Exhibit

10.1




 




CREDIT

AGREEMENT




 




dated as of June 19, 2002




 




between




 




GREAT

PLAINS ETHANOL, LLC




as Borrower




 




and




 




AGCOUNTRY

FARM CREDIT SERVICES, FLCA




as Lender




 





























 




TABLE OF CONTENTS




 




	

  ARTICLE I.


  	

  DEFINITIONS; CONSTRUCTION


  
	

   


  	

   


  
	

  Section

  1.01


  	

  Definitions


  
	

  Section

  1.02


  	

  Accounting Terms and

  Determination


  
	

  Section

  1.03


  	

  Terms Generally


  
	

   


  	

   


  
	

  ARTICLE II


  	

  AMOUNTS AND TERMS

  OF THE COMMITMENTS


  
	

   


  	

   


  
	

  Section

  2.01


  	

  General Description of

  the Loans


  
	

  Section

  2.02


  	

  Construction Loan

  Commitment


  
	

  Section

  2.03


  	

  Procedure for

  Construction Borrowings


  
	

  Section

  2.04


  	

  Reserved


  
	

  Section

  2.05


  	

  Revolving Loan

  Commitment


  
	

  Section

  2.06


  	

  Procedure for

  Revolving Borrowings


  
	

  Section

  2.07


  	

  Interest Rates


  
	

  Section

  2.08


  	

  Reserved


  
	

  Section

  2.09


  	

  Repayment of Loans


  
	

  Section

  2.10


  	

  Additional Payments


  
	

  Section

  2.11


  	

  Evidence of

  Indebtedness


  
	

  Section

  2.12


  	

  Prepayments


  
	

  Section

  2.13


  	

  Interest on Loans


  
	

  Section 2.14


  	

  Fees


  
	

  Section

  2.15


  	

  Computation of

  Interest and Fees


  
	

  Section

  2.16


  	

  Reserved


  
	

  Section

  2.17


  	

  Reserved


  
	

  Section

  2.18


  	

  Increased Costs


  
	

  Section

  2.19


  	

  Reserved


  
	

  Section

  2.20


  	

  Taxes


  
	

  Section

  2.21


  	

  Payments Generally


  
	

   


  	

   


  
	

  ARTICLE III


  	

  CONDITIONS PRECEDENT TO

  LOANS


  
	

   


  	

   


  
	

  Section

  3.01


  	

  Conditions To

  Effectiveness


  
	

  Section

  3.02


  	

  Each Loan


  
	

  Section 3.03


  	

  Each Construction Loan


  
	

  Section

  3.04


  	

  Delivery of Documents


  
	

   


  	

   


  
	

  ARTICLE IV.


  	

  REPRESENTATIONS AND

  WARRANTIES


  
	

   


  	

   


  
	

  Section

  4.01


  	

  Existence; Power


  
	

  Section

  4.02


  	

  Organizational Power;

  Authorization


  
	

  Section

  4.03


  	

  Governmental

  Approvals; No Conflicts


  
	

  Section

  4.04


  	

  Financial Statements


  





 





























 




	

  Section

  4.05


  	

  Litigation and

  Environmental Matters


  
	

  Section

  4.06


  	

  Compliance with Laws

  and Agreements


  
	

  Section

  4.07


  	

  Investment Company

  Act, Etc.


  
	

  Section

  4.08


  	

  Taxes


  
	

  Section

  4.09


  	

  Margin Regulations


  
	

  Section

  4.10


  	

  ERISA


  
	

  Section

  4.11


  	

  Ownership of Property


  
	

  Section

  4.12


  	

  Disclosure


  
	

  Section 4.13


  	

  Labor Relations


  
	

  Section

  4.14


  	

  Subsidiaries


  
	

  Section

  4.15


  	

  Construction


  
	

  Section

  4.16


  	

  Projections


  
	

  Section

  4.17


  	

  Material Contracts


  
	

  Section

  4.18


  	

  Permits


  
	

   


  	

   


  
	

  ARTICLE V.


  	

  AFFIRMATIVE

  COVENANTS


  
	

   


  	

   


  
	

  Section

  5.01


  	

  Financial Statements

  and Other Information


  
	

  Section

  5.02


  	

  Notices of Material

  Events


  
	

  Section

  5.03


  	

  Existence; Conduct of

  Business


  
	

  Section

  5.04


  	

  Compliance with Laws,

  Etc.


  
	

  Section

  5.05


  	

  Payment of Obligations


  
	

  Section

  5.06


  	

  Books and Records


  
	

  Section

  5.07


  	

  Visitation,

  Inspection, Audit, Etc.


  
	

  Section

  5.08


  	

  Maintenance of

  Properties; Insurance


  
	

  Section

  5.09


  	

  Use of Proceeds


  
	

  Section

  5.10


  	

  Subsidiaries


  
	

  Section

  5.11


  	

  Reserved


  
	

  Section

  5.12


  	

  Food Security Act

  Compliance


  
	

  Section

  5.13


  	

  Permitted Construction


  
	

  Section

  5.14


  	

  Non-Liability of

  Lender


  
	

   


  	

   


  
	

  ARTICLE VI.


  	

  FINANCIAL

  COVENANTS


  
	

   


  	

   


  
	

  Section

  6.01


  	

  Fixed Charge Coverage

  Ratio


  
	

  Section

  6.02


  	

  Leverage Ratio


  
	

  Section

  6.03


  	

  Capital Expenditures


  
	

  Section

  6.04


  	

  Current Ratio


  
	

   


  	

   


  
	

  ARTICLE VII.


  	

  NEGATIVE

  COVENANTS


  
	

   


  	

   


  
	

  Section

  7.01


  	

  Indebtedness.


  
	

  Section

  7.02


  	

  Negative Pledge


  
	

  Section

  7.03


  	

  Fundamental Changes


  
	

  Section

  7.04


  	

  Investments, Loans,

  Etc.


  
	

  Section

  7.05


  	

  Restricted Payments


  
	

  Section

  7.06


  	

  Sale of Assets


  





 




ii





























 




	

  Section

  7.07


  	

  Transactions with

  Affiliates


  
	

  Section

  7.08


  	

  Restrictive Agreements


  
	

  Section 7.09


  	

  Sale and Leaseback

  Transactions


  
	

  Section

  7.10


  	

  Lease Obligations


  
	

  Section

  7.11


  	

  Hedging Agreements


  
	

  Section

  7.12


  	

  Amendment to Material

  Documents and Construction Plans


  
	

  Section

  7.13


  	

  Accounting Changes


  
	

  Section

  7.14


  	

  Construction


  
	

  Section

  7.15


  	

  Deposit Accounts


  
	

   


  	

   


  
	

  ARTICLE VIII.


  	

  EVENTS OF

  DEFAULT


  
	

   


  	

   


  
	

  Section

  8.01


  	

  Events of Default


  
	

   


  	

   


  
	

  ARTICLE IX.


  	

  MISCELLANEOUS


  
	

   


  	

   


  
	

  Section 9.01


  	

  Notices


  
	

  Section

  9.02


  	

  Waiver; Amendments


  
	

  Section

  9.03


  	

  Expenses;

  Indemnification


  
	

  Section

  9.04


  	

  Successors and Assigns


  
	

  Section

  9.05


  	

  Governing Law;

  Jurisdiction; Consent to Service of Process


  
	

  Section

  9.06


  	

  Waiver of Jury Trial


  
	

  Section

  9.07


  	

  Right of Setoff


  
	

  Section

  9.08


  	

  Counterparts;

  Integration


  
	

  Section

  9.09


  	

  Survival


  
	

  Section

  9.10


  	

  Severability


  
	

  Section

  9.11


  	

  Confidentiality


  
	

  Section

  9.12


  	

  Interest Rate

  Limitation


  
	

  Section

  9.13.


  	

  Inspections


  
	

  Section

  9.14


  	

  Termination


  





 




	

  Schedules


  	

   


  
	

   


  	

   


  
	

  Schedule 4.05


  	

  -           Environmental Matters


  
	

  Schedule 4.17(a)


  	

  -           Management Contracts


  
	

  Schedule 4.17(b)


  	

  -           Supply Contracts


  
	

  Schedule 4.17(c)


  	

  -           Off-Take Contracts


  
	

  Schedule 4.17(d)


  	

  -           Transportation Contracts


  
	

  Schedule 4.17(e)


  	

  -           Power Contracts


  
	

  Schedule 4.18


  	

  -           Permits


  
	

  Schedule 7.01


  	

  -           Outstanding Indebtedness


  
	

  Schedule 7.02


  	

  -           Existing Liens


  
	

  Schedule 7.04


  	

  -           Existing Investments


  
	

  Schedule 7.15


  	

  -           Deposit Accounts


  





 




iii





























 




	

  Exhibits


  	

   


  
	

   


  	

   


  
	

  Exhibit A


  	

  -           Form of Construction Note


  
	

  Exhibit B


  	

  -           Form of Revolving Credit Note


  
	

  Exhibit 2.03


  	

  -           Form of Construction Draw Request


  
	

  Exhibit 2.05


  	

  -           Form of Notice of Revolving

  Conversion


  
	

  Exhibit 2.06


  	

  -           Form of Revolving Draw Request


  
	

  Exhibit 2.07


  	

  -           Form of Interest Election


  
	

  Exhibit 3.01(e)(xi)


  	

  -           Form of Secretary’s Certificate


  
	

  Exhibit 3.01(e)(xii)


  	

  -           Form of Opinion of Borrower’s

  Counsel


  
	

  Exhibit 3.01(e)(xiii)


  	

  -           Form of Officer’s Certificate


  
	

  Exhibit 3.01(e)(xvi)


  	

  -           Form of Solvency Certificate


  





 




iv





























 




CREDIT

AGREEMENT




 




THIS

CREDIT AGREEMENT (this “Agreement”)  is made and entered into as of June 19,

2002, by and between GREAT PLAINS ETHANOL, LLC, a South Dakota limited

liability company (“Borrower”)

and AGCOUNTRY FARM CREDIT SERVICES, FLCA (“Lender”).




 




W I T N

E S S E T H:




 




WHEREAS,

Borrower has requested that Lender (a) establish a $32,500,000 multiple advance

construction loan facility in favor of Borrower, (b) convert amounts

outstanding under the construction loan facility to a term loan upon

satisfaction of certain conditions, and (c) establish a $6,000,000 revolving

credit facility in favor (which shall permanently reduce the amount of term

loan outstanding) of Borrower; and




 




WHEREAS,

subject to the terms and conditions of this Agreement, Lender is willing to

provide such financing to Borrower.




 




NOW,

THEREFORE, in consideration of the premises and the mutual

covenants contained herein, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, Borrower and Lender

agree as follows:




 




ARTICLE I.




 




DEFINITIONS; CONSTRUCTION




 




Section 1.01         Definitions.  In addition to the other terms defined

herein, the following terms used herein shall have the meanings herein

specified (to be equally applicable to both the singular and plural forms of

the terms defined):




 




“Affiliate”

shall mean, as to any Person, any other Person that directly, or indirectly

through one or more intermediaries, Controls, is Controlled by, or is under

common Control with, such Person.




 




“Base Rate”

shall mean the per annum adjustable rate of interest, as of the applicable

Determination Date, charged by AgriBank FCB (or its successors or any other

similar funding source regularly used by Lender from time to time in Lender’s

sole discretion) to Lender for obligations of the same maturity related to the

Interest Election for The Term Loan selected by Borrower pursuant to Section

2.07(b).




 




“Bioenergy Payments”  shall

mean credits available to Borrower from the United States Department of

Agriculture related to its Bioenergy program established pursuant to 7 C.F.R.

Part 1424.




 




“Board”

shall mean the Board of Governors of the Federal Reserve System, or its

successor.




 




1





























 




“Borrower”  shall mean Great

Plains Ethanol, LLC, a South Dakota limited liability company, and any

successor thereof.




 




“Borrowing”

shall mean an advance of funds by Lender to Borrower pursuant to Lender’s

Commitments hereunder.




 




“Business Day”

shall mean any day other than a Saturday, Sunday or other day on which farm

credit system banks or commercial banks in Fargo, North Dakota are authorized

or required by law to close.




 




“Capital Expenditures”

shall mean for any period, without duplication, (a) the additions to property,

plant and equipment and other capital expenditures of Borrower and its

Subsidiaries that are (or would be) set forth on a combined statement of cash

flows of Borrower for such period prepared in accordance with GAAP and (b)

Capital Lease Obligations incurred by Borrower and its Subsidiaries during such

period.




 




“Capital Lease

Obligations” of any Person shall mean all obligations of such

Person to pay rent or other amounts under any lease (or other arrangement

conveying the right to use) real or personal property, or a combination

thereof, which obligations are required to be classified and accounted for as

capital leases on a balance sheet of such Person under GAAP, and the amount of

such obligations shall be the capitalized amount thereof determined in

accordance with GAAP.




 




“Cash Taxes”

shall mean the sum of Taxes paid by Borrower and its Subsidiaries during the

related Period.




 




“Charges”

shall have the meaning set forth in Section 9.12.




 




“Change in Control”

shall mean the occurrence of one or more of the following events: (a) any sale,

lease, exchange or other transfer (in a single transaction or a series of

related transactions) of all or substantially all of the assets of Borrower to

any Person or “group” (within the meaning of the Securities Exchange Act of

1934 and the rules of the Securities and Exchange Commission thereunder in

effect on the date hereof), (b) occupation of a majority of the seats (other

than vacant seats) on the board of managers of Borrower by Persons who were

neither (i) nominated by the immediately previous board of managers or (ii)

appointed by managers so nominated, or (c) any change in the managing member of

Borrower or the rights, duties or obligations of such managing member as

presently set forth in Borrower’s operating agreement.




 




“Change in Law”

shall mean (i) the adoption of any applicable law, rule or regulation after the

date of this Agreement, (ii) any change in any applicable law, rule or

regulation, or any change in the interpretation or application thereof, by any

Governmental Authority after the date of this Agreement, or (iii) compliance by

Lender with any request, guideline or directive (whether or not having the

force of law) of any Governmental Authority made or issued after the date of

this Agreement.




 




2





























 




“Class”,  when

used in reference to any Loan or Borrowing, refers to whether such Loan, or the

Loans comprising such Borrowing, are Revolving Loans, the Term Loan or

Construction Loans.




 




“Closing Date”

shall mean the date on which the conditions precedent set forth in Section

3.01 have been satisfied or waived in accordance with Section 9.02.




 




“Closing Fee”

shall have the meaning set forth in Section 2.14(b).




 




“Code”

shall mean the Internal Revenue Code of 1986, as amended and in effect from

time to time.




 




“Collateral”

shall mean all tangible and intangible property, real and personal, of Borrower

that is the subject of a Lien granted pursuant to a Loan Document to Lender for

the benefit of Lender to secure the whole or any part of the Obligations or any

Guarantee thereof, and shall include, without limitation, all casualty

insurance proceeds and condemnation awards with respect to any of the

foregoing.




 




“Collateral Assignments”

shall mean each collateral assignment by Borrower (and such other parties as

Lender may require) to Lender, along with consents to such assignments as shall

be deemed appropriate by Lender, of the Material Contracts.




 




“Commitment”

shall mean the Revolving Commitment or the Construction Loan Commitment or any

combination thereof (as the context shall permit or require).




 




“Construction Agreement”

shall mean the Agreement Between Owner and Design Builder, dated as of November

20, 2001, between Borrower and Broin and Associates, Inc., as the same may be

amended, restated, supplemented or otherwise modified from time to time, along

with all other material agreements to which Borrower is a party related to the

design and construction of the Permitted Construction.




 




“Construction Borrowing”

shall mean a Borrowing pursuant to Section 2.02.




 




“Construction

Commitment Termination Date” shall mean the earliest of (i)

October 1, 2003, (ii) the date on which the Construction Loan Commitments are

fully drawn, and (iii) the date on which all amounts outstanding under

this Agreement have been declared or have automatically become due and payable

(whether by acceleration or otherwise).




 




“Construction Completion”

shall mean the occurrence of all of the following events with respect to the

Permitted Construction: (a) all Improvements are completed in accordance with

the Construction Plans and are paid for in full, free of all mechanics’, labor,

materialmen’s and other similar lien claims; (b) said completion has been

approved by Borrower and any Construction Consultants; (c) a certificate of

substantial completion for the Improvements has been signed by Borrower and

delivered to Lender and no material punch-list items remain to be completed;

(d) Lender has received acceptable evidence that all Governmental

Requirements and all private




 




3





























 




restrictions and covenants relating to the

Improvements or the Real Estate on which it is located have been complied with

or satisfied and that unconditional certificates of occupancy (if required) for

all of the Improvements have been issued by all appropriate governmental

authorities; (e) Borrower has obtained and delivered to Lender copies of

all licenses and permits needed to operate the Improvements; (f) Lender shall

have received copies of all warranties from suppliers covering materials,

equipment and appliances included within the Improvements (to the extent such

copies of warranties have been specifically requested by Lender); (g) evidence

that all insurance required hereby is in full force and effect and three copies

of an as-built survey of the Improvements which conforms with Lender’s

requirements; and (h) no Event of Default exists.




 




“Construction

Completion Date” shall mean October 1, 2003.




 




“Construction

Consultants” shall mean any third party experts, including the

Inspecting Architect as may be retained by Lender from time to time for the

purpose of inspecting the Improvements.




 




“Construction Costs”  shall mean

Borrower’s start-up working capital (in an amount not to exceed $3,800,000),

organization costs, equity drive costs and administrative expenses prior to and

during the Construction Loan Funding Period, plus the cost of purchasing real

property for the plant, designing and engineering the plant, preparing the

site, constructing the building and purchasing and installing equipment, and

Borrower’s interest expense incurred and capitalized in accordance with GAAP during

the Construction Loan Funding Period.




 




“Construction Draw

Request” shall have the meaning set forth in Section 2.03.




 




“Construction Loan”

shall mean a loan made by Lender to Borrower under its Construction Loan

Commitment.




 




“Construction Loan

Commitment” shall mean the obligation of Lender to make

Construction Loans to Borrower in an aggregate principal amount not exceeding

the lesser of 65% of the Construction Costs or $32,500,000.




 




“Construction Loan

Funding Period” shall mean the period from the Closing Date to

the Construction Commitment Termination Date.




 




“Construction Note” shall mean a promissory

note of Borrower payable to the order of Lender in substantially the form of Exhibit

A.




 




“Construction Plans”

shall mean the final working plans for the Improvements to be constructed with

respect to the Permitted Construction, including drawings, specifications,

details and manuals as delivered to Lender.




 




“Control”

shall mean the power, directly or indirectly, either to (i) vote 5% or more of

securities having ordinary voting power for the election of directors (or

persons performing




 




4





























 




similar functions) of a Person or (ii) direct or cause

the direction of the management and policies of a Person, whether through the

ability to exercise voting power, by contract or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with”

have meanings correlative thereto.




