Document:

<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                   EXHIBIT 10.11

[FIRST LOGO]

                                 PROMISSORY NOTE

<TABLE>
<CAPTION>
  PRINCIPAL       LOAN DATE    MATURITY      LOAN NO      CALL / COLL    ACCOUNT     OFFICER      INITIALS
<S>              <C>          <C>            <C>          <C>            <C>         <C>          <C>
$2,500,000,00    02-17-2004   02-15-2007     656932         4A / 20                    RCB

</TABLE>

Reference in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item. Any item above
containing [ILLEGIBLE] has been omitted due to text length limitations.

<TABLE>
<S>                                                      <C>
BORROWER: WESTECH CAPITAL CORP. (TIN: 13-3577716)        LENDER:  FIRST UNITED BANK
          2700 VIA FORTUNA, SUITE 400                             LUBBOCK SOUTHWEST BRANCH
          AUSTIN, TX 78746                                        6604 FRANKFORD
                                                                  LUBBOCK, TX 79424
</TABLE>

<TABLE>
<S>                                     <C>                         <C>
PRINCIPAL AMOUNT: $2,500,000.00         INITIAL RATE: 6.000%        DATE OF NOTE: FEBRUARY 17, 2004
</TABLE>

PROMISE TO PAY. WESTECH CAPITAL CORP. ("BORROWER") PROMISES TO PAY TO FIRST
UNITED BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF TWO MILLION FIVE HUNDRED THOUSAND & 00/100
DOLLARS ($2,500,000.00), TOGETHER WITH INTEREST ON THE UNPAID PRINCIPAL BALANCE
FROM FEBRUARY 17, 2004, UNTIL MATURITY.

PAYMENT. SUBJECT TO ANY PAYMENT CHANGES RESULTING FROM CHANGES IN THE INDEX,
BORROWER WILL PAY THIS LOAN ON DEMAND. PAYMENT IN FULL IS DUE IMMEDIATELY UPON
LENDER'S DEMAND. IF NO DEMAND IS MADE, BORROWER WILL PAY THE LOAN IN 35
PRINCIPAL PAYMENTS OF $70,000.00 EACH AND ONE FINAL PRINCIPAL AND INTEREST
PAYMENT OF $50,258.33. BORROWER'S FIRST PRINCIPAL PAYMENT IS DUE MARCH 15, 2004,
AND ALL SUBSEQUENT PRINCIPAL PAYMENTS ARE DUE ON THE SAME DAY OF EACH MONTH
AFTER THAT. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ALL
ACCRUED UNPAID INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING MARCH 15,
2004, WITH ALL SUBSEQUENT INTEREST PAYMENTS TO BE DUE ON THE SAME DAY OF EACH
MONTH AFTER THAT. BORROWER'S FINAL PAYMENT DUE FEBRUARY 15, 2007, WILL BE FOR
ALL PRINCIPAL AND ALL ACCRUED INTEREST NOT YET PAID. UNLESS OTHERWISE AGREED OR
REQUIRED BY APPLICABLE LAW, PAYMENTS WILL BE APPLIED FIRST TO ANY ACCRUED UNPAID
INTEREST; THEN TO PRINCIPAL; AND THEN TO ANY UNPAID COLLECTION COSTS. THE ANNUAL
INTEREST RATE FOR THIS NOTE IS COMPUTED ON A 365/360 BESIS THAT IS, BY APPLYING
THE RATIO OF THE ANNUAL INTEREST RATE OVER A YEAR OF 360 DAYS, MULTIPLIED BY THE
OUTSTANDING PRINCIPAL BALANCE, MULTIPLIED BY THE ACTUAL NUMBER OF DAYS THE
PRINCIPAL BALANCE IS OUTSTANDING, UNLESS SUCH CALCULATION WOULD RESULT IN A
USURIOUS RATE, IN WHICH CASE INTEREST SHALL BE CALCULATED ON A PER CLAM BESIS OF
A YEAR OF 365 OR 366 DAYS, AS THE CASE MAY BE. BORROWER WILL PAY LENDER AT
LENDER'S ADDRESS SHOWN ABOVE OR AT SUCH OTHER PLACE AS LENDER MAY DESIGNATED IN
WRITING.

VARIABLE INTEREST RATE. The Interest rate on this Note is subject to change from
time to time based on change in an independent index which is the Wall Street
Journal Prime rate (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute Index after notice to Borrower.
Lender will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each Day. Borrower
understands that Lender may make loans based on other rates as well. THE INDEX
CURRENTLY IS 4.000% PER ANNUM. THE INTEREST RATE TO BE APPLIED PRIOR TO MATURITY
TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 2.000
PERCENTAGE POINTS OVER THE INDEX, ADJUSTED IF NECESSARY FOR ANY MINIMUM AND
MAXIMUM RATE LIMITATIONS DESCRIBED BELOW, RESULTING IN AN INITIAL RATE OF 6.000%
PER ANNUM. NOTWITHSTANDING THE FOREGOING, THE VARIABLE INTEREST RATE OR RATES
PROVIDED FOR IN THIS NOTE WILL BE SUBJECT TO THE FOLLOWING MINIMUM AND MAXIMUM
RATES. NOTICE: Under no circumstances will the Interest rate on this Note be
lees than 6.000% per annum or more than the maximum rate allowed by applicable
law. For purposes of this Note, the "maximum rate allowed by applicable law"
means the greater of (A) the maximum ratio of interest permitted under federal
or other law applicable to the Indebtedness evidenced by this Note, or (B) the
"Weekly Celling" as referred to In Sections 303.002 and 303.003 of the Texas
Finance Code.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the forgoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Prepayment
in full shall consist of payment of the remaining unpaid principal balance
together with all accrued and unpaid interest and all other amounts, costs and
expenses for which Borrower is responsible under this Note or any other
agreement with Lender pertaining to this loan, and in no event will Borrower
over be required to pay any unearned interest. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments under the payment schedule. Rather, early payments
will reduce the principal balance due and may result in Borrower's making fewer
payments. Borrower agrees not to send Lender payments marked "paid in full",
"without recourse", or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lander. All
written communications concerning disputed amounts, including any check or other
payment Instrument that indicates that the payment constitutes "payment In full"
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to: FIRST
UNITED BANK, Lubbock Northwest Branch, P.O. Box 16500 Lubbock, TX 79490.

INTEREST AFTER DEFAULT. Upon default, Including failure to pay upon final
maturity, the total sum due under this Note will bear Interest from the date of
acceleration or maturity at the variable interest rate on this Note. The
Interest rate will not exceed the maximum rate permitted by applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Dafault") under this Note:

         PAYMENT DEFAULT. Borrower fails to make any payment when due under this
         Note.

         OTHER DEFAULTS. Borrower fails to comply with or to perform any other
         term, obligation, covenant or condition contained in this Note or in
         any of the related documents of to comply with or to perform any term,
         obligation, covenant or condition contained in any other agreement
         between Lender and Borrower.

         FALSE STATEMENTS. Any warranty, representation or statement made or
         furnished to Lender by Borrower or on Borrower's behalf under this Note
         or the related documents is false or misleading in any material
         respect, either now or at the time made or furnished or becomes false
         or misleading at any time thereafter.

         INSOLVENCY. The dissolution or termination of Borrower's existence as a
         going business, the insolvency of Borrower, the appointment of a
         receiver for any part of Borrower's property, any assignment for the
         benefit of creditors, any type of creditor workout, or the commencement
         of any proceeding under any bankruptcy or Insolvency laws by or against
         Borrower.

         CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower or by any
         governmental agency against any collateral securing the loan. This
         Includes a garnishment of any of Borrower's accounts, including deposit
         accounts, with Lender. However, this Event of Default shall not apply
         If there is a good faith dispute by Borrower as to the validity or
         reasonableness of the claim which is the basis of the creditor or
         forfeiture proceeding and if Borrower gives Lender written notice of
         the creditor or forfeiture proceeding and deposits with Lender monies
         or a surety bond for the creditor or forfeiture proceeding, in an
         amount determined by Lender, in its sole discretion, as being an
         adequate reserve of bond for the dispute.

         EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
         respect to any Guarantor of any of the Indebtedness or any Guarantor
         dies or becomes incompetent, or revokes or disputes the validity of, or
         liability under, any guaranty of the indebtedness evidenced by this
         Note. In the event of a death, Lender, at its option, may, but shall
         not be required to, permit the Guarantor's estate to assumes
         unconditionally the obligations arising under the guaranty in a manner
         satisfactory to Lender, and, in doing so, cure any Event of Default.

         CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent
         (25%) or more of the common Stock of Borrower.

         ADVERSE CHANGE. A material adverse change occurs in Borrower's
         financial condition, or Lender believes the prospect of payment or
         performance of this Note is impaired.

         INSECURITY. Lender in good faith believes itself insecure.

         CURE PROVISIONS. If any default, other than a default in payment or
         failure to satisfy Lender's requirement in the Insufficient Market
         Value of Securities. section is curable, it may be cured (and no event
         of default will have occurred) if Borrower, after receding written
         notice from Under demanding cure of such default: (1) cures, the
         default within twenty (20) days; or (2) if the cure requires more than
         twenty 20 days, Immediately initiates stops which Lender dooms in
         Lender's sole discretion to be sufficient to cure the default and
         therefore

<PAGE>

                                 PROMISSORY NOTE
LOAN NO; 656932                    (CONTINUED)                            PAGE 2

         continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, under may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount.

ATTORNEYS' FEES: EXPENSES; Lender may hire an attorney to help collect this Note
if Borrower does not pay, and Borrower will pay Lender's reasonable attorneys'
fees. Borrower also will pay Lender all other amounts Lender actually incurs as
court costs, lawful fees for filing, recording releasing to any public office
any instrument securing this Note; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lion on or transferring a certificate of title to any motor
vehicle offered as security for this Note, or premiums or identifiable charges
received in connection with the sale of authorized insurance.

GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TAXES. THIS NOTE HAS
BEEN ACCEPTED BY LENDER IN THE STATE OF TAXES.

CHOICE OF VENUE. If there Is a lawsuit, and if the transaction evidenced by this
Note occurred in Lubbock County, Borrower agrees upon Lender's request to submit
to the jurisdiction of the courts of Lubbock County, State of Texas.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of set off in all Borrower's accounts with Lender (whether chocking
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future,
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which set off would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.

COLLATERAL. Borrower acknowledges this Note is secured by 100% of the
outstanding stock in Tejas Securities Group, Inc. a Texas Corporation; A
Commercial Pledge Agreement between First United Bank and Westech Capital Corp.
dated February 17, 2004 and A Commercial Security Agreement between First United
Bank and Westech Capital Corp. dated February 17, 2004.

PURPOSE OF LOAN. Renew note #666932 ($405,050) and provide working capital to
expand government desk.

CROSS COLLATERALIZATION. In addition to this note, this Agreement secures all
amounts that I may owe to Lender, whether owed now or later. This means that
every loan I have now or obtain later with Lender is secured by this Agreement.
This Agreement also secures all other amounts and obligations that I may owe to
Lender (such as an overdraft checking account). This provision does not apply to
loans secured by the borrower's principal dwelling.

RENEWAL AND EXTENSION. This Note is given in renewal and extension and not in
novation of the following described indebtedness: Renewal of note #656504.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any Inaccurate Information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
Inaccuracy(los) should be sent to as at the following address; FIRST UNITED BANK
P.O. Box 16500 Lubbock, TX 79490

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. Borrower does not
agree or intend to pay, and Lender does not agree or intend to contract for,
charge, collect, take, reserve or receive (collectively referred to herein as
"charge or collect"), any amount in the nature of interest or in the nature of a
fee for this loan, which would in any way or event (including demand,
prepayment, or acceleration) cause Lender to charge or collect more for this
loan than the maximum Lender would be permitted to charge or collect by federal
law or the law of the State of Texas (as applicable). Any such excess interest
or unauthorized fee shall, instead of anything stated to the contrary, be
applied first to reduce the principal balance of this loan, and when the
principal has been paid in full, be refunded to Borrower. The right to
accelerate maturity of sums due under this Note does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Lender does not intend to charge or collect any unearned
Interest in the event of acceleration. All sums paid or agreed to be paid to
Lender for the use, forbearance or detention of sums due hereunder shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the loan evidenced by this Note until payment in
full so that the rate or amount of interest on account of the loan evidenced
hereby does not exceed the applicable usury coiling. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive presentment, demand for payment, notice of
dishonor, notice of intent to accelerate the maturity of this Note, and notice
of acceleration of the maturity of this Note. Upon any change in the terms of
this Note, and unless otherwise expressly stated in writing, no party who signs
this Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral without the consent of or notice to anyone.
All Such parties also agree that Lender may modify this loan without the consent
of or notice to anyone other than the party with whom the modification is made.
The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER;

WESTECH CAPITAL CORP.

BY: /s/ JOHN GORMAN
    -----------------------------------------
    JOHN GORMAN, CHAIRMAN & OF WESTECH
    CAPITAL CORP.
<PAGE>

                                  [FIRST LOGO]

                          COMMERCIAL SECURITY AGREEMENT

<TABLE>
<CAPTION>
  Principal         Loan Date      Maturity         Loan No        Call / Coll                   Officer
$2,500,000,00       02-17-2004    02-15-2007         656932          4A / 20        Account        RCB     Initials
-------------------------------------------------------------------------------------------------------------------
<S>                 <C>           <C>               <C>            <C>              <C>          <C>       <C>
</TABLE>

  References in the shaded area are for Lender's use only and do not limit the
  applicability of this document to any particular loan or item. Any item above
       containing " *** " has been omitted due to text length limitations.

<TABLE>
<S>                                                       <C>
BORROWER: WESTECH CAPITAL CORP. (TIN: 13-3677716)         LENDER: FIRST UNITED BANK
          2700 VIA FORTUNA, SUITE 400                             LUBBOCK SOUTHWEST BRANCH
          AUSTIN, TX 78746                                        6604 FRANKFORD
                                                                  LUBBOCK, TX 79424

GRANTOR:  WESTECH CAPITAL CORP. (TIN: 13-3577716)
          TEJAS SECURITIES GROUP HOLDING COMPANY
          2700 VIA FORTUNA, SUITE 400
          AUSTIN, TX 78746
</TABLE>

THIS COMMERCIAL SECURITY AGREEMENT DATED FEBRUARY 17, 2004, IS MADE AND EXECUTED
AMONG WESTECH CAPITAL CORP, AND TEJAS SECURITIES GROUP HOLDING COMPANY
("GRANTOR"); WESTECH CAPITAL CORP, ("BORROWER"); AND FIRST UNITED BANK
("LENDER").

GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION. GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:

     ALL ACCOUNTS; TOGETHER WITH THE FOLLOWING SPECIFICALLY DESCRIBED PROPERTY;
     4,808,666 SHARES OF TEJAS SECURITIES GROUP, INC., CERTIFICATE NUMBER 78 AND
     990,500 SHARES OF TEJAS SECURITIES GROUP, INC., CERTIFICATE NUMBER 100;
     WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL
     ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS RELATING TO ANY OF
     THE FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING;
     ALL PROCEEDS RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
     INTANGIBLES AND OTHER ACCOUNTS PROCEEDS).

In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

     (A) All accessions, attachments, accessories, replacements of and additions
     to any of the collateral described herein, whether added now or later.

     (B) All products and produce of any of the property described in this
     Collateral section.

     (C) All accounts, general intangibles, instruments, rents, monies,
     payments, and all other rights, arising out of a sale, lease, consignment
     or other disposition of any of the property described In this Collateral
     section.

     (D) All proceeds (including Insurance proceeds) from the sale, destruction,
     loss, or other disposition of any of the property described In this
     Collateral section, and sums due from a third party who has damaged or
     destroyed the Collateral or from that party's insurer, whether due to
     judgment, settlement or other process.

     (E) All records and data relating to any of the property described in this
     Collateral section, whether in the form of a Writing, photograph,
     microfilm, microfiche, or electronic media, together with all of Grantor's
     right, title, and interest in and to all computer software required to
     utilize, create, maintain, and process any such records or data on
     electronic media.

Despite any other provision of this Agreement, Lender is not granted, and will
not have, a non purchase money security Interest In household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth In Lending for the Indebtedness, than
Lender will not have a security interest in such Collateral unless and until
such a notice is given.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except us otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not toll
Borrower about any action or Inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
Informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or Inaction of Lender, Including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender In
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement Is executed at Borrower's request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis Information about
Borrower's financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS, Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Borrower or Grantor, or any
other party to the Indebtedness or the Collateral. Lender may do any of the
following with respect to any obligation of any Borrower, without first
obtaining the consent of Grantor: (A) grant any extension of time for any
payment, (B) grant any renewal, (C) permit any modification of payment terms or
other terms, or (D) exchange or release any Collateral or other security. No
such act or failure to act shall affect Lender's rights against Grantor or the
Collateral.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff In all Grantor's accounts with Lender (whether chocking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor, may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law, Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

     PERFECTION OF SECURITY INTEREST. Grantor agrees to execute financing
     statements and to take whatever other actions are requested by Lender to
     perfect and continue Lender's security interest in the Collateral. Upon
     request of Lender, Grantor will deliver to Lender any and all of the
     documents evidencing or constituting the Collateral, and Grantor will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for possession by Lender.

     NOTICES TO LENDER. Grantor will promptly notify Lender in writing at
     Lender's address shown above (or such other addresses as Lender may
     designate from time to time) prior to any (1) change in Grantor's name; (2)
     change in Grantor's assumed business name(s); (3) change in the management
     of any Corporation Grantor; (4) change in the authorized singer(s); (5)
     change in Grantor's principal office address; (6) change in Grantor's state
     of organization; (7) conversion of Grantor to a new or different type of
     business entity; or (8) change in any other aspect of Grantor that directly
     or indirectly relates to any agreements between Grantor and Lender, No
     change in Grantor's name or state of organization will take effect until
     after Lender has received notice.

     NO VIOLATION. The execution and delivery of thin Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its certificate or articles of Incorporation and bylaws do not prohibit any
     term or condition of this Agreement.

     ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
     accounts, chattel paper, or general intangibles, as defined by the Uniform
     Commercial Code, the Collateral is enforceable in accordance with its
     terms, is genuine, and fully complies with all applicable laws and
     regulations concerning form, content and manner of preparation and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. At the time any Account

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
LOAN NO: 656932                    (CONTINUED)                            PAGE 2

     becomes subject to a security interest in favor of Lender, the Account
     shall be a good and valid account representing an undisputed, bona fide
     indebtedness incurred by the account debtor, for merchandise held subject
     to delivery instructions or previously shipped or delivered pursuant to a
     contract of sale, or for services previously performed by Grantor with or
     for the account debtor. So long as this Agreement remains in effect,
     Grantor shall not, without Lender's prior written consent, compromise,
     settle, adjust, or extend payment under or with regard to any such
     Accounts. There shall be no setoffs or counterclaims against any of the
     Collateral, and no agreement shall have been made under which any
     deductions or discounts may be claimed concerning the Collateral except
     those disclosed to Lender in writing.

     LOCATION OF THE COLLATERAL. Except in the ordinary course of Grantor's
     business, Grantor agrees to keep the Collateral (or to the extent the
     Collateral consists of intangible property such as accounts or general
     intangibles, the records concerning the Collateral) at Grantor's address
     shown above or at such other locations as are acceptable to Lender. Upon
     Lender's request, Grantor will deliver to Lender in form satisfactory to
     Lender a schedule of real properties and Collateral locations relating to
     Grantor's operations, including without limitation the following: (1) all
     real property Grantor owns or in purchasing; (2) all real property Grantor
     is renting or leasing; (3| all storage facilities Granter owns, rents,
     leases, or uses; and (4) all other properties where Collateral is or may be
     located.

     REMOVAL OF THE COLLATERAL. Except in the ordinary course of Grantor's
     business, Grantor shall not remove the Collateral from its existing
     location without Lender's prior written consent. Grantor shall, whenever
     requested, advise Lender of the exact location of the Collateral.

     TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
     collected in the ordinary course of Grantor's business, or as otherwise
     provided for in this Agreement, Grantor shall not sell, offer to sell, or
     otherwise transfer or dispose of the Collateral. Grantor shall not pledge,
     mortgage, encumber or otherwise permit the Collateral to be subject to any
     lien, security interest, encumbrance, or charge, other than the security
     interest provided for in this Agreement, without the prior written consent
     of Lender. This includes security interests even if junior in right to the
     security interests granted under this Agreement. Unless waived by Lender,
     all proceeds from any disposition of the Collateral (for whatever reason)
     shall be held in trust for Lender and shall not be commingled with any
     other funds; provided however, this requirement shall not constitute
     consent by Lender to any sale or other disposition. Upon receipt, Grantor
     shall immediately deliver any such proceeds to Lender.

     TITLE. Grantor represents and warrants to Lender that Grantor holds good
     and marketable title to the Collateral, free and clear of all liens and
     encumbrances except for the lien of this Agreement. No financing statement
     covering any of the Collateral is on file in any public office other than
     those which reflect the security interest created by this Agreement or to
     which Lender has specifically consented. Grantor shall defend Lender's
     rights in the Collateral against the claims and demands of all other
     persons.

     REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to cause
     others to keep and maintain, the Collateral in good order, repair and
     condition at all times while this Agreement remains in effect. Grantor
     further agrees to pay when due all claims for work done on, or services
     rendered or material furnished in connection with the Collateral so that no
     lien or encumbrance may ever attach to or be filed against the Collateral.

     INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
     and agents shall have the right at all reasonable times to examine and
     inspect the Collateral wherever located.

     TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
     assessments and liens upon the Collateral, its use or operation, upon this
     Agreement, upon any promissory note or notes evidencing the indebtedness,
     or upon any of the other Related Documents, Grantor may withhold any such
     payment or may elect to contest any lien if Grantor is in good faith
     conducting an appropriate proceeding to contest the obligation to pay and
     so long as Lender's interest in the Collateral is not jeopardized in
     Lender's sole opinion. In any contest Grantor shall defend itself and
     Lender and shall satisfy any final adverse judgment before enforcement
     against the Collateral. Grantor (shall name Lender as an additional obligee
     under any surety bond furnished in the contest proceedings. Grantor further
     agrees to furnish Lender with evidence that such taxes, assessments, and
     governmental and other charges have been paid in full and in a timely
     manner. Grantor may withhold any such payment or may elect to contest any
     lien if Grantor is in good faith conducting an appropriate proceeding to
     contest the obligation to pay and so long as Lender's interest in the
     Collateral is not jeopardized.

     COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
     with all laws, ordinances, rules and regulations of all governmental
     authorities, now or hereafter in effect, applicable to the ownership,
     production, disposition, or use of the Collateral, including all laws or
     regulations relating to the undue erosion of highly-erodible land or
     relating to the conversion of wetlands for the production of an
     agricultural product or commodity. Grantor may contest in good faith any
     such law, ordinance or regulation and withhold compliance during any
     proceeding, including appropriate appeals, so long as Lender's interest in
     the Collateral, in Lender's opinion, is not jeopardized.

     HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
     never has been, and never will be so long as this Agreement remains a lien
     on the Collateral, used in violation of any Environmental Laws or for the
     generation, manufacture, storage, transportation, treatment, disposal,
     release or threatened release of any Hazardous Substance. The
     representations and warranties contained herein are based on Grantor's due
     diligence in investigating the Collateral for Hazardous Substances. Grantor
     hereby (1) releases and waives any future claims against Lender for
     indemnity or contribution in the event Grantor becomes liable for cleanup
     or other costs under any Environmental Laws, and (2) agrees to indemnify
     and hold harmless Lender against any and all claims and losses resulting
     from a breach of this provision of this Agreement. This obligation to
     indemnify shall survive the payment of the indebtedness and the
     satisfaction of this Agreement.

     MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
     risks insurance, including without limitation fire, theft and liability
     coverage together with such other insurance as Lender may require with
     respect to the Collateral, in form, amounts, coverage and basis reasonably
     acceptable to Lender. Grantor, upon request of Lender, will deliver to
     Lender from time to time the policies or certificates of insurance in form
     satisfactory to Lender, including stipulations that coverage will not be
     cancelled or diminished without at least ten (101 days' prior written
     notice to Lender and not including any disclaimer of the insurer's
     liability for failure to give such a notice. Each insurance policy also
     shall include an endorsement providing that coverage in favor of Lender
     will not be impaired in any way by any act, omission or default of Grantor
     or any other person. In connection with all policies covering assets in
     which Lander holds or Is offered a security interest, Grantor will provide
     Lender with such loss payable or other endorsements as Lender may require.
     If Grantor at any time fails to obtain or maintain any insurance as
     required under this Agreement, Lender may (but shall not be obligated to)
     obtain such insurance as Lender deems appropriate, including if Lender so
     chooses "single interest insurance," which will cover only Lender's
     Interest in the Collateral.

     APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
     any loss or damage to the Collateral. Lender may make proof of loss if
     Grantor fails to do so within fifteen (15) days of the casualty. All
     proceeds of any insurance on the Collateral, including accrued proceeds
     thereon, shall be hold by Lender as part of the Collateral. If Lender
     consents to repair or replacement of the damaged or destroyed Collateral,
     Lender shall, upon satisfactory proof of expenditure, pay or reimburse
     Grantor from the proceeds for the reasonable cost of repair or restoration.
     If Lender does not consent to repair or replacement of the Collateral,
     Lender shall retain a sufficient amount of the proceeds to pay all of the
     indebtedness, and shall pay the balance, to Grantor. Any proceeds which
     have not been disbursed within six (6) months after their receipt and which
     Grantor has not committed to the repair or restoration of the Collateral
     shall be used to prepay the indebtedness.

     INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by monthly payments from Grantor of a sum estimated by Lender to be
     sufficient to produce, at least fifteen (15) days before the premium due
     date, amounts at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Lender is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the payment
     of premiums shall remain Grantor's sole responsibility.

     INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing policy of insurance showing such information as
     Lender may reasonably request including the following: (1) the name of the
     insurer; (2) the risks insured; (3) the amount of the policy; (4) the
     property insured; (5) the then current value on the basis of which
     insurance has been obtained and the manner of determining that value; and
     (6) the expiration date of the policy. In addition, Grantor shall upon
     request by Lender (however not more often than annually) have an
     independent appraiser satisfactory to Lender determine, as applicable, the
     cash value or replacement cost of the Collateral.

     FINANCING STATEMENTS. Grantor authorizes Lender to file a UCC-1 financing
     statement, or alternatively, a copy of this Agreement to perfect Lender's
     security interest. At Lender's request, Grantor additionally agrees to sign
     all other documents that are necessary to perfect, protect, and continue
     Lender's security interest in the Property. Grantor will pay all filing
     fees, title transfer fees, and other fees and costs involved unless
     prohibited by law or unless Lender is required by law to pay such fees and
     costs. Grantor irrevocably appoints Lender to execute financing statements
     and documents of title in Grantor's name and to execute all documents
     necessary to transfer title if there is a default. Lender may file a copy
     of this Agreement as a financing statement. If Grantor changes Grantor's
     name or address, or the name or address of any person granting a security
     interest under this Agreement changes, Grantor will promptly notify the
     Lender of such change.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to
<PAGE>

                          COMMERCIAL SECURITY AGREEMENT

LOAN NO: 656932                   (CONTINUED)                             PAGE 3

accounts, Grantor may have possession of the tangible personal property and
beneficial use of all the Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the Related Documents, provided that
Grantor's right to possession and beneficial use shall not apply to any
Collateral where possession of the Collateral by Lender is required by law to
perfect Lender's security interest in such Collateral. Until otherwise notified
by Lender, Grantor may collect any of the Collateral consisting of accounts. At
any time and even though no Event of Default exists, Lender may exercise its
rights to collect the accounts and to notify account debtors to make payments
directly to Lender for application to the indebtedness, if Lender at any time
has possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, In Lender's sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary to preserve any rights
in the Collateral against prior parties, nor to protect, preserve or maintain
any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantors behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures paid by Lender for such purposes will then bear Interest at the
Note rate from the date paid by Lender to the date of repayment by Grantor. To
the extent permitted by applicable law, all such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable Insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at. the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement.

     PAYMENT DEFAULT. Borrower fails to make any payment when due under the
     Indebtedness.

     OTHER DEFAULTS. Borrower or Grantor fails to comply with or to perform any
     other term, obligation, covenant or condition contained in this Agreement
     or in any of the Related Documents or to comply with or to perform any
     term, obligation, covenant or condition contained in any other agreement
     between Lender and Borrower or Grantor.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by Borrower or Grantor or on Borrower's or Grantor's
     behalf under this Agreement or the Related Documents is false or misleading
     in any material respect, either now or at time made or furnished or
     becomes false or misleading at any time thereafter.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     INSOLVENCY. The dissolution or termination of Borrower's or Grantor's
     existence as a going business, the insolvency of Borrower or Grantor, the
     appointment of a receiver for any part of Borrower's or Grantor's property,
     any assignment for the benefit of creditors, any type of creditor workout,
     or the commencement of any proceeding under any bankruptcy or insolvency
     laws by or against Borrower or Grantor.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by Judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or Grantor or
     by any governmental agency against any collateral securing the
     Indebtedness. This includes a garnishment of any of Borrower's or Grantor's
     accounts, including deposit accounts, with Lender. However, this Event of
     Default shall not apply if there is a good faith dispute by Borrower or
     Grantor as to the validity or reasonableness of the claim which is the
     basis of the creditor or forfeiture proceeding and if Borrower or Grantor
     gives Lender written notice of the creditor or forfeiture proceeding and
     deposits with Lender monies or a surety bond for the creditor or forfeiture
     proceeding, In an amount determined by Lender, in its sole discretion, as
     being an adequate reserve or bond for the dispute.

     EVENTS ALLOCATING GUARANTOR. Any of the preceding events occurs with
     respect to Guarantor of any of the Indebtedness or Guarantor dies or
     becomes Incompetent or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness.

     ADVERSE CHANGE. A material adverse change occurs in Borrower's or Grantor's
     financial condition, or Lender believes the prospect of payment or
     performance of the Indebtedness is impaired.

     INSECURITY. Lender In good faith believes itself insecure.

     CURE PROVISIONS. If any default, other than a default in payment is
     curable, it may be cured (and no event of default will have occurred if
     Grantor, after receiving written notice from Lender demanding cure of such
     default: (1) cures the default within twenty (20) days; or (2) if the cure
     requires more than twenty (20) days, immediately initiates steps which
     Lender deems in Lender's sole discretion to be sufficient to cure the
     default and thereafter continues and completes all reasonable and necessary
     steps sufficient to produce compliance as soon as reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Taxes Uniform Commercial Code. In addition and without
limitation, Lender may exercise any ones or more of the following rights and
remedies:

     ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness
     immediately due and payable, without notice of any kind to Borrower or
     Grantor.

     ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
     any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter, provided
     Lender does so without a breach of the peace or a trespass, upon the
     property of Grantor to take possession of and remove the Collateral. If the
     Collateral contains other goods not covered by this Agreement at the time
     of repossession, Grantor agrees Lender may take such other goods, provided
     that Lender makes reasonable efforts to return them to Grantor after
     repossession.

     SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof In Lender's own
     name or that of Grantor. Lender may sell the Collateral at public auction
     or private sale. Unless the Collateral threatens to decline speedily in
     value or is of a type customarily sold on a recognized market, Lender will
     give Grantor, and other persons as required by law, reasonable notice of
     the time and place of any public sale, or the time after which any private
     sale or any other disposition of the Collateral is to be made. However, no
     notice need be provided at any person who, after Event of Default occurs,
     enters into and authenticates an agreement waiving that person's right to
     notification of sale. The requirements of reasonable notice shall be met if
     such notice is given at least ten (10) days before the time of the sale or
     disposition. All expenses relating to the disposition of the Collateral,
     Including without limitation the expenses of retaking, holding, insuring,
     preparing for sale and selling the Collateral, shall become a part of the
     Indebtedness secured by this Agreement and shall be payable on demand, with
     interest at the Note rate from date of expenditure until repaid.

     APPOINT RECEIVER. Lender shall have the right to have a receiver appointed
     to take possession of all or any part of the Collateral, with the power to
     protect and preserve the Collateral, to operate the Collateral preceding
     foreclosure or sale, and to collect the Rents from the Collateral and apply
     the proceeds, over and above the cost of the receivership, against the
     Indebtedness. The receiver may serve without bond if permitted by law.
     Lender's right to the appointment of a receiver shall exist whether or not
     the apparent value of the Collateral exceeds the Indebtedness by a
     substantial amount. Employment by Lender shall not disqualify a person from
     serving as a receiver.

     COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
     receiver, may collect the payments, rents, income, and revenues from the
     Collateral. Lender may at any time in Lender's discretion transfer any
     Collateral into Lender's own name or that of Lender's nominees and receive
     the payments, rents, income, and revenues therefrom and hold the same as
     security for the Indebtedness or apply it to payment of the Indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general Intangibles, insurance policies, instruments,
     chattel paper, chooses in action, or similar property, Lender may demand,
     collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
     realize on the Collateral as Lender may determine, whether or not
     Indebtedness or Collateral is then due. For these purposes, Lender may, on
     behalf of and in the name of Grantor, receive, open and dispose of mail
     addressed to Grantor; change any address to which mail and payments are to
     be sent; and endorse notes, checks, drafts, money orders, documents of
     title, instruments and items pertaining to payment, shipment, or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligors on any Collateral to make payments directly to Lender.

     OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a Judgment against Borrower for any deficiency remaining
     on the Indebtedness due to Lender after application of all amounts resolved
     from the exercise of the rights provided in this Agreement. Borrower shall
     be liable for a deficiency even if the transaction described in this
     subsection is a sale of accounts or chattel paper.
<PAGE>

                          COMMERCIAL SECURITY AGREEMENT

LOAN NO: 656932                    (CONTINUED)                            PAGE 4

     OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of
     a secured creditor under the provisions of the Uniform Commercial Code, as
     may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
     Lender's rights and remedies, whether evidenced by this Agreement, the
     Related Documents, or by any other writing, shall be cumulative and may be
     exorcised singularly or concurrently. Election by Lender to pursue any
     remady shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform an obligation of Grantor
     under this Agreement, after Grantor's failure to perform, shall not affect
     Lender's right to declare a default and exercise its remedies.

PURPOSE OF LOAN. Renow note #656932 ($405,050) and provide working capital to
expand government desk.

CROSS COLLATERALIZATION. In addition to this note, this Agreement secures all
amounts that I may owe to Lender, whether owed now or later. This means that
every loan I have now or obtain later with Lender is secured by this Agreement.
This Agreement also secures all other amounts and obligations that I may owe to
Lender (such as an overdraft checking account). This provision does not apply to
loans secured by the borrower's principal dwelling. .

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's reasonable attorneys' fees
     and Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Grantor shall pay the costs and expanses of such
     enforcement. Costs and expenses include Lender's reasonable attorneys' fees
     and legal expenses whether or not there is a lawsuit, including Lender's
     reasonable attorneys' fees and legal expenses for bankruptcy proceedings
     (including efforts to modify or vacate any automatic stay or injunction),
     appeals, and any anticipated post-judgment collection services. Grantor
     also shall pay all court costs and such additional fees as may be directed
     by the court.

     CAPTION HEADING. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
     IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
     AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.

     CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by
     this Agreement occurred in Lubbock County, Grantor agrees upon Lender's
     request to submit to the jurisdiction of the courts of Lubbock County,
     State of Texas.

     JOINT AND SEVERAL LIABILITY. All obligations of Borrower and Grantor under
     this Agreement shall be joint and several, and all references to Grantor
     shall mean each and every Grantor, and all references to Borrower shall
     mean each and every Borrower. This means that each Borrower and Grantor
     signing below is responsible for all obligations in this Agreement. Where
     any one or more of the parties is a corporation, partnership, limited
     liability company or similar entity, it is not necessary for Lender to
     inquire into the powers of any of the officers, directors, partners,
     members, or other agents acting or purporting to act on the entity's
     behalf, and any obligations made or created in reliance upon the professed
     exercise of such powers shall be guaranteed under this Agreement.

     NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute
     a waiver of Lender's right otherwise to demand strict compliance with
     that provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Grantor, shall
     constitute a waiver of any of Lender's rights or of any of Grantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     Instance where such consent is required and in all cases such consent may
     be granted or withheld in the solo discretion of Lender.

     NOTICES. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes. Grantor agrees to keep Lender informed at all times of
     Grantor's current address. Unless otherwise provided or required by law, if
     there is more than one Grantor, any notice given by Lender to any Grantor
     is deemed to be notice given to all Grantors.

     POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect, amend, or to continue the security interest granted in this
     Agreement or to demand termination of filings of other secured parties.
     Lender may at any time, and without further authorization from Grantor,
     file a carbon, photographic or other reproduction of any financing
     statement or of this Agreement for use as a financing statement. Grantor
     will reimburse Lender for all expenses for the perfection and the
     continuation of the perfection of Lender's security interest in the
     Collateral.

     PAYMENT OF INTEREST AND FEES. Notwithstanding any other provision of this
     Agreement or any provision of any Related Document, Grantor does not agree
     or intend to pay, and Lender does not agree or intend to charge, collect,
     take, reserve or receive (collectively referred to herein as "charge or
     collect"), any amount in the nature of interest or in the nature of a fee
     for the Indebtedness which would in any way or event (including demand,
     prepayment, or acceleration) cause Lender to contract for, charge or
     collect more for the Indebtedness than the maximum Lender would be
     permitted to charge or collect by any applicable federal or Texas state
     law. Any such excess interest or unauthorized fee will, instead of anything
     stated to the contrary, be applied first to reduce the unpaid principal
     balance of the Indebtedness, and when the principal has been paid in full,
     be refunded to Grantor.

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any person or
     circumstance, that finding shall not make the offending provision illegal,
     invalid, or unenforceable as to any other person or circumstance. If
     feasible, the offending provision shall be considered modified so that it
     becomes legal, valid and enforceable. If the offending provision cannot be
     so modified, it shall be considered deleted from this Agreement. Unless
     otherwise required by law, the illegality, Invalidity, or unenforceability
     of any provision of this Agreement shall not affect the legality, validity
     or enforceability of any other provision of this Agreement.

     SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement
     on transfer of Grantor's interest, this Agreement shall be binding upon and
     Inure to the benefit of the parties, their successors and assigns. If
     ownership of the Collateral becomes vested in a person other than Grantor,
     Lender, without notice to Grantor, may deal with Grantor's successors with
     reference to this Agreement and the Indebtedness by way of forbearance or
     extension without releasing Grantor from the obligations of this Agreement
     or Mobility under the Indebtedness.

     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
     warranties, and agreements made by Grantor in this Agreement shall survive
     the execution and delivery of this Agreement, shall be continuing in
     nature, and shall remain in full force and effect until such time
     as Borrower's Indebtedness shall be paid in full.

     TIMES OF THE ESSENCE. Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

     ACCOUNT. The word "Account" means a trade account, account receivable,
     other receivable, or other right to payment for goods sold or services
     rendered owing to Grantor or to a third party grantor acceptable to
     Lender).

     AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     BORROWER. The word "Borrower" means WESTECH CAPITAL CORP. and includes all
     co-signers and co-makers signing the Note.

     COLLATERAL. The word "Collateral" means all of Grantor's right, title and
     interest in and to all the Collateral as described in the Collateral
     Description section of this Agreement.

     DEFAULT. The word "Default" means the Default set forth in this Agreement
     in the section titled "Default".
<PAGE>

                         COMMERCIAL SECURITY AGREEMENT
LOAN NO: 656932                 (CONTINUED)                               PAGE 5

         ENVIRONMENTAL LAWS. The words "Environmental laws" mean any and all
         state, federal and local statutes, regulations and ordinances relating
         to the protection of human health or the environment, including without
         limitation the Comprehensive Environmental Response, Compensation, and
         Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
         ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
         Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
         Act, 49 U.S.C. Section 1801, et seq., THE Resource Conservation and
         Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable
         state or federal laws, rules, or regulations adopted pursuant thereto.

         EVENT OF DEFAULT. The words "Event of Default" mean any of the events
         of default set forth in this Agreement in the default section of this
         Agreement.

         GRANTOR. The word "Grantor" means WESTECH CAPITAL CORP. and Tejas
         Securities Group Holding Company.

         GUARANTOR. The word "Guarantor" means any guarantor, surety, or
         accommodation party of any or all of the Indebtedness.

         GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
         Lender, including without limitation a guaranty of all or part of the
         Note),

         HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
         that, because of their quantity, concentration or physical, chemical or
         infectious characteristics, may cause or posa a present or potential
         hazard to human health or the environment when Improperly used,
         treated, stored, disposed of, generated, manufactured, transported or
         otherwise handled. The words "Hazardous Substances" are used in their
         very broadest sense and include without limitation any and all
         hazardous or toxic substances, materials or waste as defined by or
         listed under the Environmental Laws. The term "Hazardous Substances"
         also includes, without limitation, petroleum and petroleum by-products
         or any fraction thereof and asbestos.

         INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
         by the Note or Related Documents, including all principal and interest
         together with all other indebtedness and costs and expenses for which
         Borrower is responsible under this Agreement or under any of the
         Related Documents.

         LENDER. The word "Lender" means First United Bank, its successors and
         assigns.

         NOTE. The word "Note" means the Note executed by WESTECH CAPITAL CORP.
         in the principal amount of $2,500,000.00 dated February 17, 2004,
         together with all renewals of, extensions of, modifications of,
         refinancings of, consolidations of, and substitutions for the note or
         credit agreement.

         PROPERTY. The word "Property" means all of Grantor's right, title and
         interest in and to all the Property as described in the "Collateral
         Description" section of this Agreement.

         RELATED DOCUMENTS. The words "Related Documents" mean all promissory
         notes, credit agreements, loan agreements, environmental agreements,
         guaranties, security agreements, mortgages, deeds of trust, security
         deeds, collateral mortgages, and all other instruments, agreements and
         documents, whether now or hereafter existing, executed in connection
         with the Indebtedness.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
FEBRUARY 17, 2004.

GRANTOR:

WESTECH CAPITAL CORP.

By: /s/ John Gorman
   ---------------------------------
   John Gorman, Chairman & CEO of WESTECH
   CAPITAL CORP.

TEJAS SECURITIES GROUP HOLDING COMPANY

By: /s/ John Gorman
   ----------------------------------
   John Gorman, Chairman and CEO of Tejas Securities
   Group Holding Company

BORROWER:

WESTECH CAPITAL CORP.

By: /s/ John Gorman
   ----------------------------------
   John Gorman, Chairman & CEO OF WESTECH
   CAPITAL CORP.

<PAGE>

                             BUSINESS LOAN AGREEMENT

<TABLE>
<CAPTION>
  Principal           Loan Date        Maturity    Loan No.      Call/Coll     Account      Officer     Initials
<S>                  <C>               <C>         <C>           <C>           <C>          <C>         <C>
$2,500,000.00        02-17-2004       02-15-2007   656932         4A/20                       RCB
</TABLE>

  References in the shaded area are for Lender's use only and do not limit the
  applicability of this document to any particular loan or item. Any Item above
       containing " " " has been omitted due to text length limitations.

<TABLE>
<S>                                                    <C>
BORROWER:  WESTECH CAPITAL CORP. (TIN: 13-3577716)     LENDER:  First United Bank
           2700 VIA FORTUNA, SUITE 400                          Lubbock Southwest Branch
           AUSTIN, TX  78746                                    6604 Frankford
                                                                Lubbock, TX 79424
</TABLE>

THIS BUSINESS LOAN AGREEMENT DATED FEBRUARY 17, 2004, IS MADE AND EXECUTED
BETWEEN WESTECH CAPITAL CORP. ("BORROWER") AND FIRST UNITED BANK ("LENDER") ON
THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS
FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS OR OTHER
FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT
OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN"). BORROWER UNDERSTANDS AND AGREES
THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON
BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS AS SET FORTH IN THIS
AGREEMENT; (B) THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL
TIMES SHALL BE SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL
SUCH LOANS SHALL BE AND REMAIN SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT.

TERM. This Agreement shall be effective as of February 17, 2004, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until February 15,
2007.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the Initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

         LOAN DOCUMENTS. Borrower shall provide to Lender the following
         documents for the Loan: (1) the Note; (2) Security Agreements granting
         to Lender security Interests in the Collateral; (3) financing
         statements and all other documents perfecting Lender's Security
         Interests; (4) evidence of insurance as required below; (5) guaranties;
         (6) together with all such Related Documents as Lender may require for
         the Loan; all in form and substance satisfactory to Lender and Lender's
         counsel.

         BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
         substance satisfactory to Lender properly certified resolutions, duly
         authorizing the execution and delivery of this Agreement, the Note and
         the Related Documents. In addition, Borrower shall have provided such
         other resolutions, authorizations, documents and instruments as Lender
         or its counsel, may require.

         PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
         fees, charges, and other expenses which are then due and payable as
         specified in this Agreement or any Related Document.

         REPRESENTATIONS AND WARRANTIES. The representations and warranties set
         forth in this Agreement, in the Related Documents, and in any document
         or certificate delivered to Lender under this Agreement are true and
         correct.

         NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
         condition which would constitute an Event of Default under this
         Agreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the data of this Agreement, as of the data of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

         ORGANIZATION. Borrower is a corporation for profit which is, and at all
         times shall be, duly organized, validly existing, and in good standing
         under and by virtue of the laws of the State of New York. Borrower is
         duly authorized to transact business in the State of Texas and all
         other states in which Borrower is doing business, having obtained all
         necessary filings, governmental licenses and approvals for each state
         in which Borrower is doing business. Specifically, Borrower is, and at
         all times shall be, duly qualified as a foreign corporation in all
         states in which the failure to so qualify would have a material adverse
         effect on its business or financial condition. Borrower has the full
         power and authority to own its properties and to transact the business
         in which it is presently engaged or presently proposes to engage.
         Borrower maintains an office at 2700 VIA FORTUNA, SUITE 400, AUSTIN, TX
         78746. Unless Borrower has designated otherwise in writing, the
         principal office is the office at which Borrower keeps its books and
         records including its records concerning the Collateral. Borrower will
         notify Lender prior to any change in the location of Borrower's state
         of organization or any change in Borrower's name. Borrower shall do all
         things necessary to preserve and to keep in full force and effect its
         existence, rights and privileges, and shall comply with all
         regulations, rules, ordinances, statutes, orders and decrees of any
         governmental or quasi-governmental authority or court applicable to
         Borrower and Borrower's business activities.

         ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents of
         filings required by law relating to all assumed business names used by
         Borrower. Excluding the name of Borrower, the following is a complete
         list of all assumed business names under which Borrower [ILLEGIBLE]
         business: NONE.

         AUTHORIZATION. Borrower's execution, delivery, and performance of this
         Agreement and all the Related Documents have been duly authorized by
         all necessary action by Borrower and do not conflict with, result in a
         violation of, or constitute a default under (1) any provision of (a)
         Borrower's articles of Incorporation or organization, or bylaws, or (b)
         any agreement or other instrument binding upon Borrower or (2) any law,
         governmental regulation, court decree, or order applicable to Borrower
         or to Borrower's properties.

         FINANCIAL INFORMATION. Each of Borrower's financial statements supplied
         to Lender truly and completely disclosed Borrower's financial condition
         as of the date of the statement, and there has been no material adverse
         change in Borrower's financial condition subsequent to the date of the
         most recent financial statement supplied to Lender. Borrower has no
         material contingent obligations except as disclosed in such financial
         statements.

         LEGAL EFFECT. This Agreement constitutes, and any instrument or
         agreement Borrower is required to give under this Agreement when
         delivered will constitute legal, valid, and binding obligations of
         Borrower enforceable against Borrower in accordance with their
         respective terms.

         PROPERTIES. Except as contemplated by this Agreement or as previously
         disclosed in Borrower's financial statements or in writing to Lender
         and as accepted by Lender, and except for property tax liens for taxes
         not presently due and payable, Borrower owns and has good title to all
         of Borrower's properties free and clear of all Security Interests, and
         has not executed any security documents or financing statements
         relating to such properties. All of Borrower's properties are titled in
         Borrower's legal name, and Borrower has not used or filed a financing
         statement under any other name for at least the last five (5) years.

         HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender
         in writing, Borrower represents and warrants that: (1) During the
         period of Borrower's ownership of Borrower's Collateral, there has been
         no use, generation, manufacture, storage, treatment, disposal, release
         or threatened release of any Hazardous Substance by any person on,
         under, about or from any of the Collateral. (2) Borrower has no
         knowledge of, or reason to believe that there has been (a) any breach
         or violation of any Environmental Laws; (b) any use, generation,
         manufacture, storage, treatment, disposal, release or threatened
         release of any Hazardous Substance on, under, about or from the
         Collateral by any prior owners or occupants of any of the Collateral;
         or (c) any actual or threatened litigation or claims of any kind by any
         person relating to such matters. (3) Neither Borrower nor any tenant,
         contractor, agent or other authorized user of any of the Collateral
         shall use, generate, manufacture, store, treat, dispose of or release
         any Hazardous Substance on, under, about or from any of the Collateral;
         and any such activity shall be conducted in compliance with all
         applicable federal, state, and local laws, regulations, and ordinances,
         Including without limitation all Environmental Laws. Borrower
         authorizes Lender and its agents to enter upon the Collateral to make
         such inspections and tests as Lender may deem appropriate to determine
         compliances of the Collateral with this section of the Agreement. Any
         inspections or tests made by Lender shall be at Borrower's expense and
         for Lender's purposes only and shall not be construed in create any
         responsibility or liability on the part of Lender to Borrower or to any
         other person. The representations and warranties contained herein are
         based on Borrower's due diligence in investigating the Collateral for
         hazardous waste and Hazardous Substances. Borrower hereby (1) releases
         and waives any future claims against Lender for indemnity or
         contribution in the event Borrower becomes liable for cleanup or other
         costs under any such laws, and (2) agrees to indemnify and hold
         harmless Lender against any and all claims, losses, liabilities,
         damages, penalties, end expenses which Lender may directly or
         indirectly sustain or suffer resulting from a breach of this section of
         the Agreement or as a consequence of any use, generation, manufacture,
         STORAGE, DISPOSAL, release or threatened release of a hazardous waste
         or substance on the Collateral. The provisions of this section of the
         Agreement, including the obligation to indemnify, shall survive the
         payment of the Indebtedness and the termination, expiration or
         satisfaction of this Agreement and shall not be affected by Lender's
         acquisition of any Interest in any of the Collateral, whether by
         foreclosure or otherwise.

         LITIGATION AND CLAIMS. No litigation, claim, investigation,
         administrative proceeding or similar action (including those for unpaid
         taxes) against Borrower is pending or threatened, and no other event
         has occurred which may materially adversely affect Borrower's financial
         condition or properties, other than litigation, claims, or other
         events, if any, that have been disclosed to and acknowledged by Lender
         in
<PAGE>

                             BUSINESS LOAN AGREEMENT

LOAN NO: 656932                    (CONTINUED)                            PAGE 2

     writing.

     TAXES. To the bank of Borrower's knowledge, all of Borrower's tax returns
     and reports that are or were required to be filed, have been filed, and all
     taxes, assessments and other governmental charges have been paid in full,
     except those presently being or to be contested by Borrower in good faith
     in the ordinary course of business and for which adequate reserves have
     been provided.

     LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
     Borrower has not entered into or granted any Security Agreements, or
     permitted the filing or attachment of any Security Interests on or
     affecting any of the Collateral directly or indirectly securing repayment
     of Borrower's Loan and Note, that would be prior or that may in any way be
     superior to Lender's Security Interests and rights in and to such
     Collateral.

     BINDING EFFECT. This Agreement, the Note, all Security Agreements (if any),
     and all Related Documents are binding upon the signers thereof, as well as
     upon their successors, representatives and assigns, and are legally
     enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

     NOTICES OF CLAIMS AND LITIGATION. Promptly Inform Lender in writing of (1)
     all material adverse changes in Borrower's financial condition, and (2) all
     existing and all threatened litigation, claims, investigations,
     administrative proceedings or similar actions affecting Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     or the financial condition of any Guarantor.

     FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
     applied on a consistent basis, and permit Lender to examine and audit
     Borrower's books and records at all reasonable times.

     FINANCIAL STATEMENTS, Furnish Lender with the following:

          ANNUAL STATEMENTS. As soon as available, but in no event later than
          ninety (90) days after the end of each fiscal year, Borrower's balance
          sheet and income statement for the year ended, audited by a certified
          public accountant satisfactory to Lender.

          INTERIM STATEMENTS. As soon as available, but in no event later than
          thirty (30) days after the end of each fiscal quarter, Borrower's
          balance sheet and profit and loss statement for the period ended,
          compiled by a certified public accountant satisfactory to Lender.

          ADDITIONAL REQUIREMENTS. Guarantor will provide annual balance sheet
          and tax return.

     All financial reports required to be provided under this Agreement shall be
     prepared in accordance with GAAP, applied on a consistent basis, and
     certified by Borrower as being true and correct.

     ADDITIONAL INFORMATION. Furnish such additional information and statements,
     as Lender may request from time to time.

     FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
     ratios:

          TANGIBLE NET WORTH REQUIREMENTS. Maintain a minimum Tangible Net Worth
          of not less than; $2,600,000.00.

          OTHER REQUIREMENTS. Any debt payable to John Gorman and/or Tejas
          Securities will be subordinate to the debt to First United Bank.

          Except as provided above, all computations made to determine
          compliance with the requirements contained in this paragraph shall be
          made in accordance with generally accepted accounting principles,
          applied on a consistent basis, and certified by Borrower as being true
          and correct.

     INSURANCE. Maintain fire and other risk insurance, public liability
     insurance, and such other insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, and coverages
     reasonably acceptable to Lender and by insurance companies authorized to
     transact business in Texas. BORROWER MAY FURNISH THE INSURANCE REQUIRED BY
     THIS AGREEMENT WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY
     BORROWER OR THROUGH EQUIVALENT COVERAGE FROM ANY INSURANCE COMPANY
     AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. Borrower, upon request of Lender,
     will deliver to Lender from time to time the policies or certificates of
     insurance in form satisfactory to Lender, including stipulations that
     coverages will not be cancelled or diminished without at least ten (10)
     days prior written notice to Lender. Each insurance policy also shall
     include on endorsement providing that coverage in favor of Lender will not
     be impaired in any way by any act, omission or default of Borrower or any
     other person. In connection with all policies covering assets in which
     Lender holds or is offered a security Interest for the Loans, Borrower will
     provide Lender with such lender's loss payable or other endorsements as
     Lender may require.

     INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (1) the
     name of the insurer; (2) the risks Insured; (3) the amount of the policy;
     (4) the properties Insured; (5) the then currant property values on the
     basis of which Insurance has been obtained, and the manner of determining
     those values; and (6) the expiration date of the policy. In addition, upon
     request of Lender (however not more often than annually), Borrower will
     have an independent appraiser satisfactory to Lender determine, as
     applicable, the actual cash value or replacement cost of any Collateral.
     The cost of such appraisal shall be paid by Borrower.

     GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
     guaranties of the loans in favor of Lender, executed by the guarantor named
     below, on Lender's forms, and in the amount and under the conditions set
     forth in those guaranties.

<TABLE>
<CAPTION>
NAME OF GUARANTOR                 AMOUNT
<S>                             <C>
JOHN GORMAN                     UNLIMITED
</TABLE>

     OTHER AGREEMENTS. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits.

     PERFORMANCE. Perform and comply, in a timely manner, with all terms,
     conditions, and provisions set forth in this Agreement, in the Related
     Documents, and in all other instruments and agreements between Borrower and
     Lender. Borrower shall notify Lender immediately in writing of any default
     in connection with any agreement.

     OPERATIONS. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner.

     ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
     expense, all such investigations, studies, samplings and testings as may be
     requested by Lender or any governmental authority relative to any
     substance, or any waste or by-product of any substance defined as toxic or
     a hazardous substance under applicable federal, state, or local law, rule,
     regulation, order or directive, at or affecting any property or any
     facility owned, leased or used by Borrower.

     COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
     ordinances, and regulations, now or hereafter in effect, of all
     governmental authorities applicable to the conduct of Borrower's
     properties, businesses and operations, and to the use or occupancy of the
     Collateral, including without limitation, the Americans With Disabilities
     Act. Borrower may contest in good faith any such law, ordinance, or
     regulation and withhold compliance during any proceeding, including
     appropriate appeals, so long as Borrower has notified Lender in writing
     prior to doing so and so long as, in Lender's sole opinion, Lender's
     Interests in the Collateral are not jeopardized. Lender may require
     Borrower to post adequate security or a surety bond, reasonably
     satisfactory to Lender, to protect Lender's interest.

     INSPECTION. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at all reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

     COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide
     Lender at least annually, with a certificate executed by Borrower's chief
     financial officer, or other officer or person acceptable to Lender,
     certifying that the representations and warranties set forth in this
     Agreement are true and correct as of the date of the certificate and
     further certifying that, as of the date of the certificate, no Event of
     Default exists under this Agreement.

     ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
     with any and all Environmental Laws; not cause or permit to
<PAGE>

                            BUSINESS LOAN AGREEMENT

LOAN NO: 656932                   (CONTINUED)                             PAGE 3

         exist, as a result of an Intentional or unintentional action or
         omission on Borrower's part or on the part of any third party, on
         property owned and/or occupied by Borrower, any environmental activity
         where damage may result to the environment, unless such environmental
         activity is pursuant to and In compliance with the conditions of a
         permit Issued by the appropriate federal, state or local governmental
         authorities; shall furnish to Lender promptly and in any event within
         thirty (30) days after receipt thereof a copy of any notice, summons,
         lien, citation, directive. letter or other communication from any
         governmental agency or instrumentality concerning any Intentional or
         unintentional action or omission on Borrower's part in connection with
         any environmental activity whether or not there Is damage to the
         environment and/or other natural resources.

         ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
         promissory notes, mortgages, deeds of trust, security agreements,
         assignments, financing statements, instruments, documents and other
         agreements as Lender or its attorneys may reasonably request to
         EVIDENCE and secure the loans and to perfect all Security Interests,

     LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
     materially affect Lender's Interest in the Collateral or if Borrower fails
     to comply with any provision of this Agreement or any Related Documents,
     including but not limited to Borrower's failure to discharge or pay when
     due any amounts Borrower is required to discharge or pay under this
     Agreement or any Related Documents, Lender on Borrower's behalf may (but
     shall not be obligated to) take any action that Lender dooms appropriate,
     Including but not limited to discharging or paying all taxes, liens,
     security Interests, encumbrances and other claims, at any time levied or
     placed on any Collateral and paying all costs for insuring, maintaining and
     preserving any Collateral. All such expenditures paid by Lender for such
     purposes will than bear Interest at the Note rate from the data paid by
     Lender to the date of repayment by Borrower. To the extent permitted by
     applicable law, all such expenses will become a part of the Indebtedness
     and, at Lender's option, will (A) be payable on demand; (B) be added to the
     balance of the Note and be apportioned among and be payable with any
     installment payments to become, due during either (1) the term of any
     applicable insurance policy; or (2) the remaining term of the Note; or (C)
     be treated as a balloon payment which will be duo and payable at the Note's
     maturity.

     NEGATIVE COVENANTS, Borrower covenants and agrees with Lender that while
     this Agreement is In affect, Borrower shall not without the prior written
     consent of Lender:

         INDEBTEDNESS AND LIONS. (1) Except for trade debt incurred in the
         normal course of business and Indebtedness to Lender contemplated by
         this Agreement, create, incur or assume additional indebtedness for
         borrowed money, Including capital leases, in excess of the aggregate
         amount of $100,000.00, (2) sell, transfer, mortgage, assign, pledge,
         lease, grant a security Interest In, or encumber any of Borrower's
         assets (except as allowed as permitted Liens), or (3) self with
         recourse any of Borrower's accounts, except to Lender,

         CONTINUITY OF OPERATIONS. (1) Engage In any business activities
         substantially different than those in which Borrower is presently
         engaged, (2) cease operations, liquidate, merge, transfer, acquire or
         consolidate with any other entity, change its name, dissolve or
         transfer or sell Collateral out of the ordinary course of business, or
         (3) pay any dividends on Borrower's stock (other than dividends payable
         in its Block), provided, however that notwithstanding the foregoing,
         but only so long as no Event of Default has occurred and Is continuing
         or would result from the payment of dividends, if Borrower is a
         "Subchapter S Corporation" (as defined in the Internal Revenue Code of
         1986, as amended), Borrower may pay cash dividends on Its stock to its
         shareholders from time to time in amounts necessary to enable the
         shareholders to pay Income taxes and make estimated income tax payments
         to satisfy their liabilities under federal and state law which arise
         solely from their status as Shareholders of a Subchapter S Corporation
         because of their ownership of shares of Borrower's stock, or purchase
         or retire any of Borrower's outstanding shares or altar or amend
         Borrower's capital structure.

         LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest In or advance
         money or assets to any other person, enterprise or entity, (2)
         purchase, create or acquire any interest in any other enterprise or
         entity, or (3) incur any obligation as surety or guarantor other than
         In the ordinary course of business.

         AGREEMENTS. Borrower will not enter into any agreement containing any
         provisions which would be violated or breached by the performance of
         Borrower's obligations under this Agreement or in connection herewith.

     CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan
     to Borrower, whether under this Agreement or under any other agreement,
     Lender shall have no obligation to make Loan Advances or to disburse Loan
     proceeds If: (A) Borrower or any Guarantor is in default under the terms of
     this Agreement or any of the Related Documents or any other agreement that
     Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor
     dies, becomes incompetent or becomes Insolvent, files a petition in
     bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
     occurs a material adverse change in Borrower's financial condition, In the
     financial condition of any Guarantor, or in the value of any Collateral
     securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
     to limit, modify or revoke such Guarantor's guaranty of the Loan or any
     other loan with Lender; or (E) Lender in good faith deems itself insecure,
     even though no Event of Default shall have occurred.

     RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
     a right of setoff in all Borrower's accounts with Lender (whether checking,
     savings, or some other account). This Includes all accounts Borrower holds
     jointly with someone else and all accounts Borrower may open in the future.
     However, this does not include any IRA or Keogh accounts, or any trust
     accounts for which setoff would bo prohibited by low. Borrower authorizes
     Lender, to the extent permitted by applicable law, to charge or setoff all
     sums owing on the Indebtedness against any and all such accounts.

     DEFAULT, Each of the following shall constitute an Event of Default under
     this Agreement:

         PAYMENT DEFAULT. Borrower fails to make any payment when due under the
         Loan.

         OTHER DEFAULTS. Borrower fails to comply with or to perform any other
         term, obligation, covenant or condition contained in this Agreement or
         In any of tho Related Documents or to comply with or to perform any
         term, obligation, covenant or condition contained in any other
         agreement between Lender and Borrower.

         FALSE STATEMENTS. Any warranty, representation or statement made or
         furnished to Lander by Borrower or on Borrower's behalf under this
         Agreement or the Related Documents is false or misleading in any
         material respect, other now or at the time made or furnished or becomes
         false or misleading at any time thereafter.

         INSOLVENCY. The dissolution or termination of Borrower's existence as a
         going business, the insolvency of Borrower, the appointment of a
         receiver for any part of Borrower's property, any assignment for the
         benefit of creditors, any type of creditor workout, or the commencement
         of any proceeding under any bankruptcy or insolvency laws by or against
         Borrower.

         DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
         Documents ceases to be in full force and effect (including failure of
         any collateral document to create a valid and perfected security
         Interest or lien) at any time and for any reason.

         CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower or by any
         governmental agency against any collateral securing the Loan. This
         Includes a garnishment of any of Borrower's accounts, including deposit
         accounts, with Lender. However, this Event of Default shall not apply
         If there is a good faith dispute by Borrower as to the validity or
         reasonableness of the claim which is the basis of the creditor or
         forfeiture proceeding and If Borrower gives Lender written notice of
         the creditor or forfeiture proceeding and deposits with Lender monies
         or a surety bond for the creditor or forfeiture proceeding, in an
         amount determined by Lender, in its sole discretion, as being an
         adequate reserve or bond for the dispute.

         EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
         respect to any Guarantor of any of tho Indebtedness or any Guarantor
         dies or becomes Incompetent, or revokes or disputes the validity of, or
         liability under, any Guaranty of the Indebtedness. In the event of a
         death, Lender, at Its option, may, but shall not be required to, permit
         the Guarantor's estate to assume unconditionally the obligations
         arising under the guaranty in a manner satisfactory to Lander, and, in
         doing so, cure any Event of Default.

         CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent
         (25%) or more of the common stock of Borrower,

         ADVERSE CHANGE. A material adverse change occurs in Borrower's
         financial condition, or Lender believes the prospect of payment or
         performance of the Loan is impaired.

         INSECURITY. Lender In good faith believes itself insecure,

         RIGHT TO CURE. If any default, other than a default on Indebtedness, is
         curable and if Borrower or Grantor, an the case may be, has not been
         given a notice of a similar default within the preceding twelve (12)
         months, it may be cured (end no Event of Default will have occurred) if
         Borrower or Grantor, as the case may bo, after receiving written notice
         from Lender demanding cure of such default; (1) cure the default within
         twenty (20) days; or (2) if the cure requires more than twenty (20)
         days, immediately initiate steps which Lender deems in lender's sole
         discretion to be sufficient to cure the default and thereafter continue
         and complete all reasonable and necessary Stops sufficient to produce
         compliance as soon as reasonably practical.

     EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
     where otherwise provided in this Agreement or the Related Documents, all
     commitments and obligations of Lender under this Agreement or the Related
     Documents or any other agreement Immediately will terminate (Including any
     obligation to make further Loan Advances or disbursements), end, at
     Lender's option, all Indebtedness Immediately will become duo and payable,
     all without notice of any kind to Borrower, except that In the case of an
     Event of Default of the type described In the
<PAGE>

                             BUSINESS LOAN AGREEMENT
LOAN NO: 656932                    (CONTINUED)                            PAGE 4

"Insolvency" subsection above, such acceleration shall be automatic and not
optional, In addition, Lender shall have all the rights and remedies provided in
the Related Documents or available at law, In equity, or otherwise. Except as
may be prohibited by applicable law, all of Lender's rights and remedies shall
be cumulative and may be exercised singularly or concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy, and
an election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to declare a default
and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

         AMENDMENTS. This Agreement, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as to
         the matters set forth in this Agreement. No alteration of or amendment
         to this Agreement shall be effective unless given in writing and signed
         by the party or parties sought to be charged or bound by the alteration
         or amendment.

         ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
         Lender's costs and expenses, Including Lender's reasonable attorneys'
         fees and Lender's legal expenses, incurred in connection with the
         enforcement of this Agreement. Lender may hire or pay someone else to
         help enforce this Agreement, and Borrower shall pay the costs and
         expenses of such enforcement. Costs and expenses include Lender's
         reasonable attorneys' fees and legal expenses whether or not there is a
         lawsuit, including Lender's reasonable attorneys' fees and legal
         expenses for bankruptcy proceedings (including efforts to modify or
         vacate any automatic stay or injunction), appeals, and any anticipated
         post-judgment collection services. Borrower also shall pay all court
         costs and such additional fees as may be directed by the court.

         CAPTION HEADINGS. Caption headings in this Agreement are for
         convenience purposes only and are not to be used to Interpret or
         define the provisions of this Agreement.

         CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
         sale or transfer, whether now or later, of one or more participation
         interests in the Loan to one or more purchasers, whether related or
         unrelated to Lender. Lender may provide, without any limitation
         whatsoever, to any one or more purchasers, or potential purchasers, any
         information or knowledge Lender may have about Borrower or about any
         other matter relating to the Loan, and Borrower hereby waives any
         rights to privacy Borrower may have with respect to such matters.
         Borrower additionally waives any and all notices of sale of
         participation interests, as well as all notices of any repurchase of
         such participation interests. Borrower also agrees that the purchasers
         of any such participation interests will be considered as the absolute
         owners of such interests in the Loan and will have all the rights
         granted under the participation agreement or agreements governing the
         sale of such participation interests. Borrower further waives all
         rights of offset or counterclaim that it may have now or later against
         Lender or against any purchaser of such a participation interest and
         unconditionally agrees that either Lender or such purchaser may enforce
         Borrower's obligation under the Loan irrespective of the failure or
         insolvency of any holder of any interest in the Loan. Borrower further
         agrees that the purchaser of any such participation interests may
         enforce its interests irrespective of any personal claims or defenses
         that Borrower may have against Lender.

         GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND
         ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
         TEXAS, THIS AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF
         TEXAS.

         CHOICE OF VENUE. If there is a lawsuit, and if the transaction
         evidenced by this Agreement occurred in Lubbock County, Borrower agrees
         upon Lender's request to submit to the jurisdiction of the courts of
         Lubbock County, State of Texas.

         NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
         rights under this Agreement unless such waiver is given in writing and
         signed by Lender. No delay or omission on the part of Lender in
         exercising any right shall operate as a waiver of such right or any
         other right. A waiver by Lender of a provision of this Agreement shall
         not prejudice or constitute a waiver of Lender's right otherwise to
         demand strict compliance with that provision or any other provision of
         this Agreement. No prior waiver by Lender, nor any course of dealing
         between Lender and Borrower, or between Lender and any Grantor, shall
         constitute a waiver of any of Lender's rights or of any of Borrower's
         or any Grantor's obligations as to any future transactions. Whenever
         the consent of Lender is required under this Agreement, the granting of
         such consent by Lender in any instance shall not constitute continuing
         consent to subsequent instances where such consent is required and in
         all cases such consent may be granted or withheld in the sole
         discretion of Lender.

         NOTICES. Any notice required to be given under this Agreement shall be
         given in writing, and shall be effective when actually delivered, when
         actually received by telefacsimile (unless otherwise required by law),
         when deposited with a nationally recognized overnight courier, or, if
         mailed, when deposited in the United States mail, as first class,
         certified or registered mail postage prepaid, directed to the addresses
         shown near the beginning of this Agreement. Any party may change its
         address for notices under this Agreement by giving formal written
         notice to the other parties, specifying that the purpose of the notice
         is to change the party's address. For notice purposes, Borrower agrees
         to keep Lender Informed at all times of Borrower's current address.
         Unless otherwise provided or required by law, if there is more than one
         Borrower, any notice given by Lender to any Borrower is deemed to be
         notice given to all Borrowers.

         PAYMENT OF INTEREST AND FEES. Notwithstanding any other provision of
         this Agreement or any provision of any Related Document, Borrower does
         not agree or intend to pay, and Lender does not agree or intend to
         charge, collect, take, reserve or receive (collectively referred to
         herein as "charge or collect"), any amount in the nature of interest or
         in the nature of a fee for the Loan which would in any way or event
         (including demand, prepayment, or acceleration) cause Lender to
         contract for, charge or collect more for the Loan than the maximum
         Lender would be permitted to charge or collect by any applicable
         federal or Texas state law. Any such excess interest or unauthorized
         fee will, instead of anything stated to the contrary, be applied first
         to reduce the unpaid principal balance of the Loan, and when the
         principal has been paid in full, be refunded to Borrower.

         SEVERABILITY. If a court of competent jurisdiction finds any provision
         of this Agreement to be illegal, invalid, or unenforceable as to any
         circumstance, that finding shall not make the offending provision
         illegal, invalid, or unenforceable as to any other circumstance. If
         feasible, the offending provision shall be considered modified so that
         it becomes legal, valid and enforceable. If the offending provision
         cannot be so modified, it shall be considered deleted from this
         Agreement. Unless otherwise required by law, the illegality,
         invalidity, or unenforceability of any provision of this Agreement
         shall not affect the legality, validity or enforceability of any other
         provision of this Agreement.

         SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of
         any provisions of this Agreement makes it appropriate, including
         without limitation any representation, warranty or covenant, the word
         "Borrower" as used in this Agreement shall include all of Borrower's
         subsidiaries and affiliates. Notwithstanding the foregoing however,
         under no circumstances shall this Agreement be construed to require
         Lender to make any Loan or other financial accommodation to any of
         Borrower's subsidiaries or affiliates.

         SUCCESSORS AND ASSIGNS. All covenants and agreements by or on behalf of
         Borrower contained in this Agreement or any Related Documents shall
         bind Borrower's successors and assigns and shall inure to the benefit
         of Lender and its successors and assigns. Borrower shall not, however,
         have the right to assign Borrower's rights under this Agreement or any
         interest therein, without the prior written consent of Lender.

         SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
         agrees that in making the Loan, Lender is relying on all
         representations, warranties, and covenants made by Borrower in this
         Agreement or in any certificate or other instrument delivered by
         Borrower to Lender under this Agreement or the Related Documents,
         Borrower further agrees that regardless of any Investigation made by
         Lender, all such representations, warranties and covenants will survive
         the making of the Loan and delivery to Lender of the Related Documents,
         shall be continuing in nature, and shall remain in full force and
         effect until such time as Borrower's Indebtedness shall be paid in
         full, or until this Agreement shall be terminated in the manner
         provided above, whichever is the last to occur.

         TIME IS OF THE ESSENCE. Time is of the essence in the performance of
         this Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in this Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

         ADVANCE. The word "Advance" means a disbursement of Loan funds made, or
         to be made, to Borrower or on Borrower's behalf on a line of credit or
         multiple advance basis under the terms and conditions of this
         Agreement.

         AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
         this Business Loan Agreement may be amended or modified from time to
         time, together with all exhibits and schedules attached to this
         Business Loan Agreement from time to time.

         BORROWER. The word "Borrower" means WESTECH CAPITAL CORP. and Includes
         all co-signers and co-makers signing the Note.

         COLLATERAL. The word "Collateral" means all property and assets granted
         as collateral security for a Loan, whether real or personal property,
         whether granted directly or indirectly, whether granted now or in the
         future, and whether granted in the form of a security interest,
         mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
         pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
         factor's lien, equipment trust, conditional sale, trust receipt, lien,
         charge, lien or title retention contract, lease or consignment intended
         as a security device, or any other security or lien interest
         whatsoever, whether created by law, contract, or otherwise.

<PAGE>

                             BUSINESS LOAN AGREEMENT
LOAN NO: 656932                    (CONTINUED)                            PAGE 5

         ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all
         state, federal and local statutes, regulations and ordinances relating
         to the protection of human health or the environment, including without
         limitation the Comprehensive Environmental Response, Compensation, and
         Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
         ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
         Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
         Act, 49 U.S.C. Section 1601, et seq., the Resource Conservation and
         Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable
         state or federal laws, rules, or regulations adopted pursuant thereto.

         EVENT OF DEFAULT. This words "Event of Default" mean any of the events
         of default set forth in this Agreement in the default section of this
         Agreement.

         GAAP. The word "GAAP" means generally accepted accounting principles.

         GRANTOR. The word "Grantor" means each and all of the persons or
         entities granting a Security Interest In any Collateral for the Loan,
         including without limitation all Borrowers granting such a Security
         Interest.

         GUARANTOR. The word "Guarantor" means any guarantor, surety, or
         accommodation party of any or all of the Loan.

         GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
         Lender, Including without limitation a guaranty of all or part of the
         Note.

         HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
         that, because of their quantity, concentration or physical, chemical or
         infectious characteristics, may cause or pose a present or potential
         hazard to human health or the environment when Improperly used,
         treated, stored, disposed of, generated, manufactured, transported or
         otherwise handled. The words "Hazardous Substances" are used in their
         very broadest sense and include without limitation any and all
         hazardous or toxic substances, materials or waste as defined by or
         listed under the Environmental Laws. The term "Hazardous Substances"
         also Includes, without limitation, petroleum and petroleum by-products
         or any fraction thereof and asbestos.

         INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
         by the Note or Related Documents, including all principal and Interest
         together with all other indebtedness and costs and expenses for which
         Borrower is responsible under this Agreement or under any of the
         Related Documents.

         LENDER. The word "Lander" means First United Bank, Its successors and
         assigns.

         LOAN. The word "Loan" means any and all loans and financial
         accommodations from Lender to Borrower whether now or hereafter
         existing, and however evidenced, including without limitation those
         loans and financial accommodations described herein or described on any
         exhibit or schedule attached to this Agreement from time to time.

         NOTE. The word "Note" means the Note executed by WESTECH CAPITAL CORP.
         In the principal amount of $2,500,000.00 dated February 17, 2004,
         together with all renewals of, extensions of, modifications of,
         refinancings of, consolidations of, and substitutions for the note or
         credit agreement.

         PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and
         security interests securing Indebtedness owed by Borrower to Lender;
         (2) liens for taxes, assessments, or similar charges either not yet due
         or being contested in good faith; (3) liens of materialmen, mechanics,
         warehousemen, or carriers, or other like liens arising in the ordinary
         course of business and securing obligations which are not yet
         delinquent; (4) purchase money liens or purchase money security
         interests upon or in any property acquired or hold by Borrower in the
         ordinary course of business to secure indebtedness outstanding on the
         date of this Agreement or permitted to be incurred under the paragraph
         of this Agreement titled "Indebtedness and Liens"; (5) liens and
         security interests which, as of the date of this Agreement, have been
         disclosed to and approved by the Lender in writing; and (6) those liens
         and security interests which in the aggregate constitute an immaterial
         and insignificant monetary amount with respect to the net value of
         Borrower's assets.

         RELATED DOCUMENTS. The words "Related Documents" mean all promissory
         notes, credit agreements, loan agreements, environmental agreements,
         guaranties, security agreements, mortgages, deeds of trust, security
         deeds, collateral mortgages, and all other Instruments, agreements and
         documents, whether now or hereafter existing, executed in connection
         with the Loan.

         SECURITY AGREEMENT. The words "Security Agreement" mean and include
         without limitation any agreements, promises, covenants, arrangements,
         understandings or other agreements, whether created by law, contract,
         or otherwise, evidencing, governing, representing, or creating a
         Security Interest.

         SECURITY INTEREST. The words "Security Interest" mean, without
         limitation, any and all types of collateral security, present and
         future, whether in the form of a lien, charge, encumbrance, mortgage,
         deed of trust, security deed, assignment, pledge, crop pledge, chattel
         mortgage, collateral chattel mortgage, chattel trust, factor's lien,
         equipment trust, conditional sale, trust receipt, lien or title
         retention contract, lease or consignment intended as a security device,
         or any other security or lien interest whatsoever whether created by
         law, contract, or otherwise.

         TANGIBLE NET WORTH. The words "Tangible Net Worth" mean Borrower's
         total assets excluding all intangible assets (i.e., goodwill,
         trademarks, patents, copyrights, organizational expenses, and similar
         Intangible items, but including leaseholds and leasehold Improvements)
         less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED FEBRUARY 17, 2004.

BORROWER:

WESTECH CAPITAL CORP.

By: /s/ John Gorman
    --------------------------------------
    JOHN GORMAN, CHAIRMAN & CEO of WESTECH
    CAPITAL CORP.

LENDER:

FIRST UNITED BANK

By:_______________________________________
   AUTHORIZED SIGNER

<PAGE>

                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
                                                            ACCOUNT
PRINCIPAL   LOAN DATE   MATURITY   LOAN NO.   [ILLEGIBLE]   4A / 20   OFFICER RCB   INITIALS
--------------------------------------------------------------------------------------------
<S>         <C>         <C>        <C>        <C>           <C>       <C>           <C>
</TABLE>

  References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or Item.

             Any item above containing [ILLEGIBLE] has been omitted
                        due to text length limitations.

<TABLE>
<S>         <C>                                       <C>       <C>
BORROWER:   WESTECH CAPITAL CORP. (TIN: 13-3577716)   LENDER:   FIRST UNITED BANK
            2700 VIA FORTUNA, SUITE 400                         LUBBOCK SOUTHWEST BRANCH
            AUSTIN, TX 78746                                    6604 FRANKFORD
                                                                LUBBOCK, TX  79424

GUARANTOR:  JOHN GORMAN (SSN: ###-##-####)
            2700 VIA FORTUNA SUITE 400
            AUSTIN, TX 78746
</TABLE>

AMOUNT OF GUARANTY. THE AMOUNT OF THIS GUARANTY IS UNLIMITED.

CONTINUING UNLIMITED GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, JOHN GORMAN
("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO
FIRST UNITED BANK ("LENDER") OR ITS ORDER, ON DEMAND, IN LEGAL TENDER OF THE
UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS DEFINED BELOW) OF
WESTECH CAPITAL CORP. ("BORROWER") TO LENDER ON THE TERMS AND CONDITIONS SET
FORTH IN THIS GUARANTY. UNDER THIS GUARANTY, THE LIABILITY OF GUARANTOR IS
UNLIMITED AND THE OBLIGATIONS OF GUARANTOR ARE CONTINUING.

INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes
any and all of Borrower's indebtedness to Lender and is used in the most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations and debts to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, attorneys' fees, debts, overdraft indebtedness, credit card
indebtedness, lease obligations, other obligations, and liabilities of Borrower,
or any of them, and any present or future judgments against Borrower, or any of
them; and whether any such Indebtedness is voluntarily or involuntarily
incurred, due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surely;
whether recovery on the Indebtedness may be or may become barred or
unenforceable against Borrower for any reason whatsoever; and whether the
Indebtedness arises from transactions which may be voidable on account of
infancy, insanity, ultra viros, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation and Lender's written acknowledgment of receipt. For this purpose and
without limitation, the term "new Indebtedness" does not include Indebtedness
which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined
or due. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals, substitutions
or modifications of the Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind Guarantor's estate as to Indebtedness
created both before and after Guarantor's death or incapacity, regardless of
Lender's actual notice of Guarantor's death. Subject to the foregoing,
Guarantor's executor or administrator or other legal representative may
terminate this Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation Lender receives from
any one or more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. IT IS ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN
THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED BY THIS GUARANTY, AND GUARANTOR
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT REDUCTIONS IN THE AMOUNT OF
INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR TO GUARANTOR'S WRITTEN
REVOCATION OF THIS GUARANTY SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY.
THIS GUARANTY IS BINDING UPON GUARANTOR AND GUARANTOR'S HEIRS, SUCCESSORS AND
ASSIGNS AS LONG AS ANY OF THE GUARANTEED INDEBTEDNESS REMAINS UNPAID AND EVEN
THOUGH THE INDEBTEDNESS GUARANTEED MAY FROM TIME TO TIME BE ZERO DOLLARS
($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
OR OTHERWISE AFFECTING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO
TIME: (A) prior to revocation as set forth above, to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (B) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty: (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition, Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue landing money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any
kind, or at any time, with respect to any matter whatsoever.

In addition to the waivers set forth herein, if now or hereafter Borrower is or
shall become insolvent and the Indebtedness shall not at all times until paid be
fully secured by collateral pledged by Borrower, Guarantor hereby forever waives
and gives up in favor of Lender and Borrower; and Lender's and Borrower's
respective successors, any claim or right to payment Guarantor may now have or
hereafter have or acquire against Borrower, by subrogation or otherwise, so that
at no time shall Guarantor be or become a "creditor" of Borrower within the
meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal
bankruptcy laws.

Guarantor waives all rights of Guarantor under Chapter 34 of the Texas Business
and Commerce Code. Guarantor also waives any and all rights or defenses arising
by reason of (A) any "one action" or "anti-deficiency" law or any other law
which may prevent Lender from bringing any action, including a claim for
deficiency, against Guarantor, before or after Lender's commencement or
completion of any foreclosure action, either judicially or by exercise of a
power of sale; (B) any election of remedies by Lender which destroys or
otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights
to proceed against Borrower for reimbursement, Including without limitation, any
loss of

<PAGE>

                               COMMERCIAL GUARANTY

LOAN NO: 656932                    (CONTINUED)                            PAGE 2

rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging the Indebtedness; (C) any disability or other defense of Borrower,
of any other guarantor, or of any other person, or by reason of the cessation of
Borrower's liability from any cause whatsoever, other than payment in full in
legal tender, of the Indebtedness; (D) any right to claim discharge of the
Indebtedness on the basis of unjustified impairment of any collateral for the
Indebtedness: (E) any statute of limitations, if at any time any action or suit
brought by Lender against Guarantor is commenced, there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable statute
of limitations; or (F) any defenses given to guarantors at law or in equity
other than actual payment and performance of the Indebtedness. If payment is
made by Borrower, whether voluntarily or otherwise, or by any third party, on
the Indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of the enforcement of
this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes Insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of Insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

         AMENDMENTS. This Guaranty, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as to
         the matters set forth in this Guaranty. No alteration of or amendment
         to this Guaranty shall be effective unless given in writing and signed
         by the party or parties sought to be charged or bound by the alteration
         or amendment,

         ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
         Lender's costs and expenses, including Lender's reasonable attorneys'
         fees and Lender's legal expenses, incurred in connection with the
         enforcement of this Guaranty. Lender may hire or pay someone else to
         help enforce this Guaranty, and Guarantor shall pay the costs and
         expenses of such enforcement. Costs and expenses include Lender's
         reasonable attorneys' fees and legal expenses whether or not there is a
         lawsuit, including Lender's reasonable attorneys' fees and legal
         expenses for bankruptcy proceedings (including efforts to modify or
         vacate any automatic stay or injunction), appeals, and any anticipated
         post-judgment collection services. Guarantor also shall pay all court
         costs and such additional fees as may be directed by the court.

         CAPTION HEADINGS. Caption headings in this Guaranty are for convenience
         purposes only and are not to be used to interpret or define the
         provisions of this Guaranty.

         GOVERNING LAW. THIS GUARANTY WILL BE GOVERNED BY, CONSTRUED AND
         ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
         TEXAS. THIS GUARANTY HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.

         CHOICE OF VENUE. If there is a lawsuit, and if the transaction
         evidenced by this Guaranty occurred in Lubbock County, Guarantor agrees
         upon Lender's request to submit to the jurisdiction of the courts of
         Lubbock County, State of Texas.

         INTEGRATION. Guarantor further agrees that Guarantor has read and fully
         understands the terms of this Guaranty; Guarantor has had the
         opportunity to be advised by Guarantor's attorney with respect to this
         Guaranty; the Guaranty fully reflects Guarantor's intentions and parol
         evidence is not required to interpret the terms of this Guaranty.
         Guarantor hereby indemnifies and holds Lender harmless from all losses,
         claims, damages, and costs (including Lender's attorneys' fees)
         suffered or incurred by Lender as a result of any breach by Guarantor
         of the warranties, representations and agreements of this paragraph.

         INTERPRETATION. In all cases where there is more than one Borrower or
         Guarantor, than all words used in this Guaranty in the singular shall
         be deemed to have been used in the plural where the context and
         construction so require; and where there is more than one Borrower
         named in this Guaranty or when this Guaranty is executed by more than
         one Guarantor, the words "Borrower" and "Guarantor" respectively shall
         mean all and any one or more of them. The words "Guarantor,"
         "Borrower," and "Lender" include the heirs, successors, assigns, and
         transferees of each of them. If a court finds that any provision of
         this Guaranty is not valid or should not be enforced, that fact by
         itself will not mean that the rest of this Guaranty will not be valid
         or enforced. Therefore, a court will enforce the rest of the provisions
         of this Guaranty even if a provision of this Guaranty may be found to
         be invalid or unenforceable. if any one or more of Borrower or
         Guarantor are corporations, partnerships, limited liability companies,
         or similar entities, it is not necessary for Lender to inquire into the
         powers of Borrower or Guarantor or of the officers, directors,
         partners, managers, or other agents acting or purporting to act on
         their behalf, and any Loan indebtedness made or created in reliance
         upon the professed exercise of such powers shall be guaranteed under
         this Guaranty.

         NOTICES. Any notice required to be given under this Guaranty shall be
         given in writing, and, except for revocation notices by Guarantor,
         shall be effective when actually delivered, when actually received by
         telefacsimile (unless otherwise required by law), when deposited with a
         nationally recognized overnight courier, or, if mailed, when deposited
         in the United States mail, as first class, certified or registered mail
         postage prepaid, directed to the addresses shown near the beginning of
         this Guaranty. All revocation notices by Guarantor shall be in writing
         and shall be effective upon delivery to Lender as provided in the
         section of this Guaranty entitled "DURATION OF GUARANTY." Any party may
         change its address for notices under this Guaranty by giving formal
         written notice to the other parties, specifying that the purpose of the
         notice is to change the party's address. For notice purposes, Guarantor
         agrees to keep Lender informed at all times of Guarantor's current
         address. Unless otherwise provided or required by law, if there is more
         than one Guarantor, any notice given by Lender to any Guarantor is
         deemed to be notice given to all Guarantors.

         NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
         rights under this Guaranty unless such waiver is given in writing and
         signed by Lender, No delay or omission on the part of Lender in
         exercising any right shall operate as a waiver of such right or any
         other right. A waiver by Lender of a provision of this Guaranty shall
         not prejudice or constitute a waiver of Lender's right otherwise to
         demand strict compliance with that provision or any other provision of
         this Guaranty. No prior waiver by Lender, nor any course of dealing
         between Lender and Guarantor, shall constitute a waiver of any of
         Lender's rights or of any of Guarantor's obligations as to any future
         transactions. Whenever the consent of Lender is required under this
         Guaranty, the granting of such consent by Lender in any instance shall
         not constitute continuing consent to subsequent instances where such
         consent is required and in all cases such consent may be granted or
         withheld in the sole discretion of Lender.

         SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
         Guaranty on transfer of Guarantor's interest, this Guaranty shall be
         binding upon and inure to the benefit of the parties, their successors
         and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

         BORROWER. The word "Borrower" means WESTECH CAPITAL CORP. and includes
         all co-signers and co-makers signing the Note.

         GUARANTOR. The word "Guarantor" means each and every person or entity
         signing this Guaranty, including without limitation John Gorman.

         GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
         Lender, including without limitation a guaranty of all or part of the
         Note.

         INDEBTEDNESS. The word "Indebtedness" means Borrower's indebtedness to
         Lender as more particularly described in this Guaranty.

         LENDER. The word "Lender" means First United Bank, its successors and
         assigns.

         NOTE. The word "Note" means and includes without limitation all of
         Borrower's promissory notes and/or credit agreements evidencing

<PAGE>

                               COMMERCIAL GUARANTY
LOAN NO: 656932                    (CONTINUED)                            PAGE 3

         Borrower's loan obligations in favor of Lender, together with all
         renewals of, extensions of, modifications of, refinancing of,
         consolidations of and substitutions for promissory notes or credit
         agreements.

         RELATED DOCUMENTS. The words "Related Documents" mean all promissory
         notes, credit agreements, loan agreements, environmental agreements,
         guaranties, security agreements, mortgages, deeds of trust, security
         deeds, collateral mortgages, and all other Instruments, agreements and
         documents, whether now or hereafter existing, executed In connection
         with the Indebtedness.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED FEBRUARY 17, 2004.

GUARANTOR:

X /s/ JOHN GORMAN
  -----------------
 JOHN GORMAN
<PAGE>

                          COMMERCIAL PLEDGE AGREEMENT

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
  PRINCIPAL         LOAN DATE        MATURITY        LOAN NO.          CALL / COLL           ACCOUNT   OFFICER    INITIATE
<C>                 <C>             <C>              <C>               <C>                   <C>       <C>        <C>
$ 2,500,000.00     02-17-2004       02-15-2007        656932              4A / 20                        RCB
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

  References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.

       Any item above containing [ILLEGIBLE] has been omitted due to text
                               length limitations.

BORROWER: WESTECH CAPITAL CORP. (TIN:              LENDER: FIRST UNITED BANK
          13-3577716)                                      LUBBOCK SOUTHWEST
          2700 VIA FORTUNA, SUITE 400                      BRANCH
          AUSTIN, TX  78746                                6604 FRANKFORD
                                                           LUBBOCK, TX 79424

GRANTOR:  TEJAS SECURITIES GROUP HOLDING COMPANY
          2700 VIA FORTUNA, SUITE 400
          AUSTIN, TX 78746

     THIS COMMERCIAL PLEDGE AGREEMENT DATED FEBRUARY 17, 2004, IS MADE AND
     EXECUTED AMONG TEJAS SECURITIES GROUP HOLDING COMPANY ("GRANTOR"); WESTECH
     CAPITAL CORP. ("BORROWER"); AND FIRST UNITED BANK ("LENDER").

     GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO
     LENDER A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND
     AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH
     RESPECT TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY
     HAVE BY LAW.

     COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement
     means Grantor's present and future rights, title and interest in and to,
     together with any and all present and future additions thereto,
     substitutions therefore, and replacements thereof, together with any and
     all present and future certificates and/or Instruments evidencing any Stock
     and further together with all Income and Proceeds as described herein:

         4,808,555 SHARES OF TEJAS SECURITIES GROUP, INC. STOCK

     BORROWER'S WAIVERS AND RESPONSIBILITIES, Except as otherwise required under
     this Agreement or by applicable law, (A) Borrower agrees that Lender need
     not tell Borrower about any action or inaction Lender takes in connection
     with this Agreement; (B) Borrower assumes this responsibility for being and
     keeping informed about the Collateral; and (C) Borrower waives any defenses
     that may arise because of any action or inaction of Lender, Including
     without limitation any failure of Lender to realize upon the Collateral or
     any delay by Lender in realizing upon the Collateral; and Borrower agrees
     to remain liable under the Note no matter what action Lender takes or fails
     to take under this Agreement.

     GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
     Agreement is executed at Borrower's request and not at the request of
     Lender; (B) Grantor has the full right, power and authority to enter into
     this Agreement and to pledge the Collateral to Lender; (C) Grantor has
     established adequate means of obtaining from Borrower on a continuing basis
     Information about Borrower's financial condition; and (D) Lender has made
     no representation to Grantor about Borrower or Borrower's creditworthiness.

     GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
     demand, and notice of dishonor or non payment to Borrower or Grantor, or
     any other party to the Indebtedness or the Collateral. Lender may do any of
     the following with respect to any obligation of any Borrower, without first
     obtaining the consent of Grantor: (A) grant any extension of time for any
     payment, (B) grant any renewal, (C) permit any modification of payment
     terms or other terms, or (D) exchange or release any Collateral or other
     security. No such act or failure to act shall affect Lender's rights
     against Grantor or the Collateral.

     RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
     a right of setoff In all Grantor's accounts with Lender (whether checking,
     savings, or some other account). This includes all accounts Grantor holds
     jointly with someone else and all accounts Grantor may open in the future.
     However, this does not include any IRA or [ILLEGIBLE] accounts, or any
     trust accounts for which setoff would be prohibited by law. Grantor
     authorizes Lender, to the extent permitted by applicable law, to charge or
     setoff all sums owing on the Indebtedness against any and all such
     accounts.

     REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor
     represents and warrants to Lender that:

         OWNERSHIP. Grantor is the lawful owner of the Collateral free and clear
         of all security interests, liens, encumbrances and claims of others
         except as disclosed to and accepted by Lender in writing prior to
         execution of this Agreement.

         RIGHT TO PLEDGE. Grantor has the full right, power and authority to
         enter into this Agreement and to pledge the Collateral.

         AUTHORITY; BINDING EFFECT. Grantor has the full right, power and
         authority to enter into this Agreement and to grant a security Interest
         in the Collateral to Lender. This Agreement is binding upon Grantor as
         well as Grantor's successors and assigns, and is legally enforceable in
         accordance with its terms. The foregoing representations and
         warranties, and all other representations and warranties contained in
         this Agreement are and shall be continuing in nature and shall remain
         in full force and effect until such time as this Agreement is
         terminated or cancelled as provided herein.

         NO FURTHER ASSIGNMENT. Grantor has not, and shall not, sell, assign,
         transfer, encumber or otherwise dispose of any of Grantor's rights in
         the Collateral except as provided in this Agreement.

         NO DEFAULTS. There are no defaults existing under the Collateral, and
         there are no offsets or counterclaims to the same, Grantor will
         strictly and promptly perform each of the terms, conditions, covenants
         and agreements, If any, contained in the Collateral which are to be
         performed by Grantor.

         NO VIOLATION. The execution and delivery of this Agreement will not
         violate any law or agreement governing Grantor or to which Grantor is a
         party, and its certificate or articles of Incorporation and bylaws do
         not prohibit any term or condition of this Agreement.

         FINANCING STATEMENTS. Grantor authorizes Lender to file a UCC-1
         financing statement, or alternatively, a copy of this Agreement to
         perfect Lender's security Interest. At Lender's request, Grantor
         additionally agrees to sign all other documents that are necessary to
         perfect, protect, and continue Lender's security Interest in the
         Property. Grantor will pay all filing fees, title transfer fees, and
         other fees and costs involved unless prohibited by law or unless Lender
         is required by law to pay such fees and costs. Grantor irrevocably
         appoints Lender to execute financing statements and documents of title
         in Grantor's name and to execute all documents necessary to transfer
         title if there is a default. Lender may file a copy of this Agreement
         as a financing statement. If Grantor changes Grantor's name or address,
         or the name or address of any person granting a security Interest under
         this Agreement changes, Grantor will promptly notify the Lender of such
         change.

     LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lender may
     hold the Collateral until all Indebtedness has been paid and satisfied.
     Thereafter Lender may deliver the Collateral to Grantor or to any other
     owner of the Collateral. Lender shall have the following rights in addition
     to all other rights Lender may have by law:

         MAINTENANCE AND PROTECTION OF COLLATERAL. Lender may, but shall not be
         obligated to, take such steps as it deems necessary or desirable to
         protect, maintain, insure, store, or care for the Collateral,
         Including paying of any liens or claims against the Collateral. This
         may include such things as hiring other people, such as attorneys,
         appraisers or other experts. Lender may charge Grantor for any cost
         Incurred in so doing. When applicable law provides more than one method
         of perfection of Lender's security interest, Lender may choose the
         method (s) to be used. If the Collateral consists of stock, bonds or
         other Investment property for which no certificate has been Issued,
         Grantor agrees, at Lender's request, either to request Issuance of an
         appropriate certificate or to give instructions on Lender's forms to
         the Issuer, transfer agent, mutual fund company, or broker, as the case
         may be, to record on its books or records Lender's security Interest in
         the Collateral.

         INCOME AND PROCEEDS FROM THE COLLATERAL. Lender may receive all Income
         and Proceeds and add it to the Collateral. Grantor agrees to deliver to
         Lender immediately upon receipt, in the exact form received and without
         commingling with other property, all Income and Proceeds from the
         Collateral which may be received by, paid, or delivered to Grantor or
         for Grantor's account, whether as an addition to, in discharge of, in
         substitution of, or in exchange for any of the Collateral.

         APPLICATION OF CASH. At Lender's option, Lender may apply any cash,
         whether included in the Collateral or received as Income and Proceeds
         or through liquidation, sale, or retirement, of the Collateral, to the
         satisfaction of the Indebtedness or such portion thereof as Lender
         shall choose, whether or not matured.

         TRANSACTIONS WITH OTHERS. Lender may (1) extend time for payment or
         other performance, (2) grant a renewal or change in terms or
         conditions, or (3) compromise, compound or release any obligation, with
         any one or more Obligors, endorsers, or Guarantors of the Indebtedness
         as Lender deems advisable, without obtaining the prior written consent
         of Grantor, and no such act or failure to act shall affect Lender's
         rights against Grantor or the Collateral.

         ALL COLLATERAL SECURES INDEBTEDNESS. All Collateral shall be security
         for the Indebtedness, whether the Collateral is located at one or more
         offices or branches of Lender. This will be the case whether or not the
         office or branch where Grantor obtained Grantor's loan knows
<PAGE>

                          COMMERCIAL PLEDGE AGREEMENT

LOAN NO: 656932                   (CONTINUED)                             PAGE 2

         about the Collateral or [ILLEGIBLE] upon the Collateral as security.

         COLLECTION OF COLLATERAL. Lender at Lender's option may, but need not,
         collect the Income and Proceeds directly from the Obligors. Grantor
         authorizes and directs the Obligors, if Lender decides to collect the
         Income and Proceeds, to pay and deliver to Lender all income, and
         Proceeds from the Collateral and to accept Lender's receipt for the
         payments.

         POWER OF ATTORNEY. Grantor irrevocably appoints Lender as Grantor's
         attorney-in-fact, with full power of substitution, (a) to demand,
         collect, receive, receipt for, sue and recover all Income and Proceeds
         and other sums of money and other property which may now or hereafter
         become due, owing or payable from the Obligors in accordance with the
         terms of the Collateral, (b) to execute, sign and endorse any and all
         Instruments, receipts, checks, drafts and warrants issued in payment
         for the Collateral; (c) to settle or compromise any and all claims
         arising under the Collateral, and in the place and stead of Grantor,
         execute and deliver Grantor's release and acquaintance for Grantor; (d)
         to file any claim or claims or to take any action or institute or take
         part in any proceedings, either in Lender's own name or in the name of
         Grantor, or otherwise, which in the discretion of Lender may seem to be
         necessary or advisable; and (e) to execute in Grantor's name and to
         deliver to the Obligors on Grantor's behalf, at the time and in the
         manner specified by the Collateral, any necessary instruments or
         documents.

         PERFECTION OF SECURITY INTEREST. Upon Lender's request, Grantor will
         deliver to Lender any and all of the documents evidencing or consisting
         the Collateral. When applicable law provides more than one method of
         perfection of Lender's security interest, Lender may choose the
         method(s) to be used. Upon Lender's request, Grantor will sign and
         deliver any writings necessary to perfect Lender's security interest.
         If any of the Collateral consists of securities for which no
         certificate has been issued, Grantor agrees, at Lender's option, either
         to request issuance of an appropriate certificate or to execute
         appropriate instructions on Lender's forms instructing the issuer,
         transfer agent, mutual fund company, or broker, as the case may be, to
         record on its books or records, by book-entry or otherwise, Lender's
         security interest in the Collateral. Grantor hereby appoints Lender as
         Grantor's irrevocable attorney-in-fact for the purpose of executing any
         documents necessary to perfect, amend, or to continue the security
         interest granted in this Agreement or to demand termination of filings
         of other secured parties.

     LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
     materially affect Lender's interest in the Collateral or if Grantor fails
     to comply with any provision of this Agreement or any Related Documents,
     including but not limited to Grantor's failure to discharge or pay when due
     any amounts Grantor is required to discharge or pay under this Agreement or
     any Related Documents, Lender on Grantor's behalf may (but shall not be
     obligated to) take any action that Lender dooms appropriate, including but
     not limited to discharging or paying all taxes, liens, security interests,
     encumbrances and other claims, at any time levied or placed on the
     Collateral and paying all costs for insuring, maintaining and preserving
     the Collateral. All such expenditures paid by Lender for such purposes will
     then bear interest at the Note rate from the date paid by Lender to the
     date of repayment by Grantor. To the extent permitted by applicable law,
     all such expenses will become a part of the indebtedness and, at Lender's
     option, will (A) be payable on demand; (B) be added to the balance of the
     Note and be apportioned among and be payable with any installment payments
     to become due during either (1) the term of any applicable Insurance
     policy; or (2) the remaining term of the Note; or (C) be treated as a
     balloon payment which will be due and payable at the Note's maturity. The
     Agreement also will secure payment of these amounts. Such right shall be in
     addition to all other rights and remedies to which Lender may be entitled
     upon Default.

     LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable
     care in the physical preservation and custody of the Collateral in Lender's
     possession, but shall have no other obligation to protect the Collateral or
     its value. In particular, but without limitation, Lender shall have no
     responsibility for (A) any depreciation in value of the Collateral or for
     the collection or protection of any Income and Proceeds from the
     Collateral, (B) preservation of rights against parties to the Collateral or
     against third persons, (C) ascertaining any maturities, calls, conversions,
     exchanges, offers, tenders, or similar matters relating to any of the
     Collateral, or (D) informing Grantor about any of the above, whether or not
     Lender has or is deemed to have knowledge of such matters. Except as
     provided above, Lender shall have no liability for depreciation or
     deterioration of the Collateral.

     DEFAULT. Each of the following shall constitute an Event of Default under
     this Agreement:

         PAYMENT DEFAULT. Borrower fails to make any payment when due under the
         indebtedness,

         OTHER DEFAULTS. Borrower or Grantor fails to comply with or to perform
         any other term, obligation, covenant or condition contained in this
         Agreement or in any of the Related Documents or to comply with or to
         perform any term, obligation, covenant or condition contained in any
         other agreement between Lender and Borrower or Grantor.

         FALSE STATEMENTS. Any warranty. representation or statement made or
         furnished to Lender by Borrower or Grantor or on Borrower's or
         Grantor's behalf under this Agreement or the Related Documents is false
         or misleading in any material respect, either now or at the time made
         or furnished or becomes false or misleading at any time thereafter.

         DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
         Documents ceases to be in full force and effect (including failure of
         any collateral document to create a valid and perfected security
         interest or lien) at any time and for any reason.

         INSOLVENCY. The dissolution or termination of Borrower's or Grantor's
         existence as a going business, the insolvency of Borrower or Grantor,
         the appointment of a receiver for any part of Borrower's or Grantor's
         property, any assignment for the benefit of creditors, any type of
         creditor workout, or the commencement of any proceeding under any
         bankruptcy or insolvency laws by or against Borrower or Grantor.

         CREDITOR OR FOR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower or
         Grantor or by any governmental agency against any collateral securing
         the indebtedness. This includes a garnishment of any of Borrower's or
         Grantor's accounts, including deposit accounts, with Lender. However,
         this Event of Default shall not apply if there is a good faith dispute
         by Borrower or Grantor as to the validity or reasonableness of the
         claim which is the basis of the creditor or forfeiture proceeding and
         if Borrower or Grantor gives Lender written notice of the creditor or
         forfeiture proceeding and deposits, with Lender monies or a surety bond
         for the creditor or forfeiture proceeding, in an amount determined by
         Lander, in its sole discretion, as being an adequate reserve or bond
         for the dispute.

         EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
         respect to Guarantor of any of the Indebtedness or Guarantor dies or
         becomes incompetent or revokes or disputes the validity of, or
         liability under, any Guaranty of the Indebtedness.

         ADVERSE CHANGE. A material adverse change occurs in Borrower's or
         Grantor's financial condition, or Lender believes the prospect of
         payment or performance of the indebtedness is impaired.

         INSECURITY. Lender in good faith believes itself insecure.

         CURE PROVISION. If any default, other than a default in payment or
         failure to satisfy Lender's requirement in the insufficient Market
         Value of Securities section is curable, it may be cured (and no event
         of default will have occurred) if Grantor, after receiving written
         notice from Lender demanding cure of such default; (1) cures the
         default within twenty (20) days; or (2) if the cure requires more than
         twenty (20) days, immediately initiates steps which Lender deems in
         Lender's sole discretion to be sufficient to cure the default and
         thereafter continues and completes all reasonable and necessary steps
         sufficient to produce compliance as soon as reasonably practical.

     RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
     Agreement, at any time thereafter, Lender may exercise any one or more of
     the following rights and remedies:

         ACCELERATE INDEBTEDNESS. Declare all Indebtedness immediately due and
         payable, without notice of any kind to Borrower or Grantor.

         COLLECT THE COLLATERAL. Collect any of the Collateral and, at Lender's
         option and to the extent permitted by applicable law, retain possession
         of the Collateral while suing on the Indebtedness.

         SELL THE COLLATERAL. Sell the Collateral, at Lender's discretion, as a
         unit or in parcels, at one or more public or private sales. Unless the
         Collateral is perishable or threatens to decline speedily in value or
         is of a type customarily sold on a recognized market, Lender shall give
         or mail to Grantor, and other persons as required by law, notice at
         least ten (10) days in advance of the time and place of any public
         sale, or of the time after which any private sale may be made. However,
         no notice need be provided to any person who, after an Event of Default
         occurs, enters into and authenticates an agreement waiving that
         person's right to notification of sale. Grantor agrees that any
         requirement of reasonable notice as to Grantor is satisfied if Lender
         mails notice by ordinary mail addressed to Grantor at the last address
         Grantor has given Lender in writing, if a public sale is held, there
         shall be sufficient compliance with all requirements of notice to the
         public by a single publication in any newspaper of general circulation
         in the county where the Collateral is located, setting forth the time
         and place of sale and a brief description of the properly to be sold.
         Lender may be a purchaser at any public sale.

         SELL SECURITIES. Sell any securities included in the Collateral in a
         manner consistent with applicable federal and state securities laws.
         If, because of restrictions under such laws, Lender is unable, or
         believes Lender is unable, to sell the securities in an open market
         transaction, Grantor agrees that Lender will have no obligation to
         delay sale until the securities can be registered, Then Lender may make
         a private sale
<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT
LOAN NO: 656932                    (CONTINUED)                            PAGE 3

     to one or more persons or to a restricted group of persons, even though
     such sale may result in a price that is less favorable than might be
     obtained in an open market transaction. Such a sale will be considered
     commercially reasonable. If any securities held as Collateral are
     "restricted securities" as defined in the Rules of the Securities and
     Exchange Commission (such as Regulation D of Rule 144) or the rules of
     state securities departments under state "Blue Sky" laws, or if Grantor or
     any other owner of the Collateral is an affiliate of the issuer of the
     securities, Grantor agrees that neither Grantor, nor any member of
     Grantor's family, nor any other person signing this Agreement will soil or
     dispose of any securities of such issuer without obtaining Lender's prior
     written consent.

     RIGHTS AND REMEDIES WITH RESPECT TO INVESTMENT PROPERTY. FINANCIAL ASSETS
     AND ROTATED COLLATERAL. In addition to other rights and remedies granted
     under this Agreement and under applicable law, Lender may exercise any or
     all of the following rights and remedies: (1) register with any issuer,
     broker or other securities intermediary any of the Collateral consisting of
     investment property or financial assets (collectively herein, "investment
     property") in Lender's solo name or in the name of Lender's broker, agent
     or nominee; (2) cause any issuer, broker or other securities intermediary
     to deliver to Lender any of the Collateral consisting of securities, or
     investment property capable of being delivered; (3) enter into a control
     agreement or power of attorney with any issuer or securities intermediary
     with respect to any Collateral consisting of investment property, on such
     terms as Lender may deem appropriate, in its sole discretion, including
     without limitation, an agreement granting to Lender any of the rights
     provided hereunder without further notice to or consent by Grantor: (4)
     execute any such control agreement on Grantor's behalf and in Grantor's
     name, and hereby irrevocably appoints Lender as agent and attorney-in-fact,
     coupled with an interest, for the purpose of executing such control
     agreement on Grantor's behalf; (5) exercise any and all rights of Lender
     under any such control agreement or power of attorney; (6) exercise any
     voting, conversion, registration, purchase, option, or other rights with
     respect to any Collateral; (7) collect, with or without legal action, and
     issue receipts concerning any notes, Checks, drafts, remittances or
     distributions that are paid or payable with respect to any Collateral
     consisting of Investment property. Any control agreement entered with
     respect to any investment property shall contain the following provisions,
     at Lender's discretion, Lender shall be authorized to instruct the issuer,
     broker or other securities intermediary to take or to refrain from taking
     such actions with respect to the Investment property as Lender may
     instruct, without further notice to or consent by Grantor. Such actions may
     include without limitation the issuance of entitlement orders, account
     instructions, general trading or buy or sell orders, transfer and
     redemption orders, and stop loss orders. Lender shall be further entitled
     to instruct the issuer, broker or securities intermediary to sell or to
     liquidate any investment property, or to pay the cash surrender or account
     termination value with respect to any and all investment property, and to
     deliver all such payments and liquidation proceeds to Lender. Any such
     control agreement shall contain such authorizations as are necessary to
     place Lender in "control" of such investment collateral, as contemplated
     under the provisions of the Uniform Commercial Code, and shall fully
     authorize Lender to issue "entitlement orders" concerning the transfer,
     redemption, liquidation or disposition of investment collateral, in
     conformance with the provisions of the Uniform Commercial Code.

     FORECLOSURE. Maintain a Judicial suit or foreclosure and sale of the
     Collateral.

     TRANSFER TITLE. Effect transfer of title upon sale of all or part of the
     Collateral. For this purpose, Grantor irrevocably appoints Lender as
     Grantor's attorney-in-fact to execute endorsements, assignments and
     instruments in the name of Grantor and each of them (if more than one) as
     shall be necessary or reasonable.

     OTHER RIGHTS AND REMEDIES. Have and exercise any or all of the rights and
     remedies of a secured creditor under the provisions of the Uniform
     Commercial Code, at law, in equity, or otherwise.

     APPLICATION OF PROCEEDS. Apply any cash which is part of the Collateral, or
     which is received from the collection or sale of the Collateral, to
     reimbursement of any expenses, including any costs for registration of
     securities, commissions incurred in connection with a sale, Lender's
     reasonable attorneys' fees and court costs, whether or not there is a
     lawsuit and including any fees on appeal, incurred by Lender in connection
     with the collection and sale of such Collateral and to the payment of the
     indebtedness of Borrower to Lender, with any excess funds to be paid to
     Grantor as the interests of Grantor may appear. Borrower agrees, to the
     extent permitted by law, to pay any deficiency after application of the
     proceeds of the Collateral to the indebtedness.

     ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
     Lender's rights and remedies, whether evidenced by this Agreement, the
     Related Documents, or by any other writing, shall be cumulative and may be
     exercised singularly or concurrently. Election by Lender to pursue any
     remedy shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform an obligation of Grantor
     under this Agreement, after Grantor's failure to perform, shall not affect
     Lender's right to declare a default and exercise its remedies.

MISCELLANEOUS PROVISIONS, The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's reasonably attorneys' fees
     and Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Grantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's reasonable attorneys' fees
     and legal expenses whether or not there is a lawsuit, including Lender's
     reasonable attorneys' fees and legal expenses for bankruptcy proceedings
     (including efforts to modify or vacate any automatic stay or injunction),
     appeals, and any anticipated post-Judgment collection services. Grantor
     also shall pay all court costs and such additional fees as may be directed
     by the court.

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
     IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
     AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF TEXAS.

     CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by
     this Agreement occurred in Lubbock County, Grantor agrees upon Lender's
     request to submit to the jurisdiction of the courts of Lubbock County,
     State of Texas.

     JOINT AND SEVERAL LIABILITY. All obligations of Borrower and Grantor under
     this Agreement shall be joint and several, and all references to Grantor
     shall mean each and every Grantor, and all references to Borrower shall
     mean each and every Borrower. This means that each Borrower and Grantor
     signing below is responsible for all obligations in this Agreement. Where
     any one or more of the parties is a corporation, partnership, limited
     liability company or similar entity, it is not necessary for Lender to
     inquire into the powers of any of the officers, directors, partners,
     members, or other agents acting or purporting to act on the entity's
     behalf, and any obligations made or created in reliance upon the professed
     exercise of such powers shall be guaranteed under this Agreement.

     NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Grantor, shall
     constitute a waiver of any of Lender's rights or of any of Grantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     NOTICES. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law),
     when deposited with a nationally recognized overnight courier, or, if
     mailed, when deposited in the United States mail, as first class, certified
     or registered mail postage prepaid, directed to the addresses shown near
     the beginning of this Agreement. Any party may change its address for
     notices under this Agreement by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Grantor agrees to keep Lender informed at all
     times of Grantor's current address. Unless otherwise provided or required
     by law, if there is more than one Grantor, any notice given by Lender to
     any Grantor is deemed to be notice given to all Grantors.

     PAYMENT OF INTEREST AND FEES. Notwithstanding any other provision of this
     Agreement or any provision of any Related Document, Grantor does not agree
     or intend to pay, and Lender does not agree or intend to charge, collect,
     take, reserve or receive (collectively referred to herein as "charge or
     collect"), any amount in the nature of interest or in the nature of a fee
     for the indebtedness which would in any way or event (including demand,
     prepayment, or acceleration) cause Lender to contract for, charge or
     collect more for the indebtedness than the maximum Lender would be
     permitted to charge or collect by any applicable federal or Texas state
     law. Any such excess Interest or unauthorized fee will, instead of anything
     stated to the contrary, be applied first to reduce the unpaid principal
     balance of the indebtedness, and when the principal has been paid in full,
     be refunded to Grantor.

<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT

LOAN NO: 656932                   (CONTINUED)                             PAGE 4

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be Illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     Invalid, or unenforceable as to any other circumstance, If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot ha 50 modified, it
     shall he considered deleted from this Agreement. Unless otherwise required
     by Law, the Illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability
     of any other provision of this Agreement.

     SUCCESSORS AND ASSIGNS. Subject to any limitations stated In this Agreement
     on transfer of Grantor's Interest, this Agreement shall be binding upon and
     Inure to the benefit of the parties, their successors and assigns. If
     ownership of the Collateral becomes vested in a person other than Grantor,
     Lender, without notice to Grantor, may deal with Grantor's successors with
     reference to this Agreement and the Indebtedness by way of forbearance or
     extension without releasing Grantor from the obligations of this Agreement
     or liability under the Indebtedness.

     TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used In the singular shall Include
the plural, and the plural shall Include the singular, as the context may
require. Words and terms not otherwise defined In this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

     AGREEMENT. The word "Agreement" means this Commercial pledge Agreement, as
     this Commercial Pledge Agreement may be amended or modified from time to
     time, together with all exhibits and schedules attached to this Commercial
     Pledge Agreement from time to time.

     BORROWER. The word "Borrower" means WESTECH CAPITAL CORP. and includes all
     co-signers and co-makers signing the Note.

     COLLATERAL. The word "Collateral" means all of Grantor's right, title and
     Interest in and to all the Collateral as described In the Collateral
     Description section of this Agreement.

     DEFAULT. The word "Default" means the Default set forth In this Agreement
     in the section titled "Default".

     EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     GRANTOR. The word "Grantor" means Tejas Securities Group Holding Company.

     GUARANTOR. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Indebtedness.

     GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
     Including without limitation a guaranty of all or part of the Note.

     INCOME AND PROCEEDS. The words "Income and Proceeds" mean all present and
     future income, proceeds, earnings, increases, and substitutions from or for
     the Collateral of every kind and nature, Including Without limitation all
     payments, Interest, profits, distributions, benefits, rights, options,
     warrants, dividends, stock dividends, stock splits, stock rights,
     regulatory dividends, subscriptions, monies, claims for money due and to
     become due, proceeds of any Insurance on the Collateral, shares of stock of
     different par value or no par value issued in substitution or exchange for
     shares included in the Collateral, and all other property Grantor is
     entitled to receive on account of such Collateral, Including accounts,
     documents, Instruments, chattel paper, and general Intangibles.

     INDEBTEDNESS. The word "Indebtedness" means the Indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other Indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     LENDER. The word "Lender" means First United Bank, its successors and
     assigns.

     NOTE. The word "Note" means the Note executed by WESTECH CAPITAL CORP. in
     the principal amount of $2,500,000.00 dated February 17, 2004, together
     with all renewals of, extensions of, modifications of, refinancings of,
     consolidations of, and substitutions for the note or credit agreement.

     OBLIGOR. The word "Obligor" means without limitation any and all persons
     obligated to pay money or to perform some other act under the Collateral.

     PROPERTY. The word "Property" means all of Grantor's right, title and
     Interest in and to all the Property as described in the "Collateral
     Description" section of this Agreement.

     RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other Instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL PLEDGE AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
FEBRUARY 17, 2004.

GRANTOR:

TEJAS SECURITIES GROUP HOLDING COMPANY

BY: /s/ JOHN GORMAN
    -------------------------------------------------
    JOHN GORMAN, CHAIRMAN AND CEO OF TEJAS SECURITIES
    GROUP HOLDING COMPANY

BORROWER:

WESTECH CAPITAL CORP.

BY: /s/ JOHN GORMAN
    -------------------------------------------------
    JOHN GORMAN, CHAIRMAN & CEO OF WESTECH
    CAPITAL CORP.

<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT

<TABLE>
<CAPTION>
  PRINCIPAL          LOAN DATE       MATURITY     LOAN NO      CALL / COLL     ACCOUNT      OFFICER     INITIALS
$2,500,000.00        02-17-2004     02-15-2007    656932         4A / 20                      RCB
----------------------------------------------------------------------------------------------------------------
<S>                  <C>            <C>           <C>          <C>             <C>          <C>         <C>
</TABLE>

    References in the shaded area are for Lender's use only and do not limit
       the applicability of this document to any particular loan or item.

        Any item above containing " * * * " has been omitted due to text
                              length limitations,

<TABLE>
<S>                                                  <C>
GRANTOR: WESTECH CAPITAL CORP. (TIN: 13-3577716)     LENDER: FIRST UNITED BANK
         2700 VIA FORTUNA, SUITE 400                         LUBBOCK SOUTHWEST BRANCH
         AUSTIN, TX 78746                                    6604 FRANKFORD
                                                             LUBBOCK, TX 79424
</TABLE>

THIS COMMERCIAL PLEDGE AGREEMENT DATED FEBRUARY 17, 2004, IS MADE AND EXECUTED
BETWEEN WESTECH CAPITAL CORP. ("GRANTOR") AND FIRST UNITED BANK ("LENDER").

GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION. GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
Grantor's present and future rights, title and interest in and to, together
with any and all present and future additions thereto, substitutions therefore,
and replacements thereof, together with any and all present and future
certificates and/or instruments evidencing any Stock and further together with
all Income and Proceeds as described herein:

     4,808,555 SHARES OF TEJAS SECURITIES GROUP, INC. STOCK

     990,500 SHARES OF TEJAS SECURITIES GROUP, INC. STOCK

RIGHT OF SETOFF, To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor
represents and warrants to Lender that:

     OWNERSHIP. Grantor is the lawful owner of the Collateral free and clear of
     all security interests, liens, encumbrances and claims of others except as
     disclosed to and accepted by Lender in writing prior to execution of this
     Agreement.

     RIGHT TO PLEDGE. Grantor has the full right, power and authority to enter
     into this Agreement and to pledge the Collateral.

     AUTHORITY: BINDING EFFECT. Grantor has the full right, power and authority
     to enter into this Agreement and to grant a security interest in the
     Collateral to Lender. This Agreement is binding upon Grantor as well as
     Grantor's successors and assigns, and is legally enforceable in accordance
     with its terms. The foregoing representations and warranties, and all other
     representations and warranties contained in this Agreement are and shall be
     continuing in nature and shall remain in full force and effect until such
     time as this Agreement is terminated or cancelled as provided herein.

     NO FURTHER ASSIGNMENT. Grantor has not, and shall not, sell, assign,
     transfer, encumber or otherwise dispose of any of Grantor's rights in the
     Collateral except as provided in this Agreement.

     NO DEFAULTS. There are no defaults existing under the Collateral, and there
     are no offsets or counterclaims to the same. Grantor will strictly and
     promptly perform each of the terms, conditions, covenants and agreements,
     if any, contained in the Collateral which are to be performed by Grantor.

     NO VIOLATION. The execution and delivery of this Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its certificate or articles of incorporation and bylaws do not prohibit any
     term or condition of this Agreement.

     FINANCING STATEMENTS. Grantor authorizes Lender to file a UCC-1 financing
     statement, or alternatively, a copy of this Agreement to perfect Lender's
     security interest. At Lender's request, Grantor additionally agrees to sign
     all other documents that are necessary to perfect, protect, and continue
     lender's security interest in the Property. Grantor will pay all filing
     fees, title transfer fees, and other fees and costs involved unless
     prohibited by law or unless Lender is required by law to pay such fees and
     costs. Grantor irrevocably appoints Lender to execute financing statements
     and documents of title in Grantor's name and to execute all documents
     necessary to transfer title if there is a default. Lender may file a copy
     of this Agreement as a financing statement. If Grantor changes Grantor's
     name or address, or the name or address of any person granting a security
     interest under this Agreement changes, Grantor will promptly notify the
     Lender of such change.

LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lender may hold
the Collateral until all Indebtedness has been paid and satisfied. Thereafter
Lender may deliver the Collateral to Grantor or to any other owner of the
Collateral. Lender shall have the following rights in addition to all other
rights Lender may have by law:

     MAINTENANCE AND PROTECTION OF COLLATERAL. Lender may, but shall not be
     obligated to, take such steps as it deems necessary or desirable to
     protect, maintain, insure, store, or care for the Collateral, including
     paying of any liens or claims against the Collateral. This may include each
     things as hiring other people, such as attorneys, appraisers or other
     experts. Lender may charge Grantor for any cost incurred in so doing. When
     applicable law provides more than one method of perfection of Lender's
     security interest, Lender may choose the method(s) to be used. If the
     Collateral consists of stock, bonds or other investment property for which
     no certificate has been issued, Grantor agrees, at Lender's request, either
     to request issuance of an appropriate certificate or to give instructions
     on Lender's forms to the issuer, transfer agent, mutual fund company, or
     broker, as the case may be, to record on its books or records Lender's
     security interest in the Collateral.

     INCOME AND PROCEEDS FROM THE COLLATERAL. Lender may receive all income and
     Proceeds and add it to the Collateral, Grantor agrees to deliver to Lender
     immediately upon receipt, in the exact form received and without
     commingling with other property, all income and Proceeds from the
     Collateral which may be received by, paid, or delivered to Grantor or for
     Grantor's account, whether as an addition to, in discharge of, in
     substitution of, or in exchange for any of the Collateral.

     APPLICATION OF CASH. At Lender's option, Lender may apply any cash, whether
     included in the Collateral or received as income and Proceeds or through
     liquidation, sale, or retirement, of the Collateral, to the satisfaction
     of the Indebtedness or such portion thereof as Lender shall choose, whether
     or not matured.

     TRANSACTIONS WITH OTHERS. Lender may (1) extend time for payment or other
     performance, (2) grant a renewal or change in terms or conditions, or (3)
     compromise, compound or release any obligation, with any one or more
     Obligors, endorsers, or Guarantors of the indebtedness as Lender deems
     advisable, without obtaining the prior written consent of Grantor, and no
     such act or failure to act shall affect Lender's rights against Grantor or
     the Collateral.

     ALL COLLATERAL SECURES INDEBTEDNESS. All Collateral shall be security for
     the Indebtedness, whether the Collateral is located at one or more offices
     or branches of Lender. This will be the case whether or not the office or
     branch where Grantor obtained Grantor's loan knows about the Collateral or
     relies upon the Collateral as security.

     COLLECTION OF COLLATERAL. Lender at Lender's option may, but need not,
     collect the income and Proceeds directly from the Obligors. Grantor
     authorizes and directs the Obligors, if Lender decides to collect the
     income and Proceeds, to pay and deliver to Lender all income and Proceeds
     from the Collateral and to accept Lender's receipt for the payments.

     POWER OF ATTORNEY. Grantor irrevocably appoints Lender as Grantor's
     attorney-in-fact, with full power of substitution, (a) to demand, collect,
     receive, receipt for, sue and recover all income and Proceeds and other
     sums of money and other property which may now or hereafter become duo,
     owing or payable from the Obligors in accordance with the terms of the
     Collateral; (b) to execute, sign and endorse any and all instruments,
     receipts, checks, drafts and warrants issued in payment for the Collateral;
     (c) to settle or compromise any and all claims arising under the
     Collateral, and in the place and stead of Grantor, execute and deliver
     Grantor's release and acquittance for Grantor; (d) to file any claim or
     claims or to take any action or institute or take part in any proceedings,
     either in Lender's own name or in the name of Grantor, or otherwise, which
     in the discretion of Lender may seem to be necessary or advisable; and (e)
     to execute in Grantor's name and to deliver to the Obligors on Grantor's
     behalf, at the time and in the manner specified by the Collateral, any
     necessary instruments or documents.

     PERFECTION OF SECURITY INTEREST. Upon Lender's request, Grantor will
     deliver to Lender any and all of the documents evidencing or constituting
     the Collateral. When applicable law provides more than one method of
     perfection of Lender's security interest, Lender may choose the method(s)
     to be used. Upon Lender's request, Grantor will sign and deliver any
     writings necessary to perfect Lender's security interest. If any of the
     Collateral consists of securities for which no certificate has been issued,
     Grantor agrees, at Lender's option, either to

<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT

LOAN NO: 656932                   (CONTINUED)                             PAGE 2

     request Issuance of an appropriate certificate or to execute appropriate
     Instructions on Lender's forms instructing the Issuer, transfer agent,
     mutual fund company, or broker, as the case may be, to record on its books
     or records, by book entry or otherwise, Lender's security Interest in the
     Collateral. Grantor hereby appoints Lender as Grantor's irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect, amend, or to continue the security interest granted in this
     Agreement or to demand termination of filings of other secured parties.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor foils to
comply with any provision of this Agreement or any Related Documents, Including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated
[ILLEGIBLE] take any action that Lender deems appropriate, Including but not
limited to discharging or paying all taxes, liens, security Interests,
encumbrances and other claims, at any time levied or placed on the Collateral
and paying all costs for insuring, maintaining and preserving the Collateral.
All such expenditures paid by Lender for such purposes will then bear Interest
at the Note rate from the date paid by Lender to the date of repayment by
Grantor. To the extent permitted by applicable law, all such expenses will
become a part of the Indebtedness and, at Lender's option, will (A) be payable
on demand; (B) be added to the balance of the Note and be apportioned among and
be payable with any Installment payments to become due during either (1) the
term of any applicable Insurance policy; or (2) the remaining term of the Note;
or (C) be treated as a balloon payment which will be due and payable at the
Note's maturity. The Agreement also will secure payment of those amounts. Such
right shall be In addition to all other rights and remedies to which Lender may
be entitled upon Default.

LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
In the physical preservation and custody of the Collateral In Lender's
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility for (A) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (B)
preservation of rights against parties to the Collateral or against third
persons, (C) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (D) Informing
Grantor about any of the above, whether or not Lender has or Is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

     PAYMENT DEFAULT. Grantor fails to make any payment when due under the
     Indebtedness.

     OTHER DEFAULTS. Grantor fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or In any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained In any other agreement between Lender and
     Grantor.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by Grantor or on Grantor's behalf under this Agreement
     or the Related Documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security Interest or lien) at any
     time and for any reason.

     INSOLVENCY. The dissolution or termination of Grantor's existence as a
     going business, the Insolvency of Grantor, the appointment of a receiver
     for any part of Grantor's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or Insolvency laws by or against Grantor.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or by any
     governmental agency against any collateral securing the Indebtedness. This
     includes a garnishment of any of Grantor's accounts, including deposit
     accounts, with Lender. However, this Event of Default shall not apply If
     there is a good faith dispute by Grantor as to the validity or
     reasonableness of the claim which is the basis of the creditor or
     forfeiture proceeding and if Grantor gives Lender written notice of the
     creditor or forfeiture proceeding and deposits with Lender monies or a
     surety bond for the creditor or forfeiture proceeding, in an amount
     determined by Lender, in its sole discretion, as being an adequate reserve
     or bond for the dispute.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to Guarantor of any of the Indebtedness or Guarantor dies or becomes
     incompetent or revokes or disputes the validity of, or liability under, any
     Guaranty of the Indebtedness.

     ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     INSECURITY. Lender in good faith believes itself Insecure.

     CURE PROVISIONS. If any default, other than a default in payment or failure
     to satisfy Lender's requirement In the Insufficient Market Value of
     Securities section is curable, it may be cured (and no event of default
     will have occurred) if Grantor, after receiving written notice from Lender
     demanding cure of such default: (1) cures the default within twenty (20)
     days; or (2) if the cure requires more than twenty (20) days, immediately
     initiates steps which Lender deems in Lender's sole discretion to be
     sufficient to cure the default and thereafter continues and completes all
     reasonable and necessary stops sufficient to produce compliance as soon as
     reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of this
following rights and remedies:

     ACCELERATE INDEBTEDNESS. Declare all Indebtedness immediately due and
     payable, without notice of any kind to Grantor.

     COLLECT THE COLLATERAL. Collect any of the Collateral and, at Lender's
     option and to the extent permitted by applicable law, retain possession of
     the Collateral while suing on the Indebtedness.

     SELL THE COLLATERAL. Sell the Collateral, at Lender's discretion, as a unit
     or in parcels, at one or more public or private sales. Unless the
     Collateral is perishable or threatens to decline speedily in value or is of
     a type customarily sold on a recognized market, Lender shall give or mail
     to Grantor, and other persons as required by law, notice at least ten (10)
     days In advance of the time and place of any public sale, or of the time
     after which any private sale may be made. However, no notice need be
     provided to any person who, after an Event of Default occurs, enters into
     and authenticates an agreement waiving that person's right to notification
     of sale. Grantor agrees that any requirement of reasonable notice as to
     Grantor is satisfied if Lender mails notice by ordinary mail addressed to
     Grantor at the last address Grantor has given tender in writing. If a
     public sale is hold, there shall be sufficient compliance with all
     requirements of notice to the public by a single publication in any
     newspaper of general circulation in the county where the Collateral is
     located, setting forth the time and place of sale and a brief description
     of the property to be sold. Lender may be a purchaser at any public sale.

     SELL SECURITIES. Sell any securities included in the Collateral in a manner
     consistent with applicable federal and state securities laws. If, because
     of restrictions under such laws, Lander is unable, or believes Lender is
     unable, to sell the securities in an open market transaction, Grantor
     agrees that Lander will have no obligation to delay sale until the
     securities can be registered. Then Lender may make a private sale to one or
     more persons or to a restricted group of persons, even though such sale may
     result in a price that is Less favorable than might be obtained in an open
     market transaction. Such a sale will be considered commercially reasonable.
     If any securities held as Collateral are "[ILLEGIBLE] securities" as
     defined in the Rules of the Securities and Exchange Commission (such as
     Regulation D or Rule 144) or the rules of state securities departments
     under state "Blue Sky" laws, or if Grantor or any other owner of the
     Collateral is an affiliate of the issuer of the securities, Grantor agrees
     that neither Grantor, nor any member of Grantor's family, nor any other
     person signing this Agreement will sell or dispose of any securities of
     such issuer without obtaining Lender's prior written consent.

     RIGHTS AND REMEDIES WITH RESPECT TO INVESTMENT PROPERTY, FINANCIAL ASSETS
     AND RELATED COLLATERAL. In addition to other rights and remedies granted
     under this Agreement and under applicable law, Lender may exercise any or
     all of the following rights and remedies: (1) register with any issuer or
     broker or other securities Intermediary any of the Collateral consisting of
     Investment property or financial assets (collectively herein, "investment
     property") in Lander's sole name or in the name of Lender's broker, agent
     or nominee; (2) cause any issuer, broker or other securities intermediary
     to deliver to Lender any of the Collateral consisting of securities, or
     Investment property capable of being delivered: (3) enter Into a control
     agreement or power of attorney with any Issuer or securities intermediary
     With respect to any Collateral consisting of Investment property, on such
     terms as Lender may deem appropriate, in Its sole discretion, Including
     without limitation, an agreement granting to Lender any of the rights
     provided hereunder without further notice to or consent by Grantor; (4)
     execute any such control agreement on Grantor's behalf and in Grantor's
     name, and hereby irrevocably appoints Lender as agent and attorney-in-fact,
     coupled with an interest, for the purpose of executing such control
     agreement on Grantor's behalf; (5) exercise any and all rights of Lender
     under any such control agreement or power of attorney; (6) exercise any
     voting, conversion, registration, purchase, option, or other rights with
     respect to any Collateral; (7) collect, with or without legal action, and
     issue receipts concerning any notes,

<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT

LOAN NO: 656932                    (CONTINUED)                            PAGE 3

     checks, drafts, remittances or distributions that are paid or payable with
     respect to any Collateral consisting of Investment property. Any control
     agreement entered with respect to any Investment property shall contain the
     following provisions, at Lender's discretion. Lender shall be authorized to
     Instruct the Issuer, broker or other securities Intermediary to take or to
     refrain from taking such actions with respect to the investment properly as
     Lender may instruct, without further notice to or consent by Grantor. Such
     actions may Include without limitation the Issuance of entitlement orders,
     account instructions, general trading or buy or sell orders, transfer and
     redemption orders, and stop loss orders. Lender shall be further entitled
     to Instruct the Issuer, broker or securities intermediary to sell or to
     liquidate any investment property, or to pay the cash surrender or account
     termination value with respect to any and all Investment property, and to
     deliver all such payments and liquidation proceeds to Lander. Any such
     control agreement shall contain such authorizations as are necessary to
     place Lender in "control" of such investment collateral, as contemplated
     under the provisions of the Uniform Commercial Code, and shall fully
     authorize Lender to issue "entitlement orders" concerning the transfer,
     redemption, liquidation or disposition of investment collateral, in
     conformance with the provisions of the Uniform Commercial Code.

     FORECLOSURE, Maintain a Judicial suit for foreclosure and sale of the
     Collateral.

     TRANSFER TITLE, Effect transfer of title upon sale of all or part of the
     Collateral. For this purpose, Grantor irrevocably appoints Lender as
     Grantor's attorney-in-fact to execute endorsements, assignments and
     instruments in the name of Grantor and each of them (If more then one) as
     shall be necessary or reasonable.

     OTHER RIGHTS AND REMEDIES. Have and exercise any or all of the rights and
     remedies of a secured creditor under the provisions of the Uniform
     Commercial Code, at law, in equity, or otherwise.

     APPLICATION OF PROCEEDS. Apply any cash which is part of the Collateral,
     or which is received front the collection or sale of the Collateral, to
     reimbursement of any expenses, including any costs for registration of
     securities, commissions incurred in connection with a sale, Lender's
     reasonable attorneys' fees and court costs, whether or not there is a
     lawsuit and including any fees on appeal, incurred by Lender in connection
     with the collection and sale of such Collateral and to the payment of the
     Indebtedness of Grantor to Lender, with any excess funds to be paid to
     Grantor as the interests of Grantor may appear. Grantor agrees, to the
     extent permitted by law, to pay any deficiency after application of the
     proceeds of the Collateral to the Indebtedness.

     ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
     Lender's rights and remedies, whether evidenced by this Agreement, the
     Related Documents, or by any other writing, shall be cumulative and may be
     exercised singularly or concurrently. Election by Lender to pursue any
     remedy shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform an obligation of Grantor
     under this Agreement, after Grantor's failure to perform, shall not affect
     Lender's right to declare a default and exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth In this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     ATTORNEYS' FEES; EXPANSES. Grantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's reasonable attorneys' fees
     and Lender's legal expanses, incurred in connection with the enforcement of
     this Agreement, Lender may hire or pay someone else to help enforce this
     Agreement, and Grantor shall pay the costs and expenses of such
     enforcement. Costs and expanses include Lender's reasonable attorneys' foes
     and legal expanses whether or not there is a lawsuit, Including Lender's
     reasonable attorneys' fees and legal expenses for bankruptcy proceedings
     (including efforts to modify or vacate any automatic stay or injunction),
     appeals, and any anticipated post-judgment collection services. Grantor
     also shall pay all court costs and such additional fees as may be directed
     by the court.

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
     IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS. THIS
     AGREEMENT HAS BEAN ACCEPTED BY LENDER IN THE STATE OF TEXAS.

     CHOICE OF VENUE. If there is a lawsuit, and if the transaction evidenced by
     this Agreement occurred in Lubbock County, Grantor agrees upon Lender's
     request to submit to the jurisdiction of the courts of Lubbock County,
     State of Texas.

     NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right, A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Grantor, shall
     constitute a waiver of any of Lender's rights or of any of Grantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender In
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the solo discretion of Lender.

     NOTICES. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United Slates mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Grantor agrees to keep Lender informed at all times of
     Grantor's current address, Unless otherwise provided or required by law, If
     there is more than one Grantor, any notice given by Lender to any Grantor
     is deemed to be notice given to all Grantors.

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     Invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, Invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement
     on transfer of Grantor's interest, this Agreement shall be binding upon and
     inure to the benefit of the parties, their successors and assigns. If
     ownership of the Collateral becomes vested in a person other than Grantor,
     Lender, without notice to Grantor, may deal with Grantor's successors with
     reference to this Agreement and the Indebtedness by way of forbearance or
     extension without releasing Grantor from the obligations of this Agreement
     or liability under the Indebtedness.

     TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require, Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

     AGREEMENT. The word "Agreement" moans this Commercial Pledge Agreement, as
     this Commercial Pledge Agreement may be amended or modified from time to
     time, together with all exhibits and schedules attached to this Commercial
     Pledge Agreement from time to time.

     BORROWER. The word "Borrower" means WESTECH CAPITAL CORP. and includes all
     co-signers and co-makers signing the Note.

     COLLATERAL. The word "Collateral" means all of Grantor's right, title and
     interest in and to all the Collateral as described In the Collateral
     Description section of this Agreement.

     DEFAULT. The word "Default" means the Default set forth in this Agreement
     in the section titled "Default".

     EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     GRANTOR. The word "Grantor" means WESTECH CAPITAL CORP..

     GUARANTOR. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Indebtedness.

     GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the

<PAGE>

                           COMMERCIAL PLEDGE AGREEMENT

LOAN NO: 656932                    (CONTINUED)                            PAGE 4

     Note.

     INCOME AND PROCEEDS. The words "Income and Proceeds" mean all present and
     future income, proceeds, earnings, Increases, and substitutions from or for
     the Collateral of every kind and nature, Including without limitation all
     payments, Interest, profits, distributions, benefits, rights, options,
     warrants, dividends, stock dividends, stock splits, stock rights,
     regulatory dividends, subscriptions, monies, claims for money due and to
     become due, proceeds of any insurance on the Collateral, shares of stock of
     different par value or no par value Issued in substitution or exchange for
     shares Included in the Collateral, and all other property Grantor Is
     entitled to receive on account of such Collateral, Including accounts,
     documents, Instruments, chattel paper, and general Intangibles.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, Including all principal and interest
     together with all other Indebtedness and costs and expenses for which
     Grantor Is responsible under this Agreement or under any of the Related
     Documents.

     LENDER. The word "Lender" means First United Bank, its successors and
     assigns.

     NOTE. The word "Note" means the Note executed by WESTECH CAPITAL CORP. In
     the principal amount of $2,500,000.00 dated February 17, 2004, together
     with all renewals of, extensions of, modifications of, refinancings of,
     consolidations of, and substitutions for the note or credit agreement.

     OBLIGOR. The word "Obligor" means without limitation any and all persons
     obligated to pay money or to perform some other act under the Collateral.

     PROPERTY. The word 'Property" means all of Grantor's right, title and
     Interest In and to all the Property as described in the "Collateral
     Description" section of this Agreement.

     RELATED DOCUMENTS. The words "Rotated Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed In connection with the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE
AGREEMENT AND AGREES TO ITS TERMS, THIS AGREEMENT IS DATED FEBRUARY 17, 2004.

GRANTOR:

WESTECH CAPITAL CORP.

BY: /s/ JOHN GORMAN
    -------------------------------------
    JOHN GORMAN, CHAIRMAN & CEO OF WESTECH
    CAPITAL CORP.exv10w1

 

EXHIBIT 10.1

2003 Amended and Restated Credit Agreement

(December 16, 2003)

$15,000,000.00
2 Year Facility Loan

CoBank, ACB,

As Administrative Agent,

And As a Syndication Party,

U.S. AgBank, FCB),

As a Syndication Party,

As Lenders,

and

The National
Cooperative Refinery

Association,
Inc.,

as Borrower

	 	 	 
	Prepared by
	 	 
	Richard
M. Koon, Esq.

Holland & Hart, LLP

	 	
	Suite 3200
	 	 
	555
17th Street

Denver, CO 80202

	 	
	(303) 295-8545
	 	 

Holland & Hart LLP

Denver • Aspen • Boulder • Colorado Springs • Denver Tech Center • Billings • Boise • Cheyenne

Jackson Hole • Salt Lake City • Santa Fe • Washington,
D.C.

 

 

BINDER OF LOAN DOCUMENTS

2003 AMENDED AND RESTATED

CREDIT AGREEMENT

	 	 	 
	Borrower:

	 	NATIONAL COOPERATIVE REFINERY
ASSOCIATION, INC.
	 	 	 
