**Exhibit 10.30**

 

**Execution Copy**

 

 

 

 

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**TAX ABATEMENT AGREEMENT**

 

 

**Dated as of December 1, 2005**

 

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**BETWEEN THE**

 

 

**CITY OF GARNETT, KANSAS**

 

 

**AND**

 

 

**EAST KANSAS AGRI-ENERGY, L.L.C.**

 

 

 

**PreparedBy:**

 

**Gilmore &Bell, P.C.Kansas City, Missouri**

 

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**TAX ABATEMENT AGREEMENT**

 

**THIS TAX ABATEMENT AGREEMENT**, dated as of December 1, 2005 (the “Agreement”), between the **CITY OF GARNETT, KANSAS**, a municipal corporation organizedand existing under the laws of the State of Kansas (the “City”), and**EAST KANSAS AGRI-ENERGY, L.L.C.**, a Kansas limited liabilitycompany (the “Company”);

 

**WITNESSETH:**

 

**WHEREAS**, theCity is authorized by K.S.A. 12-1740 to 12-1749d, inclusive, as amended (the “Act”),to acquire, purchase, construct and improve certain facilities for commercial,industrial and manufacturing purposes, to enter into leases and lease-purchaseagreements with any person, firm or corporation for said projects, and to issuerevenue bonds for the purpose of paying the cost of any such facilities;

 

**WHEREAS**,pursuant to such authorization, the governing body of the City has passed andapproved an Ordinance authorizing the City to issue its Industrial RevenueBonds (East Kansas Agri-Energy Project), Series 2005 (the “Bonds”), in theaggregate principal amount not to exceed $50,000,000, to finance the cost ofacquiring, purchasing, constructing, installing and equipping a commercialproject, consisting of an ethanol production facility, including land,buildings, structures, improvements, fixtures, machinery and equipment (the “Project”),and authorizing the City to lease the Project to East Kansas Agri-Energy,L.L.C. (the “Company”) pursuant to a Lease Agreement (the “Lease Agreement”) tobe entered into by and between the City, as lessor, and the Company, as lessee,at the time the Bonds are issued;

 

**WHEREAS**, theCity is authorized and empowered under the Act and K.S.A. 79-201a, as amended(the “Abatement Statute”) to exempt from ad valorem taxation all or any portionof the Project financed with the proceeds of the Bonds, subject to thelimitations set forth in the Abatement Statute and this Agreement; and

 

**WHEREAS**,pursuant to the foregoing; the City desires to enter into thisAgreement with the Company in consideration of the Company’s desire topurchase, construct and equip the Project upon the terms and conditions hereinafterset forth and in the Lease Agreement;

 

**NOW,****THEREFORE**, inconsideration of the premises and the mutual representations, covenants andagreements herein contained, the City and the Company hereby represent, covenantand agree as follows:

 

**ARTICLE I**

 

**DEFINITIONS**

 

**Section 1.1.**                                **Definitions of Words and****Terms.** The following words and terms as used hereinshall have the following meanings:

 

**“Abatement Statute”** means K.S.A. 79-201a, as amended.

 

**“Agreement”**means this Tax Abatement Agreement dated as of December 1, 2005, betweenthe City and the Company, as from time to time amended and supplemented inaccordance with the provisions hereof.

 

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**“Board of Tax Appeals”** means the State of Kansas Board of Tax Appeals.

 

**“Bond Financed Portion of the Project”** means that portion of the Project financedfrom the proceeds of the Bonds as evidenced by the requisitions submitted bythe Company to the bond trustee in accordance with Section 2.8 hereof.

 

**“Bonds”** meansthe City’s Industrial Revenue Bonds (East Kansas Agri-Energy Project), Series 2005,issued in the aggregate maximum principal amount of $50,000,000.

 

**“City”** meansthe City of Garnett, Kansas.

 

**“Company”**means East Kansas Agri-Energy, L.L.C., a Kansas limited liability company, andits successors and assigns.

 

**“Event of****Default”**means any Event of Default asdescribed in Section 5.1 hereof.

 

**“Exempt Period”**means calendar years 2006 through 2015, inclusive.

 

**“Exempt Property”** means all Property that is exempt from taxation pursuant to K.S.A.79-201(a) *Second*by reasonthat such property was constructed or purchased with the proceeds of the Bondsauthorized by and in accordance with the Abatement Statute.

 

**“Future Facility Additions”** means any additions, improvements or renovations to or equipping ofthe Bond Financed Portion of the Project. As used herein, **“Future****FacilityAdditions**” shall never include any future additions, improvements orrenovations to or equipping of the Project that are exempt from ad valoremtaxes.

