Document:

EXHIBIT 10.4

 

 

LOAN AGREEMENT

Between

Heartland Grain Fuels, L.P.

And

Brown County, South Dakota

 

Dated as of October, 2007

 

Relating to $19,000,000 in aggregate
principal amount of Brown County, South Dakota Subordinate Solid Waste
Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project),
Series 2007A.

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  REPRESENTATIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Representations by Issuer

  	
  2

  
	
  Section 2.2

  	
  Representations and
  Warranties by the Borrower

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  PAYMENT
  OF SERIES 2007A BONDS; APPLICATION OF PROCEEDS; COMPLETION OF PROJECT

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Loan and Application of the
  Proceeds of Series 2007A Bonds

  	
  4

  
	
  Section 3.2

  	
  Payment of Series 2007A Bonds

  	
  5

  
	
  Section 3.3

  	
  Right of Bond Trustee to
  Enforce this Loan Agreement

  	
  5

  
	
  Section 3.4

  	
  Investment of Funds;
  Arbitrage; Tax Exemption Agreement

  	
  5

  
	
  Section 3.5

  	
  Completion of Project

  	
  5

  
	
  Section 3.6

  	
  Plans and Specifications

  	
  6

  
	
  Section 3.7

  	
  Records

  	
  6

  
	
  Section 3.8

  	
  Operation of Project

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
  PAYMENTS,
  FUND DEPOSITS, PREPAYMENTS AND OTHER PAYMENTS

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Payment of Principal, Premium
  and Interest

  	
  6

  
	
  Section 4.2

  	
  Loan Repayments

  	
  7

  
	
  Section 4.3

  	
  Credits on Loan Repayments

  	
  7

  
	
  Section 4.4

  	
  Mandatory Prepayment Upon a
  Determination of Taxability

  	
  8

  
	
  Section 4.5

  	
  Optional Prepayment

  	
  8

  
	
  Section 4.6

  	
  Notice of Prepayment

  	
  8

  
	
  Section 4.7

  	
  Extraordinary Optional
  Prepayment from Net Proceeds of Insurance or Condemnation

  	
  8

  
	
  Section 4.8

  	
  Mandatory Prepayment on the
  Completion Date

  	
  9

  
	
  Section 4.9

  	
  Effect of Partial Prepayment

  	
  9

  
	
  Section 4.10

  	
  Additional Payments

  	
  9

  
	
  Section 4.11

  	
  Borrower’s Obligations
  Unconditional

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  COVENANTS
  OF THE BORROWER

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Affirmative Covenants

  	
  10

  
	
  Section 5.2

  	
  Negative Covenants

  	
  18

  
	
  Section 5.3

  	
  Reporting Requirements

  	
  23

  
	
  Section 5.4

  	
  Maintenance of Existence and
  Status

  	
  28

  
	
  Section 5.5

  	
  Consent to Assignment of Loan
  Agreement to the Bond Trustee

  	
  28

  
	
  Section 5.6

  	
  Transfer of Project Assets

  	
  28

  
	
  Section 5.7

  	
  Indemnity

  	
  28

  
	
  Section 5.8

  	
  Notice Regarding Bankruptcy
  Petitions, Event of Default or Potential Default

  	
  30

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 5.9

  	
  Continuing Disclosure

  	
  30

  
	
  Section 5.10

  	
  Huron Expansion

  	
  30

  
	
  Section 5.11

  	
  Maintenance Capital Expense
  Account; Working Capital Reserve Account

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  EVENTS OF
  DEFAULT AND REMEDIES THEREFOR

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Events of Default

  	
  31

  
	
  Section 6.2

  	
  Application of Proceeds of
  Remedies

  	
  32

  
	
  Section 6.3

  	
  Remedies Cumulative

  	
  33

  
	
  Section 6.4

  	
  Delay or Omission Not a Waiver

  	
  33

  
	
  Section 6.5

  	
  Waiver of Extension,
  Valuation and Appraisement Laws

  	
  33

  
	
  Section 6.6

  	
  Remedies Subject to
  Provisions of Law

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  SUPPLEMENTS
  AND AMENDMENTS TO THIS LOAN AGREEMENT

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Supplements and Amendments to
  this Loan Agreement

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  DEFEASANCE

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Defeasance

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
  MISCELLANEOUS
  PROVISIONS

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Payment of Expenses of
  Issuance of Series 2007A Bonds

  	
  35

  
	
  Section 9.2

  	
  Loan Agreement for Benefit of
  Parties Hereto

  	
  35

  
	
  Section 9.3

  	
  Severability

  	
  35

  
	
  Section 9.4

  	
  Notices

  	
  35

  
	
  Section 9.5

  	
  Successors and Assigns

  	
  36

  
	
  Section 9.6

  	
  Counterparts

  	
  36

  
	
  Section 9.7

  	
  Governing Law

  	
  36

  
	
  Section 9.8

  	
  Immunity of Officers,
  Employees and Members of the Issuer and the Borrower

  	
  36

  
	
  Section 9.9

  	
  Intercreditor Agreement

  	
  36

  
				

 

ii

 

This is a LOAN AGREEMENT dated as of October 1, 2007 (herein referred
to sometimes as this “Loan Agreement”) between Heartland Grain Fuels, L.P., a
limited partnership organized and existing under the laws of the State of
Delaware (the “Borrower”) and the Brown County, South Dakota (the “Issuer”), a
public body corporate and politic and political subdivision created and
existing under and by the constitution and the laws of the State of South
Dakota.

 

PRELIMINARY STATEMENT

 

Reference is hereby made to the Bond Trust Indenture (the “Bond
Indenture”) dated as of October 1, 2007 between the Issuer and Wells Fargo
Bank, National Association, as bond trustee (the “Bond Trustee”), relating to
the hereinafter described Series 2007A Bonds, as the same may be supplemented
and amended from time to time for definitions of various terms used herein.

 

The Borrower desires to obtain a portion of the moneys which will be
used, together with certain other funds, to (i) pay the cost of acquisition,
construction and equipping of improvements and additions to the Facility (the “Project”),
including reimbursement to the Borrower of certain moneys previously spent with
respect to the Project, (ii) fund a debt service reserve, (iii) to find
capitalized interest, and (iv) pay certain expenses incurred in connection with
the issuance of the Series 2007A Bonds, all as permitted under the Act.

 

Pursuant to the Act, the Issuer is obtaining funds to provide for a
loan to the Borrower through the issuance and sale of its Brown County, South
Dakota Subordinate Solid Waste Facilities Revenue Bonds, (Heartland Grain
Fuels, L.P. Ethanol Plant Project), Series 2007A, in the original aggregate
principal amount of $19,000,000 (the “Series 2007A Bonds”), which will be
issued under and secured by the Bond Indenture. Pursuant to the Bond Indenture,
the Issuer will pledge and assign certain of its rights under this Loan
Agreement as part of the security for the Series 2007A Bonds. The Series 2007A
Bonds will be payable out of loan repayments made pursuant to this Loan
Agreement.

 

In order to provide security for the repayment of the Series 2007A
Bonds and the amounts payable under this Loan Agreement, the Borrower is
concurrently with the delivery hereof delivering to the Bond Trustee, the Bond
Collateral Documents.

 

In consideration of the premises, the respective representations and
agreements contained herein, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, and in order to secure the payment of
the principal of, premium, if any, and interest payable on the Series 2007A
Bonds, the payment of all amounts due hereunder and the performance of all the
covenants of the Borrower contained herein, the Borrower and the Issuer hereby
covenant and agree as follows:

 

ARTICLE I

DEFINITIONS

 

The terms used in this Loan Agreement, unless otherwise defined herein
or unless the context requires otherwise, shall have the same meanings as set
forth in the Bond Indenture. All accounting terms not otherwise defined in the
Bond Indenture or herein shall have the meanings

 

 

assigned to them in accordance with generally
accepted accounting principles in effect from time to time.

 

All references in this instrument to designated “Articles,” “Sections”
and other subdivisions are to the designated Articles, Sections and other
subdivisions of this instrument as originally executed. The words “herein,” “hereof”
and “hereunder” and other words of similar import refer to this Loan Agreement
as a whole and not to any particular Article, Section or other subdivision
unless the context indicates otherwise.

 

ARTICLE II

REPRESENTATIONS

 

Section 2.1     Representations by
Issuer.
The Issuer represents and
warrants that:

 

(a)        the Issuer (i) is a public body corporate and politic and political
subdivision validly created and existing under the constitution and the laws of
the State of South Dakota, is authorized to enter into the transactions
contemplated by the Bond Indenture, this Loan Agreement, and the Tax Exemption
Agreement and to carry out its obligations hereunder and thereunder, (ii) has
been duly authorized to execute and deliver this Loan Agreement, the Bond
Indenture and the Tax Exemption Agreement, and (iii) agrees that it will do or
cause to be done, to the extent within its control, all things necessary to
preserve and keep in full force and effect its existence;

 

(b)        (i) the issuance and sale of the Series 2007A Bonds, (ii) the lending of
the proceeds of the Series 2007A Bonds to the Borrower to provide a portion of
the moneys required to (A) pay the costs of the Project, (B) fund a debt
service reserve, (C) pay interest on the Series 2007A Bonds during construction
of the Project and (D) pay certain expenses incurred in connection with the
issuance of the Series 2007A Bonds, all as permitted under the Act, (iii) the
execution and delivery of this Loan Agreement, the Bond Indenture and the Tax
Exemption Agreement, and (iv) the performance of all covenants and agreements
of the Issuer contained in this Loan Agreement, the Bond Indenture and the Tax
Exemption Agreement and of all other acts and things required under the
Constitution and laws of the State to make this Loan Agreement a valid and
binding obligation enforceable against the Issuer in accordance with its terms,
are authorized by the Act and have been duly authorized by proceedings of the
Issuer adopted at meetings thereof duly called and held; and

 

(c)        in order to provide funds to lend to the Borrower for the purposes
described above, the Issuer has authorized its Series 2007A Bonds in the
aggregate principal amount of $19,000,000 to be issued upon the terms set forth
in the Bond Indenture, under the provisions of which the Issuer’s interest in
this Loan Agreement (other than Unassigned Rights) and the payments of
principal, interest and other revenues hereunder are pledged and assigned to
the Bond Trustee as security for the payment of the principal of, and interest
on, the Series 2007A Bonds.

 

2

 

Section 2.2     Representations and
Warranties by the Borrower. The
Borrower makes the following representations and warranties as the basis for
its covenants herein:

 

(a)        The Borrower is a limited liability company duly created and existing
under the laws of the State of Delaware, is in good standing and duly
authorized to conduct its business in the State, is duly authorized and has
full power under the laws of the State and all other applicable provisions of
law and its organizational documents to create, issue, enter into, execute and
deliver the, the Bond Purchase Agreement, the Tax Exemption Agreement, this
Loan Agreement, the Bond Collateral Documents to which it is a party and all
action on its part necessary for the valid execution and delivery of, this Loan
Agreement, the Tax Exemption Agreement, the Bond Purchase Agreement and the
Bond Collateral Documents to which it is a party have been duly and effectively
taken.

 

(b)        The execution and delivery of this Loan Agreement, the Tax Exemption
Agreement, the Bond Purchase Agreement, the Bond Collateral Documents to which
it is a party, the consummation of the transactions contemplated herein and
therein, and the fulfillment of the terms and conditions hereof and thereof do
not and will not conflict with or result in a breach of any of the terms or
conditions of any partnership restriction or of any agreement or instrument to
which the Borrower or any Affiliate is now a party, and do not and will not
constitute a default under any of the foregoing, or result in the creation or
imposition of any Lien of any nature upon any of the Property of the Borrower,
including Property which the Borrower subsequently acquires, except for
Permitted Liens; the Borrower has a good and marketable title to its Property,
and will have good and marketable title to the Expansions, including the
Project, in each case free and clear of all Liens whatsoever except Permitted
Liens; the easements, rights-of-way, Liens, encumbrances, covenants, conditions,
restrictions, exceptions, minor defects, irregularities of title and
encroachments on adjoining real estate, if any, now existing with respect to
the real property do not and will not materially adversely affect the value of
the Facilities, materially impair the same, or materially impair or materially
interfere with the operation and usefulness thereof for the purpose for which
it was acquired or are held by the Borrower; the Facilities are located upon
the real property described in the Subordinate Mortgage; to the best of the
Borrower’s knowledge, the Facilities do not and will not violate any applicable
zoning land use, environmental or similar law or restriction; and the recitals
of fact and statements contained in this Loan Agreement with respect to the
Borrower are true.

 

(c)        The Borrower has all necessary licenses and permits to occupy and
operate the Facilities other than the Expansions, including the Project.