	Lenders:

	 	CoBANK, ACB, as Administrative Agent,
Syndication Agent, Documentation Agent, and
Collateral Agent, as a Syndication Party
	 	 	 
	Loan:

	 	$15,000,000 2-Year Facility Loan
	 	 	 
	Date:

	 	December 16, 2003

INDEX

	1.	 	2003 Amended and Restated Credit Agreement

	A.	 	Exhibits

	 	 	 
	Exhibit 1.21

	 	Compliance Certificate
	Exhibit 1.76

	 	Subsidiaries
	Exhibit 2.3

	 	2-Year Borrowing Notice Form
	Exhibit 2.4

	 	2-Year Facility Note Form
	Exhibit 8.3

	 	Litigation
	Exhibit 8.8

	 	Payment of Taxes
	Exhibit 8.9

	 	Required Licenses
	Exhibit 8.10

	 	Employee Benefit Plans
	Exhibit 8.11

	 	Equity Investments
	Exhibit 8.14

	 	Intellectual Property
	Exhibit 11.1

	 	Existing Indebtedness
	Exhibit 14.25

	 	Syndication Acquisition Agreement
	Exhibit 14.27

	 	Wire Instructions

	B.	 	Schedule 1 (Syndication Parties and Individual Commitments)

	2.	 	$7,500,000.00 2-Year Facility Note payable to CoBank
	 
	3.	 	$7,500,000.00 2-Day Facility Note payable to U.S. AgBank, FCB
	 
	4.	 	Secretary’s Certificate and Borrowing Resolution

 

 

	5.	 	Evidence of Insurance
	 
	6.	 	Appointment of Agent for Service of Process
	 
	7.	 	Opinion of Borrower’s Counsel
	 
	8.	 	Compliance Certificate (as of 8/31/2003)

2

 

1

 

2003 AMENDED AND RESTATED CREDIT AGREEMENT

(2-YEAR REVOLVING LOAN)

BY AND BETWEEN

COBANK, ACB,

AS ADMINISTRATIVE AGENT, SYNDICATION AGENT, DOCUMENTATION AGENT, AND

COLLATERAL AGENT, AND AS A SYNDICATION PARTY,

U.S. AGBANK, FCB

AS A SYNDICATION PARTY

AND

NATIONAL COOPERATIVE REFINERY ASSOCIATION

AS BORROWER

DATED AS OF DECEMBER 16, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1. DEFINED TERMS
	 	 	2	 
	1.1   Administrative Agent’s Office
	 	 	2	 
	1.2   Advance
	 	 	2	 
	1.3   Advance Date
	 	 	2	 
	1.4   Affiliate
	 	 	2	 
	1.5   Aggregate LC Commitment
	 	 	2	 
	1.6   Aggregate 2-Year Commitment
	 	 	2	 
	1.7   Applicable Lending Office
	 	 	2	 
	1.8   Available 2-Year Amount
	 	 	2	 
	1.9   Bank Debt
	 	 	3	 
	1.10 Banking Day
	 	 	3	 
	1.11 Base Rate
	 	 	3	 
	1.12 Borrower’s Account
	 	 	3	 
	1.13 Borrower Benefit Plan
	 	 	3	 
	1.14 Borrower Pension Plan
	 	 	3	 
	1.15 Capital Leases
	 	 	3	 
	1.16 Closing Date
	 	 	4	 
	1.17 Code
	 	 	4	 
	1.18 Committed Letter of Credit Fee
	 	 	4	 
	1.19 Committed 2-Year Advances
	 	 	4	 
	1.20 Commitment Fee Factor
	 	 	4	 
	1.21 Compliance Certificate
	 	 	4	 
	1.22 Cooperative
	 	 	4	 

i

 

	 	 	 	 	 
	1.23 [INTENTIONALLY OMITTED]
	 	 	4	 
	1.24 Debt
	 	 	4	 
	1.25 Default Interest Rate
	 	 	4	 
	1.26 EBIT
	 	 	4	 
	1.27 EBITDA
	 	 	5	 
	1.28 Environmental Laws
	 	 	5	 
	1.29 ERISA Affiliate
	 	 	5	 
	1.30 Excess Working Capital
	 	 	5	 
	1.31 Fiscal Quarter
	 	 	5	 
	1.32 Fiscal Year
	 	 	5	 
	1.33 Funding Share
	 	 	5	 
	1.34 GAAP
	 	 	5	 
	1.35 Good Faith Contest
	 	 	5	 
	1.36 Governmental Authority
	 	 	6	 
	1.37 Hazardous Substances
	 	 	6	 
	1.38 Indebtedness
	 	 	6	 
	1.39 Individual Outstanding 2-Year Obligations
	 	 	6	 
	1.40 Individual 2-Year Commitment
	 	 	6	 
	1.41 Individual 2-Year Lending Capacity
	 	 	7	 
	1.42 Individual 2-Year Pro Rata Share
	 	 	7	 
	1.43 Interest Expense
	 	 	7	 
	1.44 Investment
	 	 	7	 
	1.45 Issuance Fee
	 	 	7	 
	1.46 Letters of Credit
	 	 	7	 

ii

 

	 	 	 	 	 
	1.47 Letter of Credit Bank
	 	 	7	 
	1.48 LIBO Rate
	 	 	8	 
	1.49 LIBOR Margin
	 	 	8	 
	1.50 Lien
	 	 	8	 
	1.51 Loan Documents
	 	 	8	 
	1.52 Material Adverse Effect
	 	 	8	 
	1.53 Material Agreements
	 	 	8	 
	1.54 Member
	 	 	8	 
	1.55 Member Loan
	 	 	8	 
	1.56 Member Percentage
	 	 	8	 
	1.57 Member Product Receivables
	 	 	9	 
	1.58 Multiemployer Plan
	 	 	9	 
	1.59 Net Income
	 	 	9	 
	1.60 Net Worth
	 	 	9	 
	1.61 Operating Lease
	 	 	9	 
	1.62 Organization Documents
	 	 	9	 
	1.63 Overnight Funding Commitment
	 	 	9	 
	1.64 Overnight Lender
	 	 	9	 
	1.65 Patronage Refunds
	 	 	9	 
	1.66 Person
	 	 	9	 
	1.67 Plan
	 	 	9	 
	1.68 Potential Default
	 	 	10	 
	1.69 Principal Agreements
	 	 	10	 
	1.70 Prohibited Transaction
	 	 	10	 

iii

 

	 	 	 	 	 
	1.71 Quarter
	 	 	10	 
	1.72 Reportable Event
	 	 	10	 
	1.73 Required Lenders
	 	 	10	 
	1.74 Restricted Payments
	 	 	10	 
	1.75 Security Documents
	 	 	10	 
	1.76 Subsidiary
	 	 	10	 
	1.77 Subordinated Member Loans
	 	 	11	 
	1.78 Syndication Parties
	 	 	11	 
	1.79 2-Year Availability Period
	 	 	11	 
	1.80 2-Year Facility
	 	 	11	 
	1.81 2-Year Loan or Loans
	 	 	11	 
	1.82 2-Year Maturity Date
	 	 	11	 
	1.83 2-Year Note or Notes
	 	 	11	 
	1.84 Working Capital
	 	 	11	 
	ARTICLE 2. 2-Year LOAN
	 	 	13	 
	2.1 2-Year Loan
	 	 	13	 
	2.1.1 Individual 2-Year Lending Capacity
	 	 	13	 
	2.1.2 Individual 2-Year Pro Rata Share
	 	 	13	 
	2.2    Available 2-Year Amount
	 	 	13	 
	2.3    Borrowing Notice
	 	 	13	 
	2.4    Promissory Notes
	 	 	14	 
	2.5    Overnight Advances
	 	 	14	 
	2.6    Syndication Party Records
	 	 	15	 
	2.7    Use of Proceeds
	 	 	15	 

iv

 

	 	 	 	 	 
	2.8   Syndication Party Funding Failure
	 	 	15	 
	2.9   Overnight Lender Funding Failure
	 	 	15	 
	2.10 Reduction of Aggregate 2-Year Commitment
	 	 	16	 
	2.11 Treatment of Existing Advances
	 	 	16	 
	ARTICLE 3. LETTER OF CREDIT FACILITY
	 	 	16	 
	3.1   Committed Letters of Credit
	 	 	16	 
	3.1.1 Request for Committed Letter of Credit
	 	 	16	 
	3.1.2 Notification of the Administrative Agent
	 	 	17	 
	3.2   Issuance of Committed Letters of Credit
	 	 	17	 
	3.2.1 Available Amount
	 	 	17	 
	3.2.2 Availability
	 	 	17	 
	3.2.3 Fees
	 	 	17	 
	3.2.4 Treatment of Draws
	 	 	17	 
	3.3   Negotiated Letters of Credit
	 	 	17	 
	3.3.1 Request for Negotiated Letter of Credit
	 	 	18	 
	3.3.2 Notification of the Administrative Agent
	 	 	18	 
	3.4   Issuance of Negotiated Letters of Credit
	 	 	18	 
	3.4.1 Available Amount
	 	 	18	 
	3.4.2 Availability
	 	 	18	 
	3.4.3 Fees
	 	 	18	 
	3.4.4 Treatment of Draws
	 	 	19	 
	3.4.5 Reimbursement of Draws
	 	 	19	 
	3.5   Reimbursement Obligation Unconditional
	 	 	19	 
	3.6   Cash Collateral Account
	 	 	19	 

v

 

	 	 	 	 	 
	ARTICLE 4. INTEREST AND FEES
	 	 	20	 
	4.1 Interest
	 	 	20	 
	4.1.1 Base Rate Option
	 	 	20	 
	4.1.2 LIBO Rate Option
	 	 	20	 
	4.2 Additional Provisions for LIBO Rate Loans
	 	 	21	 
	4.2.1 Limitation on LIBO Rate Loans
	 	 	21	 
	4.2.2 LIBO Rate Loan Unlawful
	 	 	21	 
	4.3 Default Interest Rate
	 	 	22	 
	4.4 Interest Calculation
	 	 	22	 
	4.5 Fees
	 	 	22	 
	4.5.1 Commitment Fee
	 	 	22	 
	4.5.2 Administrative Fee
	 	 	22	 
	ARTICLE 5. PAYMENTS; FUNDING LOSSES
	 	 	22	 
	5.1 Principal Payments
	 	 	22	 
	5.2 Interest Payments
	 	 	23	 
	5.3 Application of Principal Payments
	 	 	23	 
	5.4 Manner of Payment
	 	 	23	 
	5.5 Voluntary Prepayments
	 	 	23	 
	5.6 Mandatory Prepayments
	 	 	24	 
	5.7 Funding Losses
	 	 	24	 
	5.8 Distribution of Principal and Interest Payments
	 	 	24	 
	ARTICLE 6. BANK EQUITY INTERESTS
	 	 	24	 
	ARTICLE 7. SECURITY
	 	 	25	 
	7.1 Borrower’s Assets
	 	 	25	 

vi

 

	 	 	 	 	 
	ARTICLE 8. REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	8.1 Organization, Good Standing, Etc.
	 	 	26	 
	8.2 Corporate Authority, Due Authorization; Consents
	 	 	26	 
	8.3 Litigation
	 	 	26	 
	8.4 No Violations
	 	 	26	 
	8.5 Binding Agreement
	 	 	27	 
	8.6 Compliance with Laws
	 	 	27	 
	8.7 Principal Place of Business
	 	 	27	 
	8.8 Payment of Taxes
	 	 	27	 
	8.9 Licenses and Approvals
	 	 	27	 
	8.10 Employee Benefit Plans
	 	 	28	 
	8.11 Equity Investments
	 	 	28	 
	8.12 Title to Real and Personal Property
	 	 	28	 
	8.13 Financial Statements
	 	 	28	 
	8.14 Environmental Compliance
	 	 	29	 
	8.15 Fiscal Year
	 	 	29	 
	8.16 Material Agreements
	 	 	29	 
	8.17 Regulations U and X
	 	 	29	 
	8.18 Intellectual Property
	 	 	29	 
	8.19 No Default on Outstanding Judgments or Orders
	 	 	30	 
	8.20 No Default in Other Agreements
	 	 	30	 
	8.21 Labor Disputes and Acts of God
	 	 	30	 
	8.22 Governmental Regulation
	 	 	30	 
	8.23 Solvency
	 	 	30	 

vii

 

	 	 	 	 	 
	8.24 Business Plan
	 	 	31	 
	8.25 Disclosure
	 	 	31	 
	ARTICLE 9. CONDITIONS TO ADVANCES
	 	 	31	 
	9.1 Conditions to Closing
	 	 	31	 
	9.1.1 Loan Documents
	 	 	31	 
	9.1.2 Approvals
	 	 	31	 
	9.1.3 Good Standing; Organizational Documents
	 	 	31	 
	9.1.4 Lien Searches; Financing Statements
	 	 	32	 
	9.1.5 Evidence of Insurance
	 	 	32	 
	9.1.6 Appointment of Agent for Service
	 	 	32	 
	9.1.7 No Material Change
	 	 	32	 
	9.1.8 Fees and Expenses
	 	 	32	 
	9.1.9 Bank Equity Interest Purchase Obligation
	 	 	32	 
	9.1.10 Opinion of Counsel
	 	 	32	 
	9.1.11 Evidence of Corporate Action
	 	 	32	 
	9.1.12 Lender Consent
	 	 	33	 
	9.1.13 Compliance Certificate
	 	 	33	 
	9.1.14 Further Assurances
	 	 	33	 
	9.2 Conditions to Advance
	 	 	33	 
	9.2.1 Member Loans
	 	 	33	 
	9.2.2 Default
	 	 	33	 
	9.2.3 Representations and Warranties
	 	 	33	 
	ARTICLE 10. AFFIRMATIVE COVENANTS
	 	 	34	 
	10.1 Books and Records
	 	 	34	 

viii

 

	 	 	 	 	 
	10.2 Reports and Notices
	 	 	34	 
	10.2.1 Annual Financial Statements
	 	 	34	 
	10.2.2 Quarterly Financial Statements
	 	 	34	 
	10.2.3 Notice of Default
	 	 	35	 
	10.2.4 ERISA Reports
	 	 	35	 
	10.2.5 Notice of Litigation
	 	 	35	 
	10.2.6 Notice of Material Adverse Effect
	 	 	35	 
	10.2.7 Notice of Environmental Proceedings
	 	 	35	 
	10.2.8 Regulatory and Other Notices
	 	 	36	 
	10.2.9 Adverse Action Regarding Required Licenses and Intellectual
Property
	 	 	36	 
	10.2.10 Annual Business Plan
	 	 	36	 
	10.2.11 Additional Information
	 	 	36	 
	10.3 Eligibility
	 	 	36	 
	10.4 Maintenance of Existence and Qualification
	 	 	36	 
	10.5 Compliance with Legal Requirements and Agreements
	 	 	36	 
	10.6 Compliance with Environmental Laws
	 	 	37	 
	10.7 Taxes
	 	 	37	 
	10.8 Insurance
	 	 	37	 
	10.9 Maintenance of Properties
	 	 	38	 
	10.10 Payment of Liabilities
	 	 	38	 
	10.11 Inspection
	 	 	38	 
	10.12 Required Licenses; Intellectual Property
	 	 	38	 
	10.13 ERISA
	 	 	38	 
	10.14 Further Assurances
	 	 	38	 

ix

 

	 	 	 	 	 
	10.15 Maintenance of Commodity Position
	 	 	39	 
	10.16 Financial Covenants
	 	 	39	 
	10.16.1 Debt to EBITDA
	 	 	39	 
	10.16.2 Minimum Net Worth
	 	 	39	 
	10.16.3 Interest Coverage Ratio
	 	 	39	 
	10.16.4 Minimum Working Capital
	 	 	39	 
	ARTICLE 11. NEGATIVE COVENANTS
	 	 	39	 
	11.1 Borrowing
	 	 	39	 
	11.2 No Other Businesses
	 	 	40	 
	11.3 Liens
	 	 	40	 
	11.4 Sale of Assets
	 	 	42	 
	11.5 Liabilities of Others
	 	 	42	 
	11.6 Loans
	 	 	42	 
	11.7 Merger; Acquisitions; Business Form; Etc.
	 	 	42	 
	11.8 Investments
	 	 	42	 
	11.9 Transactions With Related Parties
	 	 	43	 
	11.10 Restricted Payments
	 	 	43	 
	11.11 Change in Fiscal Year
	 	 	44	 
	11.12 ERISA
	 	 	44	 
	11.13 Member Loans
	 	 	44	 
	11.13.1 Aggregate and Individual Amounts
	 	 	44	 
	11.13.2 Member Loan Documentation and Maturity Date
	 	 	45	 
	11.13.3 Additional Aggregate Individual Amounts
	 	 	45	 
	11.14 Principal Agreements
	 	 	45	 

x

 

	 	 	 	 	 
	ARTICLE 12. INDEMNIFICATION
	 	 	45	 
	12.1 General; Stamp Taxes; Intangibles Tax
	 	 	45	 
	12.2 Indemnification Relating to Hazardous Substances
	 	 	46	 
	ARTICLE 13. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
	 	 	47	 
	13.1 Events of Default
	 	 	47	 
	13.2 No Advance
	 	 	49	 
	13.3 Rights and Remedies
	 	 	49	 
	ARTICLE 14. AGENCY AGREEMENT
	 	 	49	 
	14.1 Funding of Syndication Interest
	 	 	49	 
	14.2 Syndication Parties’ Obligations to Remit Funds
	 	 	49	 
	14.3 Syndication Party’s Failure to Remit Funds
	 	 	50	 
	14.4 Agency Appointment
	 	 	51	 
	14.5 Power and Authority of the Administrative Agent
	 	 	51	 
	14.5.1 Advice
	 	 	51	 
	14.5.2 Documents
	 	 	52	 
	14.5.3 Proceedings
	 	 	52	 
	14.5.4 Retain Professionals
	 	 	52	 
	14.5.5 Incidental Powers
	 	 	52	 
	14.6 Duties of the Administrative Agent
	 	 	52	 
	14.6.1 Possession of Documents
	 	 	52	 
	14.6.2 Distribute Payments
	 	 	52	 
	14.6.3 Loan Administration
	 	 	52	 
	14.6.4 Action Upon Default
	 	 	53	 
	14.6.5 Forwarding of Information
	 	 	53	 

xi

 

	 	 	 	 	 
	14.7 Indemnification as Condition to Action
	 	 	53	 
	14.8 Consent Required for Certain Actions
	 	 	54	 
	14.8.1 Unanimous
	 	 	54	 
	14.8.2 Required Lenders
	 	 	54	 
	14.8.3 Action Without Vote
	 	 	54	 
	14.9 Distribution of Principal and Interest
	 	 	55	 
	14.10 Distribution of Certain Amounts
	 	 	55	 
	14.10.1 Funding Losses
	 	 	55	 
	14.11 Possession of Loan Documents
	 	 	55	 
	14.12 Collateral Application
	 	 	55	 
	14.13 Amounts Required to be Returned
	 	 	56	 
	14.14 Reports and Information to Syndication Parties
	 	 	56	 
	14.15 Standard of Care
	 	 	57	 
	14.16 No Trust Relationship
	 	 	57	 
	14.17 Sharing of Costs and Expenses
	 	 	57	 
	14.18 Syndication Parties’ Indemnification of the Administrative Agent
	 	 	58	 
	14.19 Books and Records
	 	 	58	 
	14.20 Administrative Agent Fee
	 	 	58	 
	14.21 The Administrative Agent’s Resignation or Removal
	 	 	59	 
	14.22 Representations and Warranties of All Parties
	 	 	59	 
	14.23 Syndication Parties’ Independent Credit Analysis
	 	 	60	 
	14.24 No Joint Venture or Partnership
	 	 	60	 
	14.25 Purchase for Own Account; Restrictions on Transfer; Participations
	 	 	60	 
	14.26 Certain Participants’ Voting Rights
	 	 	61	 

xii

 

	 	 	 	 	 
	14.27 Method of Making Payments
	 	 	62	 
	14.28 Events of Syndication Default/Remedies
	 	 	62	 
	14.28.1 Syndication Party Default
	 	 	62	 
	14.28.2 Remedies
	 	 	62	 
	14.29 Withholding Taxes
	 	 	62	 
	14.30 Amendments Concerning Agency Function
	 	 	63	 
	14.31 Further Assurances
	 	 	63	 
	ARTICLE 15. MISCELLANEOUS
	 	 	63	 
	15.1 Costs and Expenses
	 	 	63	 
	15.2 Service of Process and Consent to Jurisdiction
	 	 	63	 
	15.3 Jury Waiver
	 	 	64	 
	15.4 Notices
	 	 	64	 
	15.4.1 Borrower
	 	 	64	 
	15.4.2 Administrative Agent
	 	 	65	 
	15.4.3 Syndication Parties
	 	 	65	 
	15.5 Liability of Administrative Agent
	 	 	65	 
	15.6 Successors and Assigns
	 	 	65	 
	15.7 Severability
	 	 	65	 
	15.8 Entire Agreement
	 	 	65	 
	15.9 Applicable Law
	 	 	65	 
	15.10 Captions
	 	 	65	 
	15.11 Complete Agreement; Amendments
	 	 	66	 
	15.12 Additional Costs of Maintaining Loan
	 	 	66	 
	15.13 Capital Requirements
	 	 	67	 

xiii

 

	 	 	 	 	 
	15.14 Replacement Notes
	 	 	67	 
	15.15 Patronage Payments
	 	 	68	 
	15.16 Mutual Release
	 	 	68	 
	15.17 Liberal Construction
	 	 	68	 
	15.18 Counterparts
	 	 	68	 
	15.19 Confidentiality
	 	 	68	 
	15.20 Automatic Amendment to Loan Documents
	 	 	69	 
	15.21 Affect of Amended and Restated Credit Agreement
	 	 	69	 
	15.22 Release
	 	 	69	 

xiv

 

EXHIBITS

	 	 	 
	Exhibit 1.21

	 	Compliance Certificate
	Exhibit 1.76

	 	Subsidiaries
	Exhibit 2.3

	 	2-Year Borrowing Notice form
	Exhibit 2.4

	 	2-Year Note form
	Exhibit 8.3

	 	Litigation
	Exhibit 8.8

	 	Payment of Taxes
	Exhibit 8.9

	 	Required Licenses
	Exhibit 8.10

	 	Employee Benefit Plans
	Exhibit 8.11

	 	Equity Investments
	Exhibit 8.18

	 	Intellectual Property
	Exhibit 11.1

	 	Existing Indebtedness
	Exhibit 11.3

	 	Existing Liens
	Exhibit 11.8

	 	Existing Investments
	Exhibit 11.13.2

	 	Member Loan Documentation
	Exhibit 14.25

	 	Syndication Acquisition Agreement
	Exhibit 14.27

	 	Wire Instructions
	Schedule 1

	 	Individual 2-Year Commitments

xv

 

2003 AMENDED AND RESTATED CREDIT AGREEMENT

(2-YEAR Revolving Loan)

     THIS 2003 AMENDED AND RESTATED CREDIT AGREEMENT (2-Year Revolving Loan)
(“Credit Agreement”) is entered into as of the 16th day of December 2003, by
and between COBANK, ACB (“CoBank”) for its own benefit as a Syndication Party
and as the Administrative Agent for the benefit of the present and future
Syndication Parties (in that capacity “Administrative Agent”), the other
Syndication Parties identified on Schedule 1 hereto, and NATIONAL COOPERATIVE
REFINERY ASSOCIATION, a cooperative marketing association formed under the laws
of the State of Kansas, whose address is 1391 Iron Horse Road, P.O. Box 1404,
McPherson, Kansas 67460 (“Borrower”) , and amends, restates, and replaces in
its entirety the Original Credit Agreement (as defined below) effective as of
the Effective Date.

Recitals:

     A. Borrower, the Administrative Agent, and the Syndication Parties
signatory
thereto entered into that certain Credit Agreement (364-Day Revolving
Loan) dated as
of December 21, 1999 (“Original Credit Agreement”) pursuant to which the
Syndication Parties agreed to provide to Borrower certain credit
facilities more
particularly described therein on the terms and conditions set forth.

     B. The Original Credit Agreement, as amended, was replaced in its entirety
by a document entitled “2002 Amended and Restated Credit Agreement
(364-Day
Revolving Loan)” which is intended to amend and restate the Original
Credit
Agreement dated December 17, 2002 (“2002 Restated Credit Agreement”).

     C. The Administrative Agent, acting pursuant to the provisions of Section
14.8 of the 2002 Restated Credit Agreement, has obtained (i) from one or
more of the
Syndication Parties: renewal of Individual 2-Year Commitments equal to the
Aggregate
2-Year Commitment (as such terms are defined in the 2003 Restated Credit
Agreement),
(ii) from the Syndication Parties consent to (A) an extension of the
maturity date, and
(B) replacement of the 2002 Restated Credit Agreement with an amended and
restated
credit agreement to embody the provisions of the 2002 Restated Credit
Agreement, and
to put into effect the extension of the maturity date.

     D. In order to reflect such changes, the parties are entering into this
document entitled “2003 Amended and Restated Credit Agreement (2-Year
Revolving
Loan)” which is intended to amend and restate the 2002 Restated Credit
Agreement,
which, after its execution by all parties and the satisfaction of all
conditions to its
effectiveness, shall be deemed to have replaced, but not to discharge any
indebtedness
or other obligations owing under, the 2002 Restated Credit Agreement and
any

 

 

reference in any Loan Document to the “Credit Agreement” or to the 2002
Restated Credit Agreement shall thereafter be deemed to be a reference to this
2003 Amended and Restated Credit Agreement (2-Year Revolving Loan).

Agreement:

ARTICLE 1. DEFINED TERMS

     As used in this Credit Agreement, the following terms shall have the
meanings set forth below (and such meaning shall be equally applicable to
both the singular and plural form of the terms defined, as the context may
require):

     1.1 Administrative Agent’s Office: that address set forth for the
Administrative Agent in Section 15.4 as it may change from time to time by
notice to
all parties to this Credit Agreement.

     1.2 Advance: a disbursement of the proceeds of the 2-Year Loan.

     1.3 Advance Date: a day (which shall be a Banking Day) on which an
Advance is made.

     1.4 Affiliate: with respect to Borrower shall mean (a) a Subsidiary, or (b) any
Person which, directly or indirectly, (i) owns more than fifty percent
(50%) of the
outstanding stock of Borrower, or (ii) has the power under ordinary
circumstances to
elect at least a majority of the directors of Borrower; but (c) shall,
with respect to
Borrower, specifically not include Jayhawk Pipeline, L.L.C., Clear Creek
Transportation, L.L.C., Osage Pipe Line Company, or Kaw Pipe Line Company,
even if
they would otherwise satisfy either (a) or (b) of this Section.

     1.5 Aggregate LC Commitment: shall be $15,000,000.00.

     1.6 Aggregate 2-Year Commitment: shall be $15,000,000.00.

     1.7 Applicable Lending Office: means, for each Syndication Party, the
lending office of such Syndication Party designated as such on its
signature page hereof
or in the applicable Syndication Acquisition Agreement or such other
office of such
Syndication Party as such Syndication Party may from time to time specify
to the
Administrative Agent and Borrower as the office by which its Advances are
to be made
and maintained.

     1.8 Available 2-Year Amount: the amount at any time by which the
Aggregate 2-Year Commitment exceeds the sum of (a) the principal
outstanding under
the 2-Year Loan (including, without duplication, the amount of all
outstanding
Overnight Advances); (b) the amount of all Committed 2-Year Advances; and
(c) the
undrawn face amount of all outstanding Letters of Credit.

2

 

     1.9 Bank Debt: all amounts owing under the 2-Year Notes, fees, Borrower’s
obligations to purchase Bank Equity Interests, Funding Losses and all interest,
expenses, charges and other amounts payable by Borrower pursuant to the Loan
Documents.

     1.10 Banking Day: any day (a) other than a Saturday or Sunday and other than
a day which is a Federal legal holiday or a legal holiday for banks in the
States of
Colorado or New York, and (b) if such day relates to a borrowing of, a
payment or
prepayment of principal of or interest on, a continuation of or conversion
into, or a
LIBO Rate Period for, a LIBO Rate Loan, or a notice by Borrower with
respect to any
such borrowing, payment, prepayment, continuation, conversion, or LIBO
Rate Period,
on which dealings in U.S. Dollar deposits are carried out in the London interbank
market.

     1.11 Base Rate: a rate of interest per annum equal to the “prime rate” as
published from time to time in the Eastern Edition of the Wall Street
Journal as the
average prime lending rate for seventy-five percent (75%) of the United
States’ thirty
(30) largest commercial banks, or if the Wall Street Journal shall cease
publication or
cease publishing the “prime rate” on a regular basis, such other regularly published
average prime rate applicable to such commercial banks as is acceptable to the
Administrative Agent in its reasonable discretion.

     1.12 Borrower’s Account: shall mean Borrower’s account #36270092 at
CoBank, ACB, Greenwood Village, Colorado (ABA #307088754).

     1.13 Borrower Benefit Plan: means (a) any funded “employee welfare benefit
plan,” as that term is defined in Section 3(1) of ERISA; (b) any
“multiemployer plans,”
as defined in Section 3(37) of ERISA; (c) any “employee pension benefit
plan” as
defined in Section 3(2) of ERISA; (d) any “employee benefit plan”, as such
term is
defined in Section 3(3) of ERISA; (e) any “multiple employer plan” within
the meaning
of Section 413 of the Code; (f) any “multiple employer welfare
arrangement” within the
meaning of Section 3(40) of ERISA; (g) a “voluntary employees’ beneficiary
association” within the meaning of Section 501(c)(9) of the Code; (h) a
“welfare benefit
fund” within the meaning of Section 419 of the Code; or (i) any employee
welfare
benefit plan within the meaning of Section 3(1) of ERISA for the benefit
of retired or
former employees, which is maintained by the Borrower or in which Borrower
participates or to which Borrower is obligated to contribute.

     1.14 Borrower Pension Plan: means each Borrower Benefit Plan that is an
“employee pension benefit plan” as defined in Section 3(2) of ERISA that
is intended to
satisfy the requirements of Section 401 (a) of the Code.

     1.15 Capital Leases: means any lease of property (whether real, personal or
mixed) by a Person which has been or should be, in accordance with GAAP,
reflected
on the balance sheet of such Person as a capital lease.

3

 

     1.16 Closing Date: that date, which must occur on or before December 17,
2003, on which the Administrative Agent, the Syndication Parties, and
Borrower have
executed all Loan Documents to which they are parties and on which the
conditions set
forth in Section 9.1 of this Credit Agreement have been met.

     1.17 Code: means the Internal Revenue Code of 1986, as amended.

     1.18 Committed Letter of Credit Fee: shall mean a fee equal to 112.5 basis
points multiplied by the face amount of the Committed Letter of Credit.

     1.19 Committed 2-Year Advances: the principal amount of all 2-Year Facility
Advances which any Syndication Party is obligated to make as a result of
(a) such
Syndication Party having received a 2-Year Funding Notice pursuant to
Section 2.3
hereof, or (b) if such Syndication Party is the Overnight Lender, Borrower
having made
an Overnight Advance Request pursuant to Section 2.5 hereof, but which, in
either case,
has not been funded.

     1.20 Commitment Fee Factor: shall mean 25 basis points.

     1.21 Compliance Certificate: a certificate of the chief financial officer or
corporate treasurer of Borrower acceptable to the Administrative Agent and
in the form
attached hereto as Exhibit 1.21.

     1.22 Cooperative: means Cooperative Refining, LLC, a limited liability
company formed under the laws of the state of Delaware and a Subsidiary of
Borrower.

     1.23
[INTENTIONALLY OMITTED]

     1.24 Debt: for any period means, without duplication, all of the
following
indebtedness of Borrower and Cooperative: (a) the current portion of all
long term
debt; (b) all long term debt; (c) all obligations under Capital Leases;
(d) obligations
under the 2-Year Loan; and (e) all reimbursement obligations under all
Letter of Credit,
and including any of the foregoing created or assumed by such Person
either directly or
indirectly, including obligations secured by liens upon property of such Person and
upon which such Person customarily pays the interest.

     1.25 Default Interest Rate: a rate of interest equal to 200 basis points in excess
of the Base Rate which would otherwise be applicable on the 2-Year Loans.

     1.26 EBIT: for any period the net income of the Borrower and Cooperative
calculated in accordance with GAAP plus the sum of the amounts of (a)
Interest
Expense, plus (b) federal and state income taxes, plus (c) extraordinary
losses, minus
(d) extraordinary gains, minus (e) non-cash patronage income, to the
extent, in each
case as charged against (or added to, as the case may be) revenues to
arrive at net
income for such period, all as determined by GAAP, minus (f) cash
patronage dividends
paid.

4

 

     1.27 EBITDA: for any period the net income of the Borrower and
Cooperative
calculated in accordance with GAAP plus the sum of the amounts of (a)
Interest
Expense, plus (b) federal and state income taxes, plus (c) extraordinary
losses, plus (d)
depreciation and amortization expenses, minus (e) extraordinary gains,
minus (f) non-
cash patronage income, to the extent, in each case as charged against (or
added to, as
the case may be) revenues to arrive at net income for such period, all as
determined by
GAAP, minus (g) cash patronage dividends paid.

     1.28 Environmental Laws: any federal, state, or local law, statute, ordinance,
rule, regulation, administration order, or permit now in effect or
hereinafter enacted,
pertaining to the public health, safety, industrial hygiene, or the
environmental
conditions on, under or about the Collateral, including, without
limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as
amended, 42 U.S.C. 9601-9657 (“CERCLA”) and the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901-6987 (“RCRA”).

     1.29 ERISA Affiliate: means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section
414(b) of the Code) as Borrower or is under common control (within the
meaning of
Section 414(c) of the Code) with Borrower, provided, however, that for
purposes of
provisions herein concerning minimum funding obligations (imposed under
Section 412
of the Code or Section 302 of ERISA), the term “ERISA Affiliate” shall
also include
any entity required to be aggregated with Borrower under Section 414(m) or
414(o) of
the Code.

     1.30 Excess Working Capital: shall mean the amount of Borrower’s Working
Capital in excess of $20,000,000.00.

     1.31 Fiscal Quarter: each three (3) month period beginning on the first day of
each of the following months: September, December, March, and June.

     1.32 Fiscal Year: a year commencing on September 1 and ending on August
31.

     1.33 Funding Share: shall mean the amount of any Advance which any
Syndication Party is required to fund, which shall be determined as
follows: (a) the
amount of such Advance multiplied by such Syndication Party’s Individual
2-Year Pro
Rata Share as of, but without giving effect to, such Advance; and (b) for
an Overnight
Advance, the amount determined as provided in Section 2.5 hereof.

     1.34 GAAP: generally accepted accounting principles in the United States of
America, applied consistently, as in effect from time to time.

     1.35 Good Faith Contest: means the contest of an item if (a) the item is
diligently contested in good faith by appropriate proceedings timely
instituted, (b)
either the item is (i) bonded or (ii) adequate reserves are established
with respect to the
contested item if and to the extent required in accordance with GAAP, (c)
during the

5

 

period of such contest, the enforcement of any contested item is effectively
stayed, and (d) the failure to pay or comply with the contested item could not
reasonably be expected to result in a Material Adverse Effect.

     1.36 Governmental Authority: means any nation or government, any state or
 other political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     1.37 Hazardous Substances: dangerous, toxic or hazardous pollutants,
contaminants, chemicals, wastes, materials or substances, as defined in or
governed by
the provisions of any Environmental Laws or any other federal, state or
local law,
statute, code, ordinance, regulation, requirement or rule relating thereto
(“Environmental Regulations”), and also including urea formaldehyde,
polychlorinated biphenyls, asbestos, asbestos-containing materials,
nuclear fuel or
waste, and petroleum products, or any other waste, material, substances,
pollutant or
contaminant which would subject an owner of property to any damages,
penalties or
liabilities under any applicable Environmental Regulations.

     1.38 Indebtedness: means as to any Person: (a) indebtedness or liability of
such Person for borrowed money, or for the deferred purchase price of
property or
services (including trade obligations); (b) obligations of such Person as
lessee under
Capital Leases; (c) obligations of such Person arising under bankers’ or
trade
acceptance facilities; (d) all guarantees, endorsements (other than for
collection or
deposit in the ordinary course of business), and other contingent
obligations of such
Person to purchase any of the items included in this definition, to
provide funds for
payment, to supply funds to invest in any other Person, or otherwise to
assure a creditor
of another Person against loss; (e) all obligations secured by a lien on
property owned
by such Person, whether or not the obligations have been assumed; and (f)
all
obligations of such Person under any agreement providing for an interest
rate swap,
cap, cap and floor, contingent participation or other hedging mechanisms
with respect
to interest payable on any of the items described in this definition.

     1.39 Individual Outstanding 2-Year Obligations: shall mean, with respect to
any Syndication Party, the sum of (a) the aggregate outstanding principal
amount of all
Advances made by such Syndication Party under the 2-Year Facility
(including, without
duplication, Overnight Advances made by such Syndication Party in its
capacity as an
Overnight Lender); plus (b) the amount determined by multiplying (i) such
Syndication
Party’s Individual 2-Year Pro Rata Share times (ii) the undrawn face
amount of all
outstanding Committed Letters of Credit; plus (c) the undrawn face amount
of all
outstanding Negotiated Letters of Credit issued by such Syndication Party;
plus (d) all
of such Syndication Party’s Committed 2-Year Advances.

     1.40 Individual 2-Year Commitment: shall mean with respect to any
Syndication Party, the amount shown as its Individual 2-Year Commitment on
Schedule
1 hereto, subject to adjustment in the event of the sale of all or a
portion of a
Syndication Interest in accordance with Section 14.25 hereof.

6

 

     1.41 Individual 2-Year Lending Capacity: shall mean with respect to any
Syndication Party the amount at any time of its Individual 2-Year
Commitment less its
Individual Outstanding 2-Year Obligations.

     1.42 Individual 2-Year Pro Rata Share: shall mean with respect to any
Syndication Party a fraction, expressed as a percentage (rounded to 9
decimal points),
where the numerator is such Syndication Party’s Individual 2-Year
Commitment less
such Syndication Party’s Individual Outstanding 2-Year Obligations; and
the
denominator is the Aggregate 2-Year Commitment less the sum of the
Individual
Outstanding 2-Year Obligations of all of the Syndication Parties,
determined (a) in the
case of LIBO Rate Loans, at 12:00 noon (Eastern time) on the Banking Day
Borrower
delivers a 2-Year Borrowing Notice pursuant to which Borrower requests
such LIBOR
Loan, and (b) in all other cases, 12:00 noon (Eastern time) on the Banking Day
Borrower delivers a 2-Year Borrowing Notice or requests a Letter of Credit.

     1.43 Interest Expense: means, for any period, all cash paid, accrued, and
capitalized for fees and interest expense of Borrower and Cooperative as
measured in
accordance with GAAP.

     1.44 Investment: means, with respect to any Person, (a) any loan or advance
by such Person to any other Person, (b) the purchase or other acquisition
by such Person
of any capital stock, obligations or securities of, or any capital
contribution to, or
investment in, or the acquisition by such Person of all or substantially
all of the assets
of, or any interest in, any other Person, (c) any performance or standby
letter of credit
where (i) that Person has the reimbursement obligation to the issuer, and
(ii) the
proceeds of such letter of credit are to be used for the benefit of any
other Person, (d)
the agreement by such Person to make funds available for the benefit of
another Person
to either cover cost overruns incurred in connection with the construction
of a project or
facility, or to fund a debt service reserve account, (e) the agreement by
such Person to
assume, guarantee, endorse or otherwise be or become directly or
contingently
responsible or liable for the obligations or Debts of any other Person
(other than by
endorsement for collection in the ordinary course of business), (f) an
agreement to
purchase any obligations, stocks, assets, goods or services but excluding
an agreement
to purchase any assets, goods or services entered into in the ordinary
course of
business, (g) an agreement to supply or advance any funds, assets, goods
or services, or
(h) an agreement to maintain or cause such Person to maintain a minimum
working
capital or net worth or otherwise to assure the creditors of any Person against loss.

     1.45 Issuance Fee: shall be an amount equal to 1/8% of the face amount of the
Letter of Credit.

     1.46 Letters of Credit: shall mean collectively Negotiated Letters of Credit and
Committed Letters of Credit.

     1.47 Letter of Credit Bank: shall mean CoBank, ACB, Greenwood Village,
Colorado.

7

 

     1.48 LIBO Rate: (a) the rate quoted by the British Bankers’ Association
at
11:00 A.M. London Time on the day which is two (2) Banking Days prior to the
first day of each LIBO Rate Period for the offering of U.S. dollar deposits in
the London interbank market for the LIBO Rate Period selected by Borrower as
published by Bloomberg or another major information vendor listed on the
British Banker’s Association’s official website (rounded upward to the nearest
thousandth), (b) divided by a percentage equal to 100% minus the stated maximum
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable on such date to
any member bank of the Federal Reserve System in respect of “Eurocurrency
liabilities” as defined in Regulation D (or any successor category of
liabilities under Regulation D).

     1.49 LIBOR Margin: shall mean 112.5 basis points.

     1.50 Lien: means with respect to any asset any mortgage, deed of trust,
pledge,
security interest, hypothecation, assignment for security purposes,
encumbrance, lien
(statutory or other), or other security agreement or charge, or
encumbrance of any kind
or nature whatsoever (including, without limitation, any conditional sale,
Capital Lease
or other title retention agreement related to such asset).

     1.51 Loan Documents: this Credit Agreement, the 2-Year Notes, the Security
Documents.

     1.52 Material Adverse Effect: means: (a) a material adverse effect on the
financial condition, results of operation, business or property of
Borrower; or (b) a
material adverse effect on the ability of Borrower to perform its
obligations under this
Credit Agreement and the other Loan Documents; or (c) the ability of the
Administrative Agent or the Syndication Parties to enforce their rights
and remedies
against Borrower under the Loan Documents.

     1.53 Material Agreements: all agreements of Borrower, the termination or
breach of which, based upon Borrower’s knowledge as of the date of
making any
representation with respect thereto, would have a Material Adverse Effect.

     1.54 Member: shall mean each of the following Persons: Cenex Harvest States
Cooperatives; Growmark, Inc.; and MFA Oil Company.

     1.55 Member Loan: means loans made from time to time by Borrower to a
Member which meet the requirements and limits contained in Section
11.13 hereof.

     1.56 Member Percentage: shall mean the following:

	 	 	For Cenex Harvest States Cooperatives – 74.453%

For Growmark, Inc. – 18.602%
 For MFA Oil Company – 6.945%.

8

 

     1.57 Member Product Receivables: shall mean all accounts receivable
arising
out of Borrower’s sale of inventory to the following: Cenex Harvest States
Cooperatives, Growmark, Inc., and MFA Oil, Inc.

     1.58 Multiemployer Plan: means a Plan defined as such in Section 3(37) of
ERISA.

     1.59 Net Income: means for any period the net after tax income (or loss) of
Borrower for such period determined in accordance with GAAP; provided that
there
shall be excluded from such calculation any extraordinary gains or
extraordinary losses.

     1.60 Net Worth: means the total assets of Borrower (as determined in
accordance with GAAP) minus the total liabilities of Borrower (as
determined in
accordance with GAAP).

     1.61 Operating Lease: means any lease of property (whether real, personal or
mixed) by a Person under which such Person is lessee, other than a Capital Lease.

     1.62 Organization Documents: in the case of a corporation, its articles or
certificate of incorporation and bylaws; in the case of a partnership, its
partnership
agreement and certificate of limited partnership, if applicable; in the
case of a limited
liability company, its articles of organization and its operating agreement.

     1.63 Overnight Funding Commitment: shall mean $5,000,000.00.

     1.64 Overnight Lender: shall mean CoBank.

     1.65 Patronage Refunds: shall mean “Patronage Refunds” as so identified, and
as determined from time to time, by a resolution of Borrower’s Board of
Directors
pursuant to the provisions and limitations of Borrower’s Articles of
Incorporation and
Bylaws.

     1.66 Person: any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited
liability company,
cooperative association, institution, or government or governmental agency
(whether
national, federal, state, provincial, country, city, municipal or
otherwise, including
without limitation, and instrumentality, division, agency, body or
department thereof),
or other entity.

     1.67 Plan: means any plan, agreement, arrangement or commitment which is
an employee benefit plan, as defined in Section 3(3) of ERISA, maintained
by Borrower
or any Subsidiary or any ERISA Affiliate or with respect to which Borrower
or any
Subsidiary or any ERISA Affiliate at any relevant time has any liability
or obligation to
contribute.

9

 

     1.68 Potential Default: any event, other than an event described in
Section 13.1 (a) hereof, which with the giving of notice or lapse of time, or
both, would become an Event of Default.

     1.69 Principal Agreements: means each of the following: (a) the Refining
Operating and Product output Purchase Agreement dated September 1, 1999 by
and
between Cooperative Refining LLC, Farmland Industries, and Borrower; and
(b) the
Personnel Lease Agreement dated September 1, 1999 by and between Borrower,
Cooperative Refining LLC, and Farmland Industries.

     1.70 Prohibited Transaction: means any transaction prohibited under Section
406 of ERISA or Section 4975 of the Code.

     1.71 Quarter: the quarters of the calendar year commencing as of January
1,
April 1, July 1 and October 1.

     1.72 Reportable Event: means any of the events set forth in Section 4043(b) of
ERISA or in the regulations thereunder.

     1.73 Required Lenders: shall mean Syndication Parties whose Individual 2-
Year Commitments constitute fifty one percent (51%) of the 2-Year
Aggregate
Commitment. Pursuant to Section 14.26 hereof, Voting Participants shall,
under the
circumstances set forth therein, be entitled to voting rights and to be included in
determining whether certain action is being taken by the Required Lenders.

     1.74 Restricted Payments: means any dividend or other distribution (whether
in cash, securities or other property), including any cash patronage
refunds to patrons or
members, with respect to any shares of any class of capital stock or other
equity
interests of, or cooperative membership interest or accounts with,
Borrower or an
Subsidiary, or any payment (whether in cash, securities or other

property), including
any sinking fund or similar deposit, on account of the purchase,
redemption, retirement,
revolvement, acquisition, cancellation or termination of any such shares
of capital
stock, other equity interest or cooperative membership interest of
Borrower or any
option, warrant or other right to acquire any such shares of capital
stock, other equity
interest or cooperative membership interest of Borrower.

     1.75 Security Documents: the security agreements, financing statements, and
other documents executed by Borrower to secure its obligations hereunder,
under the 2-
Year Notes, and under the other Loan Documents.

     1.76 Subsidiary: means with respect to any Person: (a) any corporation in
which such Person, directly or indirectly, (i) owns more than fifty
percent (50%) of the
outstanding stock thereof, or (ii) has the power under ordinary
circumstances to elect at
least a majority of the directors thereof, or (b) any partnership,
association, joint
venture, limited liability company, or other unincorporated organization
or entity with
respect to which such Person, directly or indirectly, (i) owns more than
fifty percent
(50%) of the equity interest thereof, or (ii) directly or indirectly owns
an equity interest

10

 

in an amount sufficient to control the management thereof. All of
Borrower’s Subsidiaries owned as of the Closing Date are set forth on
Exhibit 1.76 hereto.

     1.77 Subordinated Member Loans: means loans from member owners of
Borrower to Borrower so long as payment thereof is subordinated to all
amounts owing
under the Loan Documents in a manner (including documentation)
satisfactory to the
Administrative Agent.

     1.78 Syndication Parties: shall mean those entities listed on Schedule 1 hereto
as having an Individual 2-Year Commitment, including CoBank in its role as
a
Syndication Party hereunder, but not in its role as the Administrative
Agent, hereunder,
and such Persons as shall from time to time execute a Syndication
Acquisition
Agreement substantially in the form of Exhibit 14.25 hereto signifying
their election to
purchase all or a portion of the Syndication Interest of any Syndication
Party, in
accordance with Section 14.25 hereof, and to become a Syndication Party
hereunder.

     1.79 2-Year Availability Period: shall mean the period commencing on the
Closing Date and expiring on the 2-Year Maturity Date.

     1.80 2-Year Facility: shall be a reference to the provisions hereof under which
Advances are made and Letters of Credit are issued.

     1.81 2-Year Loan or Loans: shall mean the loan or loans represented by
Advances (including Overnight Advances) made under the 2-Year Facility
pursuant to
this Credit Agreement.

     1.82 2-Year Maturity Date: December 16, 2005.

     1.83 2-Year Note or Notes: the promissory notes executed by Borrower
pursuant to Section 2.4 hereof, and all amendments, renewals,
substitutions and
extensions thereof.

     1.84 Working Capital: Current assets (determined in accordance with GAAP)
minus current liabilities (determined in accordance with GAAP).