 

**“Lease Agreement”** means the Lease Agreement dated as of December 1, 2005, betweenthe City and the Company.

 

**“Property”**means all real and personal property subject to taxation pursuant to K.S.A.79-101.

 

**“Project”**means acquiring, purchasing, constructing, installing and equipping acommercial project, consisting of an ethanol production facility, includingland, buildings, structures, improvements, fixtures, machinery and equipment;all located in the City at 1304 South Main.

 

**“Project****Costs”** means allcosts and expenses of every nature paid from the proceeds of the Bonds andrelating to the acquisition, purchase, construction and equipping of theProject.

 

**“Project Site”**means all of the real property described in **Exhibit A**attached hereto and by this reference made a part hereof.

 

**ARTICLE II****EXEMPTION;PAYMENTS IN****LIEU****OFTAX**

 

**Section 2.1.**                                **Obligation****of City to Effect Tax Abatement.**The City agrees to use its best efforts tocause the Bond Financed Portion of the Project to be Exempt Property, andagrees to make all filings required by the Board of Tax Appeals; provided,however, the City shall not be liable for any failure

 

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ofthe Board of Tax Appeals to effect the exemption permitted by the Abatement Statute.The City covenants that it will not knowingly take any action that the City hasknowledge may cause the Bond Financed Portion of the Project to no longerbe Exempt Property. In the event the Bond Financed Portion of the Project isdetermined to no longer be Exempt Property, the City shall, at the Company’srequest, cooperate with the Company in all reasonable ways to cause the BondFinanced Portion of the Project to be Exempt Property, including cooperatingwith the Company in any related litigation. The Company agrees to pay to theCity the costs that the City incurs (including legal fees and expenses) incooperating with the Company in the manner required by this Section.

 

**Section 2.2**                                   **Term of Agreement.**This Agreement shall become effective uponexecution and, subject to earlier termination pursuant to the provisions ofthis Agreement (including particularly **Article ****V** hereof), shall terminate on January 1, 2016.

 

**Section 2.3**.                                **No Abatement****of SpecialAssessments.**The City and the Company hereby agree that theAbatement Statute and any tax abatement with respect to the Project shall notapply to special assessments. In the event special assessments are ever abated,the Company hereby agrees that 100% of the amount of such abated specialassessments shall be paid at the times and in the manner required.

 

**Section 2.4.****                               ****Compliance.**The Company shall provide the City, upon theCity’s request, with (i) copies of the requisitions submitted by theCompany to the trustee for the Bonds in accordance with the Lease Agreement, (ii) alist containing a brief description and the amount of all costs of the BondFinanced Portion of the Project, and (iii) the total costs of the Project,all in such reasonable detail as the City shall request.

 

**Section 2.5.****                               ****No****Abatementon Appraised Value of Future Facility Additions.**In the event anyFuture Facility Additions are determined to be Exempt Property as a result ofthe issuance of the Bonds, this Agreement or for any other reason, the Companyagrees that 100% of the amount of such abated ad valorem taxes attributable tothe Future Facility Additions shall be paid to the City at the times and in themanner required by law. This provision shall not be construed as restrictingthe Company from applying to the City or to any other governmental entity forany future tax abatement in connection with any Future Facility Additions.

 

**Section 2.6.****                               ****Projected ConstructionSchedule.**The Companyexpects to commence and complete construction of the Project as in accordancewith the schedule set forth on **Exhibit B.**

 

**ARTICLE III**

 

**COVENANTS OF THE COMPANY**

 

**Section 3.1.****                               ****Inspection.**The Company agrees that the City and its dulyauthorized agents shall have the right at reasonable times (during businesshours), subject to at least 48 hours advance notice and to the Company’s usualbusiness proprietary, safety and security requirements, to enter upon theProject Site to examine and inspect the Project and the records of the Companywhich demonstrate compliance with this Agreement.

 

**Section 3.2.****                               ****Compliance with Laws.** The Project will comply in all materialrespects with all applicable building and zoning, health, environmental andsafety ordinances and regulations and all other applicable laws, rules andregulations.

 

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**Section 3.3.****                               ****Construction.**The Project will be constructed, equipped andoperated in a manner that is consistent with the description of the Projectherein. In the event the Project is constructed in a manner that the Citydetermines, in its reasonable discretion, is materially inconsistent with thedescription of the Project herein, the City reserves the right to declare anEvent of Default in accordance with **Section 5.1**hereof.

 

**Section 3.4.****                               ****Employment Certification.**At any time that the City may request,for the term of this Agreement, the Company agrees to provide a writtencertification to the City stating the total number of employees employed at theProject.