 




“Control Agreements”

shall mean the agreements as may be requested by Lender to perfect Lender’s

security interest in the Deposit Accounts, in form and substance satisfactory

to Lender, as the same may be amended, restated, supplemented or otherwise

modified from time to time.




 




“Default”

shall mean any condition or event that, with the giving of notice or the lapse

of time, or both, would constitute an Event of Default.




 




“Default Interest”

shall have the meaning set forth in Section 2.13(b).




 




“Deposit Accounts”

shall mean all demand, time, savings, passbook or similar depository accounts

of Borrower with financial institutions, including but not limited to the

Equity Deposit Account and Borrower’s operating, payroll and other deposit

accounts.




 




“Determination Date”

shall mean, (a) with respect to Loans subject to the Variable Rate or the Term

Variable Rate, the date three (3) Business Days prior to the Closing Date with

respect to the Interest Period immediately following the Closing Date, and the

first Business Day of each subsequent month thereafter, and (b) with respect to

all other Loans, the date three (3) Business Days prior to the first day of the

related Interest Period.




 




“Disbursing Agreement”

means that certain Disbursing Agreement dated as of the date hereof among

Lender, Borrower and Title Company, as amended, restated, supplemented or

otherwise modified from time to time.




 




“Dollars” or “$” shall mean dollars

denominated in the currency of the United States of America.




 




“Draw Request”

shall mean a Revolving Draw Request or a Construction Draw Request.




 




“EBITDA”

shall mean, for Borrower and its Subsidiaries for any period determined on a

consolidated basis in accordance with GAAP, an amount equal to (a) Net Income

for such period plus (b) to the extent deducted in determining Net Income

for such period, the sum of (i) Interest Expense, (ii) income tax expense,

(iii) depreciation and amortization and (iv) all other non-cash charges,

in each case for such period.




 




“Environmental Laws”

shall mean all laws, rules, regulations, codes, ordinances, orders, decrees,

judgments, injunctions, notices or binding agreements issued, promulgated or

entered into by or with any Governmental Authority, relating in any way to the

environment, preservation or reclamation of natural resources, the management,

Release or threatened Release of any Hazardous Material or to health and safety

matters.




 




5





























 




“Environmental

Liability” shall mean any liability, contingent or otherwise

(including any liability for damages, costs of environmental investigation and

remediation, costs of administrative oversight, fines, related attorneys’ fees,

natural resource damages, penalties or indemnities), of Borrower or any

Subsidiary directly or indirectly resulting from or based upon (a) any actual

or alleged violation of any Environmental Law, (b) the generation, use,

handling, transportation, storage, treatment or disposal of any Hazardous

Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d)

the Release or threatened Release of any Hazardous Materials, or (e) any

contract, agreement or other consensual arrangement pursuant to which liability

is assumed or imposed with respect to any of the foregoing.




 




“Equipment”

shall mean all equipment, machinery, apparatus, fittings, fixtures and other

tangible personal property of every kind and description used in the business

operations of Borrower or owned by Borrower or in which Borrower has an

interest, and all parts, accessories, and special tools and all increases and

accessions thereto and substitutions and replacements therefor.




 




“Equity Deposit Account”

shall mean Borrower’s Deposit Account with Farmers State Bank, Marion, South

Dakota in an initial principal amount of not less than $18,638,600 (which

amount does not include the proceeds of any grant from the United States

Department of Agriculture, community development grant or tax increment

financing), the proceeds of which, along with the proceeds of the Side Note,

shall pay for not less than 35% of the aggregate amount of Construction Costs.




 




“ERISA”

shall mean the Employee Retirement Income Security Act of 1974, as amended from

time to time, and any successor statute.




 




“ERISA Affiliate”

shall mean any trade or business (whether or not incorporated), which, together

with Borrower, is treated as a single employer under Section 414(b) or (c) of

the Code or, solely for the purposes of Section 302 of ERISA and Section 412 of

the Code, is treated as a single employer under Section 414 of the Code.




 




“ERISA Event”  shall

mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the

regulations issued thereunder with respect to a Plan (other than an event for

which the 30-day notice period is waived); (b) the existence with respect to

any Plan of an “accumulated funding deficiency” (as defined in Section 412 of

the Code or Section 302 of ERISA), whether or not waived; (c) the filing

pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an

application for a waiver of the minimum funding standard with respect to any

Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any

liability under Title IV of ERISA with respect to the termination of any Plan;

(e) the receipt by Borrower or the ERISA Affiliate from the PBGC or a plan

administrator appointed by the PBGC of any notice relating to an intention to

terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)

the incurrence by Borrower or any of its ERISA Affiliates of any liability with

respect to the withdrawal or partial withdrawal from any Plan or Multiemployer

Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or

the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of

any notice, concerning the imposition of Withdrawal




 




6





























 




Liability or a determination that a Multiemployer Plan

is, or is expected to be, insolvent or in reorganization, within the meaning of

Title IV of ERISA.




 




“Event of Default”

shall have the meaning provided in Article VIII.




 




“Excluded Taxes”  shall mean with

respect to Lender or any other recipient of any payment to be made by or on

account of any obligation of Borrower hereunder, (a) income or franchise taxes

imposed on (or measured by) its net income by the United States of America, or by

the jurisdiction under the laws of which such recipient is organized or in

which its principal office is located or, in which its applicable lending

office is located, and (b) any branch profits taxes imposed by the United

States of America or any similar tax imposed by any other jurisdiction in which

Lender or other recipient is located.




 




“Farm Products”

has the meaning given to it in the Food Security Act.




 




“Five-Year Adjustable

Rate” shall have the meaning set forth in Section

2.07(b)(iii).




 




“Fixed Base Rate”

shall mean the per annum fixed rate of interest, as of the applicable

Determination Date, charged by AgriBank FCB to Lender for obligations with a

maturity of ten (10) years and subject to a prepayment penalty.




 




“Fixed Charge Coverage

Ratio” shall mean, for any period of four consecutive fiscal

quarters of Borrower, the ratio of (a) EBITDA for such period  to

(b) Fixed Charges for such period.




 




“Fixed Charges”

shall mean, for Borrower and its Subsidiaries for any period determined on a

consolidated basis in accordance with GAAP, the sum of (a) Interest Expense for

such period, plus  (b) scheduled principal payments made on Total Debt (not

including payments related to seasonal indebtedness for which Lender has

consented in writing to exclusion therefrom) for such period, plus

(c) income tax expense for such period, plus (d) Restricted Payments

paid during such period, plus (e) Non-Financed Maintenance Capital

Expenditures.




 




“Fixed Rate”

shall have the meaning set forth in Section 2.07(b)(v).




 




“Food Security Act”

shall mean the federal Food Security Act of 1985, as amended from time to time

(7 U.S.C. 1631, et seq.).




 




“Free Cash Flow”

shall mean for any period, the EBITDA (not including Bioenergy Program Payments

received) less the sum of Interest Expense, Mandatory Debt Retirement, Cash

Taxes, Non-Financed Maintenance Capital Expenditures.




 




“GAAP”

shall mean generally accepted accounting principles in the United States

applied on a consistent basis and subject to the terms of Section 1.02.




 




“Governmental Authority”

shall mean the government of the United States of America, any other nation or

any political subdivision thereof, whether state or local, and any agency,




 




7





























 




authority, instrumentality, regulatory body, court,

central bank or other entity exercising executive, legislative, judicial,

taxing, regulatory or administrative powers or functions of or pertaining to

government.




 




“Government Yield”

shall mean, as of the date of any prepayment, the annualized yield on the

“Treasury Constant Maturity” with a maturity equal to the number of months

remaining prior to the Maturity Date for the most recent week available prior

to the date of such prepayment, as reported in the Federal Reserve Statistical

Release H.15 (hereinafter “Release H.15”) conclusively determined by Lender on the

date of each such prepayment. The yield will be determined by linear

interpolation if necessary.  If the

number of months remaining prior to the Maturity Date is less than twelve months,

the “Government Yield” will be the annualized yield on the “Treasury Constant

Maturity” with a maturity equal to one year. 

If Release H.15 is no longer published, Lender shall determine

Government Yield.




 




“Guarantee”

of or by any Person (the “guarantor”) shall mean any obligation, contingent or

otherwise, of the guarantor guaranteeing or having the economic effect of

guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in

any manner, whether directly or indirectly and including any obligation, direct

or indirect, of the guarantor (a) to purchase or pay (or advance or supply

funds for the purchase or payment of) such Indebtedness or other obligation or

to purchase (or to advance or supply funds for the purchase of) any security

for the payment thereof, (b) to purchase or lease property, securities or

services for the purpose of assuring the owner of such Indebtedness or other

obligation of the payment thereof, (c) to maintain working capital, equity

capital or any other financial statement condition or liquidity of the primary

obligor so as to enable the primary obligor to pay such Indebtedness or other

obligation, or (d) as an account party in respect of any letter of credit or

letter of guaranty issued in support of such Indebtedness or obligation; provided,

that the term “Guarantee” shall not include endorsements for collection or

deposits in the ordinary course of business. The amount of any Guarantee shall

be deemed to be an amount equal to the stated or determinable amount of the

primary obligation in respect of which Guarantee is made or, if not so stated

or determinable, the maximum reasonably anticipated liability in respect

thereof (assuming such Person is required to perform thereunder) as determined

by such Person in good faith. The term “Guarantee” used as a verb has a

corresponding meaning.




 




“Hazardous Materials”

means all explosive or radioactive substances or wastes and all hazardous or

toxic substances, wastes or other pollutants, including petroleum or petroleum

distillates, asbestos or asbestos containing materials, polychlorinated

biphenyls, radon gas, infectious or medical wastes and all other substances or

wastes of any nature regulated pursuant to any Environmental Law.




 




“Hedging Agreements”

shall mean interest rate swap, cap or collar agreements, interest rate future

or option contracts, currency swap agreements, currency future or option

contracts, commodity agreements and other similar agreements or arrangements

designed to protect against fluctuations in interest rates, currency values or

commodity values, in each case to which Borrower or any Subsidiary is a party.




 




8





























 




“Inspecting Architect”

shall mean the architectural, engineering or other consultant firm retained by

Lender, at Borrower’s cost, to conduct on-site inspections of the

work-in-progress related to the Improvements, and to issue periodic reports to

Lender as to progress of construction and adherence to the Construction Plans.




 




“Indebtedness”

of any Person shall mean, without duplication (i) all obligations of such

Person for borrowed money, (ii) all obligations of such Person evidenced by

bonds, debentures, notes or other similar instruments, (iii) all obligations of

such Person in respect of the deferred purchase price of property or services

(other than trade payables incurred in the ordinary course of business; provided,

that for purposes of Section 8.01(g), trade payables overdue by more

than 120 days shall be included in this definition except to the extent that

any of such trade payables are being disputed in good faith and by appropriate

measures), (iv) all obligations of such Person under any conditional sale or

other title retention agreement(s) relating to property acquired by such

Person, (v) all Capital Lease Obligations of such Person, (vi) all

obligations, contingent or otherwise, of such Person in respect of letters of

credit, acceptances or similar extensions of credit, (vii) all Guarantees

of such Person of the type of Indebtedness described in clauses

(i) through (vi) above, (viii) all Indebtedness of a third party secured

by any Lien on property owned by such Person, whether or not such Indebtedness

has been assumed by such Person, (ix) all obligations of such Person, contingent

or otherwise, to purchase, redeem, retire or otherwise acquire for value any

common stock of such Person, and (x) Off-Balance Sheet Liabilities.  The

Indebtedness of any Person shall include the Indebtedness of any partnership or

joint venture in which such Person is a general partner or a joint venturer,

except to the extent that the terms of such Indebtedness provide that such

Person is not liable therefor.




 




“Improvements”

shall mean the buildings and improvements to be placed or constructed on the

Real Estate with respect to the Permitted Construction.




 




“Indemnified Taxes”

shall mean Taxes other than Excluded Taxes.




 




“Interest Differential”

shall mean, on the date of any full or partial prepayment, the Fixed Rate minus

the Government Yield.




 




“Interest Election”

shall have the meaning set forth in Section 2.07(b).




 




“Interest Expense”

shall mean, for Borrower and its Subsidiaries for any period determined on a

consolidated basis in accordance with GAAP, the sum of (i) total cash interest

expense, including without limitation the interest component of any payments in

respect of Capital Lease Obligations capitalized or expensed during such period  (whether

or not actually paid during such period),  plus (ii) the net amount payable (or minus

the net amount receivable) under Hedging Agreements during such period (whether

or not actually paid or received during such period).




 




9





























 




“Interest Period”

shall mean:




 




(a)           with respect to

Loans subject to the Variable Rate or the Term Variable Rate, the initial

Interest Period shall be the period beginning on the date of the related

Borrowing and continuing through the last day of the month of such Borrowing,

and all other Interest Periods shall be the calendar month;




 




(b)           with respect to

Loans subject to the Three-Year Adjustable Rate, the Five-Year Adjustable Rate,

or the Ten-Year Adjustable Rate, the initial Interest Period shall be the

period beginning on the date of the related Borrowing and continuing until the

date three (3), five (5) or ten (10) years, as applicable, after the date of

such Borrowing, and all other Interest Periods shall be the period beginning on

the effective date of such interest rate pursuant to Section 2.07(c) and

continuing until the date three (3), five (5) or ten (10) years, as applicable,

following such effective date; and




 




(c)           with respect to

Loans subject to the Fixed Rate, the Interest Period shall be the period

beginning on the Closing Date and continuing until the date ten (10) years following

the Closing Date;




 




provided,

that no Interest Period may extend beyond the Maturity Date.




 




“Investments”

shall have the meaning set forth in Section 7.04.




 




“Lender”

shall mean AgCountry Farm Credit Services, FLCA and its successors and assigns.




 




“LIBOR”

shall mean the London interbank offered rate per annum for one-month deposits

in Dollars, as determined by the British Banker’s Association average of

interbank offered rates for 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.




 




“License Agreement”

shall mean the Licensing Agreement for Ethanol Production Process, dated as of

September 28, 2001, between Borrower and Broin and Associates, Inc., as the

same may be amended, restated, supplemented or otherwise modified from time to

time.




 




“Lien”

shall mean any mortgage, pledge, security interest, lien (statutory or

otherwise), charge, encumbrance, hypothecation, assignment, deposit

arrangement, or other arrangement having the practical effect of the foregoing

or any preference, priority or other security agreement or preferential

arrangement of any kind or nature whatsoever (including any conditional sale or

other title retention agreement and any capital lease having the same economic

effect as any of the foregoing).




 




10





























 




“Loan Documents”

shall mean collectively this Agreement, the Notes, all Notices of Borrowing,

the Mortgage, the Security Agreement, the Collateral Assignments, and any and

all other instruments, agreements, documents and writings executed in

connection with any of the foregoing.




 




“Loans”

shall mean the Revolving Loans, the Term Loan, and the Construction Loans in

the aggregate, or any of them, as the context shall require.




 




“Management Contracts”

shall mean those certain agreements and contracts which are material to the

management of Borrower’s business listed on Schedule 4.17(a), as the

same may be amended, restated, supplemented or otherwise modified from time to

time.




 




“Mandatory Debt

Retirement” shall mean principal and interest payments required

during the related period in connection with any Indebtedness of Borrower.




 




“Material Adverse

Effect” shall mean, with respect to any event, act, condition or

occurrence of whatever nature (including any adverse determination in any

litigation, arbitration, or governmental investigation or proceeding), whether

singularly or in conjunction with any other event or events, act or acts,

condition or conditions, occurrence or occurrences whether or not related, a

material adverse change in, or a material adverse effect on, (i) the business,

results of operations, financial condition, assets, liabilities, Projections or

prospects of Borrower, (ii) the ability of Borrower to perform any of its

obligations under the Loan Documents, (iii) the rights and remedies of Lender

under any of the Loan Documents or (iv) the legality, validity or

enforceability of any of the Loan Documents.




 




“Material Contracts”

shall mean the Management Contracts, Supply Contracts, Off-Take Contracts,

Transportation Contracts, Power Contracts, the Construction Agreement, the

License Agreement, the Process Guarantee, and such other agreements and

contracts as may be material to operation of Borrower’s business.




 




“Material Indebtedness”

shall mean Indebtedness (other than the Loans) or obligations in respect of one

or more Hedging Agreements of Borrower and its Subsidiaries in an aggregate

principal amount exceeding $100,000. 

For purposes of determining Material Indebtedness, the “principal

amount” of the obligations of Borrower or any Subsidiary in respect to any

Hedging Agreement at any time shall be the maximum aggregate amount (giving

effect to any netting agreements) that Borrower or such Subsidiary would be

required to pay if such Hedging Agreement were terminated at such time.




 




“Maturity Date”

shall mean the earlier of (i) October 1, 2013, or (ii) the date on which the

principal amount of all outstanding Loans have been declared or automatically

have become due and payable (whether by acceleration or otherwise).




 




“Maximum Rate”

shall have the meaning set forth in Section 9.12.




 




11





























 




“Mortgage”

shall mean each of the Mortgage or other real estate security documents

delivered by Borrower to Lender, all in form and substance satisfactory to

Lender, as each may be amended, restated, modified or otherwise supplemented

from time to time, whereby Borrower pledges all of its right, title and

interest in the Real Estate to Lender as collateral for the Obligations.




 




“Mortgage Properties”

shall mean, collectively, the Real Estate subject to the Mortgage.




 




“Multiemployer Plan”

shall have the meaning set forth in Section 4001(a)(3) of ERISA.




 




“Net Income”

shall mean, for any period, the net income (or loss) of Borrower and its

Subsidiaries for such period determined on a consolidated basis in accordance

with GAAP, but excluding therefrom (to the extent otherwise included therein)

(i) any extraordinary gains or losses, (ii) any gains attributable to

write-ups of assets, (iii) any equity interest of Borrower or any

Subsidiary in the unremitted earnings of any Person that is not a Subsidiary,

and (iv) any income (or loss) of any Person accrued prior to the date it becomes

a Subsidiary or is merged into or consolidated with Borrower or any Subsidiary

on the date that such Person’s assets are acquired by Borrower or any

Subsidiary.




