law.


 


 


	
   

  	
  BADGER STATE ETHANOL, LLC

  
	
   

  	
  a Wisconsin limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gary L. Kramer

  	
   

  
	
   

  	
  By: Gary L. Kramer

  
	
   

  	
   Its:
  President and General Manager

  



 


59





















 


REVOLVING NOTE


 


	
  $9,000,000.00

  	
   

  	
  June 22,
  2005

  



 


FOR
VALUE RECEIVED, BADGER STATE ETHANOL, LLC, a Wisconsin limited liability
company (the “Borrower”), hereby promises to pay to the order of AGSTAR
FINANCIAL SERVICES, PCA, an United States instrumentality (the “Lender”), the
principal sum of Nine  Million and
No/100ths ($9,000,000.00) Dollars, or so much thereof as may be advanced to, or
for the benefit of, the Borrower and be outstanding, with interest thereon, to
be computed on each advance from the date of its disbursement as set forth
herein pursuant to that certain Loan Agreement of even date herewith by and
between the Lender and the Borrower (the “Loan Agreement”), and which remains
unpaid, in lawful money of the United States and immediately available
funds.  This Revolving Note is issued
pursuant to the terms and provisions of the Loan Agreement and is entitled to
all of the benefits provided for in such Loan Agreement.  All capitalized terms used and not defined
herein shall have the meanings assigned to them in the Loan Agreement.


 


1.                                       The outstanding principal
balance of this Revolving Note shall bear interest at a variable rate
determined by Lender to be three percent (3.00%) above the LIBOR Rate in effect
on the first Advance pursuant to this Revolving Note.  Notwithstanding the foregoing, the rate of
interest under this Revolving Note may be adjusted by Lender pursuant to the
provisions of Sections 2.11 and 2.15 of the Loan Agreement.


 


2.                                       The LIBOR Rate means the London interbank offered rate per annum
for one-month deposits in United States dollars, as determined by the British
Banker’s Association average of interbank offered rates for United States
dollar deposits in the London market based on quotations at sixteen major
banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date;
provided, if Lender determines that the foregoing source is unavailable
for the applicable Interest Period, Lender shall determine LIBOR based on a new
index which is based on comparable information.


 


4.                                       The rate of
interest due hereunder shall initially be determined as of the date hereof and
shall thereafter be adjusted, as and when, and on the same day that, the LIBOR
Rate changes. All such adjustments to the rate of interest shall be made and
become effective as of the date of any change in the LIBOR Rate and shall
remain in effect until and including the day immediately preceding the next
such adjustment (each such day hereinafter being referred to as an “Adjustment
Date”).  All such adjustments to said rate shall be made and become effective as of the
Adjustment Date, and said rate as adjusted shall remain in effect until and
including the day immediately preceding the next Adjustment Date.  Interest hereunder shall be computed on the
basis of a year of three hundred sixty-five or three hundred sixty-six (365 or
366) days, but charged for actual days principal is outstanding.


 


5.                                       Notwithstanding any other provision of
this Revolving Note, the rate of interest due hereunder shall be adjusted by
the Lender according to the following schedule should the Owner’s Equity
in the Borrower achieve the levels set forth below:


 


	
  Owner’s Equity

  	
   

  	
  Interest Rate

  	
   

  
	
  Less than 39.99%

  	
   

  	
  Applicable LIBOR Rate plus 325 basis points

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  40.00%—59.99%

  	
   

  	
  Applicable LIBOR Rate plus 300 basis points

  	
   

  
	
  Greater Than 60.00%

  	
   

  	
  Applicable LIBOR Rate plus 275 basis points

  	
   

  



 


60





















 


Upon delivery of the monthly financial statements and the Compliance
Certificate required by the Loan Agreement, the rate of interest for any month
shall automatically be adjusted in accordance with the Owner’s Equity set forth
therein and the rates set forth above. 
Such automatic adjustment to the rate of interest shall take effect as
of the first Business Day of the month in which the Lender receives the related
Compliance Certificate.  If the Borrower
fails to deliver such Compliance Certificate which so sets forth the Owner’s
Equity within the period of time required by the Loan Agreement or if any Event
of Default occurs, the rate of interest shall automatically be adjusted to a
rate equal to the applicable LIBOR Rate plus 325 basis points, plus the default
rate adjustment provided in Section 2.11 of the Loan Agreement, such
automatic adjustments:  (a) to take
effect as of the first Business Day after the last day on which the Borrower
was required to deliver the applicable Compliance Certificate in accordance
with the Loan Agreement or in the case of an Event of Default, on the date the
written notice is given to the Borrower of such Event of Default; and (b) to
remain in effect until subsequently adjusted in accordance herewith upon the
delivery of such Compliance Certificate or, in the case of an Event of Default,
when such Event of Default has been cured to the satisfaction of the Lender.