 

(d)        Except as specifically described in the Official Statement, no
litigation, proceedings or investigations are pending or, to the knowledge of
the Borrower, threatened against the Borrower, except (i) litigation,
proceedings or investigations involving claims for which the probable ultimate
recoveries and the estimated costs and expenses of defense, in the opinion of
counsel to the Borrower, will be entirely within the applicable insurance
policy limits (subject to applicable deductibles) or self insurance reserves
and (ii) litigation in which, in the opinion of counsel to the Borrower, an
adverse determination would not have a material adverse effect on the
operations or condition, financial or otherwise, of the Borrower. In addition,
no litigation, proceedings or investigations are pending or, to the knowledge
of the Borrower, threatened against the Borrower seeking to restrain, enjoin or
in any way limit the approval and

 

3

 

delivery of the Official Statement, the issuance, delivery or validity
of the Series 2007A Bonds, or the execution, delivery or validity of the Bond
Indenture, this Loan Agreement, the Tax Exemption Agreement, the Bond Purchase
Agreement, the Series 2007A Bonds, the Bond Collateral Documents, or which
would in any manner challenge or adversely affect the existence or powers of
the Borrower to enter into and carry out the transactions described in or
contemplated by or the execution, delivery, validity or performance by the
Borrower of the terms and provisions of the Series 2007A Bonds, the Tax
Exemption Agreement, the Bond Purchase Agreement, this Loan Agreement or the
Bond Collateral Documents.

 

(e)        The Borrower is a limited partnership organized and existing under the
laws of the State of Delaware.

 

(f)         The financial information with respect to the Borrower and any Affiliate
included in the Preliminary Official Statement, dated August 20, 2007, as
supplemented by an addendum dated October 1, 2007, and the Official Statement
dated October 9, 2007 (the “Official Statement”), both relating to the Series
2007A Bonds is correct, and there has been no material adverse change in the
condition, financial or otherwise, of the Borrower from that set forth in the
Official Statement, except as expressly disclosed in the Official Statement.

 

(g)        The Borrower has not heretofore engaged in, and the consummation of the
transactions herein provided for and compliance by the Borrower with the
provisions of this Loan Agreement, the Bond Indenture, the Series 2007A Bonds,
the Tax Exemption Agreement and the Bond Collateral Documents will not involve,
any prohibited transaction within the meaning of Section 4975 of the Code.

 

(h)        The information set forth in this Loan Agreement, the Tax Exemption
Agreement and any other written statement (including the Official Statement)
furnished by the Borrower to the Issuer does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein or herein not misleading. The Borrower has no
knowledge of any fact not disclosed to the Issuer in writing or in the Official
Statement which materially adversely affects or, so far as the Borrower can now
foresee, will materially adversely affect the financial condition of the
Borrower, its ability to own and operate its Property or its ability to make
the payments under this Loan Agreement when and as the same become due and
payable.

 

(i)         The representations, warranties and covenants contained in the Tax
Exemption Agreement are true and correct as of such date.

 

ARTICLE III

PAYMENT OF SERIES 2007A BONDS; 

APPLICATION OF PROCEEDS; COMPLETION OF PROJECT

 

Section 3.1     Loan and Application
of the Proceeds of Series 2007A Bonds. The
Issuer hereby lends all of the proceeds of the Series 2007A Bonds in connection
with the original issuance and sale of the Series 2007A Bonds to the Borrower
upon the terms and conditions set forth herein. The Borrower agrees that the
proceeds of the Series 2007A Bonds being lent to the Borrower shall be
deposited with the Bond Trustee and applied as provided in the Bond

 

4

 

Indenture. The Borrower shall have no right to use such proceeds other
than pursuant to the terms of the Bond Indenture and may not use such proceeds
as general funds.

 

Section 3.2     Payment of Series
2007A Bonds. The Borrower agrees
that the principal of, premium, if any, and the interest on the Series 2007A
Bonds shall be made payable in accordance with the provisions of the Bond
Indenture and this Loan Agreement. The Borrower further agrees that this Loan
Agreement and payments to be made hereunder and thereunder (excluding
Unassigned Rights) shall be assigned and pledged to the Bond Trustee to secure
the payment of the Series 2007A Bonds. In addition, the Borrower agrees that
all amounts due under the Loan Agreement shall be secured by, and payable from
the proceeds of enforcement of the Bond Collateral Documents. The foregoing
notwithstanding, the Borrower agrees that the moneys and securities, if any, on
deposit in the Rebate Fund are not part of the trust estate and are not
available to make payments of principal and interest on the Series 2007A Bonds.

 

Section 3.3     Right of Bond Trustee
to Enforce this Loan Agreement. The Borrower agrees that this Loan Agreement and all of the rights,
interests, powers, privileges and benefits accruing to or vested in the Issuer
under this Loan Agreement may be protected and enforced in conformity with the
Bond Indenture and may be thereby assigned by the Issuer to the Bond Trustee
(except Unassigned Rights) as security for the Series 2007A Bonds and may be
exercised, protected and enforced for or on behalf of the Bondholders in
conformity with the provisions of this Loan Agreement and the Bond Indenture.

 

Section 3.4     Investment of Funds;
Arbitrage; Tax Exemption Agreement. The
Borrower covenants and agrees that moneys on deposit in any funds under the
Bond Indenture shall at all times be invested by the Bond Trustee pursuant to
the Borrower’s direction and that the Borrower will take all actions necessary,
including without limitation providing the Bond Trustee with all necessary
directions, to assure that such moneys are continuously invested in accordance
with the provisions of the Bond Indenture and the Tax Exemption Agreement. The
Borrower further covenants and agrees that it will not take any action or fail
to take any action, including without limitation any action with respect to the
investment of the proceeds of any Series 2007A Bonds (regardless of the source
or whether or not held under the Bond Indenture), with respect to any other
moneys or securities deposited with the Bond Trustee pursuant to the Bond
Indenture or with the Accounts Bank pursuant to the Accounts Agreement in the
Bond Proceeds Sub-account, with respect to the payments derived from the Loan
Agreement, or with respect to any actions or payments required under the Tax
Exemption Agreement which may result in the Series 2007A Bonds constituting “arbitrage
bonds” within the meaning of such term as used in Section 148 of the Code. The
Borrower covenants that neither it nor any related person, as defined in
Sections 144(a)(3) and 147(a) of the Code, shall, pursuant to an arrangement,
formal or informal, purchase obligations of the Issuer in an amount related to
the amount of the Series 2007A Bonds delivered in connection with the
transaction contemplated hereby.

 

Section 3.5     Completion of Project. The Borrower agrees to complete the
acquisition, construction and equipping of the Project substantially in
accordance with the plans and specifications on file with the Borrower, and to
undertake and complete the Project with due diligence. In the event moneys in
the Project Fund or the Bond Proceeds Sub-account available for payment of the
Costs of the Project are not sufficient to pay Costs of the Project in full,
the

 

5

 

Borrower shall cause the Project to be completed and shall pay from
other funds of the Borrower that portion of the Costs of the Project in excess
of the moneys available therefor in the Project Fund and the Bond Proceeds
Sub-account. The Issuer does not make any warranty, either express or implied,
that the moneys which will be deposited into the Project Fund will be
sufficient to pay all the Costs of the Project.

 

Section 3.6     Plans and
Specifications. The plans and
specifications for the Project are on file with the Borrower. The Borrower may
revise the plans and specifications at any time and from time to time prior to
the completion of the Project provided that no such change shall render
inaccurate any of the representations of the Borrower contained in this Loan
Agreement or in the Tax Exemption Agreement. No revision to the plans and
specifications shall be made which would cause the Costs of the Project to
exceed the amounts available in the Project Fund and the Bond Proceeds
Sub-account, or otherwise available to the Borrower, to pay such Costs. No
revisions to the plans and specifications for the Project will be made which
would affect the nature or purpose of the Project or any component thereof, unless
the Borrower shall have obtained an opinion of Bond Counsel that such revision
will not impair the exclusion from federal income taxation of the interest on
the Series 2007A Bonds.

 

Section 3.7     Records. The Borrower will
maintain such records in connection with the acquisition, construction and
equipping of the Project as are required to permit ready identification of the
Project and the items of Project Costs.

 

Section 3.8     Operation of Project. So
long as the Borrower owns the Project and the Series 2007A Bonds are
outstanding, the Project will be operated as a project as contemplated by the
Act and as Solid Waste Disposal Facilities as contemplated by
Section 142(a)(6) of the Code. To the extent that such definitions are
amended after the date of this Loan Agreement, the Borrower will use its
reasonable best efforts to operate the Project in accordance with such
amendments or changes if, or to the extent, required to maintain the validity
or tax exempt status of the Series 2007A Bonds; provided, however, that the
Borrower’s failure to operate the Project in such manner will not, in and of
itself, constitute a default under this Agreement.

 

ARTICLE IV

PAYMENTS, FUND DEPOSITS,

PREPAYMENTS AND OTHER PAYMENTS

 

Section 4.1     Payment of Principal,
Premium and Interest. The Borrower will duly
and punctually pay all loan repayments and other amounts payable under this
Loan Agreement at the dates and the places and in the manner provided in this
Loan Agreement according to the true intent and meaning hereof. Notwithstanding
any schedule of payments set forth herein, the Borrower agrees to make payments
hereunder, and to be liable therefor, at the times and in the amounts
(including principal and interest) equal to the amounts which are equal to the
principal of, premium, if any, and interest due on the Series 2007A Bonds and
the Borrower agrees to make payments equal to the amount due on the Series
2007A Bonds from time to time outstanding, whether as regularly scheduled
interest or principal payments, at maturity, upon acceleration or otherwise;
provided, however, that the Borrower may be entitled to certain credits on such
payments as permitted under Section 4.3 hereof.

 

6

 

Section 4.2     Loan Repayments. The Borrower covenants and agrees to make the
following loan repayments directly to the Bond Trustee for deposit into the
appropriate Fund established by the Bond Indenture on the following dates:

 

(a)        Interest: On or before
December 31, 2007 (or on the next preceding Business Day if such day is not a
Business Day), an amount which, after taking into account the amount available
for deposit in the Interest Fund representing capitalized interest to be
transferred from the Project Fund to the Interest Fund as described in Section
403 of the Indenture, will be sufficient to pay the interest to become due on
the Series 2007A Bonds on January 1, 2008, and on or before each Quarterly
Payment Date thereafter (or on the next preceding Business Day if such
Quarterly Payment Date is not a Business Day), after taking into account said
available amount of capitalized interest, an amount which is not less than
one-half (1/2) of the amount of interest to become due on the next succeeding
Interest Payment Date of the Series 2007A Bonds; provided, however, that the
Borrower may be entitled to certain credits on such payments as permitted under
Section 4.3 hereof.

 

(b)        Principal: On or before
each Quarterly Payment Date (or on the next preceding Business Day if such
Quarterly Payment Date is not a Business Day) commencing March 31, 2015, an
amount which is not less than one-fourth (1/4) of the amount of principal to
become due on the next succeeding January 1 principal payment date of the
Series 2007A Bonds (whether upon maturity or as a result of a Mandatory Sinking
Fund Redemption); provided, however, that the Borrower may be entitled to
certain credits on such payments as permitted under Section 4.3 hereof.

 

(c)        Commencing as of the first day of the month following any month in which
(i) the balance in the Debt Service Reserve Fund is less than the Debt Service
Reserve Requirement, (ii) a transfer is made from the Debt Service Reserve Fund
to the Interest Fund and/or the Bond Sinking Fund to cure a deficiency therein,
or (iii) a draw is made on a surety bond, insurance policy or letter of credit
on deposit in the Debt Service Reserve Fund to cure a deficiency in the
Interest Fund and/or the Bond Sinking Fund, the amount necessary to restore, in
one monthly deposit, if such deficiency is a result of a valuation loss
pursuant to Section 405 of the Bond Indenture, and otherwise in twelve equal
monthly deposits, the Debt Service Reserve Requirement (or if a draw has been
made on a surety bond, insurance policy or letter of credit on deposit in the
Debt Service Reserve Fund, to reinstate the maximum limits of such surety bond,
insurance policy or letter of credit within the time and in the manner required
by the document providing for such surety bond, insurance policy or letter of
credit).

 

Section 4.3     Credits on Loan
Repayments. Notwithstanding any
provision contained in this Loan Agreement or in the Bond Indenture to the
contrary:

 

(a)        any moneys deposited with the Bond Trustee by the Borrower or on behalf
of the Borrower by any Affiliate, for the payment of principal of, premium, if
any, or interest on, the Series 2007A Bonds or for payment of other amounts due
under this Loan Agreement, shall be credited against the obligation of the
Borrower to make such payment under this Loan Agreement as the same becomes
due; and

 

7

 

(b)        the principal amount of Series 2007A Bonds of any maturity delivered by
the Borrower to the Bond Trustee, or purchased by the Bond Trustee upon
direction of the Borrower and cancelled, shall be credited against the
obligation of the Borrower to make a loan repayment (including installment
payments corresponding to mandatory sinking fund payments on such Series 2007A
Bonds) related to such maturity of Series 2007A Bonds so delivered or purchased
to the extent directed by the Borrower; provided, however, that deposit or
purchase of a Series 2007A Bond of one maturity may not be credited against a
loan repayment which would be used, in the normal course, to retire a Series
2007A Bond of another maturity.

