Exhibit 10.5


 


ETHANOL GRAIN PROCESSORS, LLC


 


SUBSCRIPTION AND INVESTMENT
REPRESENTATION AGREEMENT


 


THIS SUBSCRIPTION AGREEMENT is entered into and made effective as of
the 21st day of November, 2005, by and between Ethanol Grain
Processors, LLC, a Tennessee limited liability company with principal executive
offices located at 1918 McDonald Road, Rives, Tennessee 38253, and mailing
office address of P.O. Box 95, Obion, Tennessee 38240 (the “Company”), and
Ethanol Capital Management, LLC, a Delaware limited liability company with
principal executive offices located at 4400 East Broadway Blvd. Suite 600,
Tucson, Arizona 85711 (the “Subscriber”).


 


W I T N E S S E T H


 


In consideration of the mutual promises
contained herein, and other good and valuable consideration, the Subscriber
hereby agrees, represents and warrants as follows:


 


1.             Agreement of Subscription.


 


a.             Subscriber hereby subscribes for the purchase of
membership interests of the Company quantified by the number of units (the “Units”)
indicated below, at a purchase price of $1.20 per Unit, upon the terms and
conditions set forth in this Subscription Agreement:


 


	
   

  	
  250,000

  	
   

  	
  Number of Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  300,000

  	
   

  	
  Total
  Purchase Price (number
  of Units multiplied by $1.20 per Unit)

  	
   

  



 


b.             Subscriber agrees to pay the total purchase
price of the Units pursuant to the payment terms of the fully-executed
promissory note dated of even date herewith in principal amount of $300,000 and
delivered to the Company with this Subscription Agreement (the “Promissory Note”).
 Subscriber
acknowledges and agrees that 100% of Subscriber’s purchase price of the Units
and all payments made thereon constitute “at-risk” capital, and will not be
placed into any type of escrow. 
Subscriber understands that this Subscription agreement is subject to
acceptance by the Company’s board of governors. 
Upon acceptance by the Company, Subscriber further agrees that this
Subscription Agreement and the Promissory Note delivered herewith each is
irrevocable and binding upon Subscriber, and the payment obligations pursuant
to the payment terms of the Promissory Note are unconditional.  Notwithstanding the foregoing, this
Subscription Agreement and the payment obligations under the Promissory Note
are contingent upon the consent and approval of a majority in interest of the
Company’s members to the purchase of the Units hereunder, which consent is
required by and shall be sought pursuant to the Company’s operating agreement
dated October 28, 2004, as amended (the “Operating Agreement”)).  If such consent and approval is not obtained
by December 31, 2005, this Subscription Agreement and the Promissory Note shall
be null and void and of no further effect, and the Company shall return the
Promissory Note and Subscription Agreement to Subscriber each marked “cancelled.”


 





















 


	
  ETHANOL GRAIN PROCESSORS, LLC

  	
   

  	
  SECOND ROUND SEED CAPITAL

  
	
   

  	
   

  	
  SUBSCRIPTION AGREEMENT

  



 


c.             Subscriber acknowledges that the Company has not
established a minimum number of Units that must be sold in conjunction with the
Company’s second round seed capital offering and that the Company may accept
subscriptions for, and complete sales of, any number of units in its second
round seed capital offering.


 


d.             Subscriber acknowledges and agrees that 100% of
Subscriber’s purchase price of the Units constitutes “at-risk” capital, and
will not be placed into any type of escrow. 
Immediately following tender of the payment(s) for the Units, the
Company will use such funds to pay for a portion of organizational, start-up,
and development costs associated with the Company’s ethanol project in
Northwest Tennessee, as further described in the Feasibility Report and
Memorandum (as defined below).


 


e.             Subscriber and the Company agree that, upon
acceptance of this Subscription Agreement, Subscriber will become a “Member” of
the Company, which membership shall be subject to the Company’s Articles of
Organization and the Operating Agreement. 
No certificates will be issued for the Units unless and until the
Company accepts this Subscription Agreement and Subscriber pays the entire
Principal Balance of the Promissory Note and all other amounts due and owing
under the Promissory Note to the Company, at the times and as provided for
therein.