 


6.                                       In addition
to the interest 
payable under this Revolving Note, Borrower agrees to pay to the
Lender an Unused Commitment Fee on the principal balance of this Revolving Note
remaining undisbursed, or portion thereof, from the date hereof until the
Maturity Date at the rate of 0.25% per annum, payable in arrears in quarterly
installments payable on the first day of each October, January, April and July until
the Maturity Date.


 


7.                                       The outstanding
principal balance hereof, together with all accrued interest, if not paid
sooner, shall be due and payable in full on July 1, 2010 (the “Maturity
Date”).


 


8.                                       Beginning on
the first (1st) day of the month following the execution of this
Revolving Note,  and
continuing on the first (1st) day of each succeeding month
thereafter until the Maturity Date, the Borrower shall make monthly payments of
all accrued interest under this Revolving Note.


 


9.                                       All payments
and prepayments shall, at the option of the Lender, be applied first to any
costs of collection, second to any late charges, third to accrued interest and
the remainder thereof to principal.


 


10.                                 This Revolving Note
may be prepaid at any time, at the option of the Borrower, either in whole or
in part, without premium or penalty. 
This Revolving Note is subject to mandatory prepayment, at the option of
the Lender, as provided in the Loan Agreement, without premium or penalty.


 


61





















 


11.                                 This
Revolving Note is issued pursuant to the terms and provisions of the Loan
Agreement and is entitled to all of the benefits provided for in said
agreement.  All capitalized terms used
and not defined herein shall have the meanings assigned to them in the Loan
Agreement.


 


12.                                 Upon the
occurrence at any time of an Event of Default or at any time thereafter, the
outstanding principal balance hereof plus accrued interest hereon plus all
other amounts due hereunder shall, at the option of the Lender, be immediately
due and payable, without notice or demand and Lender shall be entitled to
exercise all remedies provided in this Revolving Note, the Loan Agreement or
any of the Loan Documents.


 


13.                                 The
occurrence at any time of an Event of Default or at any time thereafter, the
Lender shall have the right to set off any and all amounts due hereunder by the
Borrower to the Lender against any indebtedness or obligation of the Lender to
the Borrower.


 


14.                                 If any
payment of principal or interest due hereunder is not paid within ten (10) days
of the due date thereof, the Borrower shall pay to the Lender a late charge
equal to five percent (5%) of the amount of such payment.


 


15.                                 The Borrower
promises to pay all costs of collection of this Revolving Note, including, but not
limited to, attorneys’ fees paid or incurred by the Lender on account of such
collection, whether or not suit is filed with respect thereto and whether or
not such costs are paid or incurred, or to be paid or incurred, prior to or
after the entry of judgment.


 


16.                                 Demand,
presentment, protest and notice of nonpayment and dishonor of this Promissory
Note are hereby waived.


 


17.                                 This
Promissory Note shall be governed by and construed in accordance with the laws
of the State of Minnesota.


 


18.                                 The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this Note,
the Loan Agreement and any instrument, agreement or document related hereto or
thereto, and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Minnesota
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.  
Nothing in this Promissory Note shall affect the right of the Lender to
bring any action or proceeding against the Borrower or its property in the
courts of any other jurisdiction to the extent permitted by law.


 


 


	
   

  	
  BADGER STATE ETHANOL, LLC

  
	
   

  	
  a Wisconsin limited liability company

  
	
   

  	
   

  
	
   

  	
  /s/ Gary L. Kramer

  	
   

  
	
   

  	
  By: Gary L. Kramer

  
	
   

  	
   Its:
  President and General Manager

  



 


62





















 


PROMISSORY
NOTE


 


	
  $5,891,086.94

  	
   

  	
  June 22,
  2005

  



 


1.                                       FOR VALUE
RECEIVED, BADGER STATE ETHANOL, LLC, a Wisconsin limited liability company (the
“Borrower”), hereby promises to pay to the order of AGSTAR FINANCIAL SERVICES,
P.C.A., an United States corporation (the “Lender”), at its location in
Mankato, Minnesota, or at such other location as Lender may designate from time
to time, the principal sum of Five Million Eight Hundred Ninety-One Thousand
Eighty-Six and 94/100 DOLLARS ($5,891,086.94), in lawful money of the United
States and immediately available funds, together with interest on the unpaid
balance accruing as of the date hereof at the rates set forth in this
Promissory Note.  This Promissory Note is
issued pursuant to the terms and provisions of the Loan Agreement and is
entitled to all of the benefits provided for in said agreement.  All capitalized terms used and not defined
herein shall have the meanings assigned to them in the Loan Agreement.