 




“Net Worth”

shall mean, as of any date, (i) the total assets of Borrower and its

Subsidiaries that would be reflected on Borrower’s consolidated balance sheet

as of such date prepared in accordance with GAAP, after eliminating all amounts

properly attributable to minority interests, if any, in the stock and surplus

of Subsidiaries, less (ii) the sum of (a) the total liabilities of Borrower

and its Subsidiaries that would be reflected on a consolidated balance sheet of

Borrower and its Subsidiaries as of such date prepared in accordance with GAAP,

(b) the amount of any write-up in the book value of any assets resulting from a

revaluation thereof or any write-up in excess of the cost of such assets

acquired reflected on the consolidated balance sheet of Borrower and its

Subsidiaries as of such date prepared in accordance with GAAP, and (c) the net

book amount of all assets of Borrower and its Subsidiaries that would be

classified as intangible assets on a consolidated balance sheet of Borrower and

its Subsidiaries as of such date prepared in accordance with GAAP.




 




“Non-Financed

Maintenance Capital Expenditures” shall mean the sum of Capital

Expenditures made by Borrower in the ordinary course of business related to

maintenance of Borrower’s property, plant and equipment  and paid during the related

period, except the term shall

not include Capital Expenditures for which Borrower or any Subsidiary incurred  Indebtedness

in connection therewith.




 




“Notes”

shall mean, collectively, the Revolving Credit Note, the Term Note and the

Construction Note.




 




“Obligations”

shall mean all amounts owing by Borrower to Lender pursuant to or in connection

with this Agreement or any other Loan Document, including without limitation,

all principal, interest (including any interest accruing after the filing of

any petition in bankruptcy or the commencement of any insolvency, reorganization

or like proceeding relating to Borrower,




 




12





























 




whether or not a claim for post-filing or

post-petition interest is allowed in such proceeding), all reimbursement

obligations, fees, expenses, indemnification and reimbursement payments, costs

and expenses (including all fees and expenses of counsel to Lender incurred

pursuant to this Agreement or any other Loan Document), whether direct or

indirect, absolute or contingent, liquidated or unliquidated, now existing or

hereafter arising hereunder or thereunder, together with all renewals,

extensions, modifications or refinancings thereof.




 




“Off-Balance Sheet

Liabilities” of any Person shall mean (i) any repurchase

obligation or liability of such Person with respect to accounts or notes

receivable sold by such Person, (ii) any liability of such Person under

any sale and leaseback transactions which do not create a liability on the

balance sheet of such Person, (iii) any liability of such Person under any

so-called “synthetic” lease transaction, or (iv) any obligation arising with

respect to any other transaction which is the functional equivalent of or takes

the place of borrowing but which does not constitute a liability on the balance

sheet of such Person.




 




“Off-Take Contracts”

shall mean those certain agreements and contracts which are material to the

sale or disposal of products and by-products produced by Borrower listed on Schedule

4.17(c), as the same may be amended, restated, supplemented or otherwise modified

from time to time.




 




“Other Taxes”

shall mean any and all present or future stamp or documentary taxes or any

other excise or property taxes, charges or similar levies arising from any

payment made hereunder or from the execution, delivery or enforcement of, or

otherwise with respect to, this Agreement or any other Loan Document.




 




“Participant”

shall have the meaning set forth in Section 9.04(c).




 




“Payment Office”

shall mean the office of Lender located at 1749 38th Street

Southwest, Post Office Box 6020, Fargo, North Dakota 58108-6020 or such other

location as to which Lender shall have given written notice to Borrower.




 




“PBGC”  shall

mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA,

and any successor entity performing similar functions.




 




“Permits”

shall mean all licenses, consents, approvals authorizations and permits of

Governmental Authorities which are required of Borrower or useful for Borrower

to obtain in connection with construction of the Improvements and operation of

Borrower’s business, including but not limited to any of the foregoing related

to Environmental Laws, zoning and land-use laws (including any requirement to

obtain a special exception, if applicable), water use laws, waste disposal

laws, laws requiring construction permits and occupancy certificates.




 




“Permitted Construction”

shall mean the completion by Borrower of the construction of its ethanol plant

near Chancellor, South Dakota with a production capacity of not less than 40

million gallons of ethanol per year.




 




13





























 




“Permitted Encumbrances”

shall mean:




 




(i)            Liens imposed by

law for taxes not yet due (or with respect to real estate taxes, not yet

delinquent) or which are being contested in good faith by appropriate

proceedings and with respect to which adequate reserves are being maintained in

accordance with GAAP;




 




(ii)           statutory Liens of

landlords and Liens of carriers, warehousemen, mechanics, materialmen and other

Liens imposed by law created in the ordinary course of business for amounts not

yet due or which are being contested in good faith by appropriate proceedings

and with respect to which adequate reserves are being maintained in accordance

with GAAP;




 




(iii)          pledges and

deposits made in the ordinary course of business in compliance with workers’

compensation, unemployment insurance and other social security laws or

regulations;




 




(iv)          deposits to secure

the performance of bids, trade contracts, leases, statutory obligations, surety

and appeal bonds, performance bonds and other obligations of a like nature, in

each case in the ordinary course of business;




 




(v)           judgment and

attachment liens not giving rise to an Event of Default or Liens created by or

existing from any litigation or legal proceeding that are currently being

contested in good faith by appropriate proceedings and with respect to which

adequate reserves are being maintained in accordance with GAAP; and




 




(vi)          easements, zoning

restrictions, rights-of-way and similar encumbrances on real property imposed

by law or arising in the ordinary course of business that do not secure any

monetary obligations and do not materially detract from the value of the

affected property or materially interfere with the ordinary conduct of business

of Borrower and its Subsidiaries taken as a whole;




 




provided,

that the term “Permitted Encumbrances” shall not include any Lien securing

Indebtedness.




 




“Permitted Investments”  shall

mean:




 




(i)            direct obligations

of, or obligations the principal of and interest on which are unconditionally

guaranteed by, the United States of America (or by any agency thereof to the

extent such obligations are backed by the full faith and credit of the United

States), in each case maturing within one year from the date of acquisition thereof;




 




(ii)           commercial paper

having the highest rating, at the time of acquisition thereof, of S&P or

Moody’s and in either case maturing within six months  from the date of acquisition

thereof;




 




(iii)          certificates of

deposit, bankers’ acceptances and time deposits maturing within 180 days of the

date of acquisition thereof issued or guaranteed by or placed with, and money

market deposit accounts issued or offered by, any domestic office of any

commercial bank




 




14





























 




organized under the laws of the United States of

America or any state thereof which has a combined capital and surplus and

undivided profits of not less than $500,000,000;




 




(iv)          fully collateralized

repurchase agreements with a term of not more than 30 days for securities

described in clause (i) above and entered into with a financial institution

satisfying the criteria described in clause (iii) above; and




 




(v)           mutual funds

investing solely in any one or more of the Permitted Investments described in

clauses (i) through (iv) above.




 




“Person”

shall mean any individual, partnership, firm, corporation, association, joint

venture, limited liability company, trust or other entity, or any Governmental

Authority.




 




“Plan”

means any employee pension benefit plan (other than a Multiemployer Plan)

subject to the provisions of Title IV of ERISA or Section 412 of the Code or

Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate

is (or, if such plan were terminated, would under Section 4069 of ERISA be

deemed to be) an “employer” as defined in Section 3(5) of ERISA.




 




“Power Contracts”

shall mean those certain contracts and agreements which are material to the

provision to Borrower of electricity, natural gas, water, fuel oil, coal and

other energy resources in connection with the operation of Borrower’s plant,

equipment and offices listed on Schedule 4.17(e) as the same may be

amended, restated, supplement and or otherwise modified from time to time.




 




“Process Guarantee”

shall mean the Process Guarantee provided by Broin and Associates, Inc. in

favor of Borrower dated November 20, 2001.




 




“Projections”

shall mean Borrower’s forecasted (a) balance sheets; (b) profit and loss

statements; and (c) cash flow statements; all prepared on a combined basis and

otherwise consistent with the historical financial statements of Borrower,

together with appropriate supporting details and a statement of underlying

assumptions which are believed by Borrower to be reasonable and fair in light

of the current condition and past performance of Borrower and to reflect a

reasonable estimate of the projected balance sheets, results of operations,

cash flows and other information presented therein for five (5) years following

the Closing Date.




 




“Pro Forma Balance

Sheet” shall mean the unaudited pro forma balance sheet of

Borrower on a consolidated basis setting forth as of the Closing Date the pro

forma financial position of Borrower and its Subsidiaries on a consolidated

basis, copies of which fairly present, on a pro forma basis, in conformity with

GAAP applied on a basis consistent with the financial statements referred to in

Section 4.04, the financial position of Borrower on a consolidated

basis, as of such date and time.




 




“Real Estate”

shall mean all real property owned or leased by Borrower or its Subsidiaries.




 




15





























 




“Real Estate Documents”

shall mean collectively, the Mortgage, the Disbursing Agreement and all other

documents, instruments, agreements and certificates executed and delivered by

Borrower to Lender in connection with any of the foregoing.




 




“Release”

means any release, spill, emission, leaking, dumping, injection, pouring,

deposit, disposal, discharge, dispersal, leaching or migration into the

environment (including ambient air, surface water, groundwater, land surface or

subsurface strata) or within any building, structure, facility or fixture.




 




“Release H.15”

shall have the meaning set forth in the definition of “Government Yield.”




 




“Required Stock”

shall mean the member stock or participation certificates in Lender, in amounts

as Lender may require Borrower to purchase (without using proceeds of a Loan)

from time to time under the capital plan adopted by the board of directors of

Lender (currently 2% of the amount borrowed up to $1,000) pursuant to bylaws

applicable to Lender.




 




“Responsible Officer”

shall mean any of the president, the chief executive officer, the chief

operating officer, the chief financial officer, the treasurer or a vice

president of Borrower or such other representative of Borrower as may be

designated in writing by any one of the foregoing with the consent of Lender;

and, with respect to the financial covenants only, the chief financial officer

or the treasurer of Borrower.




 




“Restricted Payment”

shall have the meaning set forth in Section 7.05.




 




“Revolving Borrowing”

shall mean a Borrowing pursuant to Section 2.05.




 




“Revolving

Commitment” shall

mean the obligation of Lender to make Revolving Loans to Borrower in accordance

with the terms of Section 2.05 in an amount not to exceed the Revolving

Conversion Amount, as reduced from time to time pursuant to Section 2.09(c).




 




“Revolving Commitment

Termination Date” shall mean the Maturity Date.




 




“Revolving Conversion

Amount” shall have the meaning specified in Section 2.05.




 




“Revolving Conversion

Date” shall mean the date a portion of the Construction Loans

are converted to Revolving Loans pursuant to Section 2.05.




 




“Revolving Credit

Availability Period” shall mean the period from the Revolving

Conversion Date to the Revolving Commitment Termination Date.




 




“Revolving Credit Note”

shall mean a promissory note of Borrower payable to the order of Lender in

substantially the form of Exhibit B.




 




“Revolving Draw Request”

shall have the meaning set forth in Section 2.06.




 




16





























 




“Revolving Loan”

shall mean a loan made by Lender to Borrower under the Revolving Commitment.




 




“Security Agreement”

shall mean that certain Security Agreement, dated as of the date hereof,

executed by Borrower in favor of Lender as amended, restated, supplemented or

otherwise modified from time to time.




 




“Security Documents”

shall mean, collectively, the Security Agreement, the Collateral Assignments,

the Mortgage, the other Real Estate Documents, and all other instruments and

agreements now or hereafter securing the whole or any part of the Obligations,

all UCC-1 financing statements, fixture financing statements, stock powers, and

all other documents, instruments, agreements and certificates executed and

delivered by Borrower or any other person to Lender in connection with the

foregoing.




 




“Side Note”  shall

have the meaning set forth in Section 2.02.




 




“Simple Interest”

shall mean interest that is computed only on the outstanding principal balance.




 




“Subsidiary”

shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint

venture, limited liability company, association or other entity the accounts of

which would be consolidated with those of the parent in the parent’s

consolidated financial statements if such financial statements were prepared in

accordance with GAAP as of such date, as well as any other corporation,

partnership, joint venture, limited liability company, association or other

entity (i) of which securities or other ownership interests representing more

than 50% of the equity or more than 50% of the ordinary voting power, or in the

case of a partnership, more than 50% of the general partnership interests are,

as of such date, owned, Controlled or held, or (ii) that is, as of such date,

otherwise Controlled, by the parent or one or more subsidiaries of the parent

or by the parent and one or more subsidiaries of the parent.  Unless otherwise indicated, all references

to “Subsidiary” hereunder shall mean a Subsidiary of Borrower (including

subsidiaries formed after the Closing Date).




 




“Supply Contracts”  shall

mean those certain agreements and contracts related to the supply of inputs

material to operation of Borrower’s business listed on Schedule 4.17(b),

as the same may be amended, restated, supplemental or otherwise modified from

time to time.




 




“Sworn Construction

Cost Statement” shall mean an itemized and certified statement

of actual and estimated costs of the Permitted Construction broken out into individual

subcontracts, signed and sworn to by Borrower and delivered to Lender, as the

same may be amended or supplemented from time to time.




 




“Taxes”

shall mean any and all present or future taxes, levies, imposts, duties,

deductions, charges or withholdings imposed by any Governmental Authority.




 




“Ten-Year Adjustable

Rate” shall have the meaning set forth in Section 2.07(b)(iv).




 




17





























 




“Term Loan”

shall have the meaning set forth in Section 2.02.




 




“Term Variable Rate”

shall have the meaning set forth in Section 2.07(b)(i).




 




“Three-Year Adjustable

Rate” shall have the meaning set forth in Section 2.07(b)(ii).




 




“Title Company”

shall mean Homestead Escrow and Exchange Company, a South Dakota corporation,

and its successors and assigns, and/or any other title or escrow company

selected by Lender from time to time.




 




“Total Debt”

shall mean, as of any date of determination, all Indebtedness of Borrower and

its Subsidiaries that would be reflected on a consolidated balance sheet of

Borrower prepared in accordance with GAAP as of such date.




 




“Transportation

Contracts” shall mean those certain agreements and contracts

related to the provision of transportation or shipping services which are

material to the operation of Borrower’s business listed on Schedule 4.17(d),

as the same may be amended, restated, supplemented or otherwise modified from

time to time.




 




“Uniform Commercial

Code” or “UCC” means the Uniform Commercial Code as in effect from

time to time in the State of North Dakota.




 




“Variable Rate”

shall mean the per annum floating rate of interest equal to LIBOR, as

determined on the applicable Determination Date, plus 314 basis points

(3.14%) during the related Interest Period.




 




“Withdrawal Liability”

shall mean liability to a Multiemployer Plan as a result of a complete or

partial withdrawal from such Multiemployer Plan, as such terms are defined in

Part I of Subtitle E of Title IV of ERISA.




 




Section 1.02         Accounting Terms and Determination.  Unless otherwise defined or specified

herein, all accounting terms used herein shall be interpreted, all accounting

determinations hereunder shall be made, and all financial statements required

to be delivered hereunder shall be prepared, in accordance with GAAP as in

effect from time to time, applied on a basis consistent (except for such

changes approved by Borrower’s independent public accountants) with the most

recent audited combined financial statement of Borrower delivered pursuant to Section

5.01(a); provided, that if Borrower notifies Lender that

Borrower wishes to amend any covenant in Article VI to eliminate the

effect of any change in GAAP on the operation of such covenant, then Borrower’s

compliance with such covenant shall be determined on the basis of GAAP in

effect immediately before the relevant change in GAAP became effective, until

either such notice is withdrawn or such covenant is amended in a manner

satisfactory to Borrower and Lender.




 




Section 1.03         Terms Generally.  The definitions of terms herein

shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any




 




18





























 




pronoun shall include the corresponding masculine,

feminine and neuter forms.  The words

“include”, “includes” and “including” shall be deemed to be followed by the

phrase “without limitation”.  The word

“will” shall be construed to have the same meaning and effect as the word

“shall”.  In the computation of periods

of time from a specified date to a later specified date, the word “from” means

“from and including” and the word “to” means “to but excluding”.  Unless the context requires otherwise (i)

any definition of or reference to any agreement, instrument or other document

herein shall be construed as referring to such agreement, instrument or other

document as it was originally executed or as it may from time to time be

amended, supplemented or otherwise modified (subject to any restrictions on

such amendments, supplements or modifications set forth herein), (ii) any

reference herein to any Person shall be construed to include such Person’s

successors and permitted assigns, (iii) the words “hereof”, “herein” and

“hereunder” and words of similar import shall be construed to refer to this

Agreement as a whole and not to any particular provision hereof, (iv) all

references to Articles, Sections, Exhibits and Schedules shall be

construed to refer to Articles, Sections, Exhibits and Schedules to this

Agreement, and (v) all references to a specific time shall be construed to

refer to the time in the city and state of Lender’s principal office, unless

otherwise indicated.




 




ARTICLE

II




 




AMOUNTS

AND TERMS OF THE COMMITMENTS




 




Section 2.01         General Description of the Loans.  Subject to and upon the terms and conditions

herein set forth, (i) Lender hereby establishes in favor of Borrower a

construction loan facility pursuant to which Lender agrees to make Construction

Loans to Borrower in accordance with Section 2.02; and (ii) Lender

agrees to establish in favor of Borrower a revolving credit facility in

accordance with Section 2.05.




 




Section 2.02         Construction Loan Commitment.  Subject to the terms and conditions set

forth herein, Lender agrees to make Construction Loans to Borrower, from time

to time during the  Construction Loan Funding Period, in an

aggregate principal amount outstanding at any time that will not result in the

aggregate amount of all Construction Loans exceeding the Construction Loan

Commitment.  During the Construction

Loan Funding Period, Borrower shall be entitled to borrow and prepay, but may

not reborrow, Construction Loans in accordance with the terms and conditions of

this Agreement; provided, that Borrower may not borrow should there

exist a Default or Event of Default.  At

the Construction Completion Date, Lender agrees to convert all amounts

outstanding under the Construction Loan to a term loan if no Default or Event

of Default exists at such time, Borrower has applied the proceeds of not less

than $1,100,000 in tax increment financing funds, not less than $401,700 in

grant funds from the United States Department of Agriculture and not less than

$50,000 in community development grant funds from the Southeast Enterprise

Facilitation Project (each of such amounts shall be considered equity of Borrower

for purposes of this Section 2.02), and Borrower’s total equity

investment in Construction Costs is not less than $20,190,300.  The proceeds of the loan of $2,000,000 from

AgCountry Farm Credit Services, PCA to Borrower pursuant to a promissory note

dated as of the date hereof (the “Side Note”) shall not be included for purposes of

computing “Borrower’s total equity investment” in the preceding sentence or for

any other




 




19





























 




purpose.  The

loans evidenced by the Construction Note after conversion are referred to as

the “Term Loan.”