 


2.             Representations and Warranties of
Subscriber.


 


In consideration of the Company’s offer
to sell the Units, Subscriber hereby represents and warrants to the Company and
its agents as follows:


 


a.             Information About the Ethanol
Project.  Subscriber, or its representative(s), has
received, read and understands the Company’s ethanol feasibility study dated
September, 2004 prepared by PRX Geographic and Holbrook Consulting Services
regarding the feasibility of a large-scale dry-mill ethanol production facility
to be located near Obion, Tennessee and all Exhibits and Appendices thereto (the
“Feasibility Report”).  Subscriber, or
its representative, has had an opportunity to obtain, and has received, any
additional information regarding the Company or its ethanol project under
development, and has had an opportunity to ask such questions of, and receive
answers from, the Company or an agent or representative of the Company, to the
extent deemed necessary by the Subscriber in order to form a decision
concerning an investment in the Company and the ethanol project the Company is
seeking to develop.  As a result,
Subscriber believes it has sufficient knowledge about the business, management
and financial affairs of the Company, the ethanol project and the proposed
ethanol plant, and the terms and conditions of the purchase of Units
contemplated hereby.


 


Without limiting the generality of the
foregoing, Subscriber understands that the Company was recently organized, is a
development stage company with no financial or operating history, and will
require approximately $60 million of additional equity (pursuant to subsequent
offerings of membership interests quantified by units) and approximately $90
million of debt financing in order to reach financial closing on the ethanol
project or begin construction of the proposed ethanol plant.  Therefore, the Company’s financing plan faces
substantial uncertainty and contemplates significant leverage, and Subscriber
will incur and suffer a substantial amount of dilution.  Moreover, the Company recently decided to
pursue a gas-fired 100 million gallon per year (MGY) ethanol project rather the
previously proposed 50 MGY coal-fired ethanol plant.  Therefore, the development of the ethanol
project remains in flux and uncertain. 
Subscriber understands and agrees that, despite these and other
substantial uncertainties facing the Company and its development and financing
of the ethanol project and the planned ethanol plant, Subscriber’s subscription
hereunder and the payment obligations under the Promissory Note each is
irrevocable, absolute and unconditional, and may not be withdrawn for any
reason.


 


2





















 


Subscriber understands that all
capitalized terms used in this Subscription Agreement and not otherwise defined
herein shall have the meaning ascribed to such terms first in the Memorandum
(defined below) or, if not defined therein, then in the Feasibility Report.


 


b.             Information About the Offering
and Revised Ethanol Project.  Subscriber, or its representative(s), has
received, read and understands the Company’s private placement memorandum dated
November 18, 2005 including all Appendices and any supplements thereto (the “Memorandum”).  Subscriber acknowledges and agrees that
Subscriber has received, read and understands the Articles and Operating
Agreement.  Subscriber, or its
representative, has had an opportunity to obtain, and has received, any
additional information and has had an opportunity to ask such questions of, and
receive answers from, the Company or an agent or representative of the Company,
to the extent deemed necessary by the Subscriber in order to form a decision
concerning an investment in the Company and its ethanol project under
development, and the Company’s capital structure and financing plans.  As a result, Subscriber believes it has
sufficient knowledge about the business, management and financial affairs of
the Company, the ethanol project, and the terms and conditions of the purchase
of Units contemplated hereby.  Without
limiting the generality of the foregoing, Subscriber
understands that Subscriber’s investment in Units is 100% at-risk capital, that
no payments will be held in escrow and there is no minimum
offering amount, and that the Company cannot complete its ethanol project
without substantial amounts of additional equity or debt financing, neither of
which is assured.  Subscriber understands that the inability or failure
of the Company to raise the substantial amount of additional equity or to
obtain the debt financing it will need to complete the ethanol project and to
construct its proposed ethanol plant will likely result in a complete loss of
Subscriber’s investment. 
Many of the impediments to raising such equity or obtaining such debt
financing are completely outside of the control of the Company.


