Exhibit 10.5


 


 


Pursuant to 17 C.F.R. § 240.24b-2, confidential information
(indicated by [***]) has been omitted and has been filed separately with the
Securities and Exchange Commission pursuant to a Confidential Treatment
Application filed with the Commission.


 


EXECUTION
COPY


 


 


MEMBERSHIP
INTEREST PURCHASE AGREEMENT


 


BY
AND AMONG


 


HAWKEYE
HOLDINGS, L.L.C.


 


HAWKEYE
RENEWABLES, LLC


 


THL-HAWKEYE
ACQUISITION LLC


 


THL
HAWKEYE ACQUISITION PARTNERS,


 


THL
HAWKEYE ACQUISITION PARTNERS II


 


and


 


THL
HAWKEYE ACQUISITION PARTNERS III


 


 


Dated as of May 11, 2006


 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Table of Definitions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  PURCHASE AND SALE

  	
   

  	
  9

  
	
  2.1

  	
   

  	
  Purchase and Sale of the Membership
  Interests

  	
   

  	
  9

  
	
  2.2

  	
   

  	
  Closing

  	
   

  	
  9

  
	
  2.3

  	
   

  	
  The Merger

  	
   

  	
  11

  
	
  2.4

  	
   

  	
  Effective Time

  	
   

  	
  11

  
	
  2.5

  	
   

  	
  Effects of the Merger

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE BUYER
  AND THE MERGER COMPANY

  	
   

  	
  11

  
	
  3.1

  	
   

  	
  Organization and Standing

  	
   

  	
  11

  
	
  3.2

  	
   

  	
  Corporate Power and Authority

  	
   

  	
  12

  
	
  3.3

  	
   

  	
  Conflicts, Consents and Approval

  	
   

  	
  12

  
	
  3.4

  	
   

  	
  Financing

  	
   

  	
  13

  
	
  3.5

  	
   

  	
  Brokerage and Finder’s Fee

  	
   

  	
  14

  
	
  3.6

  	
   

  	
  Merger Company Conduct

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
   

  	
  14

  
	
  4.1

  	
   

  	
  Organization and Qualification

  	
   

  	
  14

  
	
  4.2

  	
   

  	
  Authority

  	
   

  	
  14

  
	
  4.3

  	
   

  	
  Subsidiary and Investments

  	
   

  	
  15

  
	
  4.4

  	
   

  	
  Conflicts; Consents and Approvals

  	
   

  	
  15

  
	
  4.5

  	
   

  	
  Membership Interests and Ownership

  	
   

  	
  16

  
	
  4.6

  	
   

  	
  Financial Statements; No Undisclosed
  Liabilities

  	
   

  	
  16

  
	
  4.7

  	
   

  	
  Absence of Certain Changes or Effects

  	
   

  	
  17

  
	
  4.8

  	
   

  	
  Compliance with Law; Permits

  	
   

  	
  17

  
	
  4.9

  	
   

  	
  Litigation

  	
   

  	
  17

  
	
  4.10

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  17

  
	
  4.11

  	
   

  	
  Labor and Employment Matters

  	
   

  	
  18

  
	
  4.12

  	
   

  	
  Insurance

  	
   

  	
  19

  
	
  4.13

  	
   

  	
  Real Property

  	
   

  	
  19

  
	
  4.14

  	
   

  	
  Intellectual Property

  	
   

  	
  20

  
	
  4.15

  	
   

  	
  Taxes

  	
   

  	
  22

  
	
  4.16

  	
   

  	
  Environmental Matters

  	
   

  	
  24

  
	
  4.17

  	
   

  	
  Purchasers and Suppliers

  	
   

  	
  25

  
	
  4.18

  	
   

  	
  Material Contracts

  	
   

  	
  25

  
	
  4.19

  	
   

  	
  Related Party Transactions

  	
   

  	
  26

  
	
  4.20

  	
   

  	
  Sufficiency and Condition of Assets

  	
   

  	
  27

  



 


i

















 


	
  ARTICLE V

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE SELLER

  	
   

  	
  27

  
	
  5.1

  	
   

  	
  Organization

  	
   

  	
  27

  
	
  5.2

  	
   

  	
  Authorization

  	
   

  	
  27

  
	
  5.3

  	
   

  	
  Conflicts; Consents and Approvals

  	
   

  	
  27

  
	
  5.4

  	
   

  	
  Ownership of Membership Interests

  	
   

  	
  28

  
	
  5.5

  	
   

  	
  Brokerage and Finder’s Fee

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  COVENANTS OF THE PARTIES

  	
   

  	
  28

  
	
  6.1

  	
   

  	
  Conduct of Business Prior to the Closing

  	
   

  	
  28

  
	
  6.2

  	
   

  	
  Covenants Regarding Information

  	
   

  	
  30

  
	
  6.3

  	
   

  	
  Notification of Certain Matters

  	
   

  	
  31

  
	
  6.4

  	
   

  	
  No Solicitation by the Buyer

  	
   

  	
  31

  
	
  6.5

  	
   

  	
  Transfer and Voting of the Membership
  Interests

  	
   

  	
  32

  
	
  6.6

  	
   

  	
  Confidentiality Agreement

  	
   

  	
  32

  
	
  6.7

  	
   

  	
  Consents and Filings; Further Assurances

  	
   

  	
  32

  
	
  6.8

  	
   

  	
  Public Announcements

  	
   

  	
  33

  
	
  6.9

  	
   

  	
  Indemnification; Insurance

  	
   

  	
  33

  
	
  6.10

  	
   

  	
  Tax Matters

  	
   

  	
  34

  
	
  6.11

  	
   

  	
  Registration and Restructuring

  	
   

  	
  37

  
	
  6.12

  	
   

  	
  Non-Competition; Non-Solicitation;
  Confidentiality

  	
   

  	
  38

  
	
  6.13

  	
   

  	
  Cooperation with Financing

  	
   

  	
  40

  
	
  6.14

  	
   

  	
  Cooperation with IPO

  	
   

  	
  40

  
	
  6.15

  	
   

  	
  Related-Party Transactions with
  Non-Management Affiliates

  	
   

  	
  40

  
	
  6.16

  	
   

  	
  Fairbank/Iowa Construction Expenses

  	
   

  	
  40

  
	
  6.17

  	
   

  	
  Intermediate LLC Formation

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  CONDITIONS

  	
   

  	
  41

  
	
  7.1

  	
   

  	
  General Conditions

  	
   

  	
  41

  
	
  7.2

  	
   

  	
  Condition to Obligations of the Seller and
  the Company

  	
   

  	
  42

  
	
  7.3

  	
   

  	
  Conditions to Obligations of the Buyer

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  TERMINATION AND AMENDMENT

  	
   

  	
  45

  
	
  8.1

  	
   

  	
  Termination

  	
   

  	
  45

  
	
  8.2

  	
   

  	
  Effect of Termination

  	
   

  	
  46

  
	
  8.3

  	
   

  	
  Amendment

  	
   

  	
  47

  
	
  8.4

  	
   

  	
  Extension; Waiver

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  48

  
	
  9.1

  	
   

  	
  Survival of Representations, Warranties and
  Covenants

  	
   

  	
  48

  
	
  9.2

  	
   

  	
  Indemnification

  	
   

  	
  48

  
	
  9.3

  	
   

  	
  Limitations on Indemnification

  	
   

  	
  49

  
	
  9.4

  	
   

  	
  Mitigation; Exclusivity of Remedy

  	
   

  	
  49

  
	
  9.5

  	
   

  	
  Notice of Claims

  	
   

  	
  50

  
	
  9.6

  	
   

  	
  Third-Person Claims

  	
   

  	
  51

  
	
  9.7

  	
   

  	
  Calculation of Damages

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  53

  



 


ii

















 


	
  10.1

  	
   

  	
  Notices

  	
   

  	
  53

  
	
  10.2

  	
   

  	
  Interpretation

  	
   

  	
  54

  
	
  10.3

  	
   

  	
  Expenses

  	
   

  	
  54

  
	
  10.4

  	
   

  	
  Counterparts

  	
   

  	
  54

  
	
  10.5

  	
   

  	
  Waiver

  	
   

  	
  55

  
	
  10.6

  	
   

  	
  Entire Agreement

  	
   

  	
  55

  
	
  10.7

  	
   

  	
  Third-Party Beneficiaries

  	
   

  	
  55

  
	
  10.8

  	
   

  	
  Governing Law

  	
   

  	
  55

  
	
  10.9

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  55

  
	
  10.10

  	
   

  	
  Disclosure Generally

  	
   

  	
  56

  
	
  10.11

  	
   

  	
  Personal Liability

  	
   

  	
  56

  
	
  10.12

  	
   

  	
  Assignment; Successors

  	
   

  	
  56

  
	
  10.13

  	
   

  	
  Enforcement

  	
   

  	
  56

  
	
  10.14

  	
   

  	
  Currency

  	
   

  	
  57

  
	
  10.15

  	
   

  	
  Severability

  	
   

  	
  57

  
	
  10.16

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  57

  
	
  10.17

  	
   

  	
  Time of Essence

  	
   

  	
  57

  
	
  10.18

  	
   

  	
  DISCLAIMER OF IMPLIED WARRANTIES

  	
   

  	
  57

  
	
  10.19

  	
   

  	
  No Presumption Against Drafting Party

  	
   

  	
  58

  



 


	
  Schedule 1

  	
   

  	
  List of Buyers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Assignment of Limited
  Liability Membership Interests

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Equity Commitment Financing Letter

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Terms of Operating Agreement and Members’
  Agreement of Hawkeye Intermediate, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Debt Commitment Letter

  	
   

  	
   

  



 


iii

















 


MEMBERSHIP
INTEREST PURCHASE AGREEMENT


 


This Membership Interest Purchase Agreement
(the “Agreement”) is made and entered into as of May 11, 2006, by
and among HAWKEYE HOLDINGS, L.L.C., an Iowa limited liability company (the “Seller”),
HAWKEYE RENEWABLES, LLC, a Delaware limited liability company (the “Company”),
THL Hawkeye Acquisition Partners, a Delaware general partnership (“Buyer I”),
THL Hawkeye Acquisition Partners II, a Delaware general partnership (“Buyer
II”), and THL Hawkeye Acquisition Partners III, a Delaware general
partnership (“Buyer III”, with each of Buyer I, Buyer II and Buyer III
being referred to individually as a “Buyer” and collectively as the “Buyer”),
and THL-HAWKEYE ACQUISITION LLC, a Delaware limited liability company (“Merger
Company”).


 


PRELIMINARY
STATEMENTS


 


A.                                   As of the date
hereof, the Seller owns, of record and beneficially, all of the outstanding
membership interests of the Company.


 


B.                                     Immediately prior
to the Closing, the Seller shall cause to be formed Hawkeye Intermediate, LLC,
a Delaware limited liability company (“Intermediate LLC”), to which it
shall contribute 100% of its membership interests in the Company in exchange
for 100% of the membership interests of Intermediate LLC.


 


C.                                     The Buyer desires
to acquire, and the Seller desires to sell, 80% of the membership interests of
Intermediate LLC (such 80% of the membership interests of Intermediate LLC to
be hereinafter referred to as the “Membership Interests”) to the Buyer
and in the amounts set forth next to each of Buyers’ names on Schedule 1
attached hereto and the business of constructing, owning and operating the corn
ethanol plants and such activities related thereto (the “Business”) in
which the Company is engaged.


 


D.                                    Subject to the
terms and conditions hereof, immediately after with the Closing, the Merger
Company will merge with and into the Company, with the Company being the
surviving entity of the merger (the “Merger”).


 


AGREEMENT


 


Now, therefore, in consideration of these
premises and the mutual and dependent promises hereinafter set forth, the
parties hereto agree as follows:


 


ARTICLE I

DEFINITIONS


 


1.1                               Certain
Defined Terms. For purposes of this Agreement:


 


“Action” means any claim, action,
suit, arbitration or proceeding by or before any Governmental Authority or
arbitral tribunal.


 

















 


“Affiliate”, with respect to any
specified Person, means any other Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, such specified Person.


 


“Business Day” means any day that is
not a Saturday, a Sunday or other day on which banks are required or authorized
by Law to be closed in The City of New York.


 


“Closing Date Cash” means the cash and
cash equivalents of the Company, including without limitation cash realized
from interest rate protection agreements and similar arrangements (but not
including non-interest rate-related futures/options and hedges), as determined
in accordance with GAAP, on hand as of the start of business on the Closing
Date.


 


“Code” means the Internal Revenue Code
of 1986, as amended through the date hereof.


 


“Company Intellectual Property” means
all Intellectual Property owned by the Company that is either (i) used in
connection with the Business or (ii) held by the Company for later use in
connection with the Business.


 


“Company Technology” means all
Technology owned by the Company that is either (i) used in connection with
the Business or (ii) held by the Company for later use in connection with
the Business.


 


“control”, including the terms “controlled
by” and “under common control with”, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
as trustee or executor, as general partner or managing member, by contract or
otherwise.


 


“Encumbrance” means any charge, claim,
mortgage, lien, option, pledge, security interest or other restriction of any kind
(other than those created under applicable securities laws).


 


“Fairbank/Iowa Construction Expenses”
means any and all expenses, including third-party fees and costs, associated
with the (i) construction, opening (exclusive of start-up inventory or supply
and corn costs), initial operation and achievement of Final Completion (as such
term is defined in the Fairbank Contract) of the Fairbank facility, and (ii) Iowa
Falls expansion.


 


“GAAP” means United States generally
accepted accounting principles as in effect on the date hereof.


 


“Governmental Authority” means any
foreign, federal, state or local governmental, regulatory or administrative
authority, agency or commission or any judicial or arbitral body.


 


“Indebtedness” of any Person means,
without duplication, (i) the principal, accreted value, accrued and unpaid
interest, prepayment and redemption premiums or penalties (if any), unpaid fees
or expenses and other monetary obligations in respect of (A) indebtedness


 


2

















 


of such Person for money borrowed and (B) indebtedness evidenced
by notes, debentures, bonds or other similar instruments for the payment of
which such Person is responsible or liable; (ii) all obligations of such
Person issued or assumed as the deferred purchase price of property (but
excluding trade accounts payable and other accrued current liabilities arising
in the ordinary course of business (other than the current liability portion of
any indebtedness for borrowed money)); (iii) all obligations of such
Person under leases required to be capitalized in accordance with GAAP; (iv) all
obligations of such Person for the reimbursement of any obligor on any letter
of credit, banker’s acceptance or similar credit transaction; (v) the
liquidation value, accrued and unpaid dividends; prepayment or redemption
premiums and penalties (if any), unpaid fees or expenses and other monetary
obligations in respect of any redeemable preferred stock of such Person; (vi) all
obligations of the type referred to in clauses (i) through (vii) of
any Persons for the payment of which such Person is responsible or liable,
directly or indirectly, as obligor, guarantor, surety or otherwise, including
guarantees of such obligations; and (vii) all obligations of the type
referred to in clauses (i) through (vi) of other Persons secured
by (or for which the holder of such obligations has an existing right,
contingent or otherwise, to be secured by) any Encumbrance on any property or
asset of such Person (whether or not such obligation is assumed by such
Person).


 


“Indemnity Fund Escrow” means (i) $45,000,000
of cash (“Cash Escrow”) and (ii) membership interests of
Intermediate LLC owned by Seller and having a value (based on the initial
purchase price paid by Buyer hereunder) of $45,000,000 (the “Escrowed
Securities”).


 


“Intellectual Property” means all of
the following, whether protected, created or arising under the laws of the
United States or any other jurisdiction or under any international convention: (i) all
patents and patent applications, including all continuations, divisionals,
continuations-in-part and provisionals and patents issuing thereon, and
all reissues, reexaminations, substitutions, renewals and extensions thereof
(collectively, “Patents”); (ii) all trademarks, service marks,
trade names, trade dress, logos, and corporate names, and all registrations,
applications to register, and renewals and extensions of such registrations,
together with the goodwill associated with any of the foregoing in this subclause
(ii) (collectively, “Marks”); (iii) all Internet domain names;
(iv) all copyrights, and moral rights, and all registrations, applications
to register, renewals, extensions and reversions thereof (collectively, “Copyrights”);
and (v) all discoveries, concepts, ideas, research and development,
know-how, formulae, inventions, compositions, manufacturing and production
processes and techniques, technical data, procedures, designs, drawings,
specifications, databases, and other proprietary or confidential information,
including customer lists, supplier lists, pricing and cost information, and
business and marketing plans and proposals, that constitute Trade Secrets under
applicable law, in each case excluding any rights in respect of any of the
foregoing that comprise or are protected by Patents (collectively, “Trade
Secrets”).


 


“Intellectual Property Licenses”
means: (i) any grant by the Company to another Person of any license, any
sublicense, any right, permission or consent to use, or any covenant not to assert
claims of infringement or misappropriation with respect to any Company
Intellectual Property, Company Technology and/or Intellectual Property or
Technology owned by a third Person and licensed to the Company; and (ii) any
grant by another Person to the Company of any license, any sublicense, any
right, permission or consent to use, or any covenant


 


3

















 


not to assert claims of infringement or misappropriation with respect
to any Intellectual Property and/or Technology owned by a third Person.


 


“IRS” means the Internal Revenue
Service of the United States.


 


“Knowledge”, with respect to the
Company, means the actual knowledge, as of the date of this Agreement (or, with
respect to a certificate delivered pursuant to this Agreement, as of the date
of delivery of such certificate) of (i) any member of the board of
managers of the Company or Seller who is also a member of Seller, (ii) the
Chief Executive Officer and President and Chief Financial Officer of the Company
after making reasonable inquiry of officers or employees of the Company
responsible for the subject matter in question, (iii) with respect only to
the representations in Sections 4.8(b), 4.14, 4.16
and 4.20, Donovan Prinsloo, and (iv) with respect only to the
representations in Sections 4.6(b) regarding hedging, interest
rate protection and similar agreements and 4.17 (but only with regard to
statements regarding suppliers), Robin Sampson.


 


“Law” means any statute, law,
ordinance, regulation, rule, code, injunction, judgment, decree or any other
legal requirement (including common law) of any Governmental Authority.


 


“Leased Real Property” means the real
property leased by the Company, in each case, as tenant, together with, to the
extent leased by the Company, all buildings and other structures, facilities or
improvements located thereon and all easements, licenses, rights and
appurtenances of the Company relating to the foregoing.


 


“Material Adverse Effect” means (a) with
respect to the Company, any event, change, circumstance, development, effect or
state of facts that is materially adverse to (i) the assets, properties,
business, financial condition or results of operations of the Company, taken as
a whole or (ii) the ability of the Company to perform its obligations
under this Agreement or to consummate the transactions contemplated hereby; provided,
however, that “Material Adverse Effect” shall not include the effect of
any circumstance, change, development, event or state of facts arising out of
or attributable to any of the following, either alone or in combination:  (1) the markets in which the Company
operates generally, including the grains, gas, ethanol, distillers’ grains and
futures and commodities markets, unless such circumstance, change, development
or fact disproportionately affects the Company, (2) general economic or
political conditions (including those affecting the securities markets), unless
such circumstance, change, development or fact disproportionately affects the
Company, (3) the public announcement of this Agreement or of the
consummation of the transactions contemplated hereby, (4) acts of war
(whether or not declared), sabotage or terrorism, military actions or the
escalation thereof or other force majeure events occurring after the date
hereof, unless such circumstance, change, development or fact
disproportionately affects the Company or (5) any changes in applicable
Laws or accounting rules, unless such circumstance, change, development or fact
disproportionately affects the Company, (b) with respect to the Buyer, any
event, change, circumstance, development, effect or state of facts that is
materially adverse to the ability of the Buyer to perform its obligations
under this Agreement or to consummate the transactions contemplated hereby, and
(c) with respect to the Seller, any event, change, circumstance,
development, effect or state of facts that is materially adverse to the ability
of the Seller to


 


4

















 


perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.


 


“Net Debt” means, as of the start of
business on the Closing Date, (i) Indebtedness of the Company less (ii) Closing
Date Cash.


 


“Option Assignment Documents” means
the assignment documents necessary to transfer to the Company all right, title
and interest in and to (a) the Option and Right of First Refusal Agreement
dated October 13, 2005 by and between Midwest Renewables, L.L.C. and
Howard H. Gilman & Joyce A. Gilman, (b) the Option and Rights of
First Refusal Agreement dated October 25, 2005 by and between Midwest
Renewables, L.L.C. and Gary D. Rumley & Monica L. Hastie, (c) the
Options and Rights of First Refusal Agreement dated February 23, 2006 by
and between Midwest Renewables, L.L.C. and Brian J., Paul J. and Craig E.
Heineman, (d) the Options and Rights of First Refusal Agreement dated October 19,
2005 by and between Midwest Renewables, L.L.C. and Harlan Farms, Inc., (e) the
Options and Rights of First Refusal Agreement dated March 9, 2006 by and
between Midwest Renewables, L.L.C. and Carol Brentnall, (f) the Option
dated February 2, 2006 by and between Midwest Renewables, L.C. and Mildred
G. Templeton, as Trustee of the Mildred G. Templeton Trust dated August 13,
1999, and Lois Stevenson, as Trustee of the Stevenson Family Living Trust dated
October 9, 2002, and (g) the Options and Rights of First Refusal
dated February 27, 2006 by and between Midwest Renewables L.L.C. and Gerry
W. Swan.


 


“Owned Real Property” means the real
property owned by the Company, together with all buildings and other
structures, facilities or improvements located thereon and all easements,
licenses, rights and appurtenances of the Company relating to the foregoing.


 


“Permitted Encumbrance” means (a) statutory
liens for current Taxes not yet due or delinquent or the validity or amount of
which is being contested in good faith by appropriate proceedings, to the
extent adequate reserves have been established in accordance with GAAP, (b) any
lien held by Credit Suisse First Boston to secure that certain Credit Agreement
dated as of February 24, 2005 by and among the Company, the Seller, Credit
Suisse First Boston and the other lenders referred to therein, (c) mechanics’,
carriers’, workers’, repairers’ and other similar liens arising or incurred in
the ordinary course of business relating to obligations as to which there is no
default on the part of the Company, or the validity or amount of which is
being contested in good faith by appropriate proceedings, (d) (except with
respect to any Owned Real Property) pledges, deposits or other liens securing
the performance of bids, trade contracts, leases or statutory obligations
(including workers’ compensation, unemployment insurance or other social
security legislation), (e) zoning, entitlement, conservation restriction
and other land use and environmental regulations by Governmental Authorities
provided such have not been violated and (f) ordinary and customary
exceptions, restrictions, easements, imperfections of title, and rights-of-way
that do not materially interfere with the present use, or materially detract
from the value, of the assets of the Company.


 


“Person” means an individual,
corporation, partnership, limited liability company, limited liability partnership,
syndicate, person, trust, association, organization or other entity, including
any Governmental Authority, and including any successor, by merger or
otherwise, of any of the foregoing.


 


5

















 


“Return” means any return,
declaration, report, statement, information statement and other document
required to be filed with a Governmental Authority with respect to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.


 


“Subsidiary” of any Person means any
other Person of which at least 50% of the outstanding voting securities or
other voting equity interests are owned, directly or indirectly, by such first
Person.


 


“Taxes” means (A) all federal,
state, local or foreign taxes, and governmental charges, fees, imposts, levies,
or assessments in the nature of a tax imposed by any Tax authority, including
all net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, and customs duties, (B) all
interest, penalties, fines, additions to tax or additional amounts imposed by
any Tax authority in connection with any item described in clause (A), and
(C) any liability in respect of any items described in clauses (A) or
(B) payable by reason of contract, assumption, transferee liability,
operation of Law, Treasury Regulation Section 1.1502-6(a) (or any
predecessor or successor thereof of any analogous or similar provision under
Law) or otherwise.


 


“Technology” means all software
(whether in source code or object code), information, designs, formulae,
algorithms, procedures, methods, techniques, ideas, know-how, research and
development, technical data, programs, subroutines, tools, materials,
specifications, documentation, works of authorship, processes, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements and other similar materials, all recordings,
graphs, drawings, reports, analyses, and other writings, and all proprietary or
confidential information that do not constitute Trade Secrets (if any), and
other tangible embodiments of the foregoing, in any form whether or not
specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by or relate to, or are used in
connection with the foregoing.


 


“Transaction Expenses” means all of
the fees and expenses of the Company, Intermediate LLC and the Seller payable
in connection with the transactions contemplated by this Agreement (including,
without limitation, all attorney’s fees and investment banker fees, all change
of control bonuses and/or severance payments, and all costs of unwinding any
interest rate protection agreements and arrangements); provided, however,
that the following shall not be considered Transaction Expenses:  any fees and expenses in connection with the
financing described in Section 3.4, and fees and expenses paid as
transaction fees or management fees to Affiliates of the Buyer, and any other
fees and expenses of the Buyer.


 


“Working Capital” shall consist of the
net amount of the line items reflected in the Closing Working Capital Worksheet
set forth on Schedule 2.1 of the Disclosure Schedules, and shall, in all
instances, be computed using the same line items, and in the same manner, as
set forth in such worksheet, consistently with the Working Capital Accounting
Principles.


 


6

















 


1.2                               Table
of Definitions. The following terms have the meanings set forth in the
Sections referenced below:


 




	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  Accounting Referee

  	
   

  	
  Schedule 2.1

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Arbitrators

  	
   

  	
  Section 9.5(b)

  
	
  Balance Sheet

  	
   

  	
  Section 4.6(a)

  
	
  Business

  	
   

  	
  Preamble

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer I

  	
   

  	
  Preamble

  
	
  Buyer II

  	
   

  	
  Preamble

  
	
  Buyer III

  	
   

  	
  Preamble

  
	
  Buyer Indemnified Parties

  	
   

  	
  Section 9.2(a)

  
	
  Cap

  	
   

  	
  Section 9.3

  
	
  Cash Escrow

  	
   

  	
  Definition of Indemnity Escrow Fund

  
	
  Certificate of Formation

  	
   

  	
  Section 4.1(b)

  
	
  Certificate of Merger

  	
   

  	
  Section 2.4

  
	
  Claim Notice

  	
   

  	
  Section 9.5(a)

  
	
  Closing

  	
   

  	
  Section 2.2(a)

  
	
  Closing Date

  	
   

  	
  Section 2.2(a)

  
	
  Closing Statement

  	
   

  	
  Schedule 2.1

  
	
  Closing Date Adjustment

  	
   

  	
  Schedule 2.1

  
	
  Closing Working Capital Worksheet

  	
   

  	
  Schedule 2.1

  
	
  Company

  	
   

  	
  Preamble

  
	
  Confidentiality Agreement

  	
   

  	
  Section 6.6

  
	
  Copyrights

  	
   

  	
  Definition of Intellectual Property

  
	
  Current Assets

  	
   

  	
  Schedule 2.1

  
	
  Current Liabilities

  	
   

  	
  Schedule 2.1

  
	
  Damages

  	
   

  	
  Section 9.2(a), (c)

  
	
  Debt Commitment Letter

  	
   

  	
  Section 3.4

  
	
  Deductible

  	
   

  	
  Section 9.3(a)

  
	
  Disclosure Schedules

  	
   

  	
  Article IV

  
	
  Dispute Notice

  	
   

  	
  Section 9.5(b)

  
	
  Disputed Items

  	
   

  	
  Schedule 2.1

  
	
  DLLCA

  	
   

  	
  Section 2.3

  
	
  Effective Time

  	
   

  	
  Section 2.4

  
	
  ERISA

  	
   

  	
  Section 4.10(a)

  
	
  Employee Plans

  	
   

  	
  Section 4.10(a)

  
	
  Environmental Laws

  	
   

  	
  Section 4.16

  
	
  Environmental Permits

  	
   

  	
  Section 4.16

  
	
  Equity Commitment Letter

  	
   

  	
  Section 3.4

  
	
  Escrow Agent

  	
   

  	
  Section 7.1(c)

  






 


7

















 




	
  Escrowed Securities

  	
   

  	
  Definition of Indemnity Escrow Fund

  
	
  Expiration Date

  	
   

  	
  Section 9.1

  
	
  Fairbank Contract

  	
   

  	
  Section 7.3(d)

  
	
  Final Closing Statement

  	
   

  	
  Schedule 2.1

  
	
  Final Working Capital

  	
   

  	
  Schedule 2.1

  
	
  Financial Statements

  	
   

  	
  Section 4.6(a)

  
	
  Financing

  	
   

  	
  Section 6.13

  
	
  HSR Act

  	
   

  	
  Section 3.3(b)

  
	
  Indemnified Officers

  	
   

  	
  Section 6.9(a)

  
	
  Indemnified Party

  	
   

  	
  Section 9.5(a)

  
	
  Indemnitor

  	
   

  	
  Section 9.5(a)

  
	
  Indemnity Escrow Agreement

  	
   

  	
  Section 7.1(c)

  
	
  Interim
  Financial Statements

  	
   

  	
  Section 4.6(a)

  
	
  Intermediate
  LLC

  	
   

  	
  Preamble

  
	
  Intermediate LLC Certificate

  	
   

  	
  Section 6.17(a)

  
	
  Intermediate LLC Operating Agreement

  	
   

  	
  Section 2.2(c)

  
	
  Iowa Falls
  Contract

  	
   

  	
  Section 7.3(d)

  
	
  IPO

  	
   

  	
  Section 6.14

  
	
  J.A.M.S.