 

Section 4.4     Mandatory Prepayment Upon a Determination of
Taxability. If a final
action or decree constituting a Determination of Taxability occurs and the Bond
Trustee receives notice thereof, the Bond Trustee shall request, and the Borrower
shall pay all amounts due under this Loan Agreement, including without
limitation all principal of and accrued interest on the Series 2007A Bonds to
the date fixed by the Bond Trustee for redemption of all Series 2007A Bonds
pursuant to a mandatory redemption for a Determination of Taxability pursuant
to the Bond Indenture. The Bond Trustee shall give notice of redemption for the
first redemption date for which notice can be given upon notice of the
Determination of Taxability.

 

Section 4.5     Optional Prepayment. The Borrower shall be permitted at its option to
prepay the amounts due under this Loan Agreement for the payment of principal
of and redemption premium, if any, and interest on, the Series 2007A Bonds to
the extent and in the manner permitted or required by the Bond Indenture for
the optional prepayment of the Series 2007A Bonds. Such prepayments shall be
made by paying to the Bond Trustee an amount sufficient to redeem (when
redeemable) all or a part of the Series 2007A Bonds at the redemption prices
specified therefor in the Bond Indenture. No other such prepayment shall be
permitted except that other amounts required hereunder as additional payments
may be prepaid.

 

Section 4.6     Notice of Prepayment. The Borrower shall give the Bond Trustee not
less than 60 days prior written notice of any optional prepayment, which notice
shall designate the date of prepayment and the amount thereof and direct the
redemption of Series 2007A Bonds of the maturities and in the amounts to be
prepaid. Such notice may be withdrawn by the Borrower at any time prior to
delivery of the Written Request of the Borrower to the Bond Trustee described
in Section 5.1 of the Bond Indenture.

 

Section 4.7     Extraordinary Optional
Prepayment from Net Proceeds of Insurance or Condemnation. The Borrower shall have the right to prepay the
loan repayments due hereunder from the Net Proceeds of insurance, condemnation
or sale consummated under threat of condemnation by giving the Bond Trustee
direction to apply such Net Proceeds. In such event the Bond Trustee shall
apply such Net Proceeds promptly to prepay the loan repayments due hereunder
and the Series 2007A Bonds, without premium, plus accrued and unpaid interest
thereon to the date of prepayment. Prepayments under this Section shall be
credited against the mandatory installment payments to be made hereunder
corresponding to the related payments to be applied to the payment of the
Series 2007A Bonds. Notwithstanding partial prepayment made pursuant to this
Section, the Borrower is obligated to make the mandatory principal payments
hereunder pursuant to Section 4.2(b) hereof to the extent any portion of the
Series 2007A Bonds remains Outstanding.

 

8

 

Section 4.8        Mandatory Prepayment on the Completion Date. The Bond Trustee shall give notice to the
Borrower of all amounts on deposit in the Project Fund and the Bond Proceeds
Sub-account on the date of Substantial Completion not required for the payment
of remaining Costs of the Project and the Borrower agrees to the mandatory use
of such funds by the Bond Trustee to prepay in part the principal amount due
under this Loan Agreement to redeem Series 2007A Bonds as required under the
Bond Indenture upon payment of amounts, if any, in the Bond Proceeds
Sub-account to the Bond Trustee..

 

Section 4.9        Effect of Partial
Prepayment. Upon any partial
prepayment hereunder relating to the debt service on the Series 2007A Bonds,
each installment of interest which shall thereafter be payable hereunder shall
be reduced, taking into account the interest rate or rates on the Series 2007A
Bonds remaining outstanding after the redemption of Series 2007A Bonds from the
proceeds of such partial prepayment and after the purchase and delivery and
cancellation of Series 2007A Bonds described in Section 4.3(c) hereof, so that
the interest remaining payable on hereunder shall be sufficient to pay the
interest on such outstanding Series 2007A Bonds when due.

 

Section 4.10      Additional Payments. The Borrower agrees to pay directly all costs
incurred by or on behalf of the Issuer, the Bond Trustee or the Borrower in
connection with or incident to the issuance and sale of the Series 2007A Bonds
which exceed the amount on deposit in the Expense Fund described in Section 3.2
of the Bond Indenture.

 

The Borrower also agrees to pay the following items to the following
persons as additional payments under this Loan Agreement:

 

(1)        to the
Bond Trustee when due, an amount equal to all fees and expenses of the Bond
Trustee for services rendered under the Bond Indenture and all fees, expenses
and charges of any Paying Agents, registrars, counsel, accountants, consultants
or other persons incurred in the performance of services under the Bond
Indenture on request of the Bond Trustee for which the Bond Trustee and such
other persons are entitled to payment or reimbursement;

 

(2)        to the
Issuer, upon demand, an amount equal to all expenses incurred by the Issuer in
relation to the Series 2007A Bonds which are not otherwise required to be paid
by the Borrower under the terms of this Loan Agreement; and

 

(3)        to the
Issuer or the Bond Trustee, as the case may be, the amount of all advances of
funds made by either of them under the provisions of this Loan Agreement or an
amount equal to all advances of funds made by either of them under the Bond
Indenture, with interest thereon at the Bond Trustee’s announced prime rate per
annum from the date of each such advance.

 

Section 4.11      Borrower’s Obligations
Unconditional. The Issuer and the
Borrower agree that the Borrower shall bear all risk of damage to or
destruction in whole or in part of the Facility, its other Property or any part
thereof, including without limitation any loss, complete or partial, or
interruption in the use, occupancy or operation of the Facilities or its other
Property, or any manner or thing which for any reason interferes with, prevents
or renders burdensome, the

 

9

 

use or occupancy of the Facilities or its other Property or the compliance
by the Borrower with any of the terms of this Loan Agreement. In furtherance of
the foregoing, but without limiting any of the other provisions of this Loan
Agreement, the Borrower agrees that its obligations to pay the principal of and
interest hereunder and on the Series 2007A Bonds and to pay the other sums
herein provided for and to perform and observe its other agreements contained
herein shall be absolute and unconditional and that the Borrower shall not be
entitled to any abatement or diminution thereof or to any termination of this
Loan Agreement or the Series 2007A Bonds for any reason whatsoever.

 

ARTICLE V

COVENANTS OF THE BORROWER

 

Section 5.1            Affirmative  Covenants. The Borrower agrees that at all times the
Borrower will perform the following obligations set forth in this Section 5.1;
provided, however, the failure to perform any obligation under the Section 5.1
during the time the Senior Credit Facilities are outstanding and in effect
shall not constitute a default or Event of Default hereunder so long as the
Senior Lenders have waived compliance with, or amended the terms of, the
corresponding, if any, obligation under the Senior Credit Facilities.

 

(a)           Compliance with Laws. The Borrower shall comply in all material
respects with all Laws (other than Environmental Laws) applicable to it or to
its business or property.

 

(b)           Environmental Matters.

 

(i)            The Borrower shall (A) comply in all material
respects with all Environmental Laws, (B) keep the Facilities free of any Lien
imposed pursuant to any Environmental Law, (C) pay or cause to be paid when due
and payable by the Borrower any and all costs required in connection with any
Environmental Laws, including the cost of identifying the nature and extent of
the presence of any Materials of Environmental Concern in, on or about the
Facilities or on any real property owned or leased by the Borrower or on the
Mortgaged Property, and the cost of delineation, management, remediation,
removal, treatment and disposal of any such Materials of Environmental Concern,
and (D) use its best efforts to ensure that no Environmental Affiliate takes
any action or violates any Environmental Law that could reasonably be expected
to result in an Environmental Claim.

 

(ii)           The Borrower shall not use or allow the Facilities
to generate, manufacture, refine, produce, treat, store, handle, dispose of,
transfer, process or transport Materials of Environmental Concern other than in
compliance in all material respects with Environmental Laws.

 

10

 

(c)           Operations and Maintenance. The Borrower shall own, construct, operate and
maintain (or cause to be operated and maintained) the Aberdeen Expansion, and
shall own, operate and maintain (or cause to be operated and maintained) the
Existing Facilities in all material respects in accordance with (i) the terms
and provisions of the Transaction Documents, (ii) all applicable Governmental
Approvals and Laws and (iii) Prudent Ethanol Operating Practice.

 

(d)           Construction and Completion of the Aberdeen
Expansion; Maintenance of Properties.

 

(i)            The Borrower shall apply the proceeds of the
Series 2007A Bonds as required by or specified in the Bond Indenture, Loan
Agreement, Tax Exemption Agreement and any Written Request for disbursement of
such proceeds and shall apply the proceeds of the Senior Credit Facilities to
the purposes specified in the Senior Credit Facilities and in each Funding
Notice and shall duly construct and complete, or cause the construction and
completion of, the Aberdeen Expansion, and shall cause the Final Completion
Date with respect thereto to occur, substantially in accordance with (A) the
scope of work and other specifications set forth in the Design-Build Agreement
(including any Change Orders permitted under the Senior Credit Facilities), (B)
the Construction Budget, and (C) exercise of that degree of skill, diligence,
prudence, foresight and care reasonably to be expected of skilled and
experienced contractors in the ethanol industry in the United States of America,
in order to accomplish the desired result consistent with reliability, safety,
performance and expedition taking into account the provisions of the Facilities
Documents and any relevant manufacturer’s or licensor’s recommendations or
guidelines.

 

(ii)           The Borrower shall keep, or cause to be kept, in
good working order and condition, ordinary wear and tear excepted, all of its
properties and equipment related to the Facilities that are necessary or useful
in the proper conduct of its business.

 

(iii)          Except as required in connection with the
construction of the Aberdeen Expansion or the Huron Expansion, the Borrower
shall not permit the Facilities or any material portion thereof to be removed,
demolished or materially altered, unless such material portion that has been
removed, demolished or materially altered has been replaced or repaired as
permitted under this Loan Agreement.

 

(iv)          The Borrower shall continue to engage in
business of the same type as now conducted by it and do or cause to be done all
things necessary to preserve and keep in full force and effect (A) its

 

11

 

limited partnership existence
and good standing in the State of Delaware and (B) its material patents,
trademarks, trade names, copyrights, franchises and similar rights.

 

(v)           For the Aberdeen Expansion, the Borrower shall
cause all applicable air emissions tests to be completed to the satisfaction of
the Independent Engineer within the time periods specified for such tests in
the air permit.

 

(e)           Payment of Obligations. The Borrower shall pay and discharge as the
same shall become due and payable all of its obligations and liabilities,
including (i) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same (A) are subject to
a Contest or (B) are immaterial Taxes in an aggregate amount not in excess of
twenty-five thousand Dollars ($25,000) at any one time outstanding (taking into
account any interest and penalties that could accrue or be applicable to such
past-due Taxes), and provided that such Taxes are no more than forty-five (45)
days past due, (ii) all of its obligations and liabilities under its
Contractual Obligations, except as are subject to a Contest and (iii) all lawful
claims that, if unpaid, would by law become a Lien upon its properties (other
than Permitted Liens), unless the same are subject to a Contest.

 

(f)            Governmental Approvals. The Borrower shall maintain in full force and
effect, in the name of the Borrower, all Necessary Aberdeen Expansion Approvals
and obtain all Deferred Approvals prior to the time it is required to be
obtained, but in any event no later than the date required to be obtained under
applicable Law (other than any such failure to maintain or obtain that could
not reasonably be expected to have a Material Adverse Effect on the Borrower).

 

(g)           Use of Proceeds and Cash Flow.

 

(i)            All proceeds of the Senior Credit Facilities
shall be applied in accordance with the terms and conditions of the Senior
Credit Facilities and the Funding Notice, if any, pursuant to which any amounts
were funded.

 

(ii)           All proceeds of any equity contribution shall be
applied to pay the costs of the Aberdeen Expansion.

 

(iii)          All proceeds of the Series 2007A Bonds shall be
applied in accordance with the Bond Indenture, this Loan Agreement and the Tax
Exemption Agreement.

 

(iv)          All Cash Flow, Insurance Proceeds and
Condemnation Proceeds (as defined in the Senior Credit Agreement) shall be
applied in accordance with the Accounts Agreement and, upon the termination of
the Accounts Agreement, all insurance and condemnation proceeds shall be
applied as set forth in the Loan Agreement and the Bond Indenture.

 

12

 

(h)           Insurance. So long as the Senior Credit Facilities are outstanding and in effect
and at the Borrower’s expense, the Borrower shall at all times obtain and
maintain, or cause to be obtained and maintained, the types and amounts of
insurance listed and described on Schedule 7.01(h) of the Senior Credit
Agreement, in accordance with the terms and provisions set forth therein, and
shall obtain and maintain such other insurance as may be required pursuant to
the terms of any Transaction Document. The Borrower shall cause each such
insurance to be in place no less than ten (10) days prior to the date required,
and each required insurance policy shall be renewed or replaced no less than
thirty (30) days prior to the expiration thereof. From and after the date that
the Senior Credit Facilities are no longer in effect, the Borrower shall
continue to maintain the insurance required thereby as if the Senior Credit
Facilities were still in effect; provided, however, the Borrower may change
such insurance requirements as permitted by this Section. Not more frequently
than annually, the Borrower may retain a nationally recognized insurance
consultant familiar with the operation of ethanol plants and not objected to by
the Bond Trustee to prepare a written report specifying the insurance, the
policy limits and the deductibles or retained liability provision which such
consultant believes that the Borrower shall maintain. The Borrower may then
obtain and maintain such insurance as recommended by such consultant, provided
that (i) the Borrower certify in writing to the Bond Trustee that it believes
the recommended insurance, policy limits and deductibles cover all risks in
amounts that a reasonably prudent operator of an ethanol plant generally, and
the Facilities specifically, would obtain and maintain, (ii) the Borrower
delivers the written report of the insurance consultant to the Bond Trustee,
together with a reliance letter by the consultant to the Bond Trustee, and
(iii) the Borrower retains such a consultant at least once in every three years
to prepare an updated report and the Borrower follows the recommendations in
such updated reports.