 


c.             High Degree of Risk. 
Subscriber realizes that an investment in the Units involves a high
degree of risk, including, but not limited to, the risks of receiving no return
on the investment and of losing Subscriber’s entire investment in the Company.


 


d.             Ability to Bear the Risk. 
Subscriber is able to bear the economic risk of investment in the Units,
including the total loss of such investment.


 


e.             No Market for Units; Restrictions on Transfer. 
Subscriber realizes that (i) there are substantial restrictions on the
transfer of the Units, both under the Securities Act and State Laws, as well as
under the Articles and the Operating Agreement; (ii) there is not currently,
and it is unlikely that in the future there will exist, a public market for the
Units; and (iii) accordingly, for the above and other reasons, Subscriber may
not be able to liquidate an investment in the Units for an indefinite
period.  Subscriber realizes that the
Units have not been registered for sale under the Securities Act of 1933, as
amended (the “Securities Act”) or applicable state securities laws (the “State
Laws”).  Subscriber acknowledges and
agrees that the Units may be sold only pursuant to registration under the
Securities Act and State Laws, or an opinion of counsel acceptable to the
Company that such registration is not required, and in accordance with the
Articles and the Operating Agreement.


 


f.              Suitability. 
Subscriber believes that the investment in the Units is suitable for the
undersigned based upon Subscriber’s investment objectives and financial needs,
and Subscriber has adequate means for providing for his, her or its current financial
needs and personal contingencies and has no need for liquidity of investment
with respect to the Units.  Subscriber
has such knowledge and experience in financial and business matters that he,
she or it is capable of evaluating the merits and risks of an investment in the
Units or Subscriber has obtained, to the extent Subscriber deems necessary,
his, her or its own professional advice with respect to the risks inherent in
the investment in the Units, and the suitability of the investment in the Units
in light of Subscriber’s financial condition and investment needs.


 


3





















 


g.             Investment Intent. 
Subscriber has been advised that the Units are not being registered
under the Securities Act or the relevant State Laws but are being offered and
sold pursuant to exemptions from such laws and that the Company’s reliance upon
such exemptions is predicated in part on Subscriber’s representations to it as
contained herein.  Subscriber represents and warrants that the Units are
being purchased for Subscriber’s own account and for Subscriber’s investment
and without the intention of reselling or redistributing the same, that
Subscriber has made no agreement with others regarding any of the Units
and that Subscriber’s financial condition is such that it is not likely that it
will be necessary to dispose of any of the Units in the foreseeable
future.  Subscriber is aware that, in the
view of the Securities and Exchange Commission, a purchase of the Units with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market values, or any change in the condition of the
Company, or in connection with a contemplated liquidation or settlement of any
loan obtained for the acquisition of the Units and for which the Units were
pledged as security, would represent an intent inconsistent with the
representations set forth above. 
Subscriber further represents and agrees that if, contrary to the
foregoing stated intentions, Subscriber should later desire to dispose of or
transfer any of the Units in any manner, he, she or it shall not do so without
first obtaining the consent of the Company as required by the Company’s Articles
and the Operating Agreement and (i) the opinion of counsel satisfactory to the
Company that such proposed disposition or transfer lawfully may be made without
the registration of the Units pursuant to the Securities Act and applicable
State Laws, or (ii) such registration (it being expressly understood that the
Company shall not have any obligation to register such Units for such
purpose).  Moreover, Subscriber
understands that the Board of Governors of the Company has adopted or will
adopt shortly a unit transfer policy that will restrict the transfer of any
units (except for transfers without consideration upon death or to related
parties) until thirty (30) days following the successful start-up of the
proposed ethanol plant.


 


h.             Brokers or Finders. 
Subscriber has not taken any action that will cause the Company to
incur, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this Subscription
Agreement.