 




Section 2.03         Procedure for Construction

Borrowings.  The Borrower

shall give Lender written notice (or telephonic notice promptly confirmed in

writing) of each Construction Borrowing substantially in the form of Exhibit

2.03 attached hereto (a “Construction Draw Request”) prior to 11:00 a.m. (Central

Time) five (5) Business Days prior to the requested date of each Construction

Borrowing.  The Borrower shall request

no more than one Construction Borrowing per calendar month.  Each Construction Draw Request shall be

irrevocable and  shall specify: (a) the aggregate principal amount of the

related Borrowing, and (b) the date of the related Borrowing (which shall be a

Business Day).  The aggregate principal

amount of each Construction Borrowing shall be not less than $100,000.  If Lender approves the Construction Draw

request, it shall disburse funds pursuant to the Disbursing Agreement.  At no time shall the aggregate balance of

Construction Borrowings outstanding exceed the amount of the Construction Loan

Commitment.  Notwithstanding anything to

the contrary, Lender shall have the irrevocable right at anytime and from time

to time to advance a Construction Borrowing without first receiving a

Construction Draw Request from Borrower.




 




Section 2.04         Reserved.




 




Section 2.05         Revolving Loan Commitment.  Subject to the terms and conditions set

forth herein, Borrower may elect to convert not less than $1,000,000 or more

than $6,000,000 in principal amount of the Term Loan to Revolving Loans (the “Revolving Conversion Election”).  Borrower shall give Lender written notice of

the amount of such Revolving Conversion Election (the “Revolving Conversion Amount”) substantially

in the form of Exhibit 2.05 attached hereto not less than ten (10)

Business Days prior to the requested date of the Revolving Conversion

Election.  During the Revolving Credit

Availability Period, Borrower shall be entitled to borrow, prepay and reborrow

Revolving Loans from time to time in accordance with the terms and conditions

of this Agreement; provided, that Borrower may not borrow or reborrow

should there exist a Default or Event of Default; and provided further,

that at no time shall the aggregate principal amount of Revolving Loans

outstanding exceed the amount of the Revolving Commitment.




 




Section 2.06         Procedure for Revolving Borrowings.  The Borrower shall give Lender written

notice (or telephonic notice promptly confirmed in writing) of each Revolving

Borrowing substantially in the form of Exhibit 2.06 attached hereto (a “Revolving Draw Request”)

prior to 11:00 a.m. one (1) Business Day prior to the requested date of each

Revolving Loan.  Each Revolving Draw

Request shall be irrevocable and  shall specify: (i) the aggregate principal

amount of the related Borrowing and (ii) the date of the related Borrowing

(which shall be a Business Day).  The

aggregate principal amount of each Revolving Borrowing shall be not less than

$100,000 or a larger multiple of $100,000.




 




20





























 




Section 2.07         Interest Rates




 




 (a)          Construction Loans and Revolving Loans.  Interest on the Construction Loans and the

Revolving Loans shall accrue at the Variable Rate, as determined on the

applicable Determination Date, during the related Interest Period.




 




(b)           Term Loan.  With respect to the Term Loan, Borrower may

elect (an “Interest Election”),

from time to time, any one or more (as limited by Section 2.07(c)) of

the variable, adjustable or fixed interest rates to be applied to amounts of

not less than $1,000,000 owing on the Term Loan, as set forth in (i) through

(v) below, and interest on such amounts shall accrue at such rate selected by

Borrower during the related Interest Period. 

Interest on the Term Loan shall accrue at the Term Variable Rate for

such portion of the Term Loan for which no Interest Election shall be in

effect.




 




(i)                                     the

per annum floating rate of interest equal to LIBOR, as determined on the

applicable Determination Date, plus 264 basis points (2.64%) during the

related Interest Period (the “Term Variable Rate”);




 




(ii)                                  the

per annum rate of interest equal to the Base Rate as determined on the

applicable Determination Date plus 264 basis points (2.64%) during the

period commencing on the effective date of the applicable Interest Election and

continuing thereafter until the date three (3) years following such date (the “Three-Year Adjustable Rate”),

and thereafter at the Term Variable Rate;




 




(iii)                               the

per annum rate of interest equal to the Base Rate as determined on the

applicable Determination Date plus 264 basis points (2.64%) during the

period commencing on the effective date of the applicable Interest Election and

continuing thereafter until the date five (5) years following such date (the “Five-Year Adjustable Rate”),

and thereafter at the Term Variable Rate;




 




(iv)                              the

per annum rate of interest equal to the Base Rate as determined on the

applicable Determination Date plus 264 basis points (2.64%) during the

period commencing on the effective date of the applicable Interest Election and

continuing thereafter until the date ten (10) years following such date (the “Ten-Year Adjustable Rate”),

and thereafter at the Term Variable Rate;




 




(v)                                 the

per annum rate of interest equal to the Fixed Base Rate as determined on the

applicable Determination Date plus 264 basis points (2.64%) during the

period commencing on the Closing Date and continuing thereafter until the date

ten (10) years following the Closing Date (the “Fixed Rate”), and thereafter at the Term

Variable Rate.




 




21





























 




(c)           Procedure for Election of Interest Rate.  To make an election pursuant to subsection

(b) above, Borrower shall give Lender prior written notice (or telephonic

notice promptly confirmed in writing) of its Interest Election, in the form of Exhibit

2.07 attached hereto, no later than five (5) Business Days prior to the

desired effective date (which shall be a Business Day) of such election.  Borrower may make such Interest Elections at

any time and from time to time, without penalty, except as provided in Section

2.14(c); provided, that Borrower may not elect an interest rate in

which the related Interest Period for such interest rate would extend beyond

the Maturity Date.  Borrower

acknowledges that the terms of this Agreement may require Borrower to pay a

prepayment fee, and that payments received pursuant to Section 2.10 may

be subject to such prepayment fee. 

Lender shall determine the rate of interest pursuant to this Section

2.07 and shall notify Borrower of the same, in writing, upon any request by

Borrower.  Lender’s determination of the

rate of interest hereunder shall be deemed conclusive, absent manifest error.




 




Section 2.08         Reserved.




 




Section 2.09         Repayment of Loans.




 




(a)           Construction

Facility.  During the

Construction Loan Funding Period, Borrower shall pay in arrears, not later than

the first day of each month, interest at the rate in effect from time to time

pursuant to Section 2.07(a) based on the average daily balance of the

Construction Loans outstanding during the related monthly period.




 




(b)           Term Loan.  Upon conversion of the Construction Loans to

a Term Loan pursuant to Section 2.02, Borrower shall pay, on the first

day of each calendar quarter, 40 level amortized quarterly payments of

principal and interest based on the applicable interest rate in effect from

time to time pursuant to Section 2.07(b).  The amount of such amortized payments shall be adjusted from time

to time as the interest rate is changed or adjusted pursuant to Section

2.07(b) or Section 2.13(b). 

All remaining principal and accrued interest outstanding on the Term

Loan shall be due and payable on the Maturity Date.




 




(c)           Revolving

Facility.  During the

Revolving Credit Availability Period, Borrower shall pay in arrears, not later

than the first day of each month, interest at the rate in effect from time to

time pursuant to Section 2.07(a) based on the average daily balance of

the Revolving Loans outstanding during the related monthly period.  Borrower shall pay, not later than October 1

of each year during the Revolving Credit Availability Period, annual principal

payments of an amount not less than ten percent (10%) of the amount of the

Revolving Conversion Amount, and the amount of the Revolving Commitment shall

be permanently reduced by the amount of such annual principal payments.  All remaining principal and accrued and

unpaid interest on the Revolving Loans shall be due and payable on the Maturity

Date.




 




Section 2.10         Additional Payments.  In addition to all other payments

required on the Loans, Borrower shall pay in arrears on a quarterly basis

within forty five (45) days after the end of each of its fiscal quarters, an

amount equal to 25% of Borrower’s Free Cash Flow for such quarter (provided,

the aggregate of such additional payments based on Borrower’s Free Cash




 




22





























 




Flow shall not exceed $1,500,000 during any fiscal

year of Borrower).  Principal payments

due under such Loans shall be applied in the inverse order of the maturities of

such principle payments.




 




Section 2.11         Evidence of Indebtedness.  Lender shall maintain in

accordance with its usual practice appropriate records evidencing the

indebtedness of Borrower to Lender resulting from each Loan made by Lender from

time to time, including the amounts of principal and interest payable thereon

and paid to Lender from time to time under this Agreement.  Lender shall also maintain  appropriate

records  in

which shall be recorded (i) the Revolving Commitment, the Term Loan Commitment

and Construction Loan Commitment (ii) the amount of each Loan made hereunder by

Lender, the Class thereof and, in the case of the Term Loan, the interest rate

election (pursuant to Section 2.07(b)) applicable thereto, (iii)

the date of each conversion Interest Election of all or a portion thereof to

another pursuant to Section 2.07, (iv) the date and amount of any

principal or interest due and payable or to become due and payable from

Borrower to Lender hereunder in respect of such Loans and (v) both the date and

amount of any sum received by Lender from Borrower in respect of the

Loans.  The entries made in such records

shall be prima

facie evidence of the existence and amounts of the obligations of

Borrower therein recorded; provided, that the failure or delay of Lender

in maintaining or making entries into any such record or any error therein

shall not in any manner affect the obligation of Borrower to repay the Loans

(both principal and unpaid accrued interest) of Lender in accordance with the

terms of this Agreement.




 




Section 2.12         Prepayments.




 




(a)           Borrower shall have the right at any

time and from time to time to prepay any Borrowing, in whole or in part,

without premium or penalty (except as provided in Section 2.14(c)),

by giving irrevocable written notice (or telephonic notice promptly confirmed

in writing) to Lender no later than 11:00 a.m. (Central Time) not less

than three (3) Business Days prior to any such prepayment; provided,

that the amount of any such prepayment shall not be less than $100,000.  Each such notice shall be irrevocable and

shall specify the proposed date of such prepayment and the principal amount of

each Loan or portion thereof to be prepaid. 

If such notice is given, the aggregate amount specified in such notice

shall be due and payable on the date designated in such notice, together with

accrued interest to such date on the amount so prepaid in accordance with Section

2.13(a) and any prepayment fee pursuant to Section 2.14(c).  If no such notice is given, each prepayment

shall be applied ratably to the Loans, and in the case of a prepayment of a

Term Loan, pro rata against the remaining installments of principal due in

respect thereof.




 




(b)           If Borrower issues any membership

interests, any other equity interests, or any debt securities, then no later

than the Business Day following the date of receipt of the proceeds thereof,

Borrower shall prepay the Loans in an amount equal to all such proceeds, net of

underwriting discounts and commissions and other reasonable costs paid to

non-Affiliates in connection therewith provided, that no such prepayment

shall be required in the event Borrower issues membership interests or other

equity interests and the proceeds of such issuance are invested in assets that

constitute either plant or equipment of Borrower and such assets become




 




23





























 




Collateral subject to Lender’s security interest

hereunder.  Any such prepayment shall be

applied in accordance with paragraph (c) below.




 




(c)           Any prepayments made by Borrower

shall be applied as follows: first, to fees and reimbursable expenses of

Lender then due and payable pursuant to any of the Loan Documents; second,

to interest then due and payable on Loans made to Borrower; third, to

the principal balance of the Term Loan, in inverse order of maturity, until the

same shall have been paid in full; fourth, to the principal balance of

the Construction Loans, in inverse order of maturity, until the same shall have

been paid in full.  The applicable

Commitments shall be permanently reduced by the amount of any prepayments made

pursuant to clause third and fourth above.




 




Section 2.13         Interest on Loans.




 




(a)           Interest on the principal amount of

all Loans shall accrue on a Simple Interest basis from and including the date

such Loans are made to but excluding the date of any repayment thereof.  Interest on all outstanding Loans shall be

payable monthly in arrears on the first day of each calendar month, on the

Revolving Commitment Termination Date with respect to all Revolving Loans and

on the Maturity Date.  All Default

Interest shall be payable on demand.




 




(b)           While an Event of Default exists or

after acceleration, Borrower shall pay interest (“Default Interest”) with respect to all Loans

at the rate otherwise applicable plus an additional 2% per annum.  All Default Interest shall be payable on

demand.




 




Section 2.14         Fees.




 




(a)           Commitment Fee.  Borrower agrees to pay to Lender a commitment fee, which shall

accrue at a rate of one-quarter of one percent (0.25%) per annum on the daily

amount of the unused amount of the Construction Loan Commitment during the

period beginning on the date of the first Construction Borrowing and continuing

through the Construction Loan Funding Period and one-half of one percent

(0.50%) of the unused amount of the Revolving Commitment during the Revolving

Credit Availability Period.  Accrued

commitment fees shall be payable in arrears on the last day of each of March, June,

September and December of each year and on the Construction Completion Date and

the Revolving Commitment Termination Date, commencing on the first such date

after the Closing Date; provided, that any commitment fees accruing

after the Construction Commitment Termination Date and the Revolving Commitment

Termination Date shall be payable on demand.




 




(b)           Closing Fee.  Borrower shall pay to Lender a closing fee equal to $243,750 (the

“Closing Fee”) on or

before the Closing Date, it being acknowledged that Borrower has paid $24,375

of this amount prior to the date hereof.




 




(c)           Prepayment Fee.  In the event any Loan subject to the Three-Year Adjustable Rate,

Five-Year Adjustable Rate, Ten-Year Adjustable Rate or Fixed Rate is paid, in

whole or in part, whether voluntarily or involuntarily (including any

prepayment effected by Lender’s




 




24





























 




exercise of any right to accelerate or resulting from

application of Section 2.10), or if Borrower changes its Interest

Election with respect to such Loan prior to the last day of the related

Interest Period, Borrower shall pay to Lender a prepayment fee equal to the

greater of $100 and that amount calculated as follows:  seventy five percent (.75) of the product of

(i) the Interest Differential divided by twelve, times (ii) the principal

amount of such payment, times (iii) a factor equal to the present value of a

series of one dollar ($1.00) payments, such factor based on the following

components: (x) the interest rate equal to the Government Yield divided by

twelve and (y) the number of months remaining prior to the Maturity Date.




 




(d)           Out-of-Pocket Costs.  Borrower shall pay, on demand, all of

Lender’s out-of-pocket costs in connection with the Loans, including but not

limited to (i) fees, charges and disbursements of Lender’s counsel related to

the negotiation, documentation, closing and collection of the Loans, (ii) fees,

charges and disbursements of the Inspecting Architect, and (iii) fees, charges

and disbursements of the Title Company.




 




Section 2.15         Computation of Interest and Fees.  All computations of interest and

fees hereunder shall be made on a Simple Interest basis and on the basis of a

year of 360 days for the actual number of days (including the first day

but excluding the last day) occurring in the period for which such interest or

fees are payable (to the extent computed on the basis of days elapsed).  Each determination by Lender of an interest

amount or fee hereunder shall be made in good faith and, except for manifest

error, shall be final, conclusive and binding for all purposes.




 




Section 2.16         Reserved.




 




Section 2.17         Reserved.




 




Section 2.18         Increased Costs.




 




(a)           If Lender shall have determined that

on or after the date of this Agreement any Change in Law regarding capital

requirements has or would have the effect of reducing the rate of return on

Lender’s capital as a consequence of its obligations hereunder to a level below

that which Lender could have achieved but for such Change in Law (taking into

consideration Lender’s policies with respect to capital adequacy) then, from

time to time, within five (5) Business Days after receipt by Borrower of

written demand by Lender, Borrower shall pay to Lender such additional amounts

as will compensate Lender for any such reduction suffered.




 




(b)           A certificate of Lender setting forth

the amount or amounts necessary to compensate Lender specified in paragraph (a)

of this Section shall be delivered to Borrower, together with the written

demand referred to in paragraph (a) of this section, and shall be conclusive, absent

manifest error.




 




(c)           Failure or delay on the part of

Lender to demand compensation pursuant to this Section shall not constitute a

waiver of Lender’s right to demand such compensation.




 




Section 2.19         Reserved.




 




25





























 




Section 2.20         Taxes.




 




(a)           Any

and all payments by or on account of any obligation of Borrower hereunder shall

be made free and clear of and without deduction for any Indemnified Taxes or

Other Taxes; provided, that if Borrower shall be required to deduct any

Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable

shall be increased as necessary so that after making all required deductions

(including deductions applicable to additional sums payable under this Section)

Lender shall receive an amount equal to the sum it would have received had no

such deductions been made, (ii) Borrower shall make such deductions and (iii)

Borrower shall pay the full amount deducted to the relevant Governmental

Authority in accordance with applicable law.




 




(b)           In

addition, Borrower shall pay any Other Taxes to the relevant Governmental

Authority in accordance with applicable law.




 




(c)           Borrower

shall indemnify Lender, within five (5) Business Days after written demand

therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by

Lender, as the case may be, on or with respect to any payment by or on account

of any obligation of Borrower hereunder (including Indemnified Taxes or Other

Taxes imposed or asserted on or attributable to amounts payable under this

Section) and any penalties, interest and reasonable expenses arising therefrom

or with respect thereto, whether or not such Indemnified Taxes or Other Taxes

were correctly or legally imposed or asserted by the relevant Governmental

Authority.  A certificate as to the

amount of such payment or liability delivered to Borrower by Lender, shall be

conclusive absent manifest error.




 




(d)           As

soon as practicable after any payment of Indemnified Taxes or Other Taxes by

Borrower to a Governmental Authority, Borrower shall deliver to Lender the

original or a certified copy of a receipt issued by such Governmental Authority

evidencing such payment, a copy of the return reporting such payment or other

evidence of such payment reasonably satisfactory to Lender.




 




Section 2.21         Payments Generally.




 




(a)           Borrower

shall make each payment required to be made by it hereunder (whether of

principal, interest, fees or reimbursement of amounts payable under Section

2.14, 2.18 or 2.20, or otherwise) prior to 11:00 a.m. (Central

Time), on the date when due, in immediately available funds, without set-off or

counterclaim.  Any amounts received

after such time on any date may, in the discretion of Lender, be deemed to have

been received on the next succeeding Business Day for purposes of calculating

interest thereon.  All such payments

shall be made to Lender at the Payment Office. 

If any payment hereunder shall be due on a day that is not a Business

Day, the date for payment shall be extended to the next succeeding Business

Day, and, in the case of any payment accruing interest, interest thereon shall

be made payable for the period of such extension.  All payments hereunder shall be made in Dollars.




 




26





























 




(b)           If at any time insufficient funds are

received by and are available to Lender to pay fully all amounts of principal,

interest and fees then due hereunder, such funds shall be applied (i) first,

towards payment of interest and fees then due hereunder.




 




ARTICLE

III




 




CONDITIONS PRECEDENT TO LOANS




 




Section 3.01         Conditions To Effectiveness.  The obligations of Lender to make Loans

hereunder shall not become effective until the date on which each of the

following conditions is satisfied (or waived in accordance with Section 9.02):




 




(a)           Lender shall have received all fees

and other amounts due and payable on or prior to the Closing Date, including

the Closing Fee and amounts for reimbursement or payment of all out-of-pocket

expenses (including reasonable fees, charges and disbursements of counsel to

Lender) required to be reimbursed or paid by Borrower hereunder, under any

other Loan Document and under any agreement with Lender.