 

(i)            Books and Records; Inspections. The Borrower shall keep proper books of record
and account in which complete, true and accurate entries in conformity with
GAAP and all requirements of Law shall be made of all financial transactions
and matters involving the assets and business of the Borrower, and shall
maintain such books of record and account in material conformity with
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower. The Borrower shall keep books and records
separate from the books and records of any other Person (including any
Affiliates of the Borrower) that accurately reflect all of its business
affairs, transactions and the documents and other instruments that underlie or
authorize all of its limited liability company actions. The Borrower shall
permit officers and designated representatives, agents or consultants of the
Bond Trustee to visit and inspect any of the properties of the Borrower
(including the Facilities), to examine its limited partnership, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its members, managers,
directors, officers and independent public accountants, all at the expense of
the Borrower (provided that so long as no default or Event of Default has
occurred and is continuing, such visits or inspections shall be at the expense
of the Borrower only once per fiscal quarter) and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided that if a default or Event
of Default has occurred and is continuing, the Bond Trustee (or any of their
respective officers or designated representatives, agents or consultants) may
do any of the foregoing at the expense of the Borrower at any time during
normal business hours and without advance notice.

 

13

 

(j)            Operating Budgets.

 

(i)            The Borrower shall, with respect to each of the
Existing Facilities, not later than the Closing Date, and, with respect to the
Aberdeen Expansion, not later than thirty (30) days before the Final Completion
Date, adopt an operating plan and a budget setting forth in reasonable detail
the projected requirements for Operation and Maintenance Expenses and
Maintenance Capital Expenses for such plant for the period from such date to the
conclusion of the then-current Fiscal Year and provide a copy of such operating
plan and budget at such time to the Bond Trustee. No less than forty-five (45)
days in advance of the beginning of each Fiscal Year thereafter, the Borrower
shall similarly adopt an operating plan and a budget for the Facilities setting
forth in reasonable detail the projected requirements for Operation and
Maintenance Expenses and Maintenance Capital Expenses for the ensuing Fiscal
Year and provide a copy of such operating plan and budget at such time to the
Bond Trustee. (Each such operating plan and budget is herein called an “Operating
Budget”.)  So long as the Senior Credit
Facilities are outstanding and in effect, the Operating Budget shall be
prepared in accordance with the requirements of the Senior Credit Agreement,
with a copy delivered to the Bond Trustee, and no separate Operating Budget
need be prepared hereunder. If the Borrower shall not have adopted an annual
Operating Budget before the beginning of any Fiscal Year, the Operating Budget
for the preceding Fiscal Year shall, until the adoption of an annual Operating
Budget by the Borrower be deemed to be in force and effective as the annual
Operating Budget for such upcoming Fiscal Year.

 

(ii)           Each Operating Budget delivered to the Bond
Trustee shall be accompanied by a memorandum detailing all material assumptions
used in the preparation of such operating budget, shall contain a line item for
each operating budget category, shall specify for each month and for each such
operating budget category the amount budgeted for such category for such month,
and shall clearly distinguish Operation and Maintenance Expenses and
Maintenance Capital Expenses.

 

(k)           Performance Tests.

 

(i)            All performance tests will be made in compliance
with the requirements of the Senior Credit Agreement and the Borrower will
deliver to the Bond Trustee copies of all notices, performance test reports and
Independent Engineer reviews delivered to the Senior Lenders at the same time
such notices, reports or reviews are delivered to the Senior Lenders.

 

14

 

(l)            Facilities Documents.

 

(i)            The Borrower shall maintain in full force and
effect, preserve, protect and defend its material rights under, and take all
actions necessary to prevent termination or cancellation (except by expiration
in accordance with its terms) of, the SNDAs, and each Facilities Document. The
Borrower shall exercise all material rights, discretion and remedies under each
SNDA and each Facilities Document, if any, in accordance with its terms and in
a manner consistent with (and subject to) the Borrower’s obligations under the
Financing Documents.

 

(ii)           Promptly upon execution of any Facilities
Document by the Borrower, the Borrower shall deliver to the Bond Trustee
certified copies of such Facilities Document and, if reasonably requested by
the Bond Trustee, any Ancillary Documents related thereto.

 

(iii)          If any of the SNDAs and the Facilities Documents
provides that such document will expire prior to the Final Maturity Date, then,
on or prior to the date that is forty-five (45) days (or such shorter period as
shall be satisfactory to the Bond Trustee) prior to the expiration date of such
document, the Borrower shall enter into an agreement replacing such document.

 

(m)          Preservation of Title; Acquisition of Additional
Property.

 

(i)            The Borrower shall preserve and maintain (A)
good, marketable and insurable fee interest in the Sites (except for the Leased
Premises) and valid easement interest to its easement interest in the Sites,
(B) good and valid leasehold interest in the Leased Premises and (C) good,
legal and valid title to all of its other respective material properties and
assets, in each case free and clear of all Liens other than Permitted Liens. If
the Borrower at any time acquires any real property or leasehold or other
interest in real property (including, to the extent reasonably requested by the
Bond Trustee, with respect to any material easement or right-of-way not covered
by the Subordinate Mortgages), the Borrower shall, promptly upon such
acquisition, execute, deliver and record a supplement to the applicable
Subordinate Mortgage, reasonably satisfactory in form and substance to the Bond
Trustee, subjecting such real property or leasehold or other interest to the
Lien and security interest created by such Subordinate Mortgage. If required by
the Senior Lenders with respect to the Senior Credit Facilities or if
reasonably requested by the Bond Trustee, the Borrower shall obtain an
appropriate endorsement or supplement to any Title Insurance Policy insuring
the Lien of the Bond Collateral

 

15

 

Documents in such additional
property, subject only to Permitted Liens.

 

(ii)           If required by the Senior Lenders with respect
to the Senior Credit Facilities or if reasonably requested by the Bond Trustee
prior to the acquisition or lease of any such additional real property
interests (other than easements that do not involve soil disturbance), the
Borrower shall deliver to the Bond Trustee an Environmental Site Assessment
Report(s) with respect to such real property, in each case along with a
corresponding reliance letter from the consultant issuing such report(s) (to
the extent such report(s) does not permit reliance thereon by the Bond Trustee).
Each such Environmental Site Assessment Report(s) shall not identify any
material liability associated with the condition of such real property.

 

(n)           Maintenance of Liens; Creation of Liens on Newly
Acquired Property.

 

(i)            The Borrower shall take or cause to be taken all
action necessary or desirable to maintain and preserve the Lien of the Bond
Collateral Documents and the priority thereof.

 

(ii)           The Borrower shall take all actions required to
cause each Additional Facilities Document to be or become subject to the Lien
of the Bond Collateral Documents (whether by amendment to any agreement or
otherwise) and shall deliver or cause to be delivered to the Bond Trustee all
Ancillary Documents related thereto.

 

(o)           Certificate of Formation. The Borrower shall observe all of the
separateness and other provisions and procedures of its Bond Collateral
Documents.

 

(p)           Required LP Provisions. The Borrower shall comply at all times with
the required limited partnership provisions set forth on Schedule 5.24(a) of
the Senior Credit Agreement.

 

(q)           Further Assurances. Upon written request of the Bond Trustee, the
Borrower shall promptly perform or cause to be performed any and all acts and
execute or cause to be executed any and all documents (including UCC financing
statements and UCC continuation statements):

 

(i)            that are necessary or advisable for compliance
with Section 5.1(n)(i);

 

(ii)           for the purposes of ensuring the validity and
legality of this Loan Agreement or any other Financing Document and the rights
of the Bond Trustee hereunder or thereunder; and

 

16

 

(iii)          for the purposes of facilitating the proper
exercise of rights and powers granted to the Bond Trustee under this Loan
Agreement or any other Bond Document.

 

(r)            Priority Ranking. The payment obligations of the Borrower with
respect to this Loan Agreement constitute direct general obligations of the
Borrower, subject to the Intercreditor Agreement and Accounts Agreement.

 

(s)           Quarterly Calculations.

 

(i)            Not more than three (3) Business Days prior to
each Quarterly Payment Date, the Borrower shall calculate the Historical Debt
Service Coverage Ratio and the Prospective Debt Service Coverage Ratio, and
shall provide written evidence to the Bond Trustee of such calculations
certified by a Financial Officer of the Borrower.

 

(t)            Financial Model.

 

(i)            No less than forty-five (45) days prior to the
end of each Fiscal Year (commencing with the Fiscal Year ended September 30,
2008), the Borrower shall deliver to the Bond Trustee a proposed updated
Financial Model, as required and described in the Senior Credit Agreement.

 

(ii)           If in any Fiscal Year (A) the actual Cash Flow
for the completed Fiscal Quarters in such Fiscal Year (or, in the case of the
Fiscal Year in which the Closing Date occurs, the period from the Closing Date
to the end of the most recent completed Fiscal Quarter) (such period, the “Specified
Period”) is ninety percent (90%) or less of the projections for such period set
forth in the then-current Financial Model, or (B) Operation and Maintenance
Expenses and Maintenance Capital Expenses for the Specified Period are, in the
aggregate, ten percent (10%) or more above the projections for such period set
forth in the then-current Financial Model, the Borrower shall, no less than
thirty (30) days prior to the end of the immediately following Fiscal Quarter,
deliver to the Bond Trustee a proposed updated Financial Model, as required and
described in the Senior Credit Agreement; provided that if (x) the Historical
Debt Service Coverage Ratio calculated as of the most recent Quarterly Payment
Date exceeds 4.0x and (y) the Borrower delivers to the Bond Trustee a
certificate certifying that the Prospective Debt Service Coverage Ratio
calculated as of such most recent Quarterly Payment Date exceeds 4.0x
notwithstanding the deviation from the Financial Model described in item (A) or
(B) above, as applicable, the Borrower shall not be required to deliver an
updated Financial Model pursuant to this Section.

 

17

 

Section 5.2            Negative
Covenants. The Borrower agrees that the Borrower will
perform the obligations set forth in this Section 5.2; provided, however, the
failure to perform any obligation under this Section 5.2 during the time the
Senior Credit Facilities are outstanding and in effect shall not constitute a
default or Event of Default hereunder so long as the Senior Lenders have waived
compliance with, or amended the terms of, the corresponding, if any, obligation
under the Senior Credit Facilities.

 

(a)           Restrictions on Indebtedness of the Borrower. The Borrower will not create, incur, assume or
suffer to exist any Indebtedness except:

 

(i)            the Obligations and the Refinancing (as defined
in the Intercreditor Agreement), if any; provided the aggregate principal
amount thereof shall not exceed $150,000,000;

 

(ii)           Indebtedness under the Bond Documents;

 

(iii)          Indebtedness under the Permitted Commodity
Hedging Arrangements;

 

(iv)          accounts payable to trade creditors incurred in
the ordinary course of business and not more than forty-five (45) days past
due; and

 

(v)           obligations as lessee under operating leases or
leases for the rental of any real or personal property which are required by
GAAP to be capitalized where all such leases (other than railcar leases) under
this Section 5.2(v) do not, in the aggregate, require the Borrower to make
scheduled payments to the lessors in any Fiscal Year in excess of two hundred
thousand Dollars ($200,000) in the aggregate;

 

(vi)          indebtedness for borrowed money up to
$14,000,000 which may be secured by liens and/or security interests in any
property of the Borrower, except for the funds and accounts established under
the Bond Indenture, and consented to by the Senior Lenders if the Senior Credit
Facilities are outstanding and in effect; provided, however, the amount of
indebtedness incurred under this Section 5.2 (a) (vi) and Section 5.2. (a) (i)
shall not exceed in the aggregate $150,000,000.

 

(b)           Liens. The Borrower shall not create, incur, assume or suffer to exist any
Lien upon any of its property, revenues or assets (including its Equity
Interests), whether now owned or hereafter acquired, except:

 

(i)            Liens in favor, or for the benefit, of the
Senior Lenders securing the Senior Credit Facilities and liens securing the
Obligations and the Refinancing permitted pursuant to Section 5.2(a)(i) hereof;

 

(ii)           Liens created the Bond Collateral Documents;

 

18

 

(iii)          Liens for taxes, assessments and other
governmental charges that are not yet due or the payment of which is the
subject of a Contest;

 

(iv)          Liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not yet due or
the payment of which is the subject of a Contest;

 

(v)           any Liens reflected on the Title Insurance
Policy or any Title Continuation;

 

(vi)          Liens arising by reason of judgments that are
subject to a Contest; and

 

(vii)         Liens in respect of personal property under
which the liability of the Borrower does not exceed two hundred thousand
dollars ($200,000) in the aggregate;

 

(viii)        Liens securing up to $14,000,000 of indebtedness
for borrowed money permitted pursuant to Section 5.2 (a) (vi) hereof.