 


2.                                       Unless the
Borrower shall elect to convert the loan evidenced by this Promissory Note to a
Fixed Rate Loan, the outstanding principal balance of this Promissory Note
shall bear interest accruing as of the date hereof at a variable rate
determined by Lender to be three percent (3.00%) above the LIBOR Rate in effect
on the date hereof.


 


3.                                       The LIBOR Rate means the London interbank offered rate per annum
for one-month deposits in United States dollars, as determined by the British
Banker’s Association average of interbank offered rates for United States
dollar deposits in the London market based on quotations at sixteen major
banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date;
provided, if Lender determines that the foregoing source is unavailable
for the applicable Interest Period, Lender shall determine LIBOR based on a new
index which is based on comparable information.


 


4.                                       The rate of
interest due hereunder shall initially be determined as of the date hereof and
shall thereafter be adjusted, as and when, and on the same day that, the LIBOR
Rate changes. All such adjustments to the rate of interest shall be made and
become effective as of the date of any change in the LIBOR Rate and shall
remain in effect until and including the day immediately preceding the next
such adjustment. All such adjustments to said rate
shall be made and become effective as of the Adjustment Date, and said rate as
adjusted shall remain in effect until and including the day immediately
preceding the next Adjustment Date. 
Interest hereunder shall be computed on the basis of a year of three
hundred sixty-five or three hundred sixty-six (365 or 366) days, but charged
for actual days principal is outstanding.


 


5.                                       Notwithstanding any other provision of
this Revolving Note, the rate of interest due hereunder shall be adjusted by
the Lender according to the following schedule should the Owner’s Equity
in the Borrower achieve the levels set forth below:


 


	
  Owner’s Equity

  	
   

  	
  Interest Rate

  	
   

  
	
  Less than 39.99%

  	
   

  	
  Applicable LIBOR Rate plus 325 basis points

  	
   

  
	
  40.00%—59.99%

  	
   

  	
  Applicable LIBOR Rate plus 300 basis points

  	
   

  
	
  Greater Than 60.00%

  	
   

  	
  Applicable LIBOR Rate plus 275 basis points

  	
   

  



 


63





















 


Upon delivery of the monthly financial statements and the Compliance
Certificate required by the Loan Agreement, the rate of interest for any month
shall automatically be adjusted in accordance with the Owner’s Equity set forth
therein and the rates set forth above. 
Such automatic adjustment to the rate of interest shall take effect as
of the first Business Day of the month in which the Lender receives the related
Compliance Certificate.  If the Borrower
fails to deliver such Compliance Certificate which so sets forth the Owner’s
Equity within the period of time required by the Loan Agreement or if any Event
of Default occurs and is continuing, the rate of interest shall automatically
be adjusted to a rate equal to the applicable LIBOR Rate plus 325 basis points,
plus the default rate adjustment provided in Section 13 of this Note, such
automatic adjustments:  (a) to take
effect as of the first Business Day after the last day on which the Borrower
was required to deliver the applicable Compliance Certificate in accordance
with the Loan Agreement or in the case of an Event of Default, on the date the
written notice is given to the Borrower of such Event of Default; and (b) to
remain in effect until subsequently adjusted in accordance herewith upon the
delivery of such Compliance Certificate or, in the case of an Event of Default,
when such Event of Default has been cured to the satisfaction of the Lender.


 


6.                                       The Borrower
shall have the right to convert all or a portion of the loan evidenced by this
Promissory Note into a Fixed Rate Loan, with the consent of the Lender, which
shall bear interest at a rate equal to the most recent ten-year fixed rate
bonds sold by the Federal Farm Credit Banks Funding Corporation prior to the
Adjustment Date, plus 225 basis points.