  	
   

  	
  Section 9.5(b)

  
	
  Marks

  	
   

  	
  Definition of Intellectual Property

  
	
  Material
  Contracts

  	
   

  	
  Section 4.18(a)

  
	
  Member

  	
   

  	
  Section 6.12(c)

  
	
  Membership
  Interests

  	
   

  	
  Preamble

  
	
  Merger

  	
   

  	
  Preamble

  
	
  Merger Company

  	
   

  	
  Preamble

  
	
  Non-Competition
  Party

  	
   

  	
  Section 6.12(a)

  
	
  Non-Solicit
  Party

  	
   

  	
  Section 6.12(b)

  
	
  Operating
  Agreement

  	
   

  	
  Section 4.1(b)

  
	
  Patents

  	
   

  	
  Definition of Intellectual Property

  
	
  Permits

  	
   

  	
  Section 4.8(b)

  
	
  Permitted Action

  	
   

  	
  Section 6.1

  
	
  Purchase Price

  	
   

  	
  Section 2.1

  
	
  Purchase Price Adjustment

  	
   

  	
  Schedule 2.1

  
	
  Registration
  Statement

  	
   

  	
  Section 6.11(a)

  
	
  Related Persons

  	
   

  	
  Section 4.19

  
	
  Repayment
  Certificate

  	
   

  	
  Section 2.2(b)

  
	
  Restricted
  Business

  	
   

  	
  Section 6.12(a)

  
	
  SEC

  	
   

  	
  Section 6.11(a)

  
	
  Securities Act

  	
   

  	
  Section 2.2(c)

  
	
  Segregated Account

  	
   

  	
  Section 2.2(f)

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller
  Indemnified Parties

  	
   

  	
  Section 9.2(b)

  






 


8

















 




	
  Straddle Period

  	
   

  	
  Section 6.10(a)

  
	
  Substitution Date

  	
   

  	
  Section 3.4

  
	
  Surviving Company

  	
   

  	
  Section 2.3

  
	
  Target Working Capital Amount

  	
   

  	
  Schedule 2.1

  
	
  Tax Claim

  	
   

  	
  Section 6.10(f)

  
	
  Tax Indemnified Party

  	
   

  	
  Section 6.10(f)

  
	
  Tax Indemnifying Party

  	
   

  	
  Section 6.10(f)

  
	
  Termination Date

  	
   

  	
  Section 8.1(d)

  
	
  Termination Fee

  	
   

  	
  Section 8.2(b)

  
	
  Trade Secrets

  	
   

  	
  Definition of Intellectual Property

  
	
  Transaction

  	
   

  	
  Section 2.1

  
	
  True-Up Amount

  	
   

  	
  Schedule 2.1

  
	
  Working Capital Accounting Principles

  	
   

  	
  Schedule 2.1

  
	
  Working Capital Worksheet

  	
   

  	
  Schedule 2.1

  






 


ARTICLE II

PURCHASE AND SALE


 


2.1                               Purchase
and Sale of the Membership Interests. Upon the terms and subject to the
conditions hereof, the Seller shall sell, assign, convey, transfer and deliver
the Membership Interests to the Buyer and the Buyer shall purchase the
Membership Interests from the Seller (the “Transaction”) for an aggregate
cash purchase price in an amount equal to U.S.$1,005,000,000, as adjusted as
follows: (i) minus Net Debt immediately prior to the Closing, (ii) minus
the Closing Date Adjustment, if any, as set forth in Schedule 2.1 of the
Disclosure Schedules, and (iii) minus an amount equal to the lesser of (A) ninety-five
million dollars ($95,000,000) and (B) twenty-five percent (25%) of the
aggregate investment made by Buyer and its affiliates in their equity
securities in the Company and Intermediate LLC (such amount after such
calculation is hereinafter referred to as the “Purchase Price”).


 


2.2                               Closing.


 


(a)                                  The sale and purchase
of the Membership Interests shall take place at a closing (the “Closing”)
to take place at a time and on a date (the “Closing Date”) to be
specified by the parties, which shall be no later than the second Business Day
following the satisfaction of the latest to occur of the conditions set forth
in Article VII, at the offices of Gibson, Dunn & Crutcher
LLP, 2029 Century Park East, Los Angeles, California 90067, unless another
time, date or place is agreed to in writing by the parties hereto.


 


(b)                                 No later than
five (5) Business Days prior to the Closing, the Company shall
deliver to the Buyer a certificate, executed by the Chief Financial Officer of
the Company, setting forth (i) the amount of Net Debt as of such date and (ii) a
reasonable, good faith estimate of the Net Debt of the Company as of the start
of business on the Closing Date, together with such documents and information
necessary to verify the amount of Net Debt (the Company shall provide the Buyer
with reasonable access to all documents and personnel necessary for reviewing
the Net Debt amounts set forth in such certificate).


 


9

















 


(c)                                  At the Closing, (i) the
Buyer shall deliver (or cause to be delivered) to the Seller an amount equal to
the Purchase Price, less the Cash Escrow by wire transfer of immediately
available funds into a bank account designated in writing by the Seller to the
Buyer at least two (2) Business Days prior to the Closing Date, (ii) the
Buyer and the Seller shall enter into an operating agreement (the “Intermediate
LLC Operating Agreement”) and a members’ agreement of Intermediate LLC,
which agreements shall contain the terms set forth on Exhibit C
hereto, (iii) the Company shall pay all Indebtedness for borrowed money
and cause to be released all Encumbrances other than Permitted Encumbrances; provided
that, Permitted Encumbrances for purposes of this Section 2.2(c)(iii) shall
not include the encumbrances described in clause (b) of such definition, (iv) the
Seller shall deliver or cause to be delivered to the Buyer (x) an
Assignment of Limited Liability Membership Interests in the form attached
hereto as Exhibit A and (y) a certificate executed by an
officer of the Company evidencing the repayment of the Company’s Indebtedness
for borrowed money (the “Repayment Certificate”), (v) the Seller
shall deliver to the Company (x) that certain Certificate of Membership Interests
evidencing the ownership of the Membership Interests by the Seller which shall
be cancelled and reissued in the name of the Buyer in the appropriate amounts,
(y) a proper and effective stock power endorsement evidencing the transfer
of the Membership Interests in the form attached as Annex B to the
Operating Agreement (as defined below), and (z) an opinion of counsel
satisfactory to the Company to the effect that the transfer of the Membership
Interests does not require registration under the Securities Act of 1933, as
amended (the “Securities Act”).


 


(d)                                 At the Closing, (i) the
Buyer shall deliver an amount equal to the Cash Escrow to the Escrow Agent, and
(ii) the Seller shall deposit with the Escrow Agent the Escrowed
Securities, together with instruments of transfer therefore duly endorsed in
blank, all of which will be held and released in accordance with the terms of
the Indemnity Escrow Agreement.


 


(e)                                  Immediately prior to
the Closing, the Seller shall cause to be formed Intermediate LLC, to which it
shall contribute 100% of its membership interests in the Company in exchange
for 100% of the Membership Interests of Intermediate LLC.


 


(f)                                    Prior to Closing,
the Seller shall establish a segregated account at the Company (the “Segregated
Account”), which Segregated Account will hold funds to be used solely to
pay any Fairbank/Iowa Construction Expenses becoming due and payable following
Closing. The Buyer and the Seller shall determine, after consultation with an
independent engineer, within five (5) Business Days prior to the
Closing the appropriate amount to be held in the Segregated Account based on an
estimate of the Fairbank/Iowa Construction Expenses remaining due and payable
following the Closing plus an additional 10% of such estimated amount. The
Segregated Account shall be monitored by an independent engineer reasonably
acceptable to the Seller and the Buyer. Such engineer shall review invoices to
be paid and shall approve the release of funds from the Segregated Account to
pay the Fairbank/Iowa Construction Expenses. Amounts, if any, remaining in the
Segregated Account shall be released by wire transfer to the Seller to an
account designated by Seller upon the receipt by the Buyer of evidence
reasonably satisfactory to the Buyer from the general contractor that the
Company does not owe any further payments constituting Fairbank/Iowa
Construction Expenses to such contractor.


 


10

















 


2.3                               The
Merger. Upon the terms and subject to the conditions set forth in this
Agreement, immediately after the Closing, and upon the terms and subject to the
conditions in this Agreement and in accordance with the Delaware Limited
Liability Company Act (the “DLLCA”), Merger Company shall be merged with
and into the Company pursuant to the Merger. Following the Merger, the Company
shall continue as the surviving limited liability company (the “Surviving
Company”) and the separate existence of Merger Company shall cease.


 


2.4                               Effective
Time. Subject to the provisions of this Agreement, the Company and Merger
Company shall cause the Merger to be consummated by filing an appropriate
Certificate of Merger or other appropriate documents (the “Certificate of
Merger”) with the Secretary of State of the State of Delaware in such form as
required by, and executed in accordance with, the relevant provisions of the
DLLCA, on the Closing Date. The Merger shall become effective immediately after
the Closing (the “Effective Time”).


 


2.5                               Effects
of the Merger. The Merger shall have the effects set forth in the DLLCA. Without
limiting the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Company shall vest in the Surviving Company, and all debts, liabilities and
duties of the Company and Merger Company shall become the debts, liabilities
and duties of the Surviving Company.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE MERGER COMPANY


 


The Buyer and the Merger Company hereby
represent and warrant to the Seller and the Company as follows:


 


3.1                               Organization
and Standing.


 


(a)                                  Each Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its organization with full power and authority (corporate
and other) to own, lease, use and operate its properties and to conduct its
business as and where now owned, leased, used, operated and conducted. The
Merger Company is a limited liability company duly organized, validly existing
and in good standing under the laws of the state of its organization with full
power and authority (limited liability company and other) to own, lease, use
and operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted.


 


(b)                                 Each Buyer and the
Merger Company is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
property it owns, leases or operates, makes such qualification necessary,
except where the failure to be so qualified would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on such Buyer
or the Merger Company, as the case may be.


 


(c)                                  Each Buyer has
heretofore made available to the Company a complete and correct copy of the
certificate of incorporation and bylaws, each as amended to date, of such Buyer.
Such certificate of incorporation and bylaws are in full force and effect. No
Buyer is in default in the performance, observance or fulfillment of any
provision of its certificate of


 


11

















 


incorporation or bylaws. The Merger Company has heretofore made
available to the Company a complete and correct copy of the certificate of
formation and limited liability company agreement, each as amended to date, of
the Merger Company. Such certificate of formation and limited liability company
agreement are in full force and effect. The Merger Company is not in default in
the performance, observance or fulfillment of any provision of its certificate
of formation or limited liability company agreement.


 


3.2                               Corporate
Power and Authority. Each Buyer and the Merger Company has full corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. The
execution and delivery by each Buyer and the Merger Company of this Agreement
and the consummation by each Buyer and the Merger Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by each Buyer and the Merger Company. This Agreement constitutes the
legal, valid and binding obligation of each Buyer and the Merger Company,
enforceable against each Buyer and the Merger Company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).


 


3.3                               Conflicts,
Consents and Approval.


 


(a)                                  The execution,
delivery and performance by each Buyer and the Merger Company of this Agreement
and the consummation of the transactions contemplated hereby do not and will
not:


 


(i)                                     conflict with or
violate the certificate of incorporation or formation, or bylaws or limited
liability company agreement, as applicable, of such Buyer or the Merger Company;


 


(ii)                                  conflict with or
violate any Law applicable to such Buyer or the Merger Company or by which any
property or asset of such Buyer or the Merger Company is bound or affected;


 


(iii)                               conflict with, result in
any breach of, constitute a default (or an event that, with notice or lapse of
time or both, would become a default) under, or require any consent of any
Person pursuant to, any material contract or arrangement to which such Buyer or
the Merger Company is a party;


 


except, in the case of clause (ii) or
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on such Buyer or the Merger Company
or that arise as a result of any facts or circumstances relating to the Seller
or any of its Affiliates.


 


(b)                                 No Buyer nor the
Merger Company is required to file, seek or obtain any notice, authorization,
approval, order, permit or consent of or with any Governmental Authority in
connection with the execution, delivery and performance by the Buyer or the
Merger


 


12

















 


Company of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) any filings required to be made under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), (ii) such filings as may be required by any applicable
federal or state securities or “blue sky” laws, (iii) where failure to
obtain such consent, approval, authorization, order, permit or action, or to
make such filing or notification, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Buyer or the
Merger Company or (iv) as may be necessary as a result of any facts
or circumstances relating to the Seller or any of its Affiliates.


 


3.4                               Financing.
The Buyer has delivered to the Seller, prior to the date hereof, a true and
complete copy of the debt commitment letter attached hereto as Exhibit D.
The Buyer may, at any time prior to 5:00 p.m. (Eastern Standard Time) on
the fourth (4th) Business Day following the date hereof
(excluding the date hereof) (the “Substitution Date”) deliver to the
Seller a substitute debt commitment letter from a nationally recognized and
reputable banking institution with recent expertise in relevant debt
transactions that (i) contains conditions precedent to the lenders’
obligations to fund thereunder that are not less favorable to the Buyer in the
Seller’s reasonable judgment than the conditions precedent contained in the
debt commitment letter attached hereto as Exhibit D (that is, the
substitute debt commitment letter may contain no additional conditions
precedent, and no modifications to the conditions precedent contained in the
debt commitment letter attached hereto as Exhibit D, that would
excuse the lender’s funding obligation under such substitute debt commitment
letter in circumstances in which the lender’s funding obligation would not be
excused under the debt commitment letter attached hereto as Exhibit D),
(ii) contemplates a transaction structure (including, without limitation,
movement of funds comprised of proceeds of loans made pursuant thereto to pay
the Purchase Price and the sequence of such movement of funds, payment and
consummation of the Merger) that is, in the reasonable judgment of the Seller,
substantially the same as the transaction structure contemplated in the debt
commitment letter attached hereto as Exhibit D, and (iii) provides
for a commitment expiration date by which the financing contemplated thereby
must close that is no earlier than such date in the debt commitment letter
attached hereto as Exhibit D (the debt commitment letter attached
hereto as Exhibit D or any such substitute debt commitment letter
is referred to herein as the “Debt Commitment Letter”). The Buyer also
has delivered to the Seller, prior to the date hereof, a financing commitment
letter as attached hereto as Exhibit B (the “Equity Commitment
Letter”), evidencing an equity contribution commitment made to the Buyer by
Thomas H. Lee Equity Fund VI, L.P. and its affiliated parallel funds. The debt
and equity financings contemplated by the Debt Commitment Letter and the Equity
Commitment Letter would, in the aggregate, provide to the Buyer sufficient
funds to complete the transactions contemplated by this Agreement, including,
without limitation, to pay the Purchase Price. The Debt Commitment Letter and
the Equity Commitment Letter have been executed and delivered to the Buyer by
the lenders and investors committing funds thereunder and have each been
accepted by the Buyer (or, with respect to any substitute debt commitment
letter included in the Debt Commitment Letter, will be accepted by the Buyer by
the Substitution Date). The Equity Commitment Letter and Debt Commitment Letter
have not been amended, modified or supplemented (except (1) in a manner
that would satisfy the requirements for a substitute debt commitment letter set
out above or (2) by related letters relating primarily to compensation of
such lenders or investors, which letters do not give such lenders or investors
the right to modify the conditions precedent, or impose additional conditions
precedent, to such lenders’ funding obligations contained in the Debt Commitment
Letter or Equity Commitment Letter), and, to the


 


13

















 


best knowledge of the Buyer, are in full force and effect. Notwithstanding
anything to the contrary contained herein, the Buyer acknowledges and agrees
that its obligations hereunder (including, without limitation, the obligations
of the Buyer contained in Section 2.1 hereof) are not contingent
upon the Buyer obtaining financing to pay the Purchase Price.


 


3.5                               Brokerage
and Finder’s Fee. No brokerage, finder’s or similar fee will be incurred in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of the Buyer. All fees and expenses to
be paid for services rendered to the Buyer, its Affiliates or its Subsidiary by
their respective attorneys, accountants, investment bankers and other advisors
or agents in connection with the transactions contemplated hereby shall be paid
by the Buyer or an Affiliate or Subsidiary thereof.


 


3.6                               Merger
Company Conduct. The Merger Company has not engaged in any activity or
conducted any other business and has no assets and no liabilities other than as
provided in, or contemplated by, this Agreement and the transactions
contemplated thereby, including the Financing.


 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


Except as set forth in the applicable section of
the Disclosure Schedules attached hereto (the “Disclosure Schedules”),
the Company hereby represents and warrants to the Buyer as follows:


 


4.1                               Organization
and Qualification.


 


(a)                                  The Company is (i) a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
conduct the Business as and where now owned, leased, used, operated and
conducted and (ii) duly qualified to do business and in good standing
under the laws of each jurisdiction where such qualification is required and
neither the nature of the Business nor the property the Company owns, leases or
operates requires it to qualify to do business as a foreign corporation in any
other jurisdiction, except where the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect on the Company.


 


(b)                                 The Company is not in
default in the performance, observance or fulfillment of any provision of its
amended and restated certificate of formation dated February 9, 2005,
which certificate has not been further amended and is currently in effect (the “Certificate
of Formation”) or its amended and restated limited liability company
agreement dated February 22, 2005, which agreement has not been amended or
modified and is currently in effect (the “Operating Agreement”).


 


4.2                               Authority.
The Company has full power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary action. This
Agreement has been duly executed and


 


14

















 


delivered by the Company. This Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).


 


4.3                               Subsidiary
and Investments. Except as set forth on Schedule 4.3 of the Disclosure
Schedules:


 


(a)                                  the Company does not
have any Subsidiary;


 


(b)                                 the Company does not
own, directly or indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or enterprise; and


 


(c)                                  the Company is not
subject to any obligation or requirement to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in
any such entity referred to in subparagraph (b) above or otherwise.


 


4.4                               Conflicts;
Consents and Approvals.


 


(a)                                  Except as set forth
on Schedule 4.4(a) of the Disclosure Schedules, the execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby do not and will not:


 


(i)                                     conflict with, or
result in a breach of any provision of the Certificate of Formation or
Operating Agreement;


 


(ii)                                  conflict with or
violate in any material respect any Law applicable to the Company or by which
any property or asset of the Company is bound or affected;


 


(iii)                               conflict with, result in
any breach of, constitute a default (or an event that, with notice or lapse of
time or both, would become a default) under, or require any consent of any
Person pursuant to, any Material Contract;


 


except, in the case of clause (iii), for
any such conflicts, violations, breaches, defaults or other occurrences that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.


 


(b)                                 Except as set forth on
Schedule 4.4(b) of the Disclosure Schedules, the Company is not
required to file, seek or obtain any notice, authorization, approval, order,
permit or consent of or with any Governmental Authority in connection with the
execution, delivery and performance by the Company of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) any filings
required to be made under the HSR Act, (ii) such filings as may be
required by any applicable federal or state securities or “blue sky” laws, (iii) where
failure to obtain such consent, approval, authorization, order, permit or
action, or to make such filing or notification, would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or (iv) as may be necessary as a result of any facts or
circumstances relating to the Buyer or any of its Affiliates.


 


15

















 


4.5                               Membership
Interests and Ownership. (a) The Company’s authorized membership
interests are issued and outstanding, (b) no membership interests of the
Company are issued and held in treasury and (c) no membership interests of
the Company are reserved for issuance upon the exercise or conversion of
options, warrants or convertible securities granted or issued by the Company. The
outstanding membership interests of the Company are duly authorized and validly
issued, fully paid and non-assessable, and have not been issued in violation of
any preemptive or similar rights. Except as set forth on Schedule 4.5 of
the Disclosure Schedules, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale or transfer of any
membership interests of the Company, nor are there outstanding any securities
which are convertible into or exchangeable for any membership interests of the
Company; and the Company has no obligation of any kind to issue any additional
membership interests or to pay for membership interests of the Company or any
predecessor. The issuance and sale of the membership interests of the Company
have been in compliance with federal and state securities laws. Other than as
set forth in this Agreement, the Company has not agreed to register any
securities under the Securities Act, or under any state securities law or
granted registration rights to any person or entity.


 


4.6                               Financial
Statements; No Undisclosed Liabilities.


 


(a)                                  A copy of the audited
consolidated balance sheet of the Company as at December 31, 2005 and the
related audited consolidated statement of results of operations and cash flows
of the Company, together with all related notes and schedules thereto,
accompanied by the report thereon of the Company’s independent auditors
(collectively referred to as the “Financial Statements”) and the
unaudited consolidated balance sheet of the Company as at March 31, 2006
(the “Balance Sheet”), and the related consolidated statements, results
of operations and cash flows of the Company, together with all related notes
and schedules thereto (collectively referred to as the “Interim Financial
Statements”) are attached hereto as Schedule 4.6(a) of the
Disclosure Schedules. Each of the Financial Statements and the Interim
Financial Statements (i) has been prepared based on the books and records
of the Company (except as may be indicated in the notes thereto), (ii) has
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods indicated (except as may be indicated in the notes thereto)
and (iii) fairly presents, in all material respects, the consolidated
financial position, results of operations and cash flows of the Company as at
the respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein and subject, in the case of the Interim
Financial Statements, to normal and recurring year-end adjustments and the
absence of notes that will not, individually or in the aggregate, be material.


 


(b)                                 Except as set forth on
Schedule 4.6(b) of the Disclosure Schedules, there are no debts,
liabilities or obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, of the Company of a nature
required to be reflected on a balance sheet prepared in accordance with GAAP,
other than any such debts, liabilities or obligations (including, without
limitation, any hedging contracts, interest rate protection agreements or
similar agreements) (i) reflected or reserved against on the Interim
Financial Statements, the Financial Statements or the notes thereto, (ii) incurred
since the date of the Balance Sheet in the ordinary course of business of the
Company, or (iii) that would not,


 


16

















 


individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.


 


4.7                               Absence
of Certain Changes or Effects. Except as set forth on Schedule 4.7 of
the Disclosure Schedules, since the date of the Balance Sheet, there has not
occurred any Material Adverse Effect on the Company, and, except as set forth
in the Disclosure Schedules, since the date of the Balance Sheet, there has not
occurred any action or event that, if it occurred after the date of this
Agreement, would have required the consent of Buyer under Section 6.1.


 


4.8                               Compliance
with Law; Permits.


 


(a)                                  Except as set forth
on Schedule 4.8(a) of the Disclosure Schedules, the Company is in
compliance with all Laws applicable thereto, except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company.


 


(b)                                 Except as set forth on
Schedule 4.8(b) of the Disclosure Schedules, the Company is in
possession of all permits, licenses, franchises, approvals, certificates,
consents, waivers, concessions, exemptions, orders, registrations, notices or
other authorizations of any Governmental Authority necessary at this time for
the Company to own, lease and operate its properties and to carry on its
business as currently conducted (the “Permits”), except (i) such
Permits as are not required to have been obtained prior to the date this
representation is made, as to each of which the Company has no reason to
believe such Permit shall not be obtained in the ordinary course prior to the
time it is required to be obtained and without material expense not
contemplated in the Company’s budgets, and (ii) where the failure to have,
or the suspension or cancellation of, any of the Permits would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.


 


(c)                                  The Subsidiary is in
compliance with all Laws applicable thereto, except as would not reasonably be
expected to have a Material Adverse Effect on the Subsidiary. The Subsidiary is
in possession of all material certificates or permits necessary for the
Subsidiary to own, lease and operate its properties and to carry on its
business as currently conducted.


 


4.9                               Litigation.
Except as set forth on Schedule 4.9 of the Disclosure Schedules, as of the
date hereof, there is no Action by or against the Company pending, or to the
Knowledge of the Company, threatened. The Company is not subject to any order,
injunction, judgment, doctrine, decree, ruling, writ, assessment, arbitration
award, settlement agreement or stipulation. As of the date hereof, to the
Knowledge of the Company, there is no material Action by or against the
Subsidiary pending or threatened nor is the Subsidiary subject to any order,
injunction, judgment, doctrine, decree, ruling, writ, assessment, arbitration
award, settlement agreement or stipulation.


 


4.10                        Employee
Benefit Plans.


 


(a)                                  Schedule 4.10(a) of
the Disclosure Schedules sets forth (i) a list of all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental


 


17

















 


retirement, severance or other material benefit plans, programs or
arrangements, that are maintained, contributed to or sponsored by the Company
for the benefit of any current or former employee, officer or director of the
Company and (ii) a list of all employment, termination, severance or other
contracts, agreements or arrangements, pursuant to which the Company currently
has any obligation with respect to any current or former employee, officer or
director of the Company (collectively, the “Employee Plans”). The
Company has made available to the Buyer a true and complete copy of each
Employee Plan (and amendments thereto) and, to the extent applicable, all
current summary plan descriptions thereof, the most recent determination letter
from the IRS and the most recently filed Form 5500 with respect to any
Employee Plan.


 


(b)                                 Except as set forth on
Schedule 4.10(b) of the Disclosure Schedules, (i) each Employee
Plan has been maintained in all material respects in accordance with its terms
and the requirements of ERISA and the Code, (ii) the Company has performed
all material obligations required to be performed by them under any Employee
Plan and is not in any material respect in default under or in violation of any
Employee Plan, and (iii) no Action (other than claims for benefits in the
ordinary course) is pending or, to the Knowledge of the Company, threatened in
writing with respect to any Employee Plan that would reasonably be expected to
have a Material Adverse Effect on the Company.


 


(c)                                  Except as set forth
on Schedule 4.10(c) of the Disclosure Schedules, each Employee Plan
that is intended to be qualified under Section 401(a) of the Code has
received a determination or opinion letter from the IRS that it is so qualified
and, to the Knowledge of the Company, no fact or event has occurred since the
date of such letter or letters from the IRS that would reasonably be expected
materially and adversely to affect the qualified status of any such Employee
Plan.


 


(d)                                 The Company has no
obligation or liability (contingent or otherwise) with respect to a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) or a single employer plan (within the meaning of Section 4001(a)(15)
of ERISA) subject to Title IV of ERISA.


 


(e)                                  Except as set forth
on Schedule 4.10(e) of the Disclosure Schedules, the Company is not a
party to any employment contract, employment agreement or arrangement related
to employees that could, directly or in combination with other events, result,
separately or in the aggregate, in the payment, acceleration or enhancement of
any benefit in connection with the consummation of the transactions
contemplated by this Agreement.


