Document:

Exhibit
10(a)

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of June 2, 2003,
is made and entered into by and between PCQUOTE.COM, INC., a Delaware
corporation (“Seller”), and Money.net, Inc., a Delaware corporation (“Purchaser”).

 

WHEREAS, Seller desires to sell certain of Seller’s
assets relating to Seller’s retail Internet business that consists of Seller’s
website and the sale, processing and delivery of exchange data and services via
the internet to non-professional, individual investors, and as such business
and operations are currently operated (the “Business”);

 

WHEREAS, Purchaser desires to purchase such assets and
assume certain of Seller’s liabilities;

 

NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto, intending to be legally bound,
hereby covenant and agree as follows:

 

Article I

Purchase
and Sale

 

Section 1.1                                   Sale and Purchase of Assets.  Subject to and upon the terms and conditions
contained herein, at the Closing (as hereinafter defined), Seller shall sell,
transfer, assign, convey and deliver to Purchaser, and Purchaser shall
purchase, accept and acquire from Seller, the following (collectively, the
“Purchased Assets”):

 

(a)                                  The furniture, office
equipment, computer equipment, machinery, equipment, vehicles, and other items
of personal property owned by Seller to the extent set forth on Schedule
1.1(a);

 

(b)                                 The intellectual
property rights owned by Seller to the extent set forth on Schedule 1.1(b)
(the “Transferred Intellectual Property”);

 

(c)                                  All customer lists
owned by Seller and relating to the Business

 

(d)                                 Copies of all books,
documents and records owned by Seller and relating to the operation of the
Business;

 

(e)                                  Copies of all personnel
records and payroll records for calendar years 2002 and 2003 for all employees
of Seller;

 

(f)                                    All rights, privileges
and interest of Seller arising from the contracts, agreements and understanding
to the extent set forth on Schedule 1.1(f) (the “Assigned Contracts”);

 

(g)                                 All right, title and interest in any
assignable licenses and permits relating to the Business; and

 

(h)                                 All materials and
supplies and sundry items owned by Seller and relating to the operation of the
Business.

 

 

Notwithstanding the
foregoing, Seller will not deliver any computer sourcecode relating to any of
the Purchased Assets at the Closing. 
Promptly after the Closing, Seller will deliver such sourcecode to into
an escrow pursuant to such terms and with such escrow agent as may be
acceptable to the parties with such sourcecode to be delivered to Purchaser
upon Seller’s receipt of the cash payment of the Purchase Price contemplated in
Section 1.7(a) below.

 

Section 1.2                                   Excluded Assets.  The Purchased Assets shall
not include any of the following (collectively, the “Excluded Assets”):

 

(a)                                  all cash, cash equivalents, and bank deposits

 

(b)                                 The intellectual
property rights owned or licensed by Seller to the extent set forth on Schedule
1.2(b) (the “Excluded Intellectual Property”);

 

(c)                                  any tax refund or tax credit (or right to
claim such a tax refund or tax credit) for any period ending on or prior to the
Closing Date;

 

(d)                                 all policies of insurance maintained by
Seller;

 

(e)                                  any of Seller’s property, real or personal,
other than the Purchased Assets including, without limitation any assets not
used in the Business and the assets listed on Schedule 1.2(e); and

 

(g)                                 all accounts receivable, notes receivable (and
any security relating to such notes) and all other receivables of any other
kind.

 

Section 1.3                                   Assumed Liabilities.  Commencing from and after the Closing Date, Purchaser shall assume and
agree to pay, perform and discharge, promptly when due the following duties,
liabilities and obligations (the “Assumed Liabilities”):

 

(a)                                  all liabilities relating to the Business
and/or the Purchased Assets to the extent accruing after the Closing;

 

(b)                                 all obligations accruing for all periods from
and after the Closing under the Assigned Contracts;

 

(c)                                  all credit balances due to customers
including, but not limited to, those resulting from prepayment and overpayment
(“Customer Credits”);

 

(d)                                 obligations to customers relating to services
to be rendered after the Closing and pertaining to the Business for which
Seller has already issued invoices (“Invoiced Post-Closing Services”); and

 

(e)                                  all other debts, obligations and liabilities
specifically assumed by Purchaser under this Agreement.

 

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Section 1.4                                 Transaction with HyperFeed Technologies, Inc. and Ancillary
License Agreement.

 

At the Closing Seller shall
enter into a License Agreement in the form attached hereto as Exhibit A-1,
pursuant to which Seller will license to Purchaser certain intellectual
property rights described in Exhibit A to be licensed from Seller to Purchaser.

 

At the Closing Seller shall
cause HyperFeed Technologies, Inc. (“Parent”) to enter into a License Agreement
in the form attached hereto as Exhibit A-2 (together with the license agreement
referenced in the preceding paragraph, the “License Agreements”), pursuant to
which Parent will license to Purchaser certain intellectual property rights
described in Exhibit A (together with the intellectual property to be licensed
by Seller pursuant to the preceding paragraph, the “Licensed Intellectual
Property”).  All Licensed Intellectual
Property shall be deemed Excluded Intellectual Property under this Agreement.

 

In exchange for the licenses
granted in the License Agreements and in addition to the payments set forth in
Section 1.7 below, Purchaser agrees to amend the DataFeed License Agreement
dated October 15, 2002 between Purchaser and Parent (the “DLA”) in a form to be
agreed to by the parties no later than the Closing, which amendment shall
extend the term of such DLA through January 31, 2008 and shall increase the
licensing fees payable under such DLA as follows: (i) beginning February 1,
2004, Purchaser shall pay to Seller an additional $5,000 per month in licensing
fees for services provided under such DLA for a total monthly minimum fee of
$25,000 (“Minimum Monthly Fees”), (ii) in addition to Minimum Monthly Fees,
Purchasers shall pay the following additional incremental fees based on usage:

 

	
  Number of
  Users

  	
   

  	
  Usage Fees

  	
   

  	
  Total Monthly Fees

  
	
  3000-5499 users

  	
   

  	
  $10,000 per month

  	
   

  	
  $35,000 per month

  
	
  5500-unlimited users

  	
   

  	
  $20,000 per month

  	
   

  	
  $45,000 per month

  

 

; provided, however, (A) in calculating the
number of users above, pre-existing customers of Purchaser will not be included
and future customers of Purchaser that do not utilize any of the Purchased
Assets will also not be included and (B) the aggregate license fees payable
under the DLA shall be reduced by $1,000 per month in the event that, and for
so long as thereafter, the iTrading.com “Private Label Site” has not “gone
live” by February 1, 2004 as contemplated in that certain Marketscreen Private
Label Agreement dated January 30, 2003, as amended, between Seller and
iTrading.com, a Delaware limited liability corporation unless Purchaser
collects payments under such agreement notwithstanding any failure to “go
live”; (iii) Purchaser shall also pay $3,000 per month for Iverson Historical
Data and (iv) Purchaser will be able to terminate the DLA anytime after January
31, 2006, upon written notice to Parent provided that Purchaser pays Parent any
outstanding amounts due and a termination fee based on the number of users at
the time of termination as follows:

 

	
  Number of
  Users

  	
   

  	
  Total Termination Fee

  
	
  0 - 5499 users

  	
   

  	
  $

  	
  50,000

  
	
  5500 or more users

  	
   

  	
  $

  	
  100,000

  

 

Seller acknowledges and agrees that any
breach by Parent of the DLA referenced above shall be deemed a breach of this
Agreement by Seller.

 

Section 1.5                                   Transition Services.  Following the Closing and pursuant to the terms and conditions set
forth in the form of Transition Services Agreement attached hereto as Exhibit B
(the “Transition Services Agreement”), Seller will provide certain transition
services to Purchaser as described in the Transition Services Agreement.

 

Section 1.6                                 Closing.  The closing of
the transactions contemplated hereby (the “Closing”) shall occur on June 2,
2003 (the “Closing Date”) or such other date as the parties may agree in the
offices

 

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of Wildman, Harrold, Allen & Dixon,
225 West Wacker Drive, Chicago, Illinois 60606; provided, however, the parties
may close by facsimile with original to follow by overnight courier.

 

Section 1.7                                   Purchase Price.  The aggregate consideration (the “Purchase Price”) to be paid to Seller
for the Purchased Assets and covenants contained in this Agreement shall be
both of the following:

 

(a)                                  a $300,000 cash payment payable on June 15,
2003 in immediately available funds pursuant to the following wire transfer
instructions:

 

Lakeside Bank

141 W. Jackson Boulevard

Chicago, IL 60604-2993

Routing #071001504

Account #1665799001

 

; and

 

(b)                                 delivery of a promissory note at closing in
form and substance acceptable to Seller in the principal amount of $150,000
bearing interest at the rate of 8% per annum with interest and principal
payable in twelve equal monthly installments commencing on June 1, 2003 and
secured by a grant of a valid first priority security interest in the Purchase
Assets.

 

In addition, Seller shall remit to Purchaser
at Closing $70,000 representing the estimated amount of (i) accounts receivable
and notes receivable as of the Closing pertaining Post-Closing Services and
(ii) Customer Credits.  Within five (5)
business days following the Closing, Seller and Purchase shall agree in good
faith as to the actual amount of Customer Credits and accounts receivable for
Post-Closing Services as of the Closing. 
Upon the completion of such reconciliation, Purchaser and Seller agree
to promptly make appropriate payments reconciling the actual amounts to the
$70,000 estimate.

 

Section 1.8                                   Allocation of Purchase Price.  The Purchase Price shall be allocated to the
Purchased Assets as set forth on Schedule 1.8.  Seller and Purchaser each covenant and warrant to each other that
in no tax return hereafter filed by any party or any of their respective
successors or assigns, shall the allocation of the Purchase Price be treated or
reported inconsistently with or differently from the allocation of the Purchase
Price set forth above, unless such change in allocation is the result of a
determination by a governing authority for that year or a preceding year; and
that in no tax audit, tax examination, tax or compliance review or tax
litigation, will either party or any of their respective successors or assigns
claim or assert that the allocation of the Purchase Price is inconsistent with
or different than that which is set forth in Schedule 1.8, unless as a
result of the determination made by a governing authority.

 

Section 1.9                                   Closing Deliveries.  In order to consummate the transactions contemplated hereby, the
following items shall be executed and/or delivered at the Closing, as
appropriate:

 

(a)                                  Seller shall deliver to Purchaser possession
of the Purchased Assets and each of the following items executed by Seller as
appropriate:

 

(i)                                     assignments, bills of sale and other
instruments (including certificates of title, as applicable) in form and
substance acceptable to Purchaser sufficient to transfer title to the Purchased
Assets;

 

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(ii)                                  all documentation reasonably required by
Purchaser to effect the change by Seller of its corporate name to a new name
bearing no resemblance to its present name and not including in such new name
the words “PCQuote.com” or “PCQuote”;

 

(iii)                               all documentation reasonably required by
Purchaser to effect the transfer of any trademarks, service marks, domain names
or other intellectual property included in the Purchased Assets;

 

(iv)                              the License Agreements;

 

(v)                                 the Transition Services Agreement;

 

(vi)                              a Certificate of Good Standing for Seller
from the Delaware Secretary of State dated within twenty (20) days of the
Closing; and

 

(vii)                           a secretary’s certificate from Seller
certifying Seller’s certificate of incorporation, bylaws, copies of resolutions
duly adopted by the board of directors of Seller approving the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereunder and the incumbency of the officers of Seller executing any document
to be delivered pursuant to this Agreement.

 

From time-to-time after the Closing, at
Purchaser’s request and without further consideration from Purchaser, Seller
shall execute and deliver such other instruments of conveyance and transfer and
take such other action as Purchaser reasonably may require to convey, transfer
to and vest in Purchaser and to put Purchaser in possession of Purchased
Assets, and to comply with the purposes and intent of this Agreement.

 

(b)                                 Purchaser shall deliver to Seller each of the
following items executed by Purchaser as appropriate:

 

(i)                                     the Purchase Price payable in the manner
described in Section 1.7 above;

 

(ii)                                  an assumption agreement in form and substance
acceptable to Seller sufficient to assume the Assumed Liabilities;

 

(iii)                               the License Agreements;

 

(iv)                              the Transition Services Agreement; and

 

(v)                                 a Certificate of Good Standing for Purchase
from the Delaware Secretary of State dated within twenty (20) days of the
Closing; and

 

(vi)                              a secretary’s certificate from Purchaser
certifying Purchaser’s certificate of incorporation, bylaws, copies of
resolutions duly adopted by the board of directors of Purchaser approving the
execution and delivery of this Agreement and the closing of the transactions
contemplated hereunder and the incumbency of the officers of Purchaser
executing any document to be delivered pursuant to this Agreement.

 

From time-to-time after the Closing, at
Seller’s request and without further consideration from Seller, Purchaser shall
execute and deliver such other instruments and take such other action as Seller
reasonably may require to evidence the assumption by Purchaser of the Assumed
Liabilities, including without

 

5

 

limitation those arising under the Assigned
Contracts, and to comply with the purposes and intent of this Agreement.

 

Section 1.10                            Cooperation on Accounts Receivable.  Seller will receive the benefits from its
operation of the Business through the Closing Date.  Except as otherwise provided herein, all monies received by
either party hereto which, under the terms of this Agreement, belong to the
other party, shall be received in trust by the party receiving such funds, and
shall promptly upon receipt be paid over to the other party.  The parties agree, in this regard, to
cooperate fully and to execute and deliver as expeditiously as possible such
papers, checks and documents as are needed immediately to complete the transfer
of such payments.  Purchaser shall attempt
to collect for Seller’s account as Seller’s agent the accounts receivable of
the Business that are due to Seller (the “Seller Accounts”) and shall remit any
amounts collected to Seller on a weekly basis. 
Seller shall provide to Purchaser a list of all Seller Accounts as of
the Closing Date that identifies, by debtor, amount, age and invoice date, all
accounts receivable of Seller relating to the business of Seller as of the
Closing Date.  In attempting to collect
the Seller Accounts, Purchaser shall employ such methods it and its affiliates
customarily employ in collecting their own accounts, but it shall not be
required to bring suit or otherwise commence any collection action in respect
of any Seller Account or refer any Seller Account to a third party for
collection.  Any extraordinary
collection efforts shall require approval from Seller and shall be at Seller’s
expense.  If Purchaser receives payment
from a customer who is indebted both to Seller on a Seller Account and to
Purchaser, Purchaser shall apply that payment to the particular invoice or
account liability, if any, referenced by the customer in connection with the
making of the payment or, in the absence of any such reference or other clear
identification (including but not limited to an exact matching of an invoice
amount, invoice date or a statement from the customer), to the oldest invoice
or account liability first.  Purchaser
shall not use any direct or indirect means to cause any customer indebted to
both Purchaser and Seller to designate payment to Purchaser instead of Seller
on a Seller Account.  Together with its
remission to Seller of amounts collected upon Seller Accounts, Purchaser will
give Seller notice of any instances in which a customer, who is indebted both
on a Seller Account and to Purchaser, advises Purchaser that a payment is to be
applied otherwise than to the oldest invoice or account liability first.  Promptly after the close of each week during
which Seller receives any payment (other than through Purchaser) on Seller
Accounts outstanding at the Closing Date, Seller shall provide Purchaser with a
list of all such direct receipts. 
Seller agrees not to seek collection on any Seller Accounts for 90 days
following the Closing.  Thereafter,
Seller may use any legal means to seek collection on a Seller Account.

 

Article II

Purchaser’s Representations and Warranties

 

Purchaser represents and
warrants that the following are true and correct as of this date and will be
true and correct on the Closing Date as if made on that date:

 

Section 2.1                                   Organization and Good Standing.  Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with all requisite power and authority to carry on the business and in good
standing in which it is engaged, to own the properties it owns and to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.

 

Section 2.2                                   Authorization and Validity.  The execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by Purchaser, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by
Purchaser.  This Agreement and each
other agreement contemplated hereby have been or will be prior to Closing duly
executed and delivered by Purchaser and constitute or will constitute as of the
Closing, legal, valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms, except

 

6

 

as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights generally or the
availability of equitable remedies.

 

Section 2.3                                   Violation.  Neither the
execution and performance of this Agreement or the other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby or thereby, will (a) conflict with, or result in a breach of the terms,
conditions and provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of Purchaser or of any agreement, indenture or other
instrument under which Purchaser is bound, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
Purchaser or the properties or assets of Purchaser.

 

Section 2.4                                   Finder’s Fee.  Purchaser has not incurred any obligation for any finder’s, broker’s or
agent’s fee in connection with the transactions contemplated hereby for which
Seller may be liable.

 

Article III

Representations and Warranties of Seller

 

Except as set forth on the
Disclosure Schedules attached to this Agreement, Seller represents and warrants
that the following are true and correct as of this date and will be true and
correct on the Closing Date as if made on that date.  Any reference in this Article or any Schedule attached hereto to
Seller’s “knowledge” shall mean the actual knowledge of Jim Porter, Frank
Guerrera, Randy Diehs.

 

Section 3.1                                   Organization and Good Standing.  Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with all requisite power and authority to carry on the business in which it is
engaged and to own the properties it owns. 
Seller is duly qualified to do business in Illinois and every other
jurisdiction where the absence of such qualification would have a material
adverse affect on the Business.

 

Section 3.2                                   Authorization and Validity.  The execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by Seller, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of Seller and shareholders of Seller, if necessary. This
Agreement and each other agreement contemplated hereby have been or will be
duly executed and delivered by Seller and constitute, or will constitute as of
the Closing, legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors’ rights
generally or the availability of equitable remedies.

 

Section 3.3                                   Financial Statements.  Attached hereto as Schedule 3.3 are the unaudited balance sheets
of Seller as of March 31, 2003, and the related statement of earnings before
interest, tax, depreciation and amortization (or the equivalent) for the
three-month period then ended (collectively, the “Financial Statements”). The
Financial Statements fairly present the financial condition and results of
operations of Seller as of the dates and for the periods indicated and have
been prepared on a consistent basis with prior practices. Seller has no
liability or obligation, whether absolute, contingent or otherwise as of the
respective dates of the Financial Statements required to be recorded, reflected
or disclosed thereon or therein which was not so recorded, reflected or
disclosed.

 

Section 3.4                                   Employee Benefits. Seller does not sponsor, maintain, or
otherwise is a party to, or is in default under, or has any accrued obligations
under any pension, deferred compensation, bonus or other incentive plan,
severance plan, health, group insurance or other welfare plan, employee benefit
plan or other similar plan, agreement, policy or understanding.

 

7

 

Section 3.5                                   Absence of Material Adverse Change.  Since December 31, 2002, Seller has not
suffered any material adverse change in its financial condition, assets,
liabilities or business.

 

Section 3.6                                   Title Matters.  Except as set forth in Schedule 3.6 hereto, Seller owns the
Purchased Assets free and clear of all liens, liabilities, claims, and
encumbrances. Upon consummation of the transactions contemplated hereby,
Purchaser shall receive good, valid, and marketable title to the Purchased
Assets.

 

Section 3.7                                   Material Agreements.  Except for the Assigned Contracts, contracts listed as Excluded Assets
or as otherwise set forth in Schedule 3.7 hereto, Seller has not entered
into, nor are the Purchased Assets or the Business bound by, whether or not in
writing, any (a) partnership or joint venture agreement; (b) deed of trust
or other security agreement; (c) guaranty or suretyship, indemnification or
contribution agreement or performance bond; (d) employment, consulting or
compensation agreement or arrangement, including the election or retention in
office of any director or officer; (e) labor or collective bargaining
agreement; (f) debt instrument, loan agreement or other obligation relating to
indebtedness for borrowed money or money lent to another; (g) deed or other
document evidencing an interest in or contract to purchase or sell real
property; (h)  lease of real or personal property, whether as lessor,
lessee, sublessor or sublessee; (i) agreement for the acquisition of services,
supplies, equipment or other personal property other than agreements entered
into in the ordinary course of business; (j) contract containing noncompetition
covenants; or (k) other agreement or commitment not made in the ordinary course
of business consistent, that is material to the Business or financial condition
of Seller (all of the foregoing are hereinafter collectively referred to as the
“Material Agreements”). True, correct and complete copies of the written
Material Agreements, and true, correct and complete written descriptions of the
oral Material Agreements, have heretofore been delivered to Purchaser. There
are no existing defaults with respect to the Material Agreements.  The Material Agreements are in full force
and effect and are valid and enforceable obligations of the parties thereto in
accordance with their terms.

 

Section 3.8                                   Intellectual Property Matters.  With respect to the Transferred Intellectual
Property and the Licensed Intellectual Property (collectively, the
“Intellectual Property”) and except as set forth in Schedule 3.8, (a)
Seller,  or, as to the Licensed
Intellectual Property, Parent, has the sole and exclusive right to use the
Intellectual Property without infringing or violating the rights of any third
parties, (b) no consent of third parties will be required for the use thereof
by Purchaser upon consummation of the transactions contemplated by this Agreement,
(c) no claim has been asserted by any person to the ownership of or right to
use any Intellectual Property or challenging or questioning the validity or
effectiveness of any such license or agreement, and Seller has no knowledge of
any valid basis for any such claim. To Seller’s knowledge, no product, activity
or operation of Seller infringes upon or involves, or has resulted in the
infringement of, any intellectual property rights of any other person,
corporation or other entity. No proceedings have been instituted, are pending
or, to Seller’s knowledge, are threatened which challenge the rights of Seller
with respect thereto.  Purchaser
acknowledges and agrees that Seller will not
be liable for and Seller will not have breached any representation or warranty
under this Section 3.8 if Purchaser (i) uses the Intellectual Property other
than as intended, (ii) combines the Intellectual Property with data, hardware
or software provided by anyone other than Seller or its agents, or (iii)
modifies any of the Intellectual Property.

 

Section 3.9                                   No Violation.  Neither the execution and performance of this Agreement or the
agreements contemplated hereby nor the consummation of the transactions
contemplated hereby or thereby will (a) result in a violation or breach of the
Certificate of Incorporation or Bylaws of Seller or any agreement or other
instrument under which Seller is bound or to which any of the Purchased Assets
are subject, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the

 

8

 

Purchased Assets or (b) violate any
applicable law or regulation or any judgment or order of any court or
governmental agency.