 

**Section 3.5****                                  ****Payment of Fees and Reimbursementor Payment of Costs.**TheCompany agrees to promptly reimburse the City, upon receipt by the Company ofan invoice from the City, for any amounts that the City pays to any other partyas a result of the City pursuing, obtaining or maintaining the tax abatementgranted to the Company pursuant to this Agreement. These costs shall include,but shall not be limited to, all fees and expenses for filings with the Boardof Tax Appeals (including the existing $250 application fee and the $250 annualadministration fee), legal notice publication expenses, and the costs andexpenses of the City’s legal counsel. The Company agrees that the City may, inlieu of seeking reimbursement from the Company, forward any invoice received bythe City to the Company, which invoice is for a cost which the City could seekreimbursement from the Company pursuant to this paragraph, and the Companyagrees to promptly pay such invoice and to promptly provide the City withevidence of such payment.

 

**ARTICLE IV**

 

**SALE AND ASSIGNMENT**

 

Thebenefits granted by the City to the Company pursuant to this Agreement shallbelong solely to the Company and such benefits shall not be transferred (otherthan to an affiliate of the Company), assigned, pledged or in any other mannerhypothecated without the express written consent of the City; provided, nothingherein shall preclude the Company from assigning or pledging its interest inthe Project so long as the Company continues to occupy the Project andotherwise remains responsible for its undertakings herein.

 

**ARTICLE V**

 

**DEFAULT AND REMEDIES**

 

**Section 5.1.****                               ****Events of Default.**If any one or more of the following eventsshall occur and be continuing, it is hereby defined as and declared to be andto constitute an “Event of Default” hereunder:

 

(a)                                  the Company shall fail to perform any ofits obligations hereunder;

 

(b)                                 the Company shall breach any covenantcontained herein or any representation of the Company contained herein shallprove to be materially false or erroneous; or

 

(c)                                  the Company shall be in default under theLease Agreement.

 

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**Section 5.2.****                               ****Remedies on Default.**Upon the occurrence of an Event of Defaulthereunder, the Company shall be given 60 days (or such longer period as theCity and the Company may agree), following written notice by the City tothe Company of the occurrence of such Event of Default, to cure such Event ofDefault. If such Event of Default is not cured within such time, this Agreementmay be terminated by written notice to the Company from the City. Suchtermination shall be effective immediately following delivery of such writtennotice. Upon such termination, the Exempt Property shall no longer be exemptfrom ad valorem property taxation.

 

**ARTICLE VI**

 

**MISCELLANEOUS PROVISIONS**

 

**Section 6.1.****                               ****Severability.**If for any reason any provision of thisAgreement shall be determined to be invalid or unenforceable, the validity andenforceability of the other provisions hereof shall not be affected thereby.

 

**Section 6.2.****                               ****Governing Law.**This Agreement shall be construed in accordancewith and governed by the laws of the State of Kansas.

 

**Section 6.3.****                               ****Execution in Counterparts.**This Agreement may be executedsimultaneously in several counterparts, each of which shall be deemed to be anoriginal and all of which shall constitute but one and the same instrument.

 

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**IN WITNESS****WHEREOF,**the parties hereto have causedthis Agreement to be executed in their respective corporate names and their respectivecorporate seals to be hereunto affixed and attested by their duly authorizedofficers, all as of the date first above written.

 
|    | **CITY  OF GARNETT, KANSAS** |
|---------|------------------------------|
|    |                         |   |
| (SEAL)  | By:                          |   /s/  James A Shmidl |
|    |                         | Mayor |
| ATTEST: |                         |   |
|    |                         |   |
|    |                         |   |
| By:     | /s/  Joyce E. Martin         |   |   |   |
|    | City Clerk                   |   |   |   |

 

TaxAbatement Agreement

EastKansas Agri-Energy, Series 2005

 

S-1

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|   | **EAST KANSAS AGRI-ENERGY, L.L.C.** |
|--------|-------------------------------------|
|   | ** **                          |
|   |                                |   |
|   | By:                                 |   /s/ William Pracht |
|   |                                | William R. Pracht |
|   |                                | Chairman and President |

 

TaxAbatement Agreement

EastKansas Agri-Energy, Series 2005

 

S-2

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**EXHIBIT B**

 

**ESTIMATED CONSTRUCTION SCHEDULE**

 
| **Event**                              | ** ** | **Projected  Date** |
|----------------------------------------|------------|---------------------|
|                                   |       |                |
| Acquisition of Real Estate             |       | September 2004 |
|                                   |       |                |
| Commencement of Construction           |       | November 2004  |
|                                   |       |                |
| Substantial Completion of Construction |       | June 2005      |
|                                   |       |                |
| Final Completion                       |       | July 2005      |

 

B-1

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