 


4.11                        Labor and
Employment Matters. Except as set forth on Schedule 4.11 of the
Disclosure Schedules, the Company is not a party to any labor or collective
bargaining contract that pertains to employees of the Company. To the Knowledge
of the Company, there are no organizing activities or collective bargaining
arrangements that could affect the Company pending or under discussion with any
labor organization or group of employees of the Company. There is no picketing
pending or, to the Knowledge of the Company, threatened, and there are no
strikes, slow downs, work stoppages, lock outs, arbitrations, grievances or
other material labor disputes involving any employees of the Company pending,
or to the Knowledge of the Company, threatened.


 


18

















 


4.12                        Insurance.
Schedule 4.12 of the Disclosure Schedules sets forth a true and complete
list of all material insurance policies (the “Insurance Policies”) in
force with respect to the Company. The Seller has delivered or made available
to the Buyer copies of all such Insurance Policies, together with all riders
and amendments thereto. The Insurance Policies are in full force and effect and
all premiums due have either been paid or adequate provisions for the payment
thereof has been made. The Company has not received any written notice of any
material increase of premiums with respect to, or cancellation or non-renewal
of, any of the Insurance Policies. There are no material claims by the Company
or the Seller under any of the Insurance Policies relating to the business,
assets or properties of the Company as to which any insurance company is
denying liability or defending under a reservation of rights or similar clause.


 


4.13                        Real
Property.


 


(a)                                  Schedule 4.13(a) of
the Disclosure Schedules contains true and complete legal descriptions of all
Owned Real Properties.


 


(b)                                 Schedule 4.13(b) of
the Disclosure Schedules lists the street address of each parcel of Leased Real
Property and the identity of the lessor, lessee and current occupant (if
different from lessee) of each such parcel of Leased Real Property. The Company
has a valid leasehold estate in all Leased Real Property, free and clear of all
Encumbrances.


 


(c)                                  The Owned Real
Properties constitute all interests in real property currently used in
connection with the Business as it is currently conducted.


 


(d)                                 All of the Owned Real
Properties and the buildings, fixtures and improvements located thereon are in
good operating condition and repair (subject to normal wear and tear), and
suitable for the use to which they are presently put and are suitable for such
use to continue after the Closing Date. The Seller has delivered or otherwise
made available to the Buyer true and, to the Seller’s knowledge, complete
copies of all deeds for the Owned Real Properties, title reports, policies of
insurance (of any type, whether property, title, general liability or otherwise),
exception documents referenced in any title reports and/or policies of title
insurance, plats, replats, as-built drawings, construction plans and
specifications, any and all property reports, inspections or studies of the
Owned Real Properties, including without limitation, hydrology studies,
building inspection reports, environmental reports, foundations studies, and
surveys of, the Owned Real Properties, in each case, to the extent in the
Company’s files, together with all amendments, modifications or supplements, if
any, thereto.


 


(e)                                  The Seller has all
material certificates of occupancy and Permits of any Governmental Authority
necessary for the current use and operation of each Owned Real Property, and
the Seller is in material compliance with conditions of the Permits applicable
to each Owned Real Property.


 


(f)                                    There does not
exist any actual condemnation or eminent domain proceedings that affect any
Owned Real Property or any part thereof, and the Company has not received
any written notice of the intention of any Governmental Authority to take all
or any part thereof.


 


19

















 


(g)                                 The Company has not
granted any third party any option, right of first refusal or other contractual
right to purchase any Owned Real Property.


 


(h)                                 There are no parties
other than the Company with a right to possess any portion of the Owned Real
Properties or the improvements thereon as lessees, tenants, or licensees or
claiming any rights therein as lessees, tenants, or licensees.


 


(i)                                     The Company owns
all the railroad spur and tracks on its Owned Real Properties.


 


(j)                                     To the Knowledge
of the Company, the Subsidiary owns all railroad spurs and other tracks and
related rights necessary for the shipping by railroad of grain and products in
and out of the ethanol plant located in Fairbank, Iowa, subject to Permitted
Encumbrances, and the Subsidiary has good and marketable fee title to all real
property owned by it.


 


(k)                                  (A) all payments
for the (i) construction of the plant located in Fairbank, Iowa, and (ii) construction
of the expansion of the plant located in Iowa Falls, Iowa, that are currently
due and payable under all construction and construction-related contracts have
been made consistent with past practice; and (B) to the knowledge of the
Seller, there are no disputes as to payment or notices of claims received from
any contractors, subcontractors, materialmen or mechanics supplying any
materials or labor to or for either such construction project.


 


(l)                                     The Company has no
reason to believe the findings of the Report of Hawkeye Construction Progress –
February 2006 prepared by Harris Group Inc. dated March 24, 2006, do
not continue to be true and correct, and the construction and design of the
construction projects have not been materially altered or revised from the
design and construction program outlined in the Independent Engineer’s Report
prepared by Harris Group Inc. dated January 28, 2005.


 


4.14                        Intellectual
Property.


 


(a)                                  Schedule 4.14(a) of
the Disclosure Schedules sets forth a true and complete list of all Patents,
registered Marks and applications to register any Marks, material unregistered
Marks, registered Copyrights and applications for registration of Copyrights
included in the Company Intellectual Property.


 


(b)                                 Except as disclosed in
Schedule 4.14(a) of the Disclosure Schedules, the Company is the sole
owner of all right, title and interest in and to the Company Intellectual
Property listed in Schedule 4.14(a) of the Disclosure Schedules, free
and clear of any Encumbrances (except for Permitted Encumbrances or any
Encumbrances arising under the Intellectual Property Licenses or from any
infringement, misappropriation, violation, or dilution of Intellectual Property
owned by any third Person of which the Company does not have Knowledge). To the
Knowledge of the Company, the Company is the sole owner of, or has valid rights
to use, sell, license and commercially exploit, as the case may be, all
other Company Intellectual Property, Company Technology and Intellectual
Property licensed to the Company under the Intellectual Property Licenses as
the same is used, sold, licensed and commercially exploited in the Business as
presently conducted, free and clear of all Encumbrances (except for Permitted
Encumbrances) or obligations to others (except for the Intellectual Property
Licenses).


 


20

















 


To the Knowledge of the Company, the Company Intellectual Property, the
Company Technology and the Intellectual Property licensed to the Company under
the Intellectual Property Licenses and any other licenses of Intellectual
Property granted to the Company include all of the Intellectual Property and
Technology necessary to enable the Company to conduct the Business in the
manner in which such Business is currently being conducted.


 


(c)                                  To the Knowledge of
the Company, the operation of the Business as presently conducted, including
the development, manufacturing, licensing, marketing, importation, offer for
sale, sale or use of any products and services of the Company, the use or other
exploitation by the Company of the Company Intellectual Property, Company
Technology and Intellectual Property and Technology owned by third Persons and
licensed to the Company, and the present business practices, methods and
operations of the Company, do not infringe, dilute, constitute an unauthorized
use or misappropriation of, or violate any Intellectual Property, Technology,
right of privacy, right of publicity, or similar right of any Person. To the
Knowledge of the Company, no Person is infringing, diluting, violating or
misappropriating any Company Intellectual Property or Company Technology, and
no claims of infringement, dilution, violation or misappropriation of any
Company Intellectual Property or Company Technology have been made against any
Person by the Company.


 


(d)                                 The Company has taken
reasonable measures to protect the confidentiality of its Trade Secrets
(including any confidential information owned by a third Person to whom the
Company has a confidentiality obligation). Except as specified in Schedule 4.14(d) of
the Disclosure Schedules, each employee, consultant and independent contractor
of the Company involved in the creation or development of any products,
services, Intellectual Property or Technology related to the Business has
entered into a written non-disclosure and invention assignment agreement with
the Company in a form provided to Buyer prior to the date hereof.


 


(e)                                  Except as specified
in Schedule 4.14(e) of the Disclosure Schedules, no claim has been
asserted in writing (including by electronic mail) against the Company that the
use or exploitation by the Company of any Company Intellectual Property,
Company Technology or Intellectual Property or Technology owned by any third Person
and licensed to the Company infringes, dilutes, violates or constitutes an
unauthorized use or misappropriation of any Intellectual Property or Technology
of any third Person, which infringement, dilution, violation, unauthorized use
or misappropriation would reasonably be expected to have a Material Adverse
Effect on the Company, or challenging the ownership, validity or enforceability
of any Company Intellectual Property or the ownership of any Company Technology.
To the Knowledge of the Company, the Company Intellectual Property, and all of
the Company’s rights in and to the Company Intellectual Property, the Company
Technology and the Intellectual Property licensed to the Company under the
Intellectual Property Licenses, are valid and enforceable.


 


(f)                                    The Company has no
proprietary software. Except as specified in Schedule 4.14(f) of the
Disclosure Schedules and except pursuant to the Intellectual Property Licenses
listed in Schedule 4.18(a)(ix) of the Disclosure Schedules, the
Company has no obligation to pay any royalty, license fee or similar payment to
any third Person, whether such payment consists of cash in an amount that
exceeds, or of any other form of consideration having


 


21

















 


a fair market value in excess of, $100,000 per year for the right to
use any Intellectual Property or Technology.


 


(g)                                 Neither this Agreement
nor any transaction contemplated by this Agreement will result in the grant of
any license with respect to any Company Intellectual Property or Company
Technology to any third Person pursuant to any agreement to which the Company
is a party as of the date hereof. The consummation of the transactions
contemplated hereby will not result in the loss or impairment of Buyer’s right
to own or use any of the Company Intellectual Property, Company Technology or
Intellectual Property licensed to the Company under any Intellectual Property
License pursuant to any agreement to which the Company is a party as of the
date hereof.


 


4.15                        Taxes.


 


(a)                                  The Company is, and
has been at all times since its formation on January 27, 2005, properly
treated as a disregarded entity within the meaning of Treas. Reg. Section 301.7701-2
for federal income tax purposes.


 


(b)                                 Except as set forth on
Schedule 4.15(b) of the Disclosure Schedules:


 


(i)                                     all material
Returns required to have been filed by or with respect to the Company have been
timely filed (taking into account any extension of time to file granted or
obtained), and such Returns are true, correct and complete in all material
respects;


 


(ii)                                  all Taxes shown to be
payable by the Company on such Returns have been paid or will be timely paid
and all other material Taxes required to be paid by the Company have been
timely paid;


 


(iii)                               no deficiency for any
material amount of Tax has been asserted or assessed by a Governmental
Authority in writing against the Company that has not been satisfied by
payment, settled or withdrawn, and there are no audits or investigations of or
relating to the Taxes of the Company by any Governmental Authority in progress,
nor has the Company received any written notice from any Governmental Authority
that it intends to conduct such an audit or investigation;


 


(iv)                              there have been no audits
or examinations of or relating to the Taxes of the Company by any Governmental
Authority; no claim has been made by any Governmental Authority in a
jurisdiction where the Company does not file Returns that the Company or any of
their direct or indirect owners is or may be subject to taxation by, or required
to file any Return in, that jurisdiction;


 


(v)                                 there are no Tax liens
on the assets of the Company (other than Permitted Encumbrances);


 


(vi)                              all Taxes not yet due and
payable by the Company (or any other corporation merged into or consolidated
with the Company) have been properly accrued


 


22

















 


on the books of account of the Company, as
the case may be, in either case in accordance with GAAP;


 


(vii)                           the Company has complied in
all respects with all applicable Laws relating to the payment and withholding
of Taxes and has duly and timely withheld and paid over to the appropriate
Taxing Authority all amounts required to be so withheld and paid under all
applicable Laws;


 


(viii)                        neither the Company, nor any other
Person on the behalf of any of the Company, has (A) executed or entered
into a closing agreement pursuant to Section 7121 of the Code or any
similar provision of Law that would be binding on the Company or the Buyer
after the Closing Date, (B) requested any extension of time within which
to file any income, franchise or other material Tax Return, which Tax Return
has since not been filed, (C) granted any extension for the assessment or
collection of any income, franchise or other material Taxes, which Taxes have
not since been paid, or (D) granted to any Person any power of attorney
that is currently in force with respect to any Tax matter that would be binding
on the Company or the Buyer after the Closing Date;


 


(ix)                                the Company is not a
party to any tax sharing, allocation, indemnity or similar agreement or
arrangement (whether or not written) pursuant to which it will have any
obligation to make any payments after the Closing, other than commercial
agreements entered into in the ordinary course of business (such as, for
example only, property tax escalator clauses in real estate leases);


 


(x)                                   the Company is not
subject to any private letter ruling of the IRS or any comparable ruling of any
Taxing Authority that would be binding on the Company or the Buyer after the
Closing Date;


 


(xi)                                no property owned by
the Company is (A) property required to be treated as being owned by
another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (B) ”tax-exempt use
property” within the meaning of Section 168(h)(1) of the Code, (C) ”tax-exempt
bond financed property” within the meaning of Section 168(g)(5) of
the Code, (D) ”limited use property” within the meaning of Rev.
Proc. 2001-28, or (E) subject to Section 168(g)(1)(A) of
the Code;


 


(xii)                             the Company has not
participated in any “reportable transaction” as defined in Treasury regulation Section 1.6011-4(b) that
has not been properly reported; and


 


(xiii)                          the Company (A) has not
agreed to and is not required to make any adjustment pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign Law, (B) does
not have any Knowledge that any Governmental Authority has proposed any such
adjustment, and (C) does not have an application pending with any
Governmental Authority requesting permission for any changes in accounting
method.


 


(c)                                  All material Returns
required to have been filed by or with respect to the Subsidiary have been
timely filed (taking into account any extension of time to file granted or


 


23

















 


obtained), and such Returns are true, correct and complete in all
material respects. All Taxes shown to be payable by the Subsidiary on such
Returns have been paid or will be timely paid and all other material Taxes
required to be paid by the Subsidiary have been timely paid. There are no Tax
liens on the assets of the Subsidiary (other than Permitted Encumbrances).


 


4.16                        Environmental
Matters.


 


(a)                                  Except as set forth
on Schedule 4.16(a) of the Disclosure Schedules:


 


(i)                                     the Company is and
has been in compliance in all material respects with all applicable
Environmental Laws and has obtained, maintained and is in compliance in all
material respects with all Environmental Permits, except such Environmental
Permits as are not required to have been obtained prior to the date this
representation is made, as to each of which the Company has no reason to
believe such Environmental Permit shall not be obtained in the ordinary course
prior to the time it is required to be obtained and without material expense
not contemplated in the Company’s budgets;


 


(ii)                                  there has been no
disposal, release, or threatened release of hazardous substances, materials or
wastes on, under, in, from or about the Company’s property or otherwise related
to the operations of the Company, that has subjected or, to the Knowledge of
the Company, would reasonably be expected to result in the Company to material
liability under any Environmental Law;


 


(iii)                               the Company has not
disposed or arranged for disposal of hazardous substances, materials or wastes
on any third-party property in a manner that has subjected or to the knowledge
of the Company, would reasonably be expected to subject the Company to material
liability under any Environmental Law;


 


(iv)                              the Company has not
received any notice, demand, letter, claim or request for information relating
to the Company’s property or operations alleging
violation of or liability under any Environmental Law and there are no
proceedings, actions, orders, decrees, injunctions or other claims, to the
Knowledge of the Company, any threatened actions or claims, relating to or
otherwise alleging liability under any Environmental Law; and


 


(v)                                 The Company has made
available to the Buyer all material environmental assessments, audits,
investigations or similar reports, and any material documentation relating to
compliance or liabilities under Environmental Laws.


 


(b)                                 To the Knowledge of
the Company, the Subsidiary is and has been in compliance in all material
respects with all applicable Environmental Laws and has obtained, maintained
and is in compliance in all material respects with all applicable permits under
Environmental Laws for the Subsidiary to own, lease and operate its properties
and to carry on its business as currently conducted.


 


(c)                                  The representations
and warranties contained in this Section 4.16 are the only
representations and warranties being made with respect to compliance with or
liability under Environmental Laws or with respect to any environmental matter,
including natural


 


24

















 


resources, related to the Company or the Subsidiary.


 


For purposes of this Agreement:


 


“Environmental Laws” means any
applicable Laws of any Governmental Authority relating to pollution, the
protection of the environment or natural resources or human health and safety
as it relates to environmental protection.


 


“Environmental Permits” means all
Permits required under any Environmental Law with respect to the Business.


 


4.17                        Purchasers
and Suppliers. Schedule 4.17 of the Disclosure Schedules sets forth
the Company’s largest two purchasers (by annual revenue) of ethanol and
distillers grain produced from the Company’s ethanol operation. Schedule 4.17
of the Disclosure Schedules also sets forth the Company’s largest ten suppliers
(by annual dollars expended) of the corn inventory necessary for production of
ethanol. No purchaser or supplier disclosed in Schedule 4.17 of the
Disclosure Schedules has canceled or otherwise modified in any material adverse
respect its relationship with the Company, and the Company has not received
written notice or otherwise has Knowledge that any such purchaser or supplier
intends to cancel or otherwise modify in any material adverse respect its
relationship with the Company.


 


4.18                        Material
Contracts.


 


(a)                                  Schedule 4.18(a) of
the Disclosure Schedules discloses all material contracts described in
clauses (i) through (x) below to which the Company is a party (“Material
Contracts”):


 


(i)                                     each agreement or
arrangement of the Company that requires the payment or incurrence of
liabilities by the Company, subsequent to the date of this Agreement, of more
than $3,000,000 annually, other than agreements in the ordinary course of
business relating to the purchase of corn or natural gas or the sale of ethanol
or distiller’s grains and agreements, including forward purchase and sale
commitments and hedging arrangements as set forth on Schedule 4.18(a)(i) of
the Disclosure Schedules, related thereto;


 


(ii)                                  each contract of the
Company relating to, or evidence of, or guarantee of, or providing security
for, indebtedness or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any asset of the Company);


 


(iii)                               each material license,
sale, distribution, commission, marketing, agent, franchise, technical
assistance or similar agreement relating to or providing for the marketing
and/or sale of the products or services to which the Company is a party or by
which the Company is otherwise bound;


 


(iv)                              each acquisition,
partnership, joint venture, teaming arrangement or other similar contract,
arrangement or agreement entered into by the Company;


 


25

















 


(v)                                 each agreement,
arrangement, contract, commitment or obligation of the Company restricting or
otherwise affecting the ability of the Company to compete in the Business or
otherwise in any jurisdiction;


 


(vi)                              each lease or sublease of
Leased Real Property;


 


(vii)                           each pension, profit
sharing, stock option, employee stock purchase or other plan or arrangement
providing for deferred or other compensation to employees of the Company or any
other employee benefit plan or arrangement, or any collective bargaining
agreement or any other contract with any labor union, or any severance
agreement, program or policy;


 


(viii)                        each contract of the Company
for the employment of any officer, individual employee or other Person on a
full-time, part-time, consulting or other basis or contract of the Company
relating to loans to officers, directors or Affiliates;


 


(ix)                                each Intellectual
Property License relating to any material Intellectual Property and each
agreement involving the sale or purchase of material Intellectual Property,
except for any of the foregoing related to “off-the-shelf” generally available
software used pursuant to shrink-wrap or click-through license agreements on
reasonable terms for a license fee of no more than $10,000; and


 


(x)                                   each other existing
agreement of the Company, not otherwise covered by clauses (i) through
(ix), the loss of which would result in a Material Adverse Effect on the
Company.


 


(b)                                 True, correct and
complete copies of the Material Contracts have been made available to the Buyer.
Each Material Contract is valid and enforceable by and against the Company in
accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law), and the
Company is, and to the Knowledge of the Company, all other parties thereto are,
in compliance in all material respects with the provisions thereof.


 


4.19                        Related
Party Transactions. Except as set forth in Section 3.36 of the
data room index as it exists on the date hereof, no employee, officer,
director, or member of the Seller, Intermediate LLC, the Company, any member of
his or her immediate family or any of their respective Affiliates (“Related
Persons”) (i) owes any amount to the Seller, Intermediate LLC, or the
Company nor does the Seller, Intermediate LLC, or the Company owe any amount
to, nor has the Seller, Intermediate LLC, or the Company committed to make any
loan or extend or guarantee credit to or for the benefit of, any Related
Person, (ii) is involved in any business arrangement or other relationship
with the Seller, Intermediate LLC, or the Company (whether written or oral), (iii) owns
any property or right, tangible or intangible, that is used by the Seller,
Intermediate LLC, or the Company, (iv) has any claim or cause of action
against the Seller, Intermediate LLC, or the Company or (v) owns any
direct or indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to or borrower


 


26

















 


from or has the right to participate in the profits of, any Person
which is a competitor, supplier, customer, landlord, tenant, creditor or debtor
of the Seller, Intermediate LLC, or the Company.


 


4.20                        Sufficiency
and Condition of Assets. Except as set forth on Schedule 4.20 of the
Disclosure Schedule, the Company has good and marketable title to, or a valid
leasehold interest in, the personal properties and assets, whether tangible or
intangible, used by it, located on its premises or reflected on the Balance
Sheet (except as sold or disposed of subsequent to the date thereof in the
ordinary course of business), free and clear of any and all Encumbrances except
for Permitted Encumbrances. Such personal properties and assets comprise all of
the assets necessary to operate the business of the Company as presently
conducted in all respects, except with respect to Intellectual Property or
Technology assets, which are addressed in Section 4.14 hereof. All such
properties and assets, which individually or in the aggregate are material to the
operation of the Business are in good condition and in a state of good
maintenance and repair (ordinary wear and tear excepted) and are suitable for
the purposes used.


 


ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE SELLER


 


The Seller hereby represents and warrants to
the Buyer as follows:


 


5.1                               Organization.
The Seller is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Iowa and has all necessary
power and authority to own, lease and operate its properties and to carry on
its business as it is now being conducted.


 


5.2                               Authorization.
The execution and delivery of this Agreement by the Seller and the consummation
by the Seller of the transactions contemplated hereby have been duly authorized
by the Seller, to the extent the Seller is a party thereto. This Agreement has
been duly executed and delivered by the Seller and, assuming the due
authorization, execution and delivery of the other parties hereto, constitutes
the legal, valid and binding obligation of the Seller, enforceable against it
in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).


 


5.3                               Conflicts;
Consents and Approvals.


 


(a)                                  The execution,
delivery and performance by the Seller of this Agreement and the consummation
of the transactions contemplated hereby do not and will not:


 


(i)                                     conflict with, or
result in a breach of any provision of the articles of organization or the
operating agreement of the Seller;


 


(ii)                                  conflict with or
violate in any material respect any Law applicable to the Seller or by which
any property or asset of the Seller is bound or affected;


 


(iii)                               conflict with, result in
any breach of, constitute a default (or an event that, with notice or lapse of
time or both, would become a default) under, or require any


 


27

















 


consent of any Person pursuant to, any
material contract or arrangement to which the Seller is a party;


 


except, in the case of clause (iii), for
any such conflicts, violations, breaches, defaults or other occurrences that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Seller or that arise as a result of any facts or
circumstances relating to the Buyer or any of its Affiliates.


 


(b)                                 The Seller is not
required to file, seek or obtain any notice, authorization, approval, order,
permit or consent of or with any Governmental Authority in connection with the
execution, delivery and performance by the Company of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) any
filings required to be made under the HSR Act, (ii) such filings as may be
required by any applicable federal or state securities or “blue sky” laws, (iii) where
failure to obtain such consent, approval, authorization, order, permit or
action, or to make such filing or notification, would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Seller or (iv) as may be necessary as a result of any facts or
circumstances relating to the Buyer or any of its Affiliates.


 


5.4                               Ownership
of Membership Interests. On the date hereof, the membership interests of
the Company are owned beneficially and of record by the Seller and the Seller
owns the membership interests of the Company free and clear of all liens,
claims, charges, pledges, security interests, options or other encumbrances, or
agreements or commitments of any type relating to the issuance, sale or
transfer of the membership interests, except for (a) a pledge of the
membership interests of the Company to Credit Suisse First Boston and certain
other lenders, pursuant to that certain Credit Agreement dated as of February 24,
2005 by and among the Company, the Seller, Credit Suisse First Boston and the
other lenders referred to therein, which pledge will be released and terminated
prior to the Closing, and (b) as may be created or exist by any act
or omission of the Buyer or any other Person other than the Seller. The
Transaction will not give rise to any preemptive or similar rights on behalf of
any person under any provision of any contract to which the Seller is party or
by which any property of the Seller is bound.


 


5.5                               Brokerage
and Finder’s Fee. Except for investment banking fees owed to Credit Suisse
Securities (USA) LLC (which fees shall be paid by the Seller at Closing), no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Seller or any Affiliate or
Subsidiary of the Seller.


 


ARTICLE VI

COVENANTS OF THE PARTIES


 


6.1                               Conduct
of Business Prior to the Closing. Between the date of this Agreement and
the Closing Date, unless the Buyer shall otherwise agree in writing and except
for (i) those dividends, distributions or other transactions contemplated
by the Target Working Capital Amount as set forth in Annex A to Schedule 2.1
of the Disclosure Schedules, (ii) the filing of a Form S-1
Registration Statement with the United States Securities and Exchange
Commission as contemplated by Section 6.11 of this Agreement, and (iii) any
payment of obligations related to or arising out of that certain Credit
Agreement dated as of February 24,


 


28

















 


2005 by and among the Company, the Seller, Credit Suisse First Boston
and the other lenders referred to therein (each, a “Permitted Action”
and, collectively, the “Permitted Actions”), the Business shall be
conducted only in the ordinary course of business in all material respects, and
the Company shall use its commercially reasonable efforts to preserve intact in
all material respects its business organization and shall continue to make
capital expenditures in accordance with its 2006 annual budget previously
provided to Buyer. Between the date of this Agreement and the Closing Date,
without the prior consent of the Buyer (which consent shall not be unreasonably
withheld) and except for the Permitted Actions, the Company will not, and the
Seller will not permit the Company to:


 


(a)                                  amend or otherwise
change the Certificate of Formation or the Operating Agreement;


 


(b)                                 except for the
transfer to Intermediate LLC contemplated under Section 2.2(c),
adjust, split, combine or reclassify the membership interests in the Company;


 


(c)                                  other than any
Permitted Action, make, declare or pay any dividend or distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any of the
membership interests in the Company or any securities or obligations
convertible into or exchangeable for any of the membership interests in the
Company or any other securities;


 


(d)                                 grant any person any
right to acquire any of the membership interests in the Company or any other
securities or any registration or similar rights with respect to any of the
Membership Interests or other securities of the Company or Intermediate LLC;


 


(e)                                  except for the
transfer to Intermediate LLC contemplated under Section 2.2(c),
issue, deliver or sell or agree to issue, deliver or sell any additional
membership interests of Intermediate LLC, the Company or Intermediate LLC or
any other securities;


 


(f)                                    enter into any
agreement, understanding or arrangement with respect to the sale or voting of
the membership interests in the Company or any other securities of the Company;


 


(g)                                 except for the
formation of Intermediate LLC, acquire any corporation, partnership, limited
liability company, other business organization or division thereof or any
assets other than in the ordinary course of business;;


 


(h)                                 adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation or
recapitalization of Intermediate LLC or the Company;


 


(i)                                     incur any
long-term or short-term debt or issue any debt securities, except for
borrowings under existing lines of credit in the ordinary course of business;


 


(j)                                     enter into any
contract, agreement or arrangement that would be a Material Contract if entered
into prior to the date hereof, other than any such contracts, agreements or
arrangements entered into in the ordinary course of business (including
contracts, agreements or arrangements with customers, vendors or clients);


 


29

















 


(k)                                  except as in the
ordinary course of business as provided in this Section 6.1,
authorize, or make any unbudgeted or not previously disclosed commitment with
respect to, any capital expenditure;


 


(l)                                     fail to exercise
any rights of renewal with respect to any material Leased Real Property that by
its terms would otherwise expire;


 


(m)                               grant or announce any
increase in the salaries, bonuses or other benefits payable by the Company to
any of its employees, other than as required by Law, pursuant to any plans,
programs or agreements existing on the date hereof (which have been disclosed
in Schedule 4.10(a) of the Disclosure Schedules) or other ordinary
increases not inconsistent with the past practices of the Company;


 


(n)                                 make any change in any
method of accounting or accounting practice or policy, except as required by
GAAP or by Law;


 


(o)                                 settle or compromise
any pending or threatened legal proceeding or any claim or claims for, or that
would result in a loss of revenue of, an amount that could, individually or in
the aggregate, reasonably be expected to be greater than $250,000; or


 


(p)                                 make or revoke any
election relating to Taxes (other than making an ordinary course election in
the ordinary course of preparing the Company’s Returns), settle or compromise
any claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to material Taxes, except as required by
applicable Law, or make any material change to any of its methods of accounting
or methods of reporting income or deductions for Tax or accounting practice or
policy from those employed in the preparation of its most recently filed
federal income Return, or amend any material Return without having provided the
Buyer with a copy thereof (together with supporting work papers) at least
ten (10) days prior to the due date thereof for Buyer’s review and
approval;


 


(q)                                 terminate or unwind
any of its hedging contracts, other than interest rate protective agreements or
similar contracts; or


 


(r)                                    agree in writing or
otherwise to take any of the foregoing actions.


