Document:

Exhibit
10.1

 

SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT,
dated as of December 17, 2004, is made by AVENTINE
RENEWABLE ENERGY, INC., a Delaware corporation (“Aventine”), AVENTINE RENEWABLE ENERGY, LLC, a Delaware limited liability
company (“Parent” and, together
with Aventine and any other entity that may become a party hereto, the “Grantors” and, each individually, a “Grantor”), in favor of WELLS FARGO BANK, N.A., as the Collateral
Agent (in such capacity, the “Collateral
Agent”) for the ratable benefit of each of the trustee (the “Trustee”) under the Indenture, dated as
of December 17, 2004 (as amended, supplemented or otherwise modified from time
to time, the “Indenture”),
among Aventine Renewable Energy Holdings, Inc., the Grantors, the Trustee and
the holders of the senior secured notes issued thereunder (the “Holders”; together with the Trustee,
and the Collateral Agent, the “Secured
Parties”)

 

WITNESSETH:

 

WHEREAS, Aventine Renewable
Energy Holdings, Inc. (“Holdings”)
has issued $160 million aggregate principal amount of Senior Secured Floating
Rate Notes due 2011 (the “Notes”),
and may make further issuances of Notes, under the Indenture. In connection
therewith, the Grantors have agreed to guarantee the payment and performance of
Holding’s obligations under the Indenture, the Notes and the Security Documents
(collectively, the “Indenture Documents”);

 

WHEREAS, as a condition to
the effectiveness of the Indenture and to secure the obligations of Holdings
and the Grantors under and in connection with the Indenture Documents, the
Grantors have executed and delivered this Agreement; and

 

WHEREAS, the Grantors will
derive substantial direct and indirect benefit from the making of the
extensions of credit under the Indenture.

 

NOW, THEREFORE, in
consideration of the premises and to induce the Collateral Agent and the
Trustee to enter into the Indenture and to induce the Holders to purchase the
Notes, each Grantor hereby agrees as follows:

 

ARTICLE 1 

DEFINED TERMS

 

Section 1.1
Definitions.

 

(a) Unless otherwise defined
herein, terms defined in the Indenture and used herein shall have the meanings
given to them in the Indenture, and the following terms which are defined in
the UCC are used herein as so defined: Accounts, Chattel Paper, Certificated
Securities, Commercial Tort Claims, Commodity Accounts, Commodity Contracts,
Commodity

 

 

Intermediary, Deposit Accounts, Documents, Electronic Chattel Paper,
Equipment, Farm Products, Financial Assets, Fixtures, Goods, Health Care
Insurance Receivable, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Money, Payment Intangibles, Proceeds, Promissory
Notes, Records, Security, Securities Accounts, Security Certificate, Security
Entitlements, Securities Intermediary, Software, Supporting Obligations,
Uncertificated Securities and Tangible Chattel Paper.

 

(b) The following terms
shall have the following meanings:

 

“Administrative Agent” shall mean the
administrative agent under the credit agreement dated as of May 30, 2003, as
amended or otherwise modified from time to time, by and among Aventine, Parent,
and JPMorgan Chase Bank, individually as a lender, as the issuing bank and as
the administrative agent, and any successors or replacement thereof.

 

“Agreement” shall mean this Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.

 

“Blocked Account” shall mean Account No.
801 804 701 established by Aventine with the Administrative Agent and any other
account hereafter established by Aventine or any other Grantor with
Administrative Agent which Aventine or such Grantor and Administrative Agent
jointly designate as the “Blocked Account,” into which all cash receipts of
Aventine or any other Grantor from whatever source shall be deposited.

 

“Collateral” shall have the meaning
provided in Article 2 hereof.

 

“Collateral Account” shall mean any
collateral account established by the Collateral Agent as provided in Section
5.2 hereof.

 

“Copyright Licenses” shall mean any and
all agreements, whether written or oral, providing for the grant by or to
Grantor of any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

 

“Copyright Security Agreement” means the
Copyright Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex III hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.

 

“Copyrights” shall mean (i) any and all
other copyrights, in the United States or any other country, whether registered
or unregistered, or published or unpublished, all registrations and recordings
thereof and all applications in connection therewith, and (ii) the right to obtain
all renewals of the foregoing.

 

“General Intangibles” shall mean all
“general intangibles” as such term is defined in the UCC and, in any event,
including, without limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which

 

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such Grantor is a party or under which such Grantor has any right,
title or interest or to which such Grantor or any property of such Grantor is
subject (to the extent that a grant of a security interest in such general
intangible is not prohibited by applicable law or by the terms of any contract,
agreement, instrument, indenture or other document creating, evidencing or
relating to such general intangibles), as the same may from time to time be
amended, supplemented or otherwise modified, including, without limitation (but
limited as aforesaid), (i) all rights of such Grantor to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights of
such Grantor to damages arising thereunder, (iii) all equity that constitutes
“general intangibles” and (iv) all rights of such Grantor to perform and to
exercise all remedies thereunder. The exclusion of any general intangible from
this definition as a result of any restrictions on the grant of a security
interest in such general intangible does not restrict the grant of the security
interest contemplated hereby in any Account, Payment Intangible, Chattel Paper
or other right to payment arising under or pursuant to such general intangible.

 

“Insurance” shall mean (i) all insurance
policies covering any or all of the Collateral (regardless of whether the
Collateral Agent is the loss payee thereof) and (ii) any key man life insurance
policies.

 

“Intellectual Property” shall mean all
rights, priorities and privileges provided under United States, multinational
and foreign law relating to intellectual property, including without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trade Secrets, the Trade Secret Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

 

“Intercreditor Agreement” shall mean
that certain agreement by and between JPMorgan Chase Bank, N.A. as ABL agent
and the Collateral Agent, as term agent, dated as of December 17, 2004, and
acknowledged and consented to by Holdings, the Parent and Aventine, as such
agreement may be amended, modified, restated, supplemented or replaced from
time to time.

 

“Issuer” shall mean, with reference to
any Security, the issuer of such Security.

 

“Patent License” shall mean any and all
agreements, whether written or oral, providing for the grant by or to any
Grantor of any right to manufacture, use or sell any invention covered in whole
or in part by a Patent to the extent that a grant of a security interest in
such patent license is not prohibited by applicable law or the applicable
patent agreement.

 

“Patent Security Agreement” means the
Patent Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex IV hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.

 

“Patents” shall mean (i) all letters
patent of the United States or any other country and all reissues and
extensions thereof, (ii) all applications for letters patent of the United States

 

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or any other country and all divisions, continuations and
continuations-in-part thereof, and (iii) all rights to obtain any reissues or
extensions of the foregoing.

 

“Pekin Property” shall mean all of
Aventine’s Property and Equipment located at 1300 South Second Street, Pekin,
Illinois 61554-5402 and commonly referred to as Aventine’s Pekin, Illinois
facility.

 

“Pledged Securities” shall mean the
Securities of any Person that may be issued or granted to, or held by, any
Grantor.

 

“Receivable” shall mean any right to
payment for goods sold or leased or for services rendered, whether or not such
right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).

 

“Securities Act” shall mean the
Securities Act of 1933, as amended.

 

“Secured Obligations” shall mean the
obligations under the Indenture and the Notes.

 

“Secured Parties” has the meaning
specified in the introductory paragraph hereof.

 

“Trade Secret Licenses” shall mean any
and all agreements, whether written or oral, providing for the grant by or to
any Grantor of any right in or to Trade Secrets, to the extent that a grant of
a security interest in such Trade Secret License is not prohibited by
applicable law or the applicable Trade Secret License.

 

“Trade Secrets” shall mean all trade
secrets and all other confidential or proprietary information and know-how
whether or not such trade secret has been reduced to a writing or other
tangible form, including all documents and things embodying, incorporating, or
referring in any way to such trade secret, including but not limited to: (i)
the right to sue for past, present and future misappropriation or other violation
of any trade secret, and (ii) all Proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.

 

“Trademark License” shall mean any and
all agreements, whether written or oral, providing for the grant by or to any
Grantor of any right to use any Trademark, to the extent that a grant of a
security interest in such Trademark License is not prohibited by applicable law
or the applicable Trademark License.

 

“Trademark Security Agreement” means the
Trademark Security Agreement executed and delivered by the Grantors to the
Collateral Agent, substantially in the form of Annex V hereto, as such
agreement may hereafter be amended, supplemented or otherwise modified from
time to time.

 

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“Trademarks” shall mean (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, whether in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, and (ii) the right to
obtain all renewals thereof.

 

“Vehicles” shall mean all cars,
railcars, trucks, trailers, construction and earth moving equipment and other
vehicles covered by a certificate of title law of any state and, in any event,
shall include, without limitation, all tires and other appurtenances to any of
the foregoing.

 

Section 1.2
Other Definitional Provisions.

 

(a) The words “hereof,”
“herein”, “hereto” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.

 

(b) The meanings given to
terms defined herein or in the UCC or in the Indenture shall be equally
applicable to both the singular and plural forms of such terms.

 

(c) Where the context
requires, terms relating to the Collateral or any part thereof, when used in
relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant
part thereof.

 

ARTICLE 2

GRANT OF SECURITY INTEREST

 

Each Grantor hereby assigns
and transfers to the Collateral Agent, and hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties a security interest in,
all of the following assets and Property, tangible and intangible now owned or
at any time hereafter acquired by such Grantor or in which such Grantor now has
or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Secured Obligations under the Indenture Documents:

 

(a) all Accounts (including
Health Care Insurance Receivables);

 

(b) all books and Records
pertaining to the Collateral or otherwise;

 

(c) all Chattel Paper (including
all Tangible Chattel Paper and Electronic Chattel Paper);

 

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(d) all Commercial Tort
Claims described on Schedule 6;

 

(e) all Commodity Accounts;

 

(f) all Commodity Contracts;

 

(g) all Deposit Accounts;

 

(h) all Documents;

 

(i) all General Intangibles
(but subject to the limitations set forth in the definition of such term);

 

(j) all Goods (including,
without limitation, all Equipment and Inventory);

 

(k) all Instruments
(including, without limitation, all promissory notes);

 

(l) all Insurance;

 

(m) all Intellectual
Property;

 

(n) all Investment Property;

 

(o) all Letter of Credit
Rights;

 

(p) all Money;

 

(q) all Pledged Securities;

 

(r) all Receivables, to the
extent not otherwise described above;

 

(s) all Securities;

 

(t) all Securities Accounts;

 

(u) all Securities
Entitlements;

 

(v) all Supporting
Obligations;

 

(w) all Vehicles; and

 

(x) to the extent not
otherwise included, all Proceeds, products, accessions, rents and profits of or
in respect of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing; provided
that the Collateral shall not include (i) the Capital Stock held by any Grantor
of any Marketing Alliance Partner which is a Marketing Alliance Partner on the
Closing Date to the

 

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extent that the granting of such Lien is prohibited pursuant to the
terms of the organizational documents of such Marketing Alliance Partner on the
date hereof, (ii) the Capital Stock in NELLC unless and until either (A) Parent
or Aventine obtain the consent of the requisite holders of Capital Stock in
NELLC to the grant of the Security Interest in such Capital Stock of NELLC, or
(B) Parent and Aventine collectively hold at least 80% of the Capital Stock of
NELLC, (iii) the Capital Stock held by any Grantor in Fluid Technologies PLC
and (iv) any Capital Stock of any Subsidiary of any Grantor if and to the
extent that the inclusion of such Capital Stock in the Collateral shall mean
that the par value, book value as carried by Holdings or such Grantor or market
value, whichever is greatest, of such Capital Stock exceeds 20% of the
aggregate principal amount of the Notes outstanding; provided further, that
upon the occurrence of either event described in clause (ii), the Capital Stock
of NELLC shall immediately and without any further action on the part of any
Grantor become “Collateral” for purposes of this Agreement and the security
interest provided for herein shall immediately attach to such Capital Stock. In
the event that Rule 3-16 or Rule 3-10 of Regulation S-X under the Securities
Act requires (or is replaced with another rule or regulation, or any other law,
rule or regulation is adopted, which would require) the filing with the
Securities and Exchange Commission (or any other governmental agency) of
separate financial statements of any Subsidiary of Holdings due to the fact
that such Subsidiary’s capital stock or other securities of such Subsidiary
secure the Secured Obligations or any guarantees by Holdings’ Subsidiaries of
the Notes, then the capital stock or other securities of such Subsidiary shall
automatically be deemed not to be included in the “Collateral”, but only to the
extent necessary to not be subject to such requirement.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

To induce the Collateral
Agent and the Trustee to enter into the Indenture and to induce the Holders to
purchase the Notes, each Grantor hereby represents and warrants to the
Collateral Agent, the Trustee and each Holder that:

 

Section 3.1
Title; No Other Liens. Except for the security interest granted to the Collateral Agent for
the ratable benefit of the Secured Parties pursuant to this Agreement and the
Permitted Liens such Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of
record in any public office, except (a) such as have been filed in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties pursuant to
this Agreement and (b) such as are expressly permitted by the Indenture.

 

Section 3.2
Perfected Priority Liens. The security interests granted pursuant to this Agreement, the
Copyright Security Agreement, the Patent Security Agreement and the Trademark
Security Agreement (a) upon completion of the filings and other actions
specified on Schedule 1 hereto (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered to the
Collateral Agent in completed and duly executed form) will constitute valid
perfected security interests in the Collateral to the extent that a security
interest therein may be perfected by filing pursuant to the UCC in favor of the
Collateral Agent, for the

 

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ratable benefit of the Secured Parties, as collateral security the
Secured Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor subject to (1) bankruptcy, insolvency, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, and (2) general principles of equity (regardless
of whether considered in a proceeding at law or in equity), and (b) subject to
the terms of the Intercreditor Agreement, are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens. Any
reference in this Agreement or the other Indenture Documents to Permitted Liens
is not intended to and should not be interpreted as subordinating or
postponing, or as any agreement to subordinate or postpone, any Lien created
herein or by any of the other Indenture Documents to any Permitted Lien, except
to the extent explicitly set forth in the Intercreditor Agreement.

 

Section 3.3
Organization.
Such Grantor’s jurisdiction of incorporation, formation or organization (as
applicable), organizational identification number and federal tax identification
number are specified on Schedule 2 hereto.

 

Section 3.4
Inventory and Equipment.

 

(a) No part of the Equipment
of any Grantor constitutes a Fixture or has otherwise become permanently
attached to, affixed to or otherwise incorporated into any real property or
improvements of any Person other than real property and improvements owned in
fee by such Grantor and with respect to which such Grantor has delivered to the
Collateral Agent a Mortgage granting to the Collateral Agent (i) with respect
to the Pekin Property, a first and prior mortgage Lien on such real property
and improvements (subject to Permitted Liens) to secure the Secured Obligations
and (ii) with respect to all other property not related to the Pekin Property,
a second mortgage Lien on such real property and improvements (subject to
Permitted Liens) to secure the Secured Obligations.

 

(b) No Inventory or
Equipment of any Grantor is or at any time evidenced by a negotiable Document.

 

Section 3.5
Farm Products.
None of the Collateral constitutes, or is the Proceeds of, Farm Products.

 

Section 3.6
Securities and Securities Accounts.

 

(a) All Securities in which
a Grantor holds any beneficial or record interest are accurately listed and
described in Schedule 3 hereto.

 

(b) Each Grantor is the sole
entitlement holder of each such Securities Account, and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the
Administrative Agent) having “control” (within the meanings of Sections 8-106
and 9-106 of the UCC) over, or any other interest in, any such Securities
Account or securities or other property credited thereto.

 

8

 

(c) Except as described in Schedule
3, hereto, the Pledged Securities represent one hundred percent (100%) of
the issued and outstanding Securities of every class of the applicable Issuer.

 

(d) The applicable Grantor
has delivered to the Collateral Agent an Acknowledgement and Consent to Pledge
substantially in the form of Annex II hereto duly executed by such
Issuer of Pledged Securities.

 

(e) All of the Pledged
Securities have been duly and validly issued and are fully paid and
nonassessable.

 

(f) Each Grantor is the
record and beneficial owner of, and has good and marketable title to, the
Pledged Securities pledged by it hereunder, free of any and all Liens,
restrictions on transfer, voting agreements, options or claims of, any other
Person, other than Permitted Liens.

 

(g) To the extent any of the
Pledged Securities are Certificated Securities, subject to the Intercreditor
Agreement, the applicable Grantor has delivered the Security Certificates
evidencing such Securities, duly endorsed in blank, or accompanied by
appropriate transfer powers executed in blank, to the Collateral Agent.

 

Section 3.7
Commodity Accounts and Commodity Contracts.

 

(a) Each Grantor is the sole
entitlement holder of each such Commodity Account, and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the
Administrative Agent) having “control” (within the meanings of Sections 8-106
and 9¬106 of the UCC) over, or any other interest in, any such Commodity
Account or securities or other property credited thereto.

 

Section 3.8
Intellectual Property

 

(a) All Intellectual
Property owned or licensed by each Grantor or in which any Grantor holds an
interest are accurately listed and described in Schedule 4 hereto.

 

(b) The Copyrights and
Copyright applications listed on Schedule A to the Copyright Security Agreement
executed and delivered in connection with this Agreement constitute all of the
Copyrights and Copyright applications owned and currently in use by the
Company. The Patents and Patent applications listed on Schedule A to the Patent
Security Agreement executed and delivered in connection with this Agreement
constitute all of the Patents and Patent applications owned and currently in
use by the Company. The Trademarks and Trademark applications listed on
Schedule A to the Trademark Security Agreement executed and delivered in
connection with this Agreement constitute all of the Trademarks and Trademark
applications owned and currently in use by the Company.

 

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(c) All Intellectual
Property of each Grantor is valid, subsisting, unexpired, enforceable, has not
been abandoned, and does not infringe the Intellectual Property rights of a
third party.

 

(d) Except as set forth in Schedule
4 hereto, none of the Intellectual Property is the subject of any licensing
or franchise agreement pursuant to which such Grantor is the licensor or
franchisor.

 

(e) No holding, decision or
judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of, or such Grantor’s rights in, any
Intellectual Property.

 

(f) No action or proceeding
is pending or, to the knowledge of such Grantor, threatened on the date hereof
seeking to limit, cancel or question the validity, or such Grantor’s ownership,
of any Intellectual Property.

 

Section 3.9
Deposit Accounts.
Each Grantor is the sole account holder of each such Deposit Account and such
Grantor has not consented to, and is not otherwise aware of, any Person (other
than the Administrative Agent) having either sole dominion and control (within
the meaning of common law) or “control” (within the meaning of Section 9-104 of
the UCC) over, or any other interest in, any such Deposit Account or any money
or other property deposited therein.

 

Section
3.10 Instruments and Chattel Paper. Subject to the terms of the Intercreditor
Agreement, each Grantor has taken all actions reasonably requested by the
Collateral Agent to establish control (as defined in the UCC) by the Collateral
Agent of all electronic Chattel Paper included in the Collateral and all
“transferable records” as defined in Section 201 of the Federal Electronics
Signatures in Global and National Commerce Act or in Section 16 of Uniform
Electronic Transactions Act as in effect in all relevant jurisdictions. Without
limiting the foregoing, each Grantor represents and warrants that all
conditions necessary to establish the Collateral Agent’s control over any
electronic chattel paper included in the Collateral under Section 9.105 of the
UCC have been satisfied.

 

Section
3.11 Aircraft.
No Grantor owns or holds any interest in aircraft.

 

Section
3.12 Commercial Tort Claims. All Commercial Tort Claims of each Grantor or in which any Grantor
holds an interest are accurately listed and described in Schedule 6 hereto.

 

ARTICLE 4 

COVENANTS

 

Each Grantor covenants and
agrees that, from and after the date of this Agreement until the Notes shall
have been paid in full and the Indenture shall have terminated such Grantor
shall:

 

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Section 4.1
Covenants in Indenture and other Indenture Documents. Take, or refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that each covenant and agreement applicable to such Grantor contained in
the Indenture and the other Indenture Documents is completed and no Default or
Event of Default is caused by the failure to take such action or to refrain
from taking such action by such Grantor or any of its Subsidiaries.

 

Section 4.2
Application of Cash Proceeds. Cause each invoice issued by such Grantor to provide for payment of
such invoice (a) if by check, by remitting the same to the Lock Box, and (b) by
wire transfer, automated checking transaction or other electronic funds
transfer by remitting the same directly to the Blocked Account, and otherwise
take all action necessary to cause all cash Proceeds of the Collateral,
including, without limitation, all cash Proceeds of Receivables to be remitted
to the Blocked Account. If, notwithstanding the foregoing, any Grantor shall
receive any cash Proceeds of the Collateral, subject to the Intercreditor
Agreement, such Grantor shall hold such Proceeds in trust for the benefit of
the Collateral Agent, and not later than the first (1st) Business Day following
the date of receipt, deposit the same directly into the Blocked Account in the
exact form received.

 

Section 4.3
Electronic Chattel Paper. Subject to the terms of the Intercreditor Agreement, in the event
that such Grantor shall at any time hold or acquire an interest in any
electronic chattel paper or any “transferable record” (as such term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction), such Grantor shall promptly notify the
Collateral Agent thereof in writing, and such Grantor shall take, or cause to
be taken, such actions as the Collateral Agent may request to give the
Collateral Agent control of such Electronic Chattel Paper under Section 9-314
of the UCC and control of such transferable record under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in
effect in such jurisdiction.

 

Section 4.4
Maintenance of Perfected Security Interest; Further Documentation.

 

(a) Maintain the security
interest created by this Agreement as a perfected security interest to the
extent and having at least the priority described in Section 3.2 hereof
and, subject to the Intercreditor Agreement, shall defend such security
interest against the claims and demands of all Persons whomsoever; provided that
the Collateral Agent shall release liens and security interests in any
Collateral which is sold or otherwise disposed of in accordance with the terms
of the Indenture and the other Indenture Documents and the Intercreditor
Agreement.

 

(b) Furnish to the
Collateral Agent and the other Secured Parties from time to time, at such
Grantor’s sole cost and expense, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may request, all in such detail as the
Collateral Agent may request.

 

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(c) Subject to the
Intercreditor Agreement, at any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute (as required by applicable law), deliver
and/or have recorded with appropriate agencies such further instruments and
documents and take such further actions as the Collateral Agent may request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.

 

(d) This Section 4.5
and the obligations imposed on each Grantor by this Section 4.5 shall be
interpreted as broadly as possible in favor of the Collateral Agent and the
Secured Parties in order to effectuate the purpose and intent of this
Agreement.

 

Section 4.5
Changes in Locations, Name, etc. Not, except upon five (5) Business Days’ prior written notice to the
Collateral Agent and delivery to the Collateral Agent of all additional
financing statements and other documents reasonably requested by the Collateral
Agent to maintain the validity, perfection and priority of the security
interests provided for herein:

 

(a) change its jurisdiction
of incorporation, formation, or organization, as applicable; or

 

(b) change its name,
identity or organizational structure.

 

Each notice delivered
pursuant to this Section 4.6 shall specify in reasonable detail any
change in the jurisdiction of incorporation, organization, formation, name,
identity or corporate structure as applicable.

 

Section 4.6
Notices.
Advise the Collateral Agent promptly, in reasonable detail, of any Lien (other
than Permitted Liens) on any of the Collateral.

 

Section 4.7
Pledged Securities; Securities Accounts.

 

(a) Notify the Collateral