 

(c)           Permitted Investments. Except for the investment of amounts on deposit
with the Bond Trustee under the Bond Indenture which are governed by the Bond
Indenture, the Borrower shall not make any investments, loans or advances
(whether by purchase of stocks, bonds, notes or other securities, loans,
extensions of credit, advances or otherwise) except for investments in Cash
Equivalents.

 

(d)           Change in Business. The Borrower shall not (i) enter into or
engage in any business other than the ownership, operation, maintenance,
development, start-up, testing, use and financing of the Aberdeen Expansion and
the Huron Expansion, the ownership, operation, maintenance, use and financing
of the Existing Facilities and all activities reasonably related thereto or
(ii) change in any material respect the scope of the Facilities from that which
is contemplated as of the date hereof.

 

(e)           Equity Issuances. The Borrower shall not issue any Equity
Interests unless such Equity Interests are immediately pledged to the Bond
Trustee (for the benefit of the Bondholders) on a perfected basis pursuant to
the Subordinate Equity Pledge Agreement or, if necessary, a supplement thereto
or a pledge and security agreement in substantially the form of the Subordinate
Equity Pledge Agreement on a second lien priority to the liens securing the
Senior Credit Facilities.

 

(f)            Asset Dispositions. The Borrower shall not sell, lease, assign,
transfer or otherwise dispose of assets, including the Facilities, of the
Borrower (other than Products), whether now owned or hereafter acquired,
except:

 

(i)            disposal of assets that are promptly replaced in
accordance with the then current Operating Budgets;

 

19

 

(ii)           to the extent that such assets are uneconomical,
obsolete or no longer useful or no longer usable in connection with the
operation or maintenance of the Facilities; and

 

(iii)          disposal of assets with a fair market value, or
at a disposal price, of less than one million dollars ($1,000,000) in the
aggregate during any Fiscal Year; provided, that such disposal does not, and
would not reasonably be expected to, adversely affect the construction,
operation or maintenance of the Facilities.

 

(g)           Consolidation, Merger. The Borrower will not (i) directly or
indirectly liquidate, wind up, terminate, reorganize or dissolve itself (or
suffer any liquidation, winding up, termination, reorganization or dissolution)
or otherwise wind up; or (ii) acquire (in one transaction or a series of
related transactions) all or any substantial part of the assets, property or
business of, or any assets that constitute a division or operating unit of, the
business of any Person or otherwise merge or consolidate with or into any other
Person.

 

(h)           Transactions with Affiliates. The Borrower shall not enter into or cause,
suffer or permit to exist any arrangement or contract with any of its
Affiliates or any other Person that owns, directly or indirectly, any Equity
Interest in the Borrower unless such arrangement or contract (i) is fair and
reasonable to the Borrower and (ii) is an arrangement or contract that is on an
arm’s-length basis and contains terms no less favorable than those that would
be entered into by a prudent Person in the position of the Borrower with a
Person that is not one of its Affiliates.

 

(i)            Accounts.

 

(i)            So long as the Senior Credit Facilities are
outstanding, the Borrower shall not maintain, establish or use any deposit
account, securities account (as each is defined in the UCC) or other banking
account other than in compliance with the Senior Credit Agreement.

 

(ii)           Upon the termination of the Senior Credit
Facilities, the Borrower shall give the Bond Trustee written notice of each
deposit account, securities account (as each term is defined in the UCC) or
other banking account it maintains, establishes or uses and shall deliver to
the Bond Trustee a control agreement (meeting the requirements of the UCC) to
perfect the security interest of the Bond Trustee therein.

 

(j)            Subsidiaries. The Borrower shall not create or acquire any Subsidiary or enter into
any partnership or joint venture.

 

(k)           ERISA. The Borrower will not engage in any prohibited transactions under
Section 406 of ERISA or under Section 4975 of the Code with respect to any Plan
or any other employee benefit plan subject to ERISA that could reasonably
result in a material liability to the Borrower. The Borrower will not incur any
obligation or liability in respect of any Plan,

 

20

 

Multiemployer
Plan or employee welfare benefit plan providing post-retirement welfare benefits
(other than a plan providing continue coverage under Part 6 of Title I of ERISA
or similar state law).

 

(l)            Taxes. The Borrower shall not make any election to be treated as an
association taxable as a corporation for federal, state or local tax purposes.

 

(m)          Facilities Documents. The Borrower shall not enter into, or consent
to, any amendment, notification, supplement, waiver, consent or assignments of
any of its rights in respect of the SNDAS and the Facilities Documents except
in compliance with the terms of the Senior Credit Agreement. The Borrower will
not enter into or approve any Change Orders or Additional Aberdeen Facilities
except in compliance with the terms of the Senior Credit Agreement.

 

(n)           Suspension or Abandonment. The Borrower shall not (i) permit or suffer to
exist an Event of Abandonment or (ii) order or consent to any suspension of
work under any Facilities Document unless such action is approved by the Senior
Lenders.

 

(o)           Use of Proceeds; Margin Regulations. The Borrower shall not use any proceeds of the
Series 2007A Bonds other than in accordance with the provisions of this Loan
Agreement, the Bond Indenture or the Tax Exemption Agreement. The Borrower
shall not use any part of the proceeds of the Series 2007A Bonds to purchase or
carry any Margin Stock (as defined in Regulation U) or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock. The Borrower
shall not use the proceeds of the Series 2007A Bonds in a manner that could
violate or be inconsistent with the provisions of Regulations T, U or X.

 

(p)           Environmental Matters. The Borrower shall not permit (i) any
underground storage tanks to be located on any property owned or leased by the
Borrower, (ii) any asbestos to be contained in or form part of any building,
building component, structure or office space owned or leased by the Borrower,
(iii) any polychlorinated biphenyls (PCBs) to be used or stored at any property
owned or leased by the Borrower or (iv) any other Materials of Environmental
Concern to be used, stored or otherwise be present at any property owned or
leased by the Borrower, other than Materials of Environmental Concern necessary
for the operation of the Facilities and used in accordance with all Laws and
Prudent Ethanol Operating Practice.

 

(q)           Restricted Payments. Except as otherwise permitted under Section
2.06(e) of the Senior Credit Agreement, the Borrower shall not make any
Restricted Payments unless each of the conditions set forth below has been
satisfied:

 

(i)            the Conversion Date shall have occurred;

 

(ii)           such Restricted Payment is made on, or within
thirty (30) days following, a Quarterly Payment Date (provided, so long as the
Senior Credit Facilities are outstanding and in effect, that such Restricted
Payment is made only from funds on deposit in or standing to the credit of the
Revenue Account or the Prepayment

 

21

 

Holding Account (as both are
defined in the Accounts Agreement), as the case may be, on such Quarterly
Payment Date);

 

(iii)          no default or Event of Default under the Senior
Credit Agreement or this Loan Agreement has occurred and is continuing or would
occur as a result of such Restricted Payment;

 

(iv)          each of the Debt Service Reserve Account and the
Working Capital Reserve Account under the Accounts Agreement and after the
Senior Credit Facilities are no longer outstanding the working capital reserve
account and the capital expense account required by this Loan Agreement is
fully funded to any applicable required level;

 

(v)           each of the Historical Debt Service Coverage
Ratio and the Prospective Debt Service Coverage Ratio, calculated as of such
Quarterly Payment Date with respect to Debt Service on the Senior Credit
Agreement so long as they are outstanding and thereafter Debt Service on the
Loan Agreement, are greater than or equal to 1.5:1.0; and

 

(vi)          the Bond Trustee has received a certificate,
duly executed by an Authorized Officer of the Borrower, confirming that each of
the conditions set forth in clauses (i) through (v) of this Section 5.2(q) have
been satisfied on and as of the date such Restricted Payment is requested to be
made, and setting forth a detailed calculation of each of the Historical Debt
Service Coverage Ratio and Prospective Debt Service Coverage Ratio with respect
to Debt Service on the Senior Credit Agreement so long as they are outstanding
and thereafter Debt Service on the Loan Agreement,;

 

Provided that notwithstanding the foregoing, Restricted
Payments shall be permitted to the extent set forth in priority twelfth of
Section 6.01(b) of the Accounts Agreement.

 

(r)            Construction Budget. The Borrower shall construct the Aberdeen
Expansion in compliance with the construction budget requirements of the Senior
Credit Agreement with only such change orders and reallocations of line items
as permitted therein or otherwise consented to by the Senior Lenders.

 

(s)           Commodity Hedging Arrangements. The Borrower shall not enter into any
Commodity Hedging Arrangements that:

 

(i)            are not in accordance with the Commodity Risk
Management Plans; or

 

(ii)           are for speculative purposes.

 

22

 

(t)            Accounting Changes. The Borrower shall not make any change in (i)
its accounting policies or reporting practices or (ii) its Fiscal Year without
the prior written consent of the Senior Lenders so long as the Senior Credit
Facilities are outstanding and in effect and without prior written notice to
the Bond Trustee.

 

(u)           Huron Expansion Contracts. The Borrower will not enter into or be a party
to any agreement or contract relating to the Huron Expansion except as
permitted by the Senior Credit Agreement.

 

Section 5.3            Reporting
Requirements. The Borrower will furnish to the Bond Trustee
the following:

 

(a)           Quarterly Financial Statements. As soon as available and in any event within
forty-five (45) days after the end of the first three Fiscal Quarters of each
Fiscal Year, balance sheets and statements of income and cash flows of the
Borrower for such Fiscal Quarter and for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal Quarter,
prepared in accordance with GAAP.

 

(b)           Annual Financial Statements. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a copy of the annual audit
report for such Fiscal Year for the Borrower including therein balance sheets
as of the end of such Fiscal Year and statements of income and cash flows of
the Borrower for such Fiscal Year, and accompanied by an unqualified opinion of
the auditors selected by the Borrower stating that such financial statements
present fairly in all material respects the financial position of the Borrower
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior periods, which report and opinion shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit.

 

(c)           Certificate of Financial Officer. Concurrently with the delivery of the
financial statements referred to in Section 5.3(a) and (b), a certificate
executed by a Financial Officer of the Borrower stating that:

 

(i)            such financial statements fairly present in all
material respects the financial condition and results of operations of such
Person on the dates and for the periods indicated in accordance with GAAP
subject, in the case of interim financial statements, to the absence of notes
and normally recurring year-end adjustments;

 

(ii)           such Financial Officer has reviewed the terms of
the Bond Collateral Documents and has made, or caused to be made under his or
her supervision, a review in reasonable detail of the business and financial
condition of such Person during the accounting period covered by such financial
statements; and

 

(iii)          as a result of such review such Financial
Officer has concluded that no Default or Event of Default under either the
Senior Credit Agreement or the Bond Documents has occurred during the period
covered by such financial statements through and including the

 

23

 

date of such certificate or, if
any such Default or Event of Default has occurred, specifying the nature and
extent thereof and, if continuing, the action that the Borrower has taken and
proposes to take in respect thereof.

 

(d)           Auditor’s Letters. Promptly upon receipt, copies of any detailed
audit reports, management letters or recommendations submitted to the Borrower
(or the audit or finance committee of the Borrower) by the auditors selected by
the Borrower in connection with the accounts or books of the Borrower, or any
audit of the Borrower.

 

(e)           Notice of Default or Event of Default. As soon as possible and in any event within
five (5) days after the Borrower obtains or should have obtained knowledge of
any default or Event of Default under this Loan Agreement, a statement of an
Authorized Officer of the Borrower setting forth details of such default or
Event of Default and the action that the Borrower has taken and proposes to
take with respect thereto.

 

(f)            Notice of Other Events. Within five (5) days after the Borrower
obtains knowledge thereof, a statement of an Authorized Officer of the Borrower
setting forth details of:

 

(i)            any litigation or governmental proceeding
pending or threatened in writing against the Borrower, the Aberdeen Expansion
or the Parent Company;

 

(ii)           any litigation or governmental proceeding
pending or threatened in writing against any Facilities Party that has or could
reasonably be expected to have a Material Adverse Effect;

 

(iii)          any other event, act or condition that has or
could reasonably be expected to have a Material Adverse Effect;

 

(iv)          notification of any event of force majeure or
similar event under a Facilities Document; or

 

(v)           notification of any other change in
circumstances that could reasonably be expected to result in an increase of
more than five hundred thousand Dollars ($500,000) in the cost of the Aberdeen
Expansion.

 

(g)           Facilities Document or Additional Facilities
Document Notice. Promptly after
delivery or receipt thereof, copies of all material notices or documents given
or received by the Borrower, pursuant to any of the SNDAs, the Facilities
Documents and any Additional Facilities Document including:

 

(i)            any Change Orders or any written notices or
communications related thereto;

 

(ii)           any written notice alleging any breach or
default thereunder; and

 

24

 

(iii)          any written notice regarding, or request for
consent to, any assignment, termination, modification, waiver or variation
thereof.