 


6.2                               Covenants
Regarding Information.


 


(a)                                  Between the date
hereof and the Closing Date, the Company will provide the Buyer and its
authorized representatives with reasonable access during normal business hours
to the facilities of the Company and its personnel, representatives, books and
records; provided, that the Buyer agrees that such access will give due
regard to minimizing interference with the operations, activities and employees
of the Company.


 


(b)                                 Between the date
hereof and the Closing Date, the Company shall furnish to the Buyer and its
authorized representatives such financial and operating data and other
information with respect to the Business and properties of the Company as the
Buyer may from time to time reasonably request, including the delivery of
unaudited consolidated balance sheets


 


30

















 


and related statements of income, stockholders’ equity and cash flows
of the Company, prepared in accordance with GAAP for each fiscal quarter ended
at least 45 days prior to the Closing Date.


 


(c)                                  Between the date
hereof and Closing, Seller shall, or if applicable shall request Fagen, Inc.
(to the extent permitted under the Iowa Falls Contract and the Fairbank
Contract) to, deliver to the Buyer, (i) contemporaneously with the
delivery thereof to Company, (A) copies of all Progress Reports (as such
term is defined in each of the Iowa Falls Contract and the Fairbank Contract,
as applicable), (B) copies of all results of all Performance Tests (as
such term is defined in each of the Iowa Falls Contract and the Fairbank
Contract, as applicable), and (C) copies of all required permits listed on
the Exhibits H of the Iowa Falls Contract and Fairbank Contract; and (ii) contemporaneously
with the delivery thereof to Company or Fagen, Inc., as applicable, (A) copies
of all written notices of default delivered by either party to the Fairbank
Contract or the Iowa Falls Contract, and (B) copies of written
correspondence regarding determination of the conditions required for
Substantial Completion and Final Completion (as such term is defined in each of
the Iowa Falls Contract and the Fairbank Contract, as applicable).


 


(d)                                 Notwithstanding
anything to the contrary in this Agreement, nothing in this Section 6.2
shall require the Company to disclose any information to the Buyer if such
disclosure (i) would cause significant competitive harm to the Company,
the Seller or any of their respective Affiliates if the transactions
contemplated by this Agreement were not consummated or (ii) would be in
violation of applicable Laws or agreements.


 


6.3                               Notification
of Certain Matters. Until the Closing, each party hereto shall promptly
notify the other parties in writing of: (a) any material fact, change,
condition, circumstance, event, occurrence or non-occurrence that has caused or
is reasonably likely to cause any representation or warranty in this Agreement
made by it to be untrue or inaccurate in any respect at any time after the date
hereof and prior to the Closing, (b) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder, or (c) the institution of or the threat of
institution of any Action against the other parties related to this Agreement
or the transactions contemplated hereby; provided, however, that
the delivery of any notice pursuant to this Section 6.3 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice, or the representations or warranties of, or the
conditions to the obligations of, the parties hereto.


 


6.4                               No
Solicitation by the Buyer. If this Agreement is terminated prior to
Closing, without the Company’s prior written consent, the Buyer will not for a
period of one (1) year from the date of this Agreement directly or
indirectly solicit for employment or hire as an employee, consultant or
otherwise any person who is now employed by the Company (or whose activities
are dedicated to the Company) in an executive or management level position or
otherwise considered by the Company to be a key employee. The Buyer agrees that
any remedy at law for any breach by the Buyer of this Section 6.4
would be inadequate, and that the Seller and the Company would be entitled to
injunctive relief in such a case. If it is ever held that this restriction on
the Buyer is too onerous and is not necessary for the protection of the
Company, the Buyer agrees that any court of competent jurisdiction may impose
such lesser restrictions which such court may consider to be necessary or
appropriate to protect the Company properly.


 


31














 


6.5                               Transfer
and Voting of the Membership Interests. Except as contemplated by Section 2.2(c),
the Seller agrees that between the date hereof and the Closing Date, it shall
not (i) sell, transfer, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, substantially all of the assets of, or any of the membership
interests of the Seller, the Company or Intermediate LLC or any interest
therein or any membership interests it owns of the Subsidiary (ii) grant
any proxies, deposit the membership interests of the Company or Intermediate
LLC into a voting trust or enter into a voting agreement with respect to the
membership interests of the Intermediate LLC, the Company or its Subsidiary, or
any interest therein, or (iii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. The Seller shall, and shall cause
the Company and its officers, directors, members, managers, agents and
representatives to terminate any and all negotiations or discussions with any
third party regarding any proposal concerning any of the foregoing.


 


6.6                               Confidentiality
Agreement. Each of the parties shall hold, and shall cause its authorized
representatives to hold, in confidence all documents and information furnished
to it by or on behalf of the other parties in connection with the transactions
contemplated hereby pursuant to the terms of the confidentiality agreement
dated March 3, 2006 between the Buyer and the Company (the “Confidentiality
Agreement”), which shall continue in full force and effect until the
Closing Date, at which time such Confidentiality Agreement and the obligations
of the parties under this Section 6.6 shall terminate; provided,
however, that after the Closing Date, the Confidentiality Agreement
shall terminate only in respect of that portion of the documents and materials
referenced therein exclusively relating to the transactions contemplated by
this Agreement. If for any reason this Agreement is terminated prior to the
Closing Date, the Confidentiality Agreement shall nonetheless continue in full
force and effect in accordance with its terms.


 


6.7                               Consents
and Filings; Further Assurances.


 


(a)                                  Each of the parties
shall use all commercially reasonable efforts to take, or cause to be taken, all
appropriate action to do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective
the transactions contemplated by this Agreement as promptly as practicable,
including to (i) obtain from Governmental Authorities and other Persons
all consents, approvals, authorizations, qualifications and orders as are
necessary for the consummation of the transactions contemplated by this
Agreement and (ii) promptly make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement required
under the HSR Act or any other applicable Law.


 


(b)                                 Each of the Seller and
the Buyer shall use commercially reasonable efforts to resolve such objections,
if any, as may be asserted by any Governmental Authority with respect to
the transactions contemplated hereby. In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging such transactions, and if, by mutual agreement, the
Seller and the Buyer decide that litigation is in their best interests, each
party shall cooperate and use commercially reasonable efforts


 


32

















 


vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any order that is in effect and
that prohibits, prevents, or restricts consummation of such transactions. Each
of the Seller and the Buyer shall use commercially reasonable efforts to take
such action as may be required to cause the expiration of the notice
period under the HSR Act with respect to the transactions contemplated hereby
as promptly as possible after the execution of this Agreement.


 


(c)                                  Each of the parties,
unless prohibited or restricted by Law or any Governmental Authority, shall
promptly notify the other parties of any communication it or any of its
Affiliates receives from any Governmental Authority relating to the matters
that are the subject of this Agreement and permit the other parties to review
in advance any proposed communication by such party to any Governmental
Authority. No party to this Agreement shall agree to participate in any meeting
with any Governmental Authority in respect of any filings, investigation or
other inquiry unless it consults with the other parties in advance and, to the
extent permitted by such Governmental Authority, gives the other parties the
opportunity to attend and participate at such meeting. Subject to the Confidentiality
Agreement, the parties will coordinate and cooperate fully with each other in
exchanging such information and providing such assistance as the other parties may reasonably
request in connection with the foregoing and in seeking early termination of
any applicable waiting periods, including under the HSR Act. Subject to the
Confidentiality Agreement and unless prohibited or restricted by Law or any
Governmental Authority, the parties will provide each other with copies of all
correspondence, filings or communications between them or any of their
authorized representatives, on the one hand, and any Governmental Authority or
members of its staff, on the other hand, with respect to this Agreement and the
transactions contemplated hereby.


 


6.8                               Public
Announcements. On and after the date hereof and through the Closing Date,
the parties shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby, and none of the parties shall issue any press
release or make any public statement prior to obtaining the other parties’
written approval, which approval shall not be unreasonably withheld, except
that no such approval shall be necessary to the extent disclosure may be
required by applicable Law or any listing agreement of any party hereto.


 


6.9                               Indemnification;
Insurance.


 


(a)                                  For a period of
six (6) years following the Closing Date, the Buyer shall cause the
Company and Intermediate LLC to comply with all obligations of the Company or
Intermediate LLC, as the case may be, in existence or in effect as of the
date hereof under applicable Law, the Certificate of Formation, the Operating
Agreement (or with respect to Intermediate LLC, those provisions contained in
its certificate of formation or the Intermediate LLC Operating Agreement after
the date hereof; provided, such provisions are substantially the same as
those applicable to the Company) or by contract, to indemnify, defend and hold
harmless, and also advance expenses as incurred, to the fullest extent
permitted under applicable Law, the Certificate of Formation, the Operating
Agreement or by contract, each person who is now or has been prior to the date
hereof or who becomes prior to the Closing Date an officer, manager, member or
director of the Company and Intermediate LLC (collectively, the “Indemnified
Officers”) against all losses, claims, damages, costs, expenses (including,
without


 


33

















 


limitation, counsel fees and expenses), settlement payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising
in whole or in part out of the fact that such person is or was an officer,
manager, member or director of the Company or Intermediate LLC, whether or not
pertaining to any matter existing or occurring at or prior to the Closing Date
and whether or not asserted or claimed prior to, at or after the Closing Date. The
parties hereto intend, to the extent not prohibited by applicable Law, that the
indemnification provided for in this Section 6.9 shall apply
without limitation to acts or omissions, other than illegal acts or acts of
fraud, or alleged acts or omissions, other than illegal acts or acts of fraud,
by the Indemnified Officers in their capacities as officers, managers, members
or directors, as the case may be. Each Indemnified Officer, and his, her
or its heirs and legal representatives, is intended to be a third-party
beneficiary of this Section 6.9 and may specifically enforce
its terms. This Section 6.9 shall not limit or otherwise adversely
affect any rights any Indemnified Officer may have under any agreement
with the Company or under the Company’s organizational documents.


 


(b)                                 For a period of
six (6) years following the Closing Date, the Buyer shall cause
Intermediate LLC and its Subsidiary to maintain policies of directors’ and
officers’ liability insurance covering each Indemnified Officer with respect to
claims arising from facts or events that occurred on or prior to the Closing
Date and providing at least the same coverage and amounts and containing terms
that are not less advantageous to the Indemnified Officers than those contained
in the policies of directors’ and officers’ liability insurance in effect as of
the date hereof for officers and directors of the Buyer; provided, however,
that, if the aggregate premiums for such insurance shall exceed 300% of the
current aggregate annual premium, then the Buyer shall provide or cause to be
provided policies for the applicable individuals with the best coverage as
shall then be available at an annual premium of 300% of the current aggregate
annual premium.


 


6.10                        Tax
Matters.


 


(a)                                  Subsequent to the Closing
Date, subject to the limitations described in this Section 6.10,
the Seller shall indemnify the Buyer Indemnified Parties from and against (A) any
assessment for a deficiency in Taxes of the Company (i) for any taxable
year or period that ends on or before the Closing Date and (ii) for any
taxable year or period that commences before and ends after the Closing Date (“Straddle
Period”) which are allocable to the portion of such Straddle Period deemed
to end on the Closing Date (as determined pursuant to Section 6.10(b)),
(B) any Damages arising from the breach of any representation or warranty
contained in Section 4.15, and (C) any Damages arising from a
breach by the Seller of the covenant contained in Section 6.1(p). The
Seller shall be entitled to any refunds or credits of Taxes for any such
taxable years or periods. Notwithstanding the foregoing, the Seller shall not
be liable for (i) any Taxes that are taken into account in arriving at the
working capital adjustment pursuant to Schedule 2.1 of the Disclosure
Schedules, and (ii) any Taxes resulting from any transaction undertaken on
the Closing Date after the Effective Time of the Merger. The Seller’s liability
for claims under this Section 6.10 shall be subject to the
indemnification cap limitations set forth in Section 9.3(a) and
shall be reduced by any net tax benefit actually recognized by the Indemnified
Party in accordance with Section 9.7(b).


 


34

















 


(b)                                 For purposes of this Section 6.10,
whenever it is necessary to determine the liability for Taxes of the Company
for a Straddle Period, the determination of the Taxes for the portion of the
Straddle Period ending on and including, and the portion of the Straddle Period
beginning after, the Closing Date shall be determined by assuming that the
Straddle Period consisted of two taxable years or periods, one that ended at
the close of the Closing Date and the other that began at the beginning of the
day following the Closing Date, and items of income, gain, deduction, loss or
credit and state and local apportionment factors of the Company for the
Straddle Period shall be allocated between such two taxable years or periods on
a “closing of the books basis” by assuming that the books of the Company were
closed at the close of the Closing Date. However (i) exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, and (ii) periodic taxes, such as real and
personal property taxes, shall be apportioned ratably between such periods on a
daily basis.


 


(c)                                  (i)                                     The Buyer shall
file or cause to be filed when due all Returns of the Company that are required
to be filed after the Closing Date. All Straddle Period Returns and all Returns
relating to periods ending on or before the Closing Date that are prepared for
the Company pursuant to this section shall be prepared in a manner
consistent with past practice. Such returns shall be submitted to the Seller no
later than 30 Business Days prior to the due date for filing thereof for the
Seller’s review and approval, which approval shall not be unreasonably withheld.
The Seller shall respond in writing to the Company with any comments within 15
Business Days of receiving the draft Return(s). Failure by the Seller to respond
in writing as contemplated in the previous sentence shall indicate the Seller’s
approval of such Returns. The Seller, the Buyer and the Company shall consult
with each other and attempt in good faith to resolve any issues arising as a
result of such Returns and, if they are unable to do so, the disputed items
shall be resolved (within a reasonable time, taking into account the deadline
for filing such Return) by an internationally recognized independent accounting
firm mutually agreed upon by the Buyer and the Seller. Upon resolution of all
such items, the relevant Return shall be timely filed on that basis.


 


(ii)                                  In the event that the
Seller is liable for the payment of Taxes pursuant to Section 6.10(a) with
respect to any Return that the Buyer has the responsibility to cause to be
filed pursuant to this Section 6.10(c), the Seller shall pay to the
Company the amount of Taxes on the due date of such Return. No payment pursuant
to this Section 6.10(c) shall excuse the Seller from its
indemnification obligations pursuant to Section 6.10(a) if the
amount of Taxes as ultimately determined (on audit or otherwise) for the
periods covered by such Tax Returns and allocable to the Seller pursuant to Section 6.10(a) and
Section 6.10(b) exceeds the amount of the Seller’s payment
under this Section 6.10(c).


 


(iii)                               The Buyer (including,
after the Closing Date, Intermediate LLC and the Company) shall not amend any
Return of the Company for any period prior to the Closing Date without the
express written consent of the Seller, which consent shall not be unreasonably
withheld or delayed.


 


(d)                                 The Buyer, the Seller,
the Company and each Subsidiary of the Buyer shall reasonably cooperate, and
shall cause their respective Affiliates and their respective directors,
officers, employees, agents, auditors and authorized representatives reasonably
to


 


35

















 


cooperate, in preparing and filing all Returns and in resolving all
disputes and audits with respect to all taxable periods or relating to Taxes,
including maintaining and making available to each other all records necessary
in connection with Taxes.


 


(e)                                  (i)                                     If a claim for
Taxes, including, without limitation, notice of a pending or threatened audit,
shall be made by any taxing authority to the party seeking indemnification (the
“Tax Indemnified Party”), which, if successful, could result in an
indemnity payment pursuant to this Section 6.10 (a “Tax Claim”),
the Tax Indemnified Party shall promptly notify the other party (the “Tax
Indemnifying Party”) in writing of the Tax Claim. Such notice will state
the nature and basis of the Tax Claim and the amount thereof, to the extent
known by the Tax Indemnified Party; provided, however, that
failure to give such notice shall not relieve the Tax Indemnifying Party of its
obligations under this Section 6.10, except to the extent the Tax
Indemnifying Party shall have been prejudiced by such failure.


 


(ii)                                  The provisions of Section 9.6
relating to third-person claims shall apply to Tax Claims; provided, however,
that if a Tax Claim could adversely affect the liability of the Buyer or the
Company for Taxes for any period (or portion thereof) after the Closing Date, (1) the
Seller shall promptly notify the Buyer of such Tax Claim, (2) the Seller
shall keep the Buyer reasonably informed and consult seriously and in good
faith with the Buyer and their tax advisors with respect to any issue relating
to such Tax Claim, (3) the Seller shall provide the Buyer with copies of
all correspondence, notices or other written materials received from any
Governmental Authority relating to such Tax Claim and shall otherwise keep the
Buyer and their tax advisors apprised of significant developments in the Tax
Claim and of significant communications involving representatives of the
Governmental Authority prosecuting the Tax Claim, (4) the Seller shall
provide the Buyer with a copy of any written submission to be sent to any
Governmental Authority pertaining to such Tax Claim prior to the submission
thereof and shall give serious and good faith consideration to any comments or
suggested revisions that the Buyer or their tax advisors may have with
respect thereto, and (5) the Seller shall not be entitled to settle,
either administratively or after the commencement of litigation, any Tax Claim
described in this Section 6.10(e)(ii) without the prior
written consent of the Buyer, not to be unreasonably withheld.


 


(f)                                    The provisions
under this Section 6.10 (and not any other provision in this
Agreement) shall govern all indemnity claims with respect to Taxes of the
Company. Any claim for indemnification for Taxes under this Section 6.10
shall be brought prior to the Expiration Date.


 


(g)                                 The Company shall be
responsible for all transfer, sales, use, and value added Taxes, if any, arising
out of, and all registration or recording fees, if any, applicable to, the
Transaction.


 


(h)                                 The Buyer and the
Seller shall treat the Transaction in a manner consistent with “Situation 1”
of Revenue Ruling 99-5, 1999-1 C.B. 434. The parties shall treat the
debt-funded portion of the Purchase Price (including, without limitation, the
Seller’s existing debt deemed to be assumed for federal income tax purposes by
Intermediate LLC in the Transaction) as a sale of assets by the Seller to
Intermediate LLC pursuant to Section 707(a)(2) of the Code.


 


36

















 


The Seller shall, within 21 days after the Closing Date, prepare and
deliver to the Buyer for its review and approval a schedule that allocates
among the assets of the Company that are treated for federal income tax
purposes as having been purchased by the Buyer or Intermediate LLC the Purchase
Price (as such may be adjusted from time to time and increased by any
liabilities that are treated as purchase price for income tax purposes) for
such assets as determined for federal income tax purposes. These allocations
shall be prepared in accordance with Section 1060 of the Code and the
Treasury regulations promulgated thereunder. The Seller and the Buyer shall
negotiate in good faith to resolve any disputed items before the Closing Date,
and, if they are unable to do so, the disputed items shall be resolved (within
a reasonable time, taking into account the Closing Date) by an internationally
recognized independent accounting firm mutually agreed upon by the Buyer and
the Seller. The Buyer, the Seller, and Intermediate LLC shall file all federal,
state, local and foreign Returns in accordance with the allocation agreed to
pursuant to this Section 6.10(h) (as such allocation
originally proposed or may be revised in accordance with this Agreement,
as the case may be) and, except as required pursuant to a final
determination (as defined in Section 1313(a) of the Code or
corresponding provisions of state or local Law), shall not take, or cause to be
taken, any action that would be inconsistent with such allocation in any Tax
Return, audit, litigation or otherwise.


 


(i)                                     The Seller’s
obligations pursuant to this Section 6.10 shall expire on the
Expiration Date other than with respect to any Tax Claim filed prior to the
date thereof, in which case the obligations with respect thereto shall
terminate upon resolution of such Tax Claims.


 


6.11                        Registration
and Restructuring.


 


(a)                                  Between the date of
execution of this Agreement and the Closing Date and in any event as soon as
practicable after the date of this Agreement, the Company (or an Affiliate of
the Company as mutually determined by the Buyer and the Seller) shall file or
cause to be filed with the Securities and Exchange Commission (the “SEC”)
a registration statement on Form S-1 (the “Registration Statement”)
relating to the Company’s (or such entity’s) common stock. The Company will
keep the Buyer reasonably informed of meetings or conference calls relating to
the IPO, including drafting and due diligence sessions, and the Buyer and its
representatives may fully participate in such sessions including providing
comments to documents and shall be given full access to all working group
lists, distributions and other aspects of the IPO process. The law firm of
Gibson, Dunn & Crutcher LLP will serve as company counsel in
connection with preparation of materials related to the IPO. Promptly following
the execution of this Agreement, the Buyer shall select the investment bank(s)
to serve as underwriter in the IPO, subject to the Seller’s approval (not to be
unreasonably withheld or delayed). The Buyer shall have the right to approve
the Registration Statement, including all amendments thereto and correspondence
with the SEC, which approval shall not be unreasonably withheld or delayed. Subsequent
to the Closing, the Buyer shall use its reasonable best efforts to cause the
Registration Statement promptly to become effective, and thereafter prepare and
file with the SEC such amendments and supplements to the Registration Statement
and the prospectus used in connection therewith as may be necessary to
keep such registration effective and to comply with the provisions of the
Securities Act. The Buyer shall take all reasonable and customary actions to
effectuate the IPO.


 


37

















 


(b)                                 Notwithstanding
anything set forth in Section 6.11(a) above, if there shall
occur and for the duration of such occurrence, (i) any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other calamity or crisis, the effect of which is
such as to make it, in the reasonable judgment of the Buyer, impracticable to
market the Company’s securities or to enforce contracts for the sale of the
Company’s securities, (ii) a suspension of trading in any securities of
the Company on any exchange or in any over-the-counter market, (iii) a
suspension or material limitation of trading generally on any of the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade or other relevant exchanges, (iv) a declaration of
a moratorium on commercial banking activities by either Federal or New York
authorities or relevant foreign country authorities, (v) any material
disruption in securities settlement, payment or clearance services in the
United States, (vi) any material adverse change to the market for securities
issued by ethanol producers, or (vii) the Buyer, in its reasonable
judgment after reasonable consultation with underwriters and the Seller,
believes that market conditions are not favorable based on the performance of
recent initial public offerings of other companies, then the Buyer’s
obligations set forth in Section 6.11(a) above shall be
suspended, provided, however, that the Buyer’s obligation to use
its reasonable best efforts to complete the initial public offering of the
Company’s securities shall be reinstated when all of such above-stated
conditions cease to exist. Notwithstanding any provision of Section 6.11(a) to
the contrary, the Buyer shall have no obligation to complete an IPO if the
proposed price to the public in such offering would be based on an enterprise
value of the Company of less than $1.6 billion (before the application of any
IPO discount that may be applied).


 


6.12                        Non-Competition;
Non-Solicitation; Confidentiality.


 


(a)                                  Each of the Seller
and persons set forth on Schedule 6.12(a) of the Disclosure Schedules
(each, a “Non-Competition Party”) shall not, directly or indirectly, for
the period of time commencing on the Closing Date through the period of time
set forth opposite their respective names on Schedule 6.12(a) of the
Disclosure Schedules, own, manage, engage in, operate, control, work for,
consult with, render services for, do business with, maintain any interest in
(proprietary, financial or otherwise) or participate in the ownership,
management, operation or control of, any business, whether in corporate,
proprietorship or partnership form or otherwise, engaged in the business
of constructing, owning or operating corn ethanol plants (the “Restricted
Business”); provided, however, that the restrictions
contained in this Section 6.12(a) shall not restrict the
acquisition by the Seller or a Non-Competition Party, directly or indirectly,
of less than 2% of the outstanding capital stock of any publicly traded company
engaged in the Restricted Business.


 


(b)                                 Each of the Seller,
each Non-Competition Party and each person set forth on Schedule 6.12(b) of
the Disclosure Schedules (each, a “Non-Solicit Party”) agrees it, he or
she shall not, and shall cause, if applicable, their directors, officers,
employees and Affiliates not to, directly or indirectly, for the period of time
commencing on the Closing Date through the period of time set forth opposite
their respective names on Schedule 6.12(b) of the Disclosure
Schedules:  (i) cause, solicit,
induce or encourage any employees of the Company to leave such employment or
hire or employ any such individual; or (ii) cause, induce or encourage any
material actual or prospective client, customer, supplier, or licensor of the
Company (including


 


38

















 


any existing or former customer of the Company and any Person that
becomes a client or customer of the Company after the Closing) or any other
Person who has a material business relationship with the Company, to terminate
or modify any such actual or prospective relationship.


 


(c)                                  From and after the
Closing Date, Seller, each Non-Competition Party and each Non-Solicit Party
agrees that he, she or it shall not and shall cause, if applicable, their
directors, officers, employees and Affiliates not to, directly or indirectly,
disclose, reveal, divulge or communicate to any Person other than authorized
officers, directors and employees of Intermediate LLC or its Subsidiary or use
or otherwise exploit for its own benefit or for the benefit of anyone other than
Intermediate LLC or its Subsidiary, any Confidential Information (as defined
below). Seller, each Non-Competition Party and each Non-Solicit Party agrees
he, she or it shall not have any obligation to keep confidential (or cause its
officers, directors or Affiliates to keep confidential) any Confidential
Information if and to the extent disclosure thereof is specifically required by
applicable Law; provided, however, that in the event disclosure is required by
applicable Law, such Seller, Non-Competition Party or Non-Solicit Party shall,
to the extent reasonably possible, provide the Company with prompt notice of
such requirement prior to making any disclosure so that the Company may seek
an appropriate protective order. For purposes of this Section 6.12(c),
“Confidential Information” means (i) the names or identity of any direct
or indirect member of the Seller (a “Member”) and (ii) any
information with respect to Intermediate LLC, the Company and its Subsidiary
and, including methods of operation, customer lists, products, prices, fees,
costs, Technology, inventions, Trade Secrets, know-how, Software, marketing
methods, plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters. “Confidential Information” does not
include, and there shall be no obligation hereunder with respect to,
information that (i) is generally available to the public on the date of
this Agreement or (ii) becomes generally available to the public other
than as a result of a disclosure not otherwise permissible hereunder.


 


(d)                                 The covenants and
undertakings contained in this Section 6.12 relate to matters which
are of a special, unique and extraordinary character and a violation of any of
the terms of this Section 6.12 will cause irreparable injury to
Buyer, Intermediate LLC and the Company, the amount of which will be impossible
to estimate or determine and which cannot be adequately compensated. Accordingly,
the remedy at law for any breach of this Section 6.12 will be
inadequate. Therefore, Buyer, the Company and Intermediate LLC will be entitled
to a temporary and permanent injunction, restraining order or other equitable
relief from any court of competent jurisdiction in the event of any breach of
this Section 6.12 without the necessity of proving actual damage or
posting any bond whatsoever. The rights and remedies provided by this Section 6.12
are cumulative and in addition to any other rights and remedies which
Buyer, the Company and Intermediate LLC may have hereunder or at law or in
equity. In the event that Buyer, the Company and Intermediate LLC or were to
seek damages for any breach of this Section 6.12, the portion of
the consideration delivered to each of the Non-Competition Parties and each of
the Non-Solicit Parties hereunder which is allocated by the parties to the
foregoing covenant shall not be considered a measure of or limit on such
damages.