     The following terms are defined in portions of this Credit Agreement
other than Article 1:

	 	 	 
	Additional Costs

	 	Section 15.12
	Administrative Agent

	 	Introductory paragraph
	Administrative Fee

	 	Subsection 4.5.2
	Advances

	 	Section 2.1
	Advance Payment

	 	Section 14.1
	Authorized Officer

	 	Subsection 9.1.11
	Bank Equity Interests

	 	Article 6
	Base Rate Loan

	 	Subsection 4.1.1
	Borrower

	 	Introductory paragraph

11

 

	 	 	 
	Business Plan

	 	Subsection 10.2.10
	Cash Collateral Account

	 	Section 3.6
	CERCLA

	 	Section 1.29
	Change in Law

	 	Subsection 4.2.2
	CoBank

	 	Introductory paragraph
	CoBank Term Loan

	 	Subsection 9.1.12
	Collateral

	 	Section 7.1
	Committed Letter of Credit

	 	Section 3.1
	Commitment Fee

	 	Subsection 4.5.1
	Contributing Syndication Parties

	 	Section 14.3
	Credit Agreement

	 	Introductory paragraph
	Default Collateral

	 	Section 7.1
	Delinquency Interest

	 	Section 14.3
	Delinquent Amount

	 	Section 14.3
	Delinquent Syndication Party

	 	Section 14.3
	ERISA

	 	Section 8.10
	Environmental Regulations

	 	Section 1.38
	Event of Default

	 	Section 13.1
	Event of Syndication Default

	 	Subsection 14.28.1
	Fee Letter

	 	Subsection 9.1.8
	First Amendment

	 	Recitals
	Funding Losses

	 	Section 5.7
	Funding Loss Notice

	 	Section 5.7
	Indemnified Agency Parties

	 	Section 14.18
	Intellectual Property

	 	Section 8.18
	Indemnified Parties

	 	Section 12.1
	LC Request

	 	Subsection 3.1.1
	LIBO Rate Loan

	 	Subsection 4.1.2
	LIBO Rate Period

	 	Subsection 4.1.2
	LIBO Request

	 	Subsection 4.1.2
	Licensing Laws

	 	Section 8.4
	Negotiated LC Request

	 	Subsection 3.3.1
	Negotiated Letter of Credit

	 	Section 3.3
	Original Credit Agreement

	 	Recitals
	Overnight Advance

	 	Section 2.5
	Overnight Advance Request

	 	Section 2.5
	Overnight Maturity Date

	 	Section 2.5
	Overnight Rate

	 	Section 2.5
	Payment Account

	 	Section 14.9
	Payment Distribution

	 	Section 14.9
	PBGC

	 	Section 8.10
	Permitted Encumbrances

	 	Section 8.12
	RCRA

	 	Section 1.29
	Regulatory Change

	 	Section 15.12
	Required Licenses

	 	Section 8.9

12

 

	 	 	 
	Successor Agent

	 	Section 14.21
	Syndication Acquisition Agreement

	 	Section 14.25
	Syndication Interest

	 	Section 14.1
	Syndication Party Advance Date

	 	Section 14.2
	The Amendments

	 	Recitals
	Third Amendment

	 	Recitals
	Transfer

	 	Section 14.25
	2002 Restated Credit Agreement

	 	Recital B CHECK
	2-Year Borrowing Notice

	 	Section 2.3
	2-Year Funding Notice

	 	Section 2.3
	2-Year Note(s)

	 	Section 2.4
	Voting Participants

	 	Section 14.26
	Wire Instructions

	 	Section 14.27

ARTICLE
2.   2-YEAR LOAN

     2.1  2-Year Loan. On the terms and conditions set forth in this Credit
Agreement, and so long as no Event of Default or Potential Default has
occurred (or if
an Event of Default has occurred, it has been waived in writing by the
Administrative
Agent), each of the Syndication Parties severally agrees to advance funds
hereunder
(“Advances”) to Borrower during the 2-Year Availability Period in an
aggregate
principal amount outstanding at any time of up to the Aggregate 2-Year
Commitment,
subject to the following limits:

            2.1.1 Individual 2-Year Lending Capacity. No Syndication Party shall be
required or permitted to make Advances which would exceed its Individual
2-Year
Lending Capacity as in effect at the time of the Administrative Agent’s
receipt of the
Borrowing Notice requesting such Advance.

            2.1.2 Individual 2-Year Pro Rata Share. No Syndication Party shall be
required or permitted to make Advances under the 2-Year Loan in excess of
an amount
equal to its Individual 2-Year Pro Rata Share multiplied by the amount of
the requested
Advance. Each Syndication Party severally agrees to fund its Individual
2-Year Pro
Rata Share of each Advance, except as provided in Section 2.5 hereof
regarding
Overnight Loans.

     2.2 Available 2-Year Amount. Borrower shall not be entitled to request an
Advance under the 2-Year Loan in an amount which would exceed the
Available 2-Year
Amount.

     2.3 Borrowing Notice. Borrower shall give the Administrative Agent prior
written notice by facsimile (effective upon receipt) of each request for
an Advance on or before 12:00 noon (Eastern Time) at least one (1) Banking Day (for Base
Rate Loans) or three (3) Banking Days (for LIBO Rate Loans) prior to the date
of making such Advance (subject to the minimum amount requirements of clause (y)
below). Each
2-Year Borrowing Notice must be in substantially the form of Exhibit 2.3
hereto (“2-

13

 

Year Borrowing Notice”) and must specify (w) the amount of such Advance, (x)
the proposed date of making such Advance, (y) whether Borrower requests that
the Advance will bear interest at (i) the Base Rate (the principal amount that
is to bear interest at the Base Rate must be a minimum of $1,000,000.00 and in
incremental multiples of $1,000,000.00), or (ii) the LIBO Rate (the principal
amount that is to bear interest at the LIBO Rate must be a minimum of
$1,000,000.00 and in incremental multiples of $1,000,000.00), and (z) in the
case of a LIBO Rate Loan, the initial LIBO Rate Period applicable thereto. The
Administrative Agent shall, on or before 1:00 P.M. (Eastern Time) of the same
Banking Day, notify each Syndication Party (“2-Year Funding Notice”) of its
receipt of each such 2-Year Borrowing Notice and the amount of such Syndication
Party’s Funding Share thereunder. Not later than 2:00 P.M. (Eastern Time) on
the date of an Advance, each Syndication Party will make available to the
Administrative Agent at the Administrative Agent’s Office, in immediately
available funds, such Syndication Party’s Funding Share of such Advance. After
the Administrative Agent’s receipt of such funds, but not later than 3:00 P.M.
(Eastern Time), and upon fulfillment of the applicable conditions set forth in
Article 9 hereof, the Administrative Agent will make such Advance available to
Borrower, in immediately available funds, and will transmit such funds by wire
transfer to Borrower’s Account.

     2.4 Promissory Notes. Borrower’s obligations to each Syndication Party
under the 2-Year Loan, including Borrower’s payment obligations with
respect to all Advances made by each Syndication Party and all Overnight Advances made by the
Overnight Lender shall be evidenced by, and repaid with interest in accordance with, a
promissory note of Borrower, in substantially the form of Exhibit 2.4
hereto, duly completed, in the stated maximum principal amount equal to such
Syndication Party’s Individual 2-Year Commitment, dated the date such Syndication Party
becomes a Syndication Party, payable to such Syndication Party for the account of
its Applicable Lending Office, and maturing as to principal on the 2-Year Maturity Date
(each a “2-Year Note” and collectively, the “2-Year Notes”).

     2.5 Overnight Advances. In addition to Borrower’s right to request Advances
under Section 2.1 hereof, Borrower may, subject to the terms and
conditions of this Section, at any time before 3:00 P.M. (Eastern Time) on a Banking Day,
request the Overnight Lender to make an Advance to Borrower under the 2-Year Facility
on the same Banking Day (“Overnight Advance”) in accordance with the provisions
of this
Section. Each Banking Day by 11:30 A.M. (Eastern Time) the Overnight
Lender shall
notify Borrower of the interest rate (“Overnight Rate”) that it will
charge on all
Overnight Advances made that Banking Day, which rate may not be in excess
of the
Base Rate. Borrower’s request for an Overnight Advance (“Overnight Advance
Request”) may be made orally or in writing by facsimile (and if orally,
shall be
confirmed in writing on the same Banking Day), must be directed to the
Overnight
Lender, and must specify (a) the amount of such Advance, (b) and the date
when such
Overnight Advance will be due and payable (“Overnight Maturity Date”),
which may
not be later than the fifth Banking Day thereafter. If Borrower submits
an Overnight
Advance Request, the Overnight Lender shall promptly, but not later than
3:30 P.M.

14

 

(Eastern Time) on the same Banking Day, fund such Overnight Advance. Each
Overnight Advance shall bear interest at the applicable Overnight Rate and
shall be payable in full, including interest, on the Overnight Maturity Date
applicable to such Overnight Advance. Such payment may, at Borrower’s
discretion, and subject to the conditions of this Credit Agreement, be made by
an Advance under the 2-Year Facility (in which case, for the purpose of such
Advance, the amount of such Overnight Advance shall not be considered in
determining the Available 2-Year Amount or the Individual 2-Year Obligations of
the Overnight Lender). Overnight Advances shall be made only by the Overnight
Lender. Borrower’s entitlement to receive, and the Overnight Lender’s
obligation to fund, any Overnight Advance shall be subject to the conditions
and limitations set forth in Section 2.1 hereof and applicable to 2-Year
Advances generally, and, in addition, the aggregate outstanding principal
amount of all such Overnight Advances shall not at any time exceed the
Overnight Funding Commitment.

     2.6 Syndication Party Records. Each Syndication Party shall record on its
books and records the amount of each Advance (including Overnight Advances
with
respect to those Syndication Parties which are also Overnight Lenders),
the rate and
interest period applicable thereto, all payments of principal and
interest, and the
principal balance from time to time outstanding. The Syndication Party’s
record
thereof shall be prima facie evidence as to all such amounts and shall be
binding on
Borrower absent manifest error. Notwithstanding the foregoing, Borrower
will never be
required to pay as principal more than the principal amount of the
Advances made by
the Syndication Parties.

     2.7 Use of Proceeds. The proceeds of the 2-Year Loan will be used by
Borrower to refinance working capital debt, to fund Borrower’s purchases
of crude oil
and other working capital requirements, and to fund draws on the Letters
of Credit.
Borrower agrees not to request or use such proceeds for any other purpose.
Borrower
will not, directly or indirectly, use any part of such proceeds for the
purpose of
purchasing or carrying any margin stock within the meaning of Regulation U
of the
Board of Governors or to extend credit to any Person for the purpose of
purchasing or
carrying any such margin stock.

     2.8 Syndication Party Funding Failure. The failure of any Syndication Party
to make its Funding Share of any requested Advance under the 2-Year Loan
on the date
specified for such Advance shall not relieve any other Syndication Party
of its
obligation to make its Funding Share of any such Advance on such date. No
Syndication Party shall be responsible for the failure of any other
Syndication Party to
make any Advance to be made by such other Syndication Party.

     2.9 Overnight Lender Funding Failure. In the event the Overnight Lender
fails to make any requested Overnight Advance to be made by it on the date
specified
for such Advance, and, except where the Overnight Lender and the
Administrative
Agent are the same Person, the Administrative Agent (in that capacity)
will, in its role
and capacity of the Administrative Agent, advance such funds to Borrower
on behalf of

15

 

such Overnight Lender and, therefore, notwithstanding limitations, if any,
contained herein relating to the Administrative Agent in its role as a
Syndication Party, including its Individual 2-Year Commitment, or Individual
2-Year Lending Capacity, as applicable. In the event of any such advance by the
Administrative Agent, the Overnight Lender will be treated as a Delinquent
Syndication Party under Section 14.3 hereof, and the Administrative Agent will
be treated as a Contributing Syndication Party under such Section.

     2.10 Reduction of Aggregate 2-Year Commitment. Borrower may, by written
facsimile notice to the Administrative Agent on or before 10:00 A.M.
(Eastern time) on any Banking Day, make a one time irrevocable reduction in the Aggregate 2-Year
Commitment; provided that (a) such reduction must be in multiples of
one-million
dollars ($1,000,000.00), and (b) Borrower must simultaneously make any
principal
payment necessary (along with any applicable Funding Losses on account of
such
principal payment) so that (i) the principal amount outstanding under the
2-Year
Facility does not exceed the reduced Aggregate 2-Year Commitment on the
date of such
reduction, and (ii) the Individual Outstanding 2-Year Obligations owing to
any
Syndication Party do not exceed the Individual 2-Year Commitment of that
Syndication
Party (after reduction thereof in accordance with the following sentence).
In the event
the Aggregate 2-Year Commitment is reduced as provided in the preceding
sentence,
then the Individual 2-Year Commitment of each Syndication Party shall be
reduced in
the same proportion as the Individual 2-Year Commitment of such
Syndication Party
bears to the Aggregate 2-Year Commitment before such reduction.

     2.11 Treatment of Existing Advances. All amounts outstanding under the 2002
Restated Credit Agreement and the 364-Day Notes executed thereunder shall,
as of the
Closing Date, be treated as outstanding Advances under the 2-Year Loan and
amounts
owing under the 2-Year Notes.

ARTICLE 3. LETTER OF CREDIT FACILITY

     3.1 Committed Letters of Credit. On the terms and conditions set
forth in this Credit Agreement, and so long as no Event of Default or Potential
Default has occurred (or if an Event of Default has occurred, it has been
waived in writing by the Administrative Agent), Borrower may request the
issuance of one or more standby letters of credit (each a “Committed Letter of
Credit”) by the Letter of Credit Bank pursuant to the conditions and
limitations set forth below.

            3.1.1 Request for Committed Letter of Credit. Borrower may request
issuance of a Committed Letter of Credit by sending, not later than 11:00 A.M.
(Eastern time) on a Banking Day, a written request therefore (“LC Request”) to
the Letter of Credit Bank. The LC Request shall set forth (a) the face amount
and expiry date, (b) the beneficiary, (c) the terms thereof, and (d) such other
information as the Letter of Credit Bank shall request. Committed Letters of
Credit shall be issued under the 2-Year Facility. In no event may the expiry
date be later than three (3) Banking Days prior to the 2-Year Maturity Date.
Borrower may not request issuance of a Committed

16

 

Letter of Credit for other than a purpose for which an Advance could be
requested under Section 2.7 hereof.

            3.1.2 Notification of the Administrative Agent. Borrower shall, no later
than 3:00 P.M. (Eastern Time) on the date of issuance, notify the
Administrative Agent by facsimile of the face amount, beneficiary, and expiry
date, with respect to each Committed Letter of Credit issued. The Letter of
Credit Bank shall also, no later than 3:00 P.M. (Eastern Time) on the date of
issuance, notify the Administrative Agent by facsimile of the face amount,
beneficiary, and expiry date with respect to each Committed Letter of Credit
issued by such Letter of Credit Bank.

     3.2 Issuance of Committed Letters of Credit. No later than 12:00 noon
(Eastern Time) on the Banking Day of the receipt by the Letter of Credit
Bank of an LC
Request, the Letter of Credit Bank shall issue the requested Committed
Letter of Credit
for any expiry period from seven (7) days to the latest expiry date allowable under
Subsection 3.1.1 hereof, subject to the following:

            3.2.1 Available Amount. The face amount of the requested Committed
Letter of Credit may not exceed the lesser of (a) an amount which, when
added to the
aggregate Individual Outstanding 2-Year Obligations of all Syndication
Parties, would
exceed the Aggregate 2-Year Commitment, or (b) an amount which, when added
to the
undrawn face amount of all Committed Letters of Credit and Negotiated
Letters of
Credit then outstanding, would exceed the Aggregate LC Commitment.

            3.2.2 Availability. Committed Letters of Credit may be requested for
issuance at any time prior to the date thirty (30) days prior to the
expiration of the 2-Year Maturity Date.

            3.2.3 Fees. Borrower shall, on the date of issuance or reissuance of each
Committed Letter of Credit (a) pay to the Administrative Agent, for the
benefit of all
Syndication Parties in accordance with their Individual 2-Year Pro Rata
Share in effect
on the date of such issuance or reissuance, the Letter of Credit Fee, and
(b) pay to the
Letter of Credit Bank the Issuance Fee for each such Committed Letter of
Credit.

            3.2.4 Treatment of Draws. Each draw under a Committed Letter of Credit
shall be funded by each of the Syndication Parties as an Advance under the
2-Year Loan
in accordance with their respective Individual 2-Year Pro Rata Share as of
the date of
issuance of such Committed Letter of Credit.

     3.3 Negotiated Letters of Credit. On the terms and conditions set forth in this
Credit Agreement, and so long as no Event of Default or Potential Default
has occurred
(or if an Event of Default has occurred, it has been waived in writing by
the
Administrative Agent), Borrower may request a Syndication Party to issue
one or more
standby letters of credit (each a “Negotiated Letter of Credit”) pursuant
to the
conditions and limitations set forth below.

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            3.3.1 Request for Negotiated Letter of Credit. Borrower may request
issuance of a Negotiated Letter of Credit by sending, not later than 12:00
noon (Eastern
time) on a Banking Day, a written request therefore (“Negotiated LC
Request”) to a
Syndication Party. The Negotiated LC Request shall set forth (a) the face
amount and
expiry date, (b) the beneficiary, (c) the terms thereof, and (d) such
other information as
such Syndication Party shall request. Negotiated Letters of Credit shall
be issued under
the 2-Year Facility. In no event may the expiry date be later than three
(3) Banking
Days prior to the 2-Year Maturity Date. Borrower may not request issuance
of a
Negotiated Letter of Credit for other than a purpose for which an Advance
could be
requested under Section 2.7 hereof. Not later than 2:00 P.M. (Eastern
Time) of the
Banking Day on which a Syndication Party receives a Negotiated letter of
Credit
Request (so long as it was received no later than 12:00 noon (Eastern
Time)), it shall
notify Borrower whether it will or will not issue such Negotiated Letter
of Credit and
the amount of fees it will charge in connection with such issuance.

            3.3.2 Notification of the Administrative Agent. Borrower shall, no later
than 3:00 P.M. (Eastern Time) on the date of issuance, notify the
Administrative Agent
by facsimile of the face amount, beneficiary, and expiry date, with
respect to each
Negotiated Letter of Credit issued. Each Syndication Party issuing a
Negotiated Letter
of Credit shall also, no later than 3:00 P.M. (Eastern Time) on the date
of issuance,
notify the Administrative Agent by facsimile of the face amount,
beneficiary, and
expiry date with respect to each Negotiated Letter of Credit issued by
such Syndication Party.

     3.4 Issuance of Negotiated Letters of Credit. No later than 3:00 P.M.
(Eastern Time) on the Banking Day of the receipt by a Syndication Party of a
Negotiated LC Request, such Syndication Party shall, if it has agreed to do so,
issue the requested Negotiated Letter of Credit for any expiry date allowable
under Subsection 3.3.1 hereof, subject to the following:

            3.4.1 Available Amount. The face amount of the requested Negotiated
Letter of Credit may not exceed the lesser of (a) an amount which, when
added to the
aggregate Individual Outstanding 2-Year Obligations of all Syndication
Parties, would
exceed the Aggregate 2-Year Commitment; (b) an amount which, when added to
the
undrawn face amount of all Letters of Credit then outstanding, would
exceed the
Aggregate LC Commitment; or (c) an amount which, when added to the
Individual
Outstanding 2-Year Obligations of the Syndication Party issuing such
Negotiated Letter
of Credit, would exceed the Individual 2-Year Commitment of such
Syndication Party.

            3.4.2 Availability. Negotiated Letters of Credit may be requested for
issuance at any time to the date thirty (30) days prior to the expiration
of the 2-Year
Maturity Date.

            3.4.3 Fees. Borrower shall pay at the time of issuance and reissuance of
each Negotiated Letter of Credit such fees as may be agreed to at the time
of such

18

 

issuance or reissuance by Borrower and the Syndication Party issuing such
Negotiated Letter of Credit.

            3.4.4 Treatment of Draws. Each draw under a Negotiated Letter of Credit
shall be funded by the Syndication Party issuing such Negotiated Letter of
Credit as an
Advance under the 2-Year Loan and shall bear interest at the Base Rate.

            3.4.5 Reimbursement of Draws. In the event a draw under a Negotiated
Letter of Credit is paid on or after the 2-Year Maturity Date, Borrower
shall be obligated to reimburse the Syndication Party issuing such Negotiated
Letter of Credit,
no later than three (3) Banking Days after such draw, for the full amount
of such draw
plus interest to the date of such reimbursement computed at the Base Rate
in effect as
of the date of such draw and each subsequent day until full reimbursement
is made.

     3.5 Reimbursement Obligation Unconditional. All draws under the Letters
of
Credit are absolutely, unconditionally, and irrevocably reimbursable by
Borrower and
(except as provided otherwise in Subsection 3.4.5 hereof with respect to
draws paid on
or after the 2-Year Maturity Date) may be funded as Advances on the 2-Year
Loan,
notwithstanding:

            (a) any lack of validity or enforceability of the Letter of Credit, any of
the documents referenced in the Letter of Credit, or any other agreement
or instrument
related to any such documents;

            (b) the existence of any claim, setoff, defense or other right which
Borrower may have at any time against the beneficiary or any transferee of
the Letter of
Credit (or any person for whom the beneficiary or transferee may be
acting);

            (c) any statement, draft, certificate, or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any
respect, or any statement therein being untrue or inaccurate in any
respect whatsoever
or the draw certificate was otherwise unauthorized, it being expressly
understood and
agreed by Borrower that neither the Letter of Credit Bank (with respect to
Committed
Letters of Credit) nor any Syndication Party (with respect to all Letters
of Credit) shall
have any liability on account of any lack of authorization or forgery and
any recovery
from third parties on account of such lack of authorization or such
forgery shall be the
sole responsibility of Borrower;

            (d) payment of a draw against presentation of a draft or certificate
which does not comply with the terms of the Letter of Credit, unless such
payment is
made as a result of the gross negligence or willful misconduct of the
issuer of the Letter
of Credit.

      3.6 Cash Collateral Account. Upon the occurrence of an Event of Default,
Borrower shall immediately (a) establish an account with the
Administrative Agent, or
with such other financial institution as shall be approved by the Required
Lenders
(“Cash Collateral Account”); (b) deposit by wire transfer funds into such
Cash

19

 

Collateral Account in an amount equal to the undrawn face amount of all Letters
of Credit then outstanding; and (c) take such action, including the execution
and delivery (and, where requested, obtaining the execution thereof by third
parties) of security documents, account control agreements, financing
statements, and/or such other documents as the Administrative Agent may
require, in order to grant to the Administrative Agent, on behalf of the
Syndication Parties, a first lien security interest on such Cash Collateral
Account and the funds on deposit therein. Notwithstanding any other provision
contained in this Credit Agreement or any of the other Loan Documents, (y)
draws made against any Committed Letter of Credit on or after the date of
funding of the Cash Collateral Account shall, at the sole discretion of the
Letter of Credit Bank, be funded out of the funds on deposit in the Cash
Collateral Account rather than out of Advances; and (z) draws made against any
Negotiated Letter of Credit on or after the date of funding of the Cash
Collateral Account shall, at the sole discretion of the issuer of such
Negotiated Letter of Credit, be funded out of the funds on deposit in the Cash
Collateral Account to the extent such funds exceed the undrawn face amount of
all Committed Letters of Credit outstanding as of the day of such draw.

ARTICLE 4. INTEREST AND FEES

     4.1 Interest. Interest on Advances under the 2-Year Loan shall be
calculated as follows:

            4.1.1 Base Rate Option. Unless Borrower requests and receives a LIBO
Rate Loan pursuant to Subsection 4.1.2 hereof, the outstanding principal
balance under
the 2-Year Notes shall bear interest at the Base Rate (each a “Base Rate
Loan”).

            4.1.2 LIBO Rate Option. From time to time, and so long as no Event of
Default has occurred and is continuing, at the request of Borrower
included in a 2-Year
Borrowing Notice, all or any part of the outstanding principal balance
under the 2-Year
Notes may bear interest at the LIBO Rate plus the LIBOR Margin (each a
“LIBO Rate
Loan”) except as provided in Subsection 3.4.4 hereof; provided that
Borrower may
have no more than five (5) LIBO Rate Loans outstanding at any time. To
effect this
option, the Borrowing Notice must specify (a) the principal amount that is
to bear
interest at the LIBO Rate, which must be a minimum of $1,000,000.00 and in
incremental multiples of $1,000,000.00, and (b) the period selected by
Borrower during
which the LIBO Rate is to be applied (“LIBO Rate Period”), which may be
any period
of one, two, three, or six months, but must expire no later than the
2-Year Maturity
Date. In addition, from time to time, and so long as no Event of Default
has occurred
and is continuing, Borrower may convert any Base Rate Loan to a LIBO Rate
Loan, or
continue a LIBO Rate Loan, by making a written request therefore (“LIBO
Request”)
to the Administrative Agent by facsimile, specifying (y) the principal
amount that is to
bear interest at the LIBO Rate, which must be a minimum of $1,000,000.00
and in
incremental multiples of $1,000,000.00 and (z) the LIBO Rate Period
selected by
Borrower during which the LIBO Rate is to be applied. The Administrative
Agent shall
incur no liability in acting upon a request which it believed in good
faith had been made
by a properly authorized representative of Borrower. Following the
expiration of the

20

 

LIBO Rate Period for any LIBO Rate Loan, interest shall automatically accrue at
the Base Rate unless Borrower requests and receives another LIBO Rate Loan as
provided in this Subsection.

     4.2 Additional Provisions for LIBO Rate Loans.

            4.2.1 Limitation on LIBO Rate Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of the LIBO Rate for
any LIBO Rate Period:

            (a) The Administrative Agent determines (which determination shall
be conclusive) that quotations of interest rates in accordance with the
definition of
LIBO Rate are not being provided in the relevant amounts or for the
relevant maturities
for purposes of determining rates of interest for LIBO Rate Loans as
provided in this
Credit Agreement; or

            (b) any Syndication Party determines (which determination shall be
conclusive) that the relevant rates of interest referred to in the
definition of LIBO Rate
upon the basis of which the rate of interest for LIBO Rate Loans for such
LIBO Rate
Period is to be determined do not adequately cover the cost to the
Syndication Parties of
making or maintaining such LIBO Rate Loans for such LIBO Rate Period;

then the Administrative Agent shall give Borrower prompt notice thereof, and so
long as such condition remains in effect, in the case of clause (a) above, the
Syndication Parties, and in the case of clause (b) above, the Syndication Party
that makes the determination, shall be under no obligation to make LIBO Rate
Loans, convert Base Rate Loans into LIBO Rate Loans, or continue LIBO Rate
Loans, and Borrower shall, on the last days of the then current applicable LIBO
Rate Periods for the outstanding LIBO Rate Loans, either prepay such LIBO Rate
Loans or such LIBO Rate Loans shall automatically be converted into a Base Rate
Loan in accordance with Section 4.1 hereof.

            4.2.2 LIBO Rate Loan Unlawful. If any law, treaty, rule, regulation or
determination of a court or governmental authority or any change therein
or in the
interpretation or application thereof subsequent to December 21, 1999
(each, a “Change
in Law”) shall make it unlawful for any of the Syndication Parties to (a)
advance its
Funding Share of any LIBO Rate Loan or (b) maintain its share of all or
any portion of
the LIBO Rate Loans, each such Syndication Party shall promptly, by
telephone (in
which case it must be promptly followed by a writing) or facsimile, notify
the
Administrative Agent thereof, and of the reasons therefor and the
Administrative Agent
shall promptly notify Borrower thereof and shall provide a copy of such
written notice
to Borrower. In the former event, any obligation of any such Syndication
Party to make
available its Funding Share of any future LIBO Rate Loan shall immediately
be canceled (and, in lieu thereof shall be made as a Base Rate Loan), and in
the latter
event, any such unlawful LIBO Rate Loans or portions thereof then
outstanding shall be
converted, at the option of such Syndication Party, to a Base Rate Loan;
provided,

21

 

however, that if any such Change in Law shall permit the LIBO Rate to remain in
effect until the expiration of the LIBO Rate Period applicable to any such
unlawful LIBO Rate Loan, then such LIBO Rate Loan shall continue in effect
until the expiration of such LIBO Rate Period. Upon the occurrence of any of
the foregoing events on account of any Change in Law, Borrower shall pay to the
Administrative Agent immediately upon demand such amounts as may be necessary
to compensate any such Syndication Party for any fees, charges, or other costs
incurred or payable by such Syndication Party as a result thereof and which are
attributable to any LIBO Rate Loan made available to Borrower hereunder, and
any reasonable allocation made by any such Syndication Party among its
operations shall be conclusive and binding upon Borrower absent manifest error.

     4.3 Default Interest Rate. All past due payments on the 2-Year Notes or
of any other Bank Debt (whether as a result of nonpayment by Borrower when
due, at maturity, or upon acceleration) shall bear interest at the Default
Interest Rate from and
after the due date for the payment, or on the date of maturity or
acceleration, as the case
may be.

     4.4 Interest Calculation. Interest on Base Rate Loans and LIBO Rate Loans
shall be calculated on the actual number of days that the principal owing
thereunder is
outstanding with the daily rate calculated on the basis of a year
consisting of 360 days.

     4.5 Fees. Borrower shall pay or cause to be paid the following fees:

            4.5.1 Commitment Fee. A fee for each day during the Availability Period
(“Commitment Fee”) for each Facility (a) payable in arrears by the tenth
calendar day
following the close of each Quarter, and (b) determined for each day
during such
Quarter by (i) multiplying the Commitment Fee Factor (expressed as a daily
rate on the
basis of a year of 360 days) times (ii) the difference between the
Aggregate 2-Year
Commitment and the outstanding principal balance owing under the 2-Year
Loans as of
the close of the Administrative Agent’s business on such day. The
Commitment Fee
shall be payable by Borrower to the Administrative Agent, and the
Administrative
Agent shall distribute the Commitment Fee to the Syndication Parties based
on their
Individual 2-Year Pro Rata Share.

            4.5.2 Administrative Fee. An annual non-refundable non-prorated fee
(“Administrative Fee”) in an amount equal to the “Administrative Agent
Fee” as set
forth in the Fee Letter, payable to and for the account of the
Administrative Agent in
arrears quarterly with the first such payment due on March 31, 2004, and
thereafter on
each quarterly anniversary of such date.

ARTICLE 5. PAYMENTS; FUNDING LOSSES

     5.1 Principal Payments. Except as provided in Subsection 3.4.5
hereof, principal shall be payable under the 2-Year Notes and the 2-Year
Facility on the 2-Year Maturity Date, provided that principal owing on all
Overnight Advances shall be

22

 

payable on the applicable Overnight Maturity Date. Voluntary prepayments may be
made only as provided in Section 5.5 hereof and Mandatory Prepayments must be
made as provided in Section 5.6 hereof.

     5.2 Interest Payments. Except as provided in Subsection 3.4.5
hereof, interest shall be payable as follows: (a) interest on Base Rate Loans
shall be payable monthly in arrears on the first Banking Day of the next month;
(b) interest on LIBO Rate Loans shall be payable on the last day of the LIBO
Rate Period therefor, but no less frequently than each three month anniversary
of the date of the relevant Advance; (c) interest on all 2-Year Loans then
accrued and unpaid shall be payable on the 2-Year Maturity Date; and (d)
interest on Overnight Advances shall be payable on the applicable Overnight
Maturity Date.

     5.3 Application of Principal Payments. Principal payments and prepayments
shall be applied first to Overnight Loans, then to Base Rate Loans, and
then to LIBO
Rate Loans unless Borrower directs otherwise in writing. However, upon
the
occurrence and during the continuance of an Event of Default or Potential
Default, all
principal payments shall be applied, as the Administrative Agent in its
sole discretion
shall determine, to fees, interest or principal indebtedness under the
2-Year Notes, or to
any other Bank Debt.

     5.4 Manner of Payment. All payments, including prepayments, that Borrower
is required or permitted to make under the terms of this Credit Agreement
shall be made
to the Administrative Agent (a) in immediately available federal funds, to
be received
no later than 1:00 P.M. Eastern Time of the date on which such payment is
due (or the
following Banking Day if such date is not a Banking Day) by wire transfer
through
Federal Reserve Bank, Kansas City, in accordance with the Wire
Instructions (or to
such other account as the Administrative Agent may designate by notice);
and (b)
without setoff or counterclaim and free and clear of and without deduction
for any
taxes, levies, impost, duties, charges, fees, deductions, withholding,
compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other authority therein
unless Borrower is required by law to make such deduction or withholding.

     5.5 Voluntary Prepayments. Borrower shall have the right to prepay all or
any part of the outstanding principal balance under the 2-Year Loans at
any time in
integral multiples of $1,000,000.00 (or the entire outstanding balance, if
less) and
subject to a $1,000,000.00 minimum prepayment (or the entire outstanding
balance, if
less), on any Banking Day; provided that in the event of prepayment of any
LIBO Rate
Loan, whether voluntary or on account of acceleration (a) Borrower must
provide three
(3) Banking Days notice to the Administrative Agent prior to making such
prepayment,
and (b) Borrower must, at the time of making such prepayment, pay all
Funding Losses
applicable to such prepayment. Principal amounts paid or prepaid under
the 2-Year
Loans may be reborrowed under the terms and conditions of this Credit
Agreement.

23

 

     5.6 Mandatory Prepayments. In the event the sum of (a) the outstanding
principal under all 2-Year Loans; plus (b) the undrawn face amount of all
outstanding
Letters of Credit; plus (c) the amount of all Committed 2-Year Advances;
plus (d)
without duplication, the amount of all outstanding Overnight Advances,
exceeds the
Aggregate 2-Year Commitment, Borrower shall, within one (1) Banking Day
make a
prepayment in the amount of such excess.

     5.7 Funding Losses. In the event of any prepayment of any LIBOR Loans,
whether voluntary or mandatory, and including on account of acceleration,
Borrower
must, at the time of making such prepayment, pay all Funding Losses
applicable to such
prepayment. “Funding Losses” shall be determined on an individual
Syndication Party
basis as the amount which would result in such Syndication Party being
made whole (on
a present value basis) for the actual or imputed funding losses
(including, without
limitation, any loss, cost or expense incurred by reason of obtaining,
liquidating or
employing deposits or other funds acquired by such Syndication Party to
fund or
maintain such LIBO Rate Loan) incurred by such Syndication Party as a
result of such
prepayment (regardless of whether the Syndication Party actually funded
with such
deposits). In the event of any such prepayment, each Syndication Party
which had
funded the 2-Year Loan being prepaid shall, promptly after being notified
of such
prepayment, send written notice (“Funding Loss Notice”) to the
Administrative Agent
by facsimile setting forth the amount of attributable Funding Losses and
the method of
calculating the same. The Administrative Agent shall notify Borrower
orally or in
writing of the amount of such Funding Losses. A determination by a
Syndication Party
as to the amounts payable pursuant to this Section shall be conclusive
absent manifest
error.

     5.8 Distribution of Principal and Interest Payments. The Administrative
Agent shall distribute payments of principal and interest among the
Syndication Parties
in accordance with their respective Individual 2-Year Pro Rata Shares,
provided that (a)
payments of principal and/or interest with respect to Advances made on
account of
draws under the Negotiated Letter of Credit shall be distributed only to
the Syndication
Party which funded such Advance in accordance with Subsection 3.4.4 or
3.4.5 hereof,
as applicable, and (b) principal and interest payments on Overnight
Advances shall be
remitted only to the Overnight Lender.

ARTICLE 6. BANK EQUITY INTERESTS

     Borrower agrees to purchase such equity interests in CoBank (“Bank Equity
Interests”) as CoBank may from time to time require in accordance with its
bylaws and capital plans as applicable to cooperative borrowers generally. In
connection with the foregoing, Borrower hereby acknowledges receipt, prior to
the execution of this Credit Agreement, of the following with respect to CoBank
(a) the bylaws, (b) a written description of the terms and conditions under
which the Bank Equity Interests are issued, (c) the most recent annual report,
and (d) if more recent than the latest annual report, the latest quarterly
report. CoBank will have a statutory security interest in the

24

 

Bank Equity Interests. CoBank reserves the right to sell participations
under the provisions of Section 14.25 on a non-patronage basis.

ARTICLE 7. SECURITY

     7.1 Borrower’s Assets. As security for the payment and performance of
all obligations of Borrower to the Administrative Agent, to CoBank (including
but not limited to all obligations of Borrower under Article 6 hereof), and to
all present and future Syndication Parties, including but not limited to
principal and interest under the 2-Year Notes, purchases of Bank Equity
Interests, fees, Funding Losses, reimbursements, and all other Bank Debt or
obligations under any of the Loan Documents, Borrower shall, upon the
occurrence and during the continuance of an Event of Default, be obligated to
grant to, and maintain for, the Administrative Agent, for the benefit of CoBank
(to the extent of borrower’s obligations with respect to Bank Equity
Interests), and for the benefit of all present and future Syndication Parties,
a lien and security interest, in all of its Member Product Receivables, whether
now owned or hereafter acquired (“Collateral”), pursuant to the Security
Documents. Such lien on the Collateral shall be a first lien. Borrower shall
execute and deliver to the Administrative Agent, for the benefit of CoBank (to
the extent of borrower’s obligations with respect to Bank Equity Interests),
and for the benefit of all present and future Syndication Parties, the Security
Documents to evidence the security interest of the Administrative Agent, for
the benefit of CoBank (to the extent of borrower’s obligations with respect to
Bank Equity Interests), and for the benefit of all present and future
Syndication Parties, in the Collateral, together with such financing statements
or other documents as the Administrative Agent shall reasonably request in
furtherance of this Section; provided that the Security Documents creating
and/or perfecting the security interest in the Collateral shall not be
effective, and shall expressly provide that they are of no force or effect, and
no financing statements shall be filed or recorded with respect to the
Collateral, unless and until an Event of Default has occurred and is not cured
within twenty (20) days of such occurrence, after which time the security
agreement, the grant of the security interest in the Collateral provided
therein, and all other provisions thereof shall automatically, and without the
necessity of any other act by Borrower or the Administrative Agent or any
notice to Borrower, be in full force and effect and the Administrative Agent
shall thereafter be entitled to file one or more financing statements or take
any other action provided for herein or in the security agreement. Borrower
shall also execute such further security agreements, financing statements,
assignments or other documents as the Administrative Agent shall reasonably
request, in form and substance as the Administrative Agent shall specify (but
consistent with the foregoing provisions of this Section), to establish,
confirm, perfect or provide notice of the security interest of the
Administrative Agent, for the benefit of CoBank (to the extent of borrower’s
obligations with respect to Bank Equity Interests), and for the benefit of all
present and future Syndication Parties, in the Collateral, including Collateral
acquired after the Closing Date. If requested by the Administrative Agent (but
such request may not be made unless and until an Event of Default has occurred
and is not cured within twenty (20) days of such occurrence): (a) Borrower and
the Administrative Agent shall place a legend on any chattel paper

25

 

included in the Collateral showing the security interest therein of the
Administrative Agent, for the benefit of CoBank (to the extent of borrower’s
obligations with respect to Bank Equity Interests), and for the benefit of all
present and future Syndication Parties; and (b) Borrower shall deliver to the
Administrative Agent, for the benefit of CoBank (to the extent of borrower’s
obligations with respect to Bank Equity Interests), and for the benefit of all
present and future Syndication Parties, possession of any instruments and
securities included in the Collateral (duly endorsed to the Administrative
Agent’s reasonable satisfaction).

ARTICLE 8. REPRESENTATIONS AND WARRANTIES

     To induce the Syndication Parties to make the 2-Year Loans, and
recognizing that the Syndication Parties and the Administrative Agent are
relying thereon, Borrower represents and warrants as follows:

     8.1
Organization, Good Standing, Etc. Borrower: (a) is duly organized,
validly existing, and in good standing as a cooperative marketing
association under the
laws of its state of incorporation, which is Kansas; (b) is duly qualified
to do business
and is in good standing in each jurisdiction in which the transaction of
its business
makes such qualification necessary, except to the extent that the failure
to so qualify
has not resulted in, and could not reasonably be expected to cause, a
Material Adverse
Effect; and (c) has all authority and all requisite corporate and legal
power to own and
operate its assets and to carry on its business, and to enter into and
perform the Loan
Documents to which it is a party.

     8.2 Corporate Authority, Due Authorization; Consents. Borrower has taken,
all corporate action necessary to execute, deliver and perform its
obligations under the
Loan Documents to which it is a party and to pay off the CoBank Seasonal
Loan. All
consents or approvals of any Person which are necessary for, or are
required as a
condition of Borrower’s execution, delivery and performance of and under
the Loan
Documents, have been obtained.

     8.3 Litigation. Except as described on Exhibit 8.3 hereto, there are no
pending legal or governmental actions, proceedings or investigations to
which Borrower
is a party or to which any property of Borrower is subject which might
reasonably be
expected to result in any Material Adverse Effect and, to Borrower’s
knowledge, no
such actions or proceedings are threatened or contemplated by any federal, state,
county, or city (or similar unit) governmental agency or any other Person.

     8.4 No Violations. The execution, delivery and performance of its obligations
under the Loan Documents will not: (a) violate any provision of
Borrower’s
Organization Documents, or any law, rule, regulation (including, without
limitation,
Regulations T, U, and X of the Board of Governors of the Federal Reserve
System), or
any judgment, order or ruling of any court or governmental agency; (b)
violate, require
consent under (except such consent as has been obtained), conflict with,
result in a
breach of, constitute a default under, or with the giving of notice or the
expiration of

26

 

time or both, constitute a default under, any existing real estate mortgage,
indenture, lease, security agreement, contract, note, instrument or any other
agreements or documents binding on Borrower or affecting its property; or (c)
violate, conflict with, result in a breach of, constitute a default under, or
result in the loss of, or restriction of rights under, any Required License or
any order, law, rule, or regulation under or pursuant to which any Required
License was issued or is maintained (“Licensing
Laws”).

     8.5 Binding Agreement. Each of the Loan Documents to which Borrower is a
party is, or when executed and delivered, will be, the legal, valid and
binding obligation
of Borrower, enforceable in accordance with its terms, subject only to
limitations on
enforceability imposed by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors’ rights generally and by general
principles of equity.

     8.6 Compliance with Laws. Borrower is in compliance with all federal, state,
and local laws, rules, regulations, ordinances, codes and orders, including without
limitation all Environmental Laws and all Licensing Laws, with respect to which
noncompliance would result in a Material Adverse Effect.

     8.7 Principal Place of Business. Borrower’s place of business, or chief
executive office if it has more than one place of business, and the place
where the
records required by Section 10.1 hereof are kept, is located at 1391 Iron
Horse Road,
McPherson, Kansas 67460.

     8.8 Payment of Taxes. Except as shown on Exhibit 8.8 hereto, Borrower has
filed all required federal, state and local tax returns and has paid all
taxes as shown on
such returns as they have become due, and has paid when due all other
taxes,
assessments or impositions levied or assessed against Borrower or its
business or
properties, except where the failure to make such filing or payment could
not
reasonably be expected to result in a Material Adverse Effect.
Exhibit 8.8 specifically indicates all such taxes which are subject to a Good Faith Contest.

     8.9 Licenses and Approvals. Borrower has ownership of, or license to use, or
has been issued, all franchises, certificates, approvals, permits,
authorities, agreements,
and licenses which are used or necessary to permit it to own its
properties and to
conduct the business as presently being conducted as to which the
termination or
revocation thereof could reasonably be expected to have a Material Adverse
Effect
(“Required Licenses”). Each Required License is identified on Exhibit 8.9
hereto and
is in full force and effect, and there is no outstanding notice of
cancellation or
termination or, to Borrower’s knowledge, any threatened cancellation or
termination in
connection therewith, nor has an event occurred with respect to any
Required License
which, with the giving of notice or passage of time or both, could result
in the
revocation or termination thereof or otherwise in any impairment of
Borrower’s rights
with respect thereto, which impairment could reasonably be expected to
have a Material
Adverse Effect. No consent, permission, authorization, order, or license
of any

27

 

governmental authority, is necessary in connection with the execution,
delivery, performance, or enforcement of and under the Loan Documents to which
Borrower is a party except such as have been obtained and are in full force and
effect.

     8.10 Employee Benefit Plans. Exhibit 8.10 sets forth as of the Closing
Date a
true and complete list of each Borrower Benefit Plan, Borrower Pension
Plan, and
Multiemployer Plan that is maintained by Borrower or any of its
Subsidiaries or in
which Borrower or any of its Subsidiaries participates or to which
Borrower or any of
its Subsidiaries is obligated to contribute, in each case as of the
Closing Date.
Borrower and its Subsidiaries are in compliance in all material respects
with the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations
thereunder (“ERISA”), to the extent applicable to them, and have not received any
notice to the contrary from the Pension Benefit Guaranty Corporation (“PBGC”).

     8.11 Equity Investments. Borrower does not now own any stock or other
voting or equity interest, directly or indirectly, in any Person valued at
the greater of
book value or market value at $5,000,000 or more, other than: (a) the
Bank Equity
Interests, and (b) as set forth on Exhibit 8.11 hereto.

     8.12 Title to Real and Personal Property. Borrower has good and marketable
title to, or valid leasehold interests in, all of its material properties
and assets, real and
personal, including the properties and assets and leasehold interests
reflected in the
financial statements of Borrower referred to in Section 8.13 hereof,
except (a) any
properties or assets disposed of in the ordinary course of business, and
(b) for defects in
title and encumbrances which could not reasonably be expected to result in
a Material
Adverse Effect; and none of the properties of Borrower are subject to any
Lien, except
as permitted by Section 11.3 hereof (“Permitted Encumbrances”). All such
property
is in good operating condition and repair, reasonable wear and tear
excepted, and
suitable in all material respects for the purposes for which it is being
utilized except
where their failure to be in good operating condition could not reasonably
be expected
to result in a Material Adverse Effect. All of the leases of Borrower
which constitute
Material Agreements are in full force and effect and afford Borrower peaceful and
undisturbed possession of the subject matter thereof.

     8.13 Financial Statements. The consolidated balance sheet of Borrower and its
Subsidiaries as of August 31, 2003, and the related consolidated
statements of
operations, cash flows and consolidated statements of capital shares and
equities for the
Fiscal Year then ended, and the accompanying footnotes, together with the
unqualified
opinion thereon, dated August  , 2003 of Pricewaterhouse Coopers LLP,
independent
certified public accountants, copies of which have been furnished to the
Administrative Agent and the Syndication Parties, fairly present in all
material respects the financial condition of Borrower and its Subsidiaries as
at such dates and the results of the operations of Borrower and its
Subsidiaries for the periods covered by such statements, all in accordance with
GAAP consistently applied. Since August 31, 1999, there has been no material
adverse change in the financial condition, results of operations, business or
prospects of Borrower or any of its Subsidiaries. As of the Closing Date,

28

 

there are no liabilities of Borrower or any of its Subsidiaries, fixed or
contingent, which are material but are not reflected in the financial
statements of Borrower and its Subsidiaries referred to above or referred to in
the notes thereto, other than liabilities arising in the ordinary course of
business since August 31, 2003. No information, exhibit, or report furnished by
Borrower or any of its Subsidiaries to the Administrative Agent or the
Syndication Parties in connection with the negotiation of this Credit Agreement
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not materially
misleading in light of the circumstances in which they were made and taken
together with the other information, exhibits and reports furnished to the
Administrative Agent or the Syndication Parties.

     8.14 Environmental Compliance. Borrower and its Subsidiaries have obtained
all permits, licenses and other authorizations which are required under
all applicable
Environmental Laws, except to the extent failure to have any such permit,
license or
authorization could not reasonably be expected to result in a Material
Adverse Effect
(with respect to Borrower or any such Subsidiary). Borrower and its
Subsidiaries are in
compliance with all Environmental Laws and the terms and conditions of the
required
permits, licenses and authorizations, and are also in compliance with all
other
limitations, restrictions, obligations, schedules and timetables contained
in those Laws
or contained in any plan, order, decree, judgment, injunction, notice or
demand letter
issued, entered, promulgated or approved thereunder, except to the extent,
in each case,
failure to comply has not resulted in, and could not reasonably be
expected to result in,
a Material Adverse Effect (with respect to Borrower or any such Subsidiary).

     8.15 Fiscal Year. Each fiscal year of Borrower begins on September 1 of each
calendar year and ends on August 31 of each calendar year.

     8.16 Material Agreements. Neither Borrower nor, to Borrower’s knowledge,
any other party to any Material Agreement, is in default thereunder, and
no facts exist
which with the giving of notice or the passage of time, or both, would
constitute such a
default.

     8.17 Regulations U and X. No portion of any Advance will be used for the
purpose of purchasing, carrying, or making loans to finance the purchase
of, any
“margin security” or “margin stock” as such terms are used in Regulations
U or X of
the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.

     8.18 Intellectual Property. Set forth on Exhibit 8.18 hereto is a
complete and
accurate list of all patents, trademarks, trade names, service marks and
copyrights, and
all applications for any of the foregoing that are owned or licensed by
Borrower
(collectively, “Intellectual Property”) and are registered with any
federal or state
governmental authority and all licenses thereof, showing as of the date
hereof the
jurisdiction in which registered, the registration number, the date of
registration and the
expiration date or, if registration is not yet complete, the date of the
application therefor
and the application number and title, if any, and indicating whether
Borrower owns or

29

 

licenses each such item of Intellectual Property. Borrower owns or licenses all Intellectual Property that it utilizes in its business as presently being
conducted and as anticipated to be conducted, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect on
Borrower. The Intellectual Property is in full force and effect, and Borrower has taken or caused to be taken all action, necessary to maintain the
Intellectual Property in full force and effect and has not taken or failed to take or cause to be taken any action which, with the giving of notice, or the
expiration of time, or both, could result in any such Intellectual Property being revoked, invalidated, modified, or limited.