 

(h)           Design-Build Agreement Notice. Within two (2) days following receipt thereof,
the Borrower shall deliver to the Bond Trustee any monthly or other periodic
report provided to the Borrower under any Design-Build Agreement.

 

(i)            ERISA Event. As soon as possible and in any event within five (5) days after the
Borrower knows, or has reason to know, that any of the events described below
has occurred, a duly executed certificate of an Authorized Officer of the
Borrower setting forth the details of each such event and the action that the
Borrower proposes to take with respect thereto, together with a copy of any
notice or filing from the PBGC, Internal Revenue Service or Department of Labor
or that may be required by the PBGC or other U.S. Governmental Authority with
respect to each such event:

 

(i)            any Termination Event with respect to any Plan
or a Multiemployer Plan has occurred or will occur that could reasonably be
expected to result in any liability to the Borrower;

 

(ii)           any condition exists with respect to a Plan that
presents a material risk of termination of a Plan (other than a standard
termination under Section 4041(b) of ERISA) or imposition of an excise tax or
other material liability on the Borrower;

 

(iii)          an application has been filed for a waiver of
the minimum funding standard under Section 412 of the Code or Section 302 of
ERISA under any Plan;

 

(iv)          with respect to any Plan or any other employee
benefit plan subject to ERISA, the Borrower or any Plan fiduciary has engaged
in a “prohibited transaction,” as defined in Section 4975 of the Code or as
described in Section 406 of ERISA, that is not exempt under Section 4975 of the
Code and Section 408 of ERISA that could reasonably be expected to result in a
material liability to the Borrower;

 

(v)           there exists any Unfunded Benefit Liabilities
under any Plan;

 

(vi)          any condition exists with respect to a
Multiemployer Plan that presents a risk of a partial or complete withdrawal (as
described in Section 4203 or 4205 of ERISA) from a Multiemployer Plan that
could reasonably be expected to result in any liability to the Borrower;

 

(vii)         a “default” (as defined in Section 4219(c)(5) of
ERISA) occurs with respect to payments to a Multiemployer Plan and such default
could reasonably be expected to result in any liability to the Borrower;

 

25

 

(viii)        a Multiemployer Plan is in “reorganization” (as
defined in Section 418 of the Code or Section 4241 of ERISA) or is “insolvent”
(as defined in Section 4245 of ERISA);

 

(ix)           the Borrower and/or any ERISA Affiliate has
incurred any potential withdrawal liability (as defined in accordance with
Title IV of ERISA); or

 

(x)            there is an action brought against the Borrower
or any ERISA Affiliate under Section 502 of ERISA with respect to its failure
to comply with Section 515 of ERISA with respect to any Plan or any other
employee benefit plan subject to ERISA.

 

(j)            Notice of PBGC Demand Letter. As soon as possible and in any event within
five (5) days after the receipt by the Borrower of a demand letter from the
PBGC notifying the Borrower of its final decision finding liability and the
date by which such liability must be paid, a copy of such letter, together with
a duly executed certificate an Authorized Officer of the Borrower setting forth
the action the Borrower proposes to take with respect thereto.

 

(k)           Notice of Environmental Event. Promptly and in any event within five (5) days
after the existence of any of the following conditions, a duly executed
certificate of an Authorized Officer of the Borrower specifying in detail the
nature of such condition and, if applicable, the Borrower’s proposed response
thereto:

 

(i)            receipt by the Borrower of any written
communication from a Governmental Authority or any written communication from
any other Person (other than a privileged communication from legal counsel to
the Borrower) or other source of written information, including reports
prepared by the Borrower, that alleges or indicates that the Borrower or an
Environmental Affiliate is not in compliance in all material respects with
applicable Environmental Laws or Environmental Approvals and such alleged
noncompliance could reasonably be expected to form the basis of an Environmental
Claim against the Borrower;

 

(ii)           the Borrower obtains knowledge that there exists
any Environmental Claim pending or threatened in writing against the Borrower
or an Environmental Affiliate;

 

(iii)          the Borrower obtains knowledge of any release,
threatened release, emission, discharge or disposal of any Material of
Environmental Concern or obtains knowledge of any material non-compliance with
any Environmental Law that, in either case, could reasonably be expected to
form the basis of an Environmental Claim against the Borrower or any
Environmental Affiliate; or

 

26

 

(iv)          any Removal, Remedial or Response action taken,
or required to be taken, by the Borrower or any other person in response to any
Material of Environmental Concern in, at, on or under, a part of or about the
Borrower’s properties or any other property or any notice, claim or other
information that the Borrower might be subject to an Environmental Claim.

 

(l)            Materials of Environmental Concern. The Borrower will maintain and make available
for inspection by the Bond Trustee, on reasonable notice during regular
business hours, accurate and complete records of all non-privileged
correspondence, investigations, studies, sampling and testing conducted, and
any and all remedial actions taken, by the Borrower or, to the best of the
Borrower’s knowledge and to the extent obtained by the Borrower, by any
Governmental Authority or other Person in respect of Materials of Environmental
Concern that could reasonably be expected to form the basis of an Environmental
Claim on or affecting the Facilities.

 

(m)          Deferred Approvals. Promptly after receipt thereof, copies of each
Deferred Approval obtained by the Borrower, together with applicable documents,
if any, relating thereto, certified as true, complete and correct by an
Authorized Officer of the Borrower.

 

(n)           Operating Statements. Within forty-five (45) days after the end of
each Fiscal Quarter and concurrently with the delivery of the annual financial
statements referred to in Section 5.3(b), the Borrower shall furnish to the
Bond Trustee an Operating Statement regarding the operation and performance of
the Facilities for each monthly, quarterly and, in the case of the last
quarterly Operating Statement for each year, annual period substantially in the
form of required by the Senior Credit Agreement. Such Operating Statements
shall contain (i) line items corresponding to each Operating Budget Category of
the then current Operating Budget showing in reasonable detail by Operating
Budget Category all actual expenses related to the operation and maintenance of
the Facilities compared to the budgeted expenses for each such Operating Budget
Category for such period, (ii) information showing the amount of ethanol and
other Products produced by the Facilities during such period and (iii)
information showing (A) the amount of ethanol sold by the Borrower from the
Facilities to pursuant to the Ethanol Marketing Agreement, (B) the amount of
Distillers Grains sold by the Borrower from the Facilities pursuant to the
Co-Product Marketing Agreement, and (C) the amount, if any, of other sales of
ethanol and/or Distillers Grains sold by the Borrower from the Facilities,
together with an explanation of any such sale and identification of the
purchaser, and (D) the amount, if any, of other Products sold by the Borrower
from the Facilities, together with an explanation of any such sale and
identification of the purchaser. The Operating Statements shall be certified as
complete and correct by an Authorized Officer of the Borrower, who also shall
certify that, the expenses reflected therein for the year to date and for each
month or quarter therein did not exceed the provision for such period contained
in the Operating Budget then in effect by more than ten percent (10%) or, if
any of such certifications cannot be given, stating in reasonable detail the
necessary qualifications to such certifications.

 

(o)           Other Information. The Borrower shall furnish the Bond Trustee
with such other information reasonably requested by the Bond Trustee.

 

27

 

Section 5.4     Maintenance of
Existence and Status. The
Borrower agrees that it will at all times maintain its existence as a Delaware
limited partnership and that it will neither take any action nor suffer any
action to be taken by others which will alter, change or destroy its status as
a Delaware limited partnership.

 

The Borrower further agrees that it will not act or fail to act in any
other manner which would adversely affect the exclusion from federal income tax
of the interest earned by the owners of the Series 2007A Bonds.

 

The Borrower also covenants to cause any order, writ or warrant of
attachment, garnishment, execution, replevin or similar process filed against
any part of the funds or accounts held by the Bond Trustee under the Bond
Indenture to be discharged, vacated, bonded or stayed within 90 days after such
filing (which 90-day period shall be extended for so long as the Borrower is contesting
such process in good faith), but, notwithstanding the foregoing, in any event
not later than five days prior to any proposed execution or enforcement with
respect to such filing or any transfer of moneys or investments pursuant to
such filing.

 

Section 5.5     Consent to Assignment
of Loan Agreement to the Bond Trustee. The Borrower agrees that this Loan Agreement (excluding Unassigned
Rights) and payments to be made hereunder shall be assigned and pledged to
secure the payment of the Series 2007A Bonds and all of the rights, interests,
powers, privileges and benefits accruing to or vested in the Issuer thereunder
may be protected and enforced in conformity with the Bond Indenture and may be
assigned by the Issuer to the Bond Trustee as additional security for the
Series 2007A Bonds, other than Unassigned Rights.

 

Section 5.6     Transfer of Project
Assets.
The provisions of the Bond
Indenture notwithstanding, the Borrower covenants and agrees it will not sell,
lease or otherwise dispose of (including without limitation any involuntary
disposition) in excess of 2% in the aggregate of the Project financed or
refinanced with the proceeds of the Series 2007A Bonds unless (a) prior to such
sale, lease or other disposition there is delivered to the Bond Trustee an Officer’s
Certificate of the Borrower stating that, in the judgment of the signer, such
Property has become inadequate, obsolete or worn out and that any amounts
received by the Borrower upon such disposition shall be applied by the Borrower
to acquire additional Property constituting a “project” under the Act; or (b)
prior to such sale, lease or disposition, the Borrower delivers to the Bond
Trustee a written opinion of nationally recognized municipal bond counsel to
the effect that any such disposition will not adversely affect the validity of
the Series 2007A Bonds or any exemption of the interest on the Series 2007A
Bonds from federal income taxation to which such Series 2007A Bonds would
otherwise be entitled. The Borrower hereby agrees to apply the proceeds of any
disposition by it of Property of the type described in subsection (a) above as
provided in such subsection and agrees that any Property acquired with such
proceeds shall be deemed to be Property financed or refinanced with the
proceeds of the Series 2007A Bonds for the purposes of applying the provisions
of this Loan Agreement and the Tax Exemption Agreement.

 

Section 5.7     Indemnity. The Borrower will, and hereby does, pay,
protect, indemnify and save the Issuer and the Bond Trustee and its officers,
directors, employees and agents harmless from and against any and all
liabilities, losses, damages, costs and expenses (including attorneys’ fees and
expenses of the Issuer and the Bond Trustee), causes of action, suits, claims,

 

28

 

demands
and judgments of whatsoever kind and nature (including those arising or
resulting from any injury to or death of any person or damage to property or
from any present or future statute, law, ordinance, rule or regulation related
to the protection of the environment or hazardous substances) arising from or
in any manner directly or indirectly growing out of or connected with the
following:

 

(1)           the use, non-use, condition or occupancy of any
of the Borrower’s Property, any repairs, construction, alterations, renovation,
relocation, remodeling and equipping thereof or thereto or the condition of any
of the Borrower’s Property including adjoining sidewalks, streets or alleys and
any equipment or facilities at any time located on its Property or used in
connection therewith which are not the result of the negligence of the Issuer
or the Bond Trustee;

 

(2)           violation of any agreement, warranty, covenant
or condition of this Loan Agreement, except by the Issuer or the Bond Trustee;

 

(3)           violation of any contract, agreement or
restriction by the Borrower relating to its Property;

 

(4)           violation of any law, ordinance, regulation or
court order affecting any of the Borrower’s Property or the ownership,
occupancy or use thereof;

 

(5)           any statement or information concerning the
Borrower, any of its or their officers and members or its or their Property,
contained in any official statement furnished to the purchasers of the Series
2007A Bonds, that is untrue or incorrect in any material respect, and any
omission from such official statement of any statement or information which
should be contained therein for the purpose for which the same is to be used or
which is necessary to make the statements therein concerning the Borrower, any of
its or their officers and members and its or their Property not misleading in
any material respect, provided that such official statement has been approved
by the Borrower and that the indemnified person did not have knowledge of the
omission or misstatement and did not use such official statement with reckless
disregard of or gross negligence in regard to the accuracy or completeness of
such official statement; and

 

(6)           Any liability, loss, cost or expense suffered by
the Bond Trustee arising out of or relating to the duties as trustee for the
Series 2007A Bonds, except to the extent resulting from the gross negligence or
willful misconduct of the Bond Trustee.

 

Such indemnity shall extend to each person, if any, who “controls” the
Issuer or the Bond Trustee, as the case may be, as that term is defined in
Section 15 of the Securities Act of 1933, as amended.

 

In the event of the settlement of any litigation commenced or
threatened, such indemnity shall be limited to the aggregate amount paid under
a settlement effected with the written consent of the Borrower.