 


(e)                                  The parties hereto
agree that, if any court of competent jurisdiction determines that a specified
time period, a specified geographical area, a specified business limitation or
any other relevant feature of this Section 6.12 is unreasonable,
arbitrary or against


 


39

















 


public policy, then a lesser period of time, geographical area,
business limitation or other relevant feature which is determined by such court
to be reasonable, not arbitrary and not against public policy may be
enforced against the applicable party.


 


(f)                                    Each of
Non-Competition Parties and Non-Solicit Parties represent, as to themselves,
that they are not currently an owner (other than a passive owner of less than
5% of the equity or debt securities of any Restricted Business), operator,
manager, director, employee or consultant of any Restricted Business.


 


6.13                        Cooperation
with Financing. In order to assist with obtaining the debt financing
contemplated by the Debt Commitment Letter (the “Financing”), the
Seller, Intermediate LLC and the Company shall provide such assistance and
cooperation as Buyer and their Affiliates may reasonably request,
including (i) preparing any marketing material and cooperating with
initial purchasers, (ii) making senior management of the Company
reasonably available for customary presentations, lender or proposed financing
source meetings and rating agencies presentations, (iii) cooperating with
prospective lenders, underwriters, placement agents or initial purchasers and
their respective advisors in performing their due diligence, (iv) entering
into customary agreements with lenders, and (v) helping procure other
definitive financing documents or other reasonably requested certificates or
documents, including pledge and security documents, customary certificates
(including a certificate of the chief financial officer of the Company with
respect to solvency matters), legal opinions and real estate title
documentation.


 


6.14                        Cooperation
with IPO. The Seller, Intermediate LLC and the Company shall provide such
assistance and cooperation as Buyer and their Affiliates may reasonably
request in connection with the initial public offering (“IPO”),
including, without limitation, making senior management of the Company
reasonably available for “road shows” and meetings with underwriters and
cooperating with underwriters and their respective advisors in performing their
due diligence.


 


6.15                        Related-Party
Transactions with Non-Management Affiliates. On or prior to the Closing
Date, the Company and Intermediate LLC shall (a) terminate all contracts
with Seller or its Affiliates and (b) deliver releases executed by such
Affiliates with whom the Company has terminated such contracts pursuant to this
Section 6.15, providing that no further payments are due, or may become
due, under or in respect of any such terminated contacts; provided that in no
event shall Intermediate LLC and the Company pay any fee or otherwise incur any
expense or financial exposure with respect to any such termination or release.


 


6.16                        Fairbank/Iowa
Construction Expenses. Prior to Closing, the Company shall pay the
Fairbank/Iowa Construction Expenses as they become due and payable.


 


6.17                        Intermediate
LLC Formation.


 


(a)                                  Upon reasonable
request of the Buyer, the Seller will form Intermediate LLC as a wholly
owned Subsidiary of the Seller, solely for the purpose of consummating the
transactions contemplated hereby. Intermediate LLC will not engage in any
activity or conduct any other business and will have no assets (other than the
membership interests in the Company) and no liabilities other than as provided
in, or contemplated by, this Agreement and the


 


40

















 


transactions contemplated thereby. At Closing, the Seller shall deliver
a certificate to Buyer (the “Intermediate LLC Certificate”) representing
to Buyer that (i) Seller owns the Membership Interests, representing 100%
of the outstanding securities of the Intermediate LLC, free and clear of all
liens, claims, charges, pledges, security interests, options or other
encumbrances, (ii) the Membership Interests are duly authorized, validly
issued, fully paid and nonassessable and are issued in compliance with federal
and state securities laws, (iii) there are no outstanding options,
warrants, puts or calls or other commitments relating to the issuance, sale or
transfer of the Membership Interests, and (iv) the Intermediate LLC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.


 


(b)                                 Intermediate LLC has
not made an election to be treated as an association taxable as a corporation
for federal income tax purposes pursuant to Treas. Reg. Section 301.7701-3.


 


(c)                                  The Buyer and the
Seller agree to negotiate in good faith the Intermediate LLC Operating
Agreement based on the terms set forth in Exhibit C, which
Intermediate LLC Operating Agreement shall also include reasonable and
customary non-material terms and conditions.


 


ARTICLE VII

CONDITIONS


 


7.1                               General
Conditions. The respective obligations of the Buyer, the Seller and the
Company to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, any of which may, to the extent permitted by applicable
Law, be waived in writing by any party in its sole discretion (provided that
such waiver shall only be effective as to the obligations of such party):


 


(a)                                  No Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any Law
(whether temporary, preliminary or permanent) that is then in effect and that
enjoins, restrains, makes illegal or otherwise prohibits the consummation of
the transactions contemplated by this Agreement.


 


(b)                                 Any waiting period
(and any extension thereof) under the HSR Act applicable to the transactions
contemplated by this Agreement shall have expired or shall have been terminated.
All other material consents of, or registrations, declarations or filings with,
any Governmental Authority legally required for the consummation of the
transactions contemplated by this Agreement shall have been obtained or filed.


 


(c)                                  The Seller and the
Buyer shall have executed an indemnity escrow agreement (the “Indemnity
Escrow Agreement”) with an escrow agent mutually satisfactory to the Buyer
and the Seller (the “Escrow Agent”) pursuant to which the Indemnity
Escrow Fund will be held and released. The Indemnity Escrow Agreement will
provide for (i) the release of the Indemnity Escrow Fund upon the
Expiration Date (subject to pending claims made in accordance with the
provisions of this Agreement and the Indemnity Escrow Agreement), (ii) the
release, subject to pending claims and any claims previously paid out, from the
Indemnity


 


41

















 


Escrow Fund upon the IPO of cash to Seller in an amount equal to
$15,000,000 (such that $30,000,000 of cash remains in the Indemnity Escrow
Fund), (iii) subject to pending claims and any claims previously paid out,
either the release to Seller of Escrowed Securities or the deposit by Seller of
additional membership interests of Intermediate LLC, as the case may be,
in such amounts as necessary to provide that, immediately following the IPO,
Escrowed Securities having a value (based upon the IPO price to the public) of
at least $60,000,000 remain in the Indemnity Escrow Fund, (iv) Buyer will
have the option to make claims first against the Cash Escrow, and (v) for
any claims satisfied with Escrowed Securities, such Escrowed Securities shall
be valued at their then fair market value. The Escrow Cash shall be treated as
an installment obligation owed by the Company to the Seller for income tax
purposes, and the Seller shall be treated as the owner of the Escrow Securities
for income tax purposes.


 


7.2                               Condition
to Obligations of the Seller and the Company. The obligation of the Seller
and the Company to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, on or before September 30, 2006, of
the following conditions, which may be waived in writing by the Seller in
its sole discretion:


 


(a)                                  The representations
and warranties of the Buyer contained in this Agreement shall be true and
correct both when made and as of the Closing Date, or in the case of
representations and warranties that are made as of a specified date, such
representations and warranties shall be true and correct as of such specified
date, except where the failure to be so true and correct (without giving effect
to any limitation or qualification as to “materiality” (including the word “material”)
or “Material Adverse Effect” set forth therein) would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Buyer. The Buyer shall have performed all obligations and agreements and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. The Seller shall
have received from the Buyer a certificate to the effect set forth in the
preceding sentences, signed by a duly authorized officer thereof.


 


7.3                               Conditions
to Obligations of the Buyer. The obligations of the Buyer to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
any of which may be waived in writing by the Buyer in its sole discretion:


 


(a)                                  The representations
and warranties of the Company contained in this Agreement shall be true and
correct both when made and as of the Closing Date, or in the case of
representations and warranties that are made as of a specified date, such
representations and warranties shall be true and correct as of such specified
date, except where the failure to be so true and correct (without giving effect
to any limitation or qualification as to “materiality” (including the word “material”)
or “Material Adverse Effect” set forth therein) would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company shall have performed all obligations and agreements and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. The Buyer shall
have received from the Company a certificate to the effect set forth in the
preceding sentences, signed by a duly authorized officer thereof.


 


42

















 


(b)                                 The representations
and warranties of the Seller contained in this Agreement shall be true and
correct both when made and as of the Closing Date, or in the case of
representations and warranties that are made as of a specified date, such
representations and warranties shall be true and correct as of such specified
date, except where the failure to be so true and correct (without giving effect
to any limitation or qualification as to “materiality” (including the word “material”)
or “Material Adverse Effect” set forth therein) would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Seller. The Seller shall have performed all obligations and agreements and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. The Buyer shall
have received from the Seller a certificate to the effect set forth in the
preceding sentences, signed by a duly authorized officer thereof.


 


(c)                                  The Buyer shall have
received an executed counterpart of each of the Option Assignment
Documents and the Repayment Certificate.


 


(d)                                 Confirmation by an
independent third-party engineering firm, reasonably acceptable to the Buyer,
that, as of the Closing Date:


 


(i)                                     item (a) and
Part I, Exhibit A of item (b) of the definition of
Substantial Completion (as defined in Section 6.5.2 of that certain
Standard Form of Agreement between Midwest Renewables, L.C., and Fagen, Inc.,
dated January 6, 2005, regarding the Fairbank facility (the “Fairbank
Contract”)) have been achieved and no material requirements therefor have
been waived by the Company;


 


(ii)                                  the Company has
completed all of the Owner’s material obligations set forth on Exhibits C
and H of the Fairbank Contract;


 


(iii)                               all material permits
listed on Exhibit H of the Fairbank Contract required to have been
obtained by the Closing Date have been obtained by or on behalf of the Company;


 


(iv)                              item (a) and Part I,
Exhibit A of item (b) of the definition of Substantial
Completion (as defined in Section 6.5.2 of that certain Standard Form of
Agreement between Midwest Renewables, L.C., and Fagen, Inc., dated January 6,
2005, regarding the expansion of the Iowa Falls facility (the “Iowa Falls
Contract”)) have been achieved and no material requirements for Substantial
Completion have been waived by the Company;


 


(v)                                 the Company has
completed all of the Owner’s material obligations set forth on Exhibits C
and H of the Iowa Falls Contract; and


 


(vi)                              all material permits
listed on Exhibit H of the Iowa Falls Contract required to have been
obtained by the Closing Date have been obtained by or on behalf of the Company.


 


(e)                                  The Company shall
have provided internal documentation, reasonably satisfactory to the Buyer,
confirming that during the 14-day period ending on the day immediately
preceding the Closing Date, the average annualized ethanol production
(calculated


 


43

















 


without taking into account the production during the two lowest
production days during such 14-day period, neither of which two lowest days may be
within four days prior to the Closing Date) is at or above 95% of: (A) for
the Fairbank facility, the specified guaranteed production capacity of 100
million gallons per year of fuel-grade ethanol; and (B) for the Iowa Falls
facility, the specified guaranteed production capacity of 80 million gallons
per year of fuel-grade ethanol.


 


(f)                                    Execution by Seller
of the Intermediate LLC Operating Agreement and members’ agreement of
Intermediate LLC on the terms set forth on Exhibit C hereto. Each
member of management of the Company will own the same pro rata share of the
Seller that such management member owned as of the date hereof.


 


(g)                                 The Buyer shall have
received a release from the Seller and each Member releasing Intermediate LLC
and the Company from any and all liabilities other than any rights to
indemnification in their capacity as an officer or director or any claims for
salary or benefits.


 


(h)                                 The Buyer shall have
received satisfactory evidence of the termination of all Affiliate arrangements
between the Company and the Seller or its Affiliates pursuant to Section 6.15.


 


(i)                                     The Buyer shall
have received a statement issued by the Seller in a form reasonably
satisfactory to the Buyer certifying that the Seller is not a foreign person
(within the meaning of Treasury Regulation Section 1.1445-2(b)(2)).


 


(j)                                     Buyer shall have
received from Seller an executed Intermediate LLC Certificate.


 


(k)                                  Seller shall have
caused the Company’s Operating Agreement to be amended to remove the necessity
of (and all provisions relating to) the “special member” thereof.


 


(l)                                     With respect to
each Owned Real Property, the Company shall have received a binding commitment
from Fidelity National Title Insurance Company to issue a policy of title
insurance on such Owned Real Property, which shall show marketable fee title
thereto to be vested in the Company subject to no Encumbrances other than
Permitted Encumbrances, shall contain exceptions only for Permitted
Encumbrances, shall show no rights of occupancy or use by third parties (other
than by virtue of Permitted Exceptions) and shall show no material
encroachments, and which shall otherwise be in form and substance
reasonably acceptable to the Buyer.


 


(m)                               The Buyer shall have
received, from Daryl Eiffler (the surveyor who last completed surveys of the
Owned Real Property) or another reputable surveyor designated by Seller and
reasonably and promptly approved by Buyer, who shall be a duly licensed
surveyor in the state in which the Owned Real Property is located and who shall
be engaged pursuant to a written agreement to deliver a survey consistent with
the requirements of this Agreement, an ALTA/ACSM Class A Land Title Survey
with respect to each Owned Real Property, excluding, however, requirement (g) of
the 2005 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,
as adopted by the American Land Title Association and National Society of
Professional Surveyors, but indicating thereon all encroaching structural
appurtenances and projections by or on adjoining property or on abutting
streets, on any easement or over set back


 


44

















 


lines, which shall be indicated with the extent of such encroachment or
projection; and which survey does not otherwise reveal any fact or condition
which (i) has not been previously disclosed to Buyer and (ii) could
reasonably be expected to materially and adversely interfere with the operation
of the Business as currently conducted. The cost of such surveys shall be borne
by the Company.


 


(n)                                 Seller shall have
caused each Non-Competition Party and each Non-Solicitation Party to deliver to
Buyer an irrevocable written acknowledgement of, and agreement with, the
applicable terms of Section 6.12. Upon such delivery, which may occur
at any time prior to the Closing, the condition set forth in this Section 7.3(n)
shall be deemed satisfied and shall terminate.


 


ARTICLE VIII

TERMINATION AND AMENDMENT


 


8.1                               Termination.
This Agreement may be terminated at any time prior to the Closing Date:


 


(a)                                  by mutual written
consent of the Buyer and the Seller;


 


(b)                                 (i) by the
Seller, if the Buyer breaches or fails to perform in any respect any of
its representations, warranties or covenants contained in this Agreement and
such breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 7.2, (B) cannot be or has
not been cured within 15 days following delivery of written notice of such
breach or failure to perform and (C) has not been waived by the
Seller or (ii) by the Buyer, if either the Seller or the Company breaches
or fails to perform in any respect any of its respective representations,
warranties or covenants contained in this Agreement and such breach or failure
to perform (x) would give rise to the failure of a condition set
forth in Section 7.3, (y) cannot be or has not been cured
within 15 days following delivery of written notice of such breach or failure
to perform and (z) has not been waived by the Buyer;


 


(c)                                  [Intentionally
Omitted]


 


(d)                                 by either the Seller
or the Buyer if the Closing shall not have occurred by July 31, 2006 (the “Termination
Date”); provided, that the right to terminate this Agreement under
this Section 8.1(d) shall not be available if the failure of
the party (in the case of the Seller, including for this purpose the Company)
so requesting termination to fulfill any obligation under this Agreement shall
have been the cause of the failure of the Closing to occur on or prior to such
date; and provided  further that if the Closing shall not have
occurred as of the Termination Date solely because a curable (within
thirty (30) days) event or condition shall have occurred or be existing
that causes the failure to satisfy the condition set forth in Section 7.3(e),
then the Termination Date shall be extended, to a date not later than August 17,
2006, in order for such condition to be satisfied; or


 


(e)                                  by either the Seller
or the Buyer in the event that any Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable; provided, that


 


45

















 


the party so requesting termination shall have complied with Section 6.7.


 


The party seeking to terminate this Agreement pursuant to this Section 8.1
(other than Section 8.1(a)) shall give prompt written notice of
such termination to the other parties.


 


8.2                               Effect
of Termination.


 


(a)                                  In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement
shall become void and have no effect, without any liability on the part of
any party or its members, managers, directors or officers, except (a) for
the provisions of Sections 3.6 and 5.5 relating to broker’s fees
and finder’s fees, Section 6.6 relating to confidentiality, Section 6.8
relating to public announcements, Section 10.1 relating to notices,
Section 10.3 relating to fees and expenses, Section 10.7
relating to third-party beneficiaries, Section 10.8 relating to
governing law, Section 10.9 relating to submission to jurisdiction
and this Section 8.2. Notwithstanding the foregoing, nothing in
this Section 8.2 shall relieve any party hereto of liability for
any willful and material breach of any covenant or agreement contained in this
Agreement, and if it shall be judicially determined that termination of this
Agreement was caused by an intentional breach of any covenant or agreement
contained in this Agreement, then, in addition to other remedies at law or
equity for breach of this Agreement, the party so found to have intentionally
breached any covenant or agreement contained in this Agreement shall indemnify
and hold harmless the other party for its costs, fees and expenses of its
counsel, accountants, financial advisors, consultants and other experts and
advisors as well as fees and expenses incident to negotiation, preparation and
execution of this Agreement and related documentation and consents.


 


(b)                                 In the event that this
Agreement is terminated by the Seller pursuant to Section 8.1(d),
then the Buyer shall pay $42,500,000 (such amount, the “Termination Fee”)
to the Seller as promptly as reasonably practicable (and, in any event, within
two (2) business days following such termination), payable by wire
transfer of same-day funds.


 


(c)                                  The Buyer
acknowledges that Section 8.2(b) is an integral part of
the transactions contemplated by this Agreement and constitute liquidated
damages and not a penalty, and that the Seller would not have entered into this
Agreement without Section 8.2(b); accordingly, if the Buyer fails
to promptly pay any amounts due pursuant to Section 8.2(b) and,
in order to obtain such payment, the Seller commences a suit which results in a
final, non-appealable judgment or ruling against the Buyer for the fee set
forth in Section 8.2(b), the Buyer shall pay to the Seller the
Seller’s reasonable costs and expenses (including reasonable attorneys’ fees
and expenses of enforcement) in connection with such suit, together with
interest on the amounts owed at a per annum rate equal to the prime lending
rate charged by Citibank, N.A. at such time for demand loans in
U.S. dollars to its most creditworthy customers, plus two percent per
annum, from the date such amounts were required to be paid until the date
actually received by the Seller.


 


(d)                                 Notwithstanding
anything to the contrary set forth in this Agreement, each of the parties
hereto hereby expressly acknowledges and hereby agrees that, with respect to
any termination of this Agreement pursuant to Section 8.1(b)(i) (other
than a termination based upon the willful or intentional breach of, or any
intentional misrepresentation made in, this Agreement,


 


46

















 


it being acknowledged that failure to obtain the Financing shall not
constitute a willful or intentional breach) under circumstances in which the
Termination Fee is payable pursuant to Section 8.3(b), payment of
the Termination Fee shall constitute liquidated damages with respect to any
claim for damages or any other claim which the Seller or the Company would
otherwise be entitled to assert against the Buyer or its assets, or against any
employees or equityholders of the Buyer, with respect to any such termination
of this Agreement, and shall constitute the sole and exclusive remedy with respect
to any such termination of this Agreement. The parties hereto expressly
acknowledge and agree that, in light of the difficulty of accurately
determining actual damages with respect to the foregoing upon any such
termination of this Agreement pursuant to Section 8.1(b)(i) (other
than a termination based upon the willful or intentional breach of, or any
intentional misrepresentation made in, this Agreement, it being acknowledged
that failure to obtain the Financing shall not constitute a willful or intentional
breach) under circumstances in which the Termination Fee is payable pursuant to
Section 8.2(b), the right to such payment: (A) constitutes a
reasonable estimate of the damages that will be suffered by reason of any such
termination this Agreement, and (B) shall be in full and complete
satisfaction of any and all damages arising as a result of any such termination
of this Agreement. Except for nonpayment of the Termination Fee pursuant to Section 8.3(b),
the parties agree that, upon any termination of this Agreement pursuant to Section 8.1(b)(i) (other
than a termination based upon the willful or intentional breach of, or any
intentional misrepresentation made in, this Agreement, it being acknowledged
that failure to obtain the Financing shall not constitute a willful or
intentional breach) under circumstances in which the Termination Fee is payable
pursuant to this Section 8.3(b), in no event shall the Seller or
the Company be entitled to seek or to obtain any recovery or judgment against
the Buyer or any Subsidiary of the Buyer or any of their respective assets, or
against any of their respective directors, officers, employees or equityholders
for any such termination of this Agreement, and in no event shall the Seller or
the Company be entitled to seek or obtain any other damages of any kind,
including consequential, special, indirect or punitive damages, for any such
termination of this Agreement. Notwithstanding the foregoing, payment of the
Termination Fee pursuant to Section 8.3(b) shall not constitute
liquidated damages with respect to any claim for damages or any other claim
which the Seller or the Company would be entitled to assert against the Buyer
or its assets, or against any employees or equityholders of the Buyer, with
respect to any such termination of this Agreement based upon the willful or
intentional breach or intentional misrepresentation of any representations,
warranties or covenants of the Buyer in this Agreement, and shall not
constitute the sole and exclusive remedy with respect to any such termination
of this Agreement based upon the willful or intentional breach or
misrepresentation of any of the representations, warranties or covenants of the
Buyer in this Agreement, it being acknowledged that failure to obtain the
Financing shall not constitute a willful or intentional breach.


 


8.3                               Amendment.
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.


 


8.4                               Extension;
Waiver. At any time prior to the Closing Date, the Buyer (with respect to
the Seller and the Company) and the Seller and the Company (with respect to the
Buyer) may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of such party, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (c) waive compliance with any
of the agreements or conditions contained herein. Any agreement on the


 


47

















 


part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.


 


ARTICLE IX

INDEMNIFICATION


 


9.1                               Survival
of Representations, Warranties and Covenants. All representations and
warranties made by the parties in this Agreement, or in connection with the
negotiation, execution and performance of this Agreement, shall survive the
Closing until the first anniversary of the Closing Date (the “Expiration
Date”), at which time they shall expire; provided, however,
that those representations and warranties made by the parties in Sections 3.1
(Organization and Standing), 3.2 (Corporate Power and Authority), 4.1
(Organization and Qualification), 4.2 (Authority), and 4.5
(Membership Interests and Ownership), and 5.1 (Organization), 5.2
(Authorization), 5.4 (Ownership of Membership Interests), 5.6
(Organization), 5.7 (Authorization), and 5.8 (Membership
Interests and Ownership) and in the Intermediate LLC Certificate shall survive
for the applicable statute of limitations. The waiver of any condition based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreement, will not affect the right to
indemnification or other remedy based on such representation, warranty,
covenant and agreement. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of the parties to complete the
Closing, each party shall be entitled to rely upon the representations and
warranties set forth herein, and none of such representations and warranties
shall be deemed waived or modified in any respect by reason of any such
investigation or audit. All covenants and agreements contained herein which by
their terms contemplate actions or impose obligations following the Closing
shall survive the Closing and remain in full force and effect in accordance
with their terms.


 


9.2                               Indemnification


 


(a)                                  The Seller shall
indemnify and hold harmless the Buyer and its Subsidiary and other Affiliates
(including, after the Closing Date, Intermediate LLC and the Company) and their
respective officers, directors, employees, stockholders, partners and agents
(collectively, the “Buyer Indemnified Parties”), from and against all losses,
costs, claims, damages, liabilities, expenses (including reasonable attorneys’
and accountant’s fees, costs of suit and costs of appeal), fines and penalties
(collectively, “Damages”) incurred by any Buyer Indemnified Party,
directly or indirectly, arising out of or relating to (i) any breach or
failure to be true of any representation or warranty contained herein (other
than those representations and warranties contained in Section 4.15)
made by the Seller or the Company as if such representation or warranty was
made on the date hereof and as of the Closing Date (other than representations
and warranties made as of a specified date, which need be true and correct only
as of the specified date) or (ii) except for those covenants in Section 6.1(p)
and Section 6.10, the breach or non-performance by the Seller or
the Company of any of their covenants or agreements contained herein.


 


(b)                                 The Buyer shall
indemnify and hold harmless the Seller and its Subsidiary and other Affiliates
(including, prior to the Closing Date, the Company) and their respective
managers, members, officers, directors, employees, stockholders, partners and
agents


 


48

















 


(collectively, the “Seller Indemnified Parties”), from and
against all Damages incurred by any Seller Indemnified Party, directly or
indirectly, arising out of or relating to (i) any breach or failure to be
true of any representation or warranty contained herein made by the Buyer as if
such representation or warranty was made on or as of the Closing Date (other
than representations and warranties made as of a specified date, which need be
true and correct only as of the specified date) or (ii) the breach or
non-performance by the Buyer of any of its covenants or agreements contained
herein.


 


(c)                                  The term “Damages”
as used in this Article IX is not limited to matters asserted by
third parties, but includes Damages incurred or sustained by an indemnified
party in the absence of third-party claims. The amount of Damages shall be calculated
as further provided in Section 9.7. No party hereto will be liable
to another party hereunder for any punitive or special damages, including,
without limitation, cost of capital or loss of business reputation, relating to
any claim for which such party may be entitled to recover under this
Agreement, other than indemnification of amounts paid or payable to third
parties in respect of any third-party claim for which indemnification hereunder
is required.


 


9.3                               Limitations
on Indemnification.


 


(a)                                  Notwithstanding any
other provision in this Agreement to the contrary, a party shall not be liable
to indemnify the other party pursuant to this Article IX until the
aggregate of all claims for which indemnity is required to be made hereunder
shall exceed $12,500,000 (the “Deductible”) and thereafter, only to the
extent further Damages for which indemnification hereunder is sought exceed the
Deductible; provided, however, that the aggregate amount of
Damages recoverable pursuant to this Article IX shall be limited to
$60,000,000 (the “Cap”); provided, however, that the
Deductible and Cap shall not apply to Damages related to the failure to be true
and correct of any of the representations and warranties set forth in Sections 3.1
(Organization and Standing), 3.2 (Corporate Power and Authority), 4.1
(Organization and Qualification), 4.2 (Authority), and 4.5
(Membership Interests and Ownership), and the Intermediate LLC Certificate and 5.1
(Organization), 5.2 (Authorization), 5.4 (Ownership of Membership
Interests), 5.6 (Organization), 5.7 (Authorization), and 5.8
(Membership Interests and Ownership) hereof and provided  further,
except as otherwise provided in this Agreement, no portion of this Section 9.3
shall apply to any indemnification obligation described in Section 6.10.


 


(b)                                 Except as otherwise
provided in this Agreement, the rights and obligations of the parties with
respect to indemnification for any and all Tax matters shall be governed by Section 6.10.
Any payments made pursuant to this Article IX or Section 6.10
shall constitute an adjustment to the Purchase Price for Tax purposes and shall
be treated as such by the Buyer, the Seller, the Company and Intermediate LLC
on their Returns to the extent permitted by Law.


 


9.4                               Mitigation;
Exclusivity of Remedy.


 


(a)                                  Prior to the
assertion of any claims for indemnification under this Article IX,
an Indemnified Party (as defined below) shall utilize all reasonable efforts,
consistent with normal practices and policies and good commercial practice, to
mitigate such Damages; provided  that, it is hereby acknowledged
that such efforts shall not include any obligation by


 


49

















 


Buyer to exhaust remedies or commence a lawsuit. Except as provided in Section 6.10,
the remedies in this Article IX shall be the exclusive remedies of
the parties with respect to any and all matters covered by this Agreement,
except for the remedies of specific performance, injunction and other equitable
relief; provided, however, that no party hereto shall be deemed
to have waived any rights, claims, causes of action or remedies if and to the
extent such rights, claims, causes of action or remedies may not be waived
under applicable Law, or actual fraud, intentional misrepresentation or active
concealment is proven on the part of a party by another party hereto.