     8.19 No Default on Outstanding Judgments or Orders. Borrower has satisfied all judgments and Borrower is not in default with respect to any judgment,
writ injunction, decree, rule or regulation of any court, arbitrator or federal, state, municipal or other Governmental Authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, except to the extent such failure to satisfy any or all such judgments or to be in such a default
has not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect.

     8.20 No Default in Other Agreements. Borrower is not a party to any indenture, loan or credit agreement or any lease or other agreement or instrument
or subject to any certificate of incorporation or corporate restriction which has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect. Borrower is not in default in any respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument where such failure to perform, observe or fulfill has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.

     8.21 Labor Disputes and Acts of God. Neither the business nor the properties of Borrower are currently affected by any fire, explosion, accident,
strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the
public enemy or other casualty (whether or not covered by insurance) which has resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.

     8.22 Governmental Regulation. Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Investment Company Act of 1940, the
Interstate Commerce Act, the Federal Power Act or any statute or regulation, in each
case, limiting its ability to incur indebtedness for money borrowed as contemplated
hereby.

     8.23 Solvency. After giving effect to the consummation of each 2-Year Loan
to be made under this Credit Agreement as of the time this representation is given,
Borrower (a) will be able to pay its debts as they become due, (b) will have funds and
capital sufficient to carry on its business and all businesses in which it is about to
engage, and (c) will own property in the aggregate having a value both at fair valuation
and at fair saleable value in the ordinary course of Borrower’s business greater than the

30

 

amount required to pay its Indebtedness, including for this purpose unliquidated, contingent, and disputed claims.

     8.24 Business Plan. The Business Plan will, when submitted to the
Administrative Agent, fairly present in all material respects the forecasted operations
and financial condition of Borrower for the dates covered thereby. At the time of the
submission of the Business Plan there will exist no undisclosed facts known to
Borrower which, if taken into account, would have resulted in any material change in
the Business Plan, and the Business Plan (a) will be, at the time of submission (i) based
upon reasonable estimates and assumptions, all of which will be at the time of
submission, fair in light of then current conditions, and (ii) prepared on the basis of the
assumptions stated therein, and (b) will reflect, when submitted, the reasonable estimate
of Borrower of the results of operations and other information forecasted therein.

     8.25 Disclosure. The representations and warranties contained in this Article 8
and in the other Loan Documents or in any financial statements provided to the
Administrative Agent do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make such representations or warranties not
misleading; and all projections provided to the Administrative Agent were prepared in
good faith based on reasonable assumptions.

ARTICLE 9. CONDITIONS TO ADVANCES

     9.1 Conditions to Closing. The obligation of the Syndication Parties to make any Advances hereunder is subject to satisfaction, in the sole
discretion of the Administrative Agent and the Syndication Parties, of each of the following conditions precedent:

          9.1.1 Loan Documents. The Administrative Agent shall have received a
duly executed original of this Credit Agreement.

          9.1.2 Approvals. The Administrative Agent shall have received evidence
satisfactory to it that all consents and approvals of governmental authorities and third
parties which are with respect to Borrower, necessary for, or required as a condition of
the validity and enforceability of the Loan Documents to which it is a party.

          9.1.3 Good Standing: Organizational Documents. The Administrative
Agent shall have received: (a) good standing certificate (or equivalent), dated no more
than thirty (30) days prior to the Closing Date, for Borrower from the secretary of state
(or equivalent) of its state of incorporation and each state where its business activities
require it to qualify to do business; and (b) a copy of the Organization Documents of
Borrower certified by the Secretary of State of its state of incorporation or, in lieu
thereof, a certificate of Borrower’s corporate secretary that there have been no changes
in Borrower’s Organizational Documents as delivered to the Administrative Agent in
connection with the closing on the Original Credit Agreement.

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          9.1.4 Lien Searches; Financing Statements. Borrower shall have provided
to the Administrative Agent, no later than January 31, 2004, copies of the results of
searches of the filing offices searched in connection with the December 17, 2003
closing and, in addition, of the appropriate filing office in the jurisdiction of
Borrower’s formation, in each case dated no earlier than fourteen (14) days after the
Closing Date, showing that (a) no state or federal tax liens have been filed which
remain in effect against Borrower, and (b) except with respect to Permitted
Encumbrances no financing statements have been filed by any Person which remain in
effect against the Collateral or any inventory the disposition (before or after processing)
of which gives rise to any Member Product Receivable.

          9.1.5 Evidence of Insurance. Borrower shall have provided the
Administrative Agent with insurance certificates and such other evidence, in form and substance satisfactory to the Administrative Agent, of all insurance
required to be maintained by it under the Loan Documents.

          9.1.6 Appointment of Agent for Service. The Administrative Agent shall
have received evidence satisfactory to the Administrative Agent that Borrower has
appointed The Corporation Company (or other Person reasonably acceptable to the
Administrative Agent) to serve as its agent for service of process at such agent’s
Denver, Colorado office, and that The Corporation Company (or other acceptable
Person) has executed its written acceptance of such appointment by Borrower.

          9.1.7 No Material Change. No change shall have occurred in the
condition, financial or otherwise, or operations or prospects of Borrower since
September 30, 1999 which could reasonably be expected to result in a Material Adverse
Effect.

          9.1.8 Fees and Expenses. Borrower shall have paid the Administrative
Agent, by wire transfer of immediately available federal funds all fees set forth in
Section 4.5 hereof and any other fees owing to the Administrative Agent which are due
on the Closing Date (including fees provided for in the Fee Letter dated November 18,
2003 by and between Borrower and the Administrative Agent
(“Fee Letter”), and all
expenses owing pursuant to Section 15.1 hereof.

          9.1.9 Bank Equity Interest Purchase Obligation. Borrower shall have
purchased such Bank Equity Interests as CoBank may require pursuant to Article 6
hereof.

          9.1.10 Opinion of Counsel. Borrower shall have provided a favorable
opinion of its counsel addressed to the Administrative Agent and each of the present
and future Syndication Parties, covering such matters as the Administrative Agent may
reasonably require.

          9.1.11 Evidence of Corporate Action. The Administrative Agent shall
have received in form and substance satisfactory to the Administrative Agent: (a)

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documents evidencing all corporate action taken by Borrower to authorize (including the specific names and titles of the persons authorized to so act (each
an “Authorized Officer”)) the execution, delivery and performance of the Credit Agreement, certified to be true and correct by the corporate Secretary of
Borrower; and (b) a certificate of the corporate Secretary of Borrower, dated the Closing Date, certifying the names and true signatures of the Authorized
Officers.

          9.1.12 Lender Consent. The Administrative Agent shall have received the
consent of CoBank under its existing $57,005,386.07 term loans under the agreement
entitled “Loan Agreement” by and between The St. Paul Bank for Cooperatives
(subsequently merged into CoBank) and Borrower and dated December 14, 1998, and
amended as of August 27, 1999 (“CoBank Term Loan”).

          9.1.13 Compliance Certificate. Borrower shall have provided to the
Administrative Agent a Compliance Certificate effective as of August 31, 2003.

          9.1.14 Further Assurances. Borrower shall have provided and/or executed
and delivered to the Administrative Agent such further assignments, documents or
financing statements, in form and substance satisfactory to the Administrative Agent,
that Borrower is to execute and/or deliver pursuant to the terms of the Loan Documents
or as the Administrative Agent may reasonably request.

     9.2 Conditions to Advance. The Syndication Parties’ obligation to fund each Advance is subject to receipt by the Administrative Agent of a
properly completed 2-Year Borrowing Notice; and the Syndication Parties’ obligation to fund each Advance and the obligation of the Letter of Credit Bank to
issue a Committed Letter of Credit is subject to the satisfaction, in the sole discretion of the Administrative Agent or Letter of Credit Bank, as
applicable, of each of the following conditions precedent, as well as those set forth in Section 9.1 hereof, and each 2-Year Borrowing Request and each LC
Request by Borrower shall constitute a representation by Borrower, upon which the Administrative Agent, Syndication Parties, and Letter of Credit Bank, as
applicable, may rely, that the conditions set forth in this Section have been satisfied and that the amount of the Advance does not exceed the limits set
forth in Sections 2.1 and 2.2 hereof or that the amount of the requested Committed Letter of Credit does not exceed the limits set forth in Section 3.1
hereof, as applicable:

          9.2.1 Member Loans. As of the Advance Date, there shall be no
outstanding Member Loans.

          9.2.2 Default. As of the Advance Date no Event of Default or Potential
Default shall have occurred and be continuing, and the disbursing of the amount of the
requested Advance or requested Committed Letter of Credit shall not result in an Event
of Default or Potential Default.

          9.2.3 Representations and Warranties. The representations and warranties
of Borrower herein shall be true and correct in all material respects on and as of the

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date on which the Advance is to be made or date of issuance of a Committed Letter of Credit as though made on such date. Borrower shall have paid the
Administrative Agent, by wire transfer of immediately available U.S. funds all fees set forth in Section 4.5 hereof and the Fee Letter which are then due
and payable, including all expenses owing pursuant to Section 15.1 hereof.

ARTICLE 10. AFFIRMATIVE COVENANTS

     From and after the date of this Credit Agreement and until the Bank Debt is indefeasibly paid in full, all Letters of Credit have expired or been
fully drawn, the Letter of Credit Bank has no obligation to issue further Letters of Credit, and the Syndication Parties have no obligation to make any
Advance, Borrower agrees that it will observe and comply with the following covenants for the benefit of the Administrative Agent and the Syndication
Parties:

     10.1 Books and Records. Borrower shall at all times keep proper books of
record and account, in which correct and complete entries shall be made of all its
dealings, in accordance with GAAP.

     10.2 Reports and Notices. Borrower shall provide to the Administrative Agent
the following reports, information and notices:

          10.2.1 Annual Financial Statements. As soon as available, but in no event
later than ninety (90) days after the end of any Fiscal Year of Borrower occurring
during the term hereof, one copy of the audit report for such year and the following
accompanying financial statements prepared on a consolidated and consolidating basis
(including all footnotes thereto), including a consolidated balance sheet, a consolidated
statement of earnings, a consolidated statement of capital, and a consolidated statement
of cash flow for Borrower and its Subsidiaries, showing in comparative form the figures
for the previous Fiscal Year, all in reasonable detail, prepared in conformance with
GAAP consistently applied and certified without qualification by
PricewaterhouseCoopers LLP, or other independent public accountants of nationally
recognized standing selected by Borrower and satisfactory to the Administrative Agent,
and to be accompanied by a copy of the management letter of such accountants
addressed to the board of directors of Borrower related to such annual audit. Such
annual financial statements required pursuant to this Subsection shall be accompanied
by a Compliance Certificate signed by Borrower’s Chief Financial Officer, corporate
treasurer, or other officer of Borrower acceptable to the Administrative Agent.

          10.2.2 Quarterly Financial Statements. As soon as available but in no
event more than forty-five (45) days after the end of each Fiscal Quarter (except the last
Fiscal Quarter of Borrower’s Fiscal Year) the following financial statements prepared
on a consolidated and consolidating basis or other information concerning the
operations of Borrower and its Subsidiaries for such Fiscal Quarter, the Fiscal Year to
date, and for the corresponding periods of the preceding Fiscal Year, all prepared in
accordance with GAAP consistently applied: (a) a balance sheet, (b) a summary of

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earnings, (c) a statement of cash flows, and (d) such other statements as the Administrative Agent may reasonably request. Such quarterly financial
statements required pursuant to this Subsection shall be accompanied by a Compliance Certificate signed by Borrower’s Chief Financial Officer, corporate
treasurer, or other officer of Borrower acceptable to the Administrative Agent (subject to normal year end adjustments).

          10.2.3
Notice of Default. As soon as the existence of any Event of Default or Potential Default becomes known to any officer of Borrower, prompt written
notice of such Event of Default or Potential Default, the nature and status thereof, and
the action being taken or proposed to be taken with respect thereto.

          10.2.4 ERISA Reports. As soon as possible and in any event within
twenty (20) days after Borrower or any Subsidiary knows or has reason to know that
any Reportable Event or Prohibited Transaction has occurred with respect to any Plan
or that the PBGC or Borrower or any Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, or that Borrower, any
Subsidiary or any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan, or that a Plan which is a Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning of
Section 4245 of ERISA) or is terminating, a certificate of the Chief Financial Officer or
corporate treasurer of Borrower or such Subsidiary setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination or withdrawal or
reorganization or insolvency and the action Borrower or such Subsidiary proposes to
take with respect thereto, provided, however, that notwithstanding the foregoing, no
reporting is required under this subsection unless the matter(s), individually or in the
aggregate, result, or could be reasonably expected to result, in aggregate obligations or
liabilities of Borrower and/or the Subsidiaries in excess of five million dollars
($5,000,000).

          10.2.5 Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, arbitration and any other proceedings before any
Governmental Authority, affecting Borrower which, if determined adversely to
Borrower, could reasonably be expected to require Borrower to have to pay or deliver
assets having a value of five million dollars ($5,000,000) or more (whether or not the
claim is covered by insurance) or could reasonably be expected to result in a Material
Adverse Effect.

          10.2.6 Notice of Material Adverse Effect. Promptly after Borrower
obtains knowledge thereof, notice of any matter which, alone or when considered
together with other matters, has resulted, or could reasonably be expected to result, in a
Material Adverse Effect.

          10.2.7 Notice of Environmental Proceedings. Without limiting the
provisions of Subsection 10.2.5 hereof, promptly after Borrower’s receipt thereof,
notice of the receipt of all pleadings, orders, complaints, indictments, or other

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communication alleging a condition that may require Borrower or any Subsidiary to undertake or to contribute to a cleanup or other response under
Environmental Regulations, or which seeks penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such laws, or which
claims personal injury or property damage to any person as a result of environmental factors or conditions or which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.

          10.2.8 Regulatory and Other Notices. Promptly after Borrower’s receipt
thereof, copies of any notices or other communications received from any
Governmental Authority with respect to any matter or proceeding the effect of which
could reasonably be expected to have a Material Adverse Effect.

          10.2.9 Adverse Action Regarding Required Licenses and Intellectual
Property. As soon as Borrower learns that any petition, action, investigation, notice of
violation or apparent liability, notice of forfeiture, order to show cause, complaint or
proceeding is pending, or, to the best of Borrower’s knowledge, threatened, to seek to
revoke, cancel, suspend, modify, or limit any of the Required Licenses or any of the
Intellectual Property, prompt written notice thereof. Borrower shall contest any such
action in a Good Faith Contest.

          10.2.10 Annual Business Plan. No later than September 15 of each year, a
copy of Borrower’s annual business plan (“Business Plan”) showing financial
statement forecasts for the next Fiscal Year, and including a summary of capital
expenditures, details of costs, yields and expenses, and other assumptions used in
preparing the forecasts.

          10.2.11 Additional Information. With reasonable promptness, such other
information respecting the condition or operations, financial or otherwise, of Borrower
or any Subsidiary as any Syndication Party may from time to time reasonably request.

     10.3 Eligibility. Borrower shall preserve and maintain its status as an entity
eligible to borrow from CoBank.

     10.4 Maintenance of Existence and Qualification. Borrower shall maintain its
corporate existence in good standing under the laws of its state of organization.
Borrower will qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is necessary in view of its business, operations and
properties except where the failure to so qualify has not and could not reasonably be
expected to result in a Material Adverse Effect.

     10.5 Compliance with Legal Requirements and Agreements. Borrower shall:
(a) comply with all laws, rules, regulations and orders applicable to Borrower or its
business unless such failure to comply is the subject of a Good Faith Contest; and (b)
comply with all agreements, indentures, mortgages, and other instruments to which it is
a party or by which it or any of its property is bound; provided, however, that the
failure of Borrower to comply with this sentence in any instance not directly involving

36

 

the Administrative Agent or a Syndication Party shall not constitute an Event of Default unless such failure would have a Material Adverse Effect.

     10.6 Compliance with Environmental Laws. Without limiting the provisions of
Section 10.5 of this Credit Agreement, Borrower shall, and shall cause each Subsidiary
to, comply in all material respects with, and take all reasonable steps necessary to cause
all persons occupying or present on any properties owned or leased by Borrower (or any
Subsidiary, as applicable) to comply with, all Environmental Regulations, the failure to
comply with which would have a Material Adverse Effect (with respect to Borrower or
any such Subsidiary) or unless such failure to comply is the subject of a Good Faith
Contest.

     10.7 Taxes. Borrower shall cause to be paid when due all taxes, assessments,
and other governmental charges upon it, its income, its sales, its properties, and federal
and state taxes withheld from its employees’ earnings, unless (a) the failure to pay such
taxes, assessments, or other governmental charges could not reasonably be expected to
result in a Material Adverse Effect, or (b) such taxes, assessments, or other
governmental charges are the subject of a Good Faith Contest and Borrower has
established adequate reserves therefor in accordance with GAAP.

     10.8 Insurance. Borrower shall keep all of its insurable property insured at all
times by an insurance carrier or carriers approved by the Administrative Agent, against
all risks covered by a special form policy as well as liability, worker’s compensation,
business interruption, boiler and machinery and such other insurance as the
Administrative Agent may reasonably require, in amounts and with deductibles or
maximum payouts customarily carried by entities in similar lines of business. Borrower
shall also maintain fidelity coverage (including employee dishonesty) on such officers
and employees and in such amounts as customarily carried by corporations engaged in
comparable businesses and comparably situated. The policy or policies evidencing all
insurance referred to in this Section and receipts for the payment of premiums thereon
or certificates of such insurance satisfactory to the Administrative Agent shall be
delivered to and held by the Administrative Agent. All such insurance policies shall
contain a provision requiring at least ten (10) days’ notice to the Administrative Agent
prior to any cancellation for non-payment of premiums and at least forty-five (45) days’
notice to the Administrative Agent of cancellation for any other reason or of
modification or non-renewal. No later than forty (40) days prior to expiration,
Borrower shall give the Administrative Agent (a) satisfactory written evidence of
renewal of all such policies with premiums paid, or (b) a written report as to the steps
being taken by Borrower to renew or replace all such policies, provided that
notwithstanding the receipt of such written report, the Administrative Agent may at any
time thereafter give Borrower written notice to provide the Administrative Agent with
such evidence as described in clause (a), in which case Borrower must do so within ten
(10) days of such notice. Borrower agrees to pay all premiums on such insurance as
they become due, and will not permit any condition to exist which would wholly or
partially invalidate any insurance thereon.

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     10.9 Maintenance of Properties. Borrower shall maintain, keep and preserve
all of its material properties (tangible and intangible) necessary or used in the proper
conduct of its business in good working order and condition, ordinary wear and tear
excepted, and shall cause to be made all repairs, renewals, replacements, betterments
and improvements thereof, all as in the sole judgment of Borrower may be reasonably
necessary so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.

     10.10 Payment of Liabilities. Borrower shall pay all liabilities (including,
without limitation: (a) any indebtedness for borrowed money or for the deferred
purchase price of property or services; (b) any obligations under leases which have or
should have been characterized as Capital Leases; and (c) any contingent liabilities,
such as guaranties, for the obligations of others relating to indebtedness for borrowed
money or for the deferred purchase price of property or services or relating to
obligations under leases which have or should have been characterized as Capital
Leases) as they become due beyond any period of grace under the instrument creating
such liabilities, unless (with the exception of the Bank Debt) (x) the failure to pay such
liabilities within such time period could not reasonably be expected to result in a
Material Adverse Effect, or (y) they are subject to a Good Faith Contest, and such
contesting will not result in a Material Adverse Effect.

     10.11 Inspection. Borrower shall permit the Administrative Agent or any
Syndication Party or their agents, during normal business hours or at such other times
as the parties may agree, to examine, and make copies of or abstracts from, Borrower’s
properties, books, and records, and to discuss Borrower’s affairs, finances, operations,
and accounts with its respective officers, directors, employees, and independent
certified public accountants; provided, that, in the case of each meeting with the
independent accountants Borrower is given an opportunity to have a representative
present at such meeting.

     10.12 Required Licenses; Intellectual Property. Borrower shall duly and
lawfully obtain and maintain in full force and effect all Required Licenses and
Intellectual Property as appropriate for the business being conducted and properties
owned by Borrower at any given time.

     10.13 ERISA. Borrower shall make or cause to be made, and cause each
Subsidiary to make or cause to be made, all payments or contributions to all Plans
covered by Title IV of ERISA, which are necessary to enable those Plans to
continuously meet all minimum funding standards or requirements.

     10.14 Further Assurances. Borrower shall, as may be required from time to time
by the Administrative Agent in accordance with the provisions and limitations of
Section 7.1 hereof, provide such documents as may be necessary or desirable in the
judgment of the Administrative Agent to verify the existence and perfection of the
security interest in the Collateral granted to the Administrative Agent for the benefit of
the Syndication Parties.

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     10.15 Maintenance of Commodity Position. Borrower shall observe risk
management policies, including protection of its commodity inventory holdings or
commitments to buy or sell commodities against adverse price movements through
hedge agreements or otherwise, to minimize losses and protect margins in commodity
production, storage, processing and marketing, which policies shall be consistent with
its existing risk management policies, shall be policies as are recognized as financially
sound and reputable by prudent business persons in the commodity business, and shall
be consistent with risk management policies observed in the petroleum refining and
distribution industry in general.

     10.16 Financial Covenants. Borrower shall maintain the following financial
covenants, measured as an aggregation of the results of Borrower (including Borrower’s
earnings on account of its minority interest in Osage Pipe Line Company and in Kaw
Pipe Line Company) and Cooperative (but no other Subsidiaries):

          10.16.1 Debt to EBITDA. At all times a ratio of Debt divided by EBITDA
of not greater than 3.00 to 1.00, as measured on the basis of the previous consecutive
four Fiscal Quarters.

          10.16.2 Minimum Net Worth. At the end of each Fiscal Quarter, Net
Worth of not less than $340,000,000.00.

          10.16.3 Interest Coverage Ratio. At the end of each Fiscal Quarter
Borrower shall have a ratio of (a) EBIT over the immediately preceding four (4) Fiscal
Quarters, (b) divided by Interest Expense over the immediately preceding four (4)
Fiscal Quarters, of not less than 2.25 to 1.00.

          10.16.4 Minimum Working Capital. At all times Working Capital of not
less than $20,000,000.00.

ARTICLE 11. NEGATIVE COVENANTS

     From and after the date of this Credit Agreement until the Bank Debt is indefeasibly paid in full, all Letters of Credit have expired or been
fully drawn, the Letter of Credit Bank has no obligation to issue further Letters of Credit, and the Syndication Parties have no obligation to make any
Advance, Borrower agrees that it will observe and comply with the following covenants:

     11.1 Borrowing. Borrower shall not create, incur, assume or permit to exist, directly or indirectly, any Indebtedness, except for: (a)
Indebtedness of Borrower arising under this Credit Agreement and the other Loan Documents; (b) trade payables arising in the ordinary course of business;
(c) current operating liabilities (other than for borrowed money) incurred in the ordinary course of business; (d) Indebtedness on the date hereof as set
forth in Exhibit 11.1 attached hereto; (e) Indebtedness arising out of Subordinated Member Loans; (f) a loan, not included within the coverage of clause (e)
of this Section, of up to $150,000,000.00 in the aggregate from one or more Members so long as, through documentation approved by the Administrative Agent

39

 

(which will, at the discretion of the Administrative Agent, require execution thereof by the Members making such loan), such amount is subordinated to all
amounts owing hereunder, and upon the occurrence of an Event of Default hereunder, payment of any principal or interest under such loan from Members is
prohibited until such time as either (i) such Event of Default has been (A) cured to the sole satisfaction of the Administrative Agent prior to the
Administrative Agent having given Borrower notice that the entire amount owing hereunder has been accelerated and is immediately due and payable on account
of such Event of Default, or (B) waived in compliance with the provisions of Section 14.8 hereof, or (ii) Borrower has (A) taken all action regarding the
Cash Collateral Account as required by Section 3.6 hereof, and (B) paid in full all Bank Debt owing at such time; and (g) other Indebtedness, including,
without limitation, Indebtedness arising under guarantees permitted under Section 11.5 hereof and Indebtedness arising under Capital Leases, in a maximum
amount of principal outstanding at any one time of $40,000,000.00.

     11.2 No Other Businesses. Borrower shall not engage in any material respects
in any business activity or operations other than operations or activities (a) in the
petroleum refining and distribution industry, or (b) which are not substantially different
from or are related to its present business activities or operations.

     11.3 Liens. Borrower shall not create, incur, assume, or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance on, or any security interest in, any
of its real or personal properties (including, without limitation, leasehold interests,
leasehold improvements and any other interest in real property or fixtures, now owned
or hereafter acquired, except:

          (a) Liens for taxes or assessments or other charges or levies of any
Governmental Authority, that are not delinquent or if delinquent (i) are the subject of a
Good Faith Contest but in no event past the time when a penalty would be incurred, and
(ii) the aggregate amount of liabilities so secured (including interest and penalties) does
not exceed $10,000,000 at any one time outstanding;

          (b) Liens imposed by Law, such as mechanic’s, worker’s, repairman’s,
miner’s, agister’s, attorney’s, materialmen’s, landlord’s, warehousemen’s and carrier’s
Liens and other similar Liens which are securing obligations incurred in the ordinary
course of business for sums not yet due and payable or if due and payable which are the
subject of a Good Faith Contest;

          (c) Liens under workers’ compensation, unemployment insurance,
social security or similar legislation (other than ERISA), or to secure payments of
premiums for insurance purchased in the ordinary course of business, or to secure the
performance of tenders, statutory obligations, surety and appearance bonds and bids,
bonds for release of an attachment, stay of execution or injunction, leases, government
contracts, performance and return-of-money bonds and other similar obligations, all of
which are incurred in the ordinary course of business and not in connection with the
borrowing of money;

40

 

          (d) Any attachment or judgment Lien, the time for appeal or petition
for rehearing of which shall not have expired or in respect of which Borrower is
protected in all material respects by insurance or for the payment of which adequate
reserves have been provided, provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are the subject of a Good
Faith Contest, and provided further that the aggregate amount of liabilities of Borrower
so secured (including interest and penalties) shall not be in excess of $1,000,000 at any
one time outstanding;

          (e) Easements, rights-of-way, restrictions, encroachments, covenants,
servitudes, zoning and other similar encumbrances which, in the aggregate, do not
materially interfere with the occupation, use and enjoyment by Borrower of the property
or assets encumbered thereby in the normal course of its business or materially impair
the value of the property subject thereto;

          (f) Liens on land, buildings and equipment existing at the time of their
acquisition or Liens to secure the payment of all or any part of the purchase price of
such land, buildings or equipment or to secure Funded Debt incurred prior to, at the
time of, or within one-hundred eighty (180) days after the acquisition of such property
for the purpose of financing all or any part of the purchase price thereof, provided that
any such Liens shall not encumber any other property of Borrower;

          (g) Liens assumed in connection with permitted mergers and
acquisitions, but only to the extent that such Liens shall not encumber any other
property of Borrower;

          (h) Liens on financed property created or incurred in connection with leases, mortgages, conditional sales contracts, security
interests or arrangements for the retention of title entered into by Borrower to secure “industrial revenue bonds” as defined in Section 103(b)(2) of the
Code and treated as obligations described in legislation similar to the provisions of said Sections of the Code enacted in any State of the United States or
Puerto Rico, which are issued to finance property useful and intended to be used in carrying on the business of Borrower, provided that upon creation of any
such Lien Borrower shall incur Indebtedness secured thereby only in conformity with the provisions of Section 11.1 hereof;

          (i) Liens of CoBank, and other cooperatives, respectively, on
Investments by Borrower in the stock, participation certificates, or allocated reserves of CoBank or other cooperatives, respectively, owned by Borrower;

          (j) All precautionary filings of financing statements under the Uniform Commercial Code which cover property that is made
available to or used by Borrower pursuant to the terms of an Operating Lease or Capital Lease;

          (k) Liens securing its reimbursement obligations under any letter of credit issued in connection with the acquisition of an
asset; provided that (i) the lien

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attaches only to such asset, and (ii) the lien is released upon satisfaction of such reimbursement obligation; and

          (l) Liens in existence on the date hereof as set forth in Exhibit 11.3 attached hereto.

     11.4 Sale of Assets. Borrower shall not sell, convey, assign, lease or otherwise
transfer or dispose of, voluntarily, by operation of law or otherwise, any material part
of its now owned or hereafter acquired assets during any twelve (12) month period
commencing as of December 21, 1999 and each December 21 thereafter, except: (a) the
sale of inventory, equipment and fixtures disposed of in the ordinary course of business,
(b) the sale or other disposition of assets no longer necessary or useful for the conduct
of its business, (c) sales of assets in an amount not to exceed $12,000,000.00 (valued at
the greater of the book value or the market value) in the aggregate during any such
twelve (12) month period, and (d) in connection with the dissolution of Cooperative.

     11.5 Liabilities of Others. Borrower shall not assume, guarantee, become
liable as a surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed to
ensure any creditor against loss), for or on account of the obligation of any Person,
except (a) by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of the Borrower’s business, and (b) subject
to the limitations contained in Section 11.1 (f) hereof, guarantees made from time to
time by Borrower in the ordinary course of its business.

     11.6 Loans. Borrower shall not lend or advance money, credit, or property to
any Person, except for trade credit extended in the ordinary course of business.

     11.7
Merger; Acquisitions; Business Form; Etc. Borrower shall not merge or
consolidate with any entity, or acquire all or substantially all of the assets of any
Person, or form or create any new subsidiary or Affiliate, change its business form from
a cooperative corporation, or commence operations under any other name, organization,
or entity, including any joint venture; provided that Borrower may, so long as there is
no Potential Default or Event of Default which has occurred and is continuing, acquire
all or substantially all of the assets of any Person so long as (a) the aggregate
consideration for all such acquisitions since December 21, 1999 does not exceed
$5,000,000.00 in any 12 month period, and (b) Borrower has provided the
Administrative Agent with pro-forma financial statements and calculations
demonstrating to the Administrative Agent’s satisfaction that Borrower will be in
compliance with all financial related covenants contained in this Agreement after giving
effect to such acquisition.

     11.8 Investments. Except for the purchase of Bank Equity Interests, Borrower
shall not own, purchase or acquire any stock, obligations or securities of, or any other

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interest in, or make any capital contribution to, any Person, except that Borrower may own, purchase or acquire:

          (a) commercial paper maturing not in excess of one year from the date
of acquisition and rated P1 by Moody’s Investors Service, Inc. or Al by Standard
& Poor’s Corporation on the date of acquisition;

          (b) certificates of deposit in North American commercial banks rated C
or better by Keefe, Bruyette & Woods, Inc. or 3 or better by Cates Consulting Analysts,
maturing not in excess of one year from the date of acquisition;

          (c) obligations of the United States government or any agency thereof,
the obligations of which are guaranteed by the United States government, maturing, in
each case, not in excess of one year from the date of acquisition;

          (d) repurchase agreements of any bank or trust company incorporated
under the laws of the United States of America or any state thereof and fully secured by
a pledge of obligations issued or fully and unconditionally guaranteed by the United
States government;

          (e) registered investment funds which invest solely in one or more of
the Investments described in subparts (a) through (d) of this Section 11.8;

          (f) Investments made prior to December 21, 1999 in Persons identified
on Exhibit 11.8 hereto;

          (g) Investments in the form of non-cash patronage dividends in any
Person; and

          (h) Investments, in addition to those permitted by clauses (a) through (g) above, in an aggregate amount not exceeding
$15,000,000.00.

     11.9 Transactions With Related Parties. Borrower shall not purchase, acquire,
provide, or sell any equipment, other personal property, real property or services from
or to any Affiliate or Subsidiary of Borrower, except in the ordinary course and
pursuant to the reasonable requirements of Borrower’s business and upon fair and
reasonable terms no less favorable than would be obtained by Borrower in a comparable
arm’s-length transaction with an unrelated Person.

     11.10 Restricted Payments. Borrower shall not, in any Fiscal Year (a) make any
Restricted Payment (other than revolvements and retirements of equity) (i) in an
aggregate amount that would exceed Borrower’s Patronage Refunds from the current
Fiscal Year, or (ii) if a Potential Default or an Event of Default has occurred and is
continuing at the time of such Restricted Payment or would result therefrom; or (b)
make any revolvement or retirements of equity if a Potential Default or an Event of
Default has occurred and is continuing at the time of such Restricted Payment or would
result therefrom; provided that regardless of whether a Potential Default or an Event of

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Default has occurred and is continuing at the time of such Restricted Payment or would result therefrom, Borrower may (x) make cash payments to its patrons
or members in an aggregate amount in any Fiscal Year that does not exceed twenty-one percent (21%) of Borrower’s Patronage Refunds for the current Fiscal
Year and (y) make age retirement, estate or similar payments.

     11.11 Change in Fiscal Year. Borrower shall not change its Fiscal Year from a
year ending on August 31 unless required to do so by the Internal Revenue Service, in
which case Borrower agrees to such amendment of the terms Fiscal Quarter and Fiscal
Year, as used herein, as the Administrative Agent reasonably deems necessary.

     11.12 ERISA. Borrower shall not: (a) engage in or permit any transaction
which could result in a “prohibited transaction” (as such term is defined in Section 406
of ERISA) or in the imposition of an excise tax pursuant to Section 4975 of the Code;
(b) engage in or permit any transaction or other event which could result in a
“reportable event” as such term is defined in Section 4043 of ERISA for any Borrower
Pension Plan; (c) fail to make full payment when due of all amounts which, under the
provisions of any Borrower Benefit Plan, Borrower is required to pay as contributions
thereto; (d) permit to exist any “accumulated funding deficiency” (as such term is
defined in Section 302 of ERISA) in excess of $25,000.00, whether or not waived, with
respect to any Borrower Pension Plan; (e) fail to make any payments to any
“multiemployer plan” that Borrower may be required to make under any agreement
relating to such “multiemployer plan” or any law pertaining thereto; or (f) terminate
any Borrower Pension Plan in a manner which could result in the imposition of a lien
on any property of Borrower pursuant to Section 4068 of ERISA. Borrower shall not
terminate any Borrower Pension Plan so as to result in any liability to the PBGC. As
used in this Section, all terms enclosed in quotation marks shall have the meanings set
forth in ERISA, Borrower’s failure to comply with any of the foregoing provisions of
this Section shall not constitute a breach of this Agreement or an Event of Default
unless such failure has a Material Adverse Effect.

     11.13 Member Loans. Notwithstanding any provision in this Credit Agreement,
including, without limitation, any restriction contained in Sections 11.6, 11.8, or 11.10
hereof, Borrower may, at any time so long as all Advances, including all Overnight
Advances, have been repaid in full and there is no pending 2-Year Borrowing Notice or
Overnight Advance Request in existence, make Member Loans to its Members funded
by Borrower’s cash on hand, subject to the following conditions and limitations:

          11.13.1 Aggregate and Individual Amounts. The aggregate committed amount of all such Member Loans may not exceed Borrower’s Excess
Working Capital; and the aggregate committed and (without duplication) outstanding amount of Member Loans to any individual Member may not, except as
provided in Subsection 11.13.3 hereof, exceed the product of such individual Member’s Member Percentage multiplied by Borrower’s Excess Working Capital as
measured at the time of making such commitment.

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          11.13.2 Member Loan Documentation and Maturity Date. Each Member
Loan must be evidenced by a written credit and security agreement and revolving loan
note in substantially the form of Exhibit 11.13.2 hereto, which must be dated no later
than the date of the first advance thereunder, and, as to any advance thereunder, must be
payable in full as to interest and principal within no more than thirty-one (31) days after
the date of such advance.

          11.13.3 Additional Aggregate Individual Amounts. The aggregate
committed and (without duplication) outstanding amount of Member Loans to any
individual Member may exceed the product of such individual Member’s Member
Percentage multiplied by Borrower’s Excess Working Capital; provided that the
following conditions are satisfied: (a) such amount may not exceed the lesser of the
following: (i) two times the product of such individual Member’s Member Percentage
multiplied by Borrower’s Excess Working Capital as measured at the time of making
such commitment, or (ii) the sum of (A) the product of such individual Member’s
Member Percentage multiplied by Borrower’s Excess Working Capital, plus (B) the
amount of available credit such Member has under a credit facility satisfactory to
Borrower (“Revolving Credit Facility”), in each case as measured at the time of (but
without taking into effect the consequences of) making such commitment; (b) such
Member Loan is evidenced by a written credit and security agreement and revolving
loan note in substantially the form of Exhibit 11.13.2 hereto which must contain (i) a
representation by such Member that the amount of credit available to such Member
under the Revolving Credit Facility is in excess of the difference between (A) the face
amount of such note and (B) the product of such individual Member’s Member
Percentage multiplied by Borrower’s Excess Working Capital, (ii) a covenant that such
Member will at no time request an advance in an amount which would result in the
outstanding balance under its Member Loan exceeding the limits set forth in clause (a)
of this Subsection 11.13.3, and (iii) a covenant that such Member will promptly upon
discovery, advise Borrower of the fact and amount of any decrease in the amount of
credit available to such Member under the Revolving Credit Facility.

     11.14 Principal Agreements. Borrower shall not materially amend or modify, nor grant a waiver of any material performance under, or terminate or
allow the counter party to terminate, or allow to expire, any of the Principal Agreements without the consent of the Required Lenders.

ARTICLE 12. INDEMNIFICATION

     12.1 General; Stamp Taxes; Intangibles Tax. Borrower agrees to indemnify and hold the Administrative Agent and each Syndication Party and
their directors, officers, employees, agents, professional advisers and representatives (“Indemnified Parties”) harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the Administrative Agent or any other Indemnified Party may incur (or which may be
claimed against any such Indemnified Party by any Person), including attorneys’ fees incurred by any Indemnified Party, arising out of or resulting from:
(a) the material inaccuracy of any representation or warranty of or with

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respect to Borrower in this Credit Agreement or the other Loan Documents; (b) the material failure of Borrower to perform or comply with any covenant or
obligation of Borrower under this Credit Agreement or the other Loan Documents; (c) the exercise by the Administrative Agent of any right or remedy set
forth in this Credit Agreement or the other Loan Documents; or (d) all acts or omissions of the beneficiary of any Letter of Credit, and for such purposes,
such beneficiary shall be deemed Borrower’s agent; provided that Borrower shall have no obligation to indemnify any Indemnified Party against claims,
damages, losses, liabilities, costs or expenses to the extent that a court of competent jurisdiction renders a final non-appealable determination that the
foregoing are solely the result of the willful misconduct or gross negligence of such Indemnified Party. In addition, Borrower agrees to indemnify and hold
the Indemnified Parties harmless from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever which the Administrative
Agent or any other Indemnified Party may incur (or which may be claimed against any such Indemnified Party by any Person), including attorneys’ fees
incurred by any Indemnified Party, arising out of or resulting from the imposition or nonpayment by Borrower of any stamp tax, intangibles tax, or similar
tax imposed by any state, including any amounts owing by virtue of the assertion that the property valuation used to calculate any such tax was understated.
Borrower shall have the right to assume the defense of any claim as would give rise to Borrower’s indemnification obligation under this Section with counsel
of Borrower’s choosing so long as such defense is being diligently and properly conducted and Borrower shall establish to the Indemnified Party’s
satisfaction that the amount of such claims are not, and will not be, material in comparison to the liquid and unrestricted assets of Borrower available to
respond to any award which may be granted on account of such claim. So long as the conditions of the preceding sentence are met, Indemnified Party shall
have no further right to reimbursement of attorneys’ fees incurred thereafter. The obligation to indemnify set forth in this Section shall survive the
termination of this Credit Agreement and other covenants.

     12.2 Indemnification Relating to Hazardous Substances. Borrower shall not locate, produce, treat, transport, incorporate, discharge, emit,
release, deposit or dispose of any Hazardous Substance in, upon, under, over or from any property owned or held by Borrower, except in accordance with all
Environmental Regulations; Borrower shall not permit any Hazardous Substance to be located, produced, treated, transported, incorporated, discharged,
emitted, released, deposited, disposed of or to escape in, upon, under, over or from any property owned or held by Borrower, except in accordance with
Environmental Regulations; and Borrower shall comply with all Environmental Regulations which are applicable to such property. Borrower shall indemnify the
Indemnified Parties against, and shall reimburse the Indemnified Parties for, any and all claims, demands, judgments, penalties, liabilities, costs, damages
and expenses, including court costs and attorneys’ fees incurred by the Indemnified Parties (prior to trial, at trial and on appeal) in any action against
or involving the Indemnified Parties, resulting from any breach of the foregoing covenants in this Section or the covenants in Section 10.6 hereof, or from
the discovery of any Hazardous Substance in, upon, under or over, or emanating from, such property, it being the intent of Borrower and the Indemnified
Parties that the Indemnified Parties shall have no liability or

46

 

responsibility for damage or injury to human health, the environmental or natural resources caused by, for abatement and/or clean-up of, or otherwise with
respect to, Hazardous Substances as the result of the Administrative Agent or any Syndication Party exercising any of its rights or remedies with respect
thereto, including but not limited to becoming the owner thereof by foreclosure or conveyance in lieu of foreclosure of a judgment lien; provided that such
indemnification as it applies to the exercise by the Administrative Agent or any Syndication Party of its rights or remedies with respect to the Loan
Documents shall not apply to claims arising solely with respect to Hazardous Substances brought onto such property by the Administrative Agent or such
Syndication Party while engaged in activities other than operations substantially the same as the operations previously conducted on such property by
Borrower. The foregoing covenants of this Section shall be deemed continuing covenants for the benefit of the Indemnified Parties, and any successors and
assigns of the Indemnified Parties, including but not limited to any transferee of the title of the Administrative Agent or any Syndication Party or any
subsequent owner of the property, and shall survive the satisfaction or release of any lien, any foreclosure of any lien and/or any acquisition of title to
the property or any part thereof by the Administrative Agent or any Syndication Party, or anyone claiming by, through or under the Administrative Agent or
any Syndication Party or Borrower by deed in lieu of foreclosure or otherwise. Any amounts covered by the foregoing indemnification shall bear interest from
the date incurred at the Default Interest Rate, shall be payable on demand, and shall be secured by the Security Documents. The indemnification and
covenants of this Section shall survive the termination of this Credit Agreement and other covenants.

ARTICLE 13. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

     13.1 Events of Default. The occurrence of any of the following events (each an “Event of Default”) shall, at the option of the Administrative
Agent, make the entire Bank Debt immediately due and payable (provided, that in the case of an Event of Default under Subsection 13.1(f) all amounts owing
under the 2-Year Notes and the other Loan Documents shall automatically and immediately become due and payable without any action by or on behalf of the
Administrative Agent), and the Administrative Agent may exercise all rights and remedies for the collection of any amounts outstanding hereunder and take
whatever action it deems necessary to secure itself, all without notice of default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character:

          (a) Failure of Borrower to pay within five (5) days of the date when
due, whether by acceleration or otherwise, any of the Bank Debt in accordance with this
Credit Agreement or the other Loan Documents.

          (b) Any representation or warranty set forth in any Loan Document,
any Borrowing Notice, any financial statements or reports or projections or forecasts, or
in connection with any transaction contemplated by any such document, shall prove in
any material respect to have been false or misleading when made or furnished by
Borrower.

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          (c) Any default by Borrower in the performance or compliance with
the covenants, promises, conditions or provisions of Sections 10.3, 10.8, 10.11, 10.15,
11.1, 11.3, 11.4, 11.5, 11.7, 11.10, 11.12, or 11.13 of this Credit Agreement.

          (d) Any default by Borrower in the performance or compliance with
the covenants, promises, representations, conditions or provisions of Sections 8.2, 8.5,
8.6, 8.7, 8.9, 8.10, 10.12, 10.13, 10.16, 11.6, 11.8, 11.9, or 11.11 of this Credit
Agreement, and such failure continues for fifteen (15) days after Borrower learns of
such failure to comply, whether by Borrower’s own discovery or through notice from
the Administrative Agent.

          (e) The failure of Borrower to pay when due, or failure to perform or
observe any other obligation or condition with respect to any of the following
obligations to any Person, beyond any period of grace under the instrument creating
such obligation: (i) any indebtedness for borrowed money or for the deferred purchase
price of property or services, (ii) any obligations under leases which have or should
have been characterized as Capital Leases, or (iii) any contingent liabilities, such as
guaranties and letters of credit, for the obligations of others relating to indebtedness for
borrowed money or for the deferred purchase price of property or services or relating to
obligations under leases which have or should have been characterized as Capital
Leases; provided that no such failure will be deemed to be an Event of Default
hereunder unless and until the aggregate amount owing under obligations with respect
to which such failures have occurred and are continuing is at least $1,000,000.00.

          (f) Borrower applies for or consents to the appointment of a trustee or
receiver for any part of its properties; any bankruptcy, reorganization, debt
arrangement, dissolution or liquidation proceeding is commenced or consented to by
Borrower; or any application for appointment of a receiver or a trustee, or any
proceeding for bankruptcy, reorganization, debt management or liquidation is filed for
or commenced against Borrower, and is not withdrawn or dismissed within sixty (60)
days thereafter.

          (g) Failure of Borrower to comply with any other provision of this
Credit Agreement or the other Loan Documents not constituting an Event of Default
under any of the preceding subparagraphs of this Section 13.1, and such failure
continues for thirty (30) days after Borrower learns of such failure to comply, whether
by Borrower’s own discovery or through notice from the Administrative Agent.

          (h) The occurrence of a default under the CoBank Term Loan.

          (i) The entry of one or more judgments in an aggregate amount in excess of $1,000,000.00 against Borrower not subject to a
Good Faith Contest, or discharged or paid, in each case, within thirty (30) days after entry.

          (j) In the event (i) Cenex Harvest States Cooperatives (or, in the event Cenex Harvest States Cooperatives shall merge with or
into Farmland Industries, Inc.,

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then the survivor of such merger) shall (A) cease to own more than sixty-seven percent (67%) of the total voting power generally entitled to vote in the
election of directors, managers or trustees of Borrower or (B) cease to own more than sixty-seven percent (67%) of all non-voting classes of capital stock
of Borrower, or (ii) the members or stockholders, as applicable, of Borrower shall approve any plan for the liquidation or dissolution of Borrower.

          (k) The occurrence at any time from the Effective Date of the Original Credit Agreement to the Closing Date of any circumstance
which would have constituted an Event of Default under the Original Credit Agreement (as amended by The Amendments).

     13.2 No Advance. Upon the occurrence and during the continuance of a
Potential Default or an Event of Default, (a) the Syndication Parties shall have no
obligation to make any Advance, and (b) neither the Letter of Credit Bank nor the
Syndication Parties shall have any obligation to issue, reissue, or extend any Letters of
Credit.

     13.3 Rights and Remedies. In addition to the remedies set forth in Section 13.1
and 13.2 hereof, upon the occurrence of an Event of Default, the Administrative Agent
shall be entitled to exercise, subject to the provisions of Subsection 14.6.4 hereof, all
the rights and remedies provided in the Loan Documents and by any applicable law.
Each and every right or remedy granted to the Administrative Agent pursuant to this
Credit Agreement and the other Loan Documents, or allowed the Administrative Agent
by law or equity, shall be cumulative. Failure or delay on the part of the Administrative
Agent to exercise any such right or remedy shall not operate as a waiver thereof. Any
single or partial exercise by the Administrative Agent of any such right or remedy shall
not preclude any future exercise thereof or the exercise of any other right or remedy.

ARTICLE 14. AGENCY AGREEMENT

     14.1 Funding of Syndication Interest. Each Syndication Party, severally but
not jointly, hereby irrevocably agrees to fund its Funding Share of the Advances
(“Advance Payment”) as determined pursuant to the terms and conditions contained
herein and in particular, Article 2 hereof. Each Syndication Party’s interest
(“Syndication Interest”) in each Advance hereunder shall be without recourse to the
Administrative Agent or any other Syndication Party and shall not be construed as a
loan from any Syndication Party to the Administrative Agent or any other Syndication
Party.