 


i.              Tax Liability. 
Subscriber has reviewed with Subscriber’s own tax advisors the tax
consequences of this investment and the transactions contemplated by this
Subscription Agreement, and has and will rely solely on such advisors and not
on any statements or representations of the Company or any of its agents.  Subscriber understands that Subscriber (and
not the Company) shall be responsible for Subscriber’s own tax liability that
may arise as a result of this investment or the transactions contemplated by
this Subscription Agreement.


 


j.              Residency. 
Subscriber is a resident of or, if an entity, has its principal place of
business in, the following State:


 


        
ARIZONA                                                 
(please write in your state of residency).


 


k.            Dilution. 
Subscriber understands and realizes that the offering price per Unit
exceeds amounts paid by prior purchasers of the Company’s capital units and the
price at which the Company has granted options to purchase the Company’s
capital units, and that Subscriber will experience substantial dilution in the
per unit net tangible book value of the Units purchased hereunder.


 


3.             Accredited Status.


 


SECTION 3 IS REQUIRED IN CONNECTION WITH
THE EXEMPTIONS FROM THE SECURITIES ACT AND STATE LAWS BEING RELIED ON BY THE
COMPANY WITH RESPECT TO THE OFFER AND SALE OF THE UNITS.  ALL FINANCIAL INFORMATION IN SECTION 3 


 


4





















 


WILL BE KEPT CONFIDENTIAL, AND WILL BE
REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL. 
The undersigned agrees to furnish any additional information that the
Company or its counsel deems reasonably necessary in order to verify the
responses set forth below.


 


Subscriber represents and warrants as
follows (EACH SUBSCRIBER MUST COMPLETE. PLEASE CHECK ALL THAT APPLY – YOU
MUST BE AN ACCREDITED INVESTOR TO PURCHASE THE UNITS):


 


INDIVIDUALS


 


o            (a)           Subscriber (hereinafter in this Section 3, “the
undersigned”) is an individual with a net worth, or a joint net worth together
with his or her spouse, in excess of $1,000,000.  (In calculating net worth, you may include
equity in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.  Equity in personal property and real estate
should be based on the fair market value of such property minus debt secured by
such property.)


 


o            (b)           The undersigned is an individual that had an
individual income in excess of $200,000 in each of the prior two years and
reasonably expects an income in excess of $200,000 in the current year.


 


o            (c)           The undersigned is an individual that had with
his/her spouse joint income in excess of $300,000 in each of the prior two
years and reasonably expects joint income in excess of $300,000 in the current
year.


 


o            (d)           The undersigned is a director or executive
officer or general partner (or its equivalent) of the Company.


 


ENTITIES


 


ý            (e)           The undersigned, if other than an individual, is
an entity all of whose equity owners meet one of the tests set forth in (a)
through (d) above.  (If relying on this
category alone, each equity owner must complete a separate copy of this
Subscription Agreement.)


 


ý            (f)            The undersigned is an entity, and is an “Accredited
Investor” as defined in Rule 501(a) of Regulation D under the Securities
Act.  This representation is based on the
following (check one or more, as applicable):


 


o            (i)            The undersigned (or, in the case of a trust, the
undersigned trustee) is a bank or savings and loan association as defined in
Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Securities Act acting
either in its individual or fiduciary capacity.


 


o            (ii)           The undersigned is an insurance company as
defined in Section 2(13) of the Securities Act.


 


ý            (iii)          The undersigned is an investment company
registered under the Investment Company Act of 1940 or a business development
Company as defined in Section 2(a)(48) of that Act.


 


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o            (iv)          The undersigned is a Small Business Investment
Company licensed by the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958.


 


o            (v)           The undersigned is an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974 and either (check one or more, as applicable):


 


o            (aa)         the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance Company, or registered investment
adviser; or


 


o            (bb)         the employee benefit plan has total assets in
excess of $5,000,000; or


 


o            (cc)         the plan is a self-directed plan with investment
decisions made solely by persons who are “Accredited Investors” as defined
under the Securities Act.