 


(b)                                 The parties agree that
any and all indemnification obligations of the Seller hereunder (including
obligations under Section 6.10), other than indemnity obligations
with respect to Damages related to the failure to be true and correct of any of
the representations and warranties set forth in Sections 4.1
(Organization and Qualification), 4.2 (Authority), 5.1
(Organization), and 5.4 (Ownership of Membership Interests) and the
Intermediate LLC Certificate, shall be satisfied solely from available amounts
of the Indemnity Escrow Fund then on deposit with the Escrow Agent. If the
Indemnity Escrow Fund is exhausted or is otherwise unavailable, then the Seller
(or, to the extent that the Seller has liquidated assets, the Members, on a
several and not joint basis), shall be liable to the Buyer for Damages related
to the failure to be true and correct of any of the representations and
warranties set forth in Sections 4.1 (Organization and Qualification),
4.2 (Authority), 4.5 (Membership Interests and Ownership), 5.1
(Organization), 5.2 (Authorization) and 5.4 (Ownership of
Membership Interests) and the Intermediate LLC Certificate.


 


(c)                                  For purposes of
determining whether there has been a breach of any representation, warranty or
covenant and for purposes of calculating Damages hereunder, any materiality or
Material Adverse Effect qualifications in the representations, warranties,
covenants and agreements shall be disregarded, except with respect to any
representation or warranty made by the Company on behalf of or with respect to
the Subsidiary.


 


9.5                               Notice
of Claims.


 


(a)                                  Except with respect
to Tax Claims, which shall be governed exclusively by Section 6.10,
any Buyer Indemnified Party or Seller Indemnified Party seeking indemnification
hereunder (the “Indemnified Party”) shall, within the relevant
limitation period provided for in Section 9.1 above, give to the
party obligated to provide indemnification to such Indemnified Party (the “Indemnitor”)
a notice (a “Claim Notice”) describing in reasonable detail the facts
giving rise to any claims for indemnification hereunder and shall include in
such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any agreement, certificate or instrument executed pursuant hereto or in
connection herewith upon which such claim is based; provided, that a
Claim Notice in respect of any action at law or suit in equity by or against a
third Person as to which indemnification will be sought shall be given promptly
after the action or suit is commenced and shall be subject to Section 9.6
below; provided, further,
that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder, except to the extent it shall have been prejudiced by
such failure.


 


50

















 


(b)                                 An Indemnitor shall
have 30 days after the giving of any Claim Notice pursuant hereto to (i) agree
to the amount or method of determination set forth in the Claim Notice and to
pay such amount to such Indemnified Party in immediately available funds or (ii) provide
such Indemnified Party with notice that it disagrees with the claim or the
amount or method of determination set forth in the Claim Notice (the “Dispute
Notice”). Within 15 days after the giving of the Dispute Notice, a
representative of the Indemnitor and the Indemnified Party shall negotiate in a
bona fide attempt to resolve the
matter. In the event that the controversy is not resolved within 30 days
of the giving of the Dispute Notice, the parties shall proceed to binding
arbitration pursuant to the following procedures:


 


(i)                                     Any party may send
another party written notice identifying the matter in dispute and invoking the
procedures of this Section 9.5. Within 14 days, each party
involved in the dispute shall meet at a mutually agreed location in New York,
New York, for the purpose of determining whether they can resolve the dispute
themselves by written agreement, and, if not, whether they can agree upon a
third-party arbitrator to whom to submit the matter in dispute for final and
binding arbitration.


 


(ii)                                  If such parties fail
to resolve the dispute by written agreement or agree on the arbitrator within
said 14-day period, any such party may make written application to the
Judicial Arbitration & Mediation Services, Inc. (“J.A.M.S.”)
for the appointment of a panel of three arbitrators (collectively, the “Arbitrators”)
to resolve the dispute by arbitration. At the request of J.A.M.S., the parties
involved in the dispute shall meet with J.A.M.S. at its offices within
ten days of such request to discuss the dispute and the qualifications and
experience which each party respectively believes the Arbitrators should have; provided,
however, that the selection of the Arbitrators shall be the exclusive
decision of J.A.M.S. and shall be made within 30 days of the written
application to J.A.M.S.


 


(iii)                               Within 120 days of
the selection of the Arbitrators, the parties involved in the dispute shall
meet in New York, New York, with such Arbitrators at a place and time
designated by such Arbitrators after consultation with such parties and present
their respective positions on the dispute. The arbitration proceeding shall be
held in accordance with the rules for commercial arbitration of J.A.M.S.
in effect on the date of the initial request for appointment of the Arbitrators
(as such rules are modified by the terms of this Agreement or may be
further modified by mutual agreement of the parties). Each party shall have no
longer than five days to present its position, the entire proceedings
before the Arbitrators shall be no more than ten consecutive days, and the
decision of the Arbitrators shall be made in writing no more than 30 days
following the end of the proceeding. Such an award shall be a final and binding
determination of the dispute and shall be fully enforceable as an arbitration
decision in any court having jurisdiction and venue over such parties. The prevailing
party (as determined by the Arbitrators) shall in addition be awarded by the
Arbitrators such party’s own attorneys’ fees and expenses in connection with
such proceeding. The non-prevailing party (as determined by the Arbitrators)
shall pay the Arbitrators’ fees and expenses.


 


9.6                               Third-Person
Claims. If a claim by a third Person is made against an Indemnified Party,
and if such party intends to seek indemnity with respect thereto under this


 


51

















 


Article IX,
such Indemnified Party shall promptly notify the Indemnitor in writing of such
claims, setting forth such claims in reasonable detail. The Indemnitor shall
have 20 days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and the Indemnified Party shall cooperate with
it in connection therewith; provided, that the Indemnified Party may participate
in such settlement or defense through counsel chosen by such Indemnified Party
and paid at its own expense; provided, further, that, if in the
reasonable opinion of counsel for such Indemnified Party, there is a reasonable
likelihood of a conflict of interest between the Indemnitor and the Indemnified
Party, the Indemnitor shall be responsible for the reasonable fees and expenses
of one counsel to such Indemnified Party in connection with such defense. So
long as the Indemnitor is reasonably contesting any such claim in good faith,
the Indemnified Party shall not pay or settle any such claim without the
consent of the Indemnitor. If the Indemnitor does not notify the Indemnified
Party within ten days after receipt of the Indemnified Party’s notice of a
claim of indemnity under this Section 9.6 that it elects to
undertake the defense thereof, the Indemnified Party shall have the right to
undertake, at Indemnitor’s cost, risk and expense, the defense, compromise or
settlement of the claim, but shall not thereby waive any right to indemnity
therefore pursuant to this Agreement. The Indemnitor shall not, except with the
consent of the Indemnified Party, enter into any settlement that does not
include as an unconditional term thereof the giving by the Person or Persons
asserting such claim to all Indemnified Parties of an unconditional release
from all liability with respect to such claim or consent to entry of any
judgment.


 


9.7                               Calculation
of Damages.


 


(a)                                  The amount of any
Damage for which indemnification is provided under this Article IX
shall be (i) with respect to the Company, net of any reserves, liability
accruals or other provisions for such Damages on the balance sheet of the
Company as of the Closing Date and (ii) net of any amounts recovered by
the Indemnified Party under insurance policies with respect to such Damage. In
the event that any claim for indemnification asserted hereunder is, or may be,
the subject of any insurance coverage or other right to indemnification or
contribution from any third Person, the Indemnified Party expressly agrees to
promptly notify the applicable insurance carrier of any such claim or loss and
tender defense thereof to such carrier, and shall also promptly notify any
potential third party indemnitor or contributor which may be liable for
any portion of such losses or claims. The Indemnified Party agrees to pursue,
at the cost and expense of the Indemnitor, such claims diligently and to
reasonably cooperate, at the cost and expense of the Indemnitor, with each
applicable insurance carrier and third party indemnitor or contributor. The
Indemnified Party shall use its commercially reasonable efforts to seek
recoveries under insurance policies and shall reimburse the Indemnitor for any
Damage indemnified by them, which is subsequently recovered by the Indemnified
Party under any such insurance.


 


(b)                                 The amount of any
Damage (including Taxes) for which indemnification is provided shall be reduced
to take account of any net Tax benefit actually recognized by the Indemnified
Party arising from the incurrence or payment of any such Damage. In computing
the amount of any such Tax benefit, the Indemnified Party shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the


 


52

















 


receipt of any indemnity payment hereunder or the incurrence or payment
of any indemnified Damage.


 


ARTICLE X

MISCELLANEOUS


 


10.1                        Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or
dispatched by a nationally recognized one night courier service to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):


 


(a)                                  if to the Buyer:


 


c/o Thomas H. Lee Partners, L.P.

100 Federal Street, 35th Floor

Boston, MA 02110

Attention:  Scott Sperling
                                                   Thomas
Hagerty

                                                   Soren
Oberg

Facsimile:  (617) 227-3514


 


with a copy (which shall not constitute
notice) to:


 


Weil, Gotshal & Manges LLP


100 Federal Street, 34th Floor


Boston, MA 02110


Attention:  James Westra, Esq.


   Marilyn French, Esq.


Facsimile: 
(617) 772-8333


 


(b)                                 if to the Company:


 


Hawkeye Renewables, LLC

21050 140th Street

Iowa Falls, IA 50126

Attention:  Bruce Rastetter


Facsimile: 
(641) 648-8925


 


with a copy (which shall not constitute
notice) to:


 


Nyemaster, Goode, West, Hansell & O’Brien

700 Walnut, Suite 1600

Des Moines, Iowa 50309-3899

Attention: Wade H. Schut, Esq.

Facsimile:  (515) 283-3108


 


53

















 


(c)                                  if to the Seller:


 


Hawkeye Holdings, L.L.C.

177 Broad Street, 15th Floor

Stamford, Connecticut 06901

Attention:  Russell Stidolph

Facsimile: (203) 973-1422


 


with a copy (which shall not constitute
notice) to:


 


Gibson, Dunn & Crutcher LLP

2029 Century Park East, Suite 4000

Los Angeles, CA 90067

Attention: Jonathan K. Layne, Esq.

Facsimile:  (310) 552-7053


 


10.2                        Interpretation.
When a reference is made in this Agreement to a Section, Article or Exhibit such
reference shall be to a Section, Article or Exhibit of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement or in any Exhibit or Disclosure Schedule are for
convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require. Any
capitalized terms used in any Exhibit or Disclosure Schedule but not
otherwise defined therein shall have the meaning as defined in this Agreement. All
Exhibits and Disclosure Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth
herein. The word “including” and words of similar import when used in this
Agreement will mean “including, without limitation”, unless otherwise
specified.


 


10.3                        Expenses.
Except as otherwise provided herein, all fees and expenses incurred in
connection with or related to this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees or expenses, whether or
not such transactions are consummated. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by the
others. The Seller shall cause the Company to pay, immediately prior to
Closing, all Transaction Expenses and shall deliver to the Buyer at Closing
reasonable evidence of payment of any Transaction Expenses.


 


10.4                        Counterparts.
This Agreement may be executed in counterparts, which together shall
constitute one and the same Agreement. The parties may execute more than
one copy of the Agreement, each of which shall constitute an original and each
of which alone and all of which together shall constitute one and the same
instrument. This Agreement may be transmitted by electronic mail or
facsimile and it is the intent of the parties for the facsimile (or a photocopy
thereof) of any autograph received by electronic mail or printed by a receiving
facsimile machine to be an original signature and for the facsimile (or a
photocopy thereof) and any complete photocopy of this Agreement to be deemed an
original counterpart.


 


54

















 


10.5                        Waiver.
No failure or delay of any party in exercising any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such right or power, or any course of conduct, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the parties hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have hereunder. Any
agreement on the part of any party to any such waiver shall be valid only
if set forth in a written instrument executed and delivered by a duly
authorized officer on behalf of such party.


 


10.6                        Entire Agreement.
This Agreement (including the Exhibits and Disclosure Schedules hereto) and the
Confidentiality Agreement constitute the entire agreement, and supersede all
prior written agreements, arrangements, communications and understandings and
all prior and contemporaneous oral agreements, arrangements, communications and
understandings among the parties with respect to the subject matter of this
Agreement. This Agreement shall not be deemed to contain or imply any
restriction, covenant, representation, warranty, agreement or undertaking of
any party with respect to the transactions contemplated hereby other than those
expressly set forth herein or in any document required to be delivered
hereunder, and none shall be deemed to exist or be inferred with respect to the
subject matter hereof. Notwithstanding any oral agreement of the parties or
their authorized representatives to the contrary, no party to this Agreement
shall be under any legal obligation to enter into or complete the transactions
contemplated hereby unless and until this Agreement shall have been executed
and delivered by each of the parties.


 


10.7                        Third-Party
Beneficiaries. Nothing in this Agreement, express or implied, is intended
to or shall confer upon any Person other than the parties and their respective
successors and permitted assigns any legal or equitable right, benefit or
remedy of any nature under or by reason of this Agreement, except as provided
in Section 6.9.


 


10.8                        Governing
Law. This Agreement and all disputes or controversies arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
governed by, and construed in accordance with, the internal laws of the State
of New York, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles of the State of New York.


 


10.9                        Submission
to Jurisdiction. Except for arbitration provided in Section 9.5,
each of the parties irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement or for recognition and enforcement
of any judgment in respect hereof brought by any other party or its successors
or assigns may be brought and determined in any New York State or federal
court sitting in the Borough of Manhattan in The City of New York (or, if such
court lacks subject matter jurisdiction, in any appropriate New York State or
federal court), and each of the parties hereby irrevocably submits to the
jurisdiction of the aforesaid courts for itself and with respect to its property,
generally and unconditionally, with regard to any such action or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby. Each of the parties further agrees to accept service of process in any
manner permitted by such courts. Each of the parties hereby irrevocably and
unconditionally waives, and agrees not to assert, by way of motion or as a
defense, counterclaim or otherwise, in any action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, (a) any


 


55

















 


claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure lawfully to serve
process, (b) that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by law, that (i) the suit, action or proceeding
in any such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper or (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts.


 


10.10                 Disclosure
Generally. Notwithstanding anything to the contrary contained in the
Disclosure Schedules or in this Agreement, the information and disclosures
contained in any Disclosure Schedule shall be deemed to be disclosed and
incorporated by reference in any other Disclosure Schedule as though fully
set forth in such Disclosure Schedule for which applicability of such
information and disclosure is reasonably apparent on its face. The fact that
any item of information is disclosed in any Disclosure Schedule shall not
be construed to mean that such information is required to be disclosed by this
Agreement. Such information and the dollar thresholds set forth herein shall
not be used as a basis for interpreting the terms “material” or “Material
Adverse Effect” or other similar terms in this Agreement.


 


10.11                 Personal
Liability. This Agreement shall not create or be deemed to create or permit
any personal liability or obligation on the part of any member or manager
of the Seller or the Company, any direct or indirect stockholder of the Buyer
or any officer, director, employee, authorized representative or investor of
any party hereto.


 


10.12                 Assignment;
Successors. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned or delegated, in whole or
in part, by operation of law or otherwise, by any party without the prior
written consent of the other parties, and any such assignment without such
prior written consent shall be null and void; provided, however,
that the Buyer may assign this Agreement to any Subsidiary of the Buyer
and Buyer may assign its rights to purchase a portion of the Membership
Interests to one or more co-investors affiliated with the Buyer without the
prior consent of the Seller or the Company and; provided  further,
that the Seller may assign its right to receive the Purchase Price to one
or more Affiliates of the Seller without the consent of the Buyer or the
Company, and; provided  still  further, that no assignment
shall limit the assignor’s obligations hereunder. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.


 


10.13                 Enforcement. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, each of the parties
shall be entitled to specific performance of the terms hereof, including an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any New York State
or federal court sitting in the Borough of Manhattan in the City of New York
(or, if such court lacks subject matter jurisdiction, in any appropriate New
York State or federal court), this being in addition to any other remedy to
which they are entitled at law or in equity. Each of the parties further hereby
waives (a) any defense in any action for specific performance that a
remedy at law would be adequate and (b) any requirement under any


 


56

















 


law to post security as a prerequisite to obtaining equitable relief. Notwithstanding
the foregoing, neither the Seller nor the Company shall be entitled to an
injunction to enforce specifically the terms and provisions of the Agreement in
the circumstance in which the Buyer pays the Termination Fee (other than for
termination based upon the willful or intentional breach of, or any
misrepresentation made in the Agreement, it being acknowledged that failure to
obtain the Financing shall not constitute a willful or intentional breach), then
in such event, the sole and exclusive remedy of the Seller and the Company with
respect to any such breach shall be the payment of the Termination Fee.


 


10.14                 Currency. All
references to “dollars” or “$” or “US$” in this Agreement refer to United
States dollars, which is the currency used for all purposes in this Agreement.


 


10.15                 Severability.
Whenever possible, each provision or portion of any provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable Law in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement shall be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.


 


10.16                 Waiver of Jury
Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


10.17                 Time of Essence.
Time is of the essence with regard to all dates and time periods set forth or
referred to in this Agreement.


 


10.18                 DISCLAIMER OF IMPLIED WARRANTIES.


 


(a)                                  IT IS THE EXPLICIT INTENT AND UNDERSTANDING OF EACH
PARTY HERETO THAT NO PARTY HERETO OR ANY OF SUCH PARTY’S AFFILIATES OR
REPRESENTATIVES IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, ORAL OR
WRITTEN, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY
INFORMATION REGARDING THE COMPANY, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, AND NO PARTY HERETO IS RELYING ON ANY STATEMENT, REPRESENTATION OR
WARRANTY, ORAL OR WRITTEN, EXPRESS OR IMPLIED, MADE BY ANY OTHER PARTY HERETO
OR SUCH OTHER PARTY’S AFFILIATES OR REPRESENTATIVES, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.


 


(b)                                 IN CONNECTION WITH THE BUYER’S INVESTIGATION OF THE
COMPANY, THE BUYER HAS RECEIVED CERTAIN ESTIMATES, PROJECTIONS AND OTHER
FORECASTS REGARDING THE COMPANY AND ITS AFFILIATES. THE BUYER ACKNOWLEDGES THAT
THERE ARE


 


57

















 


UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE
SUCH ESTIMATES, PROJECTIONS AND OTHER FORECASTS, THAT THE BUYER IS FAMILIAR
WITH SUCH UNCERTAINTIES AND THAT THE BUYER IS TAKING FULL RESPONSIBILITY FOR
MAKING ITS OWN EVALUATION OF THE ADEQUACY AND ACCURACY OF ALL ESTIMATES,
PROJECTIONS AND OTHER FORECASTS SO FURNISHED TO IT (INCLUDING THE
REASONABLENESS OF THE ASSUMPTIONS UNDERLYING SUCH ESTIMATES, PROJECTIONS AND
FORECASTS). ACCORDINGLY, NEITHER THE SELLER NOR THE COMPANY MAKES ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO SUCH ESTIMATES, PROJECTIONS AND
OTHER FORECASTS (INCLUDING THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING
SUCH ESTIMATES, PROJECTIONS AND FORECASTS).


 


10.19                 No Presumption
Against Drafting Party. Each of the Buyer and the Seller acknowledges that
each party to this Agreement has been represented by counsel in connection with
this Agreement and the transactions contemplated by this Agreement. Accordingly,
any rule of law or any legal decision that would require interpretation of
any claimed ambiguities in this Agreement against the drafting party has no
application and is expressly waived.


 


[The remainder of this page is intentionally left blank.]


 


58

















 


IN WITNESS WHEREOF, the Buyer, the Company,
the Seller and Merger Company have signed this Agreement as of the date first
written above.


 


	
   

  	
  THL HAWKEYE ACQUISITION PARTNERS

  
	
   

  	
   

  
	
   

  	
  By:

  	
  THL Hawkeye GP LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  THL Equity Advisors VI, LLC,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Soren Oberg

  	
   

  
	
   

  	
  By:  Soren Oberg

  
	
   

  	
  Its:   Managing Director

  
	
   

  	
   

  
	
   

  	
  THL HAWKEYE ACQUISITION PARTNERS II

  
	
   

  	
   

  
	
   

  	
  By:

  	
  THL Hawkeye GP LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  THL Equity Advisors VI, LLC,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Soren Oberg

  	
   

  
	
   

  	
  By:  Soren Oberg

  
	
   

  	
  Its:   Managing Director

  
	
   

  	
   

  
	
   

  	
  THL HAWKEYE ACQUISITION PARTNERS III

  
	
   

  	
   

  
	
   

  	
  By:

  	
  THL Hawkeye GP LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  THL Equity Advisors VI, LLC,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Soren Oberg

  	
   

  
	
   

  	
  By:  Soren Oberg

  
	
   

  	
  Its:   Managing Director

  
						



 


Hawkeye Renewables, LLC – Membership
Interest Purchase Agreement


 

















 


	
   

  	
  THL-HAWKEYE ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Soren Oberg

  	
   

  
	
   

  	
  By:  Soren Oberg

  
	
   

  	
  Its:   Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWKEYE HOLDINGS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce Rastetter

  	
   

  
	
   

  	
  By:  Bruce Rastetter

  
	
   

  	
  Its:   Manager

  
	
   

  	
   

  
	
   

  	
  HAWKEYE RENEWABLES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce Rastetter

  	
   

  
	
   

  	
  By:  Bruce Rastetter

  
	
   

  	
  Its:   CEO

  



 














 


EXECUTION COPY


 


 


DISCLOSURE SCHEDULES


 


TO


 


MEMBERSHIP INTEREST
PURCHASE AGREEMENT


 


BY AND AMONG


 


HAWKEYE HOLDINGS,
L.L.C.,


 


HAWKEYE
RENEWABLES, LLC


 


THL-HAWKEYE
ACQUISITION LLC,


 


THL HAWKEYE ACQUISITION PARTNERS,


 


THL HAWKEYE ACQUISITION PARTNERS II,


 


and


 


THL HAWKEYE
ACQUISITION PARTNERS III,


 


 


Dated as of May 11,
2006


 

















 


DISCLOSURE
SCHEDULES TO 

MEMBERSHIP INTEREST PURCHASE AGREEMENT


 


These Disclosure Schedules have been prepared
in connection with the Membership Interest Purchase Agreement (the “Agreement”),
dated as of May 11, 2006, by and among HAWKEYE HOLDINGS, L.L.C., an Iowa
limited liability company (the “Seller”), HAWKEYE RENEWABLES, LLC, a
Delaware limited liability company (the “Company”), THL Hawkeye Acquisition Partners, a Delaware
general partnership (“Buyer I”), THL Hawkeye Acquisition Partners II, a
Delaware general partnership (“Buyer II”), and THL Hawkeye Acquisition Partners III, a Delaware general
partnership (“Buyer III”, with each of Buyer I, Buyer II and Buyer III
being referred to individually as a “Buyer” and collectively as the “Buyer”), and THL-HAWKEYE ACQUISITION LLC, a
Delaware limited liability company (“Merger Company”). Unless otherwise
defined in these Disclosure Schedules, all capitalized terms used herein shall
have the meanings ascribed to them in the Agreement.


 


These Disclosure Schedules are qualified in
their entirety by reference to the specific provisions of the Agreement, and
are not intended to constitute, and shall not be construed as constituting,
representations or warranties of the Company except as and to the extent
provided in the Agreement. Inclusion of information in any Disclosure Schedule shall
not be construed as an admission that such information is material to the
business, assets, financial condition or operations of the Company.


 


Headings have been inserted on the sections
of the Disclosure Schedules for convenience of reference only and shall to no
extent have the effect of amending or changing the express description of the
sections as set forth in the Agreement. Of and to the extent any information
required to be furnished in any Disclosure Schedule is contained in the
Agreement or disclosed on any other Disclosure Schedule attached hereto,
such information shall be deemed to be included in all Disclosure Schedules in
which the information is required to be included to the extent such disclosure
is reasonably apparent on its face. The annexes or exhibits to any particular
Disclosure Schedule hereto form an integral part of such
Disclosure Schedule and are incorporated by reference for all purposes as
if set forth fully herein.


 


The information contained herein is in all
events subject to the Confidentiality Agreement.


 

















 


LIST OF SCHEDULES


 


	
  Schedule 2.1

  	
   

  	
  Adjustment of Purchase
  Price

  
	
  Schedule 4.3

  	
   

  	
  Subsidiaries and
  Investments

  
	
  Schedule 4.4(a)

  	
   

  	
  Conflicts

  
	
  Schedule 4.4(b)

  	
   

  	
  Consents and Approvals

  
	
  Schedule 4.5

  	
   

  	
  Membership Interests
  and Ownership

  
	
  Schedule 4.6(a)

  	
   

  	
  Financial Statements

  
	
  Schedule 4.6(b)

  	
   

  	
  Undisclosed Liabilities

  
	
  Schedule 4.7

  	
   

  	
  Certain Changes or
  Effects

  
	
  Schedule 4.8(a)

  	
   

  	
  Compliance with Law

  
	
  Schedule 4.8(b)

  	
   

  	
  Permits

  
	
  Schedule 4.9

  	
   

  	
  Litigation

  
	
  Schedule 4.10(a)

  	
   

  	
  Employee Benefit Plans

  
	
  Schedule 4.10(b)

  	
   

  	
  Employee Benefit Plan
  Maintenance, Default or Action

  
	
  Schedule 4.10(c)

  	
   

  	
  Section 401(a) Qualification

  
	
  Schedule 4.10(e)

  	
   

  	
  Acceleration of
  Benefits

  
	
  Schedule 4.11

  	
   

  	
  Labor and Employment
  Matters

  
	
  Schedule 4.12

  	
   

  	
  Insurance

  
	
  Schedule 4.13(a)

  	
   

  	
  Owned Real Property

  
	
  Schedule 4.13(b)

  	
   

  	
  Leased Real Property

  
	
  Schedule 4.14(a)

  	
   

  	
  Company Intellectual
  Property

  
	
  Schedule 4.14(d)

  	
   

  	
  Confidentiality of
  Trade Secrets

  
	
  Schedule 4.14(e)

  	
   

  	
  Intellectual Property
  Claims

  
	
  Schedule 4.14(f)

  	
   

  	
  Royalty and License
  Obligations

  
	
  Schedule 4.15(b)

  	
   

  	
  Taxes

  
	
  Schedule 4.16(a)

  	
   

  	
  Environmental Matters

  
	
  Schedule 4.17

  	
   

  	
  Purchasers and
  Suppliers

  
	
  Schedule 4.18(a)

  	
   

  	
  Material Contracts

  
	
  Schedule 4.18(a)(i)

  	
   

  	
  Forward Purchase and
  Sale Commitments and Hedging Arrangements

  
	
  Schedule 4.18(a)(ix)

  	
   

  	
  Intellectual Property
  Licenses

  
	
  Schedule 4.20

  	
   

  	
  Personal Property and
  Asset Exceptions

  
	
  Schedule 6.12(a)

  	
   

  	
  Non-Competition Parties

  
	
  Schedule 6.12(b)

  	
   

  	
  Non-Solicit Parties

  



 


2

















 


SCHEDULE 2.1


ADJUSTMENT OF PURCHASE PRICE


 


(a)                                  At
least five (5) Business Days prior to the Closing Date, the Seller shall
prepare and deliver to the Buyer a statement (the “Closing Statement”)
setting forth a reasonably detailed calculation of the estimated Working
Capital of the Company as of the Closing Date prepared in accordance with (A) the
books and records of the Company and (B) the Working Capital Accounting
Principles. Seller shall grant Buyer and its Affiliates and representatives
(including advisors and accountants) access to all books, records and employees
of the Company (in each case, only those portions or aspects as they relate
solely to the Company) that is reasonably requested by the Buyer in connection
with the Seller’s preparation of estimated Working Capital. The Buyer and
Seller shall negotiate and cooperate in good faith to agree upon the estimated
Working Capital as of the Closing Date. If (A) Seller and Buyer agree on
the estimated Working Capital and (B) the estimated Working Capital is
less than the Target Working Capital Amount, then the Purchase Price payable at
Closing shall be reduced by such shortfall (such amount being the “Closing
Date Adjustment”) and no further post-Closing adjustment based on Working
Capital shall be made. If (A) Seller and Buyer agree on estimated Working
Capital and (B) the estimated Working Capital is greater than the Target
Working Capital Amount, then no adjustment to the Purchase Price shall be made
at Closing and no further post-Closing adjustment based on Working Capital
shall be made.