 

Section 3.10                            Consents.  Seller has
received all necessary authorizations, consents, and approvals required (a) to
authorize the execution, delivery and performance of this Agreement or the
agreements contemplated hereby on the part of Seller or (b) in connection with
the transfer of any Purchased Assets from Seller to Purchaser, including but
not limited to the assignment of the Assigned Contracts.

 

Section 3.11                            Finder’s Fee.  Seller has not incurred any obligation for any finder’s, broker’s or
agent’s fee in connection with the transactions contemplated hereby for which
Purchaser may be liable or for which a claim could be asserted against the
Purchased Assets.

 

Section 3.12                            Claims and Proceeding.  Schedule
3.12 is a complete and accurate list and description of all claims,
actions, suits, proceedings and investigations currently pending or, to
Seller’s knowledge, threatened against or affecting the Business or any of the
Purchased Assets, at law or in equity, or before or by any court, municipal or
other governmental department, commission, board, agency or instrumentality.  No inquiry, action or proceeding has been
asserted, instituted or, to Seller’s knowledge, threatened to restrain or
prohibit the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account thereof.

 

Section 3.13                            Employee Matters.  Set forth in Schedule 3.13 hereto is a complete and accurate
list of all employees of Seller as of the date of this Agreement, together with
their positions and their annual salaries and other compensation. Except as set
forth in Schedule 3.13 hereto, to Seller’s knowledge, Seller is in
compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and is not
engaged in, nor has it committed, any unfair labor practice as defined in the
National Labor Relations Act of 1947, as amended.

 

Section 3.14                            Real Property.  Seller owns no real property.

 

Article IV

Covenants and Agreements

 

Section 4.1                                   Covenant Not to Compete. Acknowledging that the following restrictions
are reasonable and necessary in order to protect Buyer’s legitimate interests,
and that any violation thereof would result in irreparable injury to Purchaser,
Seller and Parent agree and covenants as follows:

 

(a)                                  Non-Competition by Seller. 
During the period beginning on the Closing Date and ending on February
1, 2006 (the “Non-Compete Period”), except as hereafter provided, neither
Seller nor Parent shall alone, through any subsidiary or joint venture or as a
member, partner, or agent of any partnership, or as an agent, member,
stockholder (except stockholder of not more than five percent (5%) of the
outstanding stock of any company listed on a national securities exchange or
traded over the counter) or as an investor in any corporation or other person
or entity of any kind whatsoever, directly or indirectly, (i) engage in, (ii)
own, manage, operate, control or participate in the ownership, management,
operation or control of, or (iii) be connected in any manner with, any business
or activity which engages in a business competitive with the Business in
anywhere in the United States. 
Notwithstanding anything to the contrary contained in this Section, (A)
Seller shall be entitled to exercise its rights and obligations (i) under that
certain Distribution Agreement between Townsend Analytics Ltd. and Seller dated
July 31,

 

9

 

2001 (a summary of the relationship under
such agreement is attached as Schedule 4.1(a) and (ii) in relation to current
and future web data and display data customer contracts, and (B) Seller and
Parent shall not be prevented in any way from (X) selling any of its other
divisions, subsidiaries, or other businesses to a Person which is or may be in
competition with the Business, (Y) entering into a joint venture with a Person
relating to another division, subsidiary or other business of Seller, which
Person is also in competition with the Business; provided such joint venture is
not in competition with the Business, or (Z) merging with any Person which is
or may be in competition with the Business. 

 

(b)                                 Non-Enticement. 
During the period beginning on the date hereof and ending on February 1,
2006, neither Seller nor Parent shall directly or indirectly, whether for its
own account or for or with any other person or entity of any kind whatsoever,
hire, solicit or endeavor to entice away from Purchaser, any person who was
employed by Seller or Parent (to the extent that such person worked in the
Business) or Purchaser at any time during the period beginning one year prior
to the date of this Agreement and ending on the second anniversary of the
Closing Date, and neither Seller nor Parent shall approach any such person for
any such purpose or authorize or knowingly cooperate with the taking of any
such action by any other individual, person or entity.

 

(c)                                  Remedies.  In the event of any violation
of this Section, Purchaser shall be authorized and entitled to obtain from any
court of competent jurisdiction preliminary and permanent injunctive relief as
well as an equitable accounting of all profits or benefits arising out of such
violation, which rights and remedies shall be cumulative and in addition to any
other rights or remedies to which Purchaser may be entitled under applicable
law or this Agreement.

 

(d)                                 Partial Invalidity.  In
the event any of the restrictions contained in this Section are held to be in
any respect an unreasonable restriction upon Seller, then the court so holding
shall alter or amend this Agreement, including making any reduction in the
territory to which it pertains and/or the period of time in which it operates,
or effect any other change to the extent necessary to render any of the
restrictions enforceable.  Each of the
terms and provisions of this Section is and is to be deemed severable in whole
or in part and, if any term or provision or the application thereof in any
circumstances should be invalid, illegal or unenforceable, the remaining terms
and provisions or the application thereof to circumstances other than those as
to which it is held invalid, illegal or unenforceable, shall not be affected
thereby and shall remain in full force and effect.

 

Section 4.2                                   Name Change.  At the Closing, Seller shall deliver to Purchaser executed but unfilled
documentation in a form sufficient to change Seller’s name in Delaware and
Illinois from “PCQUOTE.COM, INC.” to another name chosen by Seller which does
not include the words “PCQUOTE” or “PCQUOTE.COM”.

 

Section 4.3.                                Consents of
Third Parties.

 

(a)                                  Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
asset or agreement or any claim or right or any benefit arising under or
resulting from such asset or agreement if an attempted assignment thereof,
without the consent of a third party, would constitute a breach or other
contravention of the rights of such third party, would be ineffective with
respect to any party to an agreement concerning such asset, or would in any way
adversely affect the rights of Seller or, upon transfer, Purchaser under such
asset or agreement.  If any transfer or
assignment by Seller to, or any assumption by Purchaser of, any interest in, or
liability, obligation or commitment under, any asset or agreement requires the
consent of a third party, then such assignment or assumption shall be made
subject to such consent being obtained. 
To the extent any Assigned Contract may not be assigned to Purchaser by
reason of the absence of any such consent,

 

10

 

Purchaser shall not be required to assume
such Assigned Contract and if not assigned shall not be entitled to receive
benefits arising under such Assigned Contract.

 

(b)                                 In connection with those consents that have
not been obtained as of the Closing, Seller and Purchaser hereby agree that,
until any such required consent is obtained, Seller, or HyperFeed Technologies,
Inc., as appropriate, shall, with the reasonable and necessary cooperation of
Purchaser continue to fulfill any and all obligations and commitments, and
enforce any and all rights, of Seller in connection with any asset, claim or
right that constitutes a Purchased Asset or Assigned Contract but for which any
required consent has not been obtained, and that Purchaser shall be entitled to
all of the economic claims, rights and benefits under such asset, claim or
right and Seller shall pay or cause to be paid to Purchaser all such economic
benefits as promptly as practicable following receipt by Seller or its parent;
provided that Purchaser shall be responsible for the Assumed Liabilities, if
any, arising under such asset, claim or right, to the extent that Purchaser has
received the economic benefit of such asset, claim or right, and further
provided that Purchaser shall reimburse Seller for its costs to fulfill any
such obligations, commitments or enforcement of rights.

 

Article V

Indemnification

 

Section 5.1                                   Seller’s Indemnity.  Subject to the terms and conditions of this Article V, Seller hereby
agrees to indemnify, defend and hold Purchaser and its shareholders, officers,
directors, agents, attorneys and affiliates (defined as Purchaser and any
person or entity controlling, controlled by, or under common control with, Purchaser)
harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys’ fees
and expenses (collectively, “Damages”), incurred by any or all of them or
assessed against the Purchased Assets by reason of or resulting from or based
upon the material inaccuracy of any representation or material breach or
material default of or under any warranty, covenant or agreement made by Seller
in this Agreement or any exhibit or schedule attached hereto or in any
certificate, document or other instrument delivered by Seller in connection
with the transactions contemplated by this Agreement.

 

Section 5.2                                   Purchaser’s Indemnity.  Subject to the terms and conditions of this Article V, Purchaser
hereby agrees to indemnify, defend and hold Seller and its shareholders,
officers, directors, agents, attorneys and affiliates (defined as Seller and
any person or entity controlling, controlled by, or under common control with,
Seller) harmless from and against all Damages asserted against or incurred by
any or all of them by reason of or resulting from or based on any of the
Assumed Liabilities or the material inaccuracy of any representation or
material breach or material default of or under any warranty, covenant or
agreement made by Purchaser in this Agreement or any exhibit or schedule
attached hereto or in any certificate, document or other instrument delivered
by Purchaser in connection with the transactions contemplated by this
Agreement.

 

Section 5.3                                   Procedures for Indemnification.  The respective obligations and liabilities of
Seller and Purchaser (the “indemnifying party”) to the other (the “party to be
indemnified”) under Sections 5.1 and 5.2 hereof with respect to claims
resulting from the assertion of liability by third parties shall be subject to
the following terms and conditions:

 

(a)                                  Within 20 days (or such earlier time as might
be required to avoid prejudicing the indemnifying party’s position) after
receipt of notice of commencement of any legal action evidenced by service of
process or other legal pleading, or with reasonable promptness after the
assertion in writing of any claim by a third party, the party to be indemnified
shall give the indemnifying party written notice

 

11

 

thereof together with a copy of such claim,
process or other legal pleading, and the indemnifying party shall have the
right to undertake the defense thereof by representatives of its own choosing
(but subject to the approval of the indemnified party which approval will not
be unreasonably withheld or delayed) and at its own expense; provided, however,
that the party to be indemnified may participate in the defense with counsel of
its own choice and at its own expense and, provided further, that the failure
of the party to be indemnified to give timely notice shall not affect the right
to indemnification hereunder except to the extent (and then only to the extent)
the indemnifying party proves actual damages caused by such failure.

 

(b)                                 In the event that the indemnifying party, by
the 30th day after receipt of notice of any such claim (or, if earlier, by the
10th day preceding the day on which an answer or other pleading must be served
in order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have the right
to undertake the defense, compromise or settlement of such claim on behalf of
and for the account and risk of the indemnifying party and at the indemnifying
party’s expense, subject to the right of the indemnifying party to assume the
defense of such claims in accordance with this Section 5.3(b) at any time prior
to settlement, compromise or final determination thereof.

 

(c)                                  Anything in this Section to the contrary
notwithstanding, the indemnifying party shall not settle any claim without the
consent of the party to be indemnified unless such settlement involves only the
payment of money and the claimant provides to the party to be indemnified a
release from all liability in respect of such claim. If the settlement of the
claim involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified,
which consent shall not be unreasonably withheld.

 

(d)                                 The party to be indemnified and the
indemnifying party will each cooperate with all reasonable requests of the
other.

 

Section 5.4                                   Limitations Period.  All representations, warranties, covenants and obligations of Purchaser
and of Seller under this Agreement shall survive the Closing for one (1) year.

 

Section 5.5                                   Exclusive Remedy.  The sole and exclusive remedy
of each Party for any all monetary claims or Damages relating to or arising out
of or in connection with this Agreement and the facts and circumstances
relating and pertaining thereto shall be an action for indemnity pursuant to
this Article which shall be governed and limited by this Article, whether any
such claim is made in contract, breach of warranty, tort, statutory, or common
law.

 

Section 5.6                                   Limits on Liability.

 

(a)                                  No indemnifying party shall have liability
under this Article unless the aggregate amount of all Damages finally
determined to arise from such breaches, misrepresentations or omissions exceeds
Five Thousand Dollars ($5,000), and, in such event such indemnifying party
shall be required to pay the amount of such Damages without regard to such
threshold amount.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Agreement, no indemnifying party shall have any liability to
any party to be indemnified to the extent that the breach of the warranty or
covenant or the falsity of the representation upon which such liability would
be based is disclosed in any of the Schedules or Exhibits to this Agreement.

 

(c)                                  The maximum amount of Damages that an
indemnifying party shall, in the aggregate, be required to pay to all parties
to be indemnified hereunder pursuant to any provision of this Agreement shall
not, in the aggregate, exceed the Purchase Price.

 

12

 

Article VI

Miscellaneous

 

Section 6.1                                   Amendment and Waiver.  No provision of this Agreement may be amended, modified, supplemented
or waived except by an instrument in writing executed by all of the parties
hereto or, in the case of an asserted waiver, executed by the party against
which enforcement of the waiver is sought.

 

Section 6.2                                   Successors and Assigns; Assignment.  This Agreement shall be binding upon and
inure to the benefit of the heirs, successors, administrators, executors, and
assigns of each of the Parties; provided, however, that this Agreement may
not be assigned by any Party in whole or in part, to any third party without
the express written permission of the other Party which permission may be
withheld or conditioned in such Party’s sole discretion and without regard to
any standard of commercial reasonableness. Any attempted assignment of this
Agreement in violation of this paragraph shall, at the option of the
non-assigning Party be rendered null and void and deemed a breach of the terms
of this Agreement.

 

Section 6.3                                   Notice.  Any notice or
communication must be in writing and given by depositing the same in the United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the
same in person, by overnight courier or by facsimile.  Such notice shall be deemed received on the date on which it is
hand-delivered or sent by facsimile (with electronic confirmation), on the
third business day following the date on which it is so mailed, or one day
after timely deposit with an overnight courier for next-day delivery.  For purposes of notice, the addresses of the
parties shall be as set forth on the signature page of this Agreement. Any
party may change its address for notice by written notice given to the other
parties in accordance with this Section.

 

Section 6.4                                   Confidentiality.

 

(a)    
The Parties agree that any information provided by one to the other (whether in
written, oral or other form)(the “Information”) is provided solely in
connection with the transactions contemplated hereby and that only such
directors, officers, employees, agents and consultants (including attorneys and
auditors, the “Advisors”) of any Party who are directly involved in the
proposed transactions will be provided access to such Information.  Unless
approved by the other Party in writing, the Parties agree not to disclose any
of such Information to any third Party who is not an Advisor except as required
by statute, regulatory authority, court order or decree or except for the
portions of such Information which are in or which come into the public domain
other than through the acts or omissions of the Parties or their respective
Advisors

 

(b)    
Prior to the Closing, except as otherwise agreed in writing, the Parties agree
not to disclose, and to take all steps necessary or desirable to ensure that
none of its Advisors disclose the transactions contemplated hereby or the
existence of this Agreement to any third party including, but not limited to,
customers, potential customers, suppliers and potential suppliers, other than
Advisors, except as may be required by statute, regulatory authority, court
order or decree.

 

(c)    
The Parties shall consult with each other as to the form and substance of any
press release or other public disclosure regarding the transactions
contemplated hereby, and neither Party shall make any public disclosure thereof
prior to Closing without the written consent of the other, provided that
nothing in this Agreement shall prohibit either Party from making any public
disclosure which it, with the

 

13

 

advice of counsel, deems reasonable necessary
to comply with law applicable to it.

 

(d)    
The Parties agree that, in connection with any breach or alleged breach by a
Party of the terms and provisions of this Section, in addition to all other
remedies available at law or hereunder, the injured Party shall be entitled to
equitable relief, including injunctive relief and specific performance and all
reasonable attorneys fees and court costs incurred in connection therewith.

 

(e)    
The provisions of this section are in addition to any other confidentiality
obligations a Party may have to whether by agreement, applicable law or
otherwise and shall not, in any way, limit the applicability, scope or
enforceability of such obligations.

 

Section 6.5                                   Entire Agreement.  This Agreement and the exhibits hereto supersede all prior agreements
and understandings relating to the subject matter hereof, except that the
obligations of any party under any agreement executed pursuant to this
Agreement or any other confidentiality agreement executed by a party shall not
be affected by this Section.

 

Section 6.6                                   Transactional Expenses.  Except as otherwise provided in this Agreement, Purchaser and Seller
shall each bear their respective costs and expenses of the transactions
contemplated hereby, including without limitation, the fees and expenses of
their attorneys, accountants and other advisors. The prevailing party in any
arbitration or other legal proceeding hereunder or under any agreement executed
pursuant hereto will, however, be entitled to recover its reasonable attorneys’
fees and expenses.

 

Section 6.7                                   Severability.  If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.

 

Section 6.8                                   Specific Performance.  Each party to this Agreement acknowledges that a refusal by the other
party to consummate the transactions contemplated hereby will cause irrevocable
harm to the non-refusing party, for which there may be no adequate remedy at
law and for which the ascertainment of damages would be difficult.  Therefore, the non-refusing party shall be
entitled, in addition to, and without having to prove the inadequacy of, other
remedies at law, to specific performance of this Agreement, as well as
injunctive relief.

 

Section 6.9                                   Governing Law.  This Agreement shall be governed by, and construed in accordance with,
the substantive laws of the State of Illinois without reference or regard to
the conflicts of law rules of any state or jurisdiction.  In the event a dispute arises under this
Agreement, the parties agree and consent to the non-exclusive jurisdiction and
venue of the state and federal courts located in Cook County, Illinois for the
resolution of any dispute arising under this Agreement.  Each party irrevocably submits to the
jurisdiction of such courts and waives any objection, which it may have based upon
improper venue or forum non conveniens to the conduct of any proceeding in any
such courts.

 

Section 6.10                            Captions.  The captions
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions hereof.

 

14

 

Section 6.11                            Counterparts.  This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.

 

Section 6.12                            Number and Gender.  Whenever the context requires, references in this Agreement to the
singular number shall include the plural, the plural number shall include the
singular and words denoting gender shall include the masculine, feminine and
neuter.

 

Section 6.13                            No Third Party Beneficiaries. Except
as expressly indicated elsewhere in this Agreement, nothing expressed or
implied in this Agreement is intended or will be construed to confer upon or
give any person or entity other than the parties to this Agreement any rights
or remedies under or by reason of this Agreement or any transactions
contemplated hereby.

 

Section 6.14                            Waiver of Trial by Jury.  EACH OF THE PARTIES TO THIS AGREEMENT WAIVES ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 
EACH OF THE PARTIES TO THIS AGREEMENT REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

Section 6.15                            No Strict Construction.  This Agreement has been prepared, and negotiations in connection
herewith have been carried on, by the joint efforts of the parties to this
Agreement and their respective counsel. This Agreement is to be construed
fairly and simply and not strictly for or against any of the parties to this
Agreement.  This Agreement is
acknowledged by each Party as having been co-drafted.

 

Section 6.16                            Incorporation of Recitals, Exhibits and Schedules.  The recitals above and all exhibits and
schedules identified in or attached to this Agreement are incorporated herein
by reference and made a part of this Agreement.

 

 

[SIGNATURE PAGES TO FOLLOW]

 

 

IN WITNESS WHEREOF, the parties
hereto, intending to be legally bound, have executed this Asset Purchase
Agreement as of the date first above written.

 

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  MONEY.NET, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H.L. Van Arnem

  	
   

  
	
   

  	
  Name:

  	
  H.L. Van Arnem

  	
   

  
	
   

  	
  Its:

  	
  CEO & Chairman

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  155 Spring Street

  	
   

  
	
   

  	
   

  	
   

  	
  3rd FL

  	
   

  
	
   

  	
   

  	
   

  	
  NY, NY 10012

  	
   

  
	
   

  	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  PCQUOTE.COM, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim R. Porter

  	
   

  
	
   

  	
  Name:

  	
  Jim R. Porter

  	
   

  
	
   

  	
  Its:

  	
  CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
  300 S. Wacker Dr.

  	
   

  
	
   

  	
   

  	
   

  	
  Chicago, IL 60606

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
   

  	
   

  
						

 

The undersigned hereby agrees and covenants to be bound
by the terms and provisions of Section 4.1 hereof; provided such provisions
shall not be amended without the approval of the undersigned.

 

	
   

  	
  HyperFeed Technologies,
  Inc.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim R. Porter

  	
   

  
	
   

  	
  Name:

  	
  Jim R. Porter

  	
   

  
	
   

  	
  Its:

  	
  CEOExhibit

10.1

 

CREDIT

AGREEMENT

 

 

dated

as of July 29, 2003

 

 

between

 

 

WESTERN

PLAINS ENERGY, LLC

as Borrower

 

 

and

 

 

AGCOUNTRY

FARM CREDIT SERVICES, FLCA

as Lender

 

 

TABLE OF

CONTENTS

 

	

  ARTICLE I. 

  DEFINITIONS; CONSTRUCTION

  
	

   

  	

   

  	

   

  
	

  Section

  1.01

  	

   

  	

  Definitions

  
	

  Section

  1.02

  	

   

  	

  Accounting

  Terms and Determination

  
	

  Section

  1.03

  	

   

  	

  Terms

  Generally

  
	

   

  	

   

  	

   

  
	

  ARTICLE II 

  AMOUNTS AND TERMS OF THE COMMITMENTS

  
	

   

  	

   

  	

   

  
	

  Section

  2.01

  	

   

  	

  General

  Description of the Loans

  
	

  Section

  2.02

  	

   

  	

  Construction

  and Term Loan Commitment

  
	

  Section

  2.03

  	

   

  	

  Procedure

  for Construction Borrowings

  
	

  Section

  2.04

  	

   

  	

  Term

  Loan Conversion

  
	

  Section

  2.05

  	

   

  	

  Revolving

  Loan Commitment

  
	

  Section

  2.06

  	

   

  	

  Procedure

  for Revolving Borrowings

  
	

  Section

  2.07

  	

   

  	

  Interest

  Rates

  
	

  Section

  2.08

  	

   

  	

  Reserved

  
	

  Section

  2.09

  	

   

  	

  Repayment

  of Loans

  
	

  Section

  2.10

  	

   

  	

  Additional

  Payments

  
	

  Section

  2.11

  	

   

  	

  Evidence

  of Indebtedness

  
	

  Section

  2.12

  	

   

  	

  Prepayments

  
	

  Section

  2.13

  	

   

  	

  Interest

  on Loans

  
	

  Section

  2.14

  	

   

  	

  Fees

  
	

  Section

  2.15

  	

   

  	

  Computation

  of Interest and Fees

  
	

  Section

  2.16

  	

   

  	

  Reserved

  
	

  Section

  2.17

  	

   

  	

  Reserved

  
	

  Section

  2.18

  	

   

  	

  Increased

  Costs

  
	

  Section

  2.19

  	

   

  	

  Reserved

  
	

  Section

  2.20

  	

   

  	

  Taxes

  
	

  Section

  2.21

  	

   

  	

  Payments

  Generally

  
	

   

  	

   

  	

   

  
	

  ARTICLE III  CONDITIONS PRECEDENT TO LOANS

  
	

   

  	

   

  	

   

  
	

  Section

  3.01

  	

   

  	

  Conditions

  To Effectiveness

  
	

  Section

  3.02

  	

   

  	

  Each

  Loan

  
	

  Section

  3.03

  	

   

  	

  Each

  Construction Loan

  
	

  Section

  3.04

  	

   

  	

  Delivery

  of Documents

  
	

   

  	

   

  	

   

  
	

  ARTICLE IV.  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

   

  	

   

  
	

  Section

  4.01

  	

   

  	

  Existence;

  Power

  
	

  Section

  4.02

  	

   

  	

  Organizational

  Power; Authorization

  
	

  Section

  4.03

  	

   

  	

  Governmental

  Approvals; No Conflicts

  
	

  Section

  4.04

  	

   

  	

  Financial

  Statements

  

 

 

	

  Section

  4.05

  	

   

  	

  Litigation

  and Environmental Matters

  
	

  Section

  4.06

  	

   

  	

  Compliance

  with Laws and Agreements

  
	

  Section

  4.07

  	

   

  	

  Investment

  Company Act, Etc.

  
	

  Section

  4.08

  	

   

  	

  Taxes

  
	

  Section

  4.09

  	

   

  	

  Margin

  Regulations

  
	

  Section

  4.10

  	

   

  	

  ERISA

  
	

  Section

  4.11

  	

   

  	

  Ownership

  of Property

  
	

  Section

  4.12

  	

   

  	

  Disclosure

  
	

  Section

  4.13

  	

   

  	

  Labor

  Relations

  
	

  Section

  4.14

  	

   

  	

  Subsidiaries

  
	

  Section

  4.15

  	

   

  	

  Construction

  
	

  Section

  4.16

  	

   

  	

  Projections

  
	

  Section

  4.17

  	

   

  	

  Material

  Contracts

  
	

  Section

  4.18

  	

   

  	

  Permits

  
	

   

  	

   

  	

   

  
	

  ARTICLE V. 

  AFFIRMATIVE COVENANTS

  
	

   

  	

   

  	

   

  
	

  Section

  5.01

  	

   

  	

  Financial

  Statements and Other Information

  
	

  Section

  5.02

  	

   

  	

  Notices

  of Material Events

  
	

  Section

  5.03

  	

   

  	

  Existence;

  Conduct of Business

  
	

  Section

  5.04

  	

   

  	

  Compliance

  with Laws, Etc.

  
	

  Section

  5.05

  	

   

  	

  Payment

  of Obligations

  
	

  Section

  5.06

  	

   

  	

  Books

  and Records

  
	

  Section

  5.07

  	

   

  	

  Visitation,

  Inspection, Audit, Etc.

  
	

  Section

  5.08

  	

   

  	

  Maintenance

  of Properties; Insurance

  
	

  Section

  5.09

  	

   

  	

  Use

  of Proceeds

  
	

  Section

  5.10

  	

   

  	

  Subsidiaries

  
	

  Section

  5.11

  	

   

  	

  Assignment

  of Material Contracts

  
	

  Section

  5.12

  	

   

  	

  Food

  Security Act Compliance

  
	

  Section

  5.13

  	

   

  	

  Shortfall

  
	

  Section

  5.14

  	

   

  	

  Non-Liability

  of Lender

  
	

   

  	

   

  	

   

  
	

  ARTICLE VI.  FINANCIAL COVENANTS

  
	

   

  	

   

  	

   

  
	

  Section

  6.01

  	

   

  	

  Fixed

  Charge Coverage Ratio

  
	

  Section

  6.02

  	

   

  	

  Leverage

  Ratio

  
	

  Section

  6.03

  	

   

  	

  Capital

  Expenditures

  
	

  Section

  6.04

  	

   

  	

  Current

  Ratio and Working Capital

  
	

  Section

  6.05

  	

   

  	

  Minimum

  Net Worth

  
	

   

  	

   

  	

   

  
	

  ARTICLE VII.  NEGATIVE COVENANTS

  
	

   

  	

   

  	

   

  
	

  Section

  7.01

  	

   

  	

  Indebtedness.

  
	

  Section

  7.02

  	

   

  	

  Negative

  Pledge

  
	

  Section

  7.03

  	

   

  	

  Fundamental

  Changes

  
	

  Section

  7.04

  	

   

  	

  Investments,

  Loans, Etc.

  
	

  Section

  7.05

  	

   

  	

  Restricted

  Payments

  

 

ii

 

	

  Section

  7.06

  	

   

  	

  Sale

  of Assets

  
	

  Section

  7.07

  	

   

  	

  Transactions

  with Affiliates

  
	

  Section

  7.08

  	

   

  	

  Restrictive

  Agreements

  
	

  Section

  7.09

  	

   

  	

  Sale

  and Leaseback Transactions

  
	

  Section

  7.10

  	

   

  	

  Lease

  Obligations

  
	

  Section

  7.11

  	

   

  	

  Hedging

  Agreements

  
	

  Section

  7.12

  	

   

  	

  Amendment

  to Material Documents and Construction Plans

  
	

  Section

  7.13

  	

   

  	

  Accounting

  Changes

  
	

  Section

  7.14

  	

   

  	

  Construction

  
	

  Section

  7.15

  	

   

  	

  Deposit

  and Investment Accounts

  
	

   

  	

   

  	

   

  
	

  ARTICLE VIII.  EVENTS OF DEFAULT

  
	

   

  	

   

  	

   

  
	

  Section

  8.01

  	

   

  	

  Events

  of Default

  
	

   

  	

   

  	

   

  
	

  ARTICLE IX.  MISCELLANEOUS

  
	

   

  	

   

  	

   

  
	

  Section

  9.01

  	

   

  	

  Notices

  
	

  Section

  9.02

  	

   

  	

  Waiver;

  Amendments

  
	

  Section

  9.03

  	

   

  	

  Expenses;

  Indemnification

  
	

  Section

  9.04

  	

   

  	

  Successors

  and Assigns

  
	

  Section

  9.05

  	

   

  	

  Governing

  Law; Jurisdiction; Consent to Service of Process

  
	

  Section

  9.06

  	

   

  	

  Waiver

  of Jury Trial

  
	

  Section

  9.07

  	

   

  	

  Right

  of Setoff

  
	

  Section

  9.08

  	

   

  	

  Counterparts;

  Integration

  
	

  Section

  9.09

  	

   

  	

  Survival

  
	

  Section

  9.10

  	

   

  	

  Severability

  
	

  Section

  9.11

  	

   

  	

  Confidentiality

  
	

  Section

  9.12

  	

   

  	

  Interest

  Rate Limitation

  
	

  Section

  9.13.

  	

   

  	

  Inspections

  
	

  Section

  9.14

  	

   

  	

  Termination

  

 

Schedules

 

	

  Schedule 4.05

  	

  -

  	

  Environmental Matters

  
	

  Schedule 4.17(a)

  	

  -

  	

  Management Contracts

  
	

  Schedule 4.17(b)

  	

  -

  	

  Supply Contracts

  
	

  Schedule 4.17(c)

  	

  -

  	

  Off-Take Contracts

  
	

  Schedule 4.17(d)

  	

  -

  	

  Transportation Contracts

  
	

  Schedule 4.17(e)

  	

  -

  	

  Utility Contracts

  
	

  Schedule 4.18

  	

  -

  	

  Permits

  
	

  Schedule 7.01

  	

  -

  	

  Outstanding Indebtedness

  
	

  Schedule 7.02

  	

  -

  	

  Existing Liens

  
	

  Schedule 7.04

  	

  -

  	

  Existing Investments

  
	

  Schedule 7.15

  	

  -

  	

  Deposit and Investment Accounts

  

 

iii

 

Exhibits

 

	

  Exhibit A

  	

  -

  	

  Form of Construction and Term Loan Note

  
	

  Exhibit B

  	

  -

  	

  Form of Revolving Credit Note

  
	

  Exhibit 2.03

  	

  -

  	

  Form of Construction Draw Request

  
	

  Exhibit 2.05

  	

  -

  	

  Form of Notice of Revolving Conversion

  
	

  Exhibit 2.06

  	

  -

  	

  Form of Revolving Draw Request

  
	

  Exhibit 2.07

  	

  -

  	

  Form of Interest Election

  
	

  Exhibit 3.01(d)(xi)

  	

  -

  	

  Form of Secretary’s Certificate

  
	

  Exhibit 3.01(d)(xii)

  	

  -

  	

  Form of Opinion of Borrower’s Counsel

  
	

  Exhibit 3.01(d)(xiii)

  	

  -

  	

  Form of Officer’s Certificate

  
	

  Exhibit 3.01(d)(xix)

  	

  -

  	

  Form of Solvency Certificate

  

 

iv

 

CREDIT

AGREEMENT

 

THIS CREDIT AGREEMENT (this

“Agreement”)  is made and entered into as of July 29,

2003, by and between WESTERN PLAINS ENERGY, LLC, a Kansas limited liability

company (“Borrower”)

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

 

W

I T N E S S E T H:

 

WHEREAS, Borrower

has requested that Lender (a) establish a $22,000,000 multiple advance

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

outstanding under the construction loan facility to a term loan upon

satisfaction of certain conditions, and (c) establish a revolving credit

facility of up to $5,000,000 (which shall permanently reduce the amount of term

loan outstanding) in favor of Borrower; and

 

WHEREAS, subject to

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

financing to Borrower.

 

NOW, THEREFORE, in

consideration of the premises and the mutual covenants contained herein, and

for other good and valuable consideration, the receipt and sufficiency of which

are hereby acknowledged, Borrower and Lender agree as follows:

 

ARTICLE I.

 

DEFINITIONS;

CONSTRUCTION

 

Section

1.01         Definitions.  In addition to the other terms defined

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

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

the terms defined):

 

“Administrative Fee”

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

 

“Affiliate”

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

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

common Control with, such Person.

 

“Base Rate”

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

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

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

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

Interest Election selected by Borrower pursuant to Section 2.07(b).

 

“Borrower” shall

mean Western Plains Energy, LLC, a Kansas limited liability company, and any

successor thereof.

 

“Borrowing”

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

Commitments hereunder.

 

 

“Business Day”

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

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

or required by law to close.

 

“Capital Expenditures”

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

plant and equipment and other capital expenditures of Borrower and its

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

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

Capital Lease Obligations incurred by Borrower and its Subsidiaries during such

period.

 

“Capital Lease

Obligations” of any Person shall mean all obligations of such

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

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

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

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

such obligations shall be the capitalized amount thereof determined in

accordance with GAAP.

 

“Charges”

shall have the meaning set forth in Section 9.12.

 

“Change in

Control” shall mean the occurrence of one or more of the

following events: (a) any sale, lease, exchange or other transfer (in a single

transaction or a series of related transactions) of all or substantially all of

the assets of Borrower to any Person or “group” (within the meaning of the

Securities Exchange Act of 1934 and the rules of the Securities and Exchange

Commission thereunder in effect on the date hereof), (b) occupation of a

majority of the seats (other than vacant seats) on the board of managers of

Borrower by Persons who were neither (i) nominated by the immediately previous

board of managers or (ii) appointed by managers so nominated, or (c) any sale,

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

related transactions) of a majority of any of Borrower’s Class B, Class C, or

Class D membership interests (as described in Borrower’s operating agreement).

 

“Change in Law”

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

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

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

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

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

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

this Agreement.

 

“Closing Date”

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

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

 

“Code”

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

time to time.

 

“Collateral”

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

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

the 

 

2

 

benefit of

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

thereof, and shall include, without limitation, all casualty insurance proceeds

and condemnation awards with respect to any of the foregoing.

 

“Collateral

Assignments” shall mean each collateral assignment by Borrower

(and such other parties as Lender may require) to Lender, along with consents

to such assignments as shall be deemed appropriate by Lender, from time to

time, of the Material Contracts.

 

“Commitment”

shall mean the Revolving Commitment or the Construction and Term Loan

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

 

“Construction

Agreement” shall mean the Agreement Between Owner and Design

Builder, dated as of April 4, 2002, between Borrower and ICM, Inc., as the same

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

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

to the Project, including the design and construction of the Improvements.

 

“Construction

and Term Loan” shall mean a loan made by Lender to Borrower

under its Construction and Term Loan Commitment.

 

“Construction

and Term Loan Repayment Period” shall mean the period beginning

on the date designated as the beginning of such period in Section 2.04

and ending on the Maturity Date.

 

“Construction

and Term Loan Commitment” shall mean the obligation of Lender to

make Construction and Term Loans to Borrower in an aggregate principal amount

not exceeding the lesser of 55% of the Construction Costs or $22,000,000.

 

 “Construction and Term Loan Note” shall

mean a note of Borrower payable to the order of Lender in substantially the

form of Exhibit A.

 

“Construction

Borrowing” shall mean a Borrowing pursuant

to Section 2.02.

 

“Construction

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

August 1, 2004, (ii) the date on which the Construction and Term Loan

Commitments are fully drawn, and (iii) the date on which all amounts

outstanding under this Agreement have been declared or have automatically

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

 

“Construction

Completion” shall mean the occurrence of all of the following

events with respect to the Project: (a) all Improvements are completed in

accordance with the Construction Plans and are paid for in full, free of all

mechanics’, labor, materialmen’s and other similar lien claims; (b) said

completion has been approved by Borrower and any Construction Consultants; (c)

a certificate of substantial completion for the Project has been signed by

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

completed; (d) Lender has received acceptable evidence that all

requirements of any Governmental Authority and all private

 

3

 

restrictions and covenants relating to the

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

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

all of the Improvements have been issued by all appropriate Governmental

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

all licenses, Permits, and Material Contracts (collaterally assigned to Lender)

necessary or appropriate to operate the Improvements at maximum capacity; (f)

Lender has received copies of all warranties from suppliers covering materials,

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

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

has received satisfactory evidence that all insurance required pursuant to the

Loan Documents is in full force and effect; (h) Lender has received three

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

requirements; (i) no Default or Event of Default exists; (j) Borrower has

invested no less than $20,000,000 of equity capital (which may include proceeds

of tax increment financing) in Construction Costs; (k) Borrower has developed

and implemented risk management programs, satisfactory to Lender in all

respects, to procure inputs necessary or appropriate for the successful

operation of the Improvements at maximum capacity; and (l) Borrower shall have

hired or engaged management satisfactory to Lender.

 

“Construction

Consultants” shall mean any third party experts, including the

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

purpose of inspecting the Project and Improvements.

 

“Construction Costs”

shall mean Borrower’s start-up working capital (in

an amount not less than $3,000,000 and not to exceed $3,500,000), organization

costs, equity drive costs and administrative expenses prior to and during the

Construction Funding Period, plus the cost of purchasing real property for the

Project, designing and engineering the Improvements, preparing the site,

constructing the building and purchasing and installing equipment, and

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

during the Construction Funding Period.

 

“Construction Draw

Request” shall have the meaning set forth in Section

2.03.

 

“Construction

Funding Period” shall mean the period from the

Closing Date to the Construction Commitment Termination Date.

 

“Construction

Plans” shall mean the final working plans for completion of the

Project and Improvements to be constructed with respect to the Project,

including drawings, specifications, details and manuals as delivered to Lender.

 

“Control”

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

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

persons performing similar functions) of a Person or (ii) direct or cause the

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

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

have meanings correlative thereto.

 

4

 

“Control

Agreements” shall

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

interest in the Deposit Accounts and Investment Accounts, in form and substance

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

otherwise modified from time to time.

 

“Default”

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

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

 

“Default

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

 

“Deposit Accounts”

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

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

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

accounts.

 

“Determination

Date” shall mean, (a) with respect to Loans subject to the

Variable Rate or the Term Variable Rate, the date three (3) Business Days prior

to the Closing Date with respect to the Interest Period immediately following

the Closing Date, and the first Business Day of each subsequent month

thereafter, and (b) with respect to all other Loans, the date three (3)

Business Days prior to the first day of the related Interest Period.

 

“Disbursing

Agreement” means that certain Disbursing Agreement

dated as of the date hereof among Lender, Borrower and Title Company, as

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

 

“Dollars” or “$” shall mean dollars

denominated in the currency of the United States of America.

 

“EBITDA” shall mean, for Borrower and its

Subsidiaries for any period determined on a consolidated basis in accordance

with GAAP, an amount equal to (a) Net Income for such period plus (b) to the extent deducted in

determining Net Income for such period, the sum of (i) Interest Expense, (ii)

income tax expense, (iii) depreciation and amortization and (iv) all other

non-cash charges, including any USDA Bio Energy Program payments and other

payments and benefits received by Borrower in respect of incentives provided by

the State of Kansas or any other Governmental Authority, in each case for such

period.

 

“Environmental

Laws” shall mean all laws, rules, regulations, codes,

ordinances, orders, decrees, judgments, injunctions, notices or binding

agreements issued, promulgated or entered into by or with any Governmental

Authority, relating in any way to the environment, preservation or reclamation

of natural resources, the management, Release or threatened Release of any

Hazardous Material or to health and safety matters.

 

“Environmental

Liability” shall mean any liability, contingent or otherwise

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

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

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

Subsidiary directly or indirectly resulting from or based upon

 

5

 

(a) any actual or alleged violation of any

Environmental Law, (b) the generation, use, handling, transportation, storage,

treatment or disposal of any Hazardous Materials, (c) any actual or alleged

exposure to any Hazardous Materials, (d) the Release or threatened Release of

any Hazardous Materials, or (e) any contract, agreement or other consensual

arrangement pursuant to which liability is assumed or imposed with respect to

any of the foregoing.

 

“Equipment”

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

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

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

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

accessions thereto and substitutions and replacements therefor.

 

“Equity

Deposit Account” shall mean Borrower’s

Escrow Deposit Account No. 62001269315 with First National Bank, Trust

Department, Goodland, Kansas, which holds the proceeds of Borrower’s equity

drive.

 

“ERISA”

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

from time to time, and any successor statute.

 

“ERISA

Affiliate” shall mean any trade or business (whether or not

incorporated), which, together with Borrower, is treated as a single employer

under Section 414(b) or (c) of the Code or, solely for the purposes of Section

302 of ERISA and Section 412 of the Code, is treated as a single employer under

Section 414 of the Code.

 

“ERISA Event” shall mean (a) any “reportable event”,

as defined in Section 4043 of ERISA or the regulations issued thereunder with

respect to a Plan (other than an event for which the 30-day notice period is

waived); (b) the existence with respect to any Plan of an “accumulated funding

deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),

whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or

Section 303(d) of ERISA of an application for a waiver of the minimum funding

standard with respect to any Plan; (d) the incurrence by Borrower or any of its

ERISA Affiliates of any liability under Title IV of ERISA with respect to the

termination of any Plan; (e) the receipt by Borrower or the ERISA Affiliate

from the PBGC or a plan administrator appointed by the PBGC of any notice

relating to an intention to terminate any Plan or Plans or to appoint a trustee

to administer any Plan; (f) the incurrence by Borrower or any of its ERISA

Affiliates of any liability with respect to the withdrawal or partial

withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Borrower

or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan

from Borrower or any ERISA Affiliate of any notice, concerning the imposition

of Withdrawal Liability or a determination that a Multiemployer Plan is, or is

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

of ERISA.

 

“Event of

Default” shall have the meaning provided in Article VIII.

 

“Excluded Taxes”  shall

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

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

 

6

 

franchise taxes imposed on (or measured by)

its net income by the United States of America, or by the jurisdiction under

the laws of which such recipient is organized or in which its principal office

is located or, in which its applicable lending office is located, and (b) any

branch profits taxes imposed by the United States of America or any similar tax

imposed by any other jurisdiction in which Lender or other recipient is

located.

 

“Farm Products”

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

 

“Five-Year

Adjustable Rate” shall have the meaning set forth in Section

2.07(b)(iii).

 

“Fixed Base Rate”

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

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

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

 

“Fixed Charge

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

fiscal quarters of Borrower, the ratio of (a) EBITDA for such period  to (b) Fixed Charges for such

period.

 

“Fixed Charges”

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

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

such period, plus (b) scheduled principal

payments made on Total Debt (not including payments related to seasonal

indebtedness for which Lender has consented in writing to exclusion therefrom)

for such period, plus

(c) income tax expense for such period, plus

(d) Restricted Payments paid during such period, plus (e) Non-Financed Maintenance Capital Expenditures.

 

“Fixed Rate”

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

 

“Food

Security Act” shall mean the federal Food

Security Act of 1985, as amended from time to time (7 U.S.C. 1631, et seq.).

 

“Free Cash

Flow” shall mean for any period, the EBITDA

less the sum of Interest Expense, Mandatory Debt Retirement, Taxes paid by

Borrower and its Subsidiaries, Non-Financed Maintenance Capital Expenditures.

 

“GAAP”

shall mean generally accepted accounting prin­ciples in the United States

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

 

“Governmental

Authority” shall mean the government of the United States of

America, any other nation or any political subdivision thereof, whether state

or local, and any agency, authority, instrumentality, regulatory body, court,

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

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

government.

 

“Government

Yield” shall mean, as of the date of any

prepayment, the annualized yield on the “Treasury Constant Maturity” with a

maturity equal to the number of months remaining prior to the Maturity Date for

the most recent week available prior to the date of such 

 

7

 

prepayment, as reported in the Federal

Reserve Statistical Release H.15 (hereinafter “Release H.15”) conclusively determined

by Lender on the date of each such prepayment. 

The yield will be determined by linear interpolation if necessary.  If the number of months remaining prior to

the Maturity Date is less than twelve months, the “Government Yield” will be

the annualized yield on the “Treasury Constant Maturity” with a maturity equal

to one year.  If Release H.15 is no

longer published, Lender shall determine Government Yield.