     14.2 Syndication Parties’ Obligations to Remit Funds. Each Syndication Party
agrees to remit its Funding Share to the Administrative Agent as, and within the time
deadlines (“Syndication Party Advance Date”), required in this Credit Agreement.
Unless the Administrative Agent shall have received notice from a Syndication Party
prior to the date on which such Syndication Party is to provide funds to the
Administrative Agent for an Advance to be made by such Syndication Party that such

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Syndication Party will not make available to the Administrative Agent such
funds, the Administrative Agent may assume that such Syndication Party has made
such funds available to the Administrative Agent on the date of such Advance in
accordance with the terms of this Credit Agreement and the Administrative Agent
in its sole discretion may, but shall not be obligated to, in reliance upon
such assumption, make available to Borrower on such date a corresponding
amount. If and to the extent such Syndication Party shall not have made such
funds available to the Administrative Agent by 2:00 P.M. (Eastern Time) on the
Banking Day due, such Syndication Party agrees to repay the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to Borrower
until the Banking Day such amount is repaid to the Administrative Agent
(assuming payment is received by the Administrative Agent at or prior to 2:00
P.M. (Eastern Time), and until the next Banking Day if payment is not received
until after 2:00 P.M.), at the customary rate set by the Administrative Agent
for the correction of errors among banks for three (3) Banking Days and
thereafter at the Base Rate. If such Syndication Party shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Syndication Party’s Advance for purposes of this Credit
Agreement. If such Syndication Party does not pay such corresponding amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent shall promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Administrative Agent with the interest thereon, for
each day from the date such amount is made available to Borrower until the date
such amount is repaid to the Administrative Agent, at the rate of interest
applicable at the time to such Advance.

     14.3 Syndication Party’s Failure to Remit Funds. If a Syndication Party
(“Delinquent Syndication Party”) fails to remit its Funding Share in full by
the date and time required (the unpaid amount of any such payment being
hereinafter referred to as the “Delinquent Amount”), in addition to any other
remedies available hereunder, any other Syndication Party or Syndication
Parties may, but shall not be obligated to, advance the Delinquent Amount (the
Syndication Party or Syndication Parties which advance such Delinquent Amount
are referred to as the “Contributing Syndication Parties”), in which case (a)
the Delinquent Amount which any Contributing Syndication Party advances shall
be treated as a loan to the Delinquent Syndication Party and shall not be
counted in determining the Individual Outstanding Obligations, as applicable,
of any Contributing Syndication Party, and (b) the Delinquent Syndication Party
shall be obligated to pay to the Administrative Agent, for the account of the
Contributing Syndication Parties, interest on the Delinquent Amount at a rate
of interest equal to the rate of interest which Borrower is obligated to pay on
the Delinquent Amount plus 200 basis points (“Delinquency Interest”) until the
Delinquent Syndication Party remits the full Delinquent Amount and remits all
Delinquency Interest to the Administrative Agent, which will distribute such
payments to the Contributing Syndication Parties (pro rata based on the amount
of the Delinquent Amount which each of them (if more than one) advanced) on the
same Banking Day as such payments are received by the Administrative Agent if
received no later than 11:00 A.M. (Eastern Time) or the next Banking Day if
received by the Administrative Agent

50

 

thereafter. In addition, the Contributing Syndication Parties
shall be entitled to share, on the same pro rata basis, and the
Administrative Agent shall pay over to them, for application
against Delinquency Interest and the Delinquent Amount, the
Delinquent Syndication Party’s Payment Distribution and any fee
distributions or distributions made under Section 14.10 hereof
until the Delinquent Amount and all Delinquency Interest have been
paid in full. For voting purposes the Administrative Agent shall
readjust the Individual 2-Year Commitments of such Delinquent
Syndication Party and the Contributing Syndication Parties from
time to time first to reflect the advance of the Delinquent Amount
by the Contributing Syndication Parties, and then to reflect the
full or partial reimbursement to the Contributing Syndication
Parties of such Delinquent Amount. As between the Delinquent
Syndication Party and the Contributing Syndication Parties, the
Delinquent Syndication Party’s interest in its 2-Year Note shall
be deemed to have been partially assigned to the Contributing
Syndication Parties in the amount of the Delinquent Amount and
Delinquency Interest owing to the Contributing Syndication Parties
from time to time. For the purposes of calculating interest owed
by a Delinquent Syndication Party, payments received on other than
a Banking Day shall be deemed to have been received on the next
Banking Day, and payments received after 2:00 P.M. (Eastern Time)
shall be deemed to have been received on the next Banking Day.

     14.4 Agency Appointment. Each of the Syndication Parties
hereby designates
and appoints the Administrative Agent to act as agent to
service and collect the 2-Year
Loans and its respective 2-Year Notes and to take such action
on behalf of such
Syndication Party with respect to the 2-Year Loans and such
2-Year Notes, and to
execute such powers and to perform such duties, as
specifically delegated or required
herein, as well as to exercise such powers and to perform
such duties as are reasonably
incident thereto, and to receive and benefit from such fees
and indemnifications as are
provided for or set forth herein, until such time as a successor is appointed and
qualified to act as the Administrative Agent.

     14.5 Power and Authority of the Administrative Agent. Without limiting the
generality of the power and authority vested in the
Administrative Agent pursuant to
Section 14.4 hereof, the power and authority vested in the
Administrative Agent
includes, but is not limited to, the following:

          14.5.1 Advice. To solicit the advice and assistance of each
of the Syndication Parties and Voting Participants concerning the
administration of the 2-Year Facility and the exercise by the
Administrative Agent of its various rights, remedies, powers, and
discretions with respect thereto. As to any matters not expressly
provided for by this Credit Agreement or any other Loan Document,
the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with
instructions signed by all of the Syndication Parties or the
Required Lenders, as the case may be (and including in each such
case, Voting Participants), and any action taken or failure to act
pursuant thereto shall be binding on all of the Syndication
Parties, Voting Participants, and the Administrative Agent.

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          14.5.2 Documents. To execute, seal, acknowledge, and deliver
as the
Administrative Agent, all such instruments as may be
appropriate in connection with
the administration of the 2-Year Loans and the exercise by
the Administrative Agent of
its various rights with respect thereto.

          14.5.3 Proceedings. To initiate, prosecute, defend, and to participate in,
actions and proceedings in its name as the Administrative
Agent for the ratable benefit
of the Syndication Parties.

          14.5.4 Retain Professionals. To retain attorneys, accountants, and other
professionals to provide advice and professional services to
the Administrative Agent,
with their fees and expenses reimbursable to the
Administrative Agent by Syndication
Parties pursuant to Section 14.17 hereof.

          14.5.5 Incidental Powers. To exercise powers reasonably incident to the
Administrative Agent’s discharge of its duties enumerated in
Section 14.6 hereof.

     14.6 Duties of the Administrative Agent. The duties of
the Administrative Agent hereunder shall consist of the
following:

          14.6.1 Possession of Documents. To safekeep one original of
each of the
Loan Documents other than the 2-Year Notes (which will be in
the possession of the
Syndication Party named as payee therein).

          14.6.2 Distribute Payments. To receive and distribute to the Syndication
Parties payments made by Borrower pursuant to the Loan
Documents, as provided in
Article 5 hereof. Unless the Administrative Agent shall have
received notice from
Borrower prior to the date on which any payment is due to any
Syndication Party
hereunder that Borrower will not make such payment in full,
the Administrative Agent
may assume that Borrower has made such payment in full to the
Administrative Agent
on such date and the Administrative Agent in its sole
discretion may, but shall not be
obligated to, in reliance upon such assumption, cause to be
distributed to each
Syndication Party on such due date an amount equal to the
amount then due such
Syndication Party. If and to the extent Borrower shall not
have so made such payment
in full to the Administrative Agent, each Syndication Party
shall repay to the
Administrative Agent forthwith on demand such amount
distributed to such Syndication
Party together with interest thereon, for each day from the
date such amount is
distributed to such Syndication Party until the date such
Syndication Party repays such
amount to the Administrative Agent at the customary rate set
by the Administrative
Agent for the correction of errors among banks for three (3)
Banking Days and
thereafter at the Base Rate.

          14.6.3 Loan Administration. Subject to the provisions of Section 14.8
hereof, to, on behalf of and for the ratable benefit of all
Syndication Parties, in
accordance with customary banking practices, exercise all
rights, powers, privileges,
and discretion to which the Administrative Agent is entitled
to administer the 2-Year

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Loans, including, without limitation: (a) monitor all borrowing activity,
Individual 2-Year Commitment balances, and maturity dates of all LIBO Rate
Loans; (b) monitor and report Credit Agreement and covenant compliance, and
coordinate required credit actions by the Syndication Parties; (c) manage the
process for future waivers and amendments if modifications to the Credit
Agreement are required; and (d) administer, record, and process all assignments
to be made for the current and future Syndication Parties.

          14.6.4 Action Upon Default. Each Syndication Party agrees that upon its
learning of any facts which would constitute a Potential Default or Event
of Default, it
shall promptly notify the Administrative Agent by a writing designated as
a notice of
default specifying in detail the nature of such facts and default, and the
Administrative
Agent shall promptly send a copy of such notice to all other Syndication
Parties. The
Administrative Agent shall be entitled to assume that no Event of Default
or Potential
Default has occurred or is continuing unless an officer thereof primarily
responsible for
the Administrative Agent’s duties as such with respect to the 2-Year Loans
or primarily
responsible for the credit relationship between the Administrative Agent
and Borrower
has actual knowledge of facts which would result in or constitute a
Potential Default or
Event of Default, or has received written notice from Borrower of such
fact, or has
received written notice of default from a Syndication Party. In the event
the
Administrative Agent has obtained actual knowledge (in the manner
described above) or received written notice of the occurrence of a Potential Default or
Event of Default
as provided in the preceding sentences, the Administrative Agent may, but
is not
required to exercise or refrain from exercising any rights which may be
available under
the Loan Documents or at law on account of such occurrence and shall be
entitled to
use its discretion with respect to exercising or refraining from
exercising any such
rights, unless and until the Administrative Agent has received specific
written
instruction from the Required Lenders to refrain from exercising such
rights or to take
specific designated action, in which case it shall follow such
instruction; provided that
the Administrative Agent shall not be required to take any action which
will subject it
to personal liability, or which is or may be contrary to any provision of
the Loan
Documents or applicable law. The Administrative Agent shall not be subject
to any
liability by reason of its acting or refraining from acting pursuant to
any such
instruction.

          14.6.5 Forwarding of Information. The Administrative Agent shall,
within a reasonable time after receipt thereof, forward to the Syndication
Parties and
the Voting Participants notices and reports provided to the Administrative
Agent by the
Borrower pursuant to Section 10.2 hereof.

     14.7 Indemnification as Condition to Action. Except for action
expressly required of the Administrative Agent hereunder, the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Syndication Parties
under Section 14.18 hereof in respect of any and

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all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

     14.8 Consent Required for Certain Actions. Except as provided in
Section 14.3 hereof, and notwithstanding the fact that this Credit Agreement
may otherwise provide that the Administrative Agent may act at its discretion,
the Administrative Agent may not take any of the following actions (nor may the
Syndication Parties or the Voting Participants take the action described in
Subsection 14.8.1(c)) with respect to, or under, the Loan Documents without the
prior written consent, given after notification by the Administrative Agent of
its intention to take any such action (or notification by such Syndication
Parties as are proposing the action described in Subsection 14.8.1(c) of their
intention to do so), of:

          14.8.1 Unanimous. Each of the Syndication Parties and Voting
Participants before:

          (a) Agreeing to an increase in the Aggregate 2-Year Commitment or an
extension of the 2-Year Availability Period or the 2-Year Maturity Date;

          (b) Agreeing to a reduction in the amount, or to a delay in the due date,
of any payment by Borrower of interest, principal, or fees with respect to
the 2-Year
Loans; provided, however, this restriction shall not apply to a delay in
payment of
interest or fees granted by the Administrative Agent in the ordinary
course of
administration of the 2-Year Loans and the exercise of reasonable
judgment, so long as
such payment delay does not exceed five (5) days;

          (c) Amending Section 1.66 hereof or any provision set forth in this
Subsection 14.8.1; or

          (d) Agreeing to waive any material provisions of this Credit Agreement
or any of the other Loan Documents.

          14.8.2 Required Lenders. The Required Lenders before:

          (a) Consenting to any action, amendment, or granting any waiver with
respect to the 2-Year Loans not covered in Subsection 14.8.1; or

          (b) Agreeing to amend Article 14 of this Credit Agreement (other than
Subsection 14.8.l(c)).

          14.8.3 Action Without Vote. Notwithstanding any other provisions of this
Section, the Administrative Agent may take the following action without
obtaining the
consent of the Syndication Parties or the Voting Participants:

          (a) Determining (i) whether the conditions to an Advance have been
met, and (ii) the amount of such Advance;

54

 

          (b) Determining (i) whether the conditions to the issuance of a Committed Letter
of Credit have been met, and (ii) the amount of such Committed Letter of Credit.

If no written consent or denial is received from a Syndication Party within five
(5) Banking Days after written notice of any proposed action as described in
this Section is delivered to such Syndication Party by the Administrative Agent,
such Syndication Party shall be conclusively deemed to have consented thereto
for the purposes of this Section.

     14.9 Distribution of Principal and Interest. The Administrative Agent will
receive and accept all payments (including prepayments) of principal and interest made
by Borrower on the 2-Year Loans and the 2-Year Notes and will hold all such payments
in trust for the benefit of all present and future Syndication Parties, and, if requested in
writing by the Required Lenders, in an account segregated from the Administrative
Agent’s other funds and accounts (“Payment
Account”). After the receipt by the
Administrative Agent of any payment representing interest or principal on the 2-Year
Loans, the Administrative Agent shall remit to each Syndication Party its share of such
payment as provided in Article 5 hereof, (“Payment
Distribution”) no later than the
same Banking Day as such payment is received by the Administrative Agent if received
no later than 11:00 A.M. (Eastern Time) or the next Banking Day if received by the
Administrative Agent thereafter. Any Syndication Party’s rights to its Payment
Distribution shall be subject to the rights of any Contributing Syndication Parties to
such amounts as set forth in Section 14.3 hereof.

     14.10 Distribution of Certain Amounts. The Administrative Agent shall (a)
receive and hold in trust for the benefit of all present and future Syndication Parties, in
the Payment Account and, if requested in writing by the Required Lenders, segregated
from the Administrative Agent’s other funds and accounts and (b) shall remit to the
Syndication Parties, as indicated, the amounts described below:

          14.10.1 Funding Losses. To each Syndication Party, the amount of any Funding
Losses paid by Borrower to the Administrative Agent in connection with a
prepayment of any portion of a LIBO Rate Loan, in accordance with the Funding
Loss Notice such Syndication Party provided to the Administrative Agent, no
later than the same Banking Day that payment of such Funding Losses is received
by the Administrative Agent, if received no later than 11:00 A.M. (Eastern
Time), or the next Banking Day if received by the Administrative Agent
thereafter.

     14.11 Possession of Loan Documents. The Loan Documents (other than the 2-Year
Notes) shall be held by the Administrative Agent in its name, for the ratable
benefit of itself and the other Syndication Parties without preference or
priority.

     14.12 Collateral Application. The Syndication Parties shall have no interest in
any other loans made to Borrower by any other Syndication Party other than the
2-Year Loans, or in any property taken as security for any other loan or loans
made to

55

 

Borrower by any other Syndication Party, or in any property now or hereinafter
in the possession or control of any other Syndication Party, which may be or
become security for the 2-Year Loans solely by reason of the provisions of a
security instrument that would cause such security instrument and the property
covered thereby to secure generally all indebtedness owing by Borrower to such
other Syndication Party. Notwithstanding the foregoing, to the extent such other
Syndication Party applies such funds or the proceeds of such property to
reduction of the 2-Year Loans, such other Syndication Party shall share such
funds or proceeds with all Syndication Parties according to their respective
Individual 2-Year Pro Rata Shares. In the event that any Syndication Party shall
obtain payment, whether partial or full, from any source in respect of the
2-Year Loans, including without limitation payment by reason of the exercise of
a right of offset, banker’s lien, general lien, or counterclaim, such
Syndication Party shall promptly make such adjustments (which may include
payment in cash or the purchase of further syndications or participations in the
2-Year Loans) to the end that such excess payment shall be shared with all other
Syndication Parties in accordance with their respective Individual 2-Year
Commitments. Notwithstanding any of the foregoing provisions of this Section or
Article 7 hereof, no Syndication Party other than CoBank shall have any right
to, or to the proceeds of, or any right to the application to any amount owing
to such Syndication Party hereunder of any the proceeds of, any Bank Equity
Interests issued to Borrower by CoBank or on account of any statutory lien held
by CoBank on such Bank Equity Interests.

     14.13 Amounts Required to be Returned. If the Administrative Agent makes any
payment to a Syndication Party in anticipation of the receipt of final funds
from Borrower, and such funds are not received from Borrower, or if excess funds
are paid by the Administrative Agent to any Syndication Party as the result of a
miscalculation by the Administrative Agent, then Syndication Party shall, on
demand of the Administrative Agent, forthwith return to the Administrative Agent
any such amounts, plus interest thereon (from the day such amounts were
transferred by the Administrative Agent to the Syndication Party to, but not
including, the day such amounts are returned by Syndication Party) at a rate per
annum equal to the customary rate set by the Administrative Agent for the
correction of errors among banks for three (3) Banking Days and thereafter at
the Base Rate. If the Administrative Agent is required at any time to return to
Borrower or a trustee, receiver, liquidator, custodian, or similar official any
portion of the payments made by Borrower to the Administrative Agent, whether
pursuant to any bankruptcy or insolvency law or otherwise, then each Syndication
Party shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent any such payments transferred to such Syndication Party by
the Administrative Agent but without interest or penalty (unless the
Administrative Agent is required to pay interest or penalty on such amounts to
the person recovering such payments).

     14.14 Reports and Information to Syndication Parties. The Administrative Agent
shall use reasonable efforts to provide to Syndication Parties, as soon as
practicable after actual knowledge thereof is acquired by an officer thereof
primarily responsible for the Administrative Agent’s duties as such with respect
to the 2-Year

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Loans or primarily responsible for the credit relationship between the
Administrative Agent and Borrower, any material factual information which has a
material adverse effect on the creditworthiness of Borrower, and Borrower hereby
authorizes such disclosure by the Administrative Agent to the Syndication
Parties (and by the Syndication Parties to any of their participants). Failure
of the Administrative Agent to provide the information referred to in this
Section or in Subsection 14.6.4 hereof shall not result in any liability upon,
or right to make a claim against, the Administrative Agent except where a court
of competent jurisdiction renders a final non-appealable determination that such
failure is a result of the willful misconduct or gross negligence of the
Administrative Agent. Syndication Parties acknowledge and agree that all
information and reports received pursuant to this Credit Agreement will be
received in confidence in connection with their Syndication Interest, and that
such information and reports constitute confidential information and shall not,
without the prior written consent of the Administrative Agent or Borrower, as
applicable, be (x) disclosed to any third party (other than the Administrative
Agent, another Syndication Party or potential Syndication Party, or a
participant or potential participant in the interest of a Syndication Party,
which disclosure is hereby approved by Borrower), except pursuant to appropriate
legal or regulatory process, or (y) used by the Syndication Party except in
connection with the 2-Year Loans and its Syndication Interest.

     14.15 Standard of Care. The Administrative Agent shall not be liable to
Syndication Parties for any error in judgment or for any action taken or not
taken by the Administrative Agent or its agents, except for its gross negligence
or willful misconduct. Subject to the preceding sentence, the Administrative
Agent will exercise the same care in administering the 2-Year Loans and the Loan
Documents as it exercises for similar loans which it holds for its own account
and risk, and the Administrative Agent shall not have any further responsibility
to the Syndication Parties. Without limiting the foregoing, the Administrative
Agent may rely on the advice of counsel concerning legal matters and on any
written document it believes to be genuine and correct and to have been signed
or sent by the proper Person or Persons.

     14.16 No Trust Relationship. Neither the execution of this Credit Agreement, nor
the sharing in the 2-Year Loans, nor the holding of the Loan Documents in its
name by the Administrative Agent, nor the management and administration of the
2-Year Loans and Loan Documents by the Administrative Agent (including the
obligation to hold certain payments and proceeds in the Payment Account in trust
for the Syndication Parties), nor any other right, duty or obligation of the
Administrative Agent under or pursuant to this Credit Agreement is intended to
be or create, and none of the foregoing shall be construed to be or create, any
express, implied or constructive trust relationship between the Administrative
Agent and any Syndication Party. Each Syndication Party hereby agrees and
stipulates that the Administrative Agent is not acting as trustee for such
Syndication Party with respect to the 2-Year Loans, this Credit Agreement, or
any aspect of either, or in any other respect.

     14.17
Sharing of Costs and Expenses. To the extent not paid by Borrower, each
Syndication Party will promptly upon demand reimburse the Administrative Agent
for

57

 

its proportionate share (based on its Individual 2-Year Pro Rata Share), for all
reasonable costs, disbursements, and expenses incurred by the Administrative
Agent on or after the date of this Credit Agreement for legal, accounting,
consulting, and other services rendered to the Administrative Agent in its role
as the Administrative Agent in the administration of the 2-Year Loans,
interpreting the Loan Documents, and protecting, enforcing, or otherwise
exercising any rights, both before and after default by Borrower under the Loan
Documents, and including, without limitation, all costs and expenses incurred in
connection with any bankruptcy proceedings; provided, however, that the costs
and expenses to be shared in accordance with this Section shall not include any
costs or expenses incurred by the Administrative Agent solely as a Syndication
Party in connection with the 2-Year Loans, nor to the Administrative Agent’s
internal costs and expenses.

     14.18 Syndication Parties’ Indemnification of the Administrative Agent. Each of
the Syndication Parties agree to indemnify the Administrative Agent, including
any Successor Agent, and their respective directors, officers, employees,
agents, professional advisers and representatives (“Indemnified Agency
Parties”), to the extent not reimbursed by Borrower, and without in any way
limiting the obligation of Borrower to do so), ratably (based on its Individual
2-Year Pro Rata Share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the 2-Year Loans and/or the
expiration or termination of this Credit Agreement) be imposed on, incurred by
or asserted against the Administrative Agent (or any of the Indemnified Agency
Parties while acting for the Administrative Agent or for any Successor Agent) in
any way relating to or arising out of this Credit Agreement or the Loan
Documents, or the performance of the duties of the Administrative Agent
hereunder or thereunder or any action taken or omitted while acting in the
capacity of the Administrative Agent under or in connection with any of the
foregoing; provided that the Syndication Parties shall not be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of an
Indemnified Agency Party to the extent that any of the forgoing result from the
gross negligence or willful misconduct of that Indemnified Agency Party as
determined by a court of competent jurisdiction. The agreements and obligations
in this Section shall survive the payment of the 2-Year Loans and the expiration
or termination of this Credit Agreement.

     14.19 Books and Records. The Administrative Agent shall maintain such books of
account and records relating to the 2-Year Loans as it maintains with respect to
other loans of similar type and amount, and which shall clearly and accurately
reflect the Syndication Interest of each Syndication Party. Syndication Parties,
or their agents, may inspect such books of account and records at all reasonable
times during the Administrative Agent’s regular business hours.

     14.20 Administrative Agent Fee. CoBank and any Successor Agent shall be entitled
to the Administrative Agent Fee for acting as the Administrative Agent. In the

58

 

event the Successor Agent is contractually entitled to an additional fee, each
Syndication Party will be responsible for its proportionate share (based on its
Individual 2-Year Pro Rata Share) thereof.

     14.21 The Administrative Agent’s Resignation or Removal. The Administrative
Agent may resign at any time by giving at least sixty (60) days’ prior written
notice of its intention to do so to each of the Syndication Parties and
Borrower. After the receipt of such notice, the Required Lenders shall appoint a
successor (“Successor Agent”). If (a) no Successor Agent shall have been so
appointed which is either (i) a Syndication Party, or (ii) if not a Syndication
Party, which is a Person approved by Borrower, such approval not to be
unreasonably withheld (provided that Borrower shall have no approval rights upon
the occurrence and during the continuance of an Event of Default), or (b) if
such Successor Agent has not accepted such appointment, in either case within
forty-five (45) days after the retiring Administrative Agent’s giving of such
notice of resignation, then the retiring Administrative Agent may, after
consulting with, but without requiring the approval of, Borrower, appoint a
Successor Agent which shall be a bank or a trust company organized under the
laws of the United States of America or any state thereof and having a combined
capital, surplus and undivided profit of at least $250,000,000. Any
Administrative Agent may be removed upon the written demand of the Required
Lenders, which demand shall also appoint a Successor Agent. Upon the appointment
of a Successor Agent hereunder, (x) the term “Administrative Agent” shall for
all purposes of this Credit Agreement thereafter mean such Successor Agent, and
(y) the Successor Agent shall notify Borrower of its identity and of the
information called for in Subsection 14.4.2 hereof. After any retiring
Administrative Agent’s resignation hereunder as the Administrative Agent, or the
removal hereunder of any Administrative Agent, the provisions of this Credit
Agreement shall continue to inure to the benefit of such Administrative Agent as
to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Credit Agreement.

     14.22 Representations and Warranties of All Parties. The Administrative Agent
and each Syndication Party represents and warrants that: (a) the execution and
delivery of, and performance of its obligations under, this Credit Agreement is
within its power and has been duly authorized by all necessary corporate and
other action by it; (b) this Credit Agreement is in compliance with all
applicable laws and regulations promulgated under such laws and does not
conflict with nor constitute a breach of its charter or by-laws nor any
agreements by which it is bound, and does not violate any judgment, decree or
governmental or administrative order, rule or regulation applicable to it; (c)
no approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by it in connection with the execution and delivery of, and
performance of its obligations under, this Credit Agreement; and (d) this Credit
Agreement has been duly executed by it, and constitutes the legal, valid, and
binding obligation of such Person, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
Each

59

 

Syndication Party that is a state or national bank represents and warrants that
the act of entering into and performing its obligations under this Credit
Agreement has been approved by its board of directors or its loan committee and
such action was duly noted in the written minutes of the meeting of such board
or committee, and that it will furnish the Administrative Agent with a certified
copy of such minutes or an excerpt therefrom reflecting such approval.

     14.23 Syndication Parties’ Independent Credit Analysis. Each Syndication Party
acknowledges receipt of true and correct copies of all Loan Documents (other
than any 2-Year Note payable to another Syndication Party) from the
Administrative Agent. Each Syndication Party agrees and represents that it has
relied upon its independent review (a) of the Loan Documents, and (b) any
information independently acquired by such Syndication Party from Borrower or
otherwise in making its decision to acquire an interest in the 2-Year Loans
independently and without reliance on the Administrative Agent. Each Syndication
Party represents and warrants that it has obtained such information as it deems
necessary (including any information such Syndication Party independently
obtained from Borrower or others) prior to making its decision to acquire an
interest in the 2-Year Loans. Each Syndication Party further agrees and
represents that it has made its own independent analysis and appraisal of and
investigation into each Borrower’s authority, business, operations, financial
and other condition, creditworthiness, and ability to perform its obligations
under the Loan Documents and has relied on such review in making its decision to
acquire an interest in the 2-Year Loans. Each Syndication Party agrees that it
will continue to rely solely upon its independent review of the facts and
circumstances related to Borrower, and without reliance upon the Administrative
Agent, in making future decisions with respect to all matters under or in
connection with the Loan Documents and the 2-Year Loans. The Administrative
Agent assumes no responsibility for the financial condition of Borrower or for
the performance of Borrower’s obligations under the Loan Documents. Except as
otherwise expressly provided herein, no Syndication Party shall have any duty or
responsibility to furnish to any other Syndication Parties any credit or other
information concerning Borrower which may come into its possession.

     14.24 No Joint Venture or Partnership. Neither the execution of this Credit
Agreement, the sharing in the 2-Year Loans, nor any agreement to share in
payments or losses arising as a result of this transaction is intended to be or
to create, and the foregoing shall not be construed to be, any partnership,
joint venture or other joint enterprise between the Administrative Agent and any
Syndication Party, nor between or among any of the Syndication Parties.

     14.25 Purchase for Own Account; Restrictions on Transfer; Participations. Each
Syndication Party other than CoBank represents that it has acquired and is
retaining its interest in the 2-Year Loans for its own account in the ordinary
course of its banking or financing business and not with a view toward the sale,
distribution, further participation, or transfer thereof. Each Syndication Party
other than CoBank agrees that it will not sell, assign, convey or otherwise
dispose of (“Transfer”) to any Person, or create or permit to exist any lien or
security interest on all or any part of its interest in

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the 2-Year Loans, without the prior written consent, of the Administrative Agent
and Borrower (which consent will not be unreasonably withheld); provided that:
(a) any such Transfer except a Transfer to another Syndication Party or a
Transfer by CoBank must be in a minimum amount of $5,000,000.00; (b) each
Syndication Party must maintain an Individual 2-Year Commitment of no less than
$5,000,000.00, unless it Transfers its entire Syndication Interest; (c) the
transferee must execute an agreement substantially in the form of Exhibit 14.25
hereto (“Syndication Acquisition Agreement”) and assume all of the transferor’s
obligations hereunder and execute such documents as the Administrative Agent may
reasonably require; and (d) the Syndication Party making such Transfer must pay
the Administrative Agent an assignment fee of $3,500.00. Any Syndication Party
may participate any part of its interest in the 2-Year Loans to any Person with
the prior written consent of the Administrative Agent and Borrower (which
consent will not be unreasonably withheld, provided that Borrower shall have no
approval rights upon the occurrence and during the continuance of an Event of
Default), provided that no such consent shall be required where the participant
is a Person at least fifty percent (50%) the equity interest in which is owned
by such Syndication Party or which owns at least fifty percent (50%) of the
equity interest in such Syndication Party or at least fifty percent (50%) of the
equity interest of which is owned by the same Person which owns at least fifty
percent (50%) of the equity interest of such Syndication Party, and each
Syndication Party understands and agrees that in the event of any such
participation: (x) its obligations hereunder will not change on account of such
participation; (y) except as provided in Section 14.26 hereof, the participant
will have no rights under this Credit Agreement, including, without limitation,
voting rights or the right to receive payments or distributions; and (z) the
Administrative Agent shall continue to deal directly with the Syndication Party
with respect to the 2-Year Loans (including with respect to voting rights) as
though no participation had been granted and will not be obligated to deal
directly with any participant. Notwithstanding any provision contained herein to
the contrary, any Syndication Party may at any time pledge or assign all or any
portion of its interest in the 2-Year Loans to any Federal Reserve Bank or the
Federal Farm Credit Bank in accordance with applicable law. CoBank reserves the
right to sell participations on a non-patronage basis.

     14.26 Certain Participants’ Voting Rights. All Persons who at any time purchase
a participation interest in the interest of CoBank as a Syndication Party
hereunder may, in the sole discretion of CoBank (or as required in any agreement
under which such purchase is made and governed), be allowed to vote hereunder,
on a dollar basis, on any matter requiring or allowing CoBank, in its capacity
as a Syndication Party, to provide or withhold its consent, or to otherwise vote
on any proposed action; provided that no such Person shall have any voting
rights unless and until CoBank shall have provided written notice to the
Administrative Agent indicating (a) the name of such Person and (b) the dollar
amount of such Persons participation interest as to which such voting rights
shall be accorded (the Persons to whom CoBank has accorded such voting rights,
and with respect to which CoBank has provided the required notice to the
Administrative Agent, are referred to as “Voting
Participants”).

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     14.27 Method of Making Payments. Payment and transfer of all amounts owing or to
be paid or remitted hereunder, including, without limitation, payment of the
Advance Payment by Syndication Parties, and distribution of principal or
interest payments or fees or other amounts by the Administrative Agent, shall be
by wire transfer in accordance with the instructions contained on Exhibit 14.27
hereto (“Wire Instructions”).

     14.28 Events of Syndication Default/Remedies.

          14.28.1 Syndication Party Default. Any of the following occurrences, failures or
acts, with respect to any of the Syndication Parties shall constitute an “Event
of Syndication Default” hereunder by such party: (a) if any representation or
warranty made by such party in this Credit Agreement shall be found to have been
untrue in any material respect; (b) if such party fails to make any
distributions or payments required under this Credit Agreement within five (5)
days of the date required; (c) if such party breaches any other covenant,
agreement, or provision of this Credit Agreement which breach shall have
continued uncured for a period of thirty (30) consecutive days after such breach
first occurs, unless a shorter period is required to avoid prejudicing the
rights and position of the other Syndication Parties; (d) if any agency having
supervisory authority over such party, or any creditors thereof, shall file a
petition to reorganize or liquidate such party pursuant to any applicable
federal or state law or regulation and such petition shall not be discharged or
denied within fifteen (15) days after the date on which it is filed; (e) if by
the order of a court of competent jurisdiction or by any appropriate supervisory
agency, a receiver, trustee or liquidator shall be appointed for such party or
for all or any material part of its property or if such party shall be declared
insolvent; or (f) if such party shall be dissolved, or shall make an assignment
for the benefit of its creditors, or shall file a petition seeking to take
advantage of any debtors’ act, including the bankruptcy act, or shall admit in
writing its inability to pay its debts generally as they become due, or shall
consent to the appointment of a receiver or liquidator of all or any material
part of its property.

          14.28.2 Remedies. Upon the occurrence of an Event of Syndication Default, the
non-defaulting parties, acting by, or through the direction of, a simple
majority (determined based on the ratio of their Individual 2-Year Commitments
to the Aggregate Commitment) of the non-defaulting parties, may, in addition to
any other remedy specifically set forth in.this Credit Agreement, have and
exercise any and all remedies available generally at law or equity, including
the right to damages and to specific performance.

     14.29 Withholding Taxes. Each Syndication Party represents that it is entitled
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Administrative Agent and to Borrower such forms,
certifications, statements and other documents as the Administrative Agent or
Borrower may request from time to time to evidence such Syndication Party’s
exemption from the withholding of any tax imposed by any jurisdiction or to
enable the Administrative Agent or Borrower, as the case may be, to comply with
any applicable laws or regulations

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relating thereto. Without limiting the effect of the foregoing, if any
Syndication Party is not created or organized under the laws of the United
States of America or any state thereof, such Syndication Party will furnish to
the Administrative Agent and Borrower IRS Form 4224 or Form 1001, or such other
forms, certifications, statements or documents, duly executed and completed by
such Syndication Party, as evidence of such Syndication Party’s exemption from
the withholding of United States tax with respect thereto. Notwithstanding
anything herein to the contrary, Borrower shall not be obligated to make any
payments hereunder to such Syndication Party until such Syndication Party shall
have furnished to the Administrative Agent and Borrower the requested form,
certification, statement or document.

     14.30 Amendments Concerning Agency Function. The Administrative Agent shall not
be bound by any waiver, amendment, supplement or modification of this Credit
Agreement or any other Loan Document which affects its duties hereunder or
thereunder unless it shall have given its prior written consent thereto.

     14.31 Further Assurances. The Administrative Agent and each Syndication Party
agree to take whatever steps and execute such documents as may be reasonable and
necessary to implement this Article 16 and to carry out fully the intent
thereof.

ARTICLE 15. MISCELLANEOUS

     15.1 Costs and Expenses. To the extent permitted by law, Borrower agrees to pay
to the Administrative Agent and the Syndication Parties, on demand, all
reasonable out-of-pocket costs and expenses (a) incurred by the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
counsel retained by the Administrative Agent, and including fees and expenses
incurred for consulting, appraisal, engineering, inspection, and environmental
assessment services) in connection with the preparation, negotiation, and
execution of the Fee Letter, and the Loan Documents and the transactions
contemplated thereby, and processing the Borrowing Notices; and (b) incurred by
the Administrative Agent or any Syndication Party (including, without
limitation, the reasonable fees and expenses of counsel retained by the
Administrative Agent and the Syndication Parties) in connection with the
enforcement or protection of the Syndication Parties’ rights under the Loan
Documents upon the occurrence of an Event of Default or upon the commencement of
an action by Borrower against the Administrative Agent or any Syndication Party,
including without limitation collection of the 2-Year Loans (regardless of
whether such enforcement or collection is by court action or otherwise).
Borrower shall not be obligated to pay the costs or expenses of any Person whose
only interest in the 2-Year Loans is as a holder of a participation interest.

     15.2 Service of Process and Consent to Jurisdiction. Borrower hereby agrees that
any litigation with respect to this Credit Agreement or to enforce any judgment
obtained against Borrower for breach of this Credit Agreement or under the
2-Year Notes or other Loan Documents may be brought in the courts of the State
of Colorado and in the United States District Court for the District of Colorado
(if applicable subject

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matter jurisdictional requirements are present), as the Administrative Agent may
elect; and, by execution and delivery of this Credit Agreement, Borrower
irrevocably submits to such jurisdiction. With respect to litigation concerning
this Credit Agreement or under the 2-Year Notes or other Loan Documents within
the jurisdiction of the courts of the State of Colorado or the United States
District Court for the District of Colorado, Borrower hereby irrevocably
appoints, until six (6) months after the expiration of the 2-Year Maturity Date
(as it may be extended at anytime), a Person, such as The Corporation Company,
with offices in Denver, Colorado and otherwise reasonably acceptable to the
Administrative Agent to serve as the agent of Borrower to receive for and on
behalf of Borrower at such agent’s Denver, Colorado office, service of process,
which service may be made by mailing a copy of any summons or other legal
process to Borrower in care of such agent. Borrower agrees that Borrower shall
maintain a duly appointed agent in Colorado for service of summons and other
legal process as long as Borrower remains obligated under this Credit Agreement
and shall keep the Administrative Agent advised in writing of the identity and
location of such agent. The receipt by such agent and/or by Borrower of such
summons or other legal process in any such litigation shall be deemed personal
service and acceptance by Borrower for all purposes of such litigation.

     15.3 Jury Waiver. IT IS MUTUALLY AGREED BY AND BETWEEN THE ADMINISTRATIVE AGENT,
EACH SYNDICATION PARTY, AND BORROWER THAT THEY EACH WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST ANY OTHER
PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
CREDIT AGREEMENT, THE 2-YEAR NOTES, OR THE OTHER LOAN DOCUMENTS.

     15.4 Notices. All notices, requests and demands required or permitted under the
terms of this Credit Agreement shall be in writing and (a) shall be addressed as
set forth below or at such other address as either party shall designate in
writing, (b) shall be deemed to have been given or made: (i) if delivered
personally, immediately upon delivery, (ii) if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt, (iii)
if by nationally recognized overnight courier service with instructions to
deliver the next Banking Day, one (1) Banking Day after sending, and (iv) if by
United States Mail, certified mail, return receipt requested, five (5) days
after mailing.

          15.4.1 Borrower:

          National Cooperative Refinery Association

          2000 Main Street

  

          P.O. Box 1404

  

          McPherson, Kansas 67460

  

          FAX: (316)241-5562

  

          Attention: John Buehrle
  

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          15.4.2 Administrative Agent:

          CoBank, ACB

          5500 South Quebec Street
 

          Englewood, Colorado 80111
 

          FAX: (303)694-5830
 

          Attention:
Syndications Coordinator, Corporate Finance Div.

 

          15.4.3
Syndication Parties:
 

          See signature pages to this Credit Agreement

     15.5 Liability of Administrative Agent. The Administrative Agent shall not have
any liabilities or responsibilities to Borrower or any Subsidiary on account of
the failure of any Syndication Party to perform its obligations hereunder or to
any Syndication Party on account of the failure of Borrower or any Subsidiary to
perform their respective obligations hereunder or under any other Loan Document.

     15.6 Successors and Assigns. This Credit Agreement shall be binding upon and
inure to the benefit of Borrower, the Administrative Agent, and the Syndication
Parties, and their respective successors and assigns, except that Borrower may
not assign or transfer its rights or obligations hereunder without the prior
written consent of all of the Syndication Parties.

     15.7
Severability. The invalidity or unenforceability of any provision of this
Credit Agreement or the other Loan Documents shall not affect the remaining
portions of such documents or instruments; in case of such invalidity or
unenforceability, such documents or instruments shall be construed as if such
invalid or unenforceable provisions had not been included therein.

     15.8 Entire Agreement. This Credit Agreement (together with all exhibits hereto,
which are incorporated herein by this reference) and the other Loan Documents
represent the entire understanding of the Administrative Agent, each Syndication
Party, and Borrower with respect to the subject matter hereof and shall replace
and supersede any previous agreements of the parties with respect to the subject
matter hereof.

     15.9 Applicable Law. To the extent not governed by federal law, this Credit
Agreement and the other Loan Documents, and the rights and obligations of the
parties hereto and thereto shall be governed by and interpreted in accordance
with the internal laws of the State of Colorado, without giving effect to any
otherwise applicable rules concerning conflicts of law, except that matters
regarding the creation, perfection and foreclosure upon security interests in
real property interests shall be interpreted in accordance with the internal
laws of the state where such property is located.

     15.10 Captions. The captions or headings in this Credit Agreement and any table
of contents hereof are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Credit Agreement.

65

 

     15.11
Complete Agreement; Amendments. THIS CREDIT AGREEMENT, THE 2-YEAR NOTES,
AND THE OTHER LOAN DOCUMENTS ARE INTENDED BY THE PARTIES HERETO TO BE A COMPLETE
AND FINAL EXPRESSION OF THEIR AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT. BY INITIALING IN THE MARGIN, THE
ADMINISTRATIVE AGENT, EACH SYNDICATION PARTY, AND BORROWER ACKNOWLEDGE AND AGREE
THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT. This Credit Agreement may not be modified or amended
unless such modification or amendment is in writing and is signed by Borrower,
the Administrative Agent, and all Syndication Parties (and each Syndication
Party hereby agrees to execute any such amendment approved pursuant to Section
14.8 hereof). Borrower agrees that it shall reimburse the Administrative Agent
for all fees and expenses incurred by the Administrative Agent in retaining
outside legal counsel in connection with any amendment or modification to this
Credit Agreement requested by Borrower.

     15.12 Additional Costs of Maintaining Loan. Borrower shall pay to the
Administrative Agent from time to time such amounts as the Administrative Agent
may determine to be necessary to compensate any Syndication Party for any
increase in costs to such Syndication Party which the Administrative Agent
determines, based on information presented to it by such Syndication Party, are
attributable to such Syndication Party’s making or maintaining an Advance
hereunder or its obligation to make such Advance, or any reduction in any amount
receivable by such Syndication Party under this Credit Agreement or the 2-Year
Notes payable to it in respect to such Advance or such obligation (such
increases in costs and reductions in amounts receivable being herein called
“Additional Costs”), resulting from any change after the date of this Credit
Agreement in United States federal, state, municipal, or foreign laws or
regulations (including Regulation D of the Federal Reserve Board), or the
adoption or making after such date of any interpretations, directives, or
requirements applying to a class of banks including such Syndication Party of or
under any United States federal, state, municipal, or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof (“Regulatory Change”), which: (a) changes the basis of
taxation of any amounts payable to such Syndication Party under this Credit
Agreement or the 2-Year Notes payable to such Syndication Party in respect of
such Advance (other than taxes imposed on the overall net income of such
Syndication Party); or (b) imposes or modifies any reserve, special deposit, or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Syndication Party; or (c)
imposes any other condition affecting this Credit Agreement or the 2-Year Notes
payable to such Syndication Party (or any of such extensions of credit or
liabilities). The Administrative Agent will notify Borrower of any event
occurring after the date of this Credit Agreement which will entitle such
Syndication Party to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation, the Administrative Agent shall include with such notice, a
certificate from such Syndication

66

 

Party setting forth in reasonable detail the calculation of the amount of such
compensation. Determinations by the Administrative Agent for purposes of this
Section of the effect of any Regulatory Change on the costs of such Syndication
Party of making or maintaining an Advance or on amounts receivable by such
Syndication Party in respect of Advances, and of the additional amounts required
to compensate such Syndication Party in respect of any Additional Costs, shall
be conclusive absent manifest error, provided that such determinations are made
on a reasonable basis.

     15.13 Capital Requirements. In the event that the introduction of or any change
in: (a) any law or regulation; or (b) the judicial, administrative, or other
governmental interpretation of any law or regulation; or (c) compliance by any
Syndication Party or any corporation controlling any such Syndication Party with
any guideline or request from any governmental authority (whether or not having
the force of law) has the effect of requiring an increase in the amount of
capital required or expected to be maintained by such Syndication Party or any
corporation controlling such Syndication Party, and such Syndication Party
certifies that such increase is based in any part upon such Syndication Party’s
obligations hereunder with respect to the 2-Year Loans, and other similar
obligations, Borrower shall pay to such Syndication Party such additional amount
as shall be certified by such Syndication Party to the Administrative Agent and
to Borrower to be the net present value (discounted at the Base Rate) of (x)
the amount by which such increase in capital reduces the rate of return on
capital which such Syndication Party could have achieved over the period
remaining until the applicable 2-Year Maturity Date, but for such introduction
or change, (y) multiplied by the product of such Syndication Party’s Individual
2-Year Pro Rata Share times the applicable Aggregate Commitment(s). The
Administrative Agent will notify Borrower of any event occurring after the date
of this Credit Agreement that will entitle any such Syndication Party to
compensation pursuant to this Section as promptly as practicable after it
obtains knowledge thereof and of such Syndication Party’s determination to
request such compensation. The Administrative Agent shall include with such
notice, a certificate from such Syndication Party setting forth in reasonable
detail the calculation of the amount of such compensation. Determinations by any
Syndication Party for purposes of this Section of the effect of any increase in
the amount of capital required to be maintained by any such Syndication Party
and of the amount of compensation owed to any such Syndication Party under this
Section shall be conclusive absent manifest error, provided that such
determinations are made on a reasonable basis.

     15.14 Replacement Notes. Upon receipt by Borrower of evidence satisfactory to it
of: (a) the loss, theft, destruction or mutilation of any 2-Year Note, and (in
case of loss, theft or destruction) of the agreement of the Syndication Party to
which the 2-Year Note was payable to indemnify Borrower, and upon surrender and
cancellation of such 2-Year Note, if mutilated; or (b) the assignment by any
Syndication Party of its interest hereunder and the 2-Year Notes relating
thereto, or any portion thereof, pursuant to this Credit Agreement, then
Borrower will pay any unpaid principal and interest (and Funding Losses, if
applicable) then or previously due and payable on such 2-Year Notes and will
(upon delivery of such 2-Year Notes for cancellation, unless covered by
subparagraph (a) of this Section) deliver in lieu of each such 2-Year Note a new
2-Year

67

 

Note or, in the case of an assignment of a portion of any such Syndication
Party’s Interest, new 2-Year Notes, for any remaining balance. All Notes
executed pursuant to this Section shall be dated as of December 21, 1999. The
Syndication Parties shall, as soon as practical after receipt of such new
executed Notes, return to Borrower the Note, if any, which has been replaced by
such new Note or Notes.

     15.15 Patronage Payments. Borrower acknowledges and agrees that: (a) only that
portion of the 2-Year Loans represented by CoBank’s Individual 2-Year Pro Rata
Share which is retained by CoBank for its own account is entitled to patronage
distributions in accordance with CoBank’s bylaws and its practices and
procedures related to patronage distribution; and (b) any patronage, or similar,
payments to which Borrower is entitled on account its ownership of Bank Equity
Interests or otherwise will not be based on any portion of CoBank’s interest in
the 2-Year Loans in which CoBank has at any time granted a participation
interest.

     15.16 Mutual Release. Upon full indefeasible payment and satisfaction of the
Bank Debt and 2-Year Notes and the other obligations contained in this Credit
Agreement, the parties, including Borrower, the Administrative Agent, and each
Syndication Party shall, except as provided in Article 12 hereof and except with
respect to Borrower’s reimbursement obligation to the issuer of each Negotiated
Letter of Credit with an expiry date beyond the Maturity Date, thereupon
automatically each be fully, finally, and forever released and discharged from
any further claim, liability, or obligation in connection with the Bank Debt.

     15.17 Liberal Construction. This Credit Agreement constitutes a fully negotiated
agreement between commercially sophisticated parties, each assisted by legal
counsel, and shall not be construed and interpreted for or against any party
hereto.

     15.18 Counterparts. This Credit Agreement may be executed by the parties hereto
in separate counterparts, each of which, when so executed and delivered, shall
be an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all of the parties hereto.