 




(b)           Borrower shall have provided

documents and evidence satisfactory to Lender showing that Borrower has been

awarded a grant from the United States Department of Agriculture in an amount

not less than $401,700, tax increment financing benefits in an amount of not

less than $1,100,000, and a community development grant from the Southeast

Enterprise Facilitation Project in an amount not less than $50,000.




 




(c)           Borrower shall have provided

documents and evidence satisfactory to Lender that the sum of amounts on

deposit in the Equity Deposit Account and amounts previously expended on

Construction Costs is equal to at least $18,638,600.




 




(d)           Borrower shall have purchased the

Required Stock.




 




(e)           Borrower shall have executed the Side

Note and such other agreements, instruments and documents related to the Side

Note as Lender shall require.




 




(f)            The managing member of Borrower

shall have entered into an agreement with Lender providing for the operation of

Borrower’s plant following the occurrence of Lender’s exercise of its remedies

pursuant to Article VIII hereof, such agreement being subject to terms

and conditions satisfactory to Lender.




 




(g)           Lender (or its counsel) shall have

received the following:




 




(i)            a counterpart of this Agreement

signed by or on behalf of Borrower or written evidence satisfactory to Lender

(which may include telecopy transmission of a signed signature page of this

Agreement) that Borrower has signed a counterpart of this Agreement;




 




27





























 




(ii)           each of the Term Note and

Construction Loan Note, duly executed by Borrower payable to the order of

Lender;




 




(iii)          the duly executed Security Agreement,

Collateral Assignments, and Control Agreements, together with (A) UCC-1

financing statements and other applicable documents under the laws of the

jurisdictions with respect to the perfection of the Liens granted under the

Security Agreement and the Collateral Assignments, as requested by Lender in

order to perfect such Liens, duly executed by Borrower and all other parties,

(B) copies of favorable UCC, tax, judgment and fixture lien search reports in

all necessary or appropriate jurisdictions and under all legal and trade names

of Borrower and all other parties requested by Lender, indicating that there

are no prior Liens on any of the Collateral other than Permitted Encumbrances,

(C) duly executed landlord waivers and/or warehouseman, or bailee agreements

with respect to all inventory of Borrower or any Subsidiary located at leased

locations or other locations not owned by Borrower in fee simple, and (D) a

certified copy of all leases of Borrower and each Subsidiary.




 




(iv)          the duly executed Mortgage covering

all of the Real Estate owned or leased by Borrower and duly executed

counterparts of the other Real Estate Documents together with: (A) title

insurance policies, current as-built ALTA/ACSM Land Title surveys (to the

extent requested by Lender) certified to Lender, zoning letters, building

permits and certificates of occupancy, in each case satisfactory in form and

substance to Lender; and (B) evidence that counterparts of the Mortgage have been

recorded in all places to the extent necessary or desirable, in the judgment of

Lender, to create a valid and enforceable first priority lien (subject to

Permitted Encumbrances) on the fee simple estate of each Mortgage Property in

favor of Lender for the benefit of Lender (or in favor of such other trustee as

may be required or desired under local law);




 




(v)           satisfactory appraisals of all

Mortgage Properties (including an “as built” appraisal related to the Permitted

Construction), together with satisfactory collateral audits of all accounts,

inventory and other personal property requested by Lender (including field

audit and survey conducted by Lender);




 




(vi)          Phase I Environmental Site Assessment

Reports, consistent with American Society of Testing and Materials (ASTM)

Standard E 1527-94, and applicable state requirements, on all of the Real

Estate, dated as of a date acceptable to Lender (February 1, 2002 being

acceptable to Lender), prepared by environmental engineers satisfactory to

Lender, all in form and substance satisfactory to Lender, and Lender shall have

further received such environmental review and audit reports, including Phase

II reports, with respect to the Real Estate of Borrower as Lender shall have

requested, and Lender shall be satisfied with the contents of all such

environmental reports.  Lender shall

have received letters executed by the environmental firms preparing such

environmental reports, in form and substance satisfactory to Lender, authorizing

Lender to rely on such reports;




 




(vii)         an executed copy of the Construction

Agreement, together with (A) a complete set of the Construction Plans,

including all mechanical, electrical, structural and 




 




28





























 




other specialized

drawings, (B) a schedule listing all subcontracts relating to the Permitted

Construction and such other contracts, subcontracts and schedules relating to

the Permitted Construction as Lender may request, (C) work progress schedule

showing estimated completion time for each phase of the Construction Agreement,

(D) a Sworn Construction Cost Statement, duly executed by Borrower, including a

reconciliation of actual costs incurred to-date against budgeted amounts, (E) a

copy of all Permits and other building permits, licenses and other agreements

that Borrower is required by law to obtain to complete construction of the

Permitted Construction, together with a schedule of all other necessary

licenses and permits which must be obtained in order to occupy and operate an

ethanol production facility on the property where the Permitted Construction

will be built, and (F) a soil report related to the Real Estate where the

Improvements will be built, certified by a registered engineer acceptable to

Lender, including structural design recommendations in form and substance

satisfactory to Lender;




 




(viii)        executed copies of the Material

Contracts;




 




(ix)           copies of duly executed payoff

letters, in form and substance satisfactory to Lender, executed by each

existing lender, together with (a) UCC-3 or other appropriate termination

statements, in form and substance satisfactory to Lender, releasing all liens

of the existing lenders upon any of the personal property of Borrower, (b)

cancellations and releases, in form and substance satisfactory to Lender,

releasing all liens of the existing lenders upon any of the Real Estate, and

(c) any other releases, terminations or other documents reasonably required by

Lender to evidence the payoff of Indebtedness owed to existing lenders;




 




(x)            certified copies of the articles of

organization or  other charter documents

of Borrower and each Subsidiary, together with certificates of good standing or

existence, as may be available from the Secretary of State of the jurisdiction

of organization of Borrower and each Subsidiary and each other jurisdiction

where Borrower or any Subsidiary is required to be qualified to do business as

a foreign entity;




 




(xi)           a certificate, substantially in the

form of Exhibit 3.01(e)(xi), dated as of the Closing Date and signed by

an appropriate Responsible Officer, attaching and certifying copies of the

operating agreement, bylaws or similar documents, and appropriate resolutions

authorizing the execution, delivery and performance of the Loan Documents and

certifying the name, title and the signature of each officer executing the Loan

Documents.




 




(xii)          a favorable written opinion of counsel

to Borrower, addressed to Lender, substantially in the form of Exhibit

3.01(e)(xii), dated as of the Closing Date and covering such matters

relating to Borrower, the Loan Documents and the transactions contemplated

therein as Lender shall reasonably request;




 




(xiii)         a certificate, substantially in the

form of Exhibit 3.01(e)(xiii), dated the Closing Date and signed by an

appropriate Responsible Officer, confirming compliance with the conditions set

forth in paragraphs (a), (b) and (c) of Section 3.02;




 




(xiv)        duly executed Draw Requests, if

applicable;




 




29





























 




(xv)         the duly executed Disbursing Agreement,

together with a report setting forth the sources and uses of funds to be

expended in connection with construction of the Improvements;




 




(xvi)        certified copies of all material

consents, approvals, authorizations, registrations and filings and orders

required or advisable to be made or obtained under any requirement of law or by

any material contractual obligation of Borrower, in connection with the

operation of Borrower’s business, including the production of ethanol and

by-products thereof, and such consents, approvals, authorizations,

registrations, filings and orders shall be in full force and effect and all

applicable waiting periods shall have expired;




 




(xvii)       certificates of insurance, in form,

substance and detail acceptable to Lender (and in any event as required

pursuant to the Mortgage), describing the types and amounts of insurance

(property and liability) carried by Borrower, in each case naming Lender as

loss payee or additional insured, as the case may be, together with a lender’s

loss payable endorsement in form and substance satisfactory to Lender;




 




(xviii)      copies of Borrower’s audited financial

statements as of its most recent fiscal year end and internally prepared

financial statements as of the last day of the immediately preceding quarter,

each in form and substance satisfactory to Lender; and




 




(xix)         a certificate, substantially in the

form of Exhibit 3.01(e)(xix), dated the Closing Date and signed by an

appropriate Responsible Officer, confirming the solvency of Borrower before and

after giving effect to all transactions contemplated by the Loan Documents,

together with (A) the Projections, and (B) a pro forma balance sheet for

Borrower as of the Closing Date.




 




Section

3.02         Each

Loan.  The obligation of

Lender to make a Loan on the occasion of any Borrowing is subject to the

satisfaction of the following conditions:




 




(a)           at the time of and immediately after

giving effect to such Borrowing, no Default or Event of Default shall exist;

and




 




(b)           all representations and warranties of

Borrower set forth in the Loan Documents shall be true and correct in all

material respects on and as of the date of such Borrowing before and after

giving effect thereto;




 




(c)           since the date of the most recent

financial statements of Borrower described in Section 5.01(a),

there shall have been no change which has had or could reasonably be expected

to have a Material Adverse Effect;




 




(d)           with respect to a Revolving

Borrowing, Lender shall have received the Revolving Credit Note, duly executed

and payable to the order of Lender in the amount of the Revolving Conversion

Amount; and




 




30





























 




(e)           Lender shall have received such other

documents, certificates, information or legal opinions as Lender may reasonably

request, all in form and substance reasonably satisfactory to Lender.




 




Each Borrowing shall be deemed to constitute a

representation and warranty by Borrower on the date thereof as to the

satisfaction of the matters specified in paragraphs (a), (b) and (c) of this Section 3.02.




 




Section

3.03         Each

Construction Loan.  In

addition to the conditions set forth in Sections 3.01 and 3.02,

the obligation of Lender to make a Construction Loan, (a) on the occasion of

any Construction Borrowing, is subject to the satisfaction of the each of the

conditions set forth in the Disbursing Agreement, which is hereby incorporated

herein by reference, and (b) on the occasion of the first

Construction Borrowing, is conditioned upon (i) Lender’s receipt of evidence

acceptable to Lender, including presentation of lien waivers and other receipts

of payment acceptable to Lender and the Title Company, that Borrower has

theretofore paid Construction Costs in an amount not less than the sum of (x)

the Aggregate amount of estimated Construction Costs stated in the Sworn

Construction Cost Statement, minus (y) the amount of the Construction Loan

Commitment, minus (z) $1,551,700, and also, (ii) that Borrower has provided

written evidence satisfactory to Lender confirming that Borrower will obtain no

less than $401,700 in grant funds from the United States Department of

Agriculture, no less than $1,100,000 in tax increment financing funds and no

less than $50,000 in funds from a community development grant (all in addition

to $18,638,600 of Borrower’s equity). 

(In the event one or more of such sources of funds is not available to

Borrower, Borrower shall invest additional equity from other sources).  Each Construction Draw Request shall be

deemed to constitute a representation and warranty by Borrower on the date thereof

as to the satisfaction of the conditions set forth in the Disbursing Agreement.




 




Section

3.04         Delivery

of Documents.  All of the

Loan Documents, certificates, legal opinions and other documents and papers

referred to in this Article III, unless otherwise specified, shall be

delivered to Lender and shall be in form, substance and detail satisfactory in

all respects to Lender.




 




ARTICLE

IV.




 




REPRESENTATIONS AND WARRANTIES




 




Borrower represents and warrants to Lender, as of the Closing Date and

the date of each Borrowing, as follows:




 




Section

4.01         Existence;

Power.  Borrower and each

Subsidiary (i) are duly organized, validly existing and in good standing as a

corporation, partnership or limited liability company, as the case may be, in

each case under the laws of the jurisdiction of its organization, (ii) have all

requisite power and authority to carry on their businesses as now conducted,

and (iii) have duly qualified to do business, and are in good standing, in each

jurisdiction where such qualification is




 




31





























 




required, except where a

failure to be so qualified could not reasonably be expected to result in a

Material Adverse Effect.




 




Section

4.02         Organizational

Power; Authorization. 

The execution, delivery and performance by Borrower of the Loan

Documents to which it is a party are within its organizational powers and have

been duly authorized by all necessary organizational, and if required, member

action.  This Agreement has been duly

executed and delivered by Borrower, and  constitutes, and each other Loan Document

to which Borrower is a party, when executed and delivered by Borrower, will

constitute, valid and binding obligations of Borrower, enforceable against it

in accordance with their respective terms, except as may be limited by

applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws

affecting the enforcement of creditors’ rights generally and by general

principles of equity.




 




Section

4.03         Governmental

Approvals; No Conflicts. 

The execution, delivery and performance by Borrower of this Agreement,

(a) does not require any consent or approval of, registration or filing with,

or any action by, any Governmental Authority, except those as have been

obtained or made and are in full force and effect or where the failure to do

so, individually or in the aggregate, could not reasonably be expected to

result in a Material Adverse Effect, (b) will not violate any applicable

law or regulation or the charter, by-laws or other organizational documents of

Borrower or any of its Subsidiaries or any order of any Governmental Authority,

(c) will not violate or result in a default under any indenture, material

agreement or other material instrument binding on Borrower or any of its

Subsidiaries or any of its assets or give rise to a right thereunder to require

any payment to be made by Borrower or any of its Subsidiaries and (d) will not

result in the creation or imposition of any Lien on any asset of Borrower or

any of its Subsidiaries, except Liens (if any) created under the Loan

Documents.




 




Section 4.04         Financial Statements.  Borrower has furnished to Lender copies of

Borrower’s (a) audited financial statements (consistent with the requirements

of Section 5.01(a)) as of its most recent fiscal year end and (b)

internally prepared financial statements (consistent with the requirements of Section

5.01(b)) as of the last day of the most recent quarter.  Such financial statements fairly present the

financial condition of Borrower and its Subsidiaries as of such dates and the

results of operations for such periods in conformity with GAAP consistently

applied, subject to year end audit adjustments and the absence of

footnotes.  Since the date of such

financial statements, there have been no changes with respect to Borrower and

its Subsidiaries which have had or could  reasonably be expected to have, singly or

in the aggregate, a material adverse effect on the business, results of

operations, financial condition, assets, liabilities or prospects of Borrower

and its Subsidiaries taken as a whole.




 




Section 4.05         Litigation and Environmental Matters.




 




(a)           No litigation, investigation or

proceeding of or before any arbitrators or Governmental Authorities is pending

against or, to the knowledge of Borrower, threatened against or affecting

Borrower or any of its Subsidiaries (i) as to which there is a reasonable

possibility of an adverse determination that could reasonably be expected to

have, either




 




32





























 




individually or in the

aggregate, a Material Adverse Effect or (ii) which in any manner draws into

question the validity or enforceability of this Agreement or any other Loan

Document.




 




(b)           Except for the matters set forth on Schedule

4.05, neither Borrower nor any Subsidiary (i) has failed to comply with any

Environmental Law or to obtain, maintain or comply with any permit, license or

other approval required under any Environmental Law, including without

limitation, all permits, licenses and approvals required by the state of South

Dakota, (ii) has become subject to any Environmental Liability, (iii) has

received notice of any claim with respect to any Environmental Liability or

(iv) knows of any basis for any Environmental Liability.




 




Section

4.06         Compliance

with Laws and Agreements. 

Borrower and each Subsidiary is in compliance with (a) all applicable

laws, rules, regulations and orders of any Governmental Authority, and (b) all

indentures, agreements or other instruments (including but not limited to the

Material Contracts) binding upon it or its properties, except where

non-compliance, either singly or in the aggregate, could not reasonably be

expected to result in a Material Adverse Effect.  Borrower has obtained all Permits necessary or appropriate

related to the present stage of construction of the Permitted Construction




 




Section

4.07         Investment

Company Act, Etc. 

Neither Borrower nor any Subsidiary is (a) an “investment company”, as

defined in, or subject to regulation under, the Investment Company Act of 1940,

as amended, (b) a “holding company” as defined in, or subject to regulation

under, the Public Utility Holding Company Act of 1935, as amended, or

(c) otherwise subject to any other regulatory scheme limiting its ability

to incur debt.




 




Section

4.08         Taxes. Borrower and its Subsidiaries and each

other Person for whose taxes Borrower or any Subsidiary could become liable

have timely filed or caused to be filed all Federal income tax returns and all

other material tax returns that are required to be filed by any of them, and

have paid all taxes shown to be due and payable (or with respect to real estate

taxes, have paid all taxes prior to the time the same become delinquent) on

such returns or on any assessments made against it or its property and all

other taxes, fees or other charges imposed on it or any of its property by any

Governmental Authority, except (i) to the extent the failure to do so would not

have a Material Adverse Effect or (ii)  where the same are currently being

contested in good faith by appropriate proceedings and for which Borrower or

such Subsidiary, as the case may be, has set aside on its books adequate

reserves.  The charges, accruals and

reserves on the books of Borrower and its Subsidiaries in respect of such taxes

are adequate, and no tax liabilities that could be materially in excess of the

amount so provided are anticipated.




 




Section

4.09         Margin

Regulations.  None of the

proceeds of any of the Loans will be used, directly or indirectly, for

“purchasing” or “carrying” any “margin stock” with the respective meanings of

each of such terms under Regulation U of the Board as now and from time to time

hereafter in effect, or for any purpose that violates the provisions of

Regulation U, T or X of the Board.




 




33





























 




Section

4.10         ERISA.  No ERISA Event has occurred or is reasonably

expected to occur that, when taken together with all other such ERISA Events

for which liability is reasonably expected to occur, could reasonably be

expected to result in a Material Adverse Effect.  The present value of all accumulated  benefit obligations under each Plan (based on the assumptions

used for purposes of Statement of Financial Standards No. 87) did not, as of

the date of the most recent financial statements reflecting such amounts,

exceed the fair market value of the assets of such Plan, and the present value

of all accumulated benefit obligations of all underfunded Plans (based on the

assumptions used for purposes of Statement of Financial Standards No. 87) did

not, as of the date of the most recent financial statements reflecting such

amounts, exceed by more than $50,000 the fair market value of the assets of all

such underfunded Plans.




 




Section 4.11         Ownership of Property.




 




(a)           Borrower and each Subsidiary have

good title to, or valid leasehold interests in, all of their real and personal

property material to the operation of their businesses.




 




(b)           Borrower and each Subsidiary own, or

are licensed, or otherwise have the right, to use, all patents, trademarks, service

marks, tradenames, copyrights and other intellectual property material to their

businesses and the use thereof by Borrower and any Subsidiary does not infringe

on the rights of any other Person, except for any such infringements that,

individually or in the aggregate, would not have a Material Adverse Effect.