 

The Issuer and the Bond Trustee shall promptly notify the Borrower and
the Borrower in writing of any claim or action brought against the Issuer, the
Bond Trustee or its officers,

 

29

 

directors, employees or agents or any
controlling person, as the case may be, in respect of which indemnity may be
sought against the Borrower, setting forth the particulars of such claim or
action, and the Borrower will assume the defense thereof, including the
employment of counsel satisfactory to the Issuer, the Bond Trustee, or its
officers, directors, employees or agents, or such controlling person, as the
case may be, and the payment of all expenses. The Issuer, the Bond Trustee or
its officers, directors, employees or agents, or any such controlling person,
as the case may be, may employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall not be payable by the Borrower unless such employment has been specially
authorized in writing by the Borrower, which authorization shall not be
unreasonably withheld. The foregoing notwithstanding, if the Issuer or the Bond
Trustee or its officers, directors, employees or agent, is advised by
Independent Counsel that there may be legal defenses available to it which are
different from or in addition to those available to the Borrower, the Borrower
shall not be entitled to assume the defense of the proceeding on behalf of the
indemnified party, but the Borrower shall be responsible for the reasonable
fees, costs and expenses of conducting such defense.

 

All amounts payable to or with respect to the Issuer under this Section
5.10 shall be deemed to be fees and expenses of the Issuer for the purposes of
the provisions hereof and of the Bond Indenture dealing with the assignment of
the Issuer’s rights hereunder.

 

Section 5.8     Notice Regarding
Bankruptcy Petitions, Event of Default or Potential Default. The Borrower agrees to notify the Bond Trustee
in writing prior to any filing by it of a petition in bankruptcy and to notify
the Bond Trustee immediately by telephone and in writing as soon as reasonably
practicable when it obtains knowledge that a petition in bankruptcy has been
filed against the Borrower or of an event of default or potential default under
this Loan Agreement or of any other development, financial or otherwise, which
might materially adversely affect the ability of the Borrower to perform its
obligations has occurred.

 

Section 5.9     Continuing Disclosure. The Borrower hereby covenants and agrees that it
will comply with and carry out all of the provisions of its Continuing
Disclosure Agreement (the “Continuing Disclosure Agreement”) to be executed and
delivered on the date of issuance and delivery of the Series 2007A Bonds. Notwithstanding
any other provision of this Loan Agreement, failure of the Borrower to comply
with the Continuing Disclosure Agreement shall not be considered an event of
default hereunder; however, any Bondholder may take such actions as may be
necessary and appropriate, including seeking specific performance by court
order, to cause the Borrower to comply with its obligations under this Section.

 

Section 5.10   Huron Expansion. The Borrower agrees that, unless it has
deposited an amount sufficient to pay interest due on the Bonds from June l,
2008 through March 31, 2009, with the Bond Trustee on or before June 1, 2008
for deposit to the Project Fund to be used to pay interest on the Bonds during
such period, the Borrower will not proceed with the Huron Expansion, will not
borrow any amounts for the payment of expenses for the Huron Expansion pursuant
to the Senior Credit Facilities and will cause the Conversion Date (as defined
in the Senior Credit Agreement) to occur no later than June l, 2008.

 

Section 5.11   Maintenance Capital Expense Account; Working
Capital Reserve Account. The
Borrower agrees to maintain a Maintenance Capital Expense reserve account in a

 

30

 

banking
institution selected by the Borrower in such amounts that on the last Business
Day of each month the amount or deposit therein equals the amount of
Maintenance Capital Expense reasonably expected to become due and payable
during the next succeeding calendar month. Amounts in such account may be used
for Maintenance Capital Expenses and debt service payable under the Loan
Agreement. In addition, the Borrower agrees to maintain a working capital
reserve account in a banking institution selected by the Borrower so that the
amount on deposit therein, less the amount available to the Borrower pursuant
to any working capital credit facility, equals at least $8,000,000; provided,
however, such amounts may be used by the Borrower provided that for at least
ten (10) days each calendar year the amount available to the Borrower for
working capital purposes is at least $8,000,000. So long as the Accounts
Agreement is in effect, the Borrower is not required to maintain such accounts
or reserves other than pursuant to the Accounts Agreement.

 

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES THEREFOR

 

Section 6.1     Events of Default. The occurrence and continuance of any of the
following events shall constitute an “event of default” hereunder:

 

(a)           failure of the Borrower to pay any installment
of interest, premium, if any, or principal on the Series 2007A Bonds or any
other payment required by Section 4.1, 4.2, or 4.10 hereof when the same shall
become due and payable, whether at maturity, upon any date fixed for prepayment
or by acceleration or otherwise, and the continuance of such failure for five
days; or

 

(b)           failure of the Borrower to comply with or
perform any of the covenants, conditions, or provisions hereof or of the Tax
Exemption Agreement and to remedy such default within 30 days after written
notice thereof from the Issuer to the Borrower; provided, however, that if such
default cannot with due diligence and dispatch be wholly cured within 30 days
but can be wholly cured, the failure of the Borrower to remedy such default
within such 30-day period shall not constitute a default hereunder if the
Borrower shall immediately upon receipt of such notice commence with due
diligence and dispatch the curing of such default and, having so commenced the
curing of such default, shall thereafter prosecute and complete the same with
due diligence and dispatch; or

 

(c)           failure of the Borrower to comply with or
perform its covenant under Section 5.1 hereof to cause the discharge, vacation,
bonding or stay of any order, writ or warrant of attachment, garnishment,
execution, replevin or similar process filed against any part of the funds or
accounts held by the Bond Trustee under the Bond Indenture; or

 

(d)           if any representation or warranty made by the
Borrower herein or in any statement or certificate furnished to the Issuer or
the Bond Trustee in connection with the sale of the Series 2007A Bonds or
furnished by the Borrower pursuant hereto proves untrue in any material respect
as of the date of the issuance or making thereof and shall not be made good
within 30 days after written notice thereof to the Borrower by the Issuer; or

 

31

 

(e)           any event of default shall occur under the
Senior Debt which would permit the acceleration of any obligation; or

 

(f)            if the Borrower admits insolvency or bankruptcy
or its inability to pay its debts as they mature, or is generally not paying
its debts as such debts become due, or makes an assignment for the benefit of
creditors or applies for or consents to the appointment of a trustee, custodian
or receiver for the Borrower, or for the major part of its Property; or

 

(g)           if a trustee, custodian or receiver is appointed
for the Borrower or for the major part of its Property and is not discharged
within 30 days after such appointment; or

 

(h)           if bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, proceedings under Title 11 of the United
States Code, as amended, or other proceedings for relief under any bankruptcy
law or similar law for the relief of debtors are instituted by or against the
Borrower (other than bankruptcy proceedings instituted by the Borrower against
third parties), and if instituted against the Borrower are allowed against the
Borrower or are consented to or are not dismissed, stayed or otherwise
nullified within 30 days after such institution; or

 

(i)            if payment of any installment of interest or
principal, or any premium, on any Series 2007A Bond shall not be made when the
same shall become due and payable under the provisions of the Bond Indenture.

 

Upon the occurrence and during the continuance of any event of default
hereunder, the Bond Trustee shall have the following rights and remedies, in
addition to any other remedies herein or by law provided:

 

(1)           Acceleration of Maturity. Waiver of Event of
Default and Rescission of Acceleration. The Bond Trustee may, by written notice to the Borrower all amounts
hereunder to be immediately due and payable anything in this Loan Agreement
contained to the contrary notwithstanding.

 

(2)           Right to Bring Suit, Etc. The Bond Trustee may, with or without entry,
personally or by attorney, in its discretion, proceed to protect and enforce
its rights by pursuing any available remedy including a suit or suits in equity
or at law, whether for damages or for the specific performance of any
obligation, covenant or agreement contained in this Loan Agreement or in aid of
the execution of any power herein granted, or for the enforcement of any other
appropriate legal or equitable remedy, as the Bond Trustee shall deem most
effectual to collect the payments then due and thereafter to become due
hereunder, to enforce performance and observance of any obligation, agreement
or covenant of the Borrower hereunder or to protect and enforce any of the
Issuer’s rights or duties hereunder.

 

Section 6.2     Application of
Proceeds of Remedies. The proceeds or avails
resulting from the exercise of any such remedies, together with any other sums
which then may be held under this Loan Agreement, whether under the provisions
of this Article or otherwise, and which are available for such application
shall be applied as follows:

 

32

 

FIRST:  To the payment of the costs and expenses of
the exercise of such remedies, including reasonable compensation to the Issuer
and the Bond Trustee, their agents, attorneys and counsel, and the expenses of
any judicial proceedings wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by the Issuer as permitted by this
Loan Agreement, together with interest at the announced prime rate per annum of
the Bond Trustee on all advances made by the Issuer, and to the payment of all
taxes, assessments or claims prior to the claim of this Loan Agreement, except
any taxes, assessments, liens or other charges, subject to which Property may
have been sold.

 

SECOND:  To the payment of the whole amount then due,
owing and unpaid hereunder for principal, interest and premium, if any, and in
case such proceeds shall be insufficient to pay in full the whole amount so
due, owing or unpaid hereunder, then ratably according to the aggregate of such
principal and the accrued and unpaid interest and premium, if any, without
preference or priority as between principal, interest or premium.

 

THIRD:  To the payment of any amounts then due and
payable under the Tax Exemption Agreement.

 

FOURTH:  To the payment of any other sums required to
be paid by the Borrower pursuant to any provisions of this Loan Agreement or of
the Series 2007A Obligation pledged under the Bond Indenture.

 

FIFTH:  To the payment of the surplus, if any, to the
Borrower, its successors or assigns, upon the Written Request of the Borrower
or to whomsoever may be lawfully entitled to receive the same upon its written
request, or as any court of competent jurisdiction may direct.

 

Section 6.3     Remedies Cumulative. No remedy herein conferred upon or reserved to
the Issuer or the Bond Trustee is intended to be exclusive of any other remedy
or remedies, and each and every such remedy shall be cumulative, and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute.

 

Section 6.4     Delay or Omission Not
a Waiver. No delay or omission of
the Issuer or the Bond Trustee to exercise any right or power accruing upon any
event of default shall impair any such right or power, or shall be construed to
be a waiver of any such event of default or an acquiescence therein; and every
power and remedy given by this Loan Agreement to the Issuer or the Bond Trustee
may be exercised from time to time and as often as may be deemed expedient by
the Issuer or the Bond Trustee.

 

Section 6.5     Waiver of Extension,
Valuation and Appraisement Laws. To
the extent permitted by law, the Borrower will not during the continuance of
any event of default hereunder insist upon or plead, or in any manner whatever
claim or take any benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance of this Loan Agreement; nor claim, take or insist upon
any benefit or advantage of any law now or hereafter in force providing for the
valuation or

 

33

 

appraisement of the Property, or any part thereof, prior to any sale or
sales thereof which may be made pursuant to any provision herein contained, or
pursuant to the decree, judgment or order of any court of competent
jurisdiction;  nor after any such sale or
sales, claim or exercise any right under any statute heretofore or hereafter
enacted by the United States of America or by any state or territory, or
otherwise, to redeem the Property so sold or any part thereof; and the Borrower
hereby expressly waives all benefits or advantage of any such law or laws and
covenants not to hinder, delay or impede the execution of any power herein
granted or delegated to the Issuer, but to suffer and permit the execution of
every power as though no such law or laws had been made or enacted.

 

Section 6.6     Remedies Subject to
Provisions of Law. All rights, remedies
and powers provided by this Article may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of the law of
the State and all the provisions of this Article are intended to be subject to
all applicable mandatory provisions of the law of the State which may be
controlling and to be limited to the extent necessary so that they will not
render this Loan Agreement invalid or unenforceable under the provisions of any
applicable law.

 

ARTICLE VII

SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT

 

Section 7.1     Supplements and
Amendments to this Loan Agreement. The
Borrower, with the consent of the Issuer and the Bond Trustee, may from time to
time enter into such supplements and amendments to this Loan Agreement as to
them may seem necessary or desirable to effectuate the purposes or intent
hereof; provided, however, that no such amendment shall be effective if not
adopted in accordance with the terms of the Bond Indenture.

 

ARTICLE VIII

DEFEASANCE

 

Section 8.1     Defeasance. If the Borrower shall pay and discharge or
provide, in the manner set forth in the Bond Indenture, for the payment and
discharge of the whole amount of the principal of, premium, if any, and
interest on the Series 2007A Bonds, shall pay or cause to be paid all sums
payable hereunder and under the Bond Indenture, or shall make arrangements
satisfactory to the Bond Trustee for such payment and discharge, including, the
payment of such amounts incurred prior to such discharge, and shall obtain the
written consent of the Issuer to such discharge, then and in that case all
property, rights and interest hereby conveyed or assigned or pledged shall revert
to the Borrower, and the estate, right, title and interest of the Issuer
therein shall thereupon cease, terminate and become void; and this Loan
Agreement and the covenants of the Borrower contained herein shall be
discharged and the Issuer in such case on demand of the Borrower and at its
cost and expense, shall execute and deliver to the Borrower a proper instrument
or proper instruments acknowledging the satisfaction and termination of this
Loan Agreement, and shall convey, assign and transfer or cause to be conveyed,
assigned or transferred, and shall deliver or cause to be delivered, to the
Borrower, all Property, including money, then held by the Issuer other than
moneys deposited with the Bond Trustee for the payment of the principal of or
interest on the Series 2007A Bonds.