 

“Guarantee”

of or by any Person (the “guarantor”)

shall mean any obligation, contingent or otherwise, of the guarantor

guaranteeing or having the economic effect of guaranteeing any Indebtedness or

other obligation of any other Person (the “primary obligor”) in any manner, whether

directly or indirectly and including any obligation, direct or indirect, of the

guarantor (a) to purchase or pay (or advance or supply funds for the purchase

or payment of) such Indebtedness or other obligation or to purchase (or to

advance or supply funds for the purchase of) any security for the payment

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

purpose of assuring the owner of such Indebtedness or other obligation of the

payment thereof, (c) to maintain working capital, equity capital or any other

financial statement condition or liquidity of the primary obligor so as to

enable the primary obligor to pay such Indebtedness or other obligation, or (d)

as an account party in respect of any letter of credit or letter of guaranty

issued in support of such Indebtedness or obligation; provided, that the

term “Guarantee” shall not include endorsements for collection or deposits in

the ordinary course of business. The amount of any Guarantee shall be deemed to

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

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

determinable, the maximum reasonably anticipated liability in respect thereof

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

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

meaning.

 

“Hazardous

Materials” means

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

substances, wastes or other pollutants, including petroleum or petroleum

distillates, asbestos or asbestos containing materials, polychlorinated

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

wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedging

Agreements” shall mean interest rate swap, cap or collar

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

currency future or option contracts, commodity agreements and other similar

agreements or arrangements designed to protect against fluctuations in interest

rates, currency values or commodity values, in each case to which Borrower or

any Subsidiary is a party.

 

“Improvements”

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

Real Estate with respect to the Project.

 

“Inspecting

Architect” shall mean the architectural, engineering or other

consultant firm retained by Lender, at Borrower’s cost, to conduct on-site

inspections of the work-in-progress related to the Project, and to issue

periodic reports to Lender as to progress of construction and adherence to the

Construction Plans.

 

8

 

“Indebtedness”

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

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

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

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

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

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

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

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

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

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

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

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

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

of such Person of the type of Indebtedness described in clauses

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

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

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

contingent or otherwise, to purchase, redeem, retire or otherwise acquire for

value any common stock or other capital interest of such Person, and (x)

Off-Balance Sheet Liabilities.  The

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

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

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

Person is not liable therefor.

 

“Indemnified

Taxes” shall mean Taxes other than Excluded Taxes.

 

“Interest

Differential” shall mean, on the date of

any full or partial prepayment, the Fixed Rate minus the Government Yield.

 

“Interest

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

 

“Interest

Expense” shall

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

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

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

respect of Capital Lease Obligations capitalized or expensed during such period  (whether or not actually paid during such

period),  plus (ii) the net amount payable (or minus the net amount receivable) under

Hedging Agreements during such period (whether or not actually paid or received

during such period).

 

“Interest Period”

shall mean:

 

(a)           with respect to

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

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

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

and all other Interest Periods shall be the calendar month;

 

(b)           with respect to

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

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

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

date three (3), five (5) or 

 

9

 

ten (10) years, as applicable, after the date

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

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

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

applicable, following such effective date; and

 

(c)           with respect to Loans

subject to the Fixed Rate, the Interest Period shall be the period beginning on

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

Closing Date;

 

provided, that no

Interest Period may extend beyond the Maturity Date.

 

“Investment

Accounts” shall

mean all securities or investment accounts of Borrower with brokerage firms and

others, including but not limited to the Equity Deposit Account.

 

“Investments”

shall have the meaning set forth in Section 7.04.

 

“Lender”

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

 

“LIBOR”

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

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

interbank offered rates for Dollar deposits in the London market based on

quotations at 16 major banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable

Determination Date; provided, if Lender determines that the foregoing

source is unavailable for the applicable Interest Period, Lender shall

determine LIBOR based on a new index which is based on comparable information.

 

“License

Agreement” shall mean the provisions of the

Construction Agreement which specify the terms of the license of proprietary

rights of the design/builder (as set forth in Exhibit F thereto), as the same

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

 

“Lien”

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

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

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

or any preference, priority or other security agree­ment or preferential

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

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

effect as any of the foregoing).

 

“Loan Documents”

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

the Mortgage, the Security Agreement, the Collateral Assignments, the

Disbursing Agreement and any and all other instruments, agreements, documents

and writings executed in connection with any of the foregoing.

 

10

 

“Loans”

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

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

 

“Management

Contracts” shall mean those certain

agreements and contracts which are material to the management of Borrower’s

business in effect presently and entered into from time to time hereafter, as

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

to time.

 

“Mandatory Debt

Retirement” shall mean principal and interest payments required

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

 

“Material

Adverse Effect” shall mean, with respect to any event, act,

condition or occurrence of whatever nature (including any adverse determination

in any litigation, arbitration, or governmental investigation or proceeding),

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

acts, condition or conditions, occurrence or occurrences whether or not

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

business, results of operations, financial condition, assets, liabilities,

Projections or prospects of Borrower, (ii) the ability of Borrower to perform

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

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

enforceability of any of the Loan Documents.

 

“Material

Contracts” shall mean the Management

Contracts, Supply Contracts, Off-Take Contracts, Transportation Contracts,

Utility Contracts, the Construction Agreement, the License Agreement, the

Process Guarantee, and such other agreements and contracts as may be material

to operation of Borrower’s business.

 

“Material

Indebtedness” shall mean Indebtedness (other than the Loans) or

obligations in respect of one or more Hedging Agreements of Borrower and its

Subsidiaries in an aggregate principal amount exceeding $100,000.  For purposes of determining Material

Indebtedness, the “principal amount” of the obligations of Borrower or any

Subsidiary in respect to any Hedging Agreement at any time shall be the maximum

aggregate amount (giving effect to any netting agreements) that Borrower or

such Subsidiary would be required to pay if such Hedging Agreement were

terminated at such time.

 

“Maturity Date”

shall mean the earlier of (i) April 1, 2014, or (ii) the date on which the

principal amount of all outstanding Loans have been declared or automatically

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

 

“Maximum Rate”

shall have the meaning set forth in Section 9.12.

 

“Mortgage”

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

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

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

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

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

 

11

 

“Multiemployer

Plan” shall have the meaning set forth in Section 4001(a)(3) of

ERISA.

 

“Net Income”

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

Subsidiaries for such period determined on a consolidated basis in accordance

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

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

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

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

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

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

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

any Subsidiary.  Net Income shall

include USDA Bioenergy program payments and other payments and benefits

received by Borrower in respect of incentives provided by the State of Kansas

or any other Governmental Authority.

 

“Net Worth”

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

that would be reflected on Borrower’s consolidated balance sheet as of such

date prepared in accordance with GAAP, after eliminating all amounts properly

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

Subsidiaries, less (ii) the sum

of (a) the total liabilities of Borrower and its Subsidiaries that would be

reflected on a consolidated balance sheet of Borrower and its Subsidiaries as

of such date prepared in accordance with GAAP, (b) the amount of any write-up

in the book value of any assets resulting from a revaluation thereof or any

write-up in excess of the cost of such assets acquired reflected on the

consolidated balance sheet of Borrower and its Subsidiaries as of such date

prepared in accordance with GAAP, and (c) the net book amount of all assets of

Borrower and its Subsidiaries that would be classified as intangible assets on

a consolidated balance sheet of Borrower and its Subsidiaries as of such date

prepared in accordance with GAAP.

 

“Non-Financed

Maintenance Capital Expenditures” shall

mean the sum of Capital Expenditures made by Borrower in the ordinary course of

business related to maintenance of Borrower’s property, plant and equipment  and paid during the related period,  except the term shall not include Capital Expenditures

for which Borrower or any Subsidiary incurredIndebtedness in connection therewith.

 

“Notes”

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

Term Loan Note.

 

“Obligations”

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

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

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

any petition in bankruptcy or the commencement of any insolvency,

reorganization or like proceeding relating to Borrower, whether or not a claim

for post-filing or post-petition interest is allowed in such proceeding), all

reimbursement obligations, fees, expenses, indemnification and reimbursement

payments, costs and expenses (including all fees and expenses of counsel to

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

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

existing or hereafter arising hereunder or thereunder, together with all

renewals, extensions, modifications or refinancings thereof.

 

12

 

“Off-Balance

Sheet Liabilities” of any Person shall mean

(i) any repurchase obligation or liability of such Person with respect to

accounts or notes receivable sold by such Person, (ii) any liability of

such Person under any sale and leaseback transactions which do not create a

liability on the balance sheet of such Person, (iii) any liability of such

Person under any so-called “synthetic” lease transaction, or (iv) any

obligation arising with respect to any other transaction which is the

functional equivalent of or takes the place of borrowing but which does not

constitute a liability on the balance sheet of such Person.

 

“Off-Take

Contracts” shall mean those certain

agreements and contracts in effect presently and entered into from time to time

hereafter which are material to the sale or disposal of products and

by-products produced by Borrower, as the same may be amended, restated,

supplemented or otherwise modified from time to time.

 

“Origination

Fee”  shall

have the meaning set forth in Section 2.14(a).

 

“Other Taxes”

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

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

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

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

 

“Participant”

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

 

“Participation

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

 

“Payment Office”

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

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

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

 

“PBGC”  shall

mean the Pension Benefit Guaranty Corpora­tion referred to and defined in

ERISA, and any successor entity performing similar functions.

 

“Permits”

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

Governmental Authorities which are required of Borrower or useful for Borrower

to obtain in connection with the Project and operation of Borrower’s business

(as contemplated following Construction Completion), including but not limited

to any of the foregoing related to Environmental Laws (including an air

emissions permit and a national pollution discharge elimination system

construction permit, each of which will allow Borrower to operate its

facilities at maximum capacity), zoning and land-use laws (including any

requirement to obtain a special exception, if applicable), water use laws,

waste disposal laws, laws requiring construction permits and occupancy

certificates, and laws relating to construction and operation of above ground

storage tanks.

 

13

 

“Permitted

Encumbrances” shall mean:

 

(i)            Liens imposed by

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

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

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

accordance with GAAP;

 

(ii)           statutory Liens of

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

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

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

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

with GAAP;

 

(iii)          pledges and deposits

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

compensation, unemployment insurance and other social security laws or

regulations;

 

(iv)          deposits to secure

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

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

each case in the ordinary course of business;

 

(v)           judgment and

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

existing from any litigation or legal proceeding that are currently being

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

adequate reserves are being maintained in accordance with GAAP; and

 

(vi)          easements, zoning

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

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

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

affected property or materially interfere with the ordinary conduct of business

of Borrower and its Subsidiaries taken as a whole;

 

provided, that the

term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

 

“Permitted

Investments” shall mean:

 

(i)            direct obligations

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

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

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

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

thereof;

 

(ii)           commercial paper

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

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

 

(iii)          certificates of de­posit,

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

acquisition thereof issued or guaranteed by or placed with, and money market

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

bank 

 

14

 

organized under the laws of the United States

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

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

 

(iv)          fully collateralized

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

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

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

 

(v)           mutual funds

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

clauses (i) through (iv) above.

 

“Person”

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

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

Authority.

 

“Plan”

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

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

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

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

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

 

“Process

Guarantee” shall mean the provisions of the

Construction Agreement which specify the terms of the performance guarantee

criteria (as set forth in Exhibit A thereto), as the same may be amended,

restated, supplemented or otherwise modified from time to time.

 

“Project”

shall mean the design, construction and completion of a dry milling ethanol

plant near Campus, Kansas which will produce, upon Construction Completion, not

less than 30 million gallons of ethanol per year, dried distillers grains and

solubles, carbon dioxide and other value — added products and carbon dioxide

recovery, together with all necessary and appropriate fixtures, equipment, attachments,

and accessories, as described in the Construction Plans, to be constructed on

the Real Estate.

 

“Projections”

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

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

otherwise consistent with the historical financial statements of Borrower,

together with appropriate supporting details and a statement of underlying

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

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

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

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

the Closing Date.

 

“Pro Forma

Balance Sheet” shall mean the unaudited pro

forma balance sheet of Borrower on a consolidated basis setting forth as of the

Closing Date the pro forma financial position of Borrower and its Subsidiaries

on a consolidated basis, copies of which fairly present, on a pro forma basis,

in conformity with GAAP applied on a basis consistent with the financial

statements referred to in Section 4.04, the financial position of

Borrower on a consolidated basis, as of such date and time.

 

15

 

“Quarterly Fees”

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

 

“Real

Estate” shall mean all real property owned

or leased by Borrower or its Subsidiaries.

 

“Real

Estate Documents” shall mean collectively,

the Mortgage, the Disbursing Agreement and all other documents, instruments,

agreements and certificates executed and delivered by Borrower to Lender in

connection with any of the foregoing.

 

“Release”

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

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

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

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

 

“Release H.15”

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

 

“Required

Stock” shall mean the member stock or

participation certificates in Lender, in amounts as Lender may require Borrower

to purchase (without using proceeds of a Loan) from time to time under the

capital plan adopted by the board of directors of Lender (currently 2% of the

amount borrowed up to $1,000) pursuant to bylaws applicable to Lender.

 

“Responsible

Officer” shall mean any of the president, the chief executive

officer, the chief operating officer, the chief financial officer, the

treasurer or a vice president of Borrower or such other representative of

Borrower as may be designated in writing by any one of the foregoing with the

consent of Lender; and, with respect to the financial covenants only, the chief

financial officer or the treasurer of Borrower.

 

“Restricted

Payment” shall have the meaning set forth in Section 7.05.

 

“Revolving

Borrowing” shall mean a Borrowing pursuant

to Section 2.05.

 

“Revolving

Commitment” shall mean the obligation of Lender to

make Revolving Loans to Borrower in accordance with the terms of Section

2.05 in an amount not to exceed the Revolving Conversion Amount, as reduced

from time to time pursuant to Section 2.09(b).

 

“Revolving

Commitment Termination Date”

shall mean the Maturity Date.

 

“Revolving

Conversion Amount” shall have the meaning

specified in Section 2.05.

 

“Revolving

Conversion Date” shall mean the date a

portion of the Construction and Term Loans are converted to Revolving Loans

pursuant to Section 2.05.

 

“Revolving

Credit Availability Period”

shall mean the period from the Revolving Conversion Date to the Revolving

Commitment Termination Date.

 

16

 

“Revolving

Credit Note” shall mean a note of Borrower payable to the order

of Lender in substantially the form of Exhibit B.

 

“Revolving Draw

Request” shall have the meaning set forth in Section 2.06.

 

“Revolving Loan”

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

 

“Security Agreement”

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

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

otherwise modified from time to time.

 

“Security

Documents” shall mean, collectively, the Security Agreement, the

Collateral Assignments, the Mortgage, the other Real Estate Documents, and all

other instruments and agreements now or hereafter securing the whole or any

part of the Obligations, all UCC-1 financing statements, fixture financing

statements, stock powers, and all other documents, instruments, agreements and

certificates executed and delivered by Borrower or any other person to Lender

in connection with the foregoing.

 

“Simple Interest”

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

 

“Subsidiary”

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

joint venture, limited liability company, association or other entity the

accounts of which would be consolidated with those of the parent in the

parent’s consolidated financial statements if such financial statements were

prepared in accordance with GAAP as of such date, as well as any other

corporation, part­nership, joint venture, limited liability company,

association or other entity (i) of which securities  or other ownership interests representing more than 50% of the

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

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

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

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

or by the parent and one or more subsidiaries of the parent. Unless otherwise

indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of

Borrower (including subsidiaries formed after the Closing Date).

 

“Supply

Contracts” shall mean those certain

agreements and contracts related to the supply of inputs material to operation

of Borrower’s business in effect presently and entered into from time to time

hereafter, as the same may be amended, restated, supplemental or otherwise

modified from time to time.

 

“Sworn

Construction Cost Statement” shall mean an itemized and

certified statement of actual and estimated costs of the Project broken out

into individual subcontracts, signed and sworn to by Borrower and delivered to

Lender, as the same may be amended or supplemented from time to time.

 

17

 

“Taxes”

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

deductions, charges or withholdings imposed by any Governmental Authority.

 

“Ten-Year

Adjustable Rate” shall have the meaning set forth in Section

2.07(b)(iv).

 

“Term Variable

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

 

“Three-Year

Adjustable Rate” shall have the meaning set forth in Section

2.07(b)(ii).

 

“Title Company”

shall mean First American Title Insurance Company of Kansas, and its successors

and assigns, and/or any other title or escrow company selected by Lender from

time to time.

 

“Total Debt”

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

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

Borrower prepared in accordance with GAAP as of such date.

 

“Transportation

Contracts” shall mean those certain agreements and contracts in

effect presently and entered into from time to time hereafter related to the

provision of transportation or shipping services which are material to the

operation of Borrower’s business as the same may be amended, restated,

supplemented or otherwise modified from time to time.

 

“Uniform

Commercial Code” or “UCC” means the Uniform

Commercial Code as in effect from time to time in the State of North Dakota.

 

“Utility

Contracts” shall mean those certain

contracts and agreements in effect presently and entered into from time to time

hereafter which are material to the provision to Borrower of electricity,

natural gas, water, fuel oil, coal and other energy resources in connection

with the operation of Borrower’s plant, equipment and offices, as the same may

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

 

“Variable Rate”

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

determined on the applicable Determination Date, plus 400 basis points (4.00%) during the related Interest

Period.

 

“Withdrawal

Liability” shall mean liability to a Multiemployer Plan as a

result of a complete or partial withdrawal from such Multiemployer Plan, as

such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

Section 1.02         Accounting

Terms and Determination. 

Unless otherwise defined or specified herein, all accounting terms used

herein shall be interpreted, all accounting determinations hereunder shall be

made, and all financial statements required to be delivered hereunder shall be

prepared, in accordance with GAAP as in effect from time to time, applied on a

basis consistent (except for such changes approved by Borrower’s independent

public accountants) with the most recent audited combined financial statement

of Borrower delivered pursuant to Section 5.01(a); provided,

that if Borrower notifies Lender that Borrower wishes to 

 

18

 

amend any covenant in Article VI to

eliminate the effect of any change in GAAP on the operation of such covenant,

then Borrower’s compliance with such covenant shall be determined on the basis

of GAAP in effect immediately before the relevant change in GAAP became

effective, until either such notice is withdrawn or such covenant is amended in

a manner satisfactory to Borrower and Lender.

 

Section

1.03         Terms Generally.  The definitions of terms herein

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

pronoun shall include the corresponding masculine, feminine and neuter

forms.  The words “include”, “includes”

and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have

the same meaning and effect as the word “shall”.  In the computation of periods of time from a specified date to a

later specified date, the word “from” means “from and including” and the word

“to” means “to but excluding”. Unless the context requires otherwise (i) any

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

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

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

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

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

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

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

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

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

references to Articles, Sections, Exhibits and Schedules shall be

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

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

refer to the time in Fargo, North Dakota, unless otherwise indicated.

 

ARTICLE

II

 

AMOUNTS

AND TERMS OF THE COMMITMENTS

 

Section 2.01         General

Description of the Loans. 

Subject to and upon the terms and conditions herein set forth, (i)

Lender hereby establishes in favor of Borrower a construction loan facility

pursuant to which Lender agrees to make Construction and Term Loans to Borrower

in accordance with Section 2.02; and (ii) Lender agrees to establish a

revolving credit facility in accordance with Section 2.05.

 

Section

2.02         Construction and Term Loan

Commitment.  Subject to

the terms and conditions set forth herein, Lender agrees to make Construction

and Term Loans to Borrower, from time to time during the  Construction Funding Period, in an

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

aggregate amount of all Construction and Term Loans exceeding the Construction

and Term Loan Commitment.  During the

Construction Funding Period, Borrower shall be entitled to borrow and prepay,

but may not reborrow, Construction and Term Loans in accordance with the terms

and conditions of this Agreement; provided, that Borrower may not borrow

should there exist a Default or Event of Default.

 

19

 

Section

2.03         Procedure for Construction

Borrowings.   The Borrower

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

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

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

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

Borrowing. The Borrower shall request no more than one Construction Borrowing

per calendar month.  Each Construction

Draw Request shall be irrevocable and  shall

specify: (a) the aggregate principal amount of the related Borrowing, and (b)

the date of the related Borrowing (which shall be a Business Day).  The aggregate principal amount of each

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

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

Construction Borrowings outstanding exceed the amount of the Construction and

Term Loan Commitment.  Notwithstanding

anything to the contrary, Lender shall have the irrevocable right (without

obligation) at any time and from time to time to advance a Construction

Borrowing without first receiving a Construction Draw Request from Borrower.

 

Section 2.04         Term

Loan Conversion.  Within

sixty (60) days following the occurrence of Construction Completion, Borrower

shall provide Lender such documents, instruments, and certificates (including,

without limitation, a certificate by an appropriate Responsible Officer of

Borrower, certifying as to occurrence of Construction Completion) as Lender may

request.  Upon determination by Lender

of Construction Completion, the Repayment Period shall begin.

 

Section 2.05         Revolving

Loan Commitment.  Subject

to the terms and conditions set forth herein, Borrower may make a one-time

election to convert not less than $1,000,000 or more than $5,000,000 in

principal amount of the Construction and Term Loans to Revolving Loans (the “Revolving Conversion Election”).  Borrower shall give Lender written notice of

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

substantially in the form of Exhibit 2.05 attached hereto not less

than ten (10) Business Days prior to the requested date of the Revolving

Conversion Election and shall execute the Revolving Credit Note in an amount

equal to the Revolving Conversion Amount. 

During the Revolving Credit Availability Period, Borrower shall be

entitled to borrow, prepay and reborrow Revolving Loans from time to time in

accordance with the terms and conditions of this Agreement; provided,

that Borrower may not borrow or reborrow should there exist a Default or Event

of Default; and provided further, that at no time shall the aggregate

principal amount of Revolving Loans outstanding exceed the amount of the Revolving

Commitment.

 

Section 2.06         Procedure

for Revolving Borrowings.  

The Borrower shall give Lender written notice (or telephonic notice

promptly confirmed in writing) of each Revolving Borrowing substantially in the

form of Exhibit 2.06 attached hereto (a “Revolving Draw Request”) prior to 11:00

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

Loan.  Each Revolving Draw Request shall

be irrevocable and  shall specify:

(i) the aggregate principal amount of the related Borrowing and (ii) the date

of the related Borrowing (which shall be a Business Day).  The aggregate principal amount of each

Revolving Borrowing shall be not less than $100,000 and shall be in multiples

of $100,000.

 

20

 

Section

2.07         Interest Rates

 

(a)           Revolving Loans.  Interest on the Revolving Loans shall accrue at the Variable

Rate, as determined on the applicable Determination Date.