 


ý            (vi)          The undersigned is a private business
development company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.


 


ý            (vii)         The undersigned has total assets in excess of
$5,000,000, was not formed for the specific purpose of acquiring securities of
the Company and is one or more of the following (check one or more, as
appropriate):


 


o            (aa)         an organization described in Section 501(c)(3)
of the Internal Revenue Code; or


 


ý            (bb)         a corporation; or


 


o            (cc)         a Massachusetts or similar business trust; or


 


o            (dd)         a partnership.


 


o            (viii)        The undersigned is a trust with total assets
exceeding $5,000,000, which was not formed for the specific purpose of
acquiring securities of the Company and whose purchase is directed by a person
who has such knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of the investment in the Units.


 


4.             Entities.


 


If Subscriber is an entity, the
individual signing on behalf of such entity and the entity jointly and
severally agree and certify that:


 


a.             if entity is accredited solely by reason of the
category described in Section 3(f)(vii) or (viii) above, then the undersigned
entity was not organized for the specific purpose of acquiring the Units; and


 


b.             this Subscription Agreement has been duly
authorized by all necessary action on the part of the undersigned entity, has
been duly executed by an authorized officer or


 


6





















 


representative of the undersigned entity,
and each is a legal, valid, and binding obligation of the undersigned entity
enforceable in accordance with its terms.


 


5.             Relationship to Brokerage Firms. 
N/A


 


(Please answer the following questions by
checking the appropriate response.)


 


a.             o   YES
o   NO:  Are you a director, officer, partner, branch
manager, registered representative, employee, shareholder of, or similarly
related to or employed by a brokerage firm?


 


b.             o   YES
o   NO:  Is your spouse, father, mother, father-in-law,
mother-in-law, or any of your brothers, sisters, brothers-in-law, sisters-in-law
or children, or any relative which you support, a director, officer, partner,
branch manager, registered representative, employee, shareholder of, or
similarly related to or engaged by, a brokerage firm?


 


c.             o  YES
o  NO:  Does the Subscriber own voting securities of
any brokerage firm?


 


d.             o   YES
o   NO:  If the undersigned is an entity, is any
director, officer, partner or 5% owner of the undersigned also a director,
officer, partner, branch manager, registered representative, employee,
shareholder of, or similarly related to or employed by, a brokerage firm?


 


e.             If the
answer to any of the above items is “YES”, please supply details below:  


 


 


 


 


6.             Securities Law Exemptions.


 


Subscriber acknowledges that the offer and sale of the Units has
not been registered under the Securities Act, or any state securities laws
and that the Company will offer and sell the Units and the Units
will be issued to Subscriber in reliance on exemptions from the registration
requirements of the Securities Act and exemptions under applicable state
securities laws and in reliance on the representations, warranties and
agreements made by Subscriber herein.


 


7.             Restrictive Legend.


 


In addition to the restrictions to
transfer on the Units contained in the Articles and Operating Agreement, and
any corresponding restrictive legends required thereunder, Subscriber also
agrees that the Company shall place a restrictive legend on any statement of
interest prepared by the Company with respect to the Units containing
substantially the following language:


 


The securities represented by this
statement have not been registered under the Securities Act of 1933, as amended
(the “Act”) or under applicable state securities laws and are also subject to a
Subscription and Investment Representation Agreement.  The securities may not be sold, transferred
or pledged in the absence of such registration, unless pursuant to an exemption
from the registration requirements of the Act and applicable state securities laws.  The Company 


 


7





















 


reserves the right to require an opinion
of counsel satisfactory to it before effecting any transfer of the securities.