 

34

 

ARTICLE IX

MISCELLANEOUS PROVISIONS

 

Section 9.1     Payment of Expenses of
Issuance of Series 2007A Bonds. The
Borrower agrees to pay for any recording expenses, Bond Trustee’s fees, escrow
and title insurance costs, legal fees, bond insurance premiums and fees,
printing expenses and other fees and fair and customary expenses incurred or to
be incurred by or on behalf of the Issuer in connection with or as an incident
to the issuance and sale of the Series 2007A Bonds.  

 

Section 9.2     Loan Agreement for
Benefit of Parties Hereto. Nothing
in this Loan Agreement, express or implied, is intended or shall be construed
to confer upon, or to give to, any person other than the parties hereto, any
right, remedy or claim under or by reason of this Loan Agreement or any
covenant, condition or stipulation hereof; and the covenants, stipulations and
agreements in this Loan Agreement contained are and shall be for the sole and
exclusive benefit of the parties hereto, their successors and assigns.

 

Section 9.3     Severability. In case any one or more of the provisions
contained in this Loan Agreement shall be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.

 

Section 9.4     Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, sent by reputable registered
overnight mail or delivery service, or send by personal delivery or confirmed
facsimile delivery, with proper address as indicated below. The Issuer, the
Borrower, and the Bond Trustee may, by written notice given by each to the
others, designate any address or addresses to which notices, certificates or
other communications to them shall be sent when required as contemplated by
this Loan Agreement. Until otherwise provided by the respective parties, all
notices, certificates and communications to each of them shall be addressed as
follows:

 

	
  To the Issuer:

  	
  To the Borrower:

  
	
   

  	
   

  
	
  Brown County, South Dakota

  	
  Heartland Grain Fuels, L.P.

  
	
  25 Market Street, Suite 2

  	
  10201
  Wayzata Blvd., Suite 250

  
	
  Aberdeen, South Dakota 57401

  	
  Minneapolis,
  Minnesota 55305

  
	
  Attention: County Auditor

  	
  Attention: General Partner

  
	
   

  	
   

  
	
  To the Bond Trustee:

  	
   

  
	
   

  	
   

  
	
  Wells Fargo Bank, National Association

  	
   

  
	
  MAC N9311-115

  	
   

  
	
  625 Marquette Avenue , 11th
  floor

  	
   

  
	
  Minneapolis, Minnesota 55479

  	
   

  
	
  Attention: Corporate Trust

  	
   

  

 

35

 

Section 9.5     Successors and Assigns. Whenever in this Loan Agreement any of the
parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included and all the covenants, promises and
agreements in this Loan Agreement contained by or on behalf of the Borrower, or
by or on behalf of the Issuer, shall bind and inure to the benefit of the
respective successors and assigns whether so expressed or not.

 

Section 9.6     Counterparts. This Loan Agreement is being executed in any
number of counterparts, each of which is an original and all of which are
identical. Each counterpart of this Loan Agreement is to be deemed an original
hereof and all counterparts collectively are to be deemed but one instrument.

 

Section 9.7     Governing Law. It is the intention of the parties hereto that
this Loan Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State.

 

Section 9.8     Immunity of Officers,
Employees and Members of the Issuer and the Borrower. No recourse shall be had for the payment of the
principal of or premium or interest on any of the Obligations pledged under the
Bond Indenture or for any claim based thereon or upon any representation,
obligation, covenant or agreement in this Loan Agreement contained against any
past, present or future officer, member, employee, director of agent of the
Issuer, the Borrower or the Bond Trustee, respectively, any successor public or
private corporation under any rule of law or equity, statute or constitution or
by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such officers, members, employees, directors or agents as such
is hereby expressly waived and released as a condition of and consideration for
the execution of this Loan Agreement.

 

Section 9.9     Intercreditor Agreement. Notwithstanding
anything herein to the contrary, any right to payment hereunder, the lien or
security interest granted to the Bond Trustee under the Bond Indenture, as
trustee, in this Loan Agreement, the exercise of any right hereunder and each
provision hereof are subject to the express provisions of the Intercreditor
Agreement. In the event of a conflict between the terms of the Intercreditor
Agreement and this Loan Agreement, the terms of the Intercreditor Agreement
shall govern and control.

 

36

 

IN WITNESS WHEREOF, the Borrower and the Issuer have caused this
Loan Agreement to be executed in their respective names and the Issuer has
caused its corporate seal to be hereunto affixed and attested by its duly
authorized officer, all as of the date first above written.

 

	
   

  	
  Heartland Grain Fuels, L.P.

  
	
   

  	
  A Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: Dakota Fuels, Inc.

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Revis L. Stephenson III

  	
   

  
	
   

  	
  By: Revis L. Stephenson III

  
	
   

  	
  Its: Chairman of the Board

  

 

 

	
   

  	
  BROWN COUNTY, SOUTH DAKOTA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Mike Wiese

  	
   

  
	
   

  	
  Chairman

  
	
  (SEAL)

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Maxine Taylor

  	
   

  	
   

  
	
   

  	
   

  
	
  Its: County
  AuditorEXHIBIT
10.5

 

AMENDMENT TO

GRAIN ORIGINATION AGREEMENT

 

THIS AMENDMENT TO GRAIN ORIGINATION AGREEMENT (this “Amendment”), is made and entered into
as of the 1st day of October, 2007, between Heartland Grain Fuels, L.P. a
Delaware limited partnership (“HGF”), and South Dakota Wheat Growers
Association, a South Dakota cooperative (“SDWG”).

 

BACKGROUND

 

1.             HGF and SDWG are parties to that certain
Grain Origination Agreement, made and entered into as of the 8th day
of November, 2006 (the “Agreement”);

 

2.             HGF and SDWG wish to amend the Agreement
pursuant to the terms and conditions set forth herein;

 

4.             All capitalized terms used but not otherwise
defined herein shall have the meanings assigned in the Agreement.

 

AGREEMENT

 

In
consideration of the mutual promises and agreements contained herein, it is
hereby agreed as follows:

 

1.             Section 3.2. Section 3.2 of the Agreement is deleted in its entirety and replaced
with the following:

 

“3.2         Termination. Except as set forth under Section 3.1 and 3.4, (i) HGF will only have
the right to terminate this Agreement upon the occurrence of an Event of
Default (as defined in Section 4.1) and (ii) SDWG shall have no right to
terminate this Agreement. Except as otherwise provided below, upon the
occurrence of an Event of Default by SDWG, HGF will have the right to terminate
this Agreement effective immediately by sending written notice thereof to SDWG
and to receive payment from SDWG as set forth in Sections 3.3 and 4.2, and as
is otherwise allowed by applicable law (except that no party will be entitled
to consequential damages for any claim arising under this Agreement). Notwithstanding
the foregoing, HGF will only have the right to terminate this Agreement with
respect to the Ethanol Plant to which the Event of Default relates.”

 

2.             Section 3.4. Section 3.4 of the Agreement is deleted in its entirety and replaced
with the following:

 

 

“3.4         Suspension of Operations. If the operation of an Ethanol Plant is
suspended for any reason (including pursuant to Section 7.3), including for
repairs, modifications, expansions or damage to the Ethanol Plant for at least
fifteen (15) months, then either party may terminate this Agreement with
respect to such Ethanol Plant by providing the other party with written notice
of such termination, which shall be effective as of the date of such written
notice.”

 

3.             Section 4.1(c). Section 4.1(c) of the Agreement shall be
deleted in its entirety and replaced with the following:

 

“(c)         HGF fails to pay any amount due to SDWG
under this Agreement by 5:00 p.m. of the business day following the due date of
such payment; or”

 

4.             Section 4.2(b). Section 4.2(b) of the Agreement is deleted
in its entirety and replaced with the following:

 

“(b)         SDWG Remedies. If an Event of Default occurs under Section 4.1(a), (b)
or (c), in addition to recovering payment of any amounts under Section 3.3,
SDWG shall have the right to pursue any one or more of the following remedies:

 

(1)           SDWG may withhold future deliveries of corn until such
Event of Default is either cured or waived by SDWG; provided, however, SDWG will resume delivery of corn
under this Agreement if (1) prior to SDWG resuming deliveries of corn
hereunder, HGF pays SDWG an amount equal to average cost of one day’s
supply of corn determined by reference to 30 day period prior to the Event of
Default; (2) HGF pays SDWG for all
deliveries of corn in immediately available funds by 5 p.m. of the day
following the day of delivery and in the
case of deliveries on any day that is not a business day by 10 a.m. on the next
succeeding business day for the remainder of the term of this Agreement; and
(3) HGF pays all past due amounts
(including interest at the rate set forth in
Section 2.4 hereof) in equal monthly installments of principal and
interest in such an amount as is necessary to fully recover all past due
amounts plus interest within two years from the date of the initial Event of
Default; provided, however, that if HGF has fully repaid all past due amounts
(including interest at the rate set forth in Section 2.4 hereof) owed under
this Agreement within 3 days of the initial due date of the payment which
caused the Event of Default and has paid all other amounts due for the purchase
of corn on a current

 

 

basis
for such period, the initial failure to timely pay which resulted in the
exercise of remedies hereunder, will no longer be treated as an Event of
Default and HGF may again make payments in accordance with the terms set forth
in Section 2.4 hereof. Notwithstanding anything to the contrary stated in this
Section 4.2(b)(1), SDWG may immediately suspend corn deliveries if HGF breaches
the terms of clauses 2 or 3 above. Further, notwithstanding anything to the
contrary stated in this Section 4.2(b)(1), if HGF has fully repaid all past due
amounts (including the amounts referred to in clause (3) above) and has paid
all other amounts due for the purchase of corn on a current basis, if HGF
delivers to SDWG a written notice indicating that it desires to pay for
deliveries of corn in increments of days or a week (although in no case shall
the payment cycle be longer than that provided for in Section 2.4 hereof)
together with a letter of credit (from a commercial banking institution
reasonably acceptable to SDWG and in form and substance reasonably acceptable
to SDWG) or other form of adequate assurance (reasonably acceptable to SDWG)
that demonstrates and supports HGF’s ability to pay according to the longer
payment cycle, the payment date referred to in Section 2.4 shall be adjusted
accordingly to match the terms of the letter of credit or other assurance and
any failure to pay within one day of that modified payment date shall be
treated as an Event of Default described in Section 4.1(c) hereof, allowing
SDWG’s to exercise remedies at its discretion pursuant to this Section 4.2(b).

 

(2)           SDWG
may seek and receive injunctive relief or a decree of specific performance;
and/or

 

(3)           SDWG
may pursue any other remedy (except for consequential damages) to which it may
be entitled in law or equity for breach of contract, except that SDWG may not
terminate this Agreement.”

 

5.             Section 4.2. (“Rights to Withhold Future Deliveries”). Section 4.2 on page 14 of
the Agreement, identified as “Rights to Withhold Future Deliveries,” is hereby
renumbered as Section 4.3. This Section is otherwise unchanged.

 

6.             Insurance. The following shall be added as Section 8.13:

 

“8.13       Insurance. So long
as those certain Leases dated as of October    , 2007 by and
between SDWG and HGF relating to SDWG’s property in Huron and

 

 

Aberdeen,
South Dakota remain in effect (the “Leases”), to the extent that the cost of
any insurance SDWG is required to obtain and maintain under the Leases exceeds
the cost of the insurance SDWG is required to obtain and maintain hereunder,
HGF shall pay SDWG such difference within 15 days of SDWG delivering an invoice
to HGF.

 

6.             Representations and Warranties. Each of the parties hereto represents and
warrants to the other that this Amendment has been duly and validly authorized,
executed and delivered by such party and, assuming this Amendment constitutes a
valid and binding obligation of the other party, this Amendment constitutes a
valid and binding obligation of the such party, enforceable against such party
in accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and other laws affecting creditors’ rights generally
and to general equitable principles.

 

7.             Governing Law. This Amendment shall be governed and
construed in accordance with the laws of the State of South Dakota without regard
to any applicable conflicts of law.

 

8.             Counterparts. This Amendment my be executed by facsimile
signature in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when a counterpart has been signed
by each of the parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart.

 

9.             Limited Effect. Except as amended hereby, the Agreement
shall continue in full force and effect in accordance with its terms without
amendment or modification.

 

[Signature Pages Follow]

 

 

The
parties hereto have duly executed this Amendment as of the date and year first
above written.

 

 

	
   

  	
  HGF:

  
	
   

  	
   

  
	
   

  	
  Heartland Grain Fuels, L.P.,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Dakota Fuels, Inc.

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Revis L. Stephenson III

  	
   

  
	
   

  	
   

  	
   Name: Revis L. Stephenson III

  
	
   

  	
   

  	
  Title:
  Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SDWG:

  
	
   

  	
   

  
	
   

  	
  South
  Dakota Wheat Growers Association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dale Locken

  	
   

  
	
   

  	
  Printed
  Name:

  	
  Dale
  Locken

  	
   

  
	
   

  	
  Title:

  	
  CEO/Treasurer

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