 

(b)           Construction and Term Loans.  Prior to the Repayment Period, interest on

the Construction and Term Loans shall accrue at the Variable Rate, as

determined on the applicable Determination Date.  During the Repayment Period, Borrower may elect (an “Interest Election”),

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

variable, adjustable or fixed interest rates to be applied to amounts of not

less than $1,000,000 owing on the Construction and Term Loans, as set forth in

(i) and (ii) below, and interest on such amounts shall accrue at such rate

selected by Borrower during the related Interest Period.  Interest shall accrue at the Term Variable

Rate for such portion of the Construction and Term Loans for which no Interest

Election shall be in effect.

 

(i)                                     the

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

applicable Determination Date, plus

400 basis points (4.00%) during the related Interest Period (the “Term Variable Rate”);

or

 

(ii)                                  the

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

applicable Determination Date plus

400 basis points (4.00%) during the period commencing on the effective date of

the applicable Interest Election and continuing thereafter until the date three

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

at the Term Variable Rate;

 

(iii)                               the

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

applicable Determination Date plus

400 basis points (4.00%) during the period commencing on the effective date of

the applicable Interest Election and continuing thereafter until the date five

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

at the Term Variable Rate;

 

(iv)                              the

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

applicable Determination Date plus

400 basis points (4.00%) during the period commencing on the effective date of

the applicable Interest Election and continuing thereafter until the date ten

(10) years following such date (the “Ten-Year Adjustable Rate”), and thereafter at

the Term Variable Rate;

 

(v)                                 the

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

applicable Determination Date plus

400 basis points (4.00%) during the period commencing on the Closing Date and

continuing thereafter until the date ten (10) years following the Closing Date

(the “Fixed Rate”),

and thereafter at the Term Variable Rate.

 

21

 

The interest rate applicable to the

Construction and Term Loans during the Repayment Period will be reduced by twenty

five basis points (0.25%) per annum at such time as Borrower has reached, and

has maintained as of the next fiscal year end, 60% owners equity based on

audited financials statements after consideration of the reduction for the

annual dividend declaration.

 

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

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

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

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

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

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

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

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

the Maturity Date.  Borrower

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

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

be subject to such prepayment fee. 

Lender shall determine the rate of interest pursuant to this Section

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

Borrower.  Lender’s determination of the

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

 

Section

2.08         Reserved.

 

Section

2.09         Repayment of Loans.

 

(a)           Construction and Term Loans.  During the Construction Funding Period, Borrower

shall pay in arrears, not later than the first day of each month, interest at

the rate in effect from time to time pursuant to Section 2.07(a) based

on the daily balance of the Construction and Term Loans outstanding during the

related monthly period.  During the

Repayment Period, Borrower shall pay, on the first day of each calendar

quarter, 40 payments of $550,000 (reduced to account for the Revolving

Conversion Amount if and at such time Borrower makes a Revolving Conversion

Election pursuant to Section 2.05) in reduction of the principal amount

of the Construction and Term Loans, plus all accrued and unpaid interest based

on the applicable interest rate in effect from time to time pursuant to Section

2.07(b).  All remaining principal

and accrued and unpaid interest outstanding on the Construction and Term Loans

shall be due and payable on the Maturity Date.

 

(b)           Revolving Facility.  During the Revolving Credit Availability

Period, Borrower shall pay in arrears, not later than the first day of each

month, interest at the rate in effect from time to time pursuant to Section

2.07(a) based on the daily balance of the Revolving Loans outstanding

during the related monthly period. 

Borrower shall pay, not later than the anniversary date of Construction Completion

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

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

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

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

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

Date.

 

22

 

Section

2.10         Additional Payments. In

addition to all other payments required on the Loans, Borrower shall pay in

arrears on a quarterly basis, beginning with the first fiscal quarter following

August 1, 2004, within forty five (45) days after the end of each fiscal quarter,

an amount equal to 40% of Borrower’s Free Cash Flow for such quarter; provided,

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

shall not exceed $2,000,000 annually. 

Principal payments due under such Loans shall be applied in the inverse

order of the maturities of such principal payments.  Payments under this Section 2.10 shall not be applied to

the Revolving Loans except to the extent there is no balance under the

Construction and Term Loans, and in such event the Revolving Commitment shall

be permanently reduced by the amount of such payment.

 

Section

2.11         Evidence of Indebtedness.  Lender shall maintain in

accordance with its usual practice appropriate records evidencing the

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

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

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

maintain  appropriate records  in which shall be recorded (i) the Revolving

Commitment and the Construction and Term Loan Commitment (ii) the amount of

each Loan made hereunder by Lender, and in the case of the Construction and

Term Loans during the Repayment Period, the interest rate election (pursuant to

Section 2.07(b)) applicable thereto, (iii) the date of each

conversion Interest Election of all or a portion thereof to another pursuant to

Section 2.07, (iv) the date and amount of any principal or interest due

and payable or to become due and payable from Borrower to Lender hereunder in

respect of such Loans and (v) both the date and amount of any sum received by

Lender from Borrower in respect of the Loans. 

The entries made in such records shall be prima facie evidence of the existence and amounts of the

obligations of Borrower therein recorded; provided, that the failure or

delay of Lender in maintaining or making entries into any such record or any

error therein shall not in any manner affect the obligation of Borrower to

repay the Loans (both principal and unpaid accrued interest) of Lender in

accordance with the terms of this Agreement.

 

Section

2.12         Prepayments.

 

(a)           Borrower shall have

the right at any time and from time to time to prepay any Borrowing, in whole

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

by giving irrevocable written notice (or telephonic notice promptly confirmed

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

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

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

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

each Loan or portion thereof to be prepaid. 

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

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

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

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

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

Construction and Term Loans during the Repayment Period, pro rata against the

remaining installments of principal due in respect thereof.

 

23

 

(b)           If Borrower issues

any membership interests, any other equity interests, or any debt securities,

then no later than the Business Day following the date of receipt of the

proceeds thereof, Borrower shall prepay the Loans in an amount equal to all

such proceeds, net of underwriting discounts and commissions and other

reasonable costs paid to non-Affiliates in connection therewith; provided,

that no such prepayment shall be required in the event Borrower issues

membership interests or other equity interests and the proceeds of such

issuance are invested in assets that constitute either plant or equipment of

Borrower and such assets become Collateral subject to Lender’s first priority

security interest.  Any such prepayment

shall be applied in accordance with paragraph (c) below.

 

(c)           Any prepayments made

by Borrower shall be applied as follows: first, to fees and reimbursable

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

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

the principal balance of the Construction and Term Loans, in inverse order of

maturity, until the same shall have been paid in full; fourth, to the

principal balance of the Revolving Loans, in inverse order of maturity, until

the same shall have been paid in full. The applicable Commitments shall be

permanently reduced by the amount of any prepayments made pursuant to clause

third and fourth above.

 

Section

2.13         Interest on Loans.

 

(a)           Interest on the

principal amount of all Loans shall accrue on a Simple Interest basis from and

including the date such Loans are made to but excluding the date of any

repayment thereof. Interest on all outstanding Loans shall be payable monthly

in arrears on the first day of each calendar month, on the Revolving Commitment

Termination Date with respect to all Revolving Loans and on the Maturity

Date.  All Default Interest shall be

payable on demand.

 

(b)           While an Event of

Default exists or after acceleration, Borrower shall pay interest (“Default Interest”)

with respect to all Loans at the rate otherwise applicable plus an additional 200 basis points (2.0%)

per annum.  All Default Interest shall

be payable on demand.

 

Section

2.14         Fees.

 

(a)           Origination Fee. Borrower agrees to pay to

Lender an origination fee equal to One Hundred Sixty Five Thousand Dollars

($165,000.00) (the “Origination

Fee”) on or before the Closing Date, it being acknowledged that

Borrower has paid $16,500 of this amount prior to the date hereof.

 

(b)           Participation Fee.  Borrower agrees to pay Lender a

participation fee equal to One Hundred Sixty Five Thousand Dollars

($165,000.00) (the “Participation

Fee”) on or before the Closing Date, it being acknowledged that

Borrower has paid $16,500 of this amount prior to the date hereof.

 

24

 

 (c)          Administrative Fee.  Borrower agrees to pay Lender an annual

administrative fee  equal to Twenty Five

Thousand Dollars ($25,000.00) (the “Administrative Fee”), which shall be due

annually on the anniversary of the Closing Date until all amounts payable

hereunder have been paid in full.

 

(d)           Quarterly Fees.  Borrower agrees to pay Lender quarterly fees in arrears (the “Quarterly Fees”),

beginning on the date of the first advance under Construction Funding Period

equal to:

 

(i)           

one-half of one percent (0.50%) per annum on the daily amount of the unused

amount of the Construction and Term Loan Commitment during the period beginning

on the date of the first Construction Borrowing and continuing through and

including the last day of the Construction Funding Period; and

 

(ii)           one-half

of one percent (0.50%) per annum on the unused amount of the Revolving

Commitment during the Revolving Credit Availability Period.

 

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

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

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

effected by Lender’s exercise of any right to accelerate or resulting from

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

Election with respect to such Loan, prior to the end of the related Interest

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

$100 and that amount calculated as follows: 

seventy five percent (.75) of the product of (i) the Interest

Differential divided by twelve, times (ii) the principal amount of such

payment, times (iii) a factor equal to the present value of a series of one

dollar ($1.00) payments, such factor based on the following components: (x) the

interest rate equal to the Government Yield divided by twelve and (y) the

number of months remaining prior to the Maturity Date.

 

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

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

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

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

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

fees, charges and disbursements of the Title Company.

 

Section

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

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

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

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

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

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

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

interest and fees shall be considered earned when due.

 

Section 2.16         Reserved.

 

25

 

Section

2.17         Reserved.

 

Section

2.18         Increased Costs.

 

(a)           If Lender shall have

determined that on or after the date of this Agreement any Change in Law

regarding capital requirements has or would have the ef­fect of reducing the

rate of return on Lender’s capital as a consequence of its obligations here­under

to a level below that which Lender could have achieved but for such Change in

Law (taking into consideration Lender’s policies with respect to capital

adequacy) then, from time to time, within five (5) Business Days after receipt

by Borrower of written demand by Lender, Borrower shall pay to Lender such

additional amounts as will compensate Lender for any such reduction suffered.

 

(b)           A certificate of

Lender setting forth the amount or amounts necessary to compensate Lender

specified in paragraph (a) of this Section shall be delivered to Borrower,

together with the written demand referred to in paragraph (a) of this section,

and shall be conclusive, absent manifest error.

 

(c)           Failure or delay on

the part of Lender to demand compensation pursuant to this Section 2.18

shall not constitute a waiver of Lender’s right to demand such compensation.

 

Section

2.19         Reserved.

 

Section

2.20         Taxes.

 

(a)           Any

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

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

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

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

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

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

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

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

Borrower shall pay the full amount deducted to the relevant Governmental

Authority in accordance with applicable law.

 

(b)           In

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

Authority in accordance with applicable law.

 

(c)           Borrower

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

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

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

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

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

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

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

were correctly or legally imposed or asserted by the relevant Governmental 

 

26

 

Authority. 

A certificate as to the amount of such payment or liability delivered to

Borrower by Lender, shall be conclusive absent manifest error.

 

(d)           As

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

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

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

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

evidence of such payment reasonably satisfactory to Lender.

 

Section

2.21         Payments Generally.

 

(a)           Borrower

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

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

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

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

counterclaim.  Any amounts received

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

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

interest thereon.  All such payments

shall be made to Lender at the Payment Office. 

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

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

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

made payable for the period of such extension. 

All payments hereunder shall be made in Dollars.

 

(b)           If

at any time insufficient funds are received by and are available to Lender to

pay fully all amounts of principal, interest and fees then due hereunder, such

funds shall be applied (i) first, towards payment of interest and fees then due

hereunder.

 

ARTICLE

III

 

CONDITIONS

PRECEDENT TO LOANS

 

Section

3.01         Conditions To Effectiveness.

The obligations of Lender to make Loans hereunder shall not become effective

until the date on which each of the following conditions is satisfied (or

waived in accordance with Section 9.02):

 

(a)           Lender

shall have received all fees and other amounts due and payable on or prior to

the Closing Date, including the Origination Fee, Participation Fee, and amounts

for reimbursement or payment of all out-of-pocket expenses (including

reasonable fees, charges and disbursements of counsel to Lender) required to be

reimbursed or paid by Borrower hereunder, under any other Loan Document and

under any agreement with Lender.

 

(b)           Borrower shall have provided

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

deposit in the Equity Deposit Account and equity amounts previously expended on

Construction Costs is equal to at least $20,000,000.

 

(c)           Borrower

shall have purchased the Required Stock.

 

27

 

(d)           Lender

(or its counsel) shall have received the following:

 

(i)            a

counterpart of this Agreement signed by or on behalf of Borrower or written

evidence satisfactory to Lender (which may include telecopy transmission of a signed

signature page of this Agreement) that Borrower has signed a counterpart of

this Agreement;

 

(ii)           Construction

and Term Loan Note, duly executed by Borrower payable to the order of Lender;

 

(iii)          the

duly executed Security Agreement, Collateral Assignments, and Control

Agreements, together with (A) UCC-1 financing statements and other applicable

documents under the laws of the jurisdictions with respect to the perfection of

the Liens granted under the Security Agreement and the Collateral Assignments,

as requested by Lender in order to perfect such Liens, duly executed by

Borrower and all other parties, (B) copies of favorable UCC, tax, judgment and

fixture lien search reports in all necessary or appropriate jurisdictions and

under all legal and trade names of Borrower and all other parties requested by

Lender, indicating that there are no prior Liens on any of the Collateral other

than Permitted Encumbrances, (C) duly executed landlord waivers and/or

warehouseman, or bailee agreements with respect to all inventory of Borrower or

any Subsidiary located at leased locations or other locations not owned by

Borrower in fee simple, and (D) a certified copy of all leases of Borrower and

each Subsidiary.

 

(iv)          the

duly executed Mortgage covering all of the Real Estate owned or leased by

Borrower and duly executed counterparts of the other Real Estate Documents

together with: (A) title insurance policies, current as-built ALTA/ACSM Land

Title surveys (to the extent requested by Lender) certified to Lender, zoning

letters, building permits and certificates of occupancy, in each case

satisfactory in form and substance to Lender; and (B) evidence that

counterparts of the Mortgage have been recorded in all places to the extent

necessary or desirable, in the judgment of Lender, to create a valid and

enforceable first priority lien (subject to Permitted Encumbrances) on the fee

simple estate of each Mortgage Property in favor of Lender for the benefit of

Lender (or in favor of such other trustee as may be required or desired under

local law);

 

(v)           satisfactory

appraisals of all Real Estate subject to the Mortgage (including an “as built”

appraisal related to the Improvements), together with satisfactory collateral

audits of all accounts, inventory and other personal property requested by

Lender (including field audit and survey conducted by Lender);

 

(vi)          [Reserved]

 

(vii)         an

executed copy of the Construction Agreement, together with (A) a complete set

of the Construction Plans, including all mechanical, electrical, structural and

other specialized drawings, (B) a schedule listing all subcontracts relating to

the Project and such other contracts, subcontracts and schedules relating to

the Project as Lender may request, (C) 

 

28

 

work progress schedule showing estimated

completion time for each phase of the Construction Agreement, (D) a Sworn

Construction Cost Statement, duly executed by Borrower, including a

reconciliation of actual costs incurred to-date against budgeted amounts, (E) a

copy of each Permit and each other building permit, license and other agreement

that Borrower is required by law to obtain in connection with the Project,

together with a schedule of all other necessary licenses and permits which must

be obtained in order to occupy and operate a dry mill ethanol production

facility (at maximum capacity in accordance with the Construction Plans) on the

property where the Improvements will be built, and (F) a soil report related to

the Real Estate where the Improvements will be built, certified by a registered

engineer acceptable to Lender, including structural design recommendations in

form and substance satisfactory to Lender;

 

(viii)        executed

copies of the Material Contracts in existence as of the Closing Date;

 

(ix)           copies

of duly executed payoff letters, in form and substance satisfactory to Lender,

executed by each existing lender, together with (a) UCC-3 or other appropriate

termination statements, in form and substance satisfactory to Lender, releasing

all liens of the existing lenders upon any of the personal property of

Borrower, (b) cancellations and releases, in form and substance satisfactory to

Lender, releasing all liens of the existing lenders upon any of the Real

Estate, and (c) any other releases, terminations or other documents reasonably

required by Lender to evidence the payoff of Indebtedness owed to existing

lenders;

 

(x)            certified

copies of the articles of organization or 

other charter documents of Borrower and each Subsidiary, together with certificates

of good standing or existence, as may be available from the Secretary of State

of the jurisdiction of organization of Borrower and each Subsidiary and each

other jurisdiction where Borrower or any Subsidiary is required to be qualified

to do business as a foreign entity;

 

(xi)           a

certificate, substantially in the form of Exhibit 3.01(d)(xi), dated as

of the Closing Date and signed by an appropriate Responsible Officer, attaching

and certifying copies of the operating agreement, bylaws or similar documents,

and appropriate resolutions authorizing the execution, delivery and performance

of the Loan Documents and certifying the name, title and the signature of each

officer executing the Loan Documents.

 

(xii)          a

favorable written opinion of counsel to Borrower, addressed to Lender,

substantially in the form of Exhibit 3.01(d)(xii), dated as of the

Closing Date and covering such matters relating to Borrower, the Loan Documents

and the transactions contemplated therein as Lender shall reasonably request;

 

(xiii)         a

certificate, substantially in the form of Exhibit 3.01(d)(xiii), dated

the Closing Date and signed by an appropriate Responsible Officer, confirming

compliance with the conditions set forth in paragraphs (a), (b) and (c) of Section

3.02;

 

(xiv)        duly

executed Draw Requests, if applicable;

 

29

 

(xv)         a

report setting forth the sources and uses of funds to be expended in connection

with the Project;

 

(xvi)        certified

copies of all material consents, approvals, authorizations, registrations and

filings and orders required or advisable to be made or obtained under any

requirement of law or by any material contractual obligation of Borrower, in

connection with the Project or operation of Borrower’s business, including the

production of ethanol and by-products thereof, and such consents, approvals,

authorizations, registrations, filings and orders shall be in full force and

effect and all applicable waiting periods shall have expired;

 

(xvii)       certificates

of insurance, in form, substance and detail acceptable to Lender (and in any

event as required pursuant to the Mortgage), describing the types and amounts

of insurance (property and liability) carried by Borrower, in each case naming

Lender as loss payee or additional insured, as the case may be, together with a

lender’s loss payable endorsement in form and substance satisfactory to Lender;

 

(xviii)      copies

of Borrower’s audited financial statements as of its most recent fiscal year

end and internally prepared financial statements as of March 31, 2002, each in

form and substance satisfactory to Lender; and

 

(xix)         a

certificate, substantially in the form of Exhibit 3.01(d)(xix), dated

the Closing Date and signed by an appropriate Responsible Officer, confirming the

solvency of Borrower before and after giving effect to all transactions

contemplated by the Loan Documents, together with (A) the Projections, and (B)

a pro forma balance sheet for Borrower as of the Closing Date.

 

(e)           Borrower

shall have entered into Off-Take Contracts, satisfactory to Lender, sufficient

to sell or dispose of a majority of the products and by-products to be produced

by Borrower (as contemplated following Construction Completion).

 

Section

3.02         Each Loan.   The obligation of Lender to make a Loan on

the occasion of any Borrowing is subject to the satisfaction of the following

conditions:

 

(a)           Borrower

shall have delivered Phase I Environmental Site Assessment Reports, consistent

with American Society of Testing and Materials (ASTM) Standard E 1527-94, and

applicable state requirements, on all of the Real Estate, dated as of a date

acceptable to Lender, prepared by environmental engineers satisfactory to

Lender, all in form and substance satisfactory to Lender, and Lender shall have

further received such environmental review and audit reports, including Phase

II reports, with respect to the Real Estate of Borrower as Lender shall have

requested, and Lender shall be satisfied with the contents of all such

environmental reports.  Lender shall

have received letters executed by the environmental firms preparing such

environmental reports, in form and substance satisfactory to Lender,

authorizing Lender to rely on such reports;

 

30

 

(b)           Borrower shall have delivered the

duly executed Disbursing Agreement between Borrower, Lender and an escrow agent

acceptable to Lender;

 

(c)           at

the time of and immediately after giving effect to such Borrowing, no Default

or Event of Default shall exist; and

 

(d)           all

representations and warranties of Borrower set forth in the Loan Documents

shall be true and correct in all material respects on and as of the date of

such Borrowing before and after giving effect thereto;

 

(e)           since

the date of the most recent financial statements of Borrower described in Section 5.01(a),

there shall have been no change which has had or could reasonably be expected

to result in a Material Adverse Effect;

 

(f)            with

respect to a Revolving Borrowing, Lender shall have received the Revolving Credit

Note, duly executed and payable to the order of Lender in the amount of the

Revolving Conversion Amount; and

 

(g)           Lender

shall have received such other documents, certificates, information or legal

opinions as Lender may reasonably request, all in form and substance reasonably

satisfactory to Lender.

 

Each Borrowing shall be deemed to constitute a representation and

warranty by Borrower on the date thereof as to the satisfaction of the matters

specified in paragraphs (a), (b) and (c) of this Section 3.02.

 

Section

3.03         Each Construction Loan.  In addition to the conditions set forth in Sections

3.01 and 3.02, the obligation of Lender to make a Construction and

Term Loan, (a) on the occasion of any Construction Borrowing, is subject to the

satisfaction of the each of the conditions set forth in the Disbursing

Agreement, which is hereby incorporated herein by reference,

and (b) on the occasion of the first Construction Borrowing, is conditioned

upon (i) Borrower’s securing Utility Contracts necessary or important for

operation of Borrower’s plant, equipment, offices, as determined by Lender in

its sole discretion, and (ii) Lender’s receipt of evidence acceptable to

Lender, including presentation of lien waivers and other receipts of payment

acceptable to Lender and the Title Company, that Borrower has theretofore paid

Construction Costs in an amount not less than the sum of (x) the aggregate

amount of estimated Construction Costs stated in the Sworn Construction Cost

Statement, minus (y) the amount of the Construction and Term Loan Commitment.  Each Construction Draw Request shall be

deemed to constitute a representation and warranty by Borrower on the date

thereof as to the satisfaction of the conditions set forth in the Disbursing

Agreement.

 

Section

3.04         Delivery of Documents.  All of the Loan Documents, certificates,

legal opinions and other documents and papers referred to in this Article

III shall be delivered to

 

31

 

Lender unless otherwise specified, and shall

be in form, substance and detail satisfactory in all respects to Lender.

 

ARTICLE IV.

 

REPRESENTATIONS

AND WARRANTIES

 

Borrower represents and warrants to Lender, as of the Closing Date and

the date of each Borrowing as follows:

 

Section

4.01         Existence; Power.

Borrower and each Subsidiary (i) are duly organized, validly existing and in

good standing as a corporation, partnership or limited liability company, as

the case may be, in each case under the laws of the jurisdiction of its

organization, (ii) have all requisite power and authority to carry on their

businesses as now conducted, and (iii) have duly qualified to do business, and

are in good standing, in each jurisdiction where such qualification is

required, except where a failure to be so qualified could not reasonably be

expected to result in a Material Adverse Effect.

 

Section

4.02         Organizational Power; Authorization.  The execution, delivery and performance by

Borrower of the Loan Documents to which it is a party are within its

organizational powers and have been duly authorized by all necessary

organizational, and if required, member action.  This Agreement has been duly executed and delivered by Borrower,

and  constitutes, and each other

Loan Document to which Borrower is a party, when executed and delivered by

Borrower, will constitute, valid and binding obligations of Borrower,

enforceable against it in accordance with their re­spective terms, except as

may be limited by applicable bankruptcy, insolvency, reorganization,

moratorium, or similar laws affecting the enforcement of creditors’ rights

generally and by general principles of equity.

 

Section

4.03         Governmental Approvals; No Conflicts.  The execution, delivery and performance by

Borrower of this Agreement, (a) does not require any consent or approval of,

registration or filing with, or any action by, any Governmental Authority,

except those as have been obtained or made and are in full force and effect or

where the failure to do so, individually or in the aggregate, could not

reasonably be expected to result in a Material Adverse Effect, (b) will

not violate any applicable law or regulation or the charter, by-laws or other

organizational documents of Borrower or any of its Subsidiaries or any order of

any Governmental Authority, (c) will not violate or result in a default under

any indenture, material agreement or other material instrument binding on

Borrower or any of its Subsidiaries or any of its assets or give rise to a

right thereunder to require any payment to be made by Borrower or any of its

Subsidiaries and (d) will not result in the creation or imposition of any Lien

on any asset of Borrower or any of its Subsidiaries, except Liens (if any)

created under the Loan Documents.

 

Section

4.04         Financial Statements.

Borrower has furnished to Lender copies of Borrower’s (a) audited financial

statements (consistent with the requirements of Section 5.01(a)) as of

its most recent fiscal year end and (b) internally prepared financial

statements (consistent with the requirements of Section 5.01(b)) as of

the last day of the most recent quarter. 

Such 

 

32

 

financial statements fairly present the

financial condition of Borrower and its Subsidiaries as of such dates and the

results of operations for such periods in conformity with GAAP consistently

applied, subject to year end audit adjustments and the absence of

footnotes.  Since the date of such

financial statements, there have been no changes with respect to Borrower and

its Subsidiaries which have had or could  reasonably

be expected to have, singly or in the aggregate, a material adverse effect on

the business, results of operations, financial condition, assets, liabilities

or prospects of Borrower and its Subsidiaries taken as a whole.

 

Section

4.05         Litigation and Environmental Matters.

 

(a)           No

litigation, investigation or proceeding of or before any arbitra­tors or

Governmental Authorities is pending against or, to the knowledge of Borrower,

threatened against or affecting Borrower or any of its Subsidiaries (i) as to

which there is a reasonable possibility of an adverse determination that could

reasonably be expected to have, either individually or in the aggregate, a

Material Adverse Effect or (ii) which in any manner draws into question the validity

or enforceability of this Agreement or any other Loan Document.

 

(b)           Except

for the matters set forth on Schedule 4.05, neither Borrower nor any

Subsidiary (i) has failed to comply with any Environmental Law or to obtain,

maintain or comply with any permit, license or other approval required under

any Environmental Law, including without limitation, all permits, licenses and

approvals required by the state of Kansas, (ii) has become subject to any

Environmental Liability, (iii) has received notice of any claim with respect to

any Environmental Liability or (iv) knows of any basis for any Environmental

Liability.

 

Section

4.06         Compliance with Laws and Agreements.  Borrower and each Subsidiary is in

compliance with (a) all applicable laws, rules, regulations and orders of any

Governmental Authority, and (b) all indentures, agreements or other instruments

(including but not limited to the Material Contracts) binding upon it or its

properties, except where non-compliance, either singly or in the aggregate,

could not reasonably be expected to result in a Material Adverse Effect.  Borrower has obtained all Permits necessary

or appropriate related to the present stage of construction of the Project.

 

Section

4.07         Investment Company Act, Etc.  Neither Borrower nor any Subsidiary is (a)

an “investment company”, as defined in, or subject to regulation under, the

Investment Company Act of 1940, as amended, (b) a “holding company” as defined

in, or subject to regulation under, the Public Utility Holding Company Act of

1935, as amended, or (c) otherwise subject to any other regulatory scheme

limiting its ability to incur debt.

 

Section

4.08         Taxes. Borrower and

its Subsidiaries and each other Person for whose taxes Borrower or any

Subsidiary could become liable have timely filed or caused to be filed all

Federal income tax returns and all other material tax returns that are required

to be filed by any of them, and have paid all taxes shown to be due and payable

(or with respect to real estate taxes, have paid all taxes prior to the time

the same become delinquent) on such returns or on any assessments made against

it or its property and all other taxes, fees or other charges imposed on 

 

33

 

it or any of its property by any Governmental

Authority, except (i) to the extent the failure to do so would not have a

Material Adverse Effect or (ii)  where

the same are currently being contested in good faith by appropriate proceedings

and for which Borrower or such Subsidiary, as the case may be, has set aside on

its books adequate reserves.  The

charges, accruals and reserves on the books of Borrower and its Subsidiaries in

respect of such taxes are adequate, and no tax liabilities that could be

materially in excess of the amount so provided are anticipated.

 

Section

4.09         Margin Regulations.  None of the pro­ceeds of any of the Loans

will be used, directly or indirectly, for “purchasing” or “carrying” any

“margin stock” with the respective meanings of each of such terms under

Regulation U of the Board of Governors of the Federal Reserve System as now and

from time to time hereafter in effect, or for any purpose that violates the

provisions of Regulation U, T or X of the Board of Governors of the Federal

Reserve System.

 

Section

4.10         ERISA.  No ERISA Event has occurred or is reasonably

expected to occur that, when taken together with all other such ERISA Events

for which liability is reasonably expected to occur, could reasonably be

expected to result in a Material Adverse Effect.  The present value of all accumulated  benefit obligations under each Plan (based on the assumptions

used for purposes of Statement of Financial Standards No. 87) did not, as of

the date of the most recent financial statements reflecting such amounts,

exceed the fair market value of the assets of such Plan, and the present value

of all accumulated benefit obligations of all underfunded Plans (based on the

assumptions used for purposes of Statement of Financial Standards No. 87) did

not, as of the date of the most recent financial statements reflecting such

amounts, exceed by more than $50,000 the fair market value of the assets of all

such underfunded Plans.

 

Section

4.11         Ownership of Property.

 

(a)           Borrower and each Subsidiary have

good title to, or valid leasehold interests in, all of their real and personal

property material to the operation of their respective businesses.

 

(b)           Borrower

and each Subsidiary own, or are licensed, or otherwise have the right, to use,

all patents, trademarks, service marks, tradenames, copyrights and other

intellectual property material to their respective businesses and the use

thereof by Borrower and any Subsidiary does not infringe on the rights of any

other Person, except for any such infringements that, individually or in the aggregate,

would not have a Material Adverse Effect.

 

Section

4.12         Disclosure.  Borrower has disclosed to Lender all

agreements, instruments, and corporate or other restrictions to which Borrower

or any of Subsidiary is subject, and all other matters known to any of them,

that, individually or in the aggregate, could reasonably be expected to result

in a Material Adverse Effect.  None of

the reports, financial statements, certificates or other information furnished

by or on behalf of Borrower to Lender in connection with the negotiation of

this Agreement or any other Loan Document or delivered hereunder or thereunder

(as modified or supplemented by any other information so furnished) contains

any material misstatement of fact or omits to state any material fact necessary

to make 

 

34

 

the statements therein, taken as a whole, in

light of the circumstances under which they were made, not misleading.

 

Section

4.13         Labor Relations.  There are no strikes, lockouts or other

material labor disputes or grievances against Borrower or any Subsidiary, or,

to the knowledge of Borrower, threatened against or affecting Borrower or any

Subsidiary, and no significant unfair labor practice, charges or grievances are

pending against Borrower or any Subsidiary, or to the knowledge of Borrower,

threatened against any of them before any Governmental Authority.  All payments due from Borrower or any

Subsidiary pursuant to the provisions of any collective bargaining agreement

have been paid or accrued as a liability on the books of Borrower or any such

Subsidiary, except where the failure to do so could not reasonably be expected

to have a Material Adverse Effect.

 

Section

4.14         Subsidiaries.  As of the Closing Date, Borrower has no

Subsidiaries and as of any subsequent date, Borrower has no Subsidiaries other

than those for which Borrower has complied with the requirements of Section

5.10.

 

Section

4.15         Construction.  The exterior lines of the

Improvements are, and at all times will be, within the boundary lines of the

Real Estate, and Borrower has examined and is familiar with all applicable

covenants, conditions, restrictions and reservations and with all applicable

requirements of all Governmental Authorities, including without limitation,

building codes and zoning, environmental, hazardous substance, energy and

pollution control laws, ordinances and regulations affecting the Project.

 

Section

4.16         Projections.  The Projections fairly present

Borrower’s reasonable forecast of the most probable results of operations and

changes in cash flows for the periods covered thereby, based on the assumptions

set forth therein, which assumptions are reasonable based on historical

experience and presently known facts. Since the date of such Projections, there

have been no changes with respect to Borrower or its Subsidiaries which could

reasonably be expected to result in, singly or in the aggregate, a material

discrepancy between such Projections and Borrower’s actual results for the

periods stated.

 

Section

4.17         Material Contracts.  There are no Material Contracts other than

the License Agreement, the Process Guarantee, and those agreements and

contracts disclosed to Lender pursuant to this Section 4.17.

 

(a)           Management Contracts.  There are no agreements or contracts which

are material to the management of Borrower’s or any Subsidiary’s business other

than those listed on Schedule 4.17(a).

 

(b)           Supply Contracts.  There are no agreements or contracts which

are material to the provision or supply of inputs related to the operation of

Borrower’s or any Subsidiary’s business other than those listed on Schedule

4.17(b).

 

35

 

(c)           Off-Take Contracts.  There are no agreements or contracts which

are material to the sale or disposal of products or by-products produced by

Borrower or any Subsidiary other than those listed on Schedule 4.17(c).

 

(d)           Transportation Contracts.  There are no agreements or contracts related

to the provision of transportation or shipping services which are material to

the operation of Borrower’s or any Subsidiary’s business other than those

listed on Schedule 4.17(d).

 

(e)           Utility Contracts.  There are no agreements or contracts related

to the provision of water, electricity, fuel oil, coal or other energy

resources which are material to the operation of Borrower’s or any Subsidiary’s

business other than those listed on Schedule 4.17(e).

 

Section

4.18         Permits.  Each Permit is listed on Schedule 4.18

including each Permit in effect presently and those Permits to be obtained as

necessary or appropriate for operation of Borrower’s ethanol plant at maximum

capacity in accordance with the Construction Plans.

 

ARTICLE

V.

 

AFFIRMATIVE

COVENANTS

 

Borrower covenants and agrees that so long as Lender has a Commitment

hereunder, or the principal of and interest on any Loan or any fee remains

unpaid:

 

Section

5.01         Financial Statements and Other

Information.  The

Borrower will deliver to Lender:

 

(a)           as

soon as available and in any event (i) within 120 days after the end of each

fiscal year of Borrower, a copy of the annual audited report for such fiscal

year for Borrower and its Subsidiaries, containing a combined and combining

balance sheet of Borrower and its Subsidiaries as of the end of such fiscal year

and the related combined and combining statements of income, owners’ equity and

cash flows (together with all footnotes thereto) of Borrower and its

Subsidiaries for such fiscal year, (ii) setting forth in comparative form the

figures for the previous fiscal year, all in reasonable detail and reported on

by Eide Bailly, LLC, Bloomington, Minnesota or other independent public

accountants acceptable to Lender (without a “going concern” or like

qualification, exception or explanation 

and without any qualification or exception as to scope of such audit) to

the effect that such financial statements present fairly in all material

respects the financial condition and the results of operations of Borrower and

its Subsidiaries, for such fiscal year on a combined basis in accordance with

GAAP and that the exami­nation by such accountants in connection with such

combined financial statements has been made in accordance with GAAP;

 

(b)           as

soon as available and in any event within 30 days after the end of each

calendar quarter, an unaudited combined balance sheet of Borrower and its

Subsidiaries as of the end of such calendar quarter and the related unaudited

combined statements of income, stockholder’s equity and cash flow of Borrower

and its Subsidiaries for such calendar quarter 

 

36

 

and the then elapsed portion of such fiscal

year, setting forth in each case in comparative form the figures for the

corresponding quarter and the corresponding portion of Borrower’s previous

fiscal year, all certified by an appropriate Responsible Officer of Borrower as

presenting fairly in all material respects the financial condition and results

of operations of Borrower and its Subsidiaries on a combined basis in

accordance with GAAP, subject to normal year-end audit adjustments and the

absence of footnotes;

 

(c)           concurrently

with the delivery of the financial statements referred to in clauses (a) and

(b) above, a certificate of a Responsible Officer, (i) certifying as to

whether there exists a Default or Event of De­fault on the date of such

certificate, and if a Default or an Event of Default then exists, specifying

the details thereof and the action which Borrower has taken or proposes to take

with respect thereto, (ii)  setting forth in reasonable detail

calculations demonstrating compliance with Article VI, (iii) stating

whether any change in GAAP or the application thereof has occurred since the

date of Borrower’s audited financial statements referred to in Section 4.04

and, if any change has occurred, specifying the effect  of such change on the financial statements

accompanying such certificate, and (iv) attaching a production report,

certified as to accuracy, which sets forth pertinent information in respect of

the amount of ethanol produced and other information as Lender may specify from

time to time;

 

(d)           concurrently

with the delivery of the financial statements referred to in clause (a)

above, a certificate of the accounting firm that reported on such financial

statements stating whether they obtained any knowledge during the course of

their examination of such financial statements of any Default or Event of

Default (which certificate may be limited to the extent required by accounting

rules or guidelines);

 

(e)           promptly

upon Borrower obtaining notice or knowledge of any changes to the Sworn

Construction Cost Statement, revised sworn statements of estimated costs of the

Project, showing changes in or variations from the original Sworn Construction

Cost Statement in excess of $1,000,000 in the aggregate along with copies of

all material changes or modifications in the Construction Plans, contracts or

subcontracts for the Project prior to incorporation of any such change or

modification into the Project;

 

(f)            as

soon as Borrower has notice or knowledge thereof, a revised construction

schedule if and when any target date set forth therein has been delayed by 10

consecutive days or more, or when the aggregate of all such delays equals 30 or

more days;

 

(g)           promptly

after the same become available, copies of all periodic and other reports, and

other materials distributed by Borrower to its members generally, or to any

Governmental Authority or national securities exchange, as applicable;

 

(h)           concurrently

with the delivery of the financial statements referred to in clause (a)

above, a copy of Borrower’s pro forma

budget and business plan for the subsequent fiscal year for Borrower and its

Subsidiaries, containing a combined and combining pro forma balance sheet of Borrower and its Subsidiaries as

of the end of such subsequent fiscal year and the related pro forma combined and combining

statements of income, owners’ equity and cash 

 

37

 

flows (together with all footnotes thereto)

of Borrower and its Subsidiaries for such subsequent fiscal year; and

 

(i)            promptly

following any request therefor, such other information regarding the results of

operations, business affairs and 

financial condition of Borrower or any Subsidiary as Lender may reasonably

request.

 

Section

5.02         Notices of Material Events.

Borrower will furnish to Lender prompt written notice of the following:

 

(a)           the

occurrence of any Default or Event of Default;

 

(b)           the

filing or commencement of any action, suit or proceeding by or before any

arbitrator or Governmental Authority against or, to the knowledge of Borrower,

affecting Borrower or any Subsidiary which, if adversely determined, could

reasonably be expected to result in a Material Adverse Effect;

 

(c)           the

occurrence of any event or any other development by which Borrower or any

Subsidiary (i) fails to comply with any Environmental Law or to obtain,

maintain or comply with any permit, license or other approval  required under any Environmental Law, (ii)

becomes subject to any Environmental Liability, (iii) receives notice of any

claim with respect to any Environmental Liability, or (iv) becomes aware of any

basis for any Environmental Liability and in each of the preceding clauses,

which individually or in the aggregate, could reasonably be expected to result

in a Material Adverse Effect;

 

(d)           the

occurrence of any ERISA Event that alone, or together with any other ERISA

Events that have occurred, could reasonably be expected to result in liability

of Borrower and its Subsidiaries in an aggregate amount exceeding $100,000; and

 

(e)           any

other development that results in, or could reasonably be expected to result

in, a Material Adverse Effect.

 

Each notice delivered under this Section

shall be accompanied by a written statement of a Responsible Officer setting

forth the details of the event or development requiring such notice and any

action taken or proposed to be taken with respect thereto.

 

Section

5.03         Existence; Conduct of Business.  Borrower will, and will cause each Subsidiary

to, do or cause to be done all things necessary to preserve, renew and maintain

in full force and effect its legal existence and its respective rights,

licenses, permits, privileges, fran­chises, patents, copyrights, trademarks and

trade names material to the conduct of its business and will continue to engage

in the same business as presently conducted or such other businesses that are

reasonably related thereto.

 

Section

5.04         Compliance with Laws, Etc.  Borrower will, and will cause each

Subsidiary to, comply with all laws, rules, regulations and requirements of any

Governmental 

 

38

 

Authority applicable to its properties,

except where the failure to do so, either individually or in the aggregate,

could not reasonably be expected to result in a Material Adverse Effect.  Borrower will cause all exterior lines of

the Improvements to be, at all times, within the boundary lines of the Real

Estate, and the Project and Improvements will in all respects conform to and

comply with all applicable covenants, conditions, restrictions and

reservations, and with all requirements of Governmental Authorities, including,

without limitation, all building codes and zoning, environmental, hazardous

substance, energy and pollution control laws, ordinances and regulations

affecting the Project and the Improvements.

 

Section

5.05         Payment of Obligations.  Borrower will, and will cause each

Subsidiary to, pay and discharge at or before maturity, all of its obligations

and liabilities (including without limitation all tax liabilities and claims

that could result in a statutory Lien) before the same shall become delinquent

or in default, except where (a) the validity or amount thereof is being

contested in good faith by appropriate proceedings, (b) Borrower or such

Subsidiary has set aside on its books adequate reserves with respect thereto in

accordance with GAAP and (c) the failure to make payment pending such contest

could not reasonably be expected to result in a Material Adverse Effect.

 

Section

5.06         Books and Records.  Borrower will, and will cause each

Subsidiary to, keep proper  books

of record and account in which full, true and correct entries shall be made of

all dealings and transactions in relation to its business and activities to the

extent necessary to prepare the combined financial statements of Borrower in

conformity with GAAP.

 

Section

5.07         Visitation, Inspection, Audit, Etc.

 

(a)           Borrower

will, and will cause each Subsidiary to, permit any representative of Lender to

visit and inspect its properties (including, without limitation, the Real

Estate and Improvements), to conduct audits of the Collateral (including

without limitation all Accounts and Inventory and all records relating

thereto), to examine its books and records and to make copies and take extracts

therefrom, to review all change orders relating to the Project, to inspect all

work and materials relating to the Project for which payment is required, to

review all Notices of Borrowing, to submit progress inspection reports relating

to the Project, and to discuss its affairs, finances and accounts with any of

its officers and with its independent certified public accountants, all at such

reasonable times and as often as Lender, may reasonably request after reasonable

prior notice to Borrower; provided, if a Default or an Event of Default

has occurred and is continuing, no prior notice shall be required.  All reasonable expenses incurred by Lender

in connection with any such visit, inspection, audit, examination and

discussions shall be borne by Borrower.

 

(b)           Borrower

will, and will cause each Subsidiary to, deliver to Lender such appraisals of

the Real Estate and other fixed assets of Borrower as Lender may reasonably

request at any time and from time to time, such appraisals to be conducted by

an appraiser, and in form and substance, reasonably satisfactory to Lender, in

each case conducted at the expense of Borrower if Lender requests such

appraisal in connection with a request for an accommodation, waiver or other

credit action by Borrower.

 

39

 

(c)           Notwithstanding

the foregoing, (i) neither Borrower nor any other Person shall have the right

to rely on the reports relating to the Project generated by Lender for any purposes

whatsoever, (ii) Borrower shall be responsible for making its own inspections

of the Project during the course of construction and shall satisfy itself that

the work performed and the materials furnished shall conform with its contracts

and (iii) by making Construction and Term Loans after inspections of the

Project by Lender, Lender shall not be deemed to have waived any Event of

Default, or the right to require the correction of construction defects or to

have acknowledged that the construction (as to quality or value of work

performed or material furnished) conforms with the Construction Plans.

 

Section

5.08         Maintenance of Properties; Insurance.  Borrower will, and will cause each

Subsidiary to, (a) keep and maintain all property material to the conduct of

its business in good working order and condition, ordinary wear and tear except

where the failure to do so, either individually or in the aggregate, could not

reasonably be expected to result in a Material Adverse Effect and (b) maintain

with financially sound and reputable insurance companies, insurance with

respect to its properties and business, and the properties and business of its

Subsidiaries, against loss or damage of the kinds customarily insured against

by companies in the same or similar businesses operating in the same or similar

locations.

 

Section

5.09         Use of Proceeds.

Borrower will use the proceeds of all Construction and Term Loans to Pay the

Construction Costs and to finance the Project. 

No part of the proceeds of any Loan will be used, whether directly or

indirectly, for any purpose that would violate Regulation T, U or X of the

Board. 

No part of the proceeds of any Loan will be used, directly or

indirectly, to fund start-up working capital until such time as the Project is

at least 80% complete.

 

Section

5.10         Subsidiaries.  If any Subsidiary is acquired or formed

after the Closing Date, Borrower will, within ten (10) business days after such

Subsidiary is acquired or formed, notify Lender and will cause such Subsidiary

to execute a guarantee of the Obligations, a joinder to the Security Agreement,

and a joinder to such other Security Documents as Lender shall require, each in

form and substance satisfactory to Lender, and will cause such Subsidiary to

deliver simultaneously therewith similar documents applicable to such

Subsidiary required under Section 3.01 as requested by Lender.

 

Section

5.11         Assignment of Material Contracts.  Borrower shall notify Lender of any Material

Contract promptly upon entering into the same. 

Borrower agrees to promptly execute and deliver to Lender such

Collateral Assignments and take such other actions as Lender may reasonably

request to perfect Lender’s security interest in Borrower’s rights under such

Material Contracts.  Borrower authorizes

Lender to file such Uniform Commercial Code financing statements (and

amendments to the same) and continuation statements as Lender may deem

necessary or appropriate from time to time to perfect Lender’s security

interest in such Material Contracts.

 

Section

5.12         Food Security Act Compliance.  If Borrower acquires any

Collateral which may have constituted Farm Products in the possession of the

seller or supplier thereof, 

 

40

 

Borrower shall, at its own expense, use its

best efforts to take such steps to insure that all Liens (except the Liens

granted pursuant hereto) in such acquired Collateral are terminated or

released, including, without limitation, in the case of such Farm Products

produced in a state which has established a Central Filing System (as defined

in the Food Security Act), registering with the Secretary of State of such

state (or such other party or office designated by such state) and otherwise

take such reasonably actions necessary, as prescribed by the Food Security Act,

to purchase Farm Products free of Liens (except the Liens granted pursuant

hereto); provided, that Borrower may contest and need not obtain the

release or termination of any Lien asserted by any creditor  of any seller of such Farm Products, so long

as it shall be contesting the same by proper proceedings and maintain

appropriate accruals and reserves therefor in accordance with the GAAP.  Upon Lender’s request, Borrower agrees to

forward to Lender promptly after receipt copies of all notices of Liens and

master lists of Effective Financing Statements delivered to Borrower pursuant

to the Food Security Act, which notices and/or lists pertain to any of the

Collateral.  Upon Lender’s request, Borrower

agrees to provide Lender with the names of Persons who supply Borrower with

such Farm Products and such other information as Lender may reasonably request

with respect to such Persons.

 

Section

5.13         Shortfall.  Whenever Borrower determines, or receives

written notice from Lender, that the sum of the principal amount not yet

advanced under the Construction and Term Loan Commitment to pay Construction

Costs are insufficient to complete the Project, Borrower shall, within three

days, irrevocably deposit with Lender immediately available funds not less than

such insufficiency.

 

Section

5.14         Non-Liability of Lender.  Borrower acknowledges and agrees that Lender

assumes no liability or responsibility for the sufficiency of the Construction

and Term Loans to complete the Project, for the protection, inspection or

completion of the Project, for the adequacy or accuracy of the Sworn

Construction Cost Statement, for any representations made by Borrower or for

any action of Borrower to be performed in the construction of the Project.

 

ARTICLE

VI.

 

FINANCIAL

COVENANTS

 

Borrower covenants and agrees that so long as Lender has a Commitment

hereunder, or the principal or interest on any Loan or any fee remains unpaid:

 

Section

6.01         Fixed Charge Coverage Ratio.  On December 31, 2005, and at each fiscal

year end thereafter, Borrower will maintain a Fixed Charge Coverage  Ratio of not less than 1.15:1.0.

 

Section

6.02         Leverage Ratio.   On December 31, 2005, and at all times

thereafter, Borrower will maintain ratio of (i) net worth to (ii) total assets

of not less than 0.5:1.0.

 

41

 

Section

6.03         Capital Expenditures.  After the occurrence of

Construction Completion, Borrower will not make Capital Expenditures in excess

of $400,000 during any fiscal year period following Construction Completion

without Lender’s prior written approval.

 

Section

6.04         Current Ratio and Working Capital.  Borrower will maintain, on

December 31, 2004 and at all times thereafter, a ratio of current assets to

current liabilities of not less than 1.2:1.0 and working capital of at least

(x) $2,500,000 on December 31, 2004, and at all times thereafter, and (y)

$3,500,000 on December 31, 2005, and at all times thereafter.

 

Section

6.05         Minimum Net Worth.  Borrower will maintain, (i) on

December 31, 2004 and at all times thereafter, a minimum Net Worth of

$19,000,000;  (ii) on December 31, 2005

and at all times thereafter, a minimum Net Worth of $23,000,000; and  (iii) on December 31, 2006, and at all times

thereafter, a minimum Net Worth of $25,000,000.

 

Compliance with the financial covenants set forth in this Article VI

shall be determined based on financial statements dated as of the close of

business on the last day of the immediately preceding quarter for the related

period.

 

ARTICLE

VII.

 

NEGATIVE

COVENANTS

 

Borrower covenants and agrees that so long as Lender has a Commitment

hereunder or the principal of or interest on any Loan or any fee remains

unpaid:

 

Section

7.01         Indebtedness.

Borrower will not, and will not permit any of its Subsidiaries to, create,

incur, assume or suffer to exist any Indebtedness, except:

 

(a)           Indebtedness

created pursuant to the Loan Documents;

 

(b)           Indebtedness

acceptable to Lender in its sole discretion and existing on the date hereof and

set forth on Schedule 7.01 and extensions, renewals and replacements of

any such Indebtedness that do not increase the outstanding principal amount

thereof (immediately prior to giving effect to such extension, renewal or

replacement) or shorten the maturity or the weighted average life thereof;

 

(c)           Indebtedness

of Borrower incurred to finance the acquisition, construction or improvement of

any fixed or capital assets, including Capital Lease Obligations and any

Indebtedness assumed in connection with the acquisition of any such assets

secured by a Lien on any such assets prior to the acquisition thereof; provided,

that such Indebtedness is incurred prior to or within 90 days after such

acquisition or the completion of such construction or improvements or

extensions, renewals, and replacements of any such Indebtedness that do not

increase the outstanding principal amount thereof (immediately prior to giving

effect to such extension, renewal or replacement) or shorten the maturity or

the weighted average life thereof;

 

42

 

provided further,

that the aggregate principal amount of such Indebtedness incurred by Borrower

in any calendar year does not exceed $200,000.

 

Section

7.02         Negative Pledge.

Borrower will not, and will not permit any of its Subsidiaries to, create,

incur, assume or suffer to exist any Lien on any of its assets or property now

owned or hereafter acquired, except:

 

(a)           Liens

created in favor of Lender pursuant to the Loan Documents;

 

(b)           Permitted

Encumbrances;

 

(c)           Liens

on any property or asset of Borrower existing on the Closing Date set forth on Schedule

7.02; provided, that such Lien shall not apply to any other property

or asset of Borrower;

 

(d)           purchase

money Liens upon or in any fixed or capital assets to secure the purchase price

or the cost of construction or improvement of such fixed or capital assets or

to secure Indebtedness incurred solely for the purpose of financing the

acquisition, construction or improvement of such fixed or capital assets

(including Liens securing  any

Capital Lease Obligations); provided, that (i) such Lien secures

Indebtedness permitted by Section 7.01(c), (ii) such Lien

attaches to such asset concurrently or within 90 days after the acquisition,

improvement or completion of the construction thereof; (iii) such Lien does not

extend to any other asset; and (iv) the Indebtedness secured thereby does not

exceed the cost of acquiring, constructing or improving such fixed or capital

assets;

 

(e)           any

Lien (i) existing on any asset of any Person at the time such Person becomes a

Subsidiary, (ii) existing on any asset of any Person at the time such Person is

merged with or into Borrower or any Subsidiary or (iii) existing on any asset

prior to the acquisition thereof by Borrower or any Subsidiary; provided,

that any such Lien was not created in the contemplation of any of the foregoing

and any such Lien secures only those obligations which it secures on the date

that such Person becomes a Subsidiary or the date of such merger or the date of

such acquisition; and

 

(f)            extensions,

renewals, or replacements of any Lien referred to in paragraphs (a) through (d)

of this Section; provided, that the principal amount of the

Indebtedness  secured thereby is not

increased and that any such extension, renewal or replacement is limited to the

assets originally encumbered thereby.

 

Section

7.03         Fundamental Changes. Borrower

will not, and will not permit any Subsidiary to, engage in any business other

than businesses of the type conducted by Borrower and its Subsidiaries on the

date hereof and businesses reasonably related thereto.

 

Section

7.04         Investments, Loans, Etc.

Borrower will not, and will not permit any Subsidiary to, purchase, hold or

acquire (including pursuant to any merger with any Person that was not a wholly

owned Subsidiary prior to such merger) any common stock, evidence of 

 

43

 

indebtedness or other securities (including

any option, warrant, or other right to acquire any of the foregoing) of, make

or permit to exist any loans or advances to, Guarantee any obligations of, or

make or permit to exist any investment or any other interest in, any other

Person (all of the foregoing being collectively called “Investments”), or

purchase or otherwise acquire (in one transaction or a series of transactions)

any assets of any other Person that constitute a business unit, or create or

form any Subsidiary, except:

 

(a)           Investments

(other than Permitted Investments) existing on the date hereof and set forth on

Schedule 7.04;

 

(b)           Permitted

Investments in which Lender maintains a first priority, perfected security

interest therein;

 

(c)           loans

or advances to employees, officers or directors of Borrower or any Subsidiary

in the ordinary course of business for travel, relocation and related expenses;

provided, however, that the aggregate amount of all such loans and

advances does not exceed $100,000 at any time;

 

(d)           Investments

in other business organizations whose primary business is the production of

ethanol and byproducts related thereto and in which Lender maintains a first

priority, perfected security interest in such Investments; provided, at the time any such Investment

is made, the aggregate book value of the sum of all such Investments may not,

without the prior written consent of Lender, exceed the lesser of (i) five

percent (5.0%) of the Net Worth of Borrower or (ii) $1,000,000; and

 

(e)           other

Investments which in the aggregate do not exceed $100,000 in any fiscal year of

Borrower.

 

Section

7.05         Restricted Payments. Borrower  will not,and will not permit any Subsidiary to,  declare or make, or agree to pay or make, directly or

indirectly, any dividend or distribution on any class of its membership

interests, or make any payment on account of, or set apart assets for a sinking

or other analogous fund for, the purchase, redemption, retirement, defeasance

or other acquisition of, any membership interest or Indebtedness subordinated

to the Obligations of Borrower or any options, warrants, or other rights to

purchase such common stock or such Indebtedness, whether now or hereafter

outstanding (each, a “Restricted

Payment”), except for 

(i) dividends or distributions payable by Borrower solely in units of

any class of its membership interests, (ii) Restricted Payments made by any

Subsidiary to Borrower and (iii) dividends or distributions which do not

exceed, in any rolling 12 month period, 40% of the amount remaining after

subtracting payments due and payable in respect of the Loans for such period

from Net Income; and provided further, and that no Restricted Payment

shall be paid by Borrower if an Event of Default exists or would result from

the payment of such Restricted Payment.

 

Section

7.06         Sale of Assets.

Borrower will not, and will not permit any Subsidiary to, convey, sell, lease,

assign, transfer or otherwise dispose of, any of its assets, business or 

 

44

 

property, whether now owned or hereafter

acquired, or, in the case of any Subsidiary, issue or sell any shares of such

Subsidiary’s common stock to any Person other than Borrower (or to qualify

directors if required by applicable law), except (a) the sale or other

disposition for fair market value of obsolete or worn out property or other

property not necessary for operations disposed of in the ordinary course of

business; and (b) the sale of inventory and Permitted Investments in the

ordinary course of business.

 

Section

7.07         Transactions with Affiliates.

Borrower will not, and will not permit any Subsidiary to, sell, lease or

otherwise transfer any property or assets to, or purchase, lease or otherwise

acquire any property or assets from, or otherwise engage in any other

transactions with, any of its Affiliates, except (a) in the ordinary course of

business at prices and on terms and conditions not less favorable to Borrower

or such Subsidiary than could be obtained on an arm’s-length basis from

unrelated third parties in comparable transactions, (b) transactions between

Borrower and its wholly owned Subsidiaries not involving any other Affiliates

and (c) any Restricted Payment permitted by Section 7.05.

 

Section

7.08         Restrictive Agreements.

Borrower will not, and will not permit any Subsidiary to, directly or

indirectly, enter into, incur or permit to exist any agreement that prohibits,

restricts or imposes any condition upon (a) the ability of Borrower or any

Subsidiary to create, incur or permit any Lien upon any of its assets or

properties, whether now owned or hereafter acquired, or (b) the ability of any

Subsidiary to pay dividends or other distributions with respect to its

common stock, to make or repay loans or advances to Borrower or any other

Subsidiary, to Guarantee Indebtedness of Borrower or any other Subsidiary or to

transfer any of its property or assets to Borrower or any Subsidiary; provided,

that (i) the foregoing shall not apply to restrictions or conditions imposed by

law or by this Agreement or any other Loan Document, (ii) the

foregoing shall not apply to customary restrictions and conditions contained in

agreements relating to the sale of a Subsidiary pending such sale, provided

such restrictions and conditions apply only to the Subsidiary that is sold and

such sale is permitted hereunder, (iii) clause (a) shall not apply to

restrictions or conditions imposed by any agreement relating to secured

Indebtedness permitted by this Agreement if such restrictions and conditions

apply only to the property or assets securing such Indebtedness, and (iv)

clause (a) shall not apply to customary provisions in leases restricting the

assignment thereof.

 

Section

7.09         Sale and Leaseback Transactions.  Borrower will not, and will not permit any

Subsidiary to, enter into any arrangement, directly or indirectly, whereby it

shall sell or transfer any property, real or personal, used or useful in its

business, whether now owned or hereinafter acquired, and thereafter rent or

lease such property or other property that it intends to use for substantially

the same purpose or purposes as the property sold or transferred.

 

Section

7.10         Lease Obligations. Borrower

will not, and will not permit any Subsidiary to, create or suffer to exist any

obligations for the payment under operating leases or agreements to lease (but

excluding any obligations under leases required to be classified as capital

leases under GAAP) having a term of five years or more which would cause the

direct or contingent liabilities of Borrower and its Subsidiaries under such

leases or agreements to lease, on a consolidated basis, to exceed $100,000 in

the aggregate in any year.

 

45

 

Section

7.11         Hedging Agreements.

Borrower will not, and will not permit any Subsidiary to, enter into any

Hedging Agreement, other than Hedging Agreements entered into in the ordinary course

of business to hedge or mitigate risks to which Borrower or any Subsidiary is

exposed in the conduct of its business or the management of its liabilities.

 

Section

7.12         Amendment to Material Documents and

Construction Plans.

 

(a)           Borrower

will not, and will not permit any Subsidiary to, amend, modify or waive any of

its rights under (i) its certificate of organization, operating agreement,

bylaws or other organizational documents, or (ii) any Material Contract.

 

(b)           Except

as allowed pursuant to Section 7.14, Borrower will not, and will not

permit any Subsidiary to, amend, modify, waive or consent to any change or

modification in the Construction Plans, contracts or subcontracts related to

the Project, and no work shall be performed with respect to any such change or

modification if such change or modification would, net of any cost reduction

resulting therefrom, increase the cost of the Project.

 

Section

7.13         Accounting Changes.

Borrower will not, and will not permit any Subsidiary to, make any significant

change in accounting treatment or reporting practices, except as required by

GAAP, or change the fiscal year of Borrower or any Subsidiary, except to change

the fiscal year of a Subsidiary to conform its fiscal year to that of Borrower.

 

Section

7.14         Construction.

Borrower will not, and will not permit any Subsidiary to, become a party to any

contract for the performance of any work related to the Project or for the

supplying of any labor, materials or services for the construction of the

Improvements that would have the effect of increasing the costs of the Project

more than $1,000,000 (in the aggregate with previous such cost increases) above

those set forth in the Sworn Construction Cost Statement, except in such

amounts and upon such terms and with such parties as shall be approved in

writing by Lender (which approval shall not be unreasonably withheld).  No approval by Lender of any contract or

change order shall make Lender responsible for the adequacy, form or content of

such contract or change order. Borrower shall expeditiously complete and fully

pay for the development and construction of the Project in a good and

workmanlike manner and in accordance with the contracts, subcontracts and

Construction Plans submitted to Lender and in compliance with all applicable

requirements of all Governmental Authorities, and any covenants, conditions,

restrictions and reservations applicable thereto, so that Construction

Completion occurs on or before August 1, 2004. 

Borrower assumes full responsibility for the compliance of the

Construction Plans and the Project with all requirements of all Governmental

Authorities and with sound building and engineering practices, and

notwithstanding any approvals by Lender, Lender shall have no obligation or

responsibility whatsoever for the Construction Plans or any other matter

incident to the Project or the construction of the Improvements.  Borrower shall correct or cause to be

corrected (a) any defect in the Improvements, (b) any departure in the

construction of the Improvements from the Construction Plans or any

requirements of any Governmental Authorities, and (c) any encroachment by any

part of the Improvements or any other structure located on the Real Estate on

any building line, easement, property line or restricted area. Borrower shall

cause all roads necessary for the utilization of the Improvements 

 

46

 

for their intended purposes to be completed

and dedicated (if dedication thereof is required by any Governmental

Authority), the bearing capacity of the soil on the Real Estate to be made

sufficient to support the Improvements, and sufficient local utilities to be

made available to the Project and installed at costs (if any) set out in the

Sworn Construction Cost Statement, on or before August 1, 2004.  No work may be performed pursuant to any

change order or pending change order to the Construction Plans prior to

delivery thereof to Lender.

 

Section 7.15         Deposit

and Investment Accounts. 

Borrower will not, and will not permit any Subsidiary to, maintain,

deposit or invest funds into any Deposit Account or Investment Account other

than those listed on Schedule 7.15 without the prior written consent of

Lender.

 

ARTICLE

VIII.

 

EVENTS

OF DEFAULT

 

Section

8.01         Events of Default.  If any of the following events (each an “Event of Default”)

shall occur:

 

(a)           Borrower

shall fail to pay any principal of any Loan when and as the same shall become

due and payable, whether at the due date thereof or at a date fixed for

prepayment or otherwise and such failure shall continue un-remedied for a

period of ten (10) days; or

 

(b)           Borrower

shall fail to pay any interest on any Loan or any fee or any other amount

(other than an amount payable under Section 8.01(a)) payable under this

Agreement or any other Loan Document, when and as the same shall become due and

payable, and such failure shall continue un-remedied for a period of ten (10)

days; or

 

(c)           any

representation or warranty made or deemed made by or on behalf of Borrower in

or in connection with this Agreement or any other Loan Document (including the

Schedules attached thereto) and any amendments or modifications hereof or

waivers hereunder, or in any certificate, report, financial statement or other

document submitted to Lender by Borrower or any representative of Borrower

pursuant to or in connection with this Agreement or any other Loan Document

shall prove to be incorrect when made or deemed made or submitted; or

 

(d)           Borrower

shall fail to observe or perform any covenant or agreement contained in Sections 5.01,

5.02, or 5.03 (with respect to Borrower’ existence) or Articles

VI or VII; or

 

(e)           Borrower

shall fail to observe or perform any covenant or agreement contained in this

Agreement (other than those referred to in clauses (a), (b) and (d) above) or

in any other Loan Document, and such failure shall remain unremedied for

30 days after the earlier 

 

47

 

of (i) any officer of Borrower becomes

aware of such failure, or (ii)  notice thereof shall have been given to

Borrower by Lender; or

 

(f)            any

default or event of default (after giving effect to any grace period) shall

have occurred and be continuing under any Loan Document or Material Contract;

or

 

(g)           Borrower

or any Subsidiary (whether as primary obligor or as guarantor or other surety)

shall fail to pay any principal of or premium or interest on any Material

Indebtedness that is outstanding, when and as the same shall become due and

payable (whether at scheduled maturity, required prepayment, acceleration,

demand or otherwise), and such failure shall continue after the applicable

grace period, if any, specified in the agreement or instrument evidencing such

Indebtedness; or any other event shall occur or condition shall exist under any

agreement or instrument relating to such Indebtedness and shall continue after

the applicable grace period, if any, specified in such agreement or instrument,

if the effect of such event or condition is to accelerate, or permit the

acceleration of, the maturity of such Indebtedness; or any such Indebtedness

shall be declared to be due and payable; or required to be prepaid or redeemed

(other  than by a regularly scheduled

required prepayment or redemption), purchased or defeased, or any offer to prepay,

redeem, purchase or defease such Indebtedness shall be required to be made, in

each case prior to the stated maturity thereof; or

 

(h)           Borrower

or any Subsidiary shall (i) commence a voluntary case or other proceeding or

file any petition seeking liquidation, reorganization or other relief under any

federal, state or foreign bankruptcy, insolvency or other similar law now or

hereafter in effect  or seeking the

appointment of a custodian, trustee, receiver, liquidator or other similar

official of it or any substantial part of its property, (ii) consent to the

institution of, or fail to contest in a timely and appropriate manner, any

proceeding or petition described in clause (i) of this Section 8.01(h),

(iii) apply for or consent to the appointment of a custodian, trustee,

receiver, liquidation or other similar official for Borrower or any such

Subsidiary or for a substantial part of its assets, (iv) file an answer

admitting the material allegations of a petition filed against it in any such

proceeding, (v) make a general assignment for the benefit of creditors, or (vi)

take any action for the purpose of effecting 

any of the foregoing; or

 

(i)            an

involuntary proceeding shall be commenced or an involuntary petition shall be

filed seeking (i) liquidation, reorganization or other relief in respect of

Borrower or any Subsidiary or its debts, or any substantial part of its

assets,  under any federal, state or

foreign bankruptcy, insolvency or other similar law now or hereafter in effect

or (ii) the appointment of a custodian, trustee, receiver, liquidator or other

similar official for Borrower or any Subsidiary or for a substantial part of

its assets, and in any such case, such 

proceeding or petition shall remain undismissed for a period of 60 days

or an order or decree approving or 

ordering any of the foregoing shall be entered; or

 

(j)            Borrower

or any Subsidiary shall become unable to pay, shall admit in writing its

inability to pay, or shall fail to pay, its debts as they become due; or

 

48

 

(k)           an

ERISA Event shall have occurred that, in the opinion of the Lender, when taken

together with other ERISA Events that have occurred, could reasonably be

expected to result in liability to Borrower and its Subsidiaries in an

aggregate amount exceeding $100,000; or

 

(l)            any  judgment or order for the payment of money

in excess of $100,000 in the aggregate shall be rendered against Borrower or

any Subsidiary, and either (i) such judgment or order is final and enforcement proceedings

shall have been commenced by any creditor upon such judgment or order, or

(ii) there shall be a period of 30 consecutive days during which a

stay of enforcement of such judgment or order, by reason of a pending appeal or

otherwise, shall not be in effect; or

 

(m)          any  non-monetary  judgment or order shall be rendered against Borrower or any

Subsidiary that could reasonably be expected to have a Material Adverse Effect,

and  there shall be a period of

30 consecutive days during which a stay of enforcement of such judgment or

order, by reason of a pending appeal or otherwise, shall not be in effect; or

 

(n)           a

Change in Control shall occur or exist;

 

(o)           the

failure of Construction Completion to occur on or before August 1, 2004; or

 

(p)           any

event which could reasonably be expected to result in a Material Adverse Effect

shall occur and be continuing;

 

then, and in every such event (other than an

event described in clause (h) or (i) of this Section) and at any time

thereafter during the continuance of such event, Lender may, by notice to

Borrower, take any or all of the following actions, at the same or different

times:   (i) terminate the Commitments, whereupon the Commitments

shall terminate immediately; (ii) declare the principal of and any accrued

interest on the Loans, and all other Obligations owing hereunder, to be due and

payable, whereupon the same shall become due and payable immediately, without

presentment, demand, protest or other notice of any kind, all of which are

hereby waived by Borrower and (iii) exercise all remedies contained in any

other Loan Document or as otherwise provided by law; and that, if an Event of

Default specified in either clause (h) or (i) shall occur, the Commitments

shall automatically terminate and the principal of the Loans then outstanding,

together with accrued interest thereon, and 

all fees, and all other Obligations shall automatically become due and

payable, without presentment, demand, protest or other notice of any kind, all

of which are hereby waived by Borrower.

 

Upon the occurrence of an Event of Default

prior to Construction Completion, and at any time thereafter during the

continuance of such event, Lender may, in addition to remedies set forth in the

preceding paragraph, enter upon Borrower’s property and proceed

either in its own name or in the name of Borrower (which authority is coupled

with an interest and is irrevocable by Borrower) to complete or cause to be

completed the Project, at the cost and expense of Borrower. If Lender elects to

complete or cause to be completed the Project, it may 

 

49

 

do so according to the Construction Plans or

according to such changes, alterations or modifications in and to the

Construction Plans as Lender may deem appropriate; and Lender may enforce or

cancel all contracts let by Borrower relating to construction and installation

of the Improvements and/or let other contracts which in Lender’s sole judgment

it may deem advisable; and Borrower shall forthwith turn over and duly assign

to Lender, as Lender may from time to time require, contracts relating to

construction and installation of the Improvements, the Construction Plans,

blueprints, shop drawings, bonds, building permits, bills and statements of

accounts pertaining to the Project, whether paid or not, and any other

instruments or records in the possession of Borrower pertaining to the

Project.  Borrower shall be liable under

this Agreement to pay to Lender, on demand, any amount or amounts expended by

Lender in so completing the Project, together with any costs, charges, or

expenses incident thereto or resulting therefrom, all of which shall be secured

by the Security Documents.  In the event

that a proceeding is instituted against Borrower for recovery and reimbursement

of any moneys expended by Lender in connection with the completion of the

Project, a statement of such expenditures, verified by the affidavit of an

officer of Lender, shall be prima facie evidence of the amounts so expended and

of the propriety of and necessity for such expenditures; and the burden of

proving to the contrary shall be upon Borrower. Lender shall have the right to

apply the undisbursed amount of the Construction and Term Loan Note to bring

about the completion of the Project and to pay the costs thereof; and if such

funds are insufficient, in the sole judgment of Lender, to complete the

Project, Borrower agrees to promptly deliver and pay to Lender such sum or sums

of money as Lender may from time to time demand for the purpose of completing

the Project or of paying any liability, charge or expense which may have been

incurred or assumed by Lender under or in performance of this Agreement, or for

the purpose of completing the Project. 

It is expressly understood and agreed that in no event shall Lender be

obligated or liable in any way to complete the Project or to pay for the costs

of construction thereof.

 

50

 

ARTICLE

IX

 

MISCELLANEOUS

 

Section

9.01         Notices.

 

Except

in the case of notices and other communications expressly permitted to be given

by telephone, all notices and other communications to any party herein to be

effective shall be in writing and shall be delivered by hand or overnight

courier service, mailed by certified or registered mail or sent by telecopy, as

follows:

 

	

  To Borrower:

  	

   

  	

  Western Plains Energy, LLC

  
	

   

  	

   

  	

  Attention: Jeff Torluemke

  
	

   

  	

   

  	

  414 Main St., P.O. Box 340

  
	

   

  	

   

  	

  Quinter, Kansas 67752

  
	

   

  	

   

  	

  Facsimile No.

  (785) 675-3030

  
	

   

  	

   

  	

   

  
	

  With a Copy to:

  	

   

  	

  James M. Wiederrich, Esq.

  
	

   

  	

   

  	

  Woods, Fuller, Shultz & Smith P.C.

  
	

   

  	

   

  	

  300 South Phillips Avenue

  
	

   

  	

   

  	

  Post Office Box 5027

  
	

   

  	

   

  	

  Sioux Falls, South Dakota 57117

  
	

   

  	

   

  	

  Facsimile No.

  (605) 339-3357

  
	

   

  	

   

  	

   

  
	

  And a Copy to:

  	

   

  	

  Mr. Mark S. Weitz

  
	

   

  	

   

  	

  Leonard Street and Deinard

  
	

   

  	

   

  	

  150 South Fifth Street, Suite 2300

  
	

   

  	

   

  	

  Minneapolis, Minnesota 55402

  
	

   

  	

   

  	

  Facsimile No.

  (612) 335-1657

  
	

   

  	

   

  	

   

  
	

  To the Lender:

  	

   

  	

  AgCountry Farm Credit Services, FLCA

  
	

   

  	

   

  	

  Attention: 

  Randolph L. Aberle, Vice President

  
	

   

  	

   

  	

  Post Office Box 6020

  
	

   

  	

   

  	

  1749 38th Street Southwest

  
	

   

  	

   

  	

  Fargo, North Dakota 58108-6020

  
	

   

  	

   

  	

  Facsimile No.

  (701) 282-9618

  

 

Any party hereto may change its address or

telecopy number for notices and other communications hereunder by notice to the

other parties hereto.  All such notices

and other communications shall, when transmitted by overnight delivery, or

faxed, be effective when delivered for overnight (next-day) delivery, or

transmitted in legible form by facsimile machine, respectively, or if mailed,

upon the third Business Day after the date deposited into the mails or if

delivered, upon delivery; provided, that notices delivered to Lender shall not

be effective until actually received by such Person at its address specified in

this Section 9.01.

 

51

 

Any

agreement of Lender herein to receive certain notices by telephone or facsimile

is solely for the convenience and at the request of Borrower.  Lender shall be entitled to rely on the

authority of any Person purporting to be a Person authorized by Borrower to

give such notice and Lender shall not have any liability to Borrower or other

Person on account of any action taken or not taken by Lender in reliance upon

such telephonic or facsimile notice. 

The obligation of Borrower to repay the Loans and all other Obligations

hereunder shall not be affected in any way or to any extent by any failure of

Lender to receive written confirmation of any telephonic or facsimile notice or

the receipt by Lender of a confirmation which is at variance with the terms

understood by Lender to be contained in any such telephonic or facsimile

notice.

 

Section

9.02         Waiver; Amendments.

 

(a)           No

failure or delay by Lender in exercising any right or power hereunder or any

other Loan Document, and no course of dealing between Borrower and Lender, shall oper­ate as a waiver thereof, nor

shall any single or partial exercise of any such right or power or any

abandonment or discontinuance of steps to enforce such right or power, preclude

any other or further exercise thereof or the exer­cise of any other right or

power hereunder or thereunder.  The

rights and remedies of Lender hereunder and under the other Loan Documents are

cumulative and are not exclu­sive of any rights or remedies provided by law. No

waiver of any provision of this Agreement or any other Loan Document or consent

to any departure by Borrower therefrom shall in any event be effective unless

the same shall be permitted by paragraph (b) of this Section, and then such

waiver or consent shall be effective only in the specific instance and for the

purpose for which given. Without limiting the generality of the foregoing, the

making of a Loan shall not be construed as a waiver of any Default or Event of

Default, regardless of whether Lender may have had notice or knowledge of such

Default or Event of Default at the time.

 

(b)           No

amendment or waiver of any provision of this Agreement or the other Loan

Documents, nor consent to any departure by Borrower therefrom, shall in any

event be effective unless the same shall be in writing and signed by Borrower

and Lender and then such waiver or consent shall be effective only in the

specific instance and for the spe­cific purpose for which given.

 

Section

9.03         Expenses; Indemnification.

 

(a)           The

Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of

Lender, including the reasonable fees, charges and disbursements of counsel for

Lender and in connection with the preparation and administration of the Loan

Documents and any amendments, modifications or waivers thereof (whether or not

the transactions contemplated in this Agreement or any other Loan Document

shall be consummated), and (ii) all reasonable out-of-pocket costs and expenses

(including, without limitation, the reasonable fees, charges and disbursements

of outside counsel and the allocated cost of inside counsel) incurred by Lender

in connection with the enforcement or protection of its rights in connection

with this Agreement, including its rights under this Section, or in connection

with the Loans made hereunder, including all such reasonable out-of-pocket

expenses incurred during any workout, restructuring 

 

52

 

or negotiations in respect of such

Loans.  Nothing in this Section 9.03

shall be deemed to obligate Borrower to pay costs of any participant in any

Loan.

 

(b)           The

Borrower shall indemnify Lender against, and hold Lender harmless from, any and

all costs, losses, liabilities, claims, damages and related expenses, including

the fees, charges and disbursements of any counsel for Lender, which may be

incurred by or asserted against Lender arising out of, in connection with or as

a result of (i) the execution or delivery of this Agreement or any other

agreement or instrument contemplated hereby, the performance by the parties

hereto of their respective obligations hereunder or the consummation of any of

the transactions contemplated hereby, (ii) any Loan or any actual or proposed

use of the proceeds therefrom, (iii) any actual or alleged presence or release

of Hazardous Materials on or from any property owned by Borrower or any

Subsidiary or any Environmental Liability 

related in any way to Borrower or any Subsidiary  or (iv)  any

actual or prospective claim, litigation, investigation or proceeding relating

to any of the foregoing, whether based on contract, tort or any other theory

and regardless of whether any Lender is a party thereto; provided,  that

Borrower shall not be obligated to indemnify Lender for any of the fore­going

arising out of Lender’s gross negligence or willful misconduct as determined by

a court of competent jurisdiction in a final and nonappealable judgment.

 

(c)           The

Borrower shall pay, and hold Lender harmless from and against, any and all

present and future stamp, documentary, and other similar taxes with re­spect to

this Agreement and any other Loan Documents, any collateral described therein,

or any payments due thereunder, and save Lender harmless from and against any

and all liabilities with respect to or resulting from any delay or omission to

pay such taxes.

 

(d)           To

the extent permitted by applicable law, Borrower shall not assert, and Borrower

hereby waives, any claim against Lender, on any theory of liability, for

special, indirect, consequential or punitive damages (as opposed to actual or

direct damages) arising out of, in connection with or as a result of, this

Agreement or any agreement or instrument contemplated hereby, the transactions

contemplated therein, any Loan or the use of proceeds thereof.

 

(e)           All

amounts due under this Section 9.03 shall be payable promptly after

written demand therefor.

 

53

 

Section

9.04         Successors and Assigns.

 

(a)           The

provisions of this Agreement shall be binding upon and inure to the benefit of

the parties hereto and their respective successors and assigns, except that

Borrower may not assign or transfer any of its rights hereunder without the

prior written consent of Lender (and any attempted assignment or transfer by

Borrower without such consent shall be null and void).

 

(b)           Lender

may at any time assign to one or more assignees all or a portion of its rights

and obligations under this Agreement and the other Loan Documents (including

all or a portion of its Commitment and the Loans at the time owing to it).

 

(c)           Lender

may at any time, without the consent of Borrower, sell participations to one or

more banks or other entities (a “Participant”) in all or a portion of Lender’s

rights and obligations under this Agreement (including all or a portion of its

Commitment and the Loans owing to it); provided, that (i) Lender’s obligations under this

Agreement shall remain unchanged, (ii) Borrower shall continue to deal

solely and directly with Lender in connection with Lender’s rights and

obligations under this Agreement and the other Loan Documents.  Borrower agrees that each Participant shall

be entitled to the benefits of Section 2.18 to the same extent as if it

were the Lender hereunder and had acquired its interest by assignment pursuant

to paragraph (b).  To the extent

permitted by law, Borrower agrees that each Participant shall be entitled to

the benefits of Section 2.20 as though it were the Lender.

 

(d)           Lender

may at any time pledge or assign a security interest in all or any por­tion of

its rights under this Agreement and the Notes without complying with this

Section; provided, that no such pledge or assignment shall release

Lender from any of its obligations hereunder or substitute any such pledgee or

assignee for Lender as a party hereto.

 

Section

9.05         Governing Law; Jurisdiction; Consent

to Service of Process.

 

(a)           This

Agreement and the other Loan Documents shall be construed in accordance with

and be governed by the law (without giving effect to the conflict of law

principles thereof) of the State of North Dakota.

 

(b)           Borrower

hereby irrevocably and unconditionally submits, for itself and its property, to

the non-exclusive jurisdiction of the United States District Court of the

District of North Dakota, and of any state court of the State of North Dakota

located in Cass County and any appellate court from any thereof, in any action

or proceeding arising out of or relating to this Agreement or any other Loan

Document or the transactions contemplated hereby or thereby, or for recognition

or enforcement of any judgment, and each of the parties hereto hereby

irrevocably and unconditionally agrees that all claims in respect of any such

action or proceeding may be heard and determined in such North Dakota state

court or, to the extent permitted by applicable law, such Federal court. Each

of the parties hereto agrees that a final judgment in any such action or

proceeding shall be conclusive and may be enforced in other jurisdictions by

suit on the judgment or in any other manner provided by law. Nothing in this

Agreement or any other 

 

54

 

Loan Document shall affect any right that

Lender may otherwise have to bring any action or proceeding relating to this

Agreement or any other Loan Document against Borrower or its properties in the

courts of any jurisdiction.

 

(c)           Borrower

irrevocably and unconditionally waives any objection which it may now or

hereafter have to the laying of venue of any such suit, action or proceeding

described in paragraph (b) of this Section and brought in any court referred to

in paragraph (b) of this Section. Each of the parties hereto irrevocably

waives, to the fullest extent permitted by applicable law, the defense of an

inconvenient forum to the maintenance of such action or proceeding in any such

court.

 

Section

9.06         WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE

FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY

JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS

AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR

THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY

HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER

PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,

IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)

ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER

INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE

MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section

9.07         Right of Setoff.  In addition to any rights now or hereafter

granted under applicable law and not by way of limitation of any such rights,

Lender shall have the right, at any time or from time to time upon the occurrence

and during the continuance of an Event of Default, without prior notice to

Borrowers, any such notice being expressly waived by Borrower to the extent

permitted by applicable law, to set off and apply against all deposits (general

or special, time or demand, provisional or final) of Borrower at any time held

or other obligations at any time owing by Lender to or for the credit or the

account of Borrower against any and all Obligations held by Lender,

irrespective of whether Lender shall have made demand hereunder and although

such Obligations may be unmatured. 

Lenders agree promptly to notify the Lender and Borrower after any such

set-off and any application made by Lender; provided, that the failure

to give such notice shall not affect the validity of such set-off and

application.

 

Section

9.08         Counterparts; Integration.  This Agreement may be executed by one or

more of the parties to this Agreement on any number of separate counterparts

(including by telecopy), and all of said counterparts taken together shall be

deemed to constitute one and the same instrument. This Agreement, the other

Loan Documents, and any separate letter agreement(s) relating to any fees

payable to the Lender constitute the entire agreement among the parties hereto

and thereto regarding the subject matters hereof and thereof and supersede all

prior agreements and understandings, oral or written, regarding such subject

matters.

 

55

 

Section

9.09         Survival.  All covenants, agreements, representations

and warranties made by Borrower herein and in the certificates or other

instruments delivered in connection with or pursuant to this Agreement shall be

considered to have been relied upon by Lender and shall survive the execution

and delivery of this Agreement and the making of any Loans, regardless of any

investigation made by any such other party or on its behalf and notwithstanding

that Lender may have had notice or knowledge of any Default or incorrect

representation or warranty at the time any credit is extended hereunder, and

shall continue in full force and effect as long as the principal of or any

accrued interest on any Loan or any fee or any other amount payable under this

Agreement is outstanding and unpaid and so long as the Commitments have not

expired or terminated.  The provisions

of Sections 2.18, 2.20, and 9.03 shall survive and remain

in full force and effect regardless of the consummation of the transactions

contemplated hereby, the repayment of the Loans, and the Commitments or the

termination of this Agreement or any provision hereof.  All representations and warranties made

herein, in the cer­tifi­cates, reports, notices, and other documents delivered

pursuant to this Agreement shall survive the execution and delivery of this

Agreement and the other Loan Documents, and the making of the Loans.

 

Section

9.10         Severability.  Any provision of this Agreement ­or any

other Loan Document held to be illegal, invalid or unenforceable in any

jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of

such illegality, invalidity or unenforceability without affecting the legality,

validity or enforceability of the remaining provisions hereof or thereof; and

the illegality, invalidity or unenforceability of a particular provision in a

particular jurisdiction shall not invalidate or render unenforceable such

provision in any other jurisdiction.

 

Section

9.11         Confidentiality.

Lender agrees to take normal and reasonable precautions to maintain the

confidentiality of any information designated in writing as confidential and

provided to it by Borrower or any Subsidiary, except that such information may

be disclosed (i) to any Affiliate, participant or advisor of Lender, including

without limitation accountants, legal counsel and other advisors, provided

that Lender shall have taken reasonable steps to assure that such Affiliates,

participants, and advisors will maintain such information in confidence to the

same extent required of Lender hereunder, (ii) to the extent required by

applicable laws or regulations or by any subpoena or similar legal process,

(iii) to the extent requested by any regulatory agency or authority, (iv) to

the extent that such information becomes publicly available other than as a

result of a breach of this Section 9.11, or which becomes available to

Lender of any of the foregoing on a nonconfidential basis from a source other

than Borrower, (v) in connection with the exercise of any remedy hereunder or

any suit, action or proceeding relating to this Agreement or the enforcement of

rights hereunder, and (ix) subject to provisions substantially similar to this Section

9.11, to any actual or prospective assignee or Participant, or (vi) with

the consent of Borrower.  Any Person

required to maintain the confidentiality of any information as provided for in

this Section shall be considered to have complied with its obligation to do so

if such Person has exercised the same degree of care to maintain the

confidentiality of such information as such Person would accord its own

confidential information.

 

56

 

Section

9.12         Interest Rate Limitation.  Notwithstanding anything herein to the

contrary, if at any time the interest rate applicable to any Loan, together

with all fees, charges and other amounts which may be treated as interest on

such Loan under applicable law (collectively, the “Charges”), shall

exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted

for, charged, taken, received or reserved by Lender in accordance with

applicable law, the rate of interest payable in respect of such Loan hereunder,

together with all Charges payable in respect thereof, shall be limited to the

Maximum Rate and, to the extent lawful, the interest and Charges  that would have been payable in respect of

such Loan but were not payable as a result of the operation of this Section

shall be cumulated and the interest and Charges payable to Lender in respect of

other Loans or periods shall be increased (but not above the Maximum Rate

therefor) until such cumulated amount, together with interest thereon at the

Maximum Rate to the date of repayment, shall have been received by Lender.

 

Section 9.13         Inspections.  Borrower shall be responsible for making

inspections of the Real Estate and the Improvements during the course of

construction and shall determine to its own satisfaction that the work done or

materials supplied by the contractors to whom payment is to be made out of each

Construction Draw Request has been properly done or supplied in accordance with

the applicable contracts with such contractors.  If any work done or materials supplied by a contractor are not

satisfactory to Borrower, Borrower will immediately notify Lender in writing of

such fact.  It is expressly understood

and agreed that Lender or its authorized representative may conduct such

inspections of the Real Estate and the Improvements as it may deem necessary

for the protection of Lender’s interest, and, specifically, the Inspecting

Architect may, at the option of Lender and at the expense of Borrower, conduct

such periodic inspections, prepare such written progress reports during the

period of construction and prepare such written reports upon completion of the

Project, as Lender may request.  Any

inspections which may be made by Lender or its representative will be made, and

all certificates issued by Lender’s representative will be issued, solely for

the benefit and protection of Lender, and Borrower will not rely thereon.

 

Section 9.14         Termination.  Upon satisfaction of all of Borrower’s

obligations hereunder and the related documents and instruments, Lender shall

(a) mark the Notes “PAID” and return the same to Borrower, (b) release its

security interests and file appropriate documentations of the same, and (c)

redeem the Required Stock.

 

 

[Signature

Page Follows]

 

57

 

IN WITNESS WHEREOF,

the parties hereto have caused this Agreement to be duly executed by their

respective authorized officers as of the day and year first above written.

 

	

   

  	

   

  	

  BORROWER:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  WESTERN PLAINS ENERGY, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By:

  	

  /s/ Jeff Torluemke

  
	

   

  	

   

  	

   

  	

  Name:

  	

   Jeff Torluemke

  
	

   

  	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  LENDER:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  AGCOUNTRY FARM CREDIT SERVICES, FLCA 

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By:

  	

  /s/ Randolf L. Aberle

  
	

   

  	

   

  	

   

  	

  Name:

  	

  Randolf L. Aberle

  
	

   

  	

   

  	

   

  	

  Title:

  	

   Vice President

  
											

 

58

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