 


(b)                                 If
the Seller and Buyer cannot agree upon the estimated Working Capital prior to
Closing, then the Closing Date Adjustment shall be based on the Seller’s
estimated Working Capital and the procedures set forth below in
clauses (c)-(h) shall take place


 


(c)                                  The
Seller and the Buyer shall refer any items which are in dispute (“Disputed
Items”) to an accountant who is a partner at a nationally recognized firm
of independent accountants (the “Accounting Referee”), within five (5) days
after acceptance of appointment by the Accounting Referee, to make a final,
non-appealable and binding determination as to such remaining Disputed Items
pursuant to the terms hereof. The Accounting Referee shall be selected by
mutual agreement of the Buyer and the Seller; provided in the event that no
Accounting Referee is appointed pursuant to the preceding provision within
fifty (50) days of the Closing Date, the Seller and the Buyer shall each,
within sixty (60) days of the Closing Date, select an accountant who is a
partner at a nationally recognized firm of independent public accountants, who
shall be directed to select, within seventy (70) days of the Closing Date,
a third accountant who is a partner at a nationally recognized firm of
independent public accountants to serve as the Accounting Referee; provided
further that any Accounting Referee appointed pursuant to this sentence shall
be a certified public accountant or accounting expert with substantial
experience with complex financial transactions of the type set forth in the
Agreement. The Accounting Referee shall be directed to make a determination in
accordance with paragraph (d) below of the Disputed Items promptly,
but no later than sixty (60) days, after acceptance of its appointment. The
Seller and the Buyer agree to use their commercially reasonable efforts to
effect the selection and appointment of the Accounting Referee pursuant to this
paragraph (c), including, without limitation, executing an engagement
agreement with the Accounting Referee providing for reasonable and customary
compensation and other terms of such engagement. The Seller and the


 


1

















 


Buyer shall make readily available to the
Accounting Referee all relevant books, records and employees of the Company
that are reasonably requested by the Accounting Referee in connection with the
Accounting Referee’s review of any Disputed Items; provided that the Seller,
the Buyer and their respective Affiliates shall not be obligated to provide any
information the disclosure of which would jeopardize any privilege available to
such Person relating to such information or which would cause such Person to
breach a confidentiality obligation to which it is bound; and provided further
that the Seller, the Buyer and their respective Affiliates shall use their
commercially reasonable efforts to minimize the effects of any such limitations.


 


(d)                                 If
Disputed Items are referred to the Accounting Referee for resolution pursuant
to paragraph (d) above, the Accounting Referee (i) shall
determine only with respect to the Disputed Items submitted whether and to what
extent, if any, the Working Capital of the Company as of the Closing Date set
forth in the Closing Statement requires adjustment, (ii) shall utilize the
Working Capital Accounting Principles without modification and (iii) shall
not assign a value to any item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed
by either party. Any finding by the Accounting Referee shall be a reasoned
award stating in reasonable detail the findings of fact (if any) on which it is
based, shall be final, non-appealable and binding upon the parties and shall be
the sole and exclusive remedy between the parties regarding the Disputed Items
so presented. The fees and expenses of the Accounting Referee shall be borne by
the Seller and the Buyer in the same proportion that the dollar amount of
Disputed Items which are not resolved in favor of the Seller or the Buyer (as
applicable) bears to the total dollar amount of Disputed Items resolved by the
Accounting Referee. For illustration purposes only, (A) if the total
amount of Disputed Items by the Seller is $1,000, and the Seller is awarded
$500 by the Accounting Referee, the Seller and the Buyer shall bear the
Accounting Referee’s fees and expenses equally; or (B) if the total amount
of Disputed Items by the Seller is $1,000, and the Seller is awarded $750 by
the Accounting Referee, the Seller shall bear twenty five percent (25%) and the
Buyer shall bear seventy five percent (75%) of the Accounting Referee’s fees
and expenses. Each of the Seller and the Buyer shall bear the fees, costs and
expenses of its own accountants and all of its other expenses incurred in
connection with matters contemplated by this Schedule 2.1.


 


(e)                                  The
Working Capital of the Company as of the Closing Date as finally determined by
the Accounting Referee under Section (d) above, shall be the “Final
Working Capital.”


 


(f)                                    The
“Closing Date Adjustment” shall be recalculated using the Final Working
Capital instead of the estimated Working Capital. If the recalculated Closing
Date Adjustment (using Final Working Capital) exceeds the Closing Date Adjustment
made at Closing, then Buyer shall pay to Seller such excess. If the
recalculated Closing Date Adjustment (using Final Working Capital) is less than
the Closing Date Adjustment made at Closing, then Seller shall pay to Buyer
such shortfall. Any such payment under this Section (f) shall be
deemed the “True-Up Amount.”


 


(g)                                 Payment
of the True-up Amount calculated pursuant to this Schedule 2.1 shall be
made within ten (10) days following final resolution of all Disputed
Items by the parties or the Accounting Referee, by wire transfer of immediately
avaiable funds to an account designated


 


2

















 


by the parties receiving such funds, plus
interest thereon from and including the Closing Date through and including the
day before the date of such payment, at a per annum rate equal to the prime
lending rate charged by Citibank, N.A. as at the Closing Date for demand loans
in U.S. dollars to its most creditworthy customers.


 


3

















 


Annex A


 


to


 


Schedule 2.1


 


Working Capital Worksheet


 


Target Working Capital Amount


 


The Target Working Capital Amount is $14,500,000. The Buyer and the Seller
agree that the Transaction shall take place on a debt-free and cash-free basis
and that all cash (including any interest rate protection agreements or
arrangements) will be paid out as a dividend or otherwise prior to Closing, or
addressed in the calculation of the Purchase Price. The Buyer shall not be
permitted to submit any objection with respect to the calculation of the Target
Working Capital Amount.


 


Closing Working Capital Worksheet


 


Working Capital shall be calculated by
subtracting the Current Liabilities from the Current Assets as set forth in the
worksheet below (the “Closing Working Capital Worksheet”). As the transaction
shall take place on a cash-free basis, cash and cash equivalents shall be
excluded from the Closing Working Capital Worksheet.


 


“Current Assets” means an amount equal
to the sum of the following items ($ in thousands):


 


	
  Accounts
  Receivable – Trade

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prepayments

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Miscellaneous Current Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL CURRENT ASSETS

  	
   

  	
  $

  	
   

  	
   

  



 


LESS:


 


“Current Liabilities” means an amount
equal to the sum of the following items ($ in thousands):


 


	
  Accounts Payable –
  Trade

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accrued Taxes Payable

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accrued Interest

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Miscellaneous Current
  Liabilities

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL CURRENT
  LIABILITIES

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EQUALS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WORKING CAPITAL

  	
   

  	
  $

  	
   

  	
   

  



 


4

















 


Working Capital Accounting Principles


 


The following Working Capital Accounting Principles shall be used in
preparing the Closing Working Capital Worksheet and the Closing Statement:


 


All terms set forth in the Working Capital Worksheet are defined,
recognized, measured and estimated consistently with the use on the balance
sheet of the Company in the interim consolidated 2006 financial statements of
the Company. For purposes of the calculation of the Closing Working Capital
Worksheet above, line item amounts shall be presented on a basis consistent
with the accounting principles, measurement methodologies and estimation
procedures applied by the Company in presenting the balance sheet in the
interim consolidated 2006 financial statements of the Company, notwithstanding
any changes to GAAP that have become effective subsequent to March 31,
2006.


 


The underlying balance sheet components of Estimated Working Capital
shall, subject to the immediately succeeding paragraph, be determined in
accordance with GAAP, as in effect at March 31, 2006, applied in a manner
consistent with the accounting principles and practices used in the
determination of the Working Capital as of March 31, 2006. No reserves
shall exist with respect to such balance sheet components for purposes of the
calculations contemplated herein.


 


To the extent that (i) there exists any
conflict between GAAP and the historical methods and practices used by the Company
in the preparation of its related financial statements or (ii) GAAP would
otherwise yield a different result than would occur using the historical
methods and practices of the Company, the historical methods and practices of
the Company shall be applied and shall supersede GAAP.


 


For the avoidance of doubt, if and to the extent an item of Net Debt,
unpaid Transaction Expenses or unpaid Fairbank/Iowa Construction Expenses are
otherwise reflected in the calculation of the Purchase Price, no such item shall
be counted or reflected in the determination of Working Capital.


 


In preparation of the estimated Working Capital, the following
accounting principles shall be utilized with regard to specific line items:


 


5

















 


Current Assets


 


Accounts Receivable – Trade:


 


Represents the dollar amount of invoices
issued to customers (including all Affiliates and associated companies of the
Company) but as yet uncollected. No discount is applied for doubtful accounts
or is to be applied in the Estimated Working Capital and Final Working Capital
calculations.


 


Notes Receivable:


 


For the avoidance of doubt, this line item is
excluded for purposes of the Working Capital calculation.


 


Prepayments:


 


Represents the dollar amount of prepaid items
not yet expensed, including items such as prepaid insurance.


 


Miscellaneous Current Assets:


 


Represents the dollar value of other current
assets, including non-trade accounts receivable (including, but not limited to,
freight refunds, and other miscellaneous receivables) inventories (including
feedstock, raw materials, goods in process, finished products and repair
parts), materials, and supplies, and excluding the fair value of futures/options,
hedges (including amounts paid to enter into hedges), any interest rate
protection agreements or arrangements and tax receivables such as income, VAT,
or other recoverable taxes. This amount shall be determined utilizing the same
accounts, accounting methodologies, and practices used in determining this amount
as of March 31, 2006.


 


Current Liabilities


 


Accounts Payable – Trade:


 


Represents the dollar amounts owed to vendors
for goods and/or services for which goods have been received and/or services
rendered.


 


Short-term borrowing:


 


For the avoidance of doubt, this line item is
excluded for purposes of the Working Capital calculation.


 


Current Portion of LT debt:


 


For the avoidance of doubt, this line item is
excluded for purposes of the Working Capital calculation.


 


6

















 


Accrued Taxes Payable:


 


Represents the dollar amount of taxes that
has been expensed and is considered payable (such as withholding, VAT, and
other taxes) within the next twelve-month period.


 


Accrued Interest:


 


For avoidance of doubt, this line items is
excluded for purposes of the Working Capital Calculation.


 


Miscellaneous Current Liabilities:


 


Represents the dollar amount of other accrued
liabilities (such as annual audit fees, accrued salaries, employee bonuses,
incentive payments, severance, employee benefits, including paid time off, and
accrued property taxes) expected to be paid within the next 12 months. This
amount shall be determined utilizing the same accounts, accounting
methodologies, and practices used in determining this amount as of March 31,
2006. A new current liability can be established for a new event or for changes
in circumstance arising after March 31, 2006 and before the Closing Date,
however, the respective amounts included in the Estimated Working Capital shall
not include any reserves.


 


Working
Capital Worksheet:


 


Working Capital as of March 31, 2006 was
calculated by subtracting the Current Liabilities from the Current Assets as
set forth in the attached worksheet (the “Working Capital Worksheet”). As
the transaction shall take place on a cash-free basis, cash and cash
equivalents shall be excluded from the Working Capital Worksheet.


 


7

















 


March 31, 2006 reference
working capital


 


	
   

  	
   

  	
   

  	
   

  	
  Excluded
  Items

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Freight

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  receivable/

  	
   

  	
  Accrued

  	
   

  	
   

  	
   

  	
  Construction

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  #’000

  	
   

  	
  Unadjusted

  	
   

  	
  Cash

  	
   

  	
  payable

  	
   

  	
  Interest

  	
   

  	
  FMV of
  hedges

  	
   

  	
  payable

  	
   

  	
  Debt

  	
   

  	
  Adjusted

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash

  	
   

  	
  71,320

  	
   

  	
  (71,320

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Accounts receivable, net

  	
   

  	
  3,470

  	
   

  	
   

  	
   

  	
  (248

  	
  )

  	
  (244

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,978

  	
   

  
	
  Inventory

  	
   

  	
  3,075

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,075

  	
   

  
	
  Prepaid expenses

  	
   

  	
  558

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  558

  	
   

  
	
  Other current assets (1)

  	
   

  	
  2,525

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (2,525

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Total current assets

  	
   

  	
  80,948

  	
   

  	
  (71,320

  	
  )

  	
  (248

  	
  )

  	
  (244

  	
  )

  	
  (2,525

  	
  )

  	
  —

  	
   

  	
  —

  	
   

  	
  6,611

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable

  	
   

  	
  21,488

  	
   

  	
   

  	
   

  	
  (248

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
  (19,266

  	
  )

  	
   

  	
   

  	
  1,974

  	
   

  
	
  Accrued liabilities

  	
   

  	
  1,862

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (1,346

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  516

  	
   

  
	
  Current portion of long-term debt

  	
   

  	
  1,030

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (1,030

  	
  )

  	
  —

  	
   

  
	
  Total current liabilities

  	
   

  	
  24,380

  	
   

  	
  —

  	
   

  	
  (248

  	
  )

  	
  (1,346

  	
  )

  	
  —

  	
   

  	
  (19,266

  	
  )

  	
  (1,030

  	
  )

  	
  2,490

  	
   

  
	
  Working capital

  	
   

  	
  56,568

  	
   

  	
  (71,320

  	
  )

  	
  —

  	
   

  	
  1,102

  	
   

  	
  (2,525

  	
  )

  	
  19,266

  	
   

  	
  1,030

  	
   

  	
  4,121

  	
   

  



 






(1)   Represents
fair value of futures options hedges (including amount paid to enter into
hedges and excluding interest rate related instruments)


 


8

















 


SCHEDULE 4.3


SUBSIDIARIES AND INVESTMENTS


 


The
Company is a member, along with Transco Railway Products, Inc., of D&W
Railroad, LLC, a Delaware limited liability company. The Company’s ownership
interest in D&W Railroad, LLC is 63.52%. Pursuant to the Limited Liability
Company Agreement of D&W Railroad, LLC, dated as of December 20, 2005,
the Company is obligated to make additional capital contributions to fund any
capital improvements approved by the management committee of D&W Railroad,
LLC to or maintenance of the rail line and trackage, as well as to fund any
other operating expenses.


 


9

















 


SCHEDULE 4.4(a)


CONFLICTS


 


1.               The following
permits shall terminate upon a change of ownership of the operations of the
Company authorized by the permits:


 


•                  Alcohol Fuel Producer Permit for the
Iowa Falls Plant, issued by the Department of the Treasury, Alcohol and Tobacco
Tax and Trade Bureau, effective March 29, 2006; and


•                  Alcohol Fuel Producer Permit for the
Fairbank Plant, issued by the Department of the Treasury, Alcohol and Tobacco
Tax and Trade Bureau, effective April 3, 2006.


 


10

















 


SCHEDULE 4.4(b)


CONSENTS AND APPROVALS


 


None


 


11

















 


SCHEDULE 4.5


MEMBERSHIP INTERESTS AND OWNERSHIP


 


None


 


12

















 


SCHEDULE 4.6(a)


FINANCIAL STATEMENTS


 


[***]


 


13

















 


SCHEDULE 4.6(b)


UNDISCLOSED
LIABILITIES


 


None


 


42

















 


SCHEDULE 4.7


CERTAIN CHANGES OR
EFFECTS


 


None


 


43

















 


SCHEDULE 4.8(a)


COMPLIANCE WITH
LAW


 


None


 


44

















 


SCHEDULE 4.8(b)


PERMITS


 


The Company has applied with the Iowa Department of Natural Resources
(“DNR”) for a permit increase in the production limit relating to the stack
flare for ethanol load out from 80MGY to 105MGY.  The Company received limited initial comments
from the DNR.


 


45

















 


SCHEDULE 4.9


LITIGATION


 


None


 


46

















 


SCHEDULE 4.10(a)


EMPLOYEE BENEFIT
PLANS


 


•      Flex Plan
(established  under a Service Agreement
and Business Associates Agreement by and between Hawkeye Renewables, LLC (f/k/a
Iowa Falls Ethanol Plant, L.L.C.) and American Administrators dated October 1,
2004.)


 


•      Life STD Dental
Plan, established under an agreement by and between Hawkeye Renewables, LLC
(f/k/a Iowa Falls Ethanol Plant, L.L.C.) and Companion Life dated October 18,
2004.


 


•      LTD Plan,
established under an agreement by and between Hawkeye Renewables, LLC and
Companion Life dated August 31, 2005.


 


•      Wellmark Health
Plan, established under an agreement by and between Hawkeye Renewables, LLC and
Wellmark Health Plan of Iowa.


 


•      IRA Employee
Retirement Plan (established under a Simple IRA Adoption Agreement by and
between Hawkeye Renewables, LLC (f/k/a Iowa Fall Ethanol Plant, LLC) and American
Funds dated September 21, 2004).


 


•      The following
bonus arrangements have been entered into between the Company and employees in
the following positions:


 


	
   

  	
   

  	
   

  	
   

  	
  Bonus Potential

  	
   

  	
  Bonus

  	
   

  
	
  Title

  	
   

  	
  Location

  	
   

  	
  (% of Annual Salary)

  	
   

  	
  Index

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corporate Staff

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CEO

  	
   

  	
  Corporate

  	
   

  	
  180.00

  	
  %

  	
  EBITDA

  	
   

  
	
  President/CFO

  	
   

  	
  Corporate

  	
   

  	
  180.00

  	
  %

  	
  EBITDA

  	
   

  
	
  VP of Manufacturing

  	
   

  	
  Corporate

  	
   

  	
  25.00

  	
  %

  	
  Production

  	
   

  
	
  Merchandiser

  	
   

  	
  Corporate

  	
   

  	
  25.00

  	
  %

  	
  EBITDA

  	
   

  
	
  Corporate Controller

  	
   

  	
  Corporate

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Administrative Staff

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Distillers Merchandiser

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Plant Controller

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Accounting Clerk

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Human Resources Manager

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Administrative Assistant

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Distillers Merchandiser

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Plant Controller

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Accounting Clerk

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Human Resources Manager

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Administrative Assistant

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  



 


47

















 


	
  Plant Level Staff

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintenance Manager

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Tech Manager

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Production Manager

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Shift Leaders

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Process Technician

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Maintenance Technician

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Grain Receiving Tech

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Laboratory Tech

  	
   

  	
  Iowa Falls Plant

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Maintenance Manager

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Tech Manager

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Production Manager

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Shift Leaders

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Process Technician

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Maintenance Technician

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Grain Receiving Tech

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  
	
  Laboratory Tech

  	
   

  	
  Fairbank

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
   

  



 


•      The Company has
verbally committed to enter into a phantom stock agreement with Donovan
Prinsloo with the following features:


 


a.             Potential
value of 2x current salary ($110,000) after 3 years, based on EBITDA valuation;


 


b.             Five-year
vesting plan, 20% per year;


 


i.              Non-vested
shares lost upon departure/terminating from the Company;


 


ii.             No
acceleration of vesting for an IPO or equivalent type of offering; and


 


iii.            No
acceleration of vesting for a merger.


 


c.             Call
option to the Company to buy any vested shares at book value if employee leaves
employment for any reason.


 


i.              Repurchase
option valid for first 5 years


 


d.             The
Company will structure for optimal tax treatment for both parties.


 


Mr. Prinsloo has agreed
to terminate his existing agreement in exchange for participation in a new
equity incentive plan of the Company pursuant to which he will be given the
opportunity to earn benefits not to exceed $220,000 over a three year period.


 


48

















 


SCHEDULE 4.10(b)


EMPLOYEE BENEFIT
PLAN MAINTENANCE, DEFAULT OR ACTION


 


None


 


49

















 


SCHEDULE 4.10(c)


SECTION 401(a)
QUALIFICATION


 


None


 


50

















 


SCHEDULE 4.10(e)


ACCELERATION OF
BENEFITS


 


None


 


51

















 


SCHEDULE 4.11


LABOR AND
EMPLOYMENT MATTERS


 


None


 


52

















 


SCHEDULE 4.12


INSURANCE


 


	
  As of 4/14/06

  	
   

  
	
  Coverage

  	
   

  	
  Policy #

  	
   

  	
  Carrier

  	
   

  	
  Date

  	
   

  	
  Limit

  	
   

  	
  Deductible

  	
   

  	
  Premium

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Liability

  	
   

  	
   

  	
   

  	
  National Fire Ins. Company
  of Hartford

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  $1M/2M

  	
   

  	
  $10,000

  	
   

  	
  $

  	
  2,467

  	
   

  
	
  Automobile

  	
   

  	
   

  	
   

  	
  Continental Casualty
  Company

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  $

  	
  42,500

  	
   

  
	
  Workers Compensation

  	
   

  	
   

  	
   

  	
  Continental Casualty
  Company

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  $500/500/500

  	
   

  	
   

  	
   

  	
  $

  	
  51,086

  	
   

  
	
  Umbrella

  	
   

  	
   

  	
   

  	
  St. Paul Fire &
  Marine Insurance Co.

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  10,000,000

  	
   

  	
   

  	
   

  	
  $

  	
  32,320

  	
   

  
	
  Pollution

  	
   

  	
   

  	
   

  	
  American International
  Specialty Lines

  	
   

  	
  12/1/04 to 11/11/06

  	
   

  	
  10,000,000

  	
   

  	
  $100,000

  	
   

  	
  $

  	
  82,641

  	
   

  
	
  Crime

  	
   

  	
   

  	
   

  	
  Continental Casualty
  Company

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  500,000

  	
   

  	
  $5,000

  	
   

  	
  $

  	
  1,043

  	
   

  
	
  Property

  	
   

  	
   

  	
   

  	
  Liberty Mutual

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  46.4% of $156M

  	
   

  	
  $25,000

  	
   

  	
  $

  	
  69,381

  	
   

  
	
  Excess Property

  	
   

  	
   

  	
   

  	
  ACE American

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  35.7% of $156M

  	
   

  	
  $25,000

  	
   

  	
  $

  	
  53,391

  	
   

  
	
  Excess Property

  	
   

  	
   

  	
   

  	
  Lexington

  	
   

  	
  11/11/05-11/11/06

  	
   

  	
  17.9% of $156M

  	
   

  	
  $25,000

  	
   

  	
  $

  	
  27,141

  	
   

  
	
  Flood

  	
   

  	
   

  	
   

  	
  Insurance Co of the West

  	
   

  	
  03/09/06-11/11/06

  	
   

  	
  $20M part of $50M

  	
   

  	
  $50M

  	
   

  	
  $

  	
  16,850

  	
   

  
	
  Excess Flood

  	
   

  	
   

  	
   

  	
  Homeland Insurance

  	
   

  	
  03/09/06-11/11/06

  	
   

  	
  $15M
  part of $50M

  	
   

  	
  $50M

  	
   

  	
  $

  	
  12,923

  	
   

  
	
  Excess Flood

  	
   

  	
   

  	
   

  	
  Traders & Pacific

  	
   

  	
  03/09/06-11/11/06

  	
   

  	
  $15M
  part of $50M

  	
   

  	
  $50M

  	
   

  	
  $

  	
  12,923

  	
   

  
	
  Bldg Risk (Liberty)

  	
   

  	
   

  	
   

  	
  Liberty Mutual

  	
   

  	
  1/27/2005 – 5/10/06

  	
   

  	
  66.667% of $75M

  	
   

  	
  $100,000

  	
   

  	
  $

  	
  142,609

  	
   

  
	
  Bldg Risk (Lex)

  	
   

  	
   

  	
   

  	
  Lexington

  	
   

  	
  1/27/2005 – 5/10/06

  	
   

  	
  33.333% of $75M

  	
   

  	
  $100,000

  	
   

  	
  $

  	
  68,897

  	
   

  
	
  Excess Bldg Risk

  	
   

  	
   

  	
   

  	
  Homeland Insurance

  	
   

  	
  1/27/2005 – 5/10/06

  	
   

  	
  $43,510,000

  	
   

  	
  $75M

  	
   

  	
  $

  	
  34,160

  	
   

  
	
  Fuel Producer Bond

  	
   

  	
   

  	
   

  	
  Fidelity & Deposit

  	
   

  	
  03/02/06 – 03/02/07

  	
   

  	
  $200,000

  	
   

  	
   

  	
   

  	
  $

  	
  1,750

  	
   

  
	
  Tax & Trade Bureau
  Bond

  	
   

  	
   

  	
   

  	
  Fidelity & Deposit

  	
   

  	
  11/07/05 – 11/06/06

  	
   

  	
  $200,000

  	
   

  	
   

  	
   

  	
  $

  	
  1,750

  	
   

  
	
  Directors’ & Officers’/EPL

  	
   

  	
   

  	
   

  	
  Illinois Union Insurance
  Co.

  	
   

  	
  4/18/06-4/17/07

  	
   

  	
  $5,000,000

  	
   

  	
  $10,000

  	
   

  	
  $

  	
  46,061

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  699,893

  	
   

  



 


53

















 


SCHEDULE 4.13(a)


OWNED REAL PROPERTY


 


Iowa Falls Facility


Northeast Quarter (NE1/4)
of the Southeast Quarter (SE1/4) and all that part of the Northwest Quarter
(NW1/4) of the Southeast Quarter (SE1/4) lying South and East of the
right-of-way of the C.R.I. and P. Railway Company in Section Twenty-Three (23);
and Northwest Quarter (NW1/4) of the Southwest Quarter (SW1/4) of Section
Twenty-four (24), except the South 39.2 feet thereof; all in Township
Eighty-nine (89) North, Range Twenty-one (21) West of the 5th P.M., Hardin
County, Iowa;


 


AND


 


Northeast Quarter (NE1/4)
of the Southwest Quarter (SW1/4) of Section Twenty-three (23), Township
Eighty-nine (89) North, Range Twenty-one (21) West of the 5th P.M., Hardin
County, Iowa, lying South of the Chicago, Rock Island and Pacific Railway.


 


Fairbank Facility


Parcel D in the Southeast
Quarter(SE1/4) of Section 33, Township 91 North, Range 10 West of the Fifth
P.M., and more particularly described as follows: Beginning at the South
Quarter of said Section; thence N01°17’45”E 299.3 feet along the North-South
Quarter Section line of said Section to the Southerly right-of-way line of the
Chicago North Western Railroad; thence N67°52’30”E 2,885.0 feet along said line
to the East section line of said Section; thence S01°23’45”W 1,296.5 feet along
said line to the Northerly right-of way line of Iowa Highway #281; thence
S61°12’00”W 169.0 feet along said line to the South Township line of said
Section; thence S89°48’45”W 2,449.6 feet along said line to the point of
beginning.


 


AND


 


The
Northeast Fractional Quarter (NE frl 1/4) lying North of public highway 190 in
Section 4, Township 90 North; Range 10 West of the 5th P.M. except for easement
for highway and excepting a parcel described as follows:


 


Commencing
1,169.5 feet South of the Northwest corner of the Northwest Quarter (NW1/4) of
the Northeast Quarter. (NE 1/4) laying North of Highway No. 190 in Section 4,
Township 90 North, Range 10 West of the 5th P.M.; thence East 381.8 feet;
thence Southeasterly 60 feet to the North line of Highway No. 190; thence Southwesterly
along the North line of the highway 397.5 feet; thence North 227.3 feet to the
point of BEGINNING; said excepted parcel is also more particularly described in
Plat of Survey recorded in Book 548, Page 93, as:


 


Parcel
A in the West Half of the Fractional Northeast Quarter of Section 4, Township
90 North, Range 10 West of the 5th P.M. Buchanan County, Iowa, and more
particularly described as follows: Commencing at the North Quarter Corner of
said Section; thence S00°37’00”W 1,169.5 feet along the North-South Quarter
Section Line to the Point of Beginning; thence S89°23’00”E


 


54

















 


381.8
feet to the Northerly Right of Way Line of Iowa Highway # 281; thence
S28°37’00”E 60.0 feet to the Centerline of said Highway; thence S61°23’00”W
(Record Bearing) 50.6 feet; thence westerly along a 1,634.1 foot radius curve
concave northerly 397.5 feet, said curve having a Long Chord of S68°21’15”W
396.5 feet all along said Centerline to said Quarter Section Line; thence
N00°37’00”E 227.3 feet along said Quarter Section Line to the Point of
BEGINNING.