 




Section

4.12         Disclosure.  Borrower has disclosed to Lender all

agreements, instruments, and corporate or other restrictions to which Borrower

or any of Subsidiary is subject, and all other matters known to any of them,

that, individually or in the aggregate, could reasonably be expected to result

in a Material Adverse Effect.  None of

the reports, financial statements, certificates or other information furnished

by or on behalf of Borrower to Lender in connection with the negotiation of

this Agreement or any other Loan Document or delivered hereunder or thereunder

(as modified or supplemented by any other information so furnished) contains

any material misstatement of fact or omits to state any material fact necessary

to make the statements therein, taken as a whole, in light of the circumstances

under which they were made, not misleading.




 




Section

4.13         Labor

Relations.  There are no

strikes, lockouts or other material labor disputes or grievances against

Borrower or any Subsidiary, or, to the knowledge of Borrower, threatened

against or affecting Borrower or any Subsidiary, and no significant unfair

labor practice, charges or grievances are pending against Borrower or any

Subsidiary, or to the knowledge of Borrower, threatened against any of them

before any Governmental Authority.  All

payments due from Borrower or any Subsidiary pursuant to the provisions of any

collective bargaining agreement have been paid or accrued as a liability on the

books of Borrower or any such Subsidiary, except where the failure to do so

could not reasonably be expected to have a Material Adverse Effect.




 




Section

4.14         Subsidiaries.  As of the Closing Date, Borrower has no

Subsidiaries.




 




34





























 




Section

4.15         Construction.  The exterior lines of the

Improvements are, and at all times will be, within the boundary lines of the

Real Estate, and Borrower has examined and is familiar with all applicable

covenants, conditions, restrictions and reservations and with all applicable

requirements of all Governmental Authorities, including without limitation,

building codes and zoning, environmental, hazardous substance, energy and

pollution control laws, ordinances and regulations affecting the Permitted

Construction.




 




Section

4.16         Projections.  The Projections fairly present

Borrower’s reasonable forecast of the most probable results of operations and

changes in cash flows for the periods covered thereby, based on the assumptions

set forth therein, which assumptions are reasonable based on historical

experience and presently known facts. Since the date of such Projections, there

have been no changes with respect to Borrower or its Subsidiaries which could

reasonably be expected to result in, singly or in the aggregate, a material

discrepancy between such Projections and Borrower’s actual results for the

periods stated.




 




Section

4.17         Material

Contracts.  There are no

Material Contracts other than the License Agreement, the Process Guarantee, and

those agreements and contracts disclosed to Lender pursuant to this Section

4.17.




 




(a)           Management

Contracts.  There are no

agreements or contracts which are material to the management of Borrower’s or

any Subsidiary’s business other than those listed on Schedule 4.17(a).




 




(b)           Supply

Contracts.  There are no

agreements or contracts which are material to the provision or supply of inputs

related to the operation of Borrower’s or any Subsidiary’s business other than

those listed on Schedule 4.17(b).




 




(c)           Off-Take

Contracts.  There are no

agreements or contracts which are material to the sale or disposal of products

or by-products produced by Borrower or any Subsidiary other than those listed

on Schedule 4.17(c).




 




(d)           Transportation

Contracts.  There are no agreements

or contracts related to the provision of transportation or shipping services

which are material to the operation of Borrower’s or any Subsidiary’s business

other than those listed on Schedule 4.17(d).




 




(e)           Power

Contracts.  There are no

agreements or contracts related to the provision of electricity, fuel oil, coal

or other energy resources which are material to the operation of Borrower’s or

any Subsidiary’s business other than those listed on Schedule 4.17(e).




 




Section

4.18         Permits.  Each Permit is listed on Schedule 4.18.




 




35





























 




ARTICLE

V.




 




AFFIRMATIVE COVENANTS




 




Borrower covenants and agrees that so long as Lender

has a Commitment hereunder, or the principal of and interest on any Loan or any

fee remains unpaid:




 




Section

5.01         Financial

Statements and Other Information.  The Borrower will deliver to Lender:




 




(a)           as soon as available and in any event

(i) within 120 days after the end of each fiscal year of Borrower, a copy of

the annual audited report for such fiscal year for Borrower and its

Subsidiaries, containing a combined and combining balance sheet of Borrower and

its Subsidiaries as of the end of such fiscal year and the related combined and

combining statements of income, owners’ equity and cash flows (together with

all footnotes thereto) of Borrower and its Subsidiaries for such fiscal year,

(ii) setting forth in comparative form the figures for the previous fiscal

year, all in reasonable detail and reported on by Eide Bailly, LLP, or other independent

public accountants acceptable to Lender (without a “going concern” or like

qualification, exception or explanation 

and without any qualification or exception as to scope of such audit) to

the effect that such financial statements present fairly in all material

respects the financial condition and the results of operations of Borrower and

its Subsidiaries, for such fiscal year on a combined basis in accordance with

GAAP and that the examination by such accountants in connection with such

combined financial statements has been made in accordance with GAAP;




 




(b)           as soon as available and in any event

within 30 days after the end of each calendar quarter, an unaudited combined

balance sheet of Borrower and its Subsidiaries as of the end of such calendar

quarter and the related unaudited combined statements of income, stockholder’s

equity and cash flow of Borrower and its Subsidiaries for such calendar quarter

and the then elapsed portion of such fiscal year, setting forth in each case in

comparative form the figures for the corresponding quarter and the

corresponding portion of Borrower’s previous fiscal year, all certified by an

appropriate Responsible Officer of Borrower as presenting fairly in all

material respects the financial condition and results of operations of Borrower

and its Subsidiaries on a combined basis in accordance with GAAP, subject to

normal year-end audit adjustments and the absence of footnotes;




 




(c)           concurrently with the delivery of the

financial statements referred to in clauses (a) and (b) above, a certificate of

a Responsible Officer, (i) certifying as to whether there exists a Default

or Event of Default on the date of such certificate, and if a Default or an

Event of Default then exists, specifying the details thereof and the action

which Borrower has taken or proposes to take with respect thereto, (ii) 

setting forth in reasonable detail calculations demonstrating compliance with Article

VI and (iii) stating whether any change in GAAP or the application thereof

has occurred since the date of Borrower’s audited financial statements referred

to in Section 4.04 and, if any change has occurred, specifying the

effect  of such change on the financial

statements accompanying such certificate;




 




36





























 




(d)           concurrently with the delivery of the

financial statements referred to in clause (a) above, a certificate of the

accounting firm that reported on such financial statements stating whether they

obtained any knowledge during the course of their examination of such financial

statements of any Default or Event of Default (which certificate may be limited

to the extent required by accounting rules or guidelines);




 




(e)           promptly upon Borrower obtaining

notice or knowledge of any changes to the Sworn Construction Cost Statement,

revised sworn statements of estimated costs of the Permitted Construction,

showing changes in or variations from the original Sworn Construction Cost

Statement in excess of $546,000 in the aggregate along with copies of all material

changes or modifications in the Construction Plans, contracts or subcontracts

for the Permitted Construction prior to incorporation of any such change or

modification into the Permitted Construction;




 




(f)            as soon as Borrower has notice or

knowledge thereof, a revised construction schedule if and when any target date

set forth therein has been delayed by 10 consecutive days or more, or when the

aggregate of all such delays equals 30 or more days;




 




(g)           promptly after the same become

available, copies of all periodic and other reports, and other materials

distributed by Borrower to its members generally, or to any Governmental

Authority or national securities exchange, as applicable; and




 




(h)           promptly following any request

therefor, such other information regarding the results of operations, business

affairs and  financial condition of

Borrower or any Subsidiary as Lender may reasonably request.




 




Section

5.02         Notices

of Material Events.  Borrower will furnish to Lender prompt written notice of the

following:




 




(a)           the occurrence of any Default or

Event of Default;




 




(b)           the filing or commencement of any

action, suit or proceeding by or before any arbitrator or Governmental

Authority against or, to the knowledge of Borrower, affecting Borrower or any

Subsidiary which, if adversely determined, could reasonably be expected to

result in a Material Adverse Effect;




 




(c)           the occurrence of any event or any

other development by which Borrower or any Subsidiary (i) fails to comply with

any Environmental Law or to obtain, maintain or comply with any permit, license

or other approval  required under any

Environmental Law, (ii) becomes subject to any Environmental Liability, (iii)

receives notice of any claim with respect to any Environmental Liability, or

(iv) becomes aware of any basis for any Environmental Liability and in each of

the preceding clauses, which individually or in the aggregate, could reasonably

be expected to result in a Material Adverse Effect;




 




37





























 




(d)           the occurrence of any ERISA Event

that alone, or together with any other ERISA Events that have occurred, could

reasonably be expected to result in liability of Borrower and its Subsidiaries

in an aggregate amount exceeding $100,000; and




 




(e)           any other development that results

in, or could reasonably be expected to result in, a Material Adverse Effect.




 




Each notice delivered under this Section shall be

accompanied by a written statement of a Responsible Officer setting forth the

details of the event or development requiring such notice and any action taken

or proposed to be taken with respect thereto.




 




Section

5.03         Existence;

Conduct of Business. 

Borrower will, and will cause each Subsidiary to, do or cause to be done

all things necessary to preserve, renew and maintain in full force and effect

its legal existence and its respective rights, licenses, permits, privileges,

franchises, patents, copyrights, trademarks and trade names material to the

conduct of its business and will continue to engage in the same business as

presently conducted or such other businesses that are reasonably related

thereto.




 




Section

5.04         Compliance

with Laws, Etc.  Borrower

will, and will cause each Subsidiary to, comply with all laws, rules,

regulations and requirements of any Governmental Authority applicable to its

properties, except where the failure to do so, either individually or in the

aggregate, could not reasonably be expected to result in a Material Adverse

Effect.  Borrower will cause all

exterior lines of the Improvements to be, at all times, within the boundary

lines of the Real Estate, and the Permitted Construction will in all respects

conform to and comply with all applicable covenants, conditions, restrictions

and reservations, and with all requirements of Governmental Authorities,

including, without limitation, all building codes and zoning, environmental,

hazardous substance, energy and pollution control laws, ordinances and

regulations affecting the Permitted Construction.




 




Section

5.05         Payment

of Obligations.  Borrower

will, and will cause each Subsidiary to, pay and discharge at or before

maturity, all of its obligations and liabilities (including without limitation

all tax liabilities and claims that could result in a statutory Lien) before

the same shall become delinquent or in default, except where (a) the validity

or amount thereof is being contested in good faith by appropriate proceedings,

(b) Borrower or such Subsidiary has set aside on its books adequate reserves

with respect thereto in accordance with GAAP and (c) the failure to make

payment pending such contest could not reasonably be expected to result in a

Material Adverse Effect.




 




Section

5.06         Books

and Records.  Borrower

will, and will cause each Subsidiary to, keep proper  books of record and account

in which full, true and correct entries shall be made of all dealings and

transactions in relation to its business and activities to the extent necessary

to prepare the combined financial statements of Borrower in conformity with

GAAP.




 




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Section 5.07         Visitation, Inspection, Audit, Etc.




 




(a)           Borrower will, and will cause each

Subsidiary to, permit any representative of Lender to visit and inspect its

properties (including, without limitation, the Real Estate and Permitted

Construction), to conduct audits of the Collateral (including without

limitation all Accounts and Inventory and all records relating thereto), to

examine its books and records and to make copies and take extracts therefrom,

to review all change orders relating to the Permitted Construction, to inspect

all work and materials relating to the Permitted Construction for which payment

is required, to review all Notices of Borrowing, to submit progress inspection

reports relating to the Permitted Construction, and to discuss its affairs,

finances and accounts with any of its officers and with its independent

certified public accountants, all at such reasonable times and as often as

Lender, may reasonably request after reasonable prior notice to Borrower; provided,

if a Default or an Event of Default has occurred and is continuing, no prior

notice shall be required.  All

reasonable expenses incurred by Lender in connection with any such visit,

inspection, audit, examination and discussions shall be borne by Borrower.




 




(b)           Borrower will, and will cause each

Subsidiary to, deliver to Lender such appraisals of the Real Estate and other

fixed assets of Borrower as Lender may reasonably request at any time and from

time to time, such appraisals to be conducted by an appraiser, and in form and

substance, reasonably satisfactory to Lender, in each case conducted at the

expense of Borrower if Lender requests such appraisal in connection with a

request for an accommodation, waiver or other credit action by Borrower.




 




(c)           Notwithstanding the foregoing, (i)

neither Borrower nor any other Person shall have the right to rely on the

reports relating to the Permitted Construction generated by Lender for any

purposes whatsoever, (ii) Borrower shall be responsible for making its own

inspections of the Permitted Construction during the course of construction and

shall satisfy itself that the work performed and the materials furnished shall

conform with its contracts and (iii) by making Construction Loans after

inspections of the Permitted Construction by Lender, Lender shall not be deemed

to have waived any Event of Default, or the right to require the correction of

construction defects or to have acknowledged that the construction (as to

quality or value of work performed or material furnished) conforms with the

Construction Plans.




 




Section

5.08         Maintenance

of Properties;  Insurance.  Borrower will, and will cause each Subsidiary to, (a) keep and

maintain all property material to the conduct of its business in good working

order and condition, ordinary wear and tear except where the failure to do so,

either individually or in the aggregate, could not reasonably be expected to

result in a Material Adverse Effect and (b) maintain with financially sound and

reputable insurance companies, insurance with respect to its properties and

business, and the properties and business of its Subsidiaries, against loss or

damage of the kinds customarily insured against by companies in the same or

similar businesses operating in the same or similar locations.




 




Section

5.09         Use

of Proceeds.  Borrower

will use the proceeds of the Term Loan to re-finance existing indebtedness and

the proceeds of all Construction Loans to finance the




 




39





























 




Permitted Construction.  No part of the proceeds of any Loan will be

used, whether directly or indirectly, for any purpose that would violate

Regulation T, U or X of the Board.




 




Section

5.10         Subsidiaries.  If any Subsidiary is acquired or formed

after the Closing Date, Borrower will, within ten (10) business days after such

Subsidiary is acquired or formed, notify Lender and will cause such Subsidiary

to execute a guarantee of the Obligations, a joinder to the Security Agreement,

and a joinder to such other Security Documents as Lender shall require, each in

form and substance satisfactory to Lender, and will cause such Subsidiary to

deliver simultaneously therewith similar documents applicable to such

Subsidiary required under Section 3.01 as requested by Lender.




 




Section 5.11         Reserved.




 




Section

5.12         Food

Security Act Compliance.  If Borrower acquires any Collateral

which may have constituted Farm Products in the possession of the seller or

supplier thereof, 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 reasonably actions

necessary, as prescribed by the Food Security Act, to purchase Farm Products

free of Liens (except the Liens granted pursuant hereto); provided, that

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 GAAP.  Upon Lender’s

request, Borrower agrees to forward to Lender promptly after receipt copies of

all notices of Liens and master lists of Effective Financing Statements

delivered to Borrower pursuant to the Food Security Act, which notices and/or

lists pertain to any of the Collateral. 

Upon Lender’s request, Borrower agrees to provide Lender with the names

of Persons who supply Borrower with such Farm Products and such other

information as Lender may reasonably request with respect to such Persons.




 




Section

5.13         Permitted

Construction.  Whenever

Borrower determines, or receives written notice from Lender, that the sum of

the principal amount not yet advanced under the Construction Loan Commitment to

pay Construction Costs are insufficient to complete the Permitted Construction,

Borrower shall, within three days, irrevocably deposit with Lender immediately

available funds not less than such insufficiency.




 




Section

5.14         Non-Liability

of Lender.  Borrower

acknowledges and agrees that Lender assumes no liability or responsibility for

the sufficiency of the Construction Loans to complete the Permitted

Construction, for the protection, inspection or completion of the Permitted

Construction, for the adequacy or accuracy of the Sworn Construction Cost

Statement, for any representations made by Borrower or for any action of

Borrower to be performed in the construction of the Permitted Construction.




 




40





























 




ARTICLE

VI.




 




FINANCIAL COVENANTS




 




Borrower covenants and agrees that so long as Lender

has a Commitment hereunder, or the principal or interest on any Loan or any fee

remains unpaid:




 




Section 6.01         Fixed Charge Coverage Ratio.  On December 31, 2004, and at all times

thereafter, Borrower will maintain a Fixed Charge Coverage  Ratio of not less than

1.15:1.0 at all times.




 




Section

6.02         Leverage

Ratio.   On October 1, 2004 and at all times thereafter, Borrower will

maintain ratio of (i) net worth to (ii) total assets of not less than 0.4:1.0.




 




Section 6.03         Capital

Expenditures.  After the

Construction Completion Date, Borrower will not make Capital Expenditures in

excess of $500,000 during fiscal year period following Construction Completion

without Lender’s prior written approval.




 




Section

6.04         Current

Ratio.  Borrower will

maintain, on October 1, 2003 and at all times thereafter, a ratio of current

assets to current liabilities of not less than 1.0:1.0.  Borrower will maintain, on October 1, 2004

and at all times thereafter, a ratio of current assets to current liabilities

of not less than 1.2:1.0.




 




Compliance with the financial covenants set forth in

this Article VI shall be determined based on financial statements dated

as of the close of business on the last day of the immediately preceding

quarter for the related period.




 




ARTICLE

VII.




 




NEGATIVE COVENANTS




 




Borrower covenants and agrees that so long as Lender

has a Commitment hereunder or the principal of or interest on any Loan or any

fee remains unpaid:




 




Section 7.01         Indebtedness.  Borrower will not, and will not

permit any of its Subsidiaries to, create, incur, assume or suffer to exist any

Indebtedness, except:




 




(a)           Indebtedness created pursuant to the

Loan Documents and the Side Note;




 




(b)           Indebtedness acceptable to Lender in

its sole discretion and existing on the date hereof and set forth on Schedule

7.01 and extensions, renewals and replacements of any such Indebtedness

that do not increase the outstanding principal amount thereof (immediately

prior to giving effect to such extension, renewal or replacement) or shorten

the maturity or the weighted average life thereof;




 




41





























 




(c)           Indebtedness of Borrower incurred to

finance the acquisition, construction or improvement of any fixed or capital

assets, including Capital Lease Obligations and any Indebtedness assumed in

connection with the acquisition of any such assets secured by a Lien on any

such assets prior to the acquisition thereof; provided, that such

Indebtedness is incurred prior to or within 90 days after such acquisition or

the completion of such construction or improvements or extensions, renewals,

and replacements of any such Indebtedness that do not increase the outstanding

principal amount thereof (immediately prior to giving effect to such extension,

renewal or replacement) or shorten the maturity or the weighted average life

thereof; provided further, that the aggregate principal amount of such

Indebtedness does not exceed $100,000 at any time outstanding.