     15.19 Confidentiality. Each Syndication Party shall maintain the confidential
nature of, and shall not use or disclose, any of Borrower’s financial
information, confidential information or trade secrets without first obtaining
Borrower’s written consent. Nothing in this Section shall require any
Syndication Party to obtain such consent after there is an Event of Default. The
obligations of the Syndication Parties shall in no event apply to: (a) providing
information about Borrower to any financial institution contemplated in Sections
14.6, 14.14, and 14.19 hereof, or to such Syndication Party’s parent holding
company or any of such Syndication Party’s Affiliates; (b) any situation in
which any Syndication Party is required by Law or required by any Governmental
Authority to disclose information; (c) providing information to counsel to any
Syndication Party in connection with the transactions contemplated by the Loan
Documents; (d) providing information to independent

68

 

auditors retained by the such Syndication Party; (e) any information that is in
or becomes part of the public domain otherwise than through a wrongful act of
such Syndication Party or any of its employees or agents thereof; (f) any
information that is in the possession of any Syndication Party prior to receipt
thereof from Borrower or any other Person known to such Syndication Party to be
acting on behalf of Borrower; (g) any information that is independently
developed by any Syndication Party; and (h) any information that is disclosed to
any Syndication Party by a third party that has no obligation of confidentiality
with respect to the information disclosed. A Syndication Party’s confidentiality
requirements continue after it is no longer a Syndication Party under this
Credit Agreement.

     15.20 Automatic Amendment to Loan Documents. Upon the Effective Date, (a) each
reference to “Credit Agreement” (by whatever name) in each of the other Loan
Documents, including, without limitation, each of the 2-Year Notes, shall be
deemed to be a reference to this 2003 Amended and Restated Credit Agreement, as
it shall be amended, extended, or replaced from time to time, and (b) each
reference to the “364- Day Notes” in any of the Loan Documents, shall be deemed
to be a reference to the 2- Year Notes.

     15.21 Affect of Amended and Restated Credit Agreement. This Credit Agreement
shall be effective from the Effective Date forward, and the execution of this
Credit Agreement shall not relieve any party to the 2002 Restated Credit
Agreement from their respective obligations thereunder for the period from the
Effective Date of the Original Credit Agreement to the Effective Date of this
Credit Agreement or from any liability for the failure to perform such
obligations or from any liability arising out of indemnification obligations
under the Original Credit Agreement or the 2002 Restated Credit Agreement.

     15.22 Release. BORROWER HEREBY RELEASES, WAIVES AND FOREVER DISCHARGES
ADMINISTRATIVE AGENT AND EACH SYNDICATION PARTY AND EACH OF THEIR RESPECTIVE
SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM ALL KNOWN AND
UNKNOWN, ABSOLUTE AND CONTINGENT, CLAIMS, DEFENSES, SETOFFS, COUNTERCLAIMS,
CAUSES OF ACTION, ACTIONS, SUITS OR OTHER LEGAL PROCEEDINGS OF ANY KIND EXISTING
OR ACCRUED AS OF THE DATE OF THIS CREDIT AGREEMENT IN FAVOR OF BORROWER

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

69

 

     IN WITNESS WHEREOF, the parties have executed this 2003 Amended and
Restated Credit Agreement (2-Year Revolving Loan) as of the date first above
written.

	 	 	 	 	 
	 	BORROWER:

NATIONAL COOPERATIVE REFINERY ASSOCIATION,
a cooperative marketing association formed
under the laws of the State of Kansas

 	 
	 	By:  	/s/ John G. Buehrle
 	 
	 	Name:  	John G. Buehrle 	 
	 	Title:  	Vice President-Finance 	 
	 

	 	 	 	 	 
	 	ADMINISTRATIVE AGENT:

COBANK, ACB

 	 
	 	By:  	/s/ Michael Tousignant
 	 
	 	Name:  	Michael Tousignant 	 
	 	Title:  	Vice President 	 

70

 

	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	SYNDICATION PARTIES:
	 
	 	 	 	 	 	 
	 	 	CoBank, ACB
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Michael Tousignant
	

	 	 	 	
 
	 	 	Name: Michael Tousignant
	 	 	Title: Vice President
	 
	 	 	 	 	 	 
	 	 	Contact Name: Michael Tousignant
	 	 	Title: Vice President
	 	 	Address:	 	5500 S. Quebec Street
	

	 	 	 	 	 	Greenwood Village, CO 80111
	 	 	Phone No.: (303) 694-5838
	 	 	Fax No.: (303) 694-5830
	 	 	Individual 2-Year Commitment: $7,500,000.00
	 	 	Payment Instructions:

	 	 	 	 	CoBank, ACB
	

	 	 	 	ABA No.: 307088754
	

	 	 	 	Acct. Name: NCRA
	

	 	 	 	Account No.: ____________________
	

	 	 	 	Reference: NCRA

71

 

	 	 	 	 	 	 	 
	 	 	SYNDICATION PARTIES:
	 
	 	 	 	 	 	 
	 	 	U.S. AgBank, FCB, f/k/a Farm Credit Bank of
Wichita
	 
	 	 	 	 	 	 
	 	 	By: /s/ Travis W. Ball
	

	 	 	 	
 
	 	 	Name: Travis W. Ball
	 	 	Title: Vice President
	 
	 	 	 	 	 	 
	 	 	Contact Name:
	 	 	Title: Vice President
	 	 	Address:	 	245 N. Waco
	

	 	 	 	 	 	Wichita, Kansas 67202
	 	 	Phone No.: (316) 266-5100
	 	 	Fax No.: (316) 266-5121
	 	 	Individual 2-Year Commitment: $7,500,000.00
	 	 	Payment Instructions:

	 	 	 	 	U.S. AgBank, FCB
	

	 	 	 	ABA No.: 101104562
	

	 	 	 	Acct. Name: FarmCreditWich
	

	 	 	 	Account No.: ________________
	

	 	 	 	Attn.: Sandra Lahar

72

 

A

 

 

EXHIBIT 1.21

to 2003 Amended and Restated Credit Agreement

COMPLIANCE CERTIFICATE

National Cooperative Refinery Association

CoBank, ACB

5500 South Quebec Street

Greenwood Village, Colorado 80111

     ATTN: Administrative Agent, National Cooperative Refinery Association Loan

Gentlemen:

     As required by Subsections 10.2.1 and 10.2.2 of that certain 2003 Amended
and Restated Credit Agreement (“Credit Agreement”) dated as of December 16,
2003, by and between National Cooperative Refinery Association (“Company”),
CoBank, ACB, in its capacity as Administrative Agent and as a Syndication
Party, and the other Syndication Parties signatory thereto, a review of the
activities of the Company for the [Fiscal Quarter ending                ,
200  ]
[fiscal year
ending                ,
200  ] (the “Fiscal Period”) has been
made under my supervision with a view to determine whether the Company has
kept, observed, performed and fulfilled all of its obligations under the Credit
Agreement and all other agreements and undertakings contemplated thereby. To
the best of my knowledge, and based upon such review, I certify, in my capacity
as [Chief Financial Officer] OR [corporate treasurer] of the Company, that no
event has occurred which constitutes, or which with the passage of time or
service of notice, or both, would constitute, an Event of Default or a
Potential Default as defined in the Credit Agreement.

     I further certify that (a) to the best of my knowledge the amounts set
forth on the attachment accurately present amounts required to be calculated on
a consolidated basis for Borrower (including Borrower’s earnings on account of
its minority interest in Osage Pipe Line Company and in Kaw Pipe Line Company)
and its Subsidiary Cooperative Refining, LLC with respect to the financial
covenants contained in the Credit Agreement as of the last day of the Fiscal
Period (unless expressly specified herein) and (b) also attached as Schedule A
are detailed calculations showing how such amounts were determined. All
capitalized terms used, but not defined, herein and on the attachment have the
identical meaning as in the Credit Agreement.

	 	 	 	 	 
	 	Very truly yours,

National Cooperative Refinery Association

 	 
	 	By:  	 	 	 
	 	 	
	 
	 	Name:  	 	 
	 	 	
	 
	 	Title:	
Chief Financial Officer/Treasurer 	 
	 

 

 

Capitalized terms used herein shall have the definitions set forth in the Credit Agreement.

SUBSECTION 10.16.1: DEBT TO EBITDA RATIO

	Test:	 	Measured over the immediately preceding four (4) Fiscal Quarters: (a) Debt
divided by (b) EBITDA.

	 	 	 	 	 	 	 
	 	 	Target: Not in excess of 3.00 to 1.00 at any time.	 	 
	 
	 	 	 	 	 	 
	 

	 	Debt to EBITDA Ratio (Actual)	 	 	 	 
	

	 	As of Fiscal Quarter ended       /      /      
	 	

	 	 

SUBSECTION 10.16.2: MINIMUM NET WORTH

	Test:	 	Measured at the end of each Fiscal Quarter, Net Worth.

	 	 	 	 	 	 	 
	 	 	Target: Not less than $340,000,000.00.	 	 
	 
	 	 	 	 	 	 
	 

	 	Net Worth	 	 	 	 
	 

	 	As of Fiscal Quarter ended       /      /      

	 	$                      
	 	 

SUBSECTION 10.16.3: INTEREST COVERAGE RATIO

	Test:	 	Measured over the immediately preceding four (4) Fiscal Quarters: (a) EBIT divided by (b) Interest Expense.

	 	 	 	 	 	 	 
	 	 	Target: Not less than 2.25 to 1.00 as of the last day of each Fiscal Quarter.
	 
	 	 	 	 	 	 
	 

	 	Interest Coverage Ratio (actual)	 	 	 	 
	 

	 	As of Fiscal Quarter ended       /      /      

	 	               to 1.00
	 	 

2

 

SUBSECTION 10.16.4: MINIMUM WORKING CAPITAL

Test: Current assets minus current liabilities.

	 	 	Target: Not less than $20,000,000.00 as of the last day of each Fiscal Quarter for each Fiscal Year

	 	 	 	 	 	 	 
	 	 	Current assets minus current liabilities (Actual)
	 

	 	As of Fiscal Quarter ended       /      /      
	 	$                      
	 	 

SCHEDULE A

DETAILED CALCULATIONS

	 	 	 	 	 	 	 
	DEBT TO EBITDA (000’s)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Debt (current measurment period)
	 	 	 	 	 	 
	Current Portion Long Term Debt
	 	 	 	 	 	 
	Capital Leases
	 	 	 	 	 	 
	364-Day Facility
	 	 	 	 	 	 
	Other	 	
	 	 
	   Total Debt
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EBITDA (rolling 4 quarters)
	 	 	 	 	 	 
	Net Income
	 	 	 	 	 	 
	Interest Expense
	 	 	 	 	 	 
	Federal and State Income Taxes
	 	 	 	 	 	 
	Extraordinary Losses
	 	 	 	 	 	 
	Depreciation
	 	 	 	 	 	 
	Amortization
	 	 	 	 	 	 
	Less:
	 	 	 	 	 	 
	Extraordinary Gains
	 	 	 	 	 	 
	Non-cash Patronage Income
	 	 	 	 	 	 
	Cash Patronage Dividends Paid

	 	 	 	

	 	 
	Total EBITDA
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Debt to EBITDA Ratio
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Maximum Ratio Permitted

	 	 	 	3.00 to 1.00	 	 

3

 

MINIMUM NET WORTH (000’s)

	 	 	 	 	 	 	 
	Total Assets	 	$                    	 	 
	Less Total Liabilities	 	$                    	 	 
	 
	Net Worth

	 	 	 	$                    	 	 
	 
	INTEREST COVERAGE RATIO (000’s)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EBIT (rolling 4 quarters)
	 	 	 	 	 	 
	Net Income
	 	 	 	 	 	 
	Interest Expense
	 	 	 	 	 	 
	Federal and State Income Taxes
	 	 	 	 	 	 
	Extraordinary Losses
	 	 	 	 	 	 
	Less:
	 	 	 	 	 	 
	Extraordinary Gains
	 	 	 	 	 	 
	Non-cash Patronage Income
	 	 	 	 	 	 
	Cash Patronage Dividends Paid

	 	 	 	                    	 	 
	   Total EBIT
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Interest Expense (rolling 4 quarters)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EBIT to Interest
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Minimum Ratio Permitted

	 	 	 	2.25 to 1.0	 	 
	 
	 	 	 	 	 	 
	WORKING CAPITAL
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Current Assets	 	$                    	 	 
	Less Current Liabilities	 	$                    	 	 
	 
	 	 	 	 	 	 
	Working Capital

	 	 	 	$                    
	 	 

4

 

EXHIBIT 1.76

to 2003 Amended and Restated Credit Agreement

Subsidiaries

	 	 	 	 	 
	Kaw Pipe Line Co.
	 	 	66.667	%
	Osage Pipeline Co.
	 	 	41.18	%
	Jayhawk Pipeline, L.L.C.
	 	 	100	%

 

 

EXHIBIT 2.3

to 2003 Amended and Restated Credit Agreement

2-YEAR BORROWING NOTICE NO.                    

	 	 	 
	 

	 	                   , 200        

	To:	 	The Administrative Agent
	 	 	 
	From:	 	National Cooperative Refinery Association (“Borrower”)
	 	 	 
	Re:	 	2003 Amended and Restated Credit Agreement (as amended from time to time,
the “Credit Agreement”) dated as of December 16, 2003, among Borrower, CoBank, ACB (“CoBank” and, in its capacity as such, the “Administrative Agent”), and the
other Syndication Parties signatory thereto.

     Pursuant to Section 2.3 of the Credit Agreement, Borrower hereby gives notice
of its desire to receive an Advance in accordance with the terms set forth below (all
capitalized terms used herein and not defined herein shall have the meaning given them in the
Credit Agreement):

	(a)	 	The Advance requested pursuant to this 2-Year Borrowing Notice shall be
made
on           , 20      [the date inserted must be a Banking Day and [the same
Banking Day as] 1 [not less than three (3) Banking
Days from]2 the date
hereof].
	 
	(b)	 	The aggregate principal amount of the 2-Year Pro Rata Advance requested
hereunder shall be          Dollars ($          ).
	 
	(c)	 	The 2-Year Pro Rata Advance requested hereunder shall initially bear
interest at the [select one]:
	 
	 	 	[ ] Base Rate and be treated as a Base Rate Loan;
	 
	 	 	[ ] LIBO Rate and be treated as a LIBO Rate Loan.
	 
	(d)	 	If the LIBO Rate is selected, the initial LIBO Rate Period shall be a
         month period [select one, two, three, or six month period].

	 	 	 	 	 
	 	 	NATIONAL COOPERATIVE REFINERY ASSOCIATION
	 
	 	 	 	 
	 

	 	By:
	 	

	 

	 	Name:
	 	

	 

	 	Title:
	 	

	1Applicable only to Base Rate Loans
	 
	2Applicable only to LIBOR Loans

 

 

EXHIBIT 2.4

2003 Amended and Restated Credit Agreement

2-YEAR FACILITY NOTE

	 	 	 
	$               

	 	Effective Date: December 21, 1999

     FOR VALUE RECEIVED, NATIONAL COOPERATIVE REFINERY ASSOCIATION, a
Kansas cooperative marketing association (“Maker”), promises to pay to the
order of          (“Payee”) at the office of the Administrative Agent (as defined in the Credit
Agreement), c/o Bank,
ACB at 5500 South Quebec Street, Englewood, Colorado 80111, or such other
place as the
Administrative Agent shall direct in writing, the principal sum of              
   
Dollars ($                  ) or, if less, the amount outstanding under this Note
for Advances (including Overnight Advances if Payee is the Overnight Lender)
made pursuant to the Credit Agreement dated as of December 21, 1999, as
replaced by the 2002 Amended and Restated Credit Agreement dated as of December
17, 2002, and as replaced by the 2003 Amended and Restated Credit Agreement
dated as of December 16, 2003, by and between CoBank, ACB (for its own benefit
as a Syndication Party, and as the Administrative Agent for the benefit of the
present and future Syndication Parties as named or defined therein), the
Syndication Parties signatory thereto, and Maker (as it may be amended from
time to time in the future, the “Credit Agreement”) and any Bank Debt related
thereto. This Note is issued and delivered to Payee pursuant to the Credit
Agreement. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings as set forth in the Credit Agreement.

     The unpaid balance of this Note from time to time outstanding shall bear
interest as set forth in
the Credit Agreement. Interest shall be payable as provided in the Credit
Agreement. Principal shall be
payable on the 2-Year Maturity Date and as otherwise provided in the Credit
Agreement. This Note has been issued by Maker to Payee pursuant to the Credit
Agreement and reference is made thereto for
specific terms and conditions under which this Note is made and to which this
Note is subject.

     This Note is subject to voluntary and mandatory prepayments as set forth in the
Credit
Agreement. Amounts repaid may be reborrowed during the 2-Year Availability
Period. Upon the
occurrence of an Event of Default, Maker agrees that the Administrative Agent
and the Payee shall
have all rights and remedies set forth in the Credit Agreement, including
without limitation the rights
of acceleration set forth in the Credit Agreement. In addition, the
Administrative Agent and the Payee
shall have the right to recover all costs of collection and enforcement of this
Note as provided in the
Credit Agreement.

     Maker and any endorser, guarantor, surety or assignor hereby waives presentment
for payment,
demand, protest, notice of protest, and notice of dishonor and nonpayment of
this Note, and all
defenses on the ground of delay, suretyship, impairment of collateral, or of
extension of time at or after maturity for the payment of this Note.

     This Note shall be governed in all respects by the law of the State of
Colorado.

	 	 	 	 	 
	 

	 	Maker:	 	 
	 
	 	 	 	 
	 	 	NATIONAL COOPERATIVE REFINERY ASSOCIATION
	 	 	a Kansas cooperative marketing association
	 
	 	 	 	 
	 

	 	By:
	 	

	 

	 	Name:
	 	

	 

	 	Title:
	 	

 

 

EXHIBIT 8.3

to 2003 Amended and Restated Credit Agreement

None.

************************************************************************

EXHIBIT 8.8

to 2003 Amended and Restated Credit Agreement

None.

************************************************************************

EXHIBIT 8.18

to 2003 Amended and Restated Credit Agreement

None.

 

 

EXHIBIT 8.9

to 2003 Amended and Restated Credit Agreement

Required Licenses

	 	 	 
	1.

	 	CCR Platforming Contact (Amended Platforming Process Contract)
	 
	 	 
	2.

	 	FCC Contract
	 
	 	 
	3.

	 	Butamer Contract
	 
	 	 
	4.

	 	Unifining Process Contract
	 
	 	 
	5.

	 	Merox Contract
	 
	 	 
	6.

	 	HF Alky Contract
	 
	 	 
	7.

	 	Computer Associates License
	 
	 	 
	8.

	 	General Electric License
	 
	 	 
	9.

	 	Macro 4 Inc. License
	 
	 	 
	10.

	 	JD Edwards License

 

 

EXHIBIT 8.10

to 2003 Amended and Restated Credit Agreement

Employee Benefit Plans

	 
	Employee Retirement Plan

	 

	Savings & Retirement Plans (Supplemental)

	 

	Thrift Plan (Non-Union)

	 

	Union Savings Plan

	 

	Union & Non-Union Medical & Dental Plans

	 

	Union & Non-Union Long Term Disability

	 

	Union & Non-Union Life Insurance

	 

	Cafeteria Plan (Union & Non-Union)

 

 

EXHIBIT 8.11

to 2003 Amended and Restated Credit Agreement

Equity Investments

	 	 	 	 	 	 	 
	 	 	Subsidiary
	 	Investment

	1.

	 	Jayhawk Pipeline, L.L.C.
	 	$	28,886,691.00	 
	2.

	 	Kaw Pipe Line Co.
	 	 	1,755,902.00	 
	3.

	 	Osage Pipeline Co.
	 	 	11,773,239.00	 

 

 

EXHIBIT 11.1

to 2003 Amended and Restated Credit Agreement

Existing Indebtedness

	 	 	 	 	 
	 CoBank Agreement	 	 
	 Number
	 	Indebtedness

	TT8127 8888800018
	 	$	0.00	 
	 8888800023
	 	 	9,000,000.00	 
	 8888800022
	 	 	5,250.000.00	 
	 
	 	 	
 	 
	Total CoBank
	 	$	14,250,000.00	 
	McPherson Office Building - IRB
	 	$	1,000,000.00	 
	 
	 	 	
 	 
	Total
	 	$	15,250,000.00	 

 

 

EXHIBIT 14.25

to 2003 Amended and Restated Credit Agreement

(2-Year Revolving Loan)

SYNDICATION ACQUISITION AGREEMENT

     This Syndication Acquisition Agreement entered into this    day of    , 200   
(“Effective Date”) pursuant to the Credit Agreement (as defined below) by and between CoBank,
ACB, in its capacity as the Administrative Agent under the Credit Agreement (in such role,
“Administrative Agent”),                , a Syndication Party under the Credit
Agreement (“Transferor”), and                (“Purchaser”).

Recitals

     A. Pursuant to the 2003 Amended and Restated Credit Agreement (2-Year
Revolving Loan) by and between Administrative Agent, the Syndication Parties
named therein, and National Refinery Cooperative Association (“Borrower”),
dated December 16, 2004
(“Credit Agreement”), the Syndication Parties (“Original Syndication Parties”)
have agreed to provide, limited to their respective Individual 2-Year
Commitments and Individual 2-Year Pro Rata Shares, financing to Borrower in the
maximum aggregate amount of $15,000,000.00, to be used for the purposes set
forth in the Credit Agreement.

     B. Transferor wishes to sell and assign a portion of its Individual
commitment and
Individual Pro Rata Share and its obligations in connection therewith
(“Syndication Interest”), and Purchaser wishes to purchase and assume such
Syndication Interest [IF TRANSFEROR IS
ALSO THE ADMINISTRATIVE AGENT, INSERT THE FOLLOWING(as Syndication Party, and not
as Administrative Agent)] under the Credit Agreement.

Agreement

     For good and valuable consideration, the receipt and sufficiency of which
the parties hereto hereby acknowledge, and each to induce the others to enter
into this Syndication
Acquisition Agreement (“Agreement”), the parties hereto hereby agree as follows:

     DEFINITIONS

     Capitalized terms used herein without definition shall have the meaning given them in the
Credit Agreement, if defined therein.

     “Loan” as used herein shall mean the 2-Year Loans made available to
Borrower under the Credit Agreement.

1. PURCHASE AND SALE OF SYNDICATION INTEREST.

1.1. Purchaser hereby purchases from Transferor and
Transferor hereby sells to Purchaser, pursuant to the terms and
conditions contained herein and in Article 14 of the Credit
Agreement, a Syndication Interest equal to (a) an Individual 2-
Year Commitment of $                (“Purchaser’s 2-Year
Commitment Amount”), and (b) an Individual 2-Year Pro Rata Share
equal to    %

 

 

(“Purchaser’s 2-Year Pro Rata Share”), and a proportionate undivided interest
in the Loan Documents (other than the Notes payable to the other Syndication
Parties), and all applicable amounts owing and all applicable payments made by
Borrower thereunder (excluding Borrower’s obligation to purchase Bank Equity
Interests, and patronage dividends and patronage shares paid or payable on
account of such Bank Equity Interests). Purchaser’s obligation as set forth
above
to purchase the Syndication Interest shall, subject to the terms and conditions
hereof and of Article 14 of the Credit Agreement, be continuing, unconditional,
and irrevocable. Purchaser’s acquisition of the Syndication Interest shall be
without recourse to Transferor and shall not be construed as a loan from
Purchaser to Transferor.

1.2. Purchaser agrees to remit to Transferor on the Effective Date,
the amount
of $          ,being the Present Balance (as defined below) multiplied
by Purchaser’s 2-Year Pro Rata Share.

1.3. Purchaser agrees to, as of the Effective Date, and at all times
thereafter,
comply with all of the obligations of a Syndication Party holding an Individual
2-Year Commitment as such obligations are set forth in the Credit Agreement.

1.4. Purchaser agrees to pay to Administrative Agent on the
Effective Date:
(a) a fee in the amount of $3,500.00 for processing Purchaser’s acquisition of
the
Syndication Interest, and (b) Administrative Agent’s out of pocket fees and
expenses incurred in connection with the transaction described herein,
including
its attorney’s fees.

2. PURCHASER’S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.

2.1. Purchaser represents and warrants that: (a) the making and
performance
of this Agreement including its agreement to be bound by the Credit Agreement
is within its power and has been duly authorized by all necessary corporate and
other action by it; (b) this Agreement is in compliance with all applicable
laws
and regulations promulgated thereunder and entering into this Agreement and
performance of its obligations hereunder and under the Credit Agreement will
not conflict with nor constitute a breach of its charter or by-laws nor any
agreements by which it is bound, and will not violate any judgment, decree or
governmental or administrative order, rule or regulation applicable to it; (c)
no
approval, authorization or other action by, or declaration to or filing with,
any
governmental or administrative authority or any other Person is required to be
obtained or made by it in connection with the execution, delivery and
performance of its duties under this Agreement and the Credit
Agreement (d),
this Agreement has been duly executed by it, and, this Agreement and the Credit
Agreement, constitute its legal, valid, and binding obligation, enforceable in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and general equitable
principles
(regardless of whether such enforceability is considered in a proceeding at law
or
in equity); and (e) the act of entering into and performing its obligations
under
this Agreement and the Credit Agreement have been approved by its board of
directors at an authorized meeting thereof (or by written consent in lieu of a
meeting) and such action was duly noted in the written minutes of such meeting,

2

 

and that it will furnish Administrative Agent with a certified copy of such
minutes or an excerpt therefrom reflecting such approval.

2.2. Purchaser further represents that it is entitled to receive any
payments to
be made to it under the Credit Agreement without the withholding of any tax and
will furnish to Administrative Agent and to Borrower such forms,
certifications,
statements and other documents as Administrative Agent or Borrower may
request from time to time to evidence Purchaser’s exemption from the
withholding of any tax imposed by any jurisdiction or to enable Administrative
Agent or Borrower, as the case may be, to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
Purchaser is not created or organized under the laws of the United States of
America or any state thereof, Purchaser will furnish to Administrative Agent
and
Borrower IRS Form 4224 or Form 1001, or such other forms, certifications,
statements or documents, duly executed and completed by Purchaser, as evidence
of Purchaser’s exemption from the withholding of United States tax with respect
thereto. Notwithstanding anything herein to the contrary, Borrower shall not be
obligated to make any payments to Purchaser until Purchaser shall have
furnished to Administrative Agent and Borrower the requested form,
certification, statement or document.

2.3. Purchaser acknowledges receipt of true and correct copies of
all Loan
Documents from Transferor and agrees and represents that: (a) it has relied
upon
its independent review (i) of the Loan Documents, and (ii) any information
independently acquired by it from Borrower or otherwise in making its decision
to acquire an interest in the Loan independently and without reliance on
Transferor or Administrative Agent; (b) it has obtained such information as it
deems necessary (including any information it independently obtained from
Borrower or others) prior to making its decision to acquire the Syndication
Interest; (c) it has made its own independent analysis and appraisal of and
investigation into Borrower’s authority, business, operations, financial and
other
condition, creditworthiness, and ability to perform its obligations under the
Loan
Documents and has relied on such review in making its decision to acquire the
Syndication Interest, and will continue to rely solely upon its independent
review
of the facts and circumstances related to Borrower, and without reliance upon
Transferor or Administrative Agent, in making future decisions with respect to
all matters under or in connection with the Loan Documents and its
participation
in the Loan as a Syndication Party.

2.4. Purchaser acknowledges and agrees that: (a) neither
Administrative
Agent nor Transferor has made any representation or warranty, except as
expressly stated in the Credit Agreement and this Agreement, nor do they assume
any responsibility with respect to the due execution, validity, sufficiency,
enforceability or collectibility of the Loan, the Loan Documents or the Notes
or
with respect to the accuracy and completeness of matters disclosed, represented
or warranted in the Loan Documents by Borrower (including financial matters);
(b) neither Administrative Agent nor Transferor assumes any responsibility for
the financial condition of Borrower or for the performance of Borrower’s
obligations under the Loan Documents; (c) except as otherwise expressly
provided in this Agreement or the Credit Agreement, neither Transferor nor
Administrative Agent nor any other Syndication Party shall have any duty or

3

 

responsibility to furnish to any other Syndication Parties any credit or other
information concerning Borrower which may come into its or their possession.

2.5. Purchaser: (a) represents that it has acquired and is retaining
the
Syndication Interest in the Loan for its own account in the ordinary course of
its
banking or financing business and not with a view toward the sale,
distribution,
further participation, or transfer thereof; (b) agrees that it will not sell,
assign,
convey or otherwise dispose of (“Transfer”), or create or permit to exist any
lien
or security interest on, all or any part of its Syndication Interest in the
Loan
without the prior written consent of Administrative Agent and Borrower (which
consent will not be unreasonably withheld), provided that (i) any such Transfer
(except a Transfer to another Syndication Party) must be made in compliance
with the applicable provisions of the Credit Agreement and be in a minimum
amount of the lesser of (A) $5,000,000.00 or (B) the full amount of Purchaser’s
Individual 2-Year Commitment, and (ii) the Syndication Party making such
Transfer must pay Administrative Agent an assignment fee of $3,500.00
(“Assignment Fee”); (c) understands and agrees that it may, with the prior
written consent of Administrative Agent and Borrower (which consent will not
be unreasonably withheld), in compliance with the applicable provisions of the
Credit Agreement, participate any part of its Syndication Interest in the Loan
to
any Person, and that in the event of any such participation (i) neither its
Individual Commitment nor the Pro Rata Share, as applicable, will change on
account of such participation, and (ii) Administrative Agent shall continue to
deal
directly with Purchaser with respect to the Loan and Purchaser’s Syndication
Interest as though no participation had been granted and will not be obligated
to
deal directly with any participant; and (d) agrees that it will not divulge any
non-
public information regarding Borrower which it acquires on account of its being
a Syndication Party to any third Persons not an employee or agent of Purchaser
except (i) as may be required by law, rule, regulation, or court order, (ii) in
connection with an examination of its books or affairs by any of its regulatory
agencies or accountants, or (iii) in connection with a Transfer of, or the sale
of a
participation interest in, its Syndication Interest in accordance with the
Credit
Agreement.

2.6. Purchaser:

2.6.1 Irrevocably consents and submits to the non-exclusive
jurisdiction of the
courts of the State of Colorado and the United States District Court for the
District of Colorado and waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this
Agreement or the Credit Agreement or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement
or the
Credit Agreement or the transactions related hereto, in each case whether now
existing or hereafter arising, and whether in contract, tort, equity or
otherwise,
and agrees that any dispute with respect to any such matters shall be heard
only
in the courts described above.

2.6.2 With respect to litigation concerning this Agreement or the
Credit
Agreement within the jurisdiction of the courts of the State of Colorado or the
United States District Court for the District of Colorado: (a) hereby
irrevocably
appoints CT Corporation Systems, 1600 Broadway, Denver, Colorado 80202, as

4

 

its agent to receive for and on its behalf, service of process, which service may be
made by mailing a copy of any summons or other legal process to such party in
care of such agent, and agrees to provide Administrative Agent with satisfactory
proof and acceptance of such appointment; (b) agrees that it shall maintain a duly
appointed agent for service of summons and other legal process as long as it
remains obligated under the Credit Agreement and shall keep Administrative
Agent advised in writing of the identity and location of such agent, and, if it
changes agents, agrees to provide Administrative Agent with satisfactory proof
of the appointment and acceptance of such new agent; (c) agrees that the receipt
by such agent and/or by it of such summons or other legal process in any such
litigation shall be deemed personal service and acceptance by Purchaser for all
purposes of such litigation; (d) in the event it shall fail to maintain a duly
appointed agent for service of summons as required by this Subsection, it hereby
waives personal service of any and all process upon it and consents that all such
service or process may be made by certified mail (return receipt requested)
directed to its address set forth in Section 15.4 of the Credit Agreement (as
provided herein) and service so made shall be deemed to be completed five (5)
days after the same shall have been so deposited in the U.S. mails, or, at the
option of the party making such service, by service in any other manner
provided
under the rules of any such courts; and (e) within thirty (30) days after such
service, Purchaser shall appear in answer to such process, failing which it
shall
be deemed in default and judgment may be entered against it for the amount of
the claim and other relief requested.

2.6.3 HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER
THIS AGREEMENT OR THE CREDIT AGREEMENT OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR THE
CREDIT AGREEMENT OR THE TRANSACTIONS RELATED THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
PURCHASER HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT, AGENT,
TRANSFEROR, OR ANY SYNDICATION PARTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
PURCHASER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

3.
REPRESENTATIONS OF ADMINISTRATIVE AGENT AND TRANSFEROR.

3.1. Transferor and Administrative Agent represent and warrant that
the total
amount of principal and interest advanced (as to principal) and outstanding as
of
the Effective Date (“Present Balance”) is
$           .     .

4. GENERAL.

4.1. Schedule 1 as referred to in the Credit Agreement is hereby revised
to
read as Schedule 1 attached hereto.

5

 

4.2. Purchaser’s address for notice under Section 15.4 of the Credit
Agreement shall be as set forth on its signature page below.

     IN WITNESS HEREOF, the parties hereto have caused this Syndication
Acquisition
Agreement to be executed as of the Effective Date by their duly authorized
representatives.

	 	 	 	 	 
	 	 	Administrative Agent (as Administrative Agent):
	 
	 	 	 	 
	 	 	COBANK, ACB
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	Name:
	 	

	

	 	Title:
	 	 

	 
	 	 	 	 
	 	 	Transferor:
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	Name:
	 	

	

	 	Title:
	 	 

6

 

	 	 	 	 	 
	 	 	Purchaser:
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	Name:	 	 
	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	Contact Name:
	 	 	Title: Vice President
	 	 	Address:
	 
	 	 	 	 
	 	 	Phone No.:
	 	 	Fax No.:
	 	 	Individual 2-Year Commitment: $
	 	 	Payment Instructions:
	 
	 	 	 	 
	

	 	 	 	ABA No.:
	

	 	 	 	Acct. Name: National Cooperative
Refinery Association
	

	 	 	 	Account No.:
	

	 	 	 	Attn . :

7

 

BORROWER’S CONSENT

     Borrower hereby signifies its consent to Transferor’s sale of the
Syndication Interest to
Purchaser as described above.

	 	 	 	 	 
	 	 	NATIONAL COOPERATIVE REFINERY ASSOCIATION
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	Name:
	 	

	

	 	Title:
	 	

8

 

EXHIBIT 14.27

to 2003 Amended and Restated Credit Agreement

WIRE INSTRUCTIONS When funds are to be wired to CoBank, including in its role
as
the Administrative Agent, by any Syndication Party or by Borrower, the
following
wiring information must be used:

	 	 	 
	To:

	 	CoBank, ACB
	

	 	ABA # 3070-8875-4
	

	 	NCRA
	

	 	#20484 130
	

	 	Attn: Cindy Cross

WIRE INSTRUCTIONS When funds are to be wired to any Syndication Party, the
wiring information provided on the signature page of the Credit Agreement with
respect
to such Syndication Party (as it may be changed from time to time by notice to
the
Administrative Agent) must be used.

 

 

SCHEDULE 1

to 2003 Amended and Restated Credit Agreement

SYNDICATION PARTIES AND INDIVIDUAL COMMITMENTS

	 	 	 	 	 
	Syndication Party	 	Individual
	Name/Address
	 	2-Year Commitment

	CoBank, ACB
	 	 	 	 
	5500 So. Quebec Avenue
	 	 	 	 
	Greenwood Village, Co 80111
	 	$	7,500,000.00	 
	 
	 	 	 	 
	U.S. AgBank, FCB f/k/a Farm Credit Bank

	 	 	 
	of Wichita
	 	 	 	 
	245 N. Waco Street
	 	 
	Wichita, KS 67201 -2940
	 	$	7,500,000.00	 
	

	 	$	 	 	 
	

	 	$	 	 

 

 

2

 

 

2-YEAR FACILITY NOTE

	 	 	 
	$ 7,500,000,00

	 	Effective Date: December 21, 1999

     FOR VALUE RECEIVED, NATIONAL COOPERATIVE REFINERY ASSOCIATION,
a Kansas cooperative marketing association (“Maker”), promises to pay to the
order of
COBANK, ACB (“Payee”) at the office of the Administrative Agent (as defined in
the Credit
Agreement), c/o Bank, ACB at 5500 South Quebec Street, Greenwood Village,
Colorado
80111, or such other place as the Administrative Agent shall direct in
writing, the principal
sum of Seven million Five-hundred thousand AND No/100 Dollars ($7,500,000.00)
or, if less,
the amount outstanding under this Note for Advances (including Overnight
Advances if Payee
is the Overnight Lender) made pursuant to the Credit Agreement dated as of
December 21,
1999, as replaced by the 2002 Amended and Restated Credit Agreement dated as of
December 17, 2002, and as replaced by the 2003 Amended and Restated Credit
Agreement
dated as of December 16, 2003, by and between CoBank, ACB (for its own benefit
as a
Syndication Party, and as the Administrative Agent for the benefit of the
present and future
Syndication Parties as named or defined therein), the Syndication Parties
signatory thereto, and
Maker (as it may be amended from time to time in the future, the “Credit
Agreement”) and any
Bank Debt related thereto. This Note is issued and delivered to Payee pursuant
to the Credit
Agreement. All capitalized terms used in this Note and not otherwise defined
herein shall have
the same meanings as set forth in the Credit Agreement.

     The unpaid balance of this Note from time to time outstanding shall bear
interest as set
forth in the Credit Agreement. Interest shall be payable as provided in the
Credit Agreement.
Principal shall be payable on the 2-Year Maturity Date and as otherwise
provided in the Credit
Agreement. This Note has been issued by Maker to Payee pursuant to the Credit
Agreement
and reference is made thereto for specific terms and conditions under which
this Note is made
and to which this Note is subject.

     This Note is subject to voluntary and mandatory prepayments as set forth
in the Credit
Agreement. Amounts repaid may be reborrowed during the 2-Year Availability
Period. Upon
the occurrence of an Event of Default, Maker agrees that the Administrative
Agent and the
Payee shall have all rights and remedies set forth in the Credit Agreement,
including without
limitation the rights of acceleration set forth in the Credit Agreement. In
addition, the
Administrative Agent and the Payee shall have the right to recover all costs of
collection and
enforcement of this Note as provided in the Credit Agreement.

     Maker and any endorser, guarantor, surety or assignor hereby waives
presentment for
payment, demand, protest, notice of protest, and notice of dishonor and
nonpayment of this
Note, and all defenses on the ground of delay, suretyship, impairment of
collateral, or of
extension of time at or after maturity for the payment of this Note.

     This Note shall be governed in all respects by the law of the State of
Colorado.

	 	 	 	 	 
	 	 	Maker:
	 	 	 
	 	 	NATIONAL COOPERATIVE REFINERY ASSOCIATION
	 	 	a Kansas cooperative marketing association
	 	 	 
	

	 	By:
	 	/s/ JOHN G. BUEHRLE
	

	 	 	 	

	

	 	Name:
	 	JOHN G. BUEHRLE
	

	 	Title:
	 	Vice President — Finance

 

 

3

 

 

2-YEAR FACILITY NOTE

	 	 	 
	$7,500,000.00

	 	Effective Date: December 21, 1999

     FOR VALUE RECEIVED, NATIONAL COOPERATIVE REFINERY ASSOCIATION, a Kansas
cooperative marketing association (“Maker”), promises to pay to the order of
U.S. AGBANK, FCB, f/k/a FARM CREDIT BANK OF WICHITA (“Payee”) at the office of
the Administrative Agent (as defined in the Credit Agreement), c/o Bank, ACB at
5500 South Quebec Street, Greenwood Village, Colorado 80111, or such other
place as the Administrative Agent shall direct in writing, the principal sum of
Seven million Five-hundred thousand AND No/100 Dollars ($7,500,000.00) or, if
less, the amount outstanding under this Note for Advances (including Overnight
Advances if Payee is the Overnight Lender) made pursuant to the Credit
Agreement dated as of December 21, 1999, as replaced by the 2002 Amended and
Restated Credit Agreement dated as of December 17, 2002, and as replaced by the
2003 Amended and Restated Credit Agreement dated as of December 16, 2003, by
and between
CoBank, ACB (for its own benefit as a Syndication Party, and as the
Administrative Agent for
the benefit of the present and future Syndication Parties as named or defined
therein), the
Syndication Parties signatory thereto, and Maker (as it may be amended from
time to time in
the future, the “Credit Agreement”) and any Bank Debt related thereto. This
Note is issued and delivered to Payee pursuant to the Credit Agreement. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings as set forth in the Credit Agreement.

     The unpaid balance of this Note from time to time outstanding shall bear
interest as set
forth in the Credit Agreement. Interest shall be payable as provided in the
Credit Agreement.
Principal shall be payable on the 2-Year Maturity Date and as otherwise
provided in the Credit
Agreement. This Note has been issued by Maker to Payee pursuant to the Credit
Agreement and reference is made thereto for specific terms and conditions under
which this Note is made
and to which this Note is subject.

     This Note is subject to voluntary and mandatory prepayments as set forth
in the Credit
Agreement. Amounts repaid may be reborrowed during the 2-Year Availability
Period. Upon
the occurrence of an Event of Default, Maker agrees that the Administrative
Agent and the
Payee shall have all rights and remedies set forth in the Credit Agreement,
including without
limitation the rights of acceleration set forth in the Credit Agreement. In
addition, the Administrative Agent and the Payee shall have the right to
recover all costs of collection and
enforcement of this Note as provided in the Credit Agreement.

     Maker and any endorser, guarantor, surety or assignor hereby waives
presentment for
payment, demand, protest, notice of protest, and notice of dishonor and
nonpayment of this
Note, and all defenses on the ground of delay, suretyship, impairment of
collateral, or of
extension of time at or after maturity for the payment of this Note.

     This Note
shall be governed in all respects by the law of the State of Colorado.

	 	 	 	 	 
	 	 	Maker:
	 	 	 
	 	 	NATIONAL COOPERATIVE REFINERY ASSOCIATION
	 	 	a Kansas cooperative marketing association
	 	 	 
	

	 	By:
	 	/s/ JOHN G. BUEHRLE
	

	 	 	 	

	

	 	Name:
	 	JOHN G. BUEHRLE
	

	 	Title:
	 	Vice President — Finance

 

 

4

 

 

I,
John G. Buehrle, Assistant Secretary of National Cooperative Refinery
Association, do hereby certify that the following resolution received Board
approval on the 9th day of December, 2003, at a meeting of the Board of
Directors of National Cooperative Refinery Association, regularly called and
duly constituted and at which a quorum was present.

WHEREAS,
the above named borrower (“Borrower”), under its articles of
incorporation, bylaws, or other organizational documents has full power and
authority to borrow money and to secure the same with its own property and
property delivered to it for marketing or otherwise; and

WHEREAS, all prerequisite acts and proceedings preliminary to the adoption of
this Resolution have been taken and done in due and proper form, time and
manner;

NOW,
THEREFORE, BE IT RESOLVED, that each of the following officers or
positions OF PRESIDENT, Treasurer, Chief Financial Officer, and any others to
be authorized under this Resolution (“Officers”) of the Borrower are jointly and
severally authorized and empowered to obtain for and on behalf of the
Borrower from time to time, from CoBank, ACB (“CoBank), a loan or loans or
other financial accommodations (including, without limitation, letters of
credit, note purchase agreements and bankers acceptances) (collectively, a
“Loan”) under this Resolution not exceeding the principal SUM OF FIFTEEN
MILLION DOLLARS ($15,000,000) at any one time outstanding, exclusive of
amounts authorized to be borrowed under other resolutions submitted
to CoBank and which have not been revoked; and for such purposes: (1)to execute such
application or applications (including exhibits, amendments and/or supplements
thereto) as may be required for all borrowings; (2) to obligate the Borrower to
pay such rate or rates of Interest as the Officers so acting shall deem proper,
and in connection therewith to purchase such interest rate risk management
products as may be offered from time to time by CoBank; (3) to obligate the
Borrower to such other terms and conditions as the Officers so acting shall
deem proper; (4) to obligate the Borrower to make such investments in
CoBank as required by CoBank; (5) to execute and deliver to CoBank or its
nominee all such written loan agreements, documents and instruments as may be
required by CoBank In regard to or as evidence of any Loan made pursuant to the
terms of this Resolution; (6) to pledge, grant a security interest or lien
in, or assign property of the Borrower or property of others on which it is
entitled to borrow, of any kind and in any amount as security for any or all
obligations (past present and/or future) of the Borrower to CoBank; (7) from
time to time extend, amend, renew or refinance any such Loan; (8) to reborrow
from time to time, subject to the provisions of this Resolution, all or any
part of the amounts repaid to CoBank on any Loan made pursuant hereto (whether
for the same or a different purpose); (9) to execute

 

 

and deliver to CoBank an Electronic Commerce Master Service Agreement, a
separate Service Agreement for each different service requested by the
Borrower, and such other agreements, addenda, documents or instruments as
may be required by CoBank in the event that the Borrower elects to use
CoBank’s electronic banking system (the “System”); (10) to execute and
deliver to CoBank any agreements, addenda, authorization forms and other
documents or instruments as may be required by CoBank in the event that the
Borrower elects to use any services or products related to the Loan that are
red by CoBank now or in the future, including without limitation an automated
clearing house (ACH) Service; (11) to direct and delegate to designated
employees of the Borrower the authority to direct, by written or telephonic
instructions or electronically, if the Borrower has agreed to use the System
for such purpose, the disposition of the proceeds of any Loan
authorized herein or any property of the Borrower at any time held by CoBank;
and (12) to delegate to designated employees of the Borrower the authority to
request by telephonic or written means or electronically, if the Borrower has
agreed to use the System for such purpose, loan advances and/or other
financial accommodations, and in connection therewith, to fix rates and agree
to pay fees. In the absence of any direction or delegation authorized in
(11) or (12) above, all existing directions and/or delegations shall remain in
full force and effect and shall be applicable to any Loan authorized herein.

RESOLVED
FURTHER, That each of the Officers are hereby jointly and severally
authorized to: (1) establish a Cash Investment Services Account at CoBank; (2)
make such investments therein as any Officer shall deem proper; (3) direct by
written or telephonic instructions or electronically, if the Borrower has
agreed to use the system for such purposes, the disposition of the proceeds
therein; (4) delegate to designated employees of the Company the authority
set forth in (2) and (3) above; and (5) execute and deliver all documents and
agreements necessary to carry out this authority.

RESOLVED FURTHER, That each of the Officers are hereby jointly and severally
authorized and directed to do and/or cause to be done, from time to time, all
things which may be necessary and/or proper for the carrying out of the terms
of these Resolutions.

RESOLVED FURTHER That all prior acts by the Officers or other employees or
agents of the Borrower to accomplish the purposes of these Resolutions are
hereby approved and ratified.

RESOLVED FURTHER, That any Officer of the Borrower is hereby authorized
and directed to cast the ballot of the Borrower in any and all proceedings in

 

 

which the Borrower is entitled to vote for the selection of a member of
CoBank’s board of directors or for any other purpose.

RESOLVED FURTHER, That these Resolutions shall remain in full force and
effect until a certified copy of a duly adopted resolution effecting a revocation
or amendment, as the case may be, shall have been received by CoBank. The
authority hereby granted shall apply with equal force and effect to the
successors in office of the Officers herein named.

RESOLVED FURTHER, That effective on the date when the Loan under these
Resolutions becomes available, the following listed Resolutions are hereby
revoked:

ALL PRIOR RESOLUTIONS

No such revocation shall affect the validity of any action or actions made or
taken in reliance on such resolution(s) prior to the effective date of
revocation.

RESOLVED FURTHER, That the Secretary or any Assistant Secretary of the Borrower
is hereby authorized and directed to certify to CoBank a copy of these
Resolutions, the names and specimen signatures of the present Officers above
referred to, and if and when any change is made in the personnel of any said
Officers, the fact of such change and the name and specimen signatures of the
new Officers. CoBank shall be entitled to rely on any such certification
until a new certification is actually received by CoBank.

IN WITNESS WHEREOF, I have hereunto affixed my official signature and the
corporate seal of National Cooperative Refinery Association this
9th day of
December, 2003.

	 	 	 	 	 	 	 
	COUNTY OF MCPHERSON

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	STATE OF KANSAS

	 	 	)	 	 	 

On
the 9th day of December, 2003, John G. Buehrle, known by me to be the Assistant Secretary
of National Cooperative Refinery Association, appeared before me and affixed his official
signature to the above writing.

	 	 	 
	 

	 	/s/ John G. Buehrle
	

	 	

 

 

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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]