 


8.             Miscellaneous.


 


a.             Survival of Representations and Warranties;
Indemnification.  Subscriber understands the meaning and legal
consequences of the agreements, representations and warranties contained
herein, agrees that such agreements, representations and warranties shall
survive and remain in full force and effect after the execution hereof and
payment for the Units, and further agrees to indemnify and hold harmless the
Company and each current and future employee, agent and member of the Company
from and against any and all loss, damage or liability due to, or arising out
of, a breach of any agreement, representation or warranty of the undersigned
contained herein.


 


b.             No Assignment or Revocation; Binding Effect. 
Neither this Subscription Agreement, nor any interest herein, shall be
assignable by Subscriber without prior written consent of the Company.  Subscriber hereby acknowledges and agrees
that Subscriber is not entitled to cancel, terminate or revoke this
Subscription Agreement or its payment obligations hereunder and under the
Promissory Note, and that it shall survive the death, incapacity, dissolution
or bankruptcy of Subscriber.  The
provisions of this Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto, and their respective heirs, legal
representatives, successors and assigns.


 


c.             Choice of Law.  This
Subscription Agreement shall be construed and interpreted in accordance with
Tennessee law, without regard to its choice of law or conflicts of law
provisions.


 


d.             Issue Date of Units.  Upon
acceptance of this Subscription Agreement by the Company and upon the consent
of a majority in interest of the Company’s members, the issuance of the Units
subscribed for hereunder may be made effective as of a uniform date for all
Units issued in the second round of the seed capital offering for
administrative convenience reasons, as determined by the Board of Governors,
and provided such date shall be within a reasonable period (but in all cases
within sixty days) of the date this Subscription Agreement is accepted and the
consent of a majority in interest of members is given.


 


9.             Representations and Warranties of
the Company. 


 


In consideration of Subscriber’s
agreement to purchase the Units, the Company represents and warrants to
Subscriber as follows:


 


a.             Existence. 
The Company is a duly organized and validly existing limited liability
company under the laws of the State of Tennessee.


 


b.             Good Standing. 
The Company is in good standing under the laws of the State of Tennessee
and there are no proceedings or actions pending to limit or impair any of its
powers, rights, privileges, or to dissolve it.


 


c.             Due Authorization. 
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by proper corporate
action of the Company.


 


d.             Units. 
Upon receipt of full payment for the Units and all other amounts due and
owing on the Promissory Note, the Units shall be duly authorized, fully-paid,
validly issued and non-assessable units of the Company.


 


8





















 


SIGNATURE


 


	
  / Gary Schwendiman /

  	
   

  	
   

  
	
  Subscriber (Signature)

  	
   

  	
  Subscriber (Signature, if more than one
  investor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gary Schwendiman

  	
   

  	
   

  
	
  Print Name of Subscriber

  	
   

  	
  Print Name of Subscriber (If more than one
  investor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gary Schwendiman,
  Chairman

  	
   

  	
   

  
	
  Name and Title of Signatory (for entities)

  	
   

  	
   

  



 


 


Address:


 


 


Ethanol Capital Management, LLC


 


 


4400 East Broadway #600


 


 


Tucson, Arizona 85711


 


 


NOTE:   All Subscriptions must be accompanied
by (i) completed Subscriber Information Page attached hereto, (ii) a
fully-executed promissory note for payment of 100% of the total purchase price
of the Units, and (iii) an executed additional member signature page to the
Operating Agreement.  Also, if Subscriber
is an entity, the attached Certificate of Signatory must be executed.


 


 


ACCEPTANCE OF SUBSCRIPTION


 


                The Company hereby accepts the subscription
evidenced by this Subscription and Investment Representation Agreement as of
the 5th day of December, 2005.


 


 


	
   

  	
  ETHANOL GRAIN PROCESSORS, LLC

  
	
   

  
	
   

  	
  By:

  	
   / James
  K. Patterson /

  	
   

  
	
   

  
	
   

  	
   

  	
  Its: Chief Executive Officer

  
						



 


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SUBSCRIBER INFORMATION


 


	
  Ethanol Capital Management, LLC

  	
   

  
	
   (Please
  print name(s) in which the Units are to be issued)

  	
   

  
	
   

  	
   

  
	
  57-1205717

  	
   

  
	
  Taxpayer I.D. No.