 




Section

7.02         Negative

Pledge.  Borrower will

not, and will not permit any of its Subsidiaries to, create, incur, assume or

suffer to exist any Lien on any of its assets or property now owned or

hereafter acquired, except:




 




(a)           Liens created in favor of Lender

pursuant to the Loan Documents;




 




(b)           Permitted Encumbrances;




 




(c)           Liens on any property or asset of

Borrower existing on the Closing Date set forth on Schedule 7.02; provided,

that such Lien shall not apply to any other property or asset of Borrower;




 




(d)           purchase money Liens upon or in any

fixed or capital assets to secure the purchase price or the cost of

construction or improvement of such fixed or capital assets or to secure Indebtedness

incurred solely for the purpose of financing the acquisition, construction or

improvement of such fixed or capital assets (including Liens securing  any

Capital Lease Obligations); provided, that (i) such Lien secures

Indebtedness permitted by Section 7.01(c), (ii) such Lien

attaches to such asset concurrently or within 90 days after the acquisition,

improvement or completion of the construction thereof; (iii) such Lien does not

extend to any other asset; and (iv) the Indebtedness secured thereby does not

exceed the cost of acquiring, constructing or improving such fixed or capital

assets;




 




(e)           any

Lien (i) existing on any asset of any Person at the time such Person becomes a

Subsidiary, (ii) existing on any asset of any Person at the time such Person is

merged with or into Borrower or any Subsidiary or (iii) existing on any asset

prior to the acquisition thereof by Borrower or any Subsidiary; provided,

that any such Lien was not created in the contemplation of any of the foregoing

and any such Lien secures only those obligations which it secures on the date

that such Person becomes a Subsidiary or the date of such merger or the date of

such acquisition; and




 




(f)            extensions,

renewals, or replacements of any Lien referred to in paragraphs (a) through (d)

of this Section; provided, that the principal amount of the

Indebtedness  secured thereby is not

increased and that any such extension, renewal or replacement is limited to the

assets originally encumbered thereby.




 




42





























 




Section

7.03         Fundamental

Changes.  Borrower will

not, and will not permit any Subsidiary to, engage in any business other than

businesses of the type conducted by Borrower and its Subsidiaries on the date

hereof and businesses reasonably related thereto.




 




Section

7.04         Investments,

Loans, Etc.  Borrower

will not, and will not permit any Subsidiary to, purchase, hold or acquire

(including pursuant to any merger with any Person that was not a wholly owned

Subsidiary prior to such merger) any common stock, evidence of indebtedness or

other securities (including any option, warrant, or other right to acquire any

of the foregoing) of, make or permit to exist any loans or advances to,

Guarantee any obligations of, or make or permit to exist any investment or any

other interest in, any other Person (all of the foregoing being collectively

called “Investments”),

or purchase or otherwise acquire (in one transaction or a series of

transactions) any assets of any other Person that constitute a business unit,

or create or form any Subsidiary, except:




 




(a)           Investments (other than Permitted

Investments) existing on the date hereof and set forth on Schedule 7.04;




 




(b)           Permitted

Investments;




 




(c)           loans

or advances to employees, officers or directors of Borrower or any Subsidiary

in the ordinary course of business for travel, relocation and related expenses;

provided, however, that the aggregate amount of all such loans and

advances does not exceed $100,000 at any time;




 




(d)           Investments

in other business organizations whose primary business is the production of

ethanol and byproducts related thereto; provided, at the time any such Investment

is made, the aggregate book value of the sum of all such Investments may not,

without the prior written consent of Lender, exceed the lesser of (i) five

percent (5.0%) of the Net Worth of Borrower or (ii) $1,000,000;




 




(e)           other

Investments which in the aggregate do not exceed $100,000 in any fiscal year of

Borrower.




 




Section

7.05         Restricted

Payments.  Borrower  will

not,  and

will not permit any Subsidiary to,  declare or make, or agree to pay or make,

directly or indirectly, any dividend or distribution on any class of its

membership interests, or make any payment on account of, or set apart assets

for a sinking or other analogous fund for, the purchase, redemption,

retirement, defeasance or other acquisition of, any membership interest or

Indebtedness subordinated to the Obligations of Borrower or any options,

warrants, or other rights to purchase such common stock or such Indebtedness,

whether now or hereafter outstanding (each, a “Restricted Payment”), except for  (i) dividends or distributions payable by

Borrower solely in units of any class of its membership interests, (ii)

Restricted Payments made by any Subsidiary to Borrower and (iii) dividends or

distributions which do not exceed in any rolling 12 month period 75% of Net

Income (not including Bioenergy Payments); and provided further, that

Borrower shall not distribute more than 65% of any Bioenergy Payments received;

and that no Restricted Payment




 




43





























 




shall be paid by Borrower if an Event of Default

exists or would result from the payment of such Restricted Payment.




 




Section

7.06         Sale

of Assets.  Borrower will

not, and will not permit any Subsidiary to, convey, sell, lease, assign,

transfer or otherwise dispose of, any of its assets, business or property,

whether now owned or hereafter acquired, or, in the case of any Subsidiary,

issue or sell any shares of such Subsidiary’s common stock to any Person other

than Borrower (or to qualify directors if required by applicable law), except

(a) the sale or other disposition for fair market value of obsolete or worn out

property or other property not necessary for operations disposed of in the

ordinary course of business; and (b) the sale of inventory and Permitted

Investments in the ordinary course of business.




 




Section

7.07         Transactions

with Affiliates.  Borrower will not, and will not permit any Subsidiary to, sell,

lease or otherwise transfer any property or assets to, or purchase, lease or

otherwise acquire any property or assets from, or otherwise engage in any other

transactions with, any of its Affiliates, except (a) in the ordinary course of

business at prices and on terms and conditions not less favorable to Borrower

or such Subsidiary than could be obtained on an arm’s-length basis from

unrelated third parties in comparable transactions, (b) transactions between

Borrower and its wholly owned Subsidiaries not involving any other Affiliates

and (c) any Restricted Payment permitted by Section 7.05.




 




Section

7.08         Restrictive

Agreements.  Borrower

will not, and will not permit any Subsidiary to, directly or indirectly, enter

into, incur or permit to exist any agreement that prohibits, restricts or

imposes any condition upon (a) the ability of Borrower or any Subsidiary to

create, incur or permit any Lien upon any of its assets or properties, whether

now owned or hereafter acquired, or (b) the ability of any Subsidiary

to pay dividends or other distributions with respect to its common stock,

to make or repay loans or advances to Borrower or any other Subsidiary, to

Guarantee Indebtedness of Borrower or any other Subsidiary or to transfer any

of its property or assets to Borrower or any Subsidiary; provided, that

(i) the foregoing shall not apply to restrictions or conditions imposed by law

or by this Agreement or any other Loan Document, (ii) the foregoing

shall not apply to customary restrictions and conditions contained in

agreements relating to the sale of a Subsidiary pending such sale, provided

such restrictions and conditions apply only to the Subsidiary that is sold and

such sale is permitted hereunder, (iii) clause (a) shall not apply to

restrictions or conditions imposed by any agreement relating to secured

Indebtedness permitted by this Agreement if such restrictions and conditions

apply only to the property or assets securing such Indebtedness, and (iv)

clause (a) shall not apply to customary provisions in leases restricting the assignment

thereof.




 




Section

7.09         Sale

and Leaseback Transactions. 

Borrower will not, and will not permit any Subsidiary to, enter into any

arrangement, directly or indirectly, whereby it shall sell or transfer any

property, real or personal, used or useful in its business, whether now owned

or hereinafter acquired, and thereafter rent or lease such property or other

property that it intends to use for substantially the same purpose or purposes

as the property sold or transferred.




 




44





























 




Section 7.10         Lease

Obligations.  Borrower

will not, and will not permit any Subsidiary to, create or suffer to exist any

obligations for the payment under operating leases or agreements to lease (but

excluding any obligations under leases required to be classified as capital

leases under GAAP) having a term of five years or more which would cause the

direct or contingent liabilities of Borrower and its Subsidiaries under such

leases or agreements to lease, on a consolidated basis, to exceed $100,000

in the aggregate in any year.




 




Section

7.11         Hedging

Agreements.  Borrower

will not, and will not permit any Subsidiary to, enter into any Hedging

Agreement, other than Hedging Agreements entered into in the ordinary course of

business to hedge or mitigate risks to which Borrower or any Subsidiary is

exposed in the conduct of its business or the management of its liabilities.




 




Section

7.12         Amendment

to Material Documents and Construction Plans.




 




(a)           Borrower will not, and will not permit

any Subsidiary to, amend, modify or waive any of its rights under (i) its

certificate of organization, operating agreement, bylaws or other

organizational documents, or (ii) any Material Contract.




 




(b)           Except as allowed pursuant to Section

7.14, Borrower will not, and will not permit any Subsidiary to, amend,

modify, waive or consent to any change or modification in the Construction

Plans, contracts or subcontracts related to the Permitted Construction, and no

work shall be performed with respect to any such change or modification if such

change or modification would, net of any cost reduction resulting therefrom,

increase the cost of the Permitted Construction.




 




Section

7.13         Accounting

Changes.  Borrower will

not, and will not permit any Subsidiary to, make any significant change in

accounting treatment or reporting practices, except as required by GAAP, or

change the fiscal year of Borrower or any Subsidiary, except to change the

fiscal year of a Subsidiary to conform its fiscal year to that of Borrower.




 




Section

7.14         Construction.

 Borrower will not, and will

not permit any Subsidiary to, become a party to any contract for the

performance of any work on the Permitted Construction or for the supplying of

any labor, materials or services for the construction of the Improvements that

would have the effect of increasing the costs of the Permitted Construction

more than $546,000 (in the aggregate with previous such cost increases) above

those set forth in the Sworn Construction Cost Statement, except in such amounts

and upon such terms and with such parties as shall be approved in writing by

Lender (which approval shall not be unreasonably withheld).  No approval by Lender of any contract or

change order shall make Lender responsible for the adequacy, form or content of

such contract or change order. Borrower shall expeditiously complete and fully

pay for the development and construction of the Permitted Construction in a

good and workmanlike manner and in accordance with the contracts, subcontracts

and Construction Plans submitted to Lender and in compliance with all

applicable requirements of all Governmental Authorities, and any covenants,

conditions, restrictions and reservations applicable thereto, so that

Completion of the Improvements occurs on or before the Construction Completion

Date.  Borrower assumes full

responsibility for the compliance of the Construction




 




45





























 




Plans and the Permitted

Construction with all requirements of all Governmental Authorities and with

sound building and engineering practices, and notwithstanding any approvals by

Lender, Lender shall have no obligation or responsibility whatsoever for the

Construction Plans or any other matter incident to the Permitted Construction

or the construction of the Improvements. 

Borrower shall correct or cause to be corrected (a) any defect in the

Improvements, (b) any departure in the construction of the Improvements from

the Construction Plans or any requirements of any Governmental Authorities, and

(c) any encroachment by any part of the Improvements or any other structure

located on the Real Estate on any building line, easement, property line or

restricted area. Borrower shall cause all roads necessary for the utilization

of the Permitted Construction for its intended purposes to be completed and

dedicated (if dedication thereof is required by any Governmental Authority),

the bearing capacity of the soil on the Real Estate to be made sufficient to

support the Improvements, and sufficient local utilities to be made available

to the Permitted Construction and installed at costs (if any) set out in the

Sworn Construction Cost Statement, on or before the Construction Completion

Date.  No work may be performed pursuant

to any change order or pending change order to the Construction Plans prior to

delivery thereof to Lender.




 




Section

7.15         Deposit

Accounts.  Borrower will

not, and will not permit any Subsidiary to, maintain or deposit funds into any

Deposit Account other than those listed on Schedule 7.15 without the

prior written consent of Lender.




 




ARTICLE VIII.




 




EVENTS OF DEFAULT




 




Section

8.01         Events

of Default.  If any of

the following events (each an “Event of Default”) shall occur:




 




(a)           Borrower shall fail to pay any

principal of any Loan when and as the same shall become due and payable,

whether at the due date thereof or at a date fixed for prepayment or otherwise

and such failure shall continue unremedied for a period of ten (10) days; or




 




(b)           Borrower shall fail to pay any

interest on any Loan or any fee or any other amount (other than an amount

payable under clause (a) of this Article) payable under this Agreement or any

other Loan Document, when and as the same shall become due and payable, and

such failure shall continue unremedied for a period of ten (10) days; or




 




(c)           any representation or warranty made

or deemed made by or on behalf of Borrower in or in connection with this

Agreement or any other Loan Document (including the Schedules attached thereto)

and any amendments or modifications hereof or waivers hereunder, or in any

certificate, report, financial statement or other document submitted to Lender

by Borrower or any representative of Borrower pursuant to or in connection with

this Agreement or any other Loan Document shall prove to be incorrect when made

or deemed made or submitted; or




 




46





























 




(d)           Borrower shall fail to observe or

perform any covenant or agreement contained in Sections 5.01, 5.02,

or 5.03 (with respect to Borrower’ existence) or Articles VI or VII;

or




 




(e)           Borrower shall fail to observe or

perform any covenant or agreement contained in this Agreement (other than those

referred to in clauses (a), (b) and (d) above) or in any other Loan Document,

and such failure shall remain unremedied for 30 days after the earlier of

(i) any officer of Borrower becomes aware of such failure, or (ii) 

notice thereof shall have been given to Borrower by Lender; or




 




(f)            any default or event of default

(after giving effect to any grace period) shall have occurred and be continuing

under any Loan Document or Material Contract; or




 




(g)           Borrower or any Subsidiary (whether

as primary obligor or as guarantor or other surety) shall fail to pay any

principal of or premium or interest on any Material Indebtedness that is

outstanding, when and as the same shall become due and payable (whether at

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 evidencing such Indebtedness; or any

other event shall occur or condition shall exist under any agreement or

instrument relating to such Indebtedness and shall continue after the

applicable grace period, if any, specified in such agreement or instrument, if

the effect of such event or condition is to accelerate, or permit the

acceleration of, the maturity of such Indebtedness; or any such Indebtedness

shall be declared to be due and payable; or required to be prepaid or redeemed

(other  than by a regularly scheduled

required prepayment or redemption), purchased or defeased, or any offer to

prepay, redeem, purchase or defease such Indebtedness shall be required to be

made, in each case prior to the stated maturity thereof; or




 




(h)           Borrower or any Subsidiary shall (i)

commence a voluntary case or other proceeding or file any petition seeking

liquidation, reorganization or other relief under any federal, state or foreign

bankruptcy, insolvency or other similar law now or hereafter in effect  or seeking the appointment of a custodian,

trustee, receiver, liquidater or other similar official of it or any

substantial part of its property, (ii) consent to the institution of, or fail

to contest in a timely and appropriate manner, any proceeding or petition

described in clause (i) of this Section 8.01(h), (iii) apply for or

consent to the appointment of a custodian, trustee, receiver, liquidation or

other similar official for Borrower or any such Subsidiary or for a substantial

part of its assets, (iv) file an answer admitting the material allegations of a

petition filed against it in any such proceeding, (v) make a general assignment

for the benefit of creditors, or (vi) take any action for the purpose of

effecting  any of the foregoing; or




 




(i)            an involuntary proceeding shall be

commenced or an involuntary petition shall be filed seeking (i) liquidation,

reorganization or other relief in respect of Borrower or any Subsidiary or its

debts, or any substantial part of its assets, under any federal, state or

foreign bankruptcy, insolvency or other similar law now or hereafter in effect

or (ii) the appointment of a custodian, trustee, receiver, liquidater or other

similar official for Borrower or any Subsidiary or for a substantial part of

its assets, and in any such case, such 

proceeding or petition shall remain




 




47





























 




undismissed for a period

of 60 days or an order or decree approving or 

ordering any of the foregoing shall be entered; or




 




(j)            Borrower or any Subsidiary shall

become unable to pay, shall admit in writing its inability to pay, or shall

fail to pay, its debts as they become due; or




 




(k)           an ERISA Event shall have occurred

that, in the opinion of the Lender, when taken together with other ERISA Events

that have occurred, could reasonably be expected to result in liability to

Borrower and its Subsidiaries in an aggregate amount exceeding $100,000; or




 




(l)            any  judgment or order for the

payment of money in excess of $100,000 in the aggregate shall be rendered

against Borrower or any Subsidiary, and either (i) such judgment or order is

final and enforcement proceedings shall have been commenced by any creditor

upon such judgment or order, or (ii) there shall be a period of

30 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




 




(m)          any  non-monetary  judgment

or order shall be rendered against Borrower or any Subsidiary that could

reasonably be expected to have a Material Adverse Effect, and  there shall be a period of

30 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




 




(n)           a Change in Control shall occur or

exist;




 




(o)           Borrower shall fail to invest the sum

of at least $20,190,300 of equity capital (which may include proceeds from

grants and tax increment financing); or




 




(p)           any event which could reasonably be

expected to result in a Material Adverse Effect shall occur and be continuing;




 




then, and in every such event (other than an event

described in clause (h) or (i) of this Section) and at any time thereafter

during the continuance of such event, Lender may, by notice to Borrower, take

any or all of the following actions, at the same or different times:   (i) terminate the Commitments, whereupon

the Commitments shall terminate immediately; (ii) declare the principal of

and any accrued interest on the Loans, and all other Obligations owing

hereunder, to be due and payable, whereupon the same shall become due and

payable immediately, without presentment, demand, protest or other notice of

any kind, all of which are hereby waived by Borrower and (iii) exercise all

remedies contained in any other Loan Document or as otherwise provided by law;

and that, if an Event of Default specified in either clause (h) or (i) shall

occur, the Commitments shall automatically terminate and the principal of the

Loans then outstanding, together with accrued interest thereon, and  all fees, and all other Obligations shall

automatically become due and payable, without presentment, demand, protest or

other notice of any kind, all of which are hereby waived by Borrower.