 


Note:
Highway # 281 was formerly known as. Highway No. 190.


 


55

















 


SCHEDULE 4.13(b)


LEASED REAL PROPERTY


 


None


 


56

















 


SCHEDULE 4.14(a)


COMPANY INTELLECTUAL PROPERTY


 


Unregistered
Trademarks:


 


1.     Hawkeye Gold


 





 


2.     Hawkeye
Renewables


 





 


57

















 


SCHEDULE 4.14(d)


CONFIDENTIALITY OF TRADE SECRETS


 


None


 


58

















 


SCHEDULE 4.14(e)


INTELLECTUAL PROPERTY CLAIMS


 


None


 


59

















 


SCHEDULE 4.14(f)


ROYALTY AND LICENSE OBLIGATIONS


 


None


 


60

















 


SCHEDULE 4.15(b)


TAXES


 


None


 


61

















 


SCHEDULE 4.16(a)


ENVIRONMENTAL MATTERS


 


(i)        In November
2004, June, July, September and October 2005 and April 2006, the Company
exceeded iron limits under its Iowa Falls NPDES industrial wastewater discharge
permit. The Company reported the excess discharges to the Iowa Department of
Natural Resources in its NPDES monthly operational reports.


 


(iv)      Letter dated
April 11, 2006 from the Iowa Department of Natural Resources (“DNR”) to J.D.
Schlieman, President, Hawkeye Renewables, LLC re notification that the Iowa
Falls facility is out of compliance with 567IAC 22.1(1) (Permits required for
new or existing stationary sources). The
Company responded to the DNR in a letter dated April 18, 2006 in which it noted
that the compliance violations listed in the April 11, 2006 letter from the DNR
were addressed by previously amended permits, permit applications or are
related to contruction that is not yet required to be permitted.  The Company had a discussion with the DNR on
May 8, 2006 during which the DNR admitted mistakes in its April 11, 2006 letter
and stated its intent to correct such mistakes in a subsequent letter.


 


62

















 


SCHEDULE 4.17


PURCHASERS AND SUPPLIERS


 


All ethanol produced at
the Iowa Falls Plant is purchased through the Ethanol Purchase and Supply
Agreement dated as of November 15, 2004 by and between Iowa Falls Ethanol
Plant, L.L.C. and Eco-Energy, Inc., as assigned to Hawkeye Renewables, LLC
pursuant to the Assignment and Assumption Agreement by and between Hawkeye
Renewables, LLC and Hawkeye Holdings, L.L.C. (f/k/a Iowa Falls Ethanol Plant,
L.L.C.) dated as of February 24, 2005.


 


All ethanol produced at
the Fairbank Plant is purchased through the Ethanol Purchase and Supply
Agreement dated as of November 15, 2004 by and between Iowa Falls Ethanol
Plant, L.L.C. and Eco-Energy, Inc., as assigned to Hawkeye Renewables, LLC
pursuant to the Assignment and Assumption Agreement by and between Hawkeye
Renewables, LLC and Hawkeye Holdings, L.L.C. (f/k/a Iowa Falls Ethanol Plant,
L.L.C.) dated as of February 24, 2005.


 


All distiller’s grain
produced at the Iowa Falls Plant is purchased through the Distiller’s Grain
Marketing Agreement dated as of November 19, 2004 by and between Iowa Falls
Ethanol Plant, L.L.C. and United Bio Energy Ingredients, LLC, dated November
19, 2004, as amended by that certain First Amendment to Distiller’s Grains
Marketing Agreement dated as of April 1, 2006, as assigned to Hawkeye
Renewables, LLC pursuant to the Assignment and Assumption Agreement by and
between Hawkeye Renewables, LLC and Hawkeye Holdings, L.L.C. (f/k/a Iowa Falls
Ethanol Plant, L.L.C.) dated as of February 24, 2005.


 


All distiller’s grain
produced at the Fairbank Plant is purchased through the Distiller’s Grain
Marketing Agreement dated as of November 19, 2004 by and between Iowa Falls
Ethanol Plant, L.L.C. and United Bio Energy Ingredients, LLC, dated November
19, 2004, as assigned to Hawkeye Renewables, LLC pursuant to the Assignment and
Assumption Agreement by and between Hawkeye Renewables, LLC and Hawkeye
Holdings, L.L.C. (f/k/a Iowa Falls Ethanol Plant, L.L.C.) dated as of February
24, 2005.


 


Ten Largest Corn Suppliers for the Period from January 1,
2006-April 30, 2006.


 


	
   

  	
   

  	
  Supplier

  	
   

  	
  Amount

  	
   

  
	
  1

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  2

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  3

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  4

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  5

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  6

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  7

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  8

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  9

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  10

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  



 


63

















 


SCHEDULE 4.18(a)


MATERIAL CONTRACTS


 


For purposes of this Schedule, the term “Iowa Falls
Plant” means the ethanol plant located in or around Iowa Falls, Iowa, the
“Expansion Plant” means the expansion to the Iowa Falls Plant, and the term
“Fairbank Plant” means the ethanol plan located in or around Fairbank, Iowa.


 


1.         Credit
Agreement by and between Hawkeye Renewables, LLC, Hawkeye Holdings, L.L.C.
(f/k/a Iowa Falls Ethanol Plant, L.L.C.), Credit Suisse First Boston and the
other lenders referred to therein, dated as of February 24, 2005.


 


2.         Term
Loan Note by and between Hawkeye Renewables, LLC and Credit Suisse First Boston,
dated as of February 24, 2005.


 


3.         Depository
Agreement by and between Hawkeye Renewables, LLC, Credit Suisse First Boston
and The Bank of New York, dated as of February 24, 2005.


 


4.         Assignment
and Security Agreement by and between Hawkeye Renewables, LLC and Credit Suisse
First Boston, dated as of February 24, 2005.


 


5.         Collateral
Agency and Intercreditor Agreement by and between Hawkeye Renewables, LLC,
Credit Suisse First Boston and the Secured Parties (or representatives thereof)
named therein, dated as of February 24, 2005.


 


6.         Mortgage,
Security Agreement, Financing Statement, Fixture filing and Assignment of
Leases, Rents and Security Deposits by and between Hawkeye Renewables, LLC and
Credit Suisse First Boston dated as of February 24, 2005.


 


7.         Contribution
Agreement by and between Hawkeye Renewables, LLC and Hawkeye Holdings, L.L.C.
(f/k/a Iowa Falls Ethanol Plant, L.L.C.), dated as of February 24, 2005.


 


8.         Assignment
and Assumption Agreement by and between Hawkeye Renewables, LLC and Hawkeye Holdings,
L.L.C. (f/k/a Iowa Falls Ethanol Plant, L.L.C.) dated as of February 24,
2005 (the “Assignment and Assumption Agreement”).


 


9.         Sale
and Assignment Agreement by and between Hawkeye Renewables, LLC and Midwest
Renewables, L.C., dated as of February 24, 2005 (the “Sale and Assignment
Agreement”).


 


10.       Communications
Agreement by and between Hawkeye Renewables, LLC, Hawkeye Holdings, L.L.C.
(f/k/a Iowa Falls Ethanol Plant, L.L.C.) and Credit Suisse First Boston, dated
as of February 24, 2005.)


 


11.       Interest
Rate Protection Agreement by and between Hawkeye Renewables, LLC and Credit Suisse
First Boston dated as of February 25, 2005.


 


12.       Funds
Flow Memorandum by and between Hawkeye Renewables, LLC, Hawkeye Holdings,
L.L.C. (f/k/a Iowa Falls Ethanol Plant, L.L.C.) and Credit Suisse First Boston
dated as of February 22, 2005.


 


64

















 


13.       Management
Services Agreement by and between Hawkeye Renewables, LLC and Midwest
Renewables, L.C., dated as of February 24, 2005.


 


14.       Standard
Form of Agreement Between Owner and Design-Builder — Lump Sum, by and between
Midwest Renewables, LLC and Fagen, Inc. dated as of December 12, 2003 (regarding
the Iowa Falls Plant prior to the contemplated expansion thereof), as assigned
to Iowa Falls Ethanol Plant, L.L.C. pursuant to that certain Assignment and
Assumption Agreement dated as of January 13, 2004 by and between Iowa
Falls Ethanol Plant, L.L.C. and Midwest Renewables, L.C., as further assigned
to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption Agreement.


 


15.       Lump
Sum Design-Build Contract by and between Midwest Renewables, LLC and Fagen,
Inc. dated as of January 6, 2005 (regarding construction of the Expansion
Plant), as assigned to Hawkeye Renewables, LLC pursuant to the Sale and Assignment
Agreement.


 


16.       Lump
Sum Design-Build Contract by and between Midwest Renewables, LLC and Fagen,
Inc. dated as of January 6, 2005 (regarding construction of the Fairbank
Plant), as assigned to Hawkeye Renewables, LLC pursuant to the Sale and
Assignment Agreement.


 


17.       Agreement
for Power by and between Iowa Falls Ethanol Plant, L.L.C. and Midland Power
Cooperative dated as of May 19, 2004, as assigned to Hawkeye Renewables, LLC
pursuant to the Assignment and Assumption Agreement.


 


18.       Large
Power and Lighting Electric Service Agreement by and between Hawkeye
Renewables, LLC and Interstate Power and Light Company dated as of February 22,
2005.


 


19.       Electric
Facilities Extension Agreement (Advance) by and between Hawkeye Renewables, LLC
and Interstate Power and Light Company, dated as of February 22, 2005.


 


20.       Ethanol
Purchase and Supply Agreement by and between Iowa Falls Ethanol Plant, L.L.C.
and Eco-Energy, Inc. dated as of November 15, 2004 related to the Iowa
Falls Plant and Expansion Plant, as assigned to Hawkeye Renewables, LLC
pursuant to the Assignment and Assumption Agreement.


 


21.       Ethanol
Purchase and Supply Agreement by and between Iowa Falls Ethanol Plant, L.L.C.
and Eco-Energy, Inc. dated as of November 15th, 2004, related to the Fairbank
Plant, as assigned to Hawkeye Renewables, LLC pursuant to the Assignment and
Assumption Agreement.


 


22.       Distiller’s
Grains Marketing Agreement by and between Iowa Falls Ethanol Plant, L.L.C. and
United Bio Energy Ingredients, LLC, dated November 19, 2004 (regarding the Iowa
Falls and Expansion Plants), as assigned to Hawkeye Renewables, LLC pursuant to
the Assignment and Assumption Agreement, as amended by that certain First
Amendment to Distiller’s Grains Marketing Agreement dated as of April 1,
2006.


 


23.       Distiller’s
Grains Marketing Agreement by and between Iowa Falls Ethanol Plant, L.L.C. and
United Bio Energy Ingredients, LLC, dated as of November 19, 2004, relating to
the


 


65

















 


Fairbank Plant, as assigned to Hawkeye Renewables, LLC
pursuant to the Assignment and Assumption Agreement.


 


24.       Amended
and Restated Plant Operation Agreement by and between Iowa Falls Ethanol Plant,
L.L.C. and United Bio Energy Management, LLC dated as of August 11, 2004,
regarding the Iowa Falls Plant and Expansion Plant, as amended by that certain
First Amendment to Amended and Restated Plant Operation Agreement dated as of
February 15, 2005, as assigned to Hawkeye Renewables, LLC pursuant to the
Assignment and Assumption Agreement.


 


25.       Plant
Operation Agreement by and between Iowa Falls Ethanol Plant, L.L.C. and United
Bio Energy Management, LLC dated as of November 19, 2004, regarding the
Fairbank Plant, as assigned to Hawkeye Renewables, LLC pursuant to the
Assignment and Assumption Agreement.


 


26.       Industry
Track Agreement by and between Iowa Falls Ethanol Plant, L.L.C. and Union
Pacific Railroad Company dated as of October 20, 2004, as assigned to Hawkeye
Renewables, LLC pursuant to the Assignment and Assumption Agreement.


 


27.       Letter
by Union Pacific waiving the confidentiality provisions of the Industry Track
Agreement dated as of January 10, 2005


 


28.       Natural
Gas Transportation Agreement (Firm) by and between Iowa Falls Ethanol Plant,
L.L.C. and Interstate Power and Light Company dated as of August 29, 2004, as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


29.       Gas
Facilities Extension Agreement (Advance) by and between Iowa Falls Ethanol
Plant, L.L.C. and Interstate Power and Light Company dated as of July 29, 2004,
as assigned to Hawkeye Renewables, LLC pursuant to the Assignment and
Assumption Agreement.


 


30.       Firm
Throughput Services Agreement by and between Iowa Falls Ethanol Plant, L.L.C.
and Northern Natural Gas dated as of July 9, 2004, as amended by the Amendment
to TPX Throughput Service Agreement dated July 27, 2004, the Amendment to
TPX Throughput Service Agreement effective as of October 1, 2004 and the
Amendment to TPX Throughput Service Agreement effective as of December 1,
2005 as assigned to Hawkeye Renewables, LLC pursuant to the Assignment and
Assumption Agreement.


 


31.       Natural
Gas Transportation Agreement by and between Hawkeye Renewables, LLC and
Northern Natural Gas Company dated as of February 16, 2005 related to the
Fairbank Plant.


 


32.       License
Agreement by and between Midwest Renewables, LLC and ICM, Inc. dated December
12, 2003, as assigned to Iowa Falls Ethanol Plant, L.L.C. pursuant to that
certain Assignment and Assumption Agreement dated as of January 13, 2004
by and between Iowa Falls Ethanol Plant, L.L.C. and Midwest Renewables, L.C.,
as further assigned to Hawkeye Renewables, LLC pursuant to the Assignment and
Assumption Agreement.


 


66

















 


33.       License
Agreement by and between Midwest Renewables, LLC and ICM, Inc. dated January 6,
2005 related to the Expansion Plant, as assigned to Hawkeye Renewables, LLC
pursuant to the Sale and Assignment Agreement.


 


34.       License
Agreement by and between Midwest Renewables, LLC and ICM, Inc. dated January 6,
2005 related to the Fairbank Plant, as assigned to Hawkeye Renewables, LLC
pursuant to the Sale and Assignment Agreement.


 


35.       Payment
Bond by Liberty Mutual Insurance Company dated as of August 6, 2004 related to
the Iowa Falls Plant for the benefit of Iowa Falls Ethanol Plant, L.L.C., as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


36.       Performance
Bond by Liberty Mutual Insurance Company dated as of August 6, 2004 related to
the Iowa Falls Plant for the benefit of Iowa Falls Ethanol Plant, L.L.C., as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


37.       Payment
Bond by Liberty Mutual Insurance Company dated as of February 23, 2005 related
to the Expansion Plant for the benefit of Hawkeye Renewables, LLC and Credit
Suisse First Boston, as Collateral Agent.


 


38.       Performance
Bond by Liberty Mutual Insurance Company dated as of February 23, 2005 related
to the Expansion Plant for the benefit of Hawkeye Renewables, LLC and Credit
Suisse First Boston, as Collateral Agent.


 


39.       Payment
Bond by Liberty Mutual Insurance Company dated as of February 23, 2005 related
to the Fairbank Plant for the benefit of Hawkeye Renewables, LLC and Credit
Suisse First Boston, as Collateral Agent.


 


40.       Performance
Bond by Liberty Mutual Insurance Company dated as of February 23, 2005 related
to the Fairbank Plant for the benefit of Hawkeye Renewables, LLC and Credit
Suisse First Boston, as Collateral Agent.


 


41.       Letter
Agreement Regarding Appointment as Agent, by and between Iowa Falls Ethanol
Plant, L.L.C. and U.S. Energy Services, Inc. dated January 5, 2004, as assigned
to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption Agreement.


 


42.       Letter
Agreement issued by U.S. Energy Services, Inc. and accepted by Iowa Falls
Ethanol Plant, L.L.C. dated January 5, 2004 regarding the Iowa Falls Plant, as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


43.       Letter
Agreement issued by U.S. Energy Services, Inc. and accepted by Iowa Falls
Ethanol Plant, L.L.C. dated January 28, 2005 regarding the Fairbank Plant, as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


44.       Agreement
for Private Redevelopment by and between Iowa Falls Ethanol Plant, L.L.C. and
the City of Iowa Falls, Iowa dated as of October 8, 2004, as amended by the
Amendment No. 1 thereto dated as of February 15, 2005, and the related
Minimum Assessment


 


67

















 


Agreement, as amended and replaced by the Amended and
Substituted Minimum Assessment Agreement dated as of February 15, 2005, as
assigned to Hawkeye Renewables, LLC pursuant to the Assignment and Assumption
Agreement.


 


45.       Financial
Advisory Services Agreement dated as of February 24, 2005.


 


46.       Memorandum
of Understanding by and between Iowa Northern Railway Company and Hawkeye Renewables,
LLC dated as of March 8, 2005.


 


47.       Grain
Origination and Storage Agreement by and between Innovative Ag Services Co. and
Hawkeye Renewables, LLC dated as of August 11, 2005.


 


68

















 


SCHEDULE
4.18(a)(i)


FORWARD PURCHASE
AND SALE COMMITMENTS 

AND HEDGING ARRANGEMENTS


 


[see attached]


 


69

















 


HAWKEYE RENEWABLES, LLC


2006 Position Report


As of 4/26/06


Actual Results Shaded in Grey


 


CORN


 


	
   

  	
   

  	
  Budget

  Usage (BU)

  	
   

  	
  BU Bought

  	
   

  	
  % Bought

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Jan

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Feb

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mar

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Apr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jun

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Jul

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aug

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sep

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oct

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nov

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dec

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


ETHANOL


 


	
   

  	
   

  	
  Budget

  Sales (gal)

  	
   

  	
  Gal Sold

  	
   

  	
  % Sold

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Jan

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Feb

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mar

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Apr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jun

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Jul

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aug

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sep

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oct

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nov

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dec

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


DISTILLERS GRAIN


 


	
   

  	
   

  	
  Budget

  Sales (tons)

  	
   

  	
  Tons
  Sold

  	
   

  	
  % Sold

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected
  $

  	
   

  
	
  Jan

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Feb

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mar

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Apr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jun

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Jul

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aug

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sep

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oct

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nov

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dec

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


NATURAL GAS


 


	
   

  	
   

  	
  Budget

  Usage (mmbtu)

  	
   

  	
  Mmbtu
  Bought

  	
   

  	
  % Bought

  	
   

  	
  Average

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected
  $

  	
   

  
	
  Jan

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Feb

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mar

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Apr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jun

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Jul

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aug

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sep

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oct

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nov

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dec

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


70

















 


HAWKEYE RENEWABLES, LLC


2006 Position Report — by Quarter


As of 4/26/06


 


CORN


 


	
   

  	
   

  	
  Budget

  Usage (bu)

  	
   

  	
  Bu
  Bought

  	
   

  	
  % Bought

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Q1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q2

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Q3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


ETHANOL


 


	
   

  	
   

  	
  Budget

  Sales (gal)

  	
   

  	
  Gal Sold

  	
   

  	
  % Sold

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Q1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q2

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Q3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


DISTILLERS GRAIN


 


	
   

  	
   

  	
  Budget

  Sales (tons)

  	
   

  	
  Tons
  Sold

  	
   

  	
  % Sold

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Q1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q2

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Q3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


NATURAL GAS


 


	
   

  	
   

  	
  Budget

  Usage (bu)

  	
   

  	
  Bu
  Bought

  	
   

  	
  % Bought

  	
   

  	
  Avg.

  Contract $

  	
   

  	
  Market $

  	
   

  	
  Projected

  	
   

  
	
  Q1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q2

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Q3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


71

















 


FCStone Trading, LLC


 


	
  2829 Westown Parkway, Suite
  250

  	
  DAILY
  STATEMENT

  	
  Account Number: [***]

  
	
  West Des Moines, Iowa 50266

  	
   

  	
  Statement Date: May 05,
  2006

  
	
   

  	
   

  	
  Tax ID: [***]

  



 


IOWA FALLS ETHANOL PLANT, LLC


21050 140TH STREET, PO BOX 233


IOWA FALLS, IA 50126


 


Open Positions and Market Values


 


	
  Trade
  Date

  	
   

  	
  Trade ID

  	
   

  	
  Long

  	
   

  	
  Short

  	
   

  	
  Contract
  Description

  	
   

  	
  Mat/Exp
  Date

  	
   

  	
  Month

  	
   

  	
  Trigger(s)/BE

  	
   

  	
  Trade
  Price

  	
   

  	
  MTM
  Price

  	
   

  	
  Debit/Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Margin Calls


 


	
  Event ID

  	
   

  	
  Margin

  Age 1

  	
   

  	
  Margin

  Age 2

  	
   

  	
  Margin

  Age 3

  	
   

  	
  Margin

  Age 4

  	
   

  	
  Margin

  Age 5

  	
   

  	
  Margin

  Age >5

  	
   

  	
  MC Type

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Account Information

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beginning Balance

  	
   

  	
  Commission

  	
   

  	
  Net Profit/Loss

  	
   

  	
  Other cash movements

  	
   

  	
  Ending

  Balance

  	
   

  	
  Open Trade

  Equity

  	
   

  	
  Total Equity

  	
   

  	
  Net Option Value

  	
   

  	
  Net Liquidity

  	
   

  	
  Margin

  Excess/Deficit

  	
   

  	
  Total

  IMRequirement

  



 


 


 


MTM disclaimer: MTM Price is used for margining purposes generated by a
computer estimate.

It is not a representation of ‘tradeable’ value.


 


72

















 





222 South Riverside Plaza #900 Chicago, IL
60606 312.373.5000


info@rjobrien.com




	
  Page
  1

  
	
  Date: 05/05/06

  






 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DAILY ACCOUNT STATUS REPORT

  TRD-DATE    S-DATE AT        LONG

  	
   

  	
  SHORT

  	
  LGN

  	
   

  	
  CONTRACT/PRODUCT DESCRIPTION

  	
   

  	
  PRICE

  	
   

  	
  PC

  	
   

  	
  NET POS

  	
   

  	
  OTE/UNREAL
  P/L

  	
   

  	
  MKT
  VALUE

  
	
  [***]               
       [***]       
           [***]

  	
   

  	
  [***]

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  



 


You
must examine all information transmitted to you herein and report any errors or
irregularities to your R.J.O’Brien intermediary or the R.J.O’Brien Compliance
Department [1-800-621-0757] immediately. Failure to immediately advise of any
such errors or irregularities before the opening of trading on the trading day
subsequent to the execution of the transaction in dispute will be deemed your
agreement that the transmitted information is correct and has been ratified by
you.


 


FOR
FURTHER INFORMATION REGARDING THIS STATEMENT OR R.J.O'BRIEN BROKERAGE SERVICES,
PLEASE VISIT www.rjobrien.com.


 


73

















 





222 South Riverside
Plaza #900 Chicago, IL 60606 312.373.5000


info@rjobrien.com




	
  Page
  2

  
	
  Date: 05/05/06

  






 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DAILY ACCOUNT STATUS REPORT

  TRD-DATE    S-DATE AT    LONG

  	
   

  	
  SHORT

  	
  LGN

  	
   

  	
  CONTRACT/PRODUCT DESCRIPTION

  	
   

  	
  PRICE

  	
   

  	
  PC

  	
   

  	
  NET POS

  	
   

  	
  OTE/UNREAL
  P/L

  	
   

  	
  MKT
  VALUE

  
	
  [***]                      [***]            [***]

  	
   

  	
  [***]

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  



 


You must examine all
information transmitted to you herein and report any errors or irregularities
to your R.J.O’Brien intermediary or the R.J.O’Brien Compliance Department
[1-800-621-0757] immediately. Failure to immediately advise of any such errors
or irregularities before the opening of trading on the trading day subsequent
to the execution of the transaction in dispute will be deemed your agreement
that the transmitted information is correct and has been ratified by you.


 


FOR FURTHER INFORMATION
REGARDING THIS STATEMENT OR R. J. O’BRIEN BROKERAGE SERVICES, PLEASE VISIT www.rjobrien.com


 


74

















 


SCHEDULE
4.18(a)(ix)


INTELLECTUAL
PROPERTY LICENSES


 


	
  Manufacturer

  	
   

  	
  Product

  	
   

  	
  Quantity

  	
   

  	
  License Number

  
	
  Veritas

  	
   

  	
  Backup.exe
  server

  	
   

  	
  4

  	
   

  	
  05-8401-9547-009216

  
	
  Veritas

  	
   

  	
  SQL Server Agent

  	
   

  	
  1

  	
   

  	
  03-8464-9800-004543

  
	
  Veritas

  	
   

  	
  Exchange Server
  Agent

  	
   

  	
  1

  	
   

  	
  01-8459-9794-002687

  
	
  Veritas

  	
   

  	
  Remote Backup
  Agent

  	
   

  	
  1

  	
   

  	
  03-8481-9551-006737

  
	
  Intuit

  	
   

  	
  Fixed Asset
  Management

  	
   

  	
  1

  	
   

  	
  Phone Activated

  
	
  Microsoft

  	
   

  	
  Office 2003 Open
  License

  	
   

  	
  2

  	
   

  	
  Phone Activated

  
	
  Microsoft

  	
   

  	
  Exchange User
  Cals

  	
   

  	
  50

  	
   

  	
  Internet
  Activated

  
	
  Microsoft

  	
   

  	
  Client Access
  Licenses

  	
   

  	
  20

  	
   

  	
  Internet
  Activated

  
	
  Microsoft

  	
   

  	
  Access

  	
   

  	
  1

  	
   

  	
   

  
	
  Microsoft

  	
   

  	
  Small Business
  Server 2003

  	
   

  	
  1

  	
   

  	
   

  
	
  Microsoft

  	
   

  	
  Standard Server
  2003

  	
   

  	
  4

  	
   

  	
   

  
	
  Microsoft

  	
   

  	
  Exchange Server

  	
   

  	
  1

  	
   

  	
   

  
	
  Microsoft

  	
   

  	
  Great Plains

  	
   

  	
  14

  	
   

  	
  $7,552 Annual
  Maintenance Fee

  
	
  E-Markets

  	
   

  	
  Intellego

  	
   

  	
  11

  	
   

  	
  $9,200 Annual
  Maintenance Fee

  
	
  Citrix

  	
   

  	
  Presentation
  Server 2004

  	
   

  	
  10

  	
   

  	
   

  



 


75

















 


SCHEDULE 4.20


PERSONAL PROPERTY
AND ASSET EXCEPTIONS


 


None


 


76

















 


SCHEDULE 6.12(a)


NON-COMPETITION PARTIES


 


	
   

  	
   

  	
  Name

  	
   

  	
  Restrictive Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Dick Jacobson

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  J.D. Schlieman

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Bruce Rastetter

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Dale Howard

  	
   

  	
  18 months

  



 


77

















 


SCHEDULE 6.12(b)


NON-SOLICIT PARTIES


 


	
   

  	
   

  	
  Name

  	
   

  	
  Restrictive Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Dick Jacobson

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  J.D. Schlieman

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Bruce Rastetter

  	
   

  	
  Longer of (i) 3 years from closing and (ii) 1 year following
  termination of employment or ceasing to be a Board member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  [***]

  	
   

  	
  18 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  [***],
  both individually and on behalf of [***] and its directors and affiliated investment funds
  (except for any affiliated “hedge funds”)

  	
   

  	
  18 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  [***]

  	
   

  	
  18 months

  



 


Notwithstanding Section 6.12(b) of the Agreement and
the names set forth above, portfolio companies of [***] and its affiliated investment
funds shall be deemed not to be Non-Solicit Parties for purposes of the Agreement
so long as such portfolio company (x) has not been introduced to the
management of the Company by [***] (y) has not received any confidential
information with respect to the Company, or (z) has not been caused by
[***] to solicit or hire any member of management of the Company.


 


78