  	
  Taxpayer I.D. No.

  
	
   

  	
  (If more than one investor)

  
	
   

  	
   

  
	
  4400 E. Broadway
  Suite 600

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
  City:

  	
  Tucson

  	
  State:

  	
  Arizona

  	
  Zip Code:

  	
  85711

  
	
   

  	
   

  
						



 


Telephone Number:  (520) 628-2000


 


 


Name of Authorized Representative (if
other than individual): Scott Brittenham, President and CEO 


 


 


Form of Ownership:    
(check one)


 


 


	
  o

  	
  Individual Ownership

  	
   

  	
  o

  	
  Tenants in Common

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   Joint
  Tenants (JTWROS)

  	
   

  	
  o

  	
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ý

  	
   Limited
  Liability Company

  	
   

  	
  o

  	
  Trust (Signature and title pages of Trust

  
	
   

  	
   

  	
   

  	
   

  	
  Agreement and all amendments must

  
	
   

  	
   

  	
   

  	
   

  	
  be enclosed)

  
	
   

  	
   

  	
   

  	
   

  	
  Trustee Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Trust Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o

  	
  Other: Provide information below.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							



 


10





















 


CERTIFICATE OF SIGNATORY


 


 


(To be completed if Units are being
subscribed for by an Entity)


 


 


I, Scott Brittenham, am the President
and CEO of Ethanol Capital Management, LLC (the “Entity”).


 


I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Subscription
and Investment Agreement and to purchase and hold the Units pursuant to the
Company’s Articles and the Operating Agreement, and to act on behalf of the
Entity with respect to any actions or consents of the Entity required
thereunder or this Agreement.  I further
certify that the Subscription and Investment Agreement and such actions or
consents been duly and validly executed on behalf of the Entity and each
constitutes a legal and binding obligation of the Entity.


 


IN WITNESS WHEREOF, I have set my hand
hereto this 21st day of November, 2005.


 


 


	
   

  	
  / Scott Brittenham /
  

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  President and CEO

  	
   

  
	
   

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Scott Brittenham

  	
   

  
	
   

  	
  (Please Print Name)

  	
   

  



 


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ETHANOL GRAIN PROCESSORS, LLC


 


PROMISSORY NOTE


 


	
  Number
  of Units subscribed:

  	
   

  	
  250,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase price per
  unit:

  	
  x

  	
   

  	
   

  	
  $

  	
  1.20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total subscription
  price:

  	
   

  	
  $

  	
  300,000.00

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Installment payment
  amount:

  	
  x

  	
   

  	
   

  	
  1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal balance:

  	
   

  	
  $

  	
  300,000.00

  	
   

  	
   

  	
   

  



 


For value received,
the undersigned, pursuant to the undersigned’s subscription agreement (the
“Subscription Agreement”) to purchase the above units of Ethanol Grain
Processors, LLC, a Tennessee limited liability company (the “Company”), hereby
promises to pay to the Company, in lawful money of the United States of
America, the principal sum of Three Hundred Thousand and No/100 Dollars
($300,000.00) (“Principal Balance”) upon the terms set forth herein.


 


1.             Payments.


 


(a)           The
Principal Balance shall be due and payable in ten, unequal installments, with
the first five installments of $5,000 each due and payable on the 1st
of each month commencing on December 1, 2005, and continuing on the 1st
of each month thereafter for a period of four months until and including the
installment due and payable on April 1, 2006, and then with the remaining five
installments of $55,000 each due and payable on the 1st of each
month commencing on May 1, 2006, and continuing on the 1st of each
month thereafter for a period of four months until and including the
installment due and payable on September 1, 2006, with the entire remaining
unpaid Principal Balance due and payable at maturity on September 1, 2006 (the
“Maturity Date”). All payments shall be made payable to the order of “Ethanol
Grain Processors, LLC”.