 




48





























 




Upon the occurrence of an

Event of Default prior to Construction Completion, and at any time thereafter

during the continuance of such event, Lender may, in addition to remedies set

forth in the preceding paragraph, enter upon Borrower’s property and proceed either in its own name or in the name of Borrower (which

authority is coupled with an interest and is irrevocable by Borrower) to

complete or cause to be completed the Improvements, at the cost and expense of

Borrower. If Lender elects to complete or cause to be completed the

Improvements, it may do so according to the Construction Plans or according to

such changes, alterations or modifications in and to the Construction Plans as

Lender may deem appropriate; and Lender may enforce or cancel all contracts let

by Borrower relating to construction and installation of the Improvements

and/or let other contracts which in Lender’s sole judgment it may deem

advisable; and Borrower shall forthwith turn over and duly assign to Lender, as

Lender may from time to time require, contracts relating to construction and

installation of the Improvements, the Construction Plans, blueprints, shop

drawings, bonds, building permits, bills and statements of accounts pertaining

to the Improvements, whether paid or not, and any other instruments or records

in the possession of Borrower pertaining to the Improvements.  Borrower shall be liable under this

Agreement to pay to Lender, on demand, any amount or amounts expended by Lender

in so completing the Improvements, together with any costs, charges, or

expenses incident thereto or resulting therefrom, all of which shall be secured

by the Security Documents.  In the event

that a proceeding is instituted against Borrower for recovery and reimbursement

of any moneys expended by Lender in connection with the completion of the

Improvements, a statement of such expenditures, verified by the affidavit of an

officer of Lender, shall be prima facie evidence of the amounts so expended and

of the propriety of and necessity for such expenditures; and the burden of

proving to the contrary shall be upon Borrower. Lender shall have the right to

apply the undisbursed amount of the Construction Note to bring about the

completion of the Improvements and to pay the costs thereof; and if such funds

are insufficient, in the sole judgment of Lender, to complete the Improvements,

Borrower agrees to promptly deliver and pay to Lender such sum or sums of money

as Lender may from time to time demand for the purpose of completing the

Improvements or of paying any liability, charge or expense which may have been

incurred or assumed by Lender under or in performance of this Agreement, or for

the purpose of completing the Improvements. 

It is expressly understood and agreed that in no event shall Lender be

obligated or liable in any way to complete the Improvements or to pay for the

costs of construction thereof.




 




ARTICLE

IX




 




MISCELLANEOUS




 




Section

9.01         Notices.




 




Except in the case of notices and other communications

expressly permitted to be given by telephone, all notices and other

communications to any party herein to be effective shall be in writing and

shall be delivered by hand or overnight courier service, mailed by certified or

registered mail or sent by telecopy, as follows:




 




49





























 




	

  To Borrower:


  	

   


  	

  Great Plains Ethanol,

  LLC


  
	

   


  	

   


  	

  Attention:  Brian Minish, C.E.O.


  
	

   


  	

   


  	

  120 South Main


  
	

   


  	

   


  	

  Post Office Box 217


  
	

   


  	

   


  	

  Lennox, South

  Dakota  57039


  
	

   


  	

   


  	

  Facsimile No.

  (605) 647-5192


  
	

   


  	

   


  	

   


  
	

  With a Copy to:


  	

   


  	

  James L. Wiederrich,

  Esq.


  
	

   


  	

   


  	

  Woods, Fuller, Schultz

  & Smith P.C.


  
	

   


  	

   


  	

  300 South Phillips

  Avenue


  
	

   


  	

   


  	

  Post Office Box 5027


  
	

   


  	

   


  	

  Sioux Falls, South

  Dakota  57117


  
	

   


  	

   


  	

  Facsimile No.

  (605) 339-3357


  
	

   


  	

   


  	

   


  
	

  To the Lender:


  	

   


  	

  AgCountry Farm

  Credit Services, FLCA


  
	

   


  	

   


  	

  Attention:  Randolph L. Aberle, Vice President


  
	

   


  	

   


  	

  Post Office Box 6020


  
	

   


  	

   


  	

  1749 38th

  Street Southwest


  
	

   


  	

   


  	

  Fargo, North Dakota

  58108-6020


  
	

   


  	

   


  	

  Facsimile No.

  (701) 282-9618


  





 




Any party hereto may change its address or telecopy

number for notices and other communications hereunder by notice to the other

parties hereto.  All such notices and

other communications shall, when transmitted by overnight delivery, or faxed,

be effective when delivered for overnight (next-day) delivery, or transmitted

in legible form by facsimile machine, respectively, or if mailed, upon the third

Business Day after the date deposited into the mails or if delivered, upon

delivery; provided, that notices delivered to Lender shall not be effective

until actually received by such Person at its address specified in this Section

9.01.




 




(a)           Any agreement of Lender herein to

receive certain notices by telephone or facsimile is solely for the convenience

and at the request of Borrower.  Lender

shall be entitled to rely on the authority of any Person purporting to be a

Person authorized by Borrower to give such notice and Lender shall not have any

liability to Borrower or other Person on account of any action taken or not

taken by Lender in reliance upon such telephonic or facsimile notice.  The obligation of Borrower to repay the

Loans and all other Obligations hereunder shall not be affected in any way or

to any extent by any failure of Lender to receive written confirmation of any

telephonic or facsimile notice or the receipt by Lender of a confirmation which

is at variance with the terms understood by Lender to be contained in any such

telephonic or facsimile notice.




 




Section

9.02         Waiver;

Amendments.




 




(a)           No failure or delay by Lender in

exercising any right or power hereunder or any other Loan Document, and no

course of dealing between Borrower and Lender, shall operate as a waiver

thereof, nor shall any single or partial exercise of any such right or power or

any abandonment or discontinuance of steps to enforce such right or power,

preclude any other




 




50





























 




or further exercise

thereof or the exercise of any other right or power hereunder or

thereunder.  The rights and remedies of

Lender hereunder and under the other Loan Documents are cumulative and are not

exclusive of any rights or remedies provided by law. No waiver of any provision

of this Agreement or any other Loan Document or consent to any departure by

Borrower therefrom shall in any event be effective unless the same shall be

permitted by paragraph (b) of this Section, and then such waiver or consent shall

be effective only in the specific instance and for the purpose for which given.

Without limiting the generality of the foregoing, the making of a Loan shall

not be construed as a waiver of any Default or Event of Default, regardless of

whether Lender may have had notice or knowledge of such Default or Event of

Default at the time.




 




(b)           No amendment or waiver of any

provision of this Agreement or the other Loan Documents, nor consent to any

departure by Borrower therefrom, shall in any event be effective unless the

same shall be in writing and signed by Borrower and Lender and then such waiver

or consent shall be effective only in the specific instance and for the

specific purpose for which given.




 




Section

9.03         Expenses;

Indemnification.




 




(a)           The Borrower shall pay (i) all

reasonable, out-of-pocket costs and expenses of Lender, including the

reasonable fees, charges and disbursements of counsel for Lender and in

connection with the preparation and administration of the Loan Documents and

any amendments, modifications or waivers thereof (whether or not the

transactions contemplated in this Agreement or any other Loan Document shall be

consummated), and (ii) all reasonable out-of-pocket costs and expenses

(including, without limitation, the reasonable fees, charges and disbursements

of outside counsel and the allocated cost of inside counsel) incurred by Lender

in connection with the enforcement or protection of its rights in connection

with this Agreement, including its rights under this Section, or in connection

with the Loans made hereunder, including all such reasonable out-of-pocket

expenses incurred during any workout, restructuring or negotiations in respect

of such Loans.  Nothing in this Section

9.03 shall be deemed to obligate Borrower to pay costs of any participant

in any Loan.




 




(b)           The Borrower shall indemnify Lender

against, and hold Lender harmless from, any and all costs, losses, liabilities,

claims, damages and related expenses, including the fees, charges and

disbursements of any counsel for Lender, which may be incurred by or asserted

against Lender arising out of, in connection with or as a result of

(i) the execution or delivery of this Agreement or any other agreement or

instrument contemplated hereby, the performance by the parties hereto of their

respective obligations hereunder or the consummation of any of the transactions

contemplated hereby, (ii) any Loan or any actual or proposed use of the

proceeds therefrom, (iii) any actual or alleged presence or release of

Hazardous Materials on or from any property owned by Borrower or any Subsidiary

or any Environmental Liability  related

in any way to Borrower or any Subsidiary  or (iv)  any actual or prospective

claim, litigation, investigation or proceeding relating to any of the

foregoing, whether based on contract, tort or any other theory and regardless

of whether any Lender is a party thereto; provided, that Borrower shall

not be obligated to indemnify Lender for any of the foregoing arising out of




 




51





























 




Lender’s gross negligence

or willful misconduct as determined by a court of competent jurisdiction in a

final and nonappealable judgment.




 




(c)           The Borrower shall pay, and hold

Lender harmless from and against, any and all present and future stamp,

documentary, and other similar taxes with respect to this Agreement and any

other Loan Documents, any collateral described therein, or any payments due

thereunder, and save Lender harmless from and against any and all liabilities

with respect to or resulting from any delay or omission to pay such taxes.




 




(d)           To the extent permitted by applicable

law, Borrower shall not assert, and Borrower hereby waives, any claim against

Lender, on any theory of liability, for special, indirect, consequential or

punitive damages (as opposed to actual or direct damages) arising out of, in

connection with or as a result of, this Agreement or any agreement or

instrument contemplated hereby, the transactions contemplated therein, any Loan

or the use of proceeds thereof.




 




(e)           All amounts due under this Section

9.03 shall be payable promptly after written demand therefor.




 




Section

9.04         Successors

and Assigns.




 




(a)           The provisions of this Agreement

shall be binding upon and inure to the benefit of the parties hereto and their

respective successors and assigns, except that Borrower may not assign or

transfer any of its rights hereunder without the prior written consent of

Lender (and any attempted assignment or transfer by Borrower without such

consent shall be null and void).




 




(b)           Lender may at any time assign to one

or more assignees all or a portion of its rights and obligations under this

Agreement and the other Loan Documents (including all or a portion of its

Commitment and the Loans at the time owing to it).




 




(c)           Lender may at any time, without the

consent of Borrower, sell participations to one or more banks or other entities

(a “Participant”) in all

or a portion of Lender’s rights and obligations under this Agreement (including

all or a portion of its Commitment and the Loans owing to it); provided, that

(i) Lender’s obligations under this Agreement shall remain unchanged,

(ii) Borrower shall continue to deal solely and directly with Lender in

connection with Lender’s rights and obligations under this Agreement and the

other Loan Documents.  Borrower agrees

that each Participant shall be entitled to the benefits of Section 2.18

to the same extent as if it were the Lender hereunder and had acquired its

interest by assignment pursuant to paragraph (b).  To the extent permitted by law, Borrower

agrees that each Participant shall be entitled to the benefits of Section

2.20 as though it were the Lender.




 




(d)           Lender may at any time pledge or

assign a security interest in all or any portion of its rights under this

Agreement and the Notes without complying with this Section;




 




52





























 




provided,

that no such pledge or assignment shall release Lender from any of its

obligations hereunder or substitute any such pledgee or assignee for Lender as a

party hereto.




 




Section 9.05         Governing Law; Jurisdiction; Consent

to Service of Process.




 




(a)           This Agreement and the other Loan

Documents shall be construed in accordance with and be governed by the law

(without giving effect to the conflict of law principles thereof) of the State

of North Dakota.




 




(b)           Borrower hereby irrevocably and

unconditionally submits, for itself and its property, to the non-exclusive

jurisdiction of the United States District Court of the District of North

Dakota, and of any state court of the State of North Dakota located in Cass

County and any appellate court from any thereof, in any action or proceeding

arising out of or relating to this Agreement or any other Loan Document or the

transactions contemplated hereby or thereby, or for recognition or enforcement

of any judgment, and each of the parties hereto hereby irrevocably and

unconditionally agrees that all claims in respect of any such action or

proceeding may be heard and determined in such North Dakota state court or, to

the extent permitted by applicable law, such Federal court. Each of the parties

hereto 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. Nothing in this Agreement or any other

Loan Document shall affect any right that Lender may otherwise have to bring

any action or proceeding relating to this Agreement or any other Loan Document

against Borrower or its properties in the courts of any jurisdiction.




 




(c)           Borrower irrevocably and

unconditionally waives any objection which it may now or hereafter have to

the laying of venue of any such suit, action or proceeding described in

paragraph (b) of this Section and brought in any court referred to in paragraph

(b) of this Section. Each of the parties hereto irrevocably waives, to the

fullest extent permitted by applicable law, the defense of an inconvenient

forum to the maintenance of such action or proceeding in any such court.




 




Section

9.06         WAIVER

OF JURY TRIAL.  EACH

PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE

LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY

OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE

TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR

ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,

AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,

THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE

THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO

HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,

AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




 




53





























 




Section

9.07         Right

of Setoff.  In addition

to any rights now or hereafter granted under applicable law and not by way of

limitation of any such rights, Lender shall have the right, at any time or from

time to time upon the occurrence and during the continuance of an Event of

Default, without prior notice to Borrowers, any such notice being expressly

waived by Borrower to the extent permitted by applicable law, to set off and

apply against all deposits (general or special, time or demand, provisional or

final) of Borrower at any time held or other obligations at any time owing by

Lender to or for the credit or the account of Borrower against any and all Obligations

held by Lender, irrespective of whether Lender shall have made demand hereunder

and although such Obligations may be unmatured.  Lenders agree promptly to notify the Lender and Borrower after

any such set-off and any application made by Lender; provided, that the

failure to give such notice shall not affect the validity of such set-off and

application.




 




Section

9.08         Counterparts;

Integration.  This

Agreement may be executed by one or more of the parties to this Agreement on

any number of separate counterparts (including by telecopy), and all of said

counterparts taken together shall be deemed to constitute one and the same

instrument. This Agreement, the other Loan Documents, and any separate letter

agreement(s) relating to any fees payable to the Lender constitute the entire

agreement among the parties hereto and thereto regarding the subject matters

hereof and thereof and supersede all prior agreements and understandings, oral

or written, regarding such subject matters.




 




Section

9.09         Survival.  All covenants, agreements, representations

and warranties made by Borrower herein and in the certificates or other

instruments delivered in connection with or pursuant to this Agreement shall be

considered to have been relied upon by Lender and shall survive the execution

and delivery of this Agreement and the making of any Loans, 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 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 the principal of or any

accrued interest on any Loan or any fee or any other amount payable under this

Agreement is outstanding and unpaid and so long as the Commitments have not

expired or terminated.  The provisions

of Sections 2.18, 2.20, and 9.03 shall survive and remain

in full force and effect regardless of the consummation of the transactions

contemplated hereby, the repayment of the Loans, and the Commitments or the

termination of this Agreement or any provision hereof.  All representations and warranties made

herein, in the certificates, reports, notices, and other documents delivered

pursuant to this Agreement shall survive the execution and delivery of this

Agreement and the other Loan Documents, and the making of the Loans.




 




Section

9.10         Severability.  Any provision of this Agreement or any other

Loan Document held to be illegal, invalid or unenforceable in any jurisdiction,

shall, as to such jurisdiction, be ineffective to the extent of such

illegality, invalidity or unenforceability without affecting the legality,

validity or enforceability of  the

remaining provisions hereof or thereof; and the illegality, invalidity or

unenforceability of a particular provision in a particular jurisdiction shall

not invalidate or render unenforceable such provision in any other

jurisdiction.




 




54





























 




Section

9.11         Confidentiality.

 Lender agrees to take normal

and reasonable precautions to maintain the confidentiality of any information

designated in writing as confidential and provided to it by Borrower or any

Subsidiary, except that such information may be disclosed (i) to any Affiliate,

participant or advisor of Lender, including without limitation accountants,

legal counsel and other advisors, provided that Lender shall have taken

reasonable steps to assure that such Affiliates, participants, and advisors

will maintain such information in confidence to the same extent required of

Lender hereunder, (ii) to the extent required by applicable laws or regulations

or by any subpoena or similar legal process, (iii) to the extent requested by

any regulatory agency or authority, (iv) to the extent that such information

becomes publicly available other than as a result of a breach of this Section

9.11, or which becomes available to Lender of any of the foregoing on a

nonconfidential basis from a source other than Borrower, (v) in connection with

the exercise of any remedy hereunder or any suit, action or proceeding relating

to this Agreement or the enforcement of rights hereunder, and (ix) subject to

provisions substantially similar to this Section 9.11, to any actual or

prospective assignee or Participant, or (vi) with the consent of Borrower.  Any Person required to maintain the

confidentiality of any information as provided for in this Section shall be

considered to have complied with its obligation to do so if such Person has

exercised the same degree of care to maintain the confidentiality of such

information as such Person would accord its own confidential information.




 




Section

9.12         Interest

Rate Limitation. 

Notwithstanding anything herein to the contrary, if at any time the

interest rate applicable to any Loan, together with all fees, charges and other

amounts which may be treated as interest on such Loan under applicable law

(collectively, the “Charges”),

shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for,

charged, taken, received or reserved by Lender in accordance with applicable

law, the rate of interest payable in respect of such Loan hereunder, together

with all Charges payable in respect thereof, shall be limited to the Maximum

Rate and, to the extent lawful, the interest and Charges  that would have been payable in respect of

such Loan but were not payable as a result of the operation of this Section

shall be cumulated and the interest and Charges payable to Lender in respect of

other Loans or periods shall be increased (but not above the Maximum Rate

therefor) until such cumulated amount, together with interest thereon at the

Maximum Rate to the date of repayment, shall have been received by Lender.




 




Section

9.13         Inspections.  Borrower shall be responsible for making

inspections of the Real Estate and the Improvements during the course of

construction and shall determine to its own satisfaction that the work done or

materials supplied by the contractors to whom payment is to be made out of each Construction Draw Request has been properly done

or supplied in accordance with the applicable contracts with such

contractors.  If any work done or

materials supplied by a contractor are not satisfactory to Borrower, Borrower

will immediately notify Lender in writing of such fact.  It is expressly understood and agreed that

Lender or its authorized representative may conduct such inspections of the

Real Estate and the Improvements as it may deem necessary for the protection of

Lender’s interest, and, specifically, the Inspecting Architect may, at the

option of Lender and at the expense of Borrower, conduct such periodic

inspections, prepare such written progress reports during the period of

construction and prepare




 




55





























 




such written

reports upon completion of the Improvements, as Lender may request.  Any inspections which may be made by Lender

or its representative will be made, and all certificates issued by Lender’s

representative will be issued, solely for the benefit and protection of Lender,

and Borrower will not rely thereon.




 




Section

9.14         Termination.  Upon satisfaction of all of Borrower’s

obligations hereunder and the related documents and instruments, Lender shall

(a) mark the Notes “PAID” and return the same to Borrower, (b) release its

security interests and file appropriate documentations of the same, and (c)

redeem the Required Stock.




 




[Signature Page

Follows]




 




56





























 




IN

WITNESS WHEREOF, the parties hereto have caused this

Agreement to be duly executed by their respective authorized officers as of the

day and year first above written.




 




	

   


  	

  BORROWER:


  	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  GREAT PLAINS

  ETHANOL, LLC


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

  /s/ Brian Minish


  
	

   


  	

   


  	

  Name:


  	

  Brian Minish


  
	

   


  	

   


  	

  Title:


  	

  Chief Executive

  Officer


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

  LENDER:


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

  AGCOUNTRY FARM

  CREDIT SERVICES, FLCA


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

  /s/ Randolph L.

  Aberle


  
	

   


  	

   


  	

  Name:


  	

  Randolph L.

  Aberle


  
	

   


  	

   


  	

  Title:


  	

  Vice President


  
														





 




 




-Signature Page-