 


7.                                       Notwithstanding any of the
provisions of this Promissory Note, the rate of interest under this Promissory
Note may be adjusted by Lender pursuant to the provisions of Sections 2.11 and
2.15 of the Loan Agreement.


 


8.                                       Beginning on August 1,
2005, and continuing on the first (1st) day of each succeeding month
thereafter until July 1, 2010 (the “Maturity Date”), the Borrower shall
make equal monthly payments of principal and accrued interest in such amounts
as will be required to fully amortize the entire outstanding principal of this
Promissory Note, together with accrued interest thereon, over a period of ten (10) years
from the date hereof.  The amount of such
monthly payments shall be recalculated and, if necessary, adjusted as of each
payment date to account for changes in the effective rate of interest hereunder
and to maintain such ten-year amortization.


 


9.                                       In addition to all other
payments required under this Promissory Note, the Borrower shall remit to
Lender all payments required by Section 2.05 of the Loan Agreement.


 


10.                                 Notwithstanding
anything herein to the contrary, the full outstanding principal balance of this
Promissory Note, and all accrued interest hereon shall be due and payable in
full on the Maturity Date.


 


64





















 


11.                                 This Note is
secured by, among other instruments, a Mortgage,  Security Agreement and Financing Statement
(the “Mortgage”) covering various parcels of real property, fixtures, and
personal property located in Green County, Wisconsin.  In the event any such security is found to be
invalid for whatever reason, such invalidity shall constitute an event of
default hereunder.  All of the
agreements, conditions, covenants, provisions, and stipulations contained in
the Mortgage, or any instrument securing this Note are hereby made a part of
this Note to the same extent and with the same force and effect as if they were
fully set forth herein. It is agreed that time is of the essence of this Note.


 


12.                                 All payments
and prepayments shall, at the option of the Lender, be applied first to costs
of collection, if any, second to any late charges, third to accrued interest on
this Note, and lastly to principal (and, with respect to prepayments, to
installments of principal in the inverse order of maturity).


 


13.                                 Notwithstanding
anything to the contrary contained herein, if and for so long as an Event of
Default, or an event or condition which with the passage of time or the giving
of notice or both would constitute an Event of Default, has occurred and
continues or exists, the rate of interest hereunder shall be equal to two
percent (2.0%) per annum in excess of the interest rate otherwise in effect
pursuant to the terms hereof.


 


14.                                 In the event the
Borrower shall fail to pay any installment due hereunder (including, without
limitation, the final installment due on the Maturity Date) within ten (10) days
after the due date thereof, Borrower shall pay to the Lender a late payment
premium in an amount equal to five  
percent (5.0%) of the aggregate delinquent installment amount.


 


15.                                 Upon the
occurrence at any time of an Event of Default or at any time thereafter, the
outstanding principal balance hereof plus accrued interest hereon plus all
other amounts due hereunder shall, at the option of the Lender, be immediately
due and payable, without notice or demand and Lender shall be entitled to
exercise all remedies provided in this Promissory Note, the Loan Agreement or
any of the Loan Documents.


 


16.                                 Upon the occurrence at
any time of an Event of Default, and at any time thereafter, the Lender shall
have the right to set off any and all amounts due hereunder by the Borrower to
the Lender against any indebtedness or obligation of the Lender to the
Borrower.


 


17.                                 The Borrower
promises to pay all costs of collection of this Promissory Note, including, but
not limited to, attorneys’ fees paid or incurred by the Lender on account of
such collection, whether or not suit is filed with respect thereto and whether
or not such costs are paid or incurred, or to be paid or incurred, prior to or
after the entry of judgment.


 


18.                                 Demand,
presentment, protest and notice of nonpayment and dishonor of this Promissory
Note are hereby waived.


 


19.                                 This
Promissory Note shall be governed by and construed in accordance with the laws
of the State of Minnesota.


 


65





















 


20.                                 The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this Note,
the Loan Agreement and any instrument, agreement or document related hereto or
thereto, and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Minnesota
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.  
Nothing in this Promissory Note shall affect the right of the Lender to
bring any action or proceeding against the Borrower or its property in the
courts of any other jurisdiction to the extent permitted by law.


 


 


	
   

  	
  BADGER STATE ETHANOL, LLC

  
	
   

  	
  a Wisconsin limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gary L. Kramer

  	
   

  
	
   

  	
  By: Gary L. Kramer

  
	
   

  	
   Its:
  President and General Manager

  



 


66