 


(b)           In
the event the undersigned fails to make any payment of the Principal Balance
when due, interest shall accrue on such payment amount at the rate of twelve
percent (12%) per annum from the due date, and such interest is due and payable
as of the last day of the calendar month in which accrued.


 


2.             Default.    In
the event the undersigned fails to make any payment of principal or interest
under this Promissory Note when due, and such default remains uncured for a
period of fifteen (15) days, the undersigned acknowledges and agrees that:


 


(a)           The
Company may demand immediate payment of all amounts owing under this Promissory
Note;


 


(b)           The
Company may commence legal proceedings to collect the amounts due, and shall be
entitled to collect from the undersigned all of its costs and expenses of
collection or enforcement including, but not limited to, reasonable attorneys’
fees and expenses; and


 


(c)           The
Company may, if such default remains uncured for a period of thirty (30) days
following written notice to the undersigned, retain all prior payments remitted
pursuant to the Subscription Agreement or this Promissory Note as liquidated
damages, and cancel any units then already issued with respect to the
Subscription Agreement, in exchange for canceling this Promissory Note.


 


3.             Notices.    All
notices, requests, consents and demands shall be made in writing and shall be
delivered by facsimile or by hand, sent via a reputable nationwide overnight
courier service or mailed by first class certified or registered mail, return
receipt requested, postage prepaid, if to the undersigned at the fax number or
address of such undersigned as shown on the books of the Company, or if to the
Company at the following fax number or address, or to such other fax number or
address as may be furnished in writing to the undersigned: Ethanol Grain
Processors, LLC, P.O. Box 95, Obion, Tennessee 38240, fax number: (731)
536-1287. Notices, requests, consents and demands shall be deemed delivered
upon confirmation of facsimile transmission, upon personal delivery, one
business day after being sent via reputable nationwide overnight courier
service, or three business days after deposit in the mail. 


 


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4.             Modification and Waiver.    No
purported amendment, modification or waiver of any provision hereof shall be
binding unless set forth in a written document signed by the undersigned and
the Company (in the case of amendments or modifications) or by the party to be
charged thereby (in the case of waivers). Any waiver shall be limited to the
provision hereof in the circumstances or events specifically made subject
thereto, and shall not be deemed a waiver of any other term hereof or of the
same circumstance or event upon any reoccurrence thereof.


 


5.             Successors and Assigns.    All
the terms and provisions of this Promissory Note shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the undersigned and the Company, whether or not so expressed.


 


6.             Waiver of Demand, Presentment and Notice of Dishonor.    The
undersigned hereby waives demand, presentment, protest, notice of protest and
notice of dishonor, and any and all other notices or demands in connection with
the delivery, acceptance, performance or default hereof.


 


7.             Applicable Law.    The
laws of the State of Tennessee, without regard to its conflicts of law
principles, shall govern the validity, the construction and the interpretation
of the rights and duties of the parties.


 


8.             Contingency.    This
Promissory Note is contingent upon the Company obtaining the consent of a
majority in interest of the Company’s members to the issuance of units pursuant
to the terms and conditions of the Subscription Agreement no later than
December 31, 2005.  Upon obtaining such
consent (certification by an officer of such consent shall be prima facie
evidence of obtaining such consent), the payment obligations under this
Promissory Note are unconditional.   If
such consent is not obtained by December 31, 2005, then the Company shall
return this Promissory Note to the undersigned marked “cancelled.”


 


IN WITNESS WHEREOF,
the undersigned has executed this Promissory Note as of the date set forth
below. 


 


	
  Individuals:

  	
   

  	
  Entities:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ethanol Capital
  Management, LLC

  
	
  Signature of Investor

  	
   

  	
  Name of Entity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /
  Scott Brittenham / 

  
	
  Signature of Joint
  Investor

  	
   

  	
   Authorized Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Scott
  Brittenham

  
	
  Date

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
  President and CEO 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
  November 21, 2005 

  



 


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