EX-10.2






Exhibit 10.2






FORBEARANCE AGREEMENT




     This Forbearance Agreement, dated as of June 1, 2009 (this “Agreement”), is entered
into by and between Advanced BioEnergy, LLC, a Delaware limited liability company (the
“Borrower”), and PJC Capital LLC, a Delaware limited liability company (the “Lender”).
Capitalized terms not defined herein shall have the definitions given to them in the Secured Bridge
Note (as defined below).



ARTICLE I

Financing Accommodations and Defaults




     1.1 The Borrower has entered into with, and issued to the order of, the Lender that Secured
Term Loan Note dated as of October 17, 2007 (the “Secured Bridge Note”) evidencing a secured bridge
loan advanced by the Lender to the Borrower in the original principal amount of $10,000,000.



     1.2 The Borrower failed to repay the entire outstanding principal amount of the Secured Bridge
Note and all accrued interest thereon on the Maturity Date as required by Section 2 of the Secured
Bridge Note, and such Event of Default (the “Maturity Payment Event of Default”) is continuing and
has not been cured or waived. In addition, the Borrower has failed to perform or comply with
certain other provisions of the Secured Bridge Note as further described on Annex A
attached hereto, and as a result of such failures, additional Events of Default have occurred which
also are continuing and have not been cured or waived (collectively, together with the Maturity
Payment Event of Default, the “Specified Events of Default”).



     1.3 The entire outstanding Obligations under the Secured Bridge Note, including the principal
amount thereof and all accrued and unpaid interest thereon (which continues to accrue on the
outstanding Obligations at the per annum rate of interest of eighteen percent (18.0%) since the
October 16, 2008 Maturity Date as provided by Section 1 of the Secured Bridge Note), is presently
due and payable in full in cash, and the Lender is entitled, as set forth in that Notice of Event
of Default and Reservation of Rights dated October 17, 2008 delivered by the Lender to the Borrower
and in the Secured Bridge Note and the other Loan Documents, to take immediate actions to collect
the outstanding Obligations and to exercise and enforce any and all remedies available under the
Loan Documents, under applicable law or at equity (including to foreclose on its Collateral,
including the membership interests of the Borrower in ABE Fairmont pledged pursuant to the
Membership Interest Pledge Agreement dated as of October 17, 2007 (the “Pledge Agreement”) by and
between the Borrower and the Lender) (collectively, “Enforcement Actions”).



     1.4 The Borrower has requested that the Lender forbear from exercising any Enforcement Action
with respect to the Specified Events of Default as set forth herein.



     1.5 On and subject to the terms and conditions set forth herein, the Lender has agreed to
forbear after the Forbearance Effective Date and until the Forbearance Termination Date (as such
terms are defined below) from exercising any Enforcement Action with respect to the Specified
Events of Defaults.













 





     NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions
contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:



ARTICLE II

Acknowledgements and Reaffirmations




     2.1 The Borrower acknowledges and agrees that as of April 24, 2009, (a) the outstanding unpaid
amount of principal and accrued interest (exclusive of outstanding fees, expenses, costs,
indemnities and/or other similar obligations payable pursuant to the Secured Bridge Note, including
Section 11(u) and Section 15 thereof) owing to the Lender, and (b) the outstanding amount of out of
pocket fees, expenses and costs incurred by Lender as of such date, including attorneys’ fees,
pursuant to Section 11(u) of the Secured Bridge Note, were as set forth on Schedule I
attached hereto.



     2.2 The Borrower acknowledges, confirms and agrees that the obligations set forth on
Schedule I attached hereto constitute Obligations and that the terms of the Secured Bridge
Note and the other Loan Documents to which the Borrower is a party are the valid and binding
obligations of the Borrower, enforceable in accordance with their terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting
the enforceability of creditors’ rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding at law or in
equity).



     2.3 The Borrower acknowledges, confirms and agrees that each of the Specified Events of
Default identified in Section 1.2 has occurred and continues to exist as of the date of this
Agreement and represents and warrants that as of such date no other Defaults or Events of Defaults
have occurred and continue to exist.



     2.4 The Borrower hereby ratifies and reaffirms the validity and enforceability of all of the
Liens and security interests heretofore granted and pledged pursuant to the Collateral Security
Documents (including the Pledge Agreement) as collateral security for the Obligations, and
acknowledges that all of such Liens and security interests, and all Collateral heretofore pledged
as security for the Obligations, continue to be and remain collateral security for the Obligations
from and after the date hereof.



ARTICLE III

Representations and Warranties




     In order to induce the Lender to enter into this Agreement, the Borrower hereby represents and
warrants to the Lender as follows:



     3.1 Limited Liability Company Power and Authority. The Borrower has all requisite limited
liability company power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Organizational Documents of the Borrower have not been
amended since October 17, 2007.



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     3.2 Authorization of this Agreement. The execution and delivery of this Agreement and the
performance hereof have been duly authorized by all necessary limited liability company action on
the part of the Borrower.



     3.3 No Conflict. The execution, delivery and performance by the Borrower of this Agreement do
not and will not contravene (a) any law or regulation binding on or affecting the Borrower, (b) the
Organizational Documents of the Borrower, (c) any order, judgment or decree of any court or other
agency of government binding on the Borrower, or (d) any contractual restriction binding on or
affecting the Borrower or ABE Fairmont, including, without limitation, the CoBank Loan Documents.



     3.4 Governmental Consents, Filings. The execution, delivery and performance by the Borrower
of this Agreement do not and will not require any authorization or approval of, or other action by,
or notice to or filing with any Governmental Authority or regulatory body or the consent of any
third party which has not yet been obtained.



     3.5 Binding Obligation. This Agreement has been duly executed and delivered by the Borrower
and is the binding obligation of the Borrower, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and equitable principles
relating to or affecting creditors’ rights generally.



ARTICLE IV

Release and Waiver




     4.1 The Borrower hereby acknowledges and agrees that: (a) it has no claim, right or cause of
action of any kind against the Lender or any parent, subsidiary or affiliate of any Lender or any
of the Lender’s officers, directors, employees, attorneys or other representatives or agents (all
of which parties other than the Lender being, collectively, the “Lender Agents”) in connection with
this Agreement, the Secured Bridge Note, the Pledge Agreement or any of the other Loan Documents or
any of the other transactions contemplated therein or thereby; (b) it has no offset or defense of
any kind against any of its obligations, indebtedness or contracts in favor of the Lender; and
(c) it recognizes that the Lender has heretofore properly performed and satisfied in a timely
manner all of its respective obligations to and contracts with the Borrower.



     4.2 Effective on the date hereof, the Borrower hereby waives, releases, remises and forever
discharges the Lender and each Lender Agent (collectively, the “Releasees”) from any and all
claims, suits, investigations, proceedings, demands, obligations, liabilities, causes of action,
damages, losses, costs and expenses, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law of any kind or character, known or
unknown, past or present, liquidated or unliquidated, suspected or unsuspected, which the Borrower
ever had from the beginning of the world, or now has against any such Releasee which relates,
directly or indirectly to the Secured Bridge Note, the Pledge Agreement, or any other Loan
Document, or to any acts or omissions of any such Releasee under, in connection with, pursuant to
or otherwise in respect of this Agreement, the Secured Bridge Note, the Pledge Agreement or any of
the other Loan Documents, or otherwise in respect of any of its obligations, indebtedness or
contracts in favour of the Lender, except for the duties and obligations set forth



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in this Agreement, the Secured Bridge Note, the Pledge Agreement or any of the other Loan
Documents. The Borrower hereby represents that it has received the advice of legal counsel with
regard to the releases contained herein.



ARTICLE V

Forbearance




     5.1 Subject to the terms and conditions hereof, the Lender agrees to forbear from taking any
Enforcement Action, including under Section 15 of the Secured Bridge Note or Section 6.2 of the
Pledge Agreement or otherwise under the Loan Documents or under applicable law or at equity with
respect to the Specified Events of Default, in each case, until the date (the “Forbearance
Termination Date”) that is the earliest of:



          (a) October 1, 2009;




          (b) The Equity Offering (as defined in Section 6.5) does not result in net cash proceeds to
the Borrower (after deduction of selling expenses, including, without limitation, underwriting fees
and discounts, brokerage commissions and other similar fees and commissions) (“Equity Offering Net
Proceeds”) of at least $3,000,000 or is not completed on or before October 1, 2009;




          (c) the date on which the Obligations are paid in full in cash;




          (d) the occurrence of a breach or default by the Borrower under this Agreement other than as
specified in clause (g) below;




          (e) Borrower or any of its Subsidiaries fails to observe or perform any agreement or condition
under the CoBank Loan Documents beyond the expiration of any applicable grace period, or any
default or other event occurs, the effect of which default or other event is to cause, or to permit
the holder or holders of the Indebtedness under the CoBank Loan Documents to cause, with the giving
of notice if required, such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay,
defease or redeem such Indebtedness to be made, prior to its stated maturity; or




          (f) the occurrence of an Event of Default under clause (5) of the definition thereof in the
Secured Bridge Note; or




          (g) the delivery to Borrower by Lender (at its discretion) of written notice (a “Forbearance
Termination Notice”, which may be delivered by electronic mail) that the forbearance contemplated
by this Article V is terminated as the result of the occurrence of an Event of Default (other than
an Event of Default under clause (5) of the definition thereof in the Secured Bridge Note) that
does not constitute a Specified Event of Default (it being understood and agreed that (i) any
failure by Lender to deliver a Forbearance Termination Notice with respect to any Event of Default
shall not be deemed to waive or otherwise limit or impair the rights and remedies of Lender with
respect to such Event of Default (except as expressly provided in this clause (g)) and (ii) Lender
may deliver its Forbearance Termination Notice with respect to an Event of Default (other than an
Event of Default under clause (5) of the definition




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thereof in the Secured Bridge Note) that does not constitute a Specified Event of Default at
any time after the occurrence of such Event of Default so long as such Event of Default is
continuing and has not been cured or waived in accordance with the Secured Bridge Note, and any
delay in delivering such Forbearance Termination Notice shall not be deemed a waiver of, or to
otherwise limit or impair, the right of Lender to deliver such Forbearance Termination Notice or
the effect of such delivery when so made at such future time.




     5.2 The Borrower acknowledges, reaffirms and agrees that upon the occurrence of an event
triggering the Forbearance Termination Date pursuant to Section 5.1 other than under clauses (a) or
(c) of such Section, such Forbearance Termination Date shall be deemed to have occurred immediately
prior to the applicable default and this Agreement shall terminate and the Lender shall be entitled
to commence and exercise immediately all of its rights and remedies under the Loan Documents and
under applicable law or at equity (including, (A) any and all Enforcement Actions and (B) the right
to re-institute the per annum rate of interest of eighteen percent (18.0%) on the outstanding
Obligations, calculated in the manner set forth in Section 1 of the Secured Bridge Note retroactive
to the Maturity Date of the Secured Bridge Note, that was in effect immediately prior to the
Forbearance Effective Date; provided, and the parties hereto acknowledge, confirm and
agree, that the amount of interest that shall have been deemed paid-in-kind in accordance with
Section 6.1 shall accrue and compound at the per annum rate of interest of eighteen percent
(18.0%)).



     5.3 The Borrower acknowledges, reaffirms and agrees that, unless and until the Lender, in
accordance with Section 17 of the Secured Bridge Note, shall have waived in writing all Events of
Default then in existence, the determination to give such waiver being at the Lender’s sole and
absolute discretion, the Lender reserves all rights and remedies available to it under the Loan
Documents and under applicable law or at equity (i) with respect to the Specified Events of Default
and (ii) with respect to any Default or Event of Default under any of the Loan Documents which upon
the Borrower’s execution and delivery of this Agreement might otherwise exist or which might
hereafter occur. The failure of the Lender at any time or times hereafter to require strict
performance by the Borrower of any of the provisions, warranties, terms and conditions contained in
this Agreement, the Secured Bridge Note, the Pledge Agreement or any other Loan Document shall not
waive, affect or diminish any right of the Lender at any time or times thereafter to demand strict
performance thereof. No waiver by the Lender of any of its rights shall operate as a waiver of any
other of its rights or any of its rights on a future occasion at any time and from time to time.
The terms, conditions and events described in this Section 5.3 are currently in full force and
effect without regard to or the assent of the Borrower or any other Person.



ARTICLE VI

Modification of Secured Bridge Note; Undertakings of the Borrower; Amendment of Membership Unit

Pledge Agreement




     6.1 Notwithstanding anything to the contrary set forth in Section 1 of the Secured Bridge
Note, but subject to Section 5.2, effective upon the Forbearance Effective Date and for purposes of
calculating the accrual of interest on the Obligations from and after the Forbearance Effective
Date until the Forbearance Termination Date, Section 1 of the Secured Bridge Note will be modified
to read as follows:



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All amounts outstanding hereunder shall bear interest (computed daily until paid,
prior to and after any bankruptcy or insolvency of the Borrower) at a per annum rate
equal to twelve (12.0%). Interest hereunder will be calculated, accrued, imposed
and payable on the basis of a 360-day year for the actual number of days elapsed.
Commencing on the Forbearance Effective Date and continuing thereafter, unless
prohibited by applicable law, (i) cash interest of $50,000 (or such lesser amount as
shall have accrued during the applicable calendar month), pro rata for any partial
month, shall be paid monthly in arrears on the first Business Day of the next
succeeding calendar month; and (ii) the entire remaining amount of interest, if any,
in excess of the cash interest paid pursuant to clause (i) above accrued during any
calendar month shall be paid-in-kind rather than in cash, with all such paid-in-kind
interest to accrue and compound monthly (by being added to the principal amount of
the Obligations) on the first Business Day of the next succeeding month. The
failure by the Borrower to pay the full amount of the accrued cash interest as and
when the same becomes due and payable each month pursuant to this Section 1 within
three (3) Business Days of the due date therefor shall constitute an immediate Event
of Default, and upon the occurrence of such Event of Default such unpaid accrued
cash interest shall immediately be deemed paid-in-kind and shall be added to the
principal amount of the Obligations retroactive to the first Business Day of such
month (in which such cash interest first became due) and the amount of interest that
shall have been deemed paid-in-kind in accordance with this paragraph shall accrue
and compound at the per annum rate of interest of eighteen percent (18.0%).



     6.2 The Borrower acknowledges, reaffirms and agrees that upon the Forbearance Termination
Date, effective immediately and without further notice, the foregoing modification will be of no
further force, and for purposes of calculating the accrual of interest on the Obligations from and
after the Forbearance Termination Date, Section 1 of the Secured Bridge Note will be re-instituted
as it was in effect immediately prior to the Forbearance Effective Date, with all accrued and
unpaid interest on the Obligations being immediately due and payable on demand.



     6.3 The Borrower shall comply and continue to comply with all of the terms, covenants and
provisions contained in the Secured Bridge Note, the Pledge Agreement and the other Loan Documents
and any other instruments evidencing or creating any Obligations, including, without limitation,
the delivery of all financial statements as required by Sections 11(a) and (b) of the Secured
Bridge Note, except as such terms, covenants and provisions are expressly modified by this
Agreement upon the terms set forth herein.



     6.4 The Borrower shall deliver to the Lender a copy of each compliance package, including
financial statements, compliance certificates and other deliverables, as applicable, delivered by
ABE Fairmont to CoBank as the administrative agent under the CoBank Loan Documents, in each case
concurrently, but in no event later than five days after the delivery thereof CoBank.



     6.5 Effective on the Forbearance Effective Date, the Borrower shall commence a private
offering of its common units in a single transaction or series of related transactions to



6









 







corporate, institutional or other investors, with the rights and obligations of such units to
be substantially the same as those of the Borrower’s issued and outstanding Units other than with
respect to the price of such Units (as defined in the Third Amended and Restated Operating
Agreement of the Borrower dated February 1, 2006 (the “Operating Agreement”)) (such offering of
units the “Equity Offering”). Upon the consummation of the Equity Offering, the Borrower shall pay
the full amount of the Equity Offering Net Proceeds received by the Borrower to the Lender,
provided that the amount of such Equity Offering Net Proceeds is at least $3,000,000. Upon
receipt of such Equity Offering Net Proceeds, such amount shall be applied to the Obligations as
follows: (a) to the payment of any fees and charges due under the Loan Documents, then (b) to any
obligations for the payment of expenses, costs and indemnities due under the Loan Documents, then
(c) to the payment of all other interest due and owing under Section 6.1 other than interest under
clause (ii), then (d) to payments of all paid-in-kind interest under clause (ii) of Section 6.1
accrued and not yet paid, to the extent such paid-in-kind has been added to principal, then (e) to
the principal indebtedness due under the Secured Bridge Note, then (f) to any other interest
accrued under the Secured Bridge Note other than as set forth in clauses (c) and (d) above, then
(g) to any other indebtedness of Borrower to Lender under the Loan Documents.



     6.6 On the date of and concurrently with the consummation of the Equity Offering (the
“Restated Note Effective Date”), provided that the Borrower has paid to the Lender the full
amount of the Equity Offering Net Proceeds received by the Borrower as provided in Section 6.5 and
provided further that the amount of the Equity Offering Net Proceeds is at least
$3,000,000, (a) the Borrower and the Lender shall enter into an Amended and Restated Secured Term
Loan Note in the form attached hereto as Annex B (the “Restated Note”), which
shall amend and restate and replace the Secured Bridge Note and (b) the Borrower shall issue to the
Lender a detachable warrant in the form attached hereto as Annex C (the “New Warrant”),
exercisable for Units of the Borrower at an exercise price equal to the price of the Units issued
in the Equity Offering, representing a percentage of the fully diluted equity interest in
the Borrower after giving effect to the Equity Offering equal to (i) 5.0%, if the amount of the
Equity Offering Net Proceeds is equal to or greater than $3,000,000 but less than $4,000,000; (ii)
4.5%, if the amount of the Equity Offering Net Proceeds is equal to or greater than $4,000,000 but
less than $5,000,000; (iii) 4.0%, if the amount of the Equity Offering Net Proceeds is equal to or
greater than $5,000,000 but less than $6,000,000; (iv) 3.5%, if the amount of the Equity Offering
Net Proceeds is equal to or greater than $6,000,000 but less than $7,000,000; and (v) 3.0%, if the
amount of the Equity Offering Net Proceeds is equal to or greater than $7,000,000.



     6.7 The Restated Note shall provide for principal reductions of the Secured Bridge Note when
certain amounts are released or otherwise paid to the Borrower from (a) the release of
approximately $2,500,000 of cash collateral (plus accrued interest thereon) (the “GSB Funds”)
securing reimbursement obligations with respect to an irrevocable standby letter of credit issued
by Geneva State Bank (“GSB”) for the benefit of West LB, AG and further account of the Borrower,
which GSB Funds are currently carried in and credited to a deposit account maintained by the
Borrower with Geneva State Bank (the “GSB Account”), (b) various tax and other investment and
employment credits and incentives from the State of Nebraska under the Nebraska Advantage Act (the
“Nebraska Funds”) and (c) annual distributions from ABE Fairmont made to the Borrower to the extent
permitted under the CoBank Loan Documents (the “ABE Fairmont Distributions”), all as further set
forth in the Restated Note. To effect the



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foregoing, the Borrower shall open a deposit account with U.S. Bank, National Association (the
“Blocked Account”) which will be subject to a control agreement with the Lender in the form
attached hereto as Annex D (the “Control Agreement”). On the Restated Note Effective Date
the Borrower shall (a) direct GSB to deposit all GSB Funds into the Blocked Account as and when the
same are released by GSB, (b) direct the State of Nebraska to deposit the Nebraska Funds into the
Blocked Account as and when the same are paid or reimbursed by the State of Nebraska under the
Nebraska Advantage Act and (c) direct ABE Fairmont to pay the ABE Fairmont Distributions directly
to Lender rather than to Borrower.



     6.8 The Borrower represents and warrants that as of the Forbearance Effective Date, other than
the Lien of Geneva State Bank in the GSB Account and the GSB Funds, the Borrower owns the GSB
Account, the GSB Funds and the rights to the Nebraska Funds and the ABE Fairmont Distributions free
and clear of any Lien. Lender also understands that the State of Nebraska has certain rights under
Section 22 of that Nebraska Advantage Act Project Agreement dated as of August 13, 2007 between
Borrower and the State of Nebraska, by and through its Tax Commissioner. From and after the
Forbearance Effective Date, the Borrower will not, and will not permit any of its Subsidiaries to
(a) create, incur, permit, assume or suffer to exist, or agree or consent to cause or permit in the
future (upon the happening of a contingency or otherwise) any Lien upon the GSB Funds, the GSB
Account, the Blocked Account, the Nebraska Funds or the ABE Fairmont Distributions, or any income,
revenue or profits from any such property or assets, whether now owned or hereafter acquired, other
than as set forth in this Agreement, and (b) give any contrary instructions to GSB or the State of
Nebraska to deposit or disburse the GSB Funds or the Nebraska Funds, respectively, into any other
account or to any other Person other than to the Blocked Account.



     6.9 Notwithstanding anything to the contrary set forth in Section 13(ii) of the Secured Bridge
Note, effective on the Forbearance Effective Date until the Forbearance Termination Date, ABE
Heartland, LLC, a Delaware limited liability company, Dakota Fuels, Inc., a Delaware corporation
and Heartland Grain Fuels, L.P., a Delaware limited partnership, shall be excluded from the
definition of “Subsidiary” under the Secured Bridge Note.



     6.10 Section 2.1 of the Membership Unit Pledge Agreement is hereby amended to (i) deleted the
word “and” following the semi-colon at the end of clause (b), (ii) renumber clause “(c)” to be
clause “(d)” and (iii) insert the following new clause (c):




     (c) the deposit account (account number 1-523-0777-2839, as the same may be
renumbered from time to time) maintained by Pledgor with U.S. Bank National
Association and all funds from time to time maintained in or credited to such
deposit account; and



ARTICLE VII

Conditions Precedent to Effectiveness




     7.1 The satisfaction of each of the following shall constitute conditions precedent to the
effectiveness of this Agreement and each and every provision hereof, and this Agreement shall be
effective as of the date upon which such conditions precedent shall be fully and completely
satisfied (such date being the “Forbearance Effective Date”):



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          (a) a copy of this Agreement shall have been originally executed by the Borrower and the
Lender;




          (b) the Borrower shall have paid $300,000 by wire transfer of immediately available funds to
the Lender to an account designated by the Lender, to be applied to pay a portion of the accrued
interest outstanding under the Secured Bridge Note;




          (c) the Borrower shall have paid $95,765.91 by wire transfer of immediately available funds to
the Lender to an account designated by the Lender, representing fees and expenses (including
attorneys’ fees) reimbursable pursuant to Section 11(u) of the Secured Bridge Note;




          (d) ABE Fairmont shall have entered into an amendment of the CoBank Loan Documents to amend,
among other things, Sections 11(A) and 11(B), respectively, of the Master Loan Agreement dated as
of November 20, 2006 between Farm Credit Services of America, FLCA and ABE Fairmont (as amended) to
provide for (i) a reduction of the minimum working capital amount to $8,000,000 through February
2010, increasing to $9,000,000 effective March 2010 through August 2010, then increasing to
$10,000,000 effective September 2010 and thereafter, and (ii) a minimum net worth test of not less
than $48,000,000, increasing to $49,000,000 effective March 2010 and further increasing to
$50,000,000 effective September 2010 and thereafter, and waiving action for anticipated violation
of the current $52,000,000 requirement for April 2009, so long as net worth is not less than
$48,000,000, such amendment to be in form and substance satisfactory to the Lender;




          (e) the Borrower shall have opened the Blocked Account with U.S. Bank, National Association
(“U.S. Bank”) and the Borrower, U.S. Bank and the Lender shall have entered into the Control
Agreement in form and substance reasonably satisfactory to the Lender; and




          (f) the Lender shall have received a complete copy of each compliance package, including
financial statements, compliance certificates and other deliverables, as applicable, delivered by
ABE Fairmont to CoBank as the administrative agent under the CoBank Loan Documents, as of and for
ABE Fairmont’s fiscal year ended September 30, 2008, fiscal quarter ended December 31, 2008 and, to
the extent previously delivered to CoBank, fiscal quarter ended March 31, 2009.




ARTICLE VIII

Other Matters; Entirety of Agreement




     8.1 The Borrower ratifies and affirms its reimbursement and indemnification obligations under
the Secured Bridge Note and the other Loan Documents, including Sections 11(u) and 15 of the
Secured Bridge Note, and including its obligation to pay all fees and expenses, including
reasonable attorneys’ fees and expenses, incurred by the Lender in connection with the negotiation,
implementation, execution and enforcement of this Agreement and any acts contemplated hereby.
Nothing herein shall be construed to limit, affect, modify or alter the Borrower’s obligations
under the Secured Bridge Note or elsewhere under the Loan Documents.



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     8.2 At any time on or after the Forbearance Termination Date, the Lender shall be entitled to
exercise all rights and remedies available, whether under the Loan Documents or at law or in
equity, without further notice or demand.



     8.3 The Borrower and the Lender each understand that this Agreement is a legally binding
agreement that may affect such Person’s rights. Each represents to the other that it has received
legal advice from counsel of its choice in connection with the negotiation, drafting, meaning and
legal significance of this Agreement and that it is satisfied with its legal counsel and the advice
received from it. The Borrower has entered into this Agreement freely and voluntarily, without
coercion, duress, distress or undue influence by the Lender or any other person or entity,
affiliated with the Lender or any Lender Agent.



     8.4 Should any provision of this Agreement require judicial interpretation, it is agreed that
a court interpreting or construing the same shall not apply a presumption that the terms hereof
shall be more strictly construed against any party by reason of the rule of construction that a
document is to be construed more strictly against the party who itself or through its agent
prepared the same.



     8.5 When executed by the Borrower and the Lender, this Agreement shall be effective as to and
for the benefit of the Borrower and the Lender, and thereupon shall be binding upon and inure to
the benefit of each of such signatory parties and their respective heirs, successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender.



     8.6 Section and subsection headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other purpose or be given
any substantive effect.



     8.7 In accordance with Section 5-1401 of the New York General Obligations Law, and except as
otherwise expressly provided in any of the Loan Documents, in all respects, including all matters
of construction, validity and performance, this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to contracts made and
performed in such state without regard to the principles thereof regarding conflict of laws, and
any applicable laws of the United States of America.



     8.8 THE BORROWER HEREBY WAIVES ANY RIGHTS THAT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. Except as prohibited by law, the Borrower hereby waives any right that it may have to
claim or recover in any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to, actual damages.
The Borrower hereby (a) certifies that the Lender has not represented, expressly or otherwise, that
it would not, in the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Lender has been induced to enter into this Agreement by, among other things,
the waivers and certifications herein.



10









 





     8.9 This Agreement, together with the other Loan Documents (exclusive of those provisions of
that letter agreement dated August 3, 2007 between the Borrower and Piper Jaffray & Co. that
survived the January 27, 2009 termination of the letter agreement), incorporates all negotiations
of the parties hereto with respect to the subject matter hereof and is the final expression and
agreement of the parties hereto with respect to the subject matter hereof.



     8.10 This Agreement may be executed in counterparts, each of which when so executed shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the same document. Each
party executing this Agreement represents that such party has the full authority and legal power to
do so. This Agreement is not intended to confer any rights or benefits on any parties other than
the parties hereto and their respective successors and assigns. If any provision of this Agreement
shall be unenforceable under applicable law, such provision shall be ineffective without
invalidating the remaining provisions of this Agreement.



11









 






     IN WITNESS WHEREOF, this Forbearance Agreement is duly executed by the respective
duly authorized officers of the undersigned and delivered as of the date first written above.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Borrower	 	Advanced BioEnergy, llc,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard R. Peterson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Richard R. Peterson	 	 
	 

	 	 	 	Title:   CEO	 	 
	 
	 	 	 	 	 	 
	Lender	 	PJC Capital LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. Rinek	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Robert P. Rinek	 	 
	 

	 	 	 	Co-President and Co-Chief Operating Officer	 	 






 









 





ANNEX A




SPECIFIED EVENTS OF DEFAULT



1. Borrower failed to deliver within 30 calendar days after the end of each month (including the
last month of each fiscal quarter and of each fiscal year) (a) consolidated financial statements
for Borrower and its Subsidiaries under Section 11(a) of the Secured Bridge Note and (b) a
certificate executed by the chief financial officer of Borrower certifying the items set forth in
Section 11(a) of the Secured Bridge Note, in each case for periods ending up through and including
March 30, 2009, which failure constituted an Event of Default under Section 13(q)(3) of the Secured
Bridge Note.



2. Borrower failed to deliver annual financial statements for Borrower and its Subsidiaries for the
year ended September 30, 2008 required by Section 11(b) of the Secured Bridge Note which failure
constituted an Event of Default under Section 13(q)(3) of the Secured Bridge Note.



3. Borrower received notice of certain violations from the NDEQ-Air Quality Division at its
Fairmont plant that may be a violation of Section 11(d) of the Secured Bridge Note, which
violations may constitute an Event of Default under Section 13(q)(3) of the Secured Bridge Note.
Remedial action has been taken, but there is the possibility of a fine being assessed.



4. Borrower has experienced issues with its molecular sieves at its Aberdeen, South Dakota plant
which may be a violation of Section 11(e) of the Secured Bridge Note and which may constitute an
Event of Default under Section 13(q)(3) of the Secured Bridge Note.



5. On December 24, 2008, Borrower entered into certain amendments to the CoBank Loan Documents
which impose more burdensome terms on Borrower without Lender’s consent in violation of Section
11(g)(viii) of the Secured Bridge Note, which constitutes an Event of Default under Section
13(q)(3) of the Secured Bridge Note.



6. Borrower failed to provide to Lender under Section 11(p) of the Secured Bridge Note written
notice of changes in senior management personnel within 20 days after any change (including the
termination of Donald Gales, suspension and termination of Revis Stephenson, the promotion of
Richard Peterson to interim Chief Executive Officer, and the termination of Perry Johnston), which
failure is an Event of Default under Section 13(q)(3) of the Secured Bridge Note.



7. Borrower failed to provide to Lender under Section 11(q) of the Secured Bridge Note with notice
in writing of threatened claims by Ethanol Capital Management, LLC and its Affiliates
(collectively, “ECM”) relating to the convertible note issued by Borrower to ECM which had a
purported amount in controversy in excess of $250,000, which failure is an Event of Default under
Section 13(q)(3) of the Secured Bridge Note.



8. Borrower failed to provide to Lender under Section 11(q) of the Secured Bridge Note with notice
in writing of Revis Stephenson’s demand for arbitration in connection with his termination of
employment which has a purported amount in controversy in excess of $250,000, which failure is an
Event of Default under Section 13(q)(3) of the Secured Bridge Note.




2









 







9. With respect to Specified Events of Default as defined in the Forbearance Agreement that
constitute a Default or Event of Default under the Secured Bridge Note, Borrower has not complied
with its obligation under Section 11(r) of the Secured Bridge Note to notify Lender in writing
promptly of such Default or Event of Default, which failure is an Event of Default under Section
13(q)(3) of the Secured Bridge Note.



10. Borrower’s failure to cure certain of the Specified Events of Default constitutes an Event of
Default under Section 13(q)(3) of the Secured Bridge Note.



11. Borrower failed to pay (a) interest accrued from the Maturity Date through the Forbearance
Effective Date under Section 1 of the Secured Bridge Note, and (b) fees and costs through the
Forbearance Effective Date under Section 11(u) of the Secured Bridge Note, each of which
constituted an Event of Default under Section 13(q)(1) of the Secured Bridge Note.



12. Borrower’s failure to pay amounts due under the Secured Bridge Notes constitutes an Event of
Default under Section 13(q)(5) of the Secured Bridge Note.



13. The inability of the Heartland Entities (as defined in the Forbearance Agreement) to pay when
due certain amounts and to otherwise comply with the covenants set forth in certain Indebtedness
constitutes an Event of Default under Section 13(q)(5) of the Secured Bridge Note.



14. Borrower has from time to time been in violation of its minimum net working capital and minimum
net worth covenants in its CoBank Loan Documents (as defined in the Forbearance Agreement) which
constitutes an Event of Default under Section 13(q)(8) of the Secured Bridge Note.



15. Borrower has not provided Lender with proper notice of events occurring which caused the number
and price of the Warrants to change which constitutes an Event of Default under Section 13(q)(11)
of the Secured Bridge Note.



16. Borrower’s defaults under the Secured Bridge Note and the defaults of the Heartland Entities
under certain Indebtedness could be deemed to be a Material Adverse Effect and an Event of Default
under Section 13(q)(12) of the Secured Bridge Note.




3









 








SCHEDULE I




OUTSTANDING UNPAID AMOUNT OF PRINCIPAL AND

ACCRUED INTEREST; FEES, COSTS AND EXPENSES




as of April 24, 2009




	 	 	 	 	 
	Principal outstanding:
	 	$	10,000,000.00	 
	Accrued interest:
	 	$	2,563,332.26	 
	Per diem interest:
	 	$	6,207.18	 
	Attorneys fees, costs and expenses:
	 	$	73,766.57	 
	Printing, database and miscellaneous expenses
	 	$	5,000.00	 






4










 





ANNEX B




FORM OF AMENDED AND RESTATED SECURED TERM LOAN NOTE




5









 








AMENDED AND RESTATED SECURED TERM LOAN NOTE




			
	 	 	 
	$[                    ]
	 	[                    ], 2009






Minneapolis, Minnesota



FOR VALUE RECEIVED, the undersigned, ADVANCED BIOENERGY, LLC, a Delaware limited liability company
(as more fully defined below, “Borrower”), hereby unconditionally promises to pay to the
order of PJC CAPITAL LLC, a Delaware limited liability company (including its successors, assigns,
pledgees, transferees and participants, collectively, “Lender”), on or before the Maturity
Date on the dates, in the manner and otherwise in accordance with the terms and conditions of this
Restated Note the principal sum of [                                                                      
                                                  ]
DOLLARS ($[                    ]), on the terms and conditions set forth in this Amended and Restated Secured
Term Loan Note (this “Restated Note”), together with all accrued but unpaid interest
thereon computed as set forth below and all unpaid fees, expenses, indemnities and other advances
connected herewith. Capitalized terms used but not otherwise defined herein shall have the meaning
given to them in Section 13.
This Restated Note amends and restates, and is being delivered in exchange for, that certain
Secured Term Loan Note dated as of October 17, 2007, in the original principal amount of
$10,000,000, made by Borrower in favor of Lender, as and to the extent modified by that Forbearance
Agreement dated June 1, 2009 (the “Forbearance Agreement”) between Lender and Borrower (as
so modified, the “Prior Note”). The original stated principal amount of this Restated Note
is equal to the sum of the original principal amount of the Prior Note plus all accrued and
capitalized interest on the Prior Note as of the date hereof, less the amount of principal
reductions made pursuant to the Forbearance Agreement. All amounts obligated to be paid by
Borrower pursuant to the Prior Note shall not be deemed extinguished by reason hereof but shall be
carried over from the Prior Note.




     1. Accrual and Imposition of Interest.



          (a) All amounts outstanding hereunder shall bear interest (computed daily until paid, both
prior to and after the Maturity Date and prior to and after any bankruptcy or insolvency of
Borrower) at a per annum rate equal to 10.0%. Upon the occurrence and during the continuation of
any Event of Default hereunder, to the maximum extent not prohibited by applicable law, Lender (at
Lender’s election) may increase the interest rate hereunder by 3.0% per annum in excess of the rate
then otherwise applicable hereunder (provided that, if the relevant default relates to the
insolvency or bankruptcy of Borrower, then such rate increase (to the maximum extent not prohibited
by applicable law) will occur automatically without any action by Lender). Interest hereunder will
be calculated, accrued, imposed and payable on the basis of a 360-day year for the actual number of
days elapsed.




          (b) Unless prohibited by applicable law, (i) cash interest of $50,000 (or such lesser amount
as shall have accrued during the applicable calendar month), pro rata for any partial month, shall
be paid monthly in arrears on the first Business Day of the next succeeding calendar month; and
(ii) the entire remaining amount of interest, if any, in excess of the cash interest paid pursuant
to clause (i) above accrued during any calendar month shall be paid-in-kind rather than in cash,
with all such paid-in-kind interest to accrue and compound monthly (by being added to the principal
amount of the Obligations) on the first Business Day of the next succeeding month.














 








          (c) The failure by Borrower to pay the full amount of the accrued cash interest as and when
the same becomes due and payable each month pursuant to this Section 1 within three (3)
Business Days of the due date therefor shall constitute an immediate Event of Default, and upon the
occurrence of such Event of Default such unpaid accrued cash interest shall be immediately deemed
paid-in-kind and shall be added to the principal amount of the Obligations retroactive to the first
Business Day of such month (in which such cash interest first became due) and the amount of
interest that shall have been deemed paid-in-kind in accordance with this paragraph shall accrue
and compound at the per annum rate of interest of eighteen percent (18.0%).




     2. Payments at Maturity. Borrower shall pay Lender the entire outstanding balance
hereunder together with all accrued but unpaid interest hereunder and all fees, expenses,
indemnities and other advances in connection herewith or any other Loan Document on the date of the
earlier to occur of the following (the “Maturity Date”): (a) [                                        ], 2012 [date
that is three years from date of note to be inserted], and (b) the occurrence of a Change
of Control and (c) the date of acceleration of the maturity of the Obligations pursuant to
Section 14 (whether automatically or at Lender’s election after notice to Borrower)
following the occurrence of an Event of Default.



     3. Voluntary Prepayments. At any time, upon advance written notice to Lender of at
least 3 Business Days, Borrower may prepay outstanding balances hereunder in whole or in part
without penalty or premium. Any voluntary partial prepayment must be in an amount of not less than
$100,000 (or such lesser amount equal to the then outstanding principal balance of this Restated
Note) or in multiples of $25,000 in excess thereof. Amounts prepaid pursuant to this Section
3 shall be applied to the Obligations in accordance with Section 7.



     4. Mandatory Prepayments.



          (a) Net Cash Proceeds. If Borrower or ABE Fairmont (i) sells, leases, licenses
pursuant to an exclusive license, transfers or otherwise disposes of any assets (other than (A)
inventory sold in the ordinary course of business and (B) other dispositions of assets not
exceeding an aggregate fair market value of $1,000,000 during any 12 consecutive calendar month
period), (ii) issues any Equity Interests (other than “Excluded Units”, as such term is defined in
the Warrant as in effect on the date hereof) or (iii) issues any debt securities or notes (other
than Indebtedness permitted hereunder), Borrower shall (except for Net Cash Proceeds of
dispositions of assets of ABE Fairmont that are required to be applied pursuant to the applicable
mandatory prepayment provisions relating to dispositions of assets of ABE Fairmont either under the
CoBank Loan Documents or the Wells Fargo Loan Documents, in each case as in effect on the date
funds are first advanced under this Restated Note) immediately prepay the outstanding Obligations
under this Restated Note without penalty or premium in an amount equal to 100% of the resulting Net
Cash Proceeds from such sale or other disposition of assets or such issuance of equity or debt
securities, as the case may be. Net Cash Proceeds prepaid pursuant to this Section 4 shall
be applied to the Obligations in accordance with Section 7.




          (b) GSB Letter of Credit Cash Collateral. There is outstanding as of the date hereof
an irrevocable standby letter of credit dated March 31, 2008 in the stated face amount of
$2,500,000 issued by Geneva State Bank (“GSB”) for the account of Borrower and for the
benefit of WestLB AG, New York Branch, which expires on March 31, 2010 (the “GSB Letter of
Credit”). Borrower’s reimbursement obligation under the GSB Letter of Credit is secured by
cash collateral deposited by Borrower with GSB in a deposit account (the “GSB Deposit
Account”) in the amount of $2,500,000 plus accrued interest (the “GSB Letter of Credit Cash
Collateral”). Immediately upon release by GSB of all or any portion of the GSB Letter of
Credit Cash Collateral as collateral for the GSB Letter of Credit at any time or from time to time,
whether such release is upon expiration of the GSB Letter of Credit or otherwise, Borrower shall
immediately pay or cause to be paid to Lender the full amount of GSB Letter of




2









 




Credit Cash Collateral released by GSB until Lender has received an aggregate of $1,700,000
(the “Lender Portion”). To effect the foregoing, Borrower has opened a deposit account
with U.S. Bank, National Association (the “Blocked Account”) which shall be subject to a
control agreement in favor of Lender in the form attached to the Forbearance Agreement as Annex D
thereto (the “Control Agreement”) for the purpose of depositing, among other things, the
GSB Letter of Credit Cash Collateral when released by GSB. Borrower shall, effective on the date
hereof, instruct GSB in writing in the form attached hereto as Exhibit A (the “GSB
Instruction Letter”) that the GSB Letter of Credit Cash Collateral shall be disbursed by GSB to
Borrower at the Blocked Account, which instructions shall contain the acknowledgment of GSB that it
shall not send the GSB Letter of Credit Cash Collateral to Borrower or to any other account or
Person other than to Borrower at the Blocked Account without the prior written consent of Lender.
Borrower shall not give any instructions to GSB inconsistent with the GSB Instruction Letter.
After the Lender Portion has been paid into the Blocked Account and such Lender Portion has been
received by Lender from the Blocked Account, Lender shall (i) deliver written instructions to GSB
authorizing Borrower to direct the payment of all further releases of GSB Letter of Credit Cash
Collateral without need for written consent from Lender and (ii) promptly authorize the withdrawal
by Borrower of all GSB Letter of Credit Cash Collateral paid into the Blocked Account in excess of
the Lender Portion pursuant to instructions confirmed by Lender (as to such excess amount).
Borrower shall execute and deliver such other agreements and documents and take such other actions
as Lender shall reasonably request in order to effect the distribution of the GSB Letter of Credit
Cash Collateral as set forth in this Section 4(b).




          (c) Nebraska Advantage Act Payments. Borrower currently participates in a program
under the State of Nebraska Advantage Act pursuant to that Nebraska Advantage Act Project Agreement
dated as of August 13, 2007 between Borrower and the State of Nebraska, by and through its Tax
Commissioner (the “NAA Agreement”). Pursuant to the NAA Agreement, Borrower expects to
receive certain payments and credits for various tax and other related investment and employment
credits and incentives (the “NAA Payments”) from the State of Nebraska Department of
Revenue (the “Nebraska DOR”). Immediately upon receipt by Borrower of any NAA Payment from
time to time from the Nebraska DOR with respect to the NAA Agreement, Borrower shall immediately
pay or cause to be paid to Lender the full amount of such NAA Payment, to be applied to the
Obligations in accordance with Section 7. To effect the foregoing, Borrower shall,
effective on the date hereof, instruct the Nebraska DOR in writing in the form attached hereto as
Exhibit B (the “Nebraska Instruction Letter”) that all NAA Payments from time to
time shall be disbursed by the Nebraska DOR to Borrower at the Blocked Account. Borrower shall not
give any instructions to the Nebraska DOR inconsistent with the Nebraska Instruction Letter. If
any payment by the Nebraska DOR is not paid to the Blocked Account pursuant to the Nebraska
Instruction Letter, Borrower shall, immediately upon the making of such payment by the Nebraska
DOR, cause such payment to be deposited into the Blocked Account. Borrower shall give written
notice to Lender within two (2) Business Days of (i) the making of any request for NAA Payments by
Borrower, and (ii) the acknowledgment of, or payment by, the State of Nebraska of any NAA Payments,
in each case in reasonable detail. Borrower shall execute and deliver such other agreements and
documents and take such other actions as Lender shall reasonably request in order to effect the
distribution of the NAA Payments as set forth in this Section 4(c).




          (d) ABE Fairmont Distributions. Beginning with the fiscal year of Borrower and ABE
Fairmont ended September 30, 2009, Borrower shall calculate “net profit” (as defined in the Section
10(K) of the 11/20/06 MLA) of ABE Fairmont for such fiscal year, and shall provide evidence to
Lender in reasonable detail of such calculation no later than 10 Business Days after the end of
such fiscal year. If such net profit is a positive number, and so long as such distribution is
permitted by the CoBank Loan Documents, Borrower shall cause ABE Fairmont to distribute forty
percent (40.0%) of such net profit (or if less than sixty percent (60.0%) of the net profit is
required by the CoBank Loan Documents to be retained by ABE Fairmont, than such greater percentage
as is not required to be retained) (each such




3









 




payment, an “ABE Fairmont Distribution”) no later than the date that the audited
financial statements of ABE Fairmont for such fiscal year are delivered to CoBank, to Lender by
causing ABE Fairmont to pay the full amount of such ABE Fairmont Distribution directly to Lender,
to be applied to the Obligations in accordance with Section 7. To effect the foregoing,
Borrower shall, effective on the date hereof, instruct ABE Fairmont in writing in the form attached
hereto as Exhibit C (the “ABE Fairmont Instruction Letter”) that all ABE Fairmont
Distributions from time to time shall be distributed by ABE Fairmont directly to Lender at an
account set forth in such ABE Fairmont Instruction Letter, which instructions shall contain the
acknowledgment of ABE Fairmont that it shall not send any ABE Fairmont Distributions to Borrower or
to any other account or Person other than to Lender at the account specified in the ABE Fairmont
Instruction Letter without the prior written consent of Lender. Borrower shall not give any
instructions to ABE Fairmont inconsistent with the ABE Fairmont Instruction Letter. Borrower shall
execute and deliver such other agreements and documents and take such other actions as Lender shall
reasonably request in order to effect the distribution of the ABE Fairmont Distributions as set
forth in this Section 4(d).




          (e) Additional Principal Payments. If at any time the interest on this Restated Note
accrued during any month is less than $50,000 (pro rata for any partial month), Borrower shall pay
to Lender the difference between $50,000 (or such pro rata portion thereof) and the interest
accruing on this Restated Note during such month, to be applied to the Obligations in accordance
with Section 7.




     5. Funding Advances. At the written request and expense of Borrower, Lender will wire
transfer all or any portion of the advances hereunder in accordance with written instructions
therefor. By executing this Restated Note, Borrower hereby requests Lender to make and fund the
initial advances in accordance with the funding instructions that have been provided to Lender in
writing.



     6. Mechanics of Payment. All payments and other amounts due hereunder must be
received by Lender by wire transfer in immediately available funds in Dollars (and without any
deduction, offset, netting, counterclaim or reservation of rights) on or before 2:00 p.m. Central
Time on the due date therefor at the principal office of Lender located at 800 Nicollet Mall,
Minneapolis, MN 55402, Attention Tim Carter or Greg Meyer, or at such other location as Lender at
any time or from time to time may designate to Borrower in writing. Any funds received by Lender
after 2:00 p.m. Central Time on any day will be deemed to be received on the next succeeding
Business Day. Whenever any payment to be made hereunder is due on a day that is not a Business
Day, then such payment may be made on the next succeeding Business Day, and such extension of time
will be included in the computation of interest due hereunder.



     7. Application of Payments. All payments and other funds received by Lender hereunder
will be applied in the following order: (a) to the payment of any fees and charges due under the
Loan Documents, then (b) to any obligations for the payment of expenses, costs and
indemnities due under the Loan Documents, then (c) to the payment of all other interest due
and owing under Section 1(b) other than interest under Section 1(b)(ii), then (d)
to payments of all paid-in-kind interest under Section 1(b)(ii) accrued and not yet paid,
to the extent such paid-in-kind has been added to principal, then (e) to the principal
indebtedness due hereunder, then (f) to any other interest accrued hereunder other than as
set forth in clauses (c) and (d) above, then (g) to any other indebtedness
of Borrower to Lender under the Loan Documents.



     8. Capital Adequacy, Taxes and Other Adjustments. If Lender determines that (a) the
adoption, implementation or interpretation after the date hereof of any law, treaty, governmental
(or quasi-governmental) rule, regulation, guideline, directive, policy or order regarding capital
adequacy, reserve requirements, taxes or similar requirements, or (b) the compliance by Lender or
any entity controlling or funding the operations of Lender with any request or directive regarding
capital adequacy,



4









 







reserve requirements, taxes or similar requirements (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from any central bank,
governmental agency, controlling entity, funding source or body, in either instance, would have the
effect of increasing the amount of capital, reserves, taxes, funding costs or other funds required
to be maintained or paid by Lender and thereby have the effect of reducing the rate of return on
Lender’s capital as a consequence of its obligations hereunder, then Borrower must pay to Lender
additional amounts sufficient to compensate Lender for such reduction. Lender will notify Borrower
of any such determination and payment amount within a reasonable period of time thereafter, and
(upon written request) Lender will furnish a statement setting forth the basis and the method for
determining the amount of such payment. Any such determination or calculation by Lender will be
conclusive absent manifest error.



     9. Miscellaneous Additional Payment Terms, Including Ability to Re-Borrow. Principal
amounts repaid or prepaid hereunder will not be available for re-borrowing under the terms hereof.
To the extent Lender notes the date or amount of any payment hereunder on a schedule annexed
hereto, then such notations shall constitute prima facie evidence of the information noted on such
schedule, but the failure of Lender to make any such notation will not limit or otherwise affect
the obligations or liabilities of Borrower hereunder.



     10. Usury Savings Provision. Notwithstanding any provision of any Loan Document,
Borrower shall not be required to pay interest at a rate or any fee or charge in an amount
prohibited by applicable law. If interest or any fee or charge payable on any date would be in a
prohibited amount, then such interest, fee or charge will be automatically reduced to the maximum
amount that is not prohibited, and any interest, fee or charge for subsequent periods (to the
extent not prohibited by applicable law) will be increased accordingly until Lender receives
payment of the full amount of each such reduction. To the extent that any prohibited amount is
actually received by Lender, then such amount will be automatically deemed to constitute a
repayment of principal indebtedness hereunder.



     11. Affirmative and Negative Covenants. Borrower hereby covenants and agrees that,
until this Restated Note has been Paid in Full, Borrower will comply with the following covenants:



          (a) Delivery of Periodic Financial Information. Within 30 calendar days after the end
of each month (including the last month of each fiscal quarter and of each fiscal year), Borrower
shall deliver to Lender a set of consolidated financial statements for such immediately preceding
month (in form and substance reasonably acceptable to Lender) including a balance sheet, income
statement and statement of cash flows for Borrower and its Subsidiaries (with appropriate exhibits
and schedules). Together with the monthly financial statements, Lender must also receive a
certificate executed by the chief financial officer of Borrower as is acceptable to Lender
(1) stating that the financial statements have been prepared in accordance with GAAP (except for
the absence of footnotes and for customary, nonmaterial year-end adjustments) and fairly present
the consolidated financial condition of Borrower and its Subsidiaries as of the date thereof and
for the periods covered thereby and (2) certifying that as of the date of such certificate there is
not any existing Default or Event of Default. In addition, Borrower shall deliver to Lender a copy
of each compliance package, including financial statements, compliance certificates and other
deliverables, as applicable, delivered by ABE Fairmont to CoBank as the administrative agent under
the CoBank Loan Documents, concurrently, but in no event later than five (5) days after the
delivery thereof to CoBank.




          (b) Delivery of Financial Statements. Within 90 calendar days after each fiscal year,
Borrower shall deliver to Lender a complete set of annual consolidated and consolidating financial
statements for Borrower and its Subsidiaries (with accompanying notes), in reasonable detail and in
comparative form. Such financial statements (1) must be prepared in accordance with GAAP
consistently applied, and (2) must be audited by McGladrey & Pullen, LLP or another
independent certified public




5









 




accounting firm satisfactory to Lender. Together with the annual financial statements, Lender
must also receive all related management letters, if any, prepared by such accountants, and such
financial statements shall be accompanied by a report of such accountants, which report shall be
without limitation as to the scope of the audit and shall state that such financial statements
present fairly, in all material respects, the financial position of Borrower and its Subsidiaries
in conformity with GAAP as of the date thereof and for the periods covered thereby.




          (c) Other Information; Access. At Borrower’s expense, upon request by Lender,
Borrower will, and will cause ABE Fairmont to, during normal business hours, permit Lender and its
representatives to visit and inspect any of their respective properties, to examine and make
abstracts or copies from any of their respective books and records (whether in the possession of
Borrower or a third party) and to discuss their respective operations, affairs, finances and
accounts with their respective management personnel, officers, employees and independent public
accountants. In addition to the foregoing, from time to time, Borrower shall provide Lender with
any other information (financial or otherwise) about Borrower or any of its Subsidiaries reasonably
requested by Lender.




          (d) Compliance with Laws; Existence and Good Standing. Borrower shall, and shall
cause each of its Subsidiaries to, comply in all material respects with all laws, rules,
regulations and orders (federal, state, local and otherwise) that are applicable to Borrower, or
any Subsidiary of Borrower, including all applicable Environmental Control Statutes and ERISA.
Borrower shall, and shall cause each of Subsidiaries to, preserve and maintain (1) such Person’s
existence as an organization in good standing under the applicable laws of such Person’s
jurisdiction of organization, and (2) such Person’s qualification in good standing to
conduct business in all jurisdictions where it conducts business and as to which the failure to be
in good standing could reasonably be expected to have a Material Adverse Effect, and (3)
the validity of all such Person’s authorizations and licenses required or otherwise appropriate in
the conduct of such Person’s businesses and as to which the failure to have such valid
authorization or license could reasonably be expected to have a Material Adverse Effect.




          (e) Books and Records; Maintenance of Properties. Borrower shall, and shall cause
each of Subsidiaries to, keep and maintain accurate books and records of account in accordance with
GAAP. Borrower shall, and shall cause each of Subsidiaries to, keep, maintain and preserve all of
its material assets in good order and repair (ordinary wear and tear excepted) and fully insured by
reputable and financially sound insurance companies with coverages that are customary for
Borrower’s or such Subsidiary’s industry (and reasonably acceptable to Lender).




          (f) Transactions with Affiliates. Borrower shall not, and shall not permit any of its
Subsidiaries to, engage in any transaction (including employment, management and/or other
compensation arrangements) with any Person who is an Affiliate of Borrower or any of its
Subsidiaries other than (a) reasonable and customary compensation arrangements in the ordinary
course of business with its officers and directors, to the extent permitted hereunder and
(b) transactions on a basis no more favorable to such Affiliate then would be obtained in a
comparable arm’s length transaction with a Person not an Affiliate of Borrower or any of its
Subsidiaries and disclosed to Lender in writing prior to entering into any such transaction.




          (g) Indebtedness and Guaranties. Borrower shall not, and shall not permit ABE
Fairmont to, (1) create, incur, assume or permit to exist any additional Indebtedness or
liabilities or (2) guarantee, assume or otherwise be or agree to become directly or
indirectly liable in any way for any additional indebtedness or liability of any other Person,
except (i) Indebtedness and guarantees in favor of Lender; (ii) trade debt and customary operating
expenses incurred and paid by such Person in the normal and ordinary course of business;
(iii) Indebtedness incurred to purchase fixed or capital assets and Capital Leases, consistent with
the restrictions and conditions in Section 11(h)(2), provided that the aggregate




6









 




amount of such Indebtedness outstanding under this clause (iii) at any time may not exceed
$3,000,000; (iv) Indebtedness under the CoBank Loan Documents in an amount not to exceed
$93,650,000 in the aggregate outstanding at any time; (v) the Indebtedness listed on
Schedule 11(g) attached to this Restated Note; (vi) Indebtedness under the Wells Fargo
Documents in an amount not to exceed $7,000,000 in the aggregate outstanding at any time; and (vii)
extensions, refinancings and renewals of any of the Indebtedness permitted by the foregoing
clauses, provided that the principal amount of such Indebtedness shall not be increased or
the terms of such Indebtedness modified to impose more burdensome terms upon Borrower or any of its
Subsidiaries.




          (h) Liens. Borrower shall not, and shall not permit ABE Fairmont to, create, permit
or suffer the creation or existence of any Liens on any of its property or assets (real or
personal, tangible or intangible), except (1) Liens in favor of Lender; (2) Liens arising
in favor of sellers, lessors or other financial institutions for indebtedness and obligations
incurred to purchase or lease fixed or capital assets as permitted under Section
11(g)(iii), provided that such Liens secure only the indebtedness and obligations
created thereunder (but not any related monetary obligations under non-compete and consulting
arrangements) and are limited to the assets purchased or leased pursuant thereto and the proceeds
thereof; (3) Liens for taxes, assessments or other governmental charges (federal, state or local)
that are not yet delinquent or that are then being currently contested in good faith by appropriate
proceedings diligently prosecuted, provided that (i) adequate reserves therefor in
accordance with GAAP have been established, and (ii) such Liens could not reasonably be
expected to have or cause a Material Adverse Effect, (4) deposits or pledges made in the ordinary
course of business to secure obligations which are not overdue in respect of under workmen’s
compensation, unemployment insurance or social security laws or similar legislation; (5) deposits
to secure performance or payment bonds, bids, tenders, contracts, leases, franchises or public and
statutory obligations required in the ordinary course of business; (6) statutory or common law
liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen, and landlords
incurred in the ordinary course of business and in existence less than 120 days from the date of
creation thereof in respect of obligations not past due or sums being currently contested in good
faith by appropriate proceedings diligently prosecuted, provided that (A) adequate reserves
therefor in accordance with GAAP must have been established, and (B) such Liens could not
reasonably be expected to have or cause a Material Adverse Effect; (7) easements, rights-of-way,
restrictions and other similar encumbrances on real property owned or leased by Borrower and
encumbrances evidencing the ownership interest or title of any owner or lessor with respect to real
property leased by Borrower, provided that such Liens do not in the aggregate materially
interfere with the occupation, use or enjoyment by Borrower of the property or assets encumbered
thereby in the normal course of business or materially impair the value of the property subject
thereto; (8) Liens securing Indebtedness permitted by Section 11(g)(iv) or Section
11(g)(vi); (9) the Liens listed on Schedule 11(h) attached to this Restated Note; (10)
Liens arising from judgments, decrees or attachments that do not constitute an Event of Default;
(11) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment
of customs duties in connection with the importation of goods; (12) Liens arising solely by virtue
of any statutory or common law provision relating to banker’s liens, rights of setoff or similar
rights and remedies as to deposit accounts or other funds maintained with a creditor depository
institution; (13) Liens in favor of a depository bank or a securities intermediary pursuant to such
depository bank’s or securities intermediary’s customary customer account agreement; provided that
any such Liens shall at no time secure any indebtedness or obligations other than customary fees
and charges payable to such depository bank or securities intermediary; and (14) Liens incurred in
connection with the extension, renewal or refinancing of indebtedness secured by Liens permitted
under the preceding clauses, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase. Lender also understands that
the State of Nebraska has certain rights under Section 22 of the NAA Agreement.




7









 








          (i) Investments, Acquisitions and Loans. Borrower shall not, and shall not permit ABE
Fairmont to, purchase or otherwise acquire (including by way of share exchange) any part or share
of the Equity Interests or equity ownership of, or acquire all or substantially all of the assets
or any division or similar operating unit of, guaranty any Indebtedness of, or make any loan,
advance or extension of credit to, or contribute to the capital of, or make or permit to exist any
contribution, investment in or other interest in, any other Person (collectively,
“Investments”), except for: (1) government and agency securities backed by the full
faith and credit of the U.S. federal government; (2) commercial paper of a U.S. domestic issuer
rated at least A-1+ or A-1 by Standard & Poor’s Ratings Group or at least P-1 by Moody’s Investor
Services, Inc. and maturing not more than 90 calendar days from the date of acquisition thereof;
(3) certificates of deposit (maturing within 12 calendar months after the date of issuance), time
deposits, other deposits and bankers’ acceptances issued by or established with U.S. federally
insured commercial banks rated as “well capitalized” by their primary federal regulators, and
having unimpaired capital and unimpaired surplus (collectively) of at least $250,000,000, and whose
commercial paper (or commercial paper that is supported by such bank’s letter of credit or
commitment to lend) is rated at least A-1+ or A-1 by Standard & Poor’s Ratings Group or at least
P-1 by Moody’s Investor Services, Inc.; (4) loans and advances to employees of Borrower or any of
its Subsidiaries in the ordinary course of business not to exceed an aggregate principal amount of
$100,000 at any time outstanding; (5) Investments set forth on Schedule 11(i) attached to
this Restated Note; (6) Investments in Subsidiaries and in the Heartland Entities existing as of
the date of this Restated Note; and (7) repurchases of Equity Interests from former employees or
managers of Borrower under the terms of applicable repurchase agreements, including repurchases
effected by the cancellation of indebtedness owed to such former employees of Borrower, in an
aggregate amount not to exceed $100,000 during the term of this Restated Note, provided
that no Event of Default has occurred, is continuing or would exist after giving effect to such
repurchases or cancellation of indebtedness.




          (j) Transfer of Assets. Borrower shall not, and shall not permit ABE Fairmont to,
sell, lease, license pursuant to an exclusive license (whether or not fully paid up front),
transfer or otherwise dispose of all or a substantial part of its assets or any asset the loss of
which could reasonably be expected to have or cause a Material Adverse Effect. In addition,
Borrower shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer
or otherwise dispose of any asset other than (1) pursuant to a transaction with an unrelated third
party in the normal and ordinary course of business for value received and otherwise in accordance
with the terms hereof that (together with all other transactions during the immediately preceding
12 consecutive calendar months) has a fair market value aggregating less than $1,000,000,
provided that no Default or Event of Default is then occurring or would otherwise be caused
thereby; (2) with respect to obsolete or replaced equipment no longer useful in the operation of
Borrower’s or any Subsidiary’s business, pursuant to a reasonable and customary transaction with an
unrelated third party and otherwise in accordance with the terms hereof; or (3) dispositions of
inventory, or used, worn-out or surplus property, all in the ordinary course of business. Borrower
shall not, and shall not permit any of its Subsidiaries to, enter into any sale-lease back
transaction with respect to any of their respective assets.




          (k) Dividends, Distributions and Redemptions. Except as permitted by
Section 11(i)(9), Borrower shall not declare or make (directly or indirectly) any payment
or distribution with respect to, or incur any liability for the purchase, acquisition, redemption
or retirement of, any of its equity interests (including warrants therefor) or as a dividend,
return of capital or other payment or distribution of any kind to any holder of any such equity
interest. Notwithstanding the foregoing, so long as no Default or Event of Default then exists
under the Loan Documents or would otherwise be caused by the payment of such dividend, Borrower may
declare and distribute reasonable and lawful dividends to the holders of its equity securities for
the sole purpose of making Tax Distributions to such holders of its Equity Interests.




8









 








          (l) New Ventures; Mergers. Borrower shall not, and shall not permit ABE Fairmont to,
(1) enter into any new business activities or ventures not directly related to its current
business; (2) merge or consolidate with or into any other corporation, partnership, limited
liability company or other organization; or (3) create or acquire (or cause or permit the creation
or acquisition of) any Subsidiary.




          (m) Modifications to Organizational Documents. Borrower shall not, and shall not
permit ABE Fairmont to, (1) amend or otherwise modify any of its Organizational Documents, or (2)
change its legal or official name, its operating names or the names under which it executes
contracts and conducts business, in each instance, if such amendment or change could reasonably be
expected to have or cause an adverse effect (including any adverse affect on the attachment or
perfection of any pledge or security interest in favor of Lender).




          (n) General Insurance Provisions. Borrower shall, and shall cause ABE Fairmont to,
keep all of their respective property and assets fully covered by insurance with reputable and
financially sound insurance companies (reasonably acceptable to Lender), and also maintain such
protection against such hazards and liability in such amounts and with such deductibles as is
customary in the industry of Borrower or ABE Fairmont and appropriate under the relevant
circumstances and, on the date that is 5 Business Days from the date hereof, and at all times
thereafter, shall name (with appropriate endorsements) Lender as an additional insured with respect
to policies of liability insurance. Upon Lender’s request, Borrower from time to time will furnish
Lender with proof of such insurance, in form and substance acceptable to Lender, and a copy of the
related policy or policies.




          (o) Taxes. Borrower shall, and shall cause ABE Fairmont to, pay and discharge all
material taxes, assessments or other governmental charges or levies imposed on it or any of its
property or assets prior to the date upon which any penalty for non-payment or late payment is
incurred, unless the same are then being contested in good faith by appropriate proceedings
diligently prosecuted, adequate reserves therefor have been established in accordance with GAAP,
and the consequences of such non-payment could not reasonably be expected to have a Material
Adverse Effect.




          (p) Management Changes. Borrower shall notify Lender in writing within 20 days after
any change (including any dismissal or change in title or status) in the senior management
personnel of Borrower or ABE Fairmont.




          (q) Litigation and Administrative Proceedings. Borrower shall notify Lender in
writing promptly upon the institution or commencement of any litigation, legal or administrative
proceeding, any arbitration proceeding, or any labor controversy against or involving Borrower or
any of its Subsidiaries (1) with a purported amount in controversy in excess of $250,000 (in excess
of the amount of any insurance coverage as to which the applicable insurer has accepted tender) or
(2) that could otherwise, if adversely determined, reasonably be expected to have or cause a
Material Adverse Effect.




          (r) Monitoring Compliance. Borrower shall notify Lender in writing promptly, but in
any event within 5 calendar days, after obtaining knowledge of the occurrence or existence of any
Default or Event of Default hereunder.




          (s) Margin Stock Restrictions; Other Federal Statutes. Borrower shall not, and shall
not permit ABE Fairmont to, use any of the proceeds hereunder, directly or indirectly, to purchase
or carry, or to reduce or retire any indebtedness that was originally incurred to purchase or
carry, any “Margin Stock” or for any other purpose that might constitute the transactions
contemplated hereby as a “Purpose Credit” within the meaning of the Board of Governors of the
Federal Reserve Systems’ Margin Regulations. Borrower shall not, and shall not permit ABE Fairmont
to, engage as its principal business in the extension of credit for purchasing or carrying Margin
Stock. Borrower shall not, and shall not




9









 




permit ABE Fairmont to, cause or permit any Loan Document to violate any other regulation of
the Board of Governors of the Federal Reserve System or the Securities and Exchange Commission or
any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940 or the Small Business Investment Act of 1958, each as amended, or any rules or
regulations promulgated under any of such statutes.




          (t) Further Assurances. From time to time, Borrower shall, and shall cause ABE
Fairmont to, execute and deliver (or will cause to be executed and delivered) such supplements,
amendments, modifications to and/or replacements of the Loan Documents and such further instruments
as may be reasonably required or reasonably requested by Lender to effectuate the intention of the
parties to (or to otherwise facilitate the performance of) the Loan Documents.




          (u) Costs and Expenses. Borrower shall pay or reimburse Lender for all fees and costs
(including all reasonable attorneys’ fees and disbursements) that Lender may pay or incur in
connection with (1) the preparation, negotiation and review of the Loan Documents, any waivers,
consents and amendments in connection herewith or therewith and all other documentation related
hereto or thereto, (2) the initial and continuing perfection or protection of Lender’s interest in
any of the Collateral, (3) the collection or enforcement of any of the Loan Documents, (4) the
periodic examination of the books, records and operations of Borrower and its Subsidiaries
(including with respect to the Collateral), and (5) Lender’s release of its interests in the
Collateral in accordance with the terms of the Loan Documents. Borrower shall pay any and all
recordation taxes or other fees due upon the filing of the financing statements or documents of
similar effect required to be filed under the Loan Documents, and shall provide Lender with a copy
of any receipt or other evidence reflecting such payments. All obligations provided for in this
Section 11(u) shall survive the termination of this Restated Note and the repayment of the
Obligations hereunder.




          (v) Negative Pledge. Borrower shall not, and shall not permit any of its Subsidiaries
to create, incur, permit, assume or suffer to exist, or agree or consent to cause or permit in the
future (upon the happening of a contingency or otherwise) any Lien upon the GSB Letter of Credit
Cash Collateral, the GSB Deposit Account, the Blocked Account, the NAA Payments or the ABE Fairmont
Distributions, or any income, revenue or profits from any such property or assets, whether now
owned or hereafter acquired, other than as set forth in this Restated Note or in the other Loan
Documents. Lender also understands that the State of Nebraska has certain rights under Section 22
of the NAA Agreement.




          (w) Closing Conditions. The effectiveness of this Restated Note is subject to the
satisfaction or waiver, on or before the date hereof, of the following conditions:




               (i) Note. Borrower shall have duly executed and delivered this Restated Note to
Lender.



               (ii) Other Documents. Borrower and ABE Fairmont shall have duly executed and
delivered the other Loan Documents together with such other certificates, documents and agreements
as Lender may reasonably request, and Borrower shall have delivered to Lender the Control
Agreement, the GSB Instruction Letter and the Nebraska Instruction Letter, in each case duly
executed by all parties thereto.



               (iii) Representations and Warranties; No Default. The representations and warranties
contained in Section 12 and in the other Loan Documents shall be true on and as of the date
hereof, both immediately before and immediately after giving effect to the consummation of the
transactions contemplated hereby and there shall exist on such day no Default or Event of Default,
both



10









 




immediately before and immediately after giving effect to the consummation of the transactions
contemplated hereby.




               (iv) Opinion. Lender shall have received from Faegre & Benson, counsel to Borrower
and ABE Fairmont, an opinion letter regarding the Loan Documents and the financing transaction
contemplated thereby, in form and substance satisfactory to Lender.



               (v) Compliance with Laws. The advance of the funds as contemplated by this Restated
Note on the terms and conditions herein provided (including the use of the proceeds thereof by
Borrower) and the issuance of the Warrant and the Prior Warrant shall not violate any applicable
law or governmental regulation and shall not subject Lender or the holder of the Warrant and the
Prior Warrant to any tax, penalty or liability under or pursuant to any applicable law or
governmental regulation.



               (vi) Consents. Lender shall be satisfied that any and all material government,
contractual and other third-party licenses, approvals and consents necessary to the funding of the
advance contemplated by this Restated Note, the issuance of the Warrant and the Prior Warrant and
the granting of the security interest to Lender pursuant to the Collateral Security Documents have
been obtained.



               (vii) Warrant. Borrower shall have issued the Warrant to Lender in form and substance
satisfactory to Lender.



               (viii) Other Fees and Expenses. Borrower shall have paid all fees required by
Section 11(u) then due and owing.



               (ix) Secretary’s Certificate with Attachments. Borrower shall have, and shall have
caused ABE Fairmont to have, delivered to Lender certificates of the Secretary or an Assistant
Secretary and one other officer of each of Borrower and ABE Fairmont (with incumbency), certifying
the names and true signatures of the officers of such Person authorized to sign the Loan Documents
(and the Warrant, with respect to Borrower) to which such Person is a party and the other documents
to be delivered hereunder to which such Person is a party, in form and substance satisfactory to
Lender, attaching (A) copies of the resolutions of the board of directors or the sole member, as
applicable, of each of Borrower and ABE Fairmont, authorizing its execution and delivery of, and
the performance of, its respective obligations under the Loan Documents to which such Person is a
party (and the Warrant, with respect to Borrower), (B) certified copies of the certificates of
formation and operating agreements of each of Borrower and ABE Fairmont; and (C) a good standing
certificate for each of Borrower and ABE Fairmont from the Secretary of State of the state of
formation of each such Person, each dated as of a recent date.



               (x) Officer’s Certificate. Borrower shall have delivered a certificate of an officer
of Borrower having primary responsibility for financial matters, in form and substance satisfactory
to Lender, certifying as to the amount of outstanding Indebtedness of each of Borrower and ABE
Fairmont on an unconsolidated basis as of the date hereof.



               (xi) Perfection of Security Interest. All actions necessary to perfect (and to
maintain perfection of) the Lien of Lender in the Collateral shall have been taken in accordance
with the terms and provisions of the Collateral Security Documents. The Lien of Lender in the
Collateral shall be valid and enforceable and the Collateral shall be subject to no other Liens.
Lender also understands that the State of Nebraska has certain rights under Section 22 of the NAA
Agreement.



11









 





               (xii) Material Adverse Effect. No Material Adverse Effect shall have occurred.



          (x) Independence of Covenants. All covenants and defaults contained in this Restated
Note and the other Loan Documents shall be given independent effect. If a particular action or
condition is not permitted by any covenant in this Restated Note, then the fact that such action or
condition would be permitted by an exception to (or would otherwise be within the limitations of)
another covenant in this Restated Note shall not avoid the occurrence or existence of a Default or
Event of Default if such action is taken or if such condition exists.




     12. Representations and Warranties. Borrower hereby represents and warrants to and
for the benefit of Lender as follows:



          (a) Organization and Good Standing. Each of Borrower and each of its Subsidiaries (1)
is duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization, and (2) has all requisite limited liability company power to own its
properties and to conduct its business as now conducted and as currently proposed to be conducted,
and (3) is duly qualified to conduct business as a foreign limited liability company and is
currently in good standing in each state and jurisdiction in which it conducts business,
except where failure to be duly qualified and in good standing could not reasonably be
expected to have a Material Adverse Effect.




          (b) Power and Authority. Borrower has all requisite limited liability company power
and authority under applicable law and under its Organizational Documents to execute, deliver and
perform its obligations under the Loan Documents.




          (c) Validity and Legal Effect. This Restated Note constitutes, and the other Loan
Documents to which Borrower is a party constitute (or will constitute when executed and delivered),
the legal, valid and binding obligations of Borrower enforceable against it in accordance with the
terms thereof, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws and except as limited by general principles of equity.




          (d) No Violation of Laws or Agreements. The execution, delivery and performance by
Borrower of the Loan Documents (1) will not violate or contravene any material provision of any
material law, rule, regulation, administrative order or judicial decree (federal, state or local),
(2) will not violate or contravene any provision of the Organizational Documents of Borrower or any
of its Subsidiaries, (3) will not result in any material breach or violation of (or constitute a
material default under) any material agreement or instrument by which Borrower or any of its
Subsidiaries or any of their respective assets or property may be bound, and (4) will not result in
or require the creation of any Lien (other than pursuant to the Loan Documents) upon or with
respect to any assets or properties of Borrower or any of its Subsidiaries, whether such assets or
properties are now owned or hereafter acquired.




          (e) Accuracy of Financial Information. All financial statements previously furnished
to Lender concerning the financial condition and operations of Borrower and it Subsidiaries: (1)
fairly present in all material respects the financial condition of the organization covered thereby
as of the dates and for the periods covered thereby, (2) disclose all material liabilities
(contingent and otherwise) of Borrower and its Subsidiaries, and (3) with respect to financial
statements prepared by or on behalf of Borrower and its Subsidiaries, have been prepared in
accordance with GAAP consistently applied.




          (f) No Liens. Other than the Lien of GSB in the GSB Deposit Account and the GSB
Letter of Credit Cash Collateral, Borrower owns the GSB Deposit Account, the GSB Letter of Credit
Cash Collateral and the rights to the NAA Payments and the ABE Fairmont Distributions free and
clear of




12









 




any Lien. Lender also understands that the State of Nebraska has certain rights under Section
22 of the NAA Agreement.




     13. Definitions. For purposes of this Restated Note, the following terms have the
following corresponding meanings:



          (a) “ABE Fairmont” means ABE Fairmont, LLC, a Delaware limited liability company and
wholly-owned Subsidiary of Borrower.




          (b) “Affiliate” of any Person means any other Person that directly or indirectly
controls, is controlled by or is under direct or indirect common control with such Person. A
Person shall be deemed to “control” another Person if such first Person directly or indirectly
possesses the power to direct (or to cause the direction of or to materially influence) the
management and policies of the second Person, whether through the ownership of voting securities,
by contract or otherwise. Without limiting the generality of the foregoing, each Person who owns
or controls 5% or more of any class or series of any equity interest of such Person will be deemed
to be an Affiliate of a Person. Notwithstanding the foregoing, in no event shall Lender or any of
its Affiliates be deemed to be an Affiliate of Borrower or any of its Subsidiaries.




          (c) “Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978, as codified
under Title 11 of the United States Code, and the Bankruptcy Rules promulgated thereunder, as
amended.




          (d) “Borrower” means Advanced BioEnergy, LLC, a Delaware limited liability company,
having its principal and chief executive office at the address specified in Section 25, and
any successor or authorized assignee of any thereof.




          (e) “Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks under the laws of the States of Minnesota or New York are authorized or required to be
closed.




          (f) “Capital Leases” means all leases that have been or should be recorded as
capitalized leases in accordance with GAAP.




          (g) “Change of Control” means shall mean the occurrence of an event, or series of
events, which shall lead, or has led to (a) any “person” or any syndicate or group deemed a
“person” within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), has become, directly or indirectly, the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed
to have “beneficial ownership” of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time), of 30% or more of the
voting power of the voting stock of Borrower on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options and other securities of Borrower
(whether or not such securities are then currently convertible or exercisable), provided
that with respect to ECM, a Change of Control under this clause (a) shall occur only if ECM has
become, directly or indirectly, the beneficial owner (as defined above) of more than 50% of the
voting power of the voting stock of Borrower on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options and other securities of Borrower
(whether or not such securities are then currently convertible or exercisable), by aggregating the
voting power of Borrower held by ECM as in effect on the date of the Forbearance Agreement plus all
voting power obtained by ECM subsequent to the date of the Forbearance Agreement, or (b) during any
period of 2 consecutive calendar years, individuals who at the beginning of such period constituted
the board of




13









 




directors (or similar governing body) of Borrower cease for any reason (other than death,
disability or expiration of term) to constitute a majority of the board of directors (or similar
governing body) of Borrower then in office unless such new directors (or similar) were elected by
the directors (or similar) of Borrower who constituted the board of directors (or similar governing
body) of Borrower at the beginning of such period, or (c) the failure of Borrower to own 100% of
the equity interests of each of its Subsidiaries on a fully-diluted basis.




          (h) “CoBank Loan Documents” means, collectively, (i) that Master Loan Agreement dated
as of November 20, 2006 between Farm Credit Services of America, FLCA (“Farm Credit”) and
ABE Fairmont as amended by an Amendment dated on or about October 5, 2007 and an amendment dated as
of December 24, 2008 (the “11/20/06 MLA”), as further amended and supplemented by that (1)
Construction and Term Loan Supplement to the MLA dated as of November 20, 2006 between Farm Credit
and ABE Fairmont with respect to a construction and term loan in an amount not to exceed
$6,500,000, as amended by the Amendment to such Supplement dated on or about October 5, 2007
between Farm Credit and ABE Fairmont, (2) Construction and Revolving Term Loan Supplement to the
11/20/06 MLA dated as of November 20, 2006 and effective as of June 1, 2007 between Farm Credit and
ABE Fairmont with respect to a construction and revolving term loan commitment in an amount not to
exceed $4,000,000, as amended by the Amendment to such Supplement entered into on or about October
5, 2007 between Farm Credit and ABE Fairmont, (3) Disbursing Agreement dated as of November 1, 2006
among ABE Fairmont, Farm Credit, CoBank, ACB (“CoBank”) and Homestead Escrow and Exchange
Co., (4) Administrative Agency Agreement dated as of November 20, 2006 among Farm Credit, CoBank
and ABE Fairmont, and (5) Statused Revolving Credit Supplement dated as of December 24, 2008 which
amended and restated the Statused Revolving Credit Supplement dated on or about October 5, 2007
between ABE Fairmont and Farm Credit; and (ii) that Master Loan Agreement dated as of February 17,
2006 between Farm Credit and Borrower (the “2/17/06 MLA”), as amended and supplemented by
that (1) Construction and Term Loan Supplement dated as of December 24, 2008 between Farm Credit
and ABE Fairmont, with respect to a construction and term loan in an amount not to exceed
$58,250,000, which amended and restated the Construction and Term Loan Supplement dated as of
February 17, 2006 between Farm Credit and ABE Fairmont, (2) Construction and Revolving Loan
Supplement dated as of December 24, 2008 between Farm Credit and ABE Fairmont, with respect to a
construction and revolving term loan in an amount not to exceed at any one time outstanding
$25,000,000 less the amounts scheduled to be repaid therein, which amended and restated the
Construction and Revolving Term Loan Supplement dated as of February 17, 2006 between Farm Credit
and ABE Fairmont, (3) Statused Revolving Credit Supplement dated as of February 17, 2006 between
Farm Credit and ABE Fairmont with respect to a revolving credit facility in an available amount not
to exceed at any one time outstanding $5,000,000 as amended by the Amendment dated on or about
October 5, 2007 and as further amended by the Revolving Credit Supplement — Letters of Credit dated
as of October 24, 2008 (4) Administrative Agency Agreement dated as of February 17, 2006 among Farm
Credit, CoBank and Borrower, ABE Fairmont, (5) Amendment to Master Loan Agreement dated as of April
11, 2006 between Farm Credit and Borrower, (6) that Security Agreement dated February 17, 2006
between Borrower and Farm Credit, and (7) that Deed of Trust and Assignment of Rents dated February
17, 2006 by Borrower in favor of Farm Credit, all of Borrower’s obligations and liabilities under
the 2/17/06 MLA, as amended, having been assumed by ABE Fairmont pursuant to Section 25 of the
11/20/06 MLA and Borrower having been discharged from its obligations under the 2/17/06 MLA, as
amended, pursuant to that letter agreement dated November 10, 2006 between Farm Credit and
Borrower, as the 2/17/06 MLA has
been further amended by that (x) Amendments to the Construction
and Term Loan Supplement dated as of November 20, 2006 and on or about October 5, 2007 between Farm
Credit and ABE Fairmont and (y) Amendments to the Construction and Revolving Term Loan Supplement
dated as of November 20, 2006 and on or about October 5, 2007 between Farm Credit and ABE Fairmont,
together with all amendments, supplements, agreements, documents, exhibits, schedules and
certificates contemplated thereby or entered into in connection with any of the foregoing.




14









 








          (i) “Collateral” means the collateral security committed to Lender under the
Collateral Security Documents executed by Borrower in favor of Lender pursuant to this Restated
Note from time to time and/or pursuant to all similar or related documents and agreements from time
to time, all as amended, modified, supplemented or restated and in effect from time to time.




          (j) “Collateral Security Documents” means, individually and collectively, (1) the
Membership Interest Pledge Agreement, all financing statements filed pursuant thereto, and all
other instruments (including membership interest certificates) and other executed and/or delivered
pursuant thereto and (2) any additional documents granting security to Lender pursuant to this
Restated Note or required or delivered in connection with any other Loan Document, all as amended
modified, supplemented or restated and in effect from time to time.




          (k) “Default” means any event or circumstance that with the giving of notice or the
passage of time (or both) would constitute an Event of Default.




          (l) “Dollar” or “$” means U.S. dollars.




          (m) “ECM” means, collectively, Tennessee Ethanol Partners, L.P., Ethanol Capital
Management, LLC and Ethanol Investment Partners, LLC and their respective Affiliates.




          (n) “Environmental Control Statutes” means all federal, state and local laws,
statutes, rules, ordinances, regulations (as implemented and as interpreted), judgments, decrees,
orders, licenses, permits and rules governing the control, removal, storage, transportation, spill,
release or discharge of hazardous or toxic wastes, substances and petroleum products or otherwise
pertaining to the protection of human health, safety or the environment or natural resources.




          (o) “Equity Interests” means shares of capital stock, partnership interests,
membership interests or units in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or other rights entitling
the holder thereof to purchase or acquire any such equity interest.




          (p) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.




          (q) “Event of Default” means the occurrence of any one or more of the following
events: (1) if any payment of principal, interest, fees, expenses, indemnities or other sums
payable to Lender under any Loan Document is not received by Lender in immediately available funds
on the date such payment is due and payable and, except with respect to principal payments,
such failure to receive such payment in immediately available funds continues for 3 Business Days
after the due date therefor; (2) if any representation, warranty or other statement made in any
Loan Document or in any financial statement or written report provided to Lender by or on behalf of
Borrower or ABE Fairmont (or otherwise furnished in connection herewith) when made was misleading
or incorrect in any material respect; (3) if Borrower or ABE Fairmont defaults in the full and
timely performance when due of any other covenant or agreement contained in any Loan Document, and
such default remains uncured for 15 Business Days after the earlier of the date that Lender
notifies Borrower thereof or the date that Borrower or ABE Fairmont otherwise acquires knowledge or
should have acquired knowledge thereof; (4) if Borrower or ABE Fairmont fails or refuses to make
any required payment (whether as principal, interest or otherwise) with respect to any indebtedness
for borrowed money in excess of $1,000,000 (or with respect to any guaranty or reimbursement
obligation of any such indebtedness) prior to the expiration of any applicable grace period with
respect to such payment, or if any such indebtedness for borrowed money is accelerated prior to its
express maturity as a result of any default thereunder; (5) if Borrower or




15









 




any of its Subsidiaries (i) becomes insolvent, bankrupt or generally fails to pay its debts as
such debts become due; or (ii) is adjudicated insolvent or bankrupt in any Insolvency Proceeding;
or (iii) admits in writing an inability to pay its debts; or (iv) comes under the authority
of a custodian, receiver or trustee (or one is appointed for substantially all of its property); or
(v) makes an assignment for the benefit of creditors; or (vi) has commenced against it any
proceeding (including any Insolvency Proceeding) under any law related to bankruptcy, insolvency,
liquidation, dissolution or the reorganization, readjustment or release of debtors that is either
not contested or if contested is not dismissed or stayed within 60 calendar days after the
commencement thereof; or (vii) commences or institutes any proceeding (including any Insolvency
Proceeding) under any law related to bankruptcy, insolvency, liquidation, dissolution or the
reorganization, readjustment or release of debtors; or (viii) calls a meeting of creditors with a
view to arranging a composition or adjustment of debt; or (ix) by any act or failure to act that
indicates consent to, approval of or acquiescence in any of the foregoing; (6) if (i) any judgment,
writ, warrant, attachment or execution or similar process that calls for payment or presents
liability in excess of $250,000 is rendered, issued or levied against Borrower or ABE Fairmont or
any of their respective properties or assets or (ii) any final, non-appealable arbitration award
that calls for payment or presents liability in excess of $250,000 is rendered, issued or levied
against Borrower or ABE Fairmont or any of their respective properties or assets, and in either
case such liability is not paid, waived, stayed, vacated, discharged, settled, satisfied or fully
bonded within 60 calendar days after it is rendered, issued or levied; (7) (i) if the security
interest or lien in any of the Collateral with a fair market value exceeding collectively $250,000
at any time does not constitute a legal, valid and enforceable security interest or lien in favor
of Lender or shall cease to have the priority contemplated by the Collateral Security Documents
otherwise than in accordance with the terms thereof or with the express prior written agreement,
consent or approval of Lender, or (ii) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of Lender, or any action at law, suit or in
equity or other legal proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of Borrower or any of its Subsidiaries or any of their respective equity
holders, or any Governmental Authority shall make a determination that, or issue a judgment, order,
decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; (8) Borrower or any of its Subsidiaries fails
to observe or perform any agreement or condition under the CoBank Loan Documents beyond the
expiration of any applicable grace period, or any default or other event occurs (unless such
default or event is waived in writing in accordance with the terms thereof), the effect of which
default or other event is to cause, or to permit the holder or holders of the Indebtedness under
the CoBank Loan Documents to cause, with the giving of notice if required, such Indebtedness to be
demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity; (9) Borrower or any of its Subsidiaries fails to observe or perform
any agreement or condition under the Wells Fargo Documents beyond the expiration of any applicable
grace period, or any other default or other event occurs (unless such default or event is waived in
writing in accordance with the terms thereof), the effect of which default or other event is to
cause, or to permit the holder or holders of the Indebtedness under the Wells Fargo Documents to
cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or
to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity;
(10) so long as the Warrant is held by Lender or any of its Affiliates, (i) any representation,
warranty or other statement made in the Warrant when made shall be misleading or incorrect in any
material respect; or (ii) Borrower defaults in the full and timely performance when due of any
covenant or agreement contained in the Warrant, and such default remains uncured for 15 Business
Days after the earlier of the date that Lender notifies Borrower thereof or the date that Borrower
otherwise acquires knowledge or should have acquired knowledge thereof; and/or (11) if a Material
Adverse Effect has occurred.




16









 





          (r) “GAAP” means generally accepted accounting principles from time to time in effect,
including the statements and interpretations of the United States Financial Accounting Standards
Board, applied on a consistent basis.




          (s) “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
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.




          (t) “Hazardous Materials” includes (a) any “hazardous waste” as defined by the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), as
amended from time to time, and regulations promulgated thereunder; or (b) any “hazardous
substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.C. § 9601 et seq.), as amended from time to time, and regulations
promulgated thereunder; or (c) any pollutant or contaminant as defined by 42 U.S.C.
§9601(33); or (d) any toxic substance, oil or hazardous material or other chemical or
substance (including, without limitation, asbestos in any form, urea formaldehyde or
polychlorinated biphenyls) the use or presence of which is similarly regulated or prohibited by any
Environmental Control Statute.




          (u) “Heartland Entities” means, collectively, ABE Heartland, LLC, a Delaware limited
liability company, Dakota Fuels, Inc., a Delaware corporation and Heartland Grain Fuels, L.P., a
Delaware limited partnership.




          (v) “Indebtedness” of any Person means, without duplication, (1) all indebtedness of
such Person for borrowed money, and (2) all obligations of such Person for the deferred
purchase price of property or services (other than trade indebtedness, if and to the extent such
indebtedness is incurred in the ordinary course of business for value received which would be shown
as a liability on a balance sheet or are required to be set forth in the footnotes to a year-end
balance sheet, each prepared in accordance with GAAP, and (3) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, and (4) all
obligations of such Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are limited to repossession or
sale of such property), and (5) all obligations of such Person as lessee under Capital
Leases to the extent classified as a liability on a balance sheet in accordance with GAAP,
and (6) all obligations, contingent or otherwise, of such Person under acceptance, letter
of credit or similar facilities, and (7) all obligations of such Person in respect of any
interest rate or currency swap, cap or other agreement or arrangement designed to provide
protection against fluctuations in interest or currency exchange rates, and (8) all
Indebtedness of others referred to in clauses (1) through (7) above or clause (9) below guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly
by such Person to assure a creditor against loss, and (9) all Indebtedness referred to in
clauses (1) through (8) above of another Person secured by (or for which the holder of such debt
has an existing right, contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts, contract rights or inventory) owned by such Person, even though such
Person has not assumed or become liable for the payment of such debt; provided that
Indebtedness of any Subsidiary of Borrower other than ABE Fairmont shall not be deemed to be
Indebtedness of Borrower solely as a result of a non-recourse pledge by Borrower of its Equity
Interest in such Subsidiary and/or its intercompany receivables from such Subsidiary in order to
secure such Indebtedness, and (10) the principal balance outstanding under any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing
product to which such Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP,
and (11)




17









 




all payment obligations of such Person to former owners of businesses which were acquired by
such Person which are in the nature of deferred purchase price or earn-out. For the purposes of
the Agreement, the term “Indebtedness” shall exclude any effects of the application of FASB 150.




          (w) “Insolvency Proceeding” means (1) any case, action or proceeding before any court
or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (2) any general assignment
for the benefit of creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of its creditors, in
each of case (1) and (2) undertaken under federal, state or foreign law, including the Bankruptcy
Code.




          (x) “Lien” means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), reversionary or reclamation
interest, charge against or interest in property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of any kind or nature whatsoever.




          (y) “Loan Documents” means this Restated Note, the Control Agreement, the GSB
Instruction Letter, the Nebraska Instruction Letter, the Collateral Security Documents and all
other documents, agreements and certificates (inclusive of all schedules and exhibits thereto) from
time to time entered into or delivered in connection herewith or therewith or pursuant hereto or
thereto, all as may be amended, modified and supplemented from time to time.




          (z) “Material Adverse Effect” means, relative to any occurrence of whatever nature, a
change that has, causes or could reasonably be expect to have or cause a material adverse change to
or a materially adverse effect on: (1) the business, assets, revenues, financial condition,
operations or prospects of Borrower, or of Borrower and its Subsidiaries, taken as a whole, (2) the
ability of Borrower or any of its Subsidiaries to perform any of its payment obligations when due
or to perform any other material obligations under any Loan Document or (3) any right, remedy,
benefit or collateral in favor of Lender under any Loan Document.




          (aa) “Maturity Date” has the meaning set forth in Section 2.




          (bb) “Net Cash Proceeds” means the cash proceeds or, with respect to non-cash
transactions, the cash equivalent of the fair market value of any equity or debt issuance, asset
disposition or asset condemned or subject to insurance proceeds in each case net of (as applicable)
(1) reasonable commissions and expenses actually paid to unrelated third parties in connection with
such transaction, (2) taxes actually due from Borrower as a direct result of such transaction and
(3) in the case of asset dispositions, commercially reasonable reserves established in respect of
post-closing purchase price adjustments and indemnification and other contingent liabilities
arising in connection with such asset dispositions.




          (cc) “Note” means this Secured Term Loan Note as amended, modified, renewed, extended
and/or restated from time to time in accordance with the terms hereof.




          (dd) “Obligations” means all loans, advances, debts, liabilities and obligations
(including reimbursement obligations), for monetary amounts owing by Borrower to Lender, whether
due or to become due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, of any kind or nature, present or future, arising under or in respect of this
Restated Note or any of the other Loan Documents. This term includes all principal, interest
(including all interest that accrues after the commencement against Borrower of any Insolvency
Proceeding under the Bankruptcy Code), reasonable fees, including any and all arrangement fees,
delivery fees, loan fees, commitment fees, agent fees and




18









 




any and all other reasonable fees, expenses, costs or other sums (including reasonable
attorneys fees) chargeable to Borrower under any of the Loan Documents.




          (ee) “Organizational Documents” means, relative to any entity, its certificate or
articles of incorporation or organization or formation, its by-laws or operating agreements, and
all equityholder agreements, voting agreements and similar arrangements applicable to any of its
authorized shares of capital stock, its partnership interests or its member interests, and any
other arrangements relating to the control or management of any such entity.




          (ff) “Paid in Full” and “Payment in Full” mean, with respect to the
Obligations, all amounts owing with respect thereto (including any interest accruing thereon after
the commencement of any Insolvency Proceeding against Borrower, whether or not allowed as a claim
against Borrower in such Insolvency Proceeding, but excluding as yet unasserted contingent
obligations), have been fully, finally and completely paid in cash.




          (gg) “Person” means any natural person, corporation, limited liability company,
partnership, firm, association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.




          (hh) “Prior Warrant” means the Warrant to Purchase Units of Borrower, dated October
17, 2007 and numbered No. 1 issued by Borrower to Lender.




          (ii) “Subsidiary” of any Person or entity means any Person as to which such other
Person or entity (1) directly or indirectly owns, controls or holds 50% or more of the outstanding
beneficial interest or (2) is otherwise required in accordance with GAAP to be considered as part
of a consolidated organization. Notwithstanding the foregoing, the Heartland Entities shall not be
“Subsidiaries” for purposes of this Restated Note or any of the other Loan Documents.




          (jj) “Tax Distributions” means any dividend or distribution paid in accordance with
Section 11(k) to any holder of membership interests of Borrower to the extent that such
funds are distributed to provide cash or other assets to such holder in order to pay such holder’s
federal, state and local income tax liabilities for such year (determined based upon a combined
marginal rate of 40%) that is directly attributable to such holder as a direct result of the amount
of income and gain (net of allowable deductions, losses and credits) of Borrower.




          (kk) “Warrant” means the Warrant to Purchase Units of Borrower, dated as of the date
hereof and numbered No. 2 issued by Borrower to Lender.




          (ll) “Wells Fargo Loan Documents” means, collectively, (i) that Loan and Trust
Agreement dated as of April 1, 2006 (the “4/1/06 Loan Agreement”) among Borrower, County of
Fillmore, State of Nebraska, as issuer (“Issuer”), and Wells Fargo Bank, N.A., as trustee
(“Trustee”), as Borrowers obligations and liabilities under the 4/1/06 Loan Agreement have
been assigned to and assumed by ABE Fairmont pursuant to that Assignment and Assumption Agreement
dated as of November 14, 2006 among Borrower, ABE Fairmont, Issuer and Trustee, (ii) that
Promissory Note dated April 27, 2007 among Borrower, issuer and Trustee, (iii) that Subordinate
Deed of Trust and Construction Security Agreement by Borrower in favor of Trustee, (iv) that Tax
Regulatory Agreement dated as of April 27, 2006 from Borrower and Issuer to Trustee and (v) that
Continuing Disclosure Agreement as of dated April 1, 2006 between Borrower and Trustee, together
with all amendments, supplements, agreements, documents, exhibits, schedules and certificates
contemplated thereby or entered into in connection with any of the foregoing.




19









 





     14. Selected Rights and Remedies Upon Event of Default. Upon the occurrence and
during the continuation of any Event of Default, with notice thereof to Borrower (unless an
Event of Default described in clause (5) of the definition of “Event of Default” has occurred, in
which case acceleration will occur automatically with respect to the entire indebtedness and
without any notice), Lender may declare all or any portion of the indebtedness under any Loan
Document to be immediately due and payable. Upon the occurrence and during the continuation of any
Event of Default, Lender shall have the immediate right to enforce and realize upon any collateral
security (including all or any portion of the Collateral) for the Obligations hereunder in any
manner or order that Lender deems expedient without regard to any equitable principles of
marshalling or otherwise. Lender shall have and be entitled to all of the rights, remedies,
benefits and powers of enforcement with respect hereto that are available to a holder of a
negotiable instrument under Article 3 of the Uniform Commercial Code, and any subsequent transferee
of Lender shall have and be entitled to all of the rights, remedies, benefits and powers of
enforcement with respect hereto that are available to a holder in due course of a negotiable
instrument under Article 3 of the Uniform Commercial Code (provided that such transferee
acquired this Restated Note in good faith, for value and without actual notice of a claim or
defense hereunder by Borrower). In addition to any rights granted hereunder or in any other Loan
Document, Lender shall also have all other rights and remedies permissible under any applicable law
(including creditor rights and the rights of a secured party under the Uniform Commercial Code),
and all such rights and remedies shall be cumulative in nature.



     15. Indemnification, Reliance and Assumption of Risk. Without limiting any other
indemnification in any Loan Document, Borrower hereby agrees to defend Lender (and its directors,
officers, employees, agents, representatives, counsels and Affiliates) (each an
“Indemnitee”) from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, interests, judgments, or costs (including reasonable fees and
disbursements of counsel) incurred by any of them arising out of or in any way connected with any
Loan Document, except for losses resulting directly from such Person’s own gross negligence or
willful misconduct. Expenses (including, without limitation, reasonable attorneys’ fees and
expenses) incurred by an Indemnitee shall be paid in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking from such Indemnitee to repay such amount
if it shall ultimately be determined that such Indemnitee is not entitled to indemnification.
Borrower’s obligations provided for in this Section 15 will survive any termination of this
Agreement, and the repayment of the outstanding balances hereunder. Without limiting the
generality of the foregoing, Borrower hereby agrees to indemnify, defend and hold harmless each
Indemnitee from and against, any and all losses, liabilities, claims, damages (including, without
limitation, natural resource damages), interests, judgments, fines, penalties, liens or costs
(including reasonable fees and disbursements of counsel and consultants) resulting from or relating
to any of the following: (1) the storage, holding, existence, migration, release (as defined by
CERCLA), threat of release, disposal, treatment, generation, processing, abatement, handling or
transportation of any Hazardous Materials (collectively “Environmental Activity”) at, on,
under, from or in the vicinity of any property presently or formerly owned, leased or operated by
Borrower; and (2) any violation or alleged violation of Environmental Control Statutes by
Borrower at any property presently or formerly owned, leased or operated by Borrower; and
(3) any investigation, inquiry, notice, order (including consent orders, agreements and decrees),
hearing, action, proceeding, demand, directive, fine, penalty, lien or claim instituted, asserted
or threatened by any Person in connection with any Environmental Activity or Environmental Control
Statute relating to Borrower or any portion of any property presently or formerly owned, leased or
operated by Borrower; and (4) any off-site transportation, treatment, storage or disposal
or Hazardous Materials generated at or transported from any property presently or formerly owned,
leased or operated by Borrower.



     16. Selected Waivers and Consents by Borrower. Borrower hereby waives diligence,
presentment, protest, demand for payment, notice of protest and non-payment, notice of dishonor,
and any



20









 







and all other notices or demands in connection with the delivery, acceptance, payment,
performance, default, acceleration or enforcement of this Restated Note. Borrower, in addition,
hereby consents (without the necessity of prior notice) to any extensions of time, renewals,
releases of any party hereto or guarantor hereof, waivers and/or modifications in connection
herewith that may be granted or consented to by Lender from time to time. Borrower also waives any
defenses (other than the defense of full unconditional payment) and rights of discharge to its
obligations hereunder that it may have or may hereafter acquire based upon suretyship or impairment
of collateral (including lack of attachment or perfection with respect thereto).



     17. Waivers by Lender and Severability. To be effective, any waiver by Lender must be
expressed in a writing executed by Lender. If Lender waives any term, right or remedy arising
hereunder or under any applicable law, then such waiver will not be deemed to be a waiver (1) upon
any later occurrence or recurrence of any events giving rise to the earlier waiver or (2) as to any
other Person. No failure or delay by Lender to insist upon the strict performance of any Loan
Document, or to exercise any right or remedy, will constitute a waiver of compliance with any term,
condition, covenant or agreement, or preclude Lender from exercising any right, power, or remedy at
any later time or times. By accepting payment after the due date of any amount payable under any
Loan Document, Lender will not be deemed to waive the right either to require prompt payment when
due of all other amounts payable under any Loan Document or to declare an Event of Default for
failure to effect such prompt payment of any such other amount. If fulfillment of any provision
hereof at the time performance is due involves transcending the limit of validity prescribed by
applicable law, then (ipso facto) the obligation to be fulfilled shall be reduced to the limit of
such validity. If any clause or provision hereof operates or would prospectively operate to
invalidate this Restated Note in whole or in part, then such clause or provision only shall be void
(as though not contained herein), and the remainder of this Restated Note shall remain operative
and in full force and effect; provided, however, if any such clause or provision
pertains to the repayment of any indebtedness hereunder, then the occurrence of any such invalidity
shall constitute an immediate Event of Default hereunder.



     18. Reinstatement. To the maximum extent not prohibited by applicable law, this
Restated Note (and the Obligations hereunder and Collateral therefor) will be automatically
reinstated and the indebtedness correspondingly increased (as though such payments had not been
made) if at any time any amount received by Lender in respect hereof is rescinded or must otherwise
be restored, refunded or returned by Lender to Borrower or other Person for any reason, including
(a) as a result of the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Person, or (b) as a result of the appointment of any receiver, intervenor, conservator, trustee or
similar official for any Person or for any part of the assets of any Person.



     19. Assignability. Borrower shall not assign or delegate any of its obligations,
duties, rights or benefits hereunder or under any other Loan Document without the prior written
consent of Lender. Lender (and its successors or assigns), at any time and from time to time, may
assign, transfer, participate, syndicate, delegate and/or pledge all or any part of its
obligations, duties, rights and benefits under this Restated Note and the other Loan Documents
without the consent of Borrower.



     20. Conflicts Among Loan Documents. In the event of any irreconcilable conflict
between the terms and conditions of this Restated Note and the terms and conditions of any other
Loan Document, then the terms and conditions of this Restated Note shall govern.



     21. Relationship with Prior Agreements. This Restated Note, together with the other
Loan Documents and the Warrant, completely and fully supersedes all oral agreements and all other
and prior written agreements by and among Borrower and Lender concerning the terms and conditions
of this credit arrangement.



21









 





     22. Severability. If fulfillment of any provision of or any transaction related to
any Loan Document at the time performance is due involves transcending the limit of validity
prescribed by applicable law, then ipso facto, the obligation to be fulfilled shall be reduced to
the limit of such validity.  If any clause or provision of this Agreement operates or would
prospectively operate to invalidate this Agreement or any other Loan Document in whole or in part,
then such clause or provision only shall be void (as though not contained herein or therein), and
the remainder of this Agreement or such other Loan Document shall remain operative and in full
force and effect; provided, however, if any such clause or provision pertains to
the repayment of any indebtedness hereunder, then the occurrence of any such invalidity shall
constitute an immediate Event of Default hereunder.



     23. No Fiduciary Relationship. No provision in the Loan Documents and no course of
dealing between the parties shall be deemed to create any fiduciary duty owing to Borrower or any
of its Affiliates by Lender and Lender shall not be deemed to be a partner, joint venturer or
co-venturer with Borrower by reason of this Agreement or the transaction contemplated hereunder.



     24. Secured Note. The full amount of this Restated Note is secured by the Collateral
identified and described as security therefor in the Collateral Security Documents and the other
Loan Documents.



     25. Notices. Any notice or other communication required or permitted in connection
with the Loan Documents will be deemed satisfactorily given if it is in writing and is delivered
either personally to the addressee thereof, or by prepaid registered or certified U.S. mail (return
receipt requested), or by a nationally recognized commercial courier service with next-day delivery
charges prepaid, or by facsimile (voice confirmed), or by any other reasonable means of personal
delivery to the party entitled thereto at its respective address set forth below:



	 	 	 	 	 
	 

	 	 	 	 
	If to Borrower:

	 	Advanced BioEnergy, LLC	 	 
	 

	 	10201 Wayzata Blvd., Suite 250	 	 
	 

	 	Minneapolis, MN 55305	 	 
	 

	 	Attn: Richard Peterson	 	 
	 

	 	Facsimile No.:  (763) 226-2728	 	 
	 
	 	 	 	 
	If to Lender:

	 	PJC Capital LLC	 	 
	 

	 	c/o Piper, Jaffray & Co.	 	 
	 

	 	800 Nicollet Mall	 	 
	 

	 	Minneapolis, MN 55402-7020	 	 
	 

	 	Attention:       Robert P. Rinek	 	 
	 

	 	Facsimile:       (612) 303-1068	 	 





Any party to a Loan Document may change its address or other contact information for notice
purposes by giving notice thereof to the other parties to such Loan Document in accordance with
this Section 25, provided that such change shall not be effective until 2 calendar days
after notice of such change. All such notices and other communications will be deemed given and
effective (a) if by mail, then upon actual receipt or 5 calendar days after mailing as
provided above (whichever is earlier), or (b) if by facsimile, then upon successful
transmittal to such party’s designated number, or (c) if by nationally recognized
commercial courier service, then upon actual receipt or 2 Business Days after delivery to
the courier service (whichever is earlier), or (d) if otherwise delivered, then
upon actual receipt.




     26. Jurisdictional and Related Consents. Any litigation in any way related to this
Restated Note, or any course of conduct, course of dealing, statements (whether verbal or written),
actions or inactions of Lender or Borrower may be brought and maintained, on a non-exclusive



22









 







basis, in the courts of the State of New York or in the United States District Court for the
Southern District of New York; provided, however, that any suit seeking enforcement
hereof against Borrower or any property may also be brought (at Lender’s option) in the courts of
any other jurisdiction where such property may be found or where Borrower may be subject to
personal jurisdiction. Borrower hereby expressly and irrevocably submits to the jurisdiction of
the courts of the State of New York and of the United States District Court for the Southern
District of New York for the purpose of any such litigation as set forth above and irrevocably
agrees to be bound by any final and non-appealable judgment rendered thereby in connection with
such litigation. Borrower further irrevocably consents to the service of process by registered or
certified mail, postage prepaid, or by personal service within or outside the State of New York.
Borrower hereby expressly and irrevocably waives (to the fullest extent permitted by law) any
objection that it at any time may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been brought in an
inconvenient forum.



     27. Jury Trial Waiver. Lender and Borrower each hereby knowingly, voluntarily and
intentionally waives any rights it may have to a trial by jury in respect of any litigation
(whether as claim, counter-claim, affirmative defense or otherwise) in any way related to this
Restated Note or any of the Loan Documents or any course of conduct, course of dealing, statements
(whether verbal or written), actions or inactions of Lender or Borrower.



     28. Governing Law and Binding Effect. This Restated Note and the other Loan Documents
are binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns. This Restated Note and the other Loan Documents are governed as to their validity,
interpretation, construction and effect by the laws of the State of New York (without giving effect
to the conflicts of law rules of such state).



[Balance of Page Intentionally Blank...Signatures on Next Page]





23









 







IN WITNESS WHEREOF, Borrower has executed this Amended and Restated Secured Term Loan Note on the
day and year first written above.




	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	ADVANCED BIOENERGY, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 
	 

	 	 	 	 
	ACCEPTED:	 	 
	 
	 	 	 	 
	PJC CAPITAL LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Robert P. Rinek	 	 
	 

	 	Co-President and Co-Chief Operating
Officer	 	 






 









 






Exhibit A




GSB Instruction Letter




2









 





Exhibit B




Nebraska Instruction Letter




3









 





Exhibit C




ABE Fairmont Instruction Letter




4










 





ANNEX C




FORM OF NEW WARRANT




 









 




THIS WARRANT HAS BEEN, AND THE UNITS WHICH MAY BE RECEIVED PURSUANT TO THE EXERCISE OF THIS WARRANT
WILL BE, ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR SUCH UNITS HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE SECURITIES LAWS.




			
	 	 	 
	No. 2 
	 	[                    ], 2009






WARRANT TO PURCHASE UNITS OF ADVANCED BIOENERGY, LLC




     This Warrant to Purchase Units (this “Warrant”) certifies that, for good and valuable
consideration, PJC CAPITAL LLC, a Delaware limited liability company (along with its permitted
assignees, the “Holder”) is entitled to purchase from ADVANCED BIOENERGY, LLC, a Delaware limited
liability company (the “Company”), [                    ] [number of Units to be determined based upon number
of Units issued in Equity Issuance] fully paid and nonassessable Units (as defined in the Company’s
Third Amended and Restated Operating Agreement dated February 1,
2006 (the “LLC Agreement”)) (the
“Units”) of the Company, as adjusted pursuant
to Section 3 hereof (the “Warrant Units”), at
an exercise price per Unit equal to $[                    ] [exercise price to be the same price as the price of
the Units issued in the Equity Issuance] (as adjusted pursuant to Section 3 hereof) (the
“Exercise Price”), subject to the provisions and upon the terms and conditions hereinafter set
forth. This Warrant is issued in connection with the Amended and Restated Secured Term Loan Note
made by the Company in favor of the initial Holder dated as of the date hereof (the “Note”).
Unless otherwise defined in this Warrant, capitalized terms defined in the Note are used in this
Warrant as defined in the Note.



     This Warrant replaces and is being delivered in exchange for the Warrant to Purchase Units of
Advanced BioEnergy, LLC, dated October 17, 2007 and numbered No. 1 issued by the Company to the
Holder (the “Prior Warrant”), and as of the date hereof the Prior Warrant shall be terminated and
have no further force and effect. The Holder shall surrender the Prior Warrant in exchange for
this Warrant.



Exercise; Payment.




     Exercise Period. This Warrant may be exercised in whole or part by the Holder during
the term (as set forth in Section 11) and in compliance with the provisions of this Warrant
at any time after the date of issuance set forth above (the
“Warrant Date”), by the surrender of
this Warrant (with the notice of exercise form attached hereto as Exhibit A (the “Notice of
Exercise”) duly executed) at the principal office of the Company. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Units, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Units, which new Warrant shall in all other respects be
identical with this Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.



 









 





     Cash Exercise. Upon exercise of this Warrant, the Holder shall pay the Company an
amount equal to the product of (x) the Exercise Price multiplied by (y) the total number of Warrant
Units purchased pursuant to the Exercise of this Warrant, by wire transfer or check payable to the
order of the Company. The Holder shall be deemed to have become the holder of record of, and shall
be treated for all purposes as the record holder of, the Warrant Units represented by such exercise
(and such Warrant Units shall be deemed to have been issued) immediately prior to the close of
business on the date upon which this Warrant is exercised.



     Net Exercise. The Exercise Price also may be paid at the Holder’s election by
surrender of all or a portion of the Warrant for Units to be exercised under this Warrant (“Net
Exercise”). If the Holder elects the Net Exercise method, the Company will issue Warrant Units in
accordance with the following formula:







          Where:



X =      the number of Warrant Units to be issued upon exercise of the Warrant



Y =      the number of Warrant Units requested to be exercised



A =      the fair market value of 1 Unit on the date of exercise of this Warrant



B =      the Exercise Price



For purposes of the above calculation, the fair market value of a Unit shall mean:




          if at any time the Units are not listed on any securities exchange or traded in the
over-the-counter market, the fair market value of the Units shall be the highest price per Unit
which the Company could obtain from a willing buyer (other than an employee, director or
“Affiliate” of the Company, as such term is defined in Rule 405 under the Securities Act of 1933,
as amended (the “Securities Act”) for Units sold by the Company, as determined in good faith by its
Directors (as defined in the LLC Agreement);




          if the exercise is in connection with the conversion of the Units to common stock of the
Company (“Common Stock”) in order to facilitate a public offering of such Common Stock, and if the
Company’s Registration Statement relating to such initial public offering has been declared
effective by the SEC, then the fair market value per Unit shall be the initial “Price to Public” of
the Common Stock specified in the final prospectus with respect to the offering, giving effect to
the conversion mechanism with respect to such conversion of the Units to Common Stock;




          if the exercise is not in connection with a public offering, and:




               if the Units (or the Common Stock, if the Units have been converted to Common Stock) are
traded on a securities exchange, the fair market value shall be deemed to be the average of the
closing prices over a 5 day period ending 3 days before the day the fair market value of the Units
or the Common Stock, as applicable, is being determined; or



2









 





               if the Units (or the Common Stock, if the Units have been converted to Common Stock) are
traded over-the-counter, the fair market value shall be deemed to be the average of the closing bid
and asked prices quoted on the principal market on which or through which the Units or the Common
Stock, as applicable, are traded over the 5 day period ending 3 days before the day the fair market
value of the Units or the Common Stock, as applicable, is being determined;



          if property or securities in addition to or in substitution for Units shall be issuable upon
exercise of the Warrant, the fair market value of such property (to the extent such property does
not include a security which is listed on any securities exchange or traded in the over-the-counter
market, in which fair market value shall be calculated as provided in Section 1(c)(i) -
(iii) above) shall be determined in good faith by the Company’s Directors (as defined in the
LLC Agreement).




     Exercise Prior to Expiration. To the extent this Warrant has not been previously
exercised as to any Warrant Units issuable hereunder, and if the fair market value of one Warrant
Unit immediately before expiration of the Warrant is greater than the Exercise Price then in
effect, this Warrant shall be deemed automatically exercised pursuant to the Net Exercise
provisions in Section 1(c) (even if not surrendered) immediately before its expiration. In
such event, the fair market value of one Warrant Unit shall be determined pursuant to Section
1(c). To the extent this Warrant or any portion thereof is deemed automatically exercised
pursuant to this Section 1(d), the Company agrees to promptly notify the Holder of the
number of Units, if any, and any other property, which the Holder is entitled to receive by reason
of such automatic exercise.



     Unit Certificates. In the event of the exercise of this Warrant, certificates for the
Warrant Units so purchased shall be delivered to the Holder within a reasonable time after
exercise, to the extent that the Units are certificated.


Units Fully Paid; Reservation of Units. All of the Units issuable upon the exercise of this
Warrant, upon issuance and receipt by the Company of the Exercise Price therefor (or upon Net
Exercise thereof, as provided in Section 1(c)), shall be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes, liens and charges
with respect to the issuance thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company shall at all times have authorized and reserved for
issuance a sufficient number of Units to provide for the exercise of this Warrant.



Adjustment of Exercise Price and Number of Units. The number and kind of Warrant Units purchasable
upon the exercise of this Warrant and the Exercise Price payable therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:




     Unit Distributions, Subdivisions, Combinations. If the Company shall (i) make a
distribution in respect of the Units in additional Units (or securities convertible into,
exchangeable for or otherwise entitling the registered holder to receive Units), (ii) subdivide the
outstanding Units into a greater number of Units or (iii) combine the outstanding Units into a
smaller number of Units, the number of Units purchasable upon exercise of this Warrant immediately
prior to the record date applicable to such event shall be adjusted so that the Holder shall
thereafter be entitled to receive that kind and number of Units or other securities of the Company
that the Holder would have owned or have been entitled to receive after the happening of any of the
events described above, had the Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. The Exercise Price per Warrant Unit purchasable
upon exercise of any Warrant shall be subject to adjustment from time to time such that upon each
adjustment of the number of Warrant Units purchasable pursuant to this Section 3(a), the
Exercise Price shall be reduced or increased, as the case may be, to a price determined by dividing
the aggregate



3









 







Exercise Price of all Warrant Units in effect prior to such adjustment by the total maximum
number of Warrant Units purchasable upon the exercise of all Warrants immediately after such
adjustment.



     Reorganization or Reclassification. In case of any capital reorganization or
reclassification of the equity interests of the Company, or the conversion of the Company into a
corporation (whether pursuant to a merger, consolidation, statutory conversion or otherwise), each
Warrant shall thereafter be exercisable from the number of Units or other securities or property
receivable upon such capital reorganization, reclassification or conversion, as the case may be, by
a holder of the number of Units into which the Warrant was exercisable immediately prior to such
capital reorganization, reclassification or conversion; and, in any such case, appropriate
adjustment shall be made in the application of the provisions herein set forth with respect to the
rights and interests thereafter of the Holder of the Warrant to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other securities or property thereafter deliverable upon the exercise of the
Warrant.



     Issuance of Securities Under Certain Circumstances.



          If the Company shall issue or sell (or, in accordance with clause (ii) below, shall be deemed
to have issued or sold) any Units (other than Excluded Units, as defined below) without
consideration or for a consideration per unit that is less than the Exercise Price in effect
immediately prior to such issuance or sale, as adjusted for any unit splits, combinations, unit
dividends or similar transactions after the date hereof, then, effective immediately upon such
issuance or sale, (a) this Warrant shall immediately become exercisable for such additional Warrant
Units as are necessary to maintain the percentage ownership interest in the Company’s Units
(calculated on an as-converted, fully diluted basis assuming the issuance of all outstanding
options and warrants other than this Warrant) held by the Holder immediately prior to such issuance
and (b) the Exercise Price in effect immediately prior to such issuance or sale shall be reduced,
concurrently with such issuance or sale, to the consideration per Unit received by the Company for
such issuance, sale or deemed issuance of such additional Units; provided that if such
issuance, sale or deemed issuance was without consideration, then the Company shall be deemed to
have received an aggregate of $0.01 of consideration for all such additional Units issued, sold or
deemed to be issued. Adjustments shall be made successively whenever such an issuance or sale is
made.




          For the purpose of determining the adjusted Exercise Price under Section 3(c), the
following shall be applicable:




               If the Company in any manner issues or grants any Option Rights or Convertible Securities
(each as defined below) and the price per unit for which Units are issuable upon the exercise of
such Option Rights or upon conversion or exchange of such Convertible Securities is less than the
Exercise Price, then the total maximum number of Units issuable upon the exercise of such Option
Rights or upon conversion or exchange of the total maximum amount of such Convertible Securities
(or any Convertible Securities issuable upon the exercise of such Option Rights) shall be deemed to
be outstanding and to have been issued and sold by the Company for such lesser price per unit. For
purposes of this paragraph, the price per unit for which a Unit is issuable upon exercise of Option
Rights or upon conversion or exchange of Convertible Securities (or any Convertible Securities
issuable upon exercise of Option Rights) shall be determined by dividing (x) the total amount, if
any, received or receivable by the Company as consideration for the issuing or granting of such
Option Rights or Convertible Securities, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Option Rights or the exchange or
conversion of all such Convertible Securities (plus in the case of such Option Rights which relate
to Convertible Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance or sale of such Convertible Securities and the conversion
or exchange thereof) by (y) the total maximum number of Units issuable



4









 







upon exercise of such Option Rights or Convertible Securities (or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such Option Rights).



               If the purchase price provided for in any Option Rights, the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for Units decreases at any
time, then the number of Warrant Units issuable upon the exercise of this Warrant and the Exercise
Price (each as in effect at the time of such decrease) shall be readjusted to number of Warrant
Units and the Exercise Price which would have been in effect at such time had such Option Rights or
Convertible Securities still outstanding provided for such decreased purchase price, additional
consideration or changed conversion rate, as the case may be, at the time initially granted, issued
or sold.



               If any Units, Option Rights or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, then the consideration received therefor shall be deemed to be the
gross amount received by the Company therefor. If any Units, Option Rights or Convertible
Securities are issued or sold for consideration other than cash, then the amount of consideration
received by the Company shall be the fair value of such consideration determined in good faith by
the Directors of the Company.



          For purposes of this Section 3(c):




               “Convertible Securities” means any securities or other obligations issued or issuable by the
Company or any other Person that are exchangeable for, or convertible into, (i) any Units or (ii)
any securities exchangeable for, or convertible into, any Units.



               “Excluded Units” means, collectively, (i) Units or Option Rights issued in any of the
transactions described in Sections 3(a) or 3(b), (ii) Units issued or issuable to officers,
directors or employees of, or consultants to, the Company pursuant to equity incentive plans or
agreements on terms approved by the Directors of the Company (including Units issuable upon
exercise of the options outstanding on the date hereof) in an amount not to exceed [                    ] Units
in the aggregate during the term of this Warrant [a number of units equal to 5% of all Units on a
full diluted basis to be entered-to be completed upon ABE’s confirmation of the size of the option
pool on a pro forma basis, after giving effect to the issuance pursuant to the Reg. D offering],
(iii) Units issued after the date hereof upon the exercise of other Option Rights or the exchange
or conversion of Convertible Securities in each case outstanding on the date hereof and (iv) the
issuance of this Warrant or any Warrant Units pursuant to this Warrant.



               “Option Rights” means any warrants, options or other rights to subscribe for or purchase, or
obligations to issue, any Units, or any Convertible Securities, including, without limitation, any
options or similar rights issued or issuable under any employee equity incentive plan, pension plan
or other employee benefit plan of the Company.



     Notice of Certain Transactions. In the event that the Company shall propose at any
time to effect any action of the type described in Sections 3(a), (b) or (c), or any right
to subscribe for or purchase any evidences of its indebtedness, any units or capital stock of any
class or any other securities or property, or to receive any other right, or take any similar
extraordinary action affecting the Company’s Units or equity capital (including but not limited to
the transfer of substantially all of the Company’s assets), then, in connection with each such
event, the Company shall send notice thereof to all Holders no later than 10 days after the earlier
to occur of (i) the date on which such event became effective or (ii) the record date for such
event, in each case specifying in reasonable detail what the transaction or event consists of and,
if



5









 




applicable, the aggregate amount or value of any cash or property distributed, paid, purchased
or received by the Company in connection therewith.




Investment Representations of Holder; Transfer of Warrant and Warrant Units.




     Holder represents and warrants to the Company that: (i) it is an “Accredited Investor” as that
term is defined in Rule 501 of Regulation D promulgated under the Securities Act; and (ii) it has
the ability to bear the economic risks of such Holder’s prospective investment, including a
complete loss of Holder’s investment in the Warrants and the Warrant Units; and (iii) the Warrants
and the Warrant Units are purchased for the Holder’s own account, and not with view to distribution
of either the Warrants or any securities purchasable upon exercise thereof; provided however that
the Holder may transfer the Warrant and any Warrant Units to any Affiliate of the Holder.



     This Warrant and the Warrant Units may only be Transferred (as defined in the LLC Agreement)
in compliance with federal and state securities laws. At the time of the surrender of this Warrant
in connection with any Transfer of this Warrant or the Transfer of the Warrant Units (except to an
Affiliate), the Company may require, as a condition of allowing such Transfer (i) that the Holder
or transferee of this Warrant or the Warrant Units, as the case may be, furnish to the Company a
written opinion of counsel that is reasonably acceptable to the Company to the effect that such
Transfer may be made without registration under the Securities Act or qualification under any state
securities laws and/or (ii) that the Holder or transferee execute and deliver to the Company an
investment representation letter in form and substance acceptable to the Company and substantially
in the form of Exhibit B hereto and the transfer application used by the Company, a form of
which has previously been provided to the Holder. Transfer of this Warrant and all rights
hereunder, in whole or in part, in accordance with the foregoing provisions, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company or the office or agency designated by the Company, together with a
written assignment of this Warrant substantially in the form of Exhibit C hereto duly
executed by the Holder or its attorney-in-fact. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of assignment, and shall
issue to the Holder a new warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall be deemed cancelled.



     Subject to the requirements of Section 4(b) of this Warrant and Section 9.2 of the LLC
Agreement, the Holder shall be entitled to Transfer all or any portion of the Warrant Units to any
Person, whether or not such Person is an Affiliate of the Holder, provided that
notwithstanding the provisions of Section 9.2(b)(i) of the LLC Agreement, a Transfer to any Person
that would otherwise require the consent of the Directors in writing under such section, shall be
subject to the consent of a majority of the Directors (as defined in the LLC Agreement), such
consent not to be unreasonably withheld, delayed or conditioned.



Legend.




     Each certificate evidencing the Warrant Units issued upon exercise of this Warrant shall be
stamped or imprinted with a legend substantially in the following form:




THE TRANSFERABILITY OF THE MEMBERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, OR
TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE
THEREOF BE RECOGNIZED



6









 






AS HAVING ACQUIRED ANY SUCH UNITS FOR ANY PURPOSES, UNLESS AND TO
THE EXTENT SUCH SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT IS
PERMITTED BY, AND IS COMPLETED IN STRICT ACCORDANCE WITH, THE TERMS
AND CONDITIONS SET FORTH IN THE OPERATING AGREEMENT OF THE COMPANY.




THE UNITS REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED
FOR SALE, OR TRANSFERRED IN ABSENCE OF AN EFFECTIVE REGISTRATION OR
EXEMPTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER
APPLICABLE STATE SECURITIES LAW.



     Removal of Legend and Transfer Restrictions. Any legend endorsed on a certificate pursuant to
this Section 5 shall be removed, and the Company shall issue a certificate without such
legend to the holder of such Warrant Units if (i) such Warrant Units are resold pursuant to an
effective registration statement under the Securities Act, (ii) if such holder satisfies the
requirements of Rule 144(k) under the Securities Act or (iii) if such holder provides the Company
with an opinion of counsel for such holder of the Warrant Units, in form and substance reasonably
satisfactory to the Company, to the effect that a sale, transfer or assignment of such Warrant
Units may be made without registration and that upon such sale, transfer or assignment such Warrant
Units will not be deemed “restricted securities,” as such term is defined in Rule 144 under the
Securities Act.


Fractional Units. No fractional Warrant Units will be issued in connection with any exercise of
this Warrant, but in lieu of such fractional Units the Company shall make a cash payment therefor
upon the basis of the Exercise Price then in effect.



Rights as a Member. Except as set forth in Section 3, the Holder shall not be entitled to
vote, or receive dividends or distributions, or be deemed a holder of Units or a member of the
Company, nor shall anything contained herein be construed to confer upon the Holder any of the
rights of a member of the Company or any right to vote for the election of directors or upon any
matter submitted to members at any meeting thereof, or to give or withhold consent to any action
with respect to the Warrant Units, until this Warrant shall have been exercised and the Warrant
Units purchasable upon the exercise of this Warrant shall have become deliverable, as provided in
Section 1(b). Upon exercise of this Warrant, the Holder shall automatically be deemed to
be a Member (as defined in the LLC Agreement) of the Company with all rights of a Member, including
the Membership Voting Interest (as defined in the LLC Agreement), without any further approval of
the members, directors, officers or managers of the Company required; provided that the
Holder shall execute such documents as are reasonably requested by the Company to document the
Holder’s agreement to be bound by the terms and provisions of the LLC Agreement and evidence of the
authority of the Holder to execute and deliver such agreement to be so bound.



Information Rights. At all times when Holder is holding this Warrant (whether or not exercised in
part) or any Warrant Units, and if not already delivered pursuant to another agreement, the Company
will deliver to the Holder the financial statements delivered to the Members of the Company
pursuant to the LLC Agreement, including, without limitation, Section 7.3 thereof.




7









 








Registration Rights; Resales Under Rule 144.




     Registration Rights. If the Company at any time converts into a corporation, and the
Company, as converted, proposes to register any Common Stock solely for cash pursuant to a
registration statement under the Securities Act, other than a registration solely for the sale of
securities to participants in a Company stock or other incentive plan or in connection with a
transaction under Rule 145 promulgated under the Securities Act, the Company shall use its best
efforts to cause to be registered for resale under the Securities Act all of the Common Stock that
the Holder has requested to be registered on such registration statement.



     Compliance with Rule 144(c). If the Holder proposes to sell Common Stock, the Warrant
or any Warrant Units in compliance with Rule 144 under the Securities Act, then, upon Holder’s
written request the Company shall furnish to the Holder, within 3 days after receipt of such
request, a written statement confirming the Company’s compliance with the “Current Public
Information” requirements of Rule 144(c), as such Rule may be amended from time to time.


Parallel Rights; No Impairment. The Holder shall be entitled, but not required, to become a
signatory to and entitled to the benefits of, any investor rights agreement to the extent any such
agreement is entered into on or after the Warrant Date until the consummation of a Change of
Control (as defined in the Note), including any such agreement entered into in connection with a
Change of Control. The Company shall not, by amendment of its certificate of formation or the LLC
Agreement or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Warrant
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Warrant against impairment.



Term of Warrant; Early Termination.




     This Warrant shall become exercisable on the Warrant Date and shall no longer be exercisable
as of 5:00 p.m., Central Time, on the date that is the five (5) year anniversary of the Warrant
Date (the “Exercise Period”).



     Notwithstanding Section 11(a), in the case of any consolidation of the Company with,
or merger of the Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding securities as to which Warrants may then be exercised and other than a
merger solely to change the jurisdiction of organization of the Company) or any sale, transfer or
lease of all or substantially all of the assets of the Company to any Person, in each case during
the Exercise Period, the Company shall provide the Holder with written notice of such proposed
transaction, in reasonable detail, no less than 10 days prior to the consummation thereof, and this
Warrant shall terminate upon the consummation of such transaction unless exercised prior to such
consummation.



Registry of Warrants.



The Company shall maintain a registry showing the name and address of the registered holder of this
Warrant. Holder’s initial address, for purposes of such registry, is set forth below Holder’s
signature on this Warrant. Holder may change such address by giving written notice of such changed
address to the Company.




8









 








Miscellaneous.




     This Warrant shall be construed and enforced in accordance with and governed by the laws of
the State of Delaware, without giving effect to principles of conflicts of laws.



     The Company shall pay all expenses (including attorneys fees and expenses) in connection with,
and all taxes and other governmental charges that may be imposed in respect of, the issue or
delivery of any Warrant Units issuable upon the exercise of any Warrant (excluding any applicable
income taxes payable by the Holder); provided that the Company shall not be required to pay
any tax or other charge imposed in connection with any transfer involved in the issue of Warrant
Units in any name other than that of the Holder.



     The headings in this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof.



     The terms of this Warrant shall be binding upon and shall inure to the benefit of any
successors or assigns of the Company and of the Holder and of the Warrant Units issued or issuable
upon the exercise hereof.



     Any notice provided for or permitted under this Warrant shall be treated as having been given
(i) upon receipt, when delivered personally, (ii) one day after sending, when sent by commercial
overnight courier with written verification of receipt, (iii) upon confirmed transmission when sent
via facsimile on a business day prior to 5:00 pm (Central Time) or, if sent after 5:00 pm (Central
Time), the next business day after confirmed transmission, or (iv) three business days after
deposit with the United States Postal Service, when mailed postage prepaid by certified or
registered mail, return receipt requested, addressed at such address or facsimile number as set
forth on the signature page below, or at such other place of which the other party has been
notified in accordance with the provisions of this Section 13(e).



     This Warrant constitutes the full and entire understanding and agreement between the parties
with regard to the matters contained herein.



     Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the
Company at the Holder’s expense will execute and deliver to the holder of record, in lieu thereof,
a new Warrant of like date and tenor.



     This Warrant and any provision hereof may be amended, waived or terminated only by an
instrument in writing signed by the Company and the Holder.




9









 








     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer, all as of the day and year first above written.



     COMPANY:



	 	 	 	 	 
	 	 	ADVANCED BIOENERGY, LLC

a Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





	 	 	 	 	 
	 

	 	Notice Address:
	 	10201 Wayzata Blvd., Suite 250
	 

	 	 	 	Minneapolis, MN 55305
	 

	 	 	 	Attn: Richard Peterson
	 

	 	 	 	Facsimile: (763) 226-2728






	 	 	 	 	 
	     WARRANTHOLDER:	 	PJC CAPITAL LLC,

a Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Robert P. Rinek
	 

	 	 	 	Co-President and Co-Chief Operating Officer






	 	 	 	 	 
	 

	 	Notice Address:	 	c/o Piper, Jaffray & Co.
	 

	 	 	 	800 Nicollet Mall
	 

	 	 	 	Minneapolis, MN 55402
	 

	 	 	 	Attn: Robert P. Rinek
	 

	 	 	 	Facsimile: (612) 303-1068







 









 








EXHIBIT A




NOTICE OF EXERCISE




	 	 	 	 	 
	TO:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 





1. Cash
Exercise. The undersigned hereby elects to purchase                      Units (“Units”),
of ADVANCED BIOENERGY, LLC, a Delaware limited liability company (the
“Company”) pursuant to the
terms of Section 1(b) of the Warrant to Purchase Units dated [                    ], 2009, (the
“Warrant”), and tenders herewith payment of the Exercise Price (as such term is defined in the
Warrant) therefor.



2. Net Exercise. The undersigned hereby elects to effect a Net Exercise for                     
Units pursuant to Section 1(c) of the Warrant.



Please issue a certificate or certificates representing said                      Units in the name of the
undersigned or in such other name as is specified below:




	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 






     The undersigned hereby represents and warrants that the aforesaid Units are being acquired for
the account of the undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention of distributing or
reselling such shares.



	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 






 









 






EXHIBIT B




FORM OF INVESTMENT REPRESENTATION LETTER



In connection with the acquisition of [warrants (the “Warrants”) to purchase                      Units
of ADVANCED BIOENERGY, LLC (the “Company”)] [Units of ADVANCED BIOENERGY, LLC (the
“Company”)] (the “Units”), by                      (the “Holder”) from
                    , the Holder hereby represents and warrants to the Company as follows:



The Holder has such knowledge and experience in financial and business matters that the Holder is
capable of evaluating the merits and risks of an investment in the Warrants and the Units issuable
upon the exercise thereof (collectively, the “Securities”); and, has the ability to bear
the economic risks of such Holder’s investment, including a complete loss of the Holder’s
investment in Securities.



The Holder, by acceptance of the [Warrants/Units], represents to the Company that the Warrants and
all securities acquired upon any and all exercises of the Warrants are purchased for the Holder’s
own account, and not with view to distribution of either the Warrants or any securities purchasable
upon exercise thereof in violation of applicable securities laws.



The Holder acknowledges that (i) the Securities have not been registered under the Act, (ii) the
certificate(s) representing the Securities shall bear a legend as set forth in the Warrant
Agreement until such Securities shall have been registered for resale by the Holder under the Act
that has been declared effective by the SEC; or (ii) in the opinion of counsel in form and
substance reasonably satisfactory to the Company, such Securities may be sold without registration
under the Act.



IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter to be executed in
its corporate name by its duly authorized officer this [___] day of [                    ], 20[___].




[Name]




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






 









 






EXHIBIT C




ASSIGNMENT FORM



FOR VALUE RECEIVED, the undersigned owner of this Warrant for the purchase of Units of ADVANCED
BIOENERGY, LLC, a Delaware limited liability company (the
“Company”) hereby sells, assigns and
transfers unto the assignee named below all of the rights of the undersigned under this Warrant,
with respect to the number of Units set forth below:




	 	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 

(Name and Address of Assignee)

	 	 
	 
	 	 
	 

(Number of Units)

	 	 





and does hereby irrevocably constitute and appoint                      attorney-in-fact to register
such transfer on the books of the Company, maintained for the purpose, with full power of
substitution in the premises.




	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 






[Name]




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






 









 






ANNEX D




FORM OF CONTROL AGREEMENT




 









 





BLOCKED ACCOUNT CONTROL AGREEMENT




U.S. Bank National Association




	 	 	 	 	 	 	 
	 	 	 
	Attention
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Street Address
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	City

	 	State
	 	Zip	 	 






Ladies and Gentlemen:



    Please be advised that pursuant to certain agreements between Advanced BioEnergy,
LLC, a Delaware limited liability company (“Company”) and PJC Capital LLC, a Delaware
limited liability company (“Lender”), Company has granted to Lender a security interest in all
rights of the Company with respect to account number                      (such account, together
with all substitutions and replacements therefor, the “Deposit Account”) located at U.S. Bank
National Association (“Depositary Bank”) and subject to the terms of the Deposit Agreements
(defined below).



1. Deposit Agreements. The terms and conditions of this Agreement are in addition to any deposit
account agreements and other related agreements that Company has with Depositary Bank, including
without limitation all agreements concerning banking products and services, treasury management
documentation, account booklets containing the terms and conditions of the Deposit Account,
signature cards, fee schedules, disclosures, specification sheets and change of terms notices
(collectively, the “Deposit Agreements”). The provisions of this Agreement shall supersede the
provisions of the Deposit Agreements only to the extent the provisions herein are inconsistent with
the Deposit Agreements, and in all other respects, the Deposit Agreements shall remain in full
force and effect. All items deposited into the Deposit Account shall be processed according to the
provisions of the Deposit Agreements, as amended by this Agreement.



2. Security Interest. Company has granted to Lender a security interest in, among other property,
the Deposit Account and all credits or proceeds thereto and all monies, checks and other
instruments held or deposited therein (all of which shall be included in the definition of the
“Deposit Account”). Company represents and warrants that there are no perfected liens or
encumbrances with respect to the Deposit Account and covenants with Lender that it shall not enter
into any acknowledgment or agreement that gives any other person or entity except Lender control
over, or any other security interest, lien or title in, the Deposit Account.



3. Control. In order to provide Lender with control over the Deposit Account, Company agrees that
Depositary Bank may comply with any and all orders, notices, requests and other instructions
originated by Lender directing disposition of the funds in the Deposit Account without any further
consent from Company, even if such instructions are contrary to any of Company’s instructions or
demands or result in Depositary Bank dishonoring items which may be presented for payment. Company
agrees that instructions from Lender may include the giving of stop payment orders for any items
presented to the Deposit Account, instructions to transfer funds to or for the benefit of Lender or
any other person or entity, and instructions to close the Deposit Account.




4. Access to Deposit Account. [CHECK ONE BOX ONLY]





	 	X 	 	(a) The Deposit Account shall be under the sole dominion and control of Lender.
Neither Company, nor any other person or entity, acting through or under Company,
shall have any control over the use of, or any right to withdraw any amount from, the
Deposit Account. Depositary Bank is hereby authorized and instructed to transfer all
available




 









 






	 	 	 	funds (subject to Depositary Bank’s funds availability policy) in the Deposit
Account to such account and at such times as Lender may direct in writing to
Depositary Bank.






	 	o	 	(b) The Deposit Account shall be under the control of Lender; provided, that
unless and until Depositary Bank receives Lender’s written notice that Company’s
access to the funds in the Deposit Account is terminated, Depositary Bank shall
honor Company’s instructions, notices and directions with respect to the transfer or
withdrawal of funds from the Deposit Account, including paying or transferring the
funds to Company or any other person or entity.
	 
	 	 	 	Upon receipt of a written notice from Lender instructing Depositary Bank to
terminate Company’s access to funds in the Deposit Account, Depositary Bank shall
transfer all available funds (subject to Depositary Bank’s funds availability
policy) in the Deposit Account in accordance with Lender’s written instructions.
	 
	 	 	 	As for any such written notice sent under this subsection (b) to Depositary Bank,
Depositary Bank shall endeavor to promptly transfer to Lender the available funds as
referenced above, but Depositary Bank shall not be obligated to do so until it
provides written confirmation to Lender that it received Lender’s notice of
direction.




5. Subordination by Depositary Bank. Company and Depositary Bank acknowledge notice of and
recognize Lender’s continuing security interest in the Deposit Account and in all items deposited
in the Deposit Account and in the proceeds thereof. Depositary Bank hereby subordinates any
statutory or contractual right or claim of offset or lien resulting from any transaction which
involves the Deposit Account if Section 4(a) is checked above or upon Depositary Bank’s
confirmation of receipt of Lender’s notice under Section 4(b). Notwithstanding the preceding
sentence, in the event any fees and expenses (“Fees”) related to the Deposit Account go unpaid or
any checks or other items which were deposited or credited to the Deposit Account are returned,
reversed, refunded or charged back for insufficient funds or for any other reason (“Returned
Items”), Depositary Bank may charge the Deposit Account or other accounts of Company maintained at
Depositary Bank. If there are insufficient funds in the Deposit Account or any of Company’s other
accounts to cover the Fees and Returned Items, Company agrees to immediately reimburse Depositary
Bank for the amount of such shortfall. If Company fails to pay the amount demanded by Depositary
Bank, Lender agrees to reimburse Depositary Bank within three (3) business days of demand thereof
by Depositary Bank for any Returned Items to the extent Lender received payment in respect thereof
pursuant to section 4.



6. Indemnity. Company agrees to defend, indemnify and hold Depositary Bank and its
directors, officers, employees, attorneys, successors and assigns (collectively “Depositary
Bank”) harmless from and against any and all claims, losses, liabilities, costs, damages
and expenses, including, without limitation, reasonable legal and accounting fees
(collectively, “Claims”), arising out of or in any way related to this Agreement, excepting
only liability arising out of Depositary Bank’s gross negligence or willful misconduct.
Without regard to Company’s indemnification obligations to Depositary Bank, Lender agrees
to: (i) reimburse Depositary Bank for any Returned Items (the proceeds of which were
received by Lender) and (ii) defend, indemnify and hold Depositary Bank harmless from and
against any and all Claims arising out of Depositary Bank’s compliance with Lender’s
instructions. Lender’s obligations to Depositary Bank hereunder shall in no way operate to
release Company from its obligations to Lender and shall not impair any rights or remedies
of Lender to collect any such amounts from Company. IN NO EVENT WILL DEPOSITARY BANK BE
LIABLE FOR ANY INDIRECT DAMAGES, LOST PROFITS, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES
WHICH ARISE OUT OF OR IN CONNECTION WITH THE SERVICES CONTEMPLATED BY THIS AGREEMENT EVEN
IF DEPOSITARY BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.



7. Depositary’s Bank’s Responsibility. The duties of Depositary Bank are strictly limited to those
set forth in this Agreement and Depositary Bank is not acting as a fiduciary for any party hereto.
Depositary Bank shall be protected in relying on any form of instruction or other notice purporting
to be from Lender which Depositary Bank, in good faith, believes to be genuine and what it purports
to be.




 









 







Depositary Bank shall have no duty to inquire as to the genuineness, validity, or enforceability of
any such instruction or notice even if Company notifies Depositary Bank that Lender is not legally
entitled to originate any such instruction or notice. The Deposit Account and all actions and
undertakings by Depositary Bank shall be subject to all rules and regulations relating to the
Deposit Account and to applicable law.



8. Termination. This Agreement shall not be terminable by Company so long as any obligations of
Company to Lender are outstanding and unpaid. This Agreement may be terminated by Depositary Bank
upon thirty (30) days prior written notice to all parties; provided, however, that Depositary Bank
may terminate this Agreement immediately in the event Lender fails to make payments to Depositary
Bank in accordance with section 5 above. This Agreement may be terminated by Lender in a writing
sent to Depositary Bank in which Lender releases Depositary Bank from any further obligation to
comply with instructions originated by Lender with respect to the Deposit Account. Any available
funds remaining in the Deposit Account upon termination or deposited in thereafter shall be
transferred in accordance with the provisions of section 4 above after deduction for any amounts
otherwise reimbursable to Depositary Bank as provided hereunder. Termination shall not affect the
rights and obligations of any party hereto with respect to any period prior to such termination.



9. Legal Process and Insolvency. In the event Depositary Bank receives any form of legal process
concerning the Deposit Account, including, without limitation, court orders, levies, garnishments,
attachments, and writs of execution, or in the event Depositary Bank learns of any insolvency
proceeding concerning Company, including, without limitation, bankruptcy, receivership, and
assignment for the benefit of creditors, Depositary Bank will respond to such legal process or
knowledge of insolvency in the normal course or as required by law.



10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of Minnesota. The parties agree that Minnesota is the “bank’s jurisdiction” for
purposes of the Uniform Commercial Code.



11. Notices. Except as otherwise provided in this Agreement, all notices and other communications
required under this Agreement shall be in writing and may be personally served or sent by United
States Mail or courier or by facsimile, and shall be deemed given when delivered in person or
received by facsimile or upon deposit in the United States Mail or with such courier at the address
specified below. Any party may change its address for notices hereunder by notice to all other
parties given in accordance with this section 11.




	 	 	 	 	 
	 

	 	Company:
	 	Advanced BioEnergy, LLC
	 

	 	 	 	10201 Wayzata Blvd., Suite 250
	 

	 	 	 	Minneapolis, MN 5530
	 

	 	 	 	Attn: Richard Peterson
	 

	 	 	 	Facsimile: (763) 226-2728
	 

	 	 	 	Telephone:                                         
	 
	 	 	 	 
	 

	 	Lender:
	 	PJC Capital LLC
	 

	 	 	 	c/0 Piper Jaffray & Co.
	 

	 	 	 	800 Nicollet Mall
	 

	 	 	 	Minneapolis, MN 55402-7020
	 

	 	 	 	Attn: Robert P. Rinek, Co-President and Co-Chief Operating Officer
	 

	 	 	 	Facsimile: (612) 303-1068
	 

	 	 	 	Telephone: (612) 303-6306
	 
	 	 	 	 
	 

	 	Depositary Bank:
	 	U.S. Bank National Association
	 

	 	 	 	                                                            






 









 






	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telephone:	 	 	 	 
	 

	 	 	 	 	 	 




12. Miscellaneous. This Agreement shall bind and benefit the parties and their respective
successors and assigns. This Agreement may be amended only with the prior written consent of all
parties hereto. None of the terms of this Agreement may be waived except as Depositary Bank may
consent thereto in writing. No delay on the part of Depositary Bank in exercising any right, power
or privilege hereunder shall operate as a waiver hereof, nor shall any single or partial exercise
of any right, power or privilege hereunder preclude other or further exercise thereof or the
exercise of any right, power or privilege. The rights and remedies specified herein are cumulative
and are not exclusive of any rights or remedies which Depositary Bank would otherwise have.



13. Counterparts. This Agreement may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same instrument.



14. Jury Trial Waiver. COMPANY, LENDER AND DEPOSITARY BANK HEREBY WAIVE ALL RIGHTS TO TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR SERVICES RENDERED
IN CONNECTION WITH THIS AGREEMENT.




Dated as of:                                         




	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	ADVANCED BIOENERGY, LLC,
	 	 	as COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	PJC CAPITAL LLC,
	 	 	as LENDER
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	ACCEPTED:	 	U.S. BANK NATIONAL ASSOCIATION,
	 	 	as DEPOSITARY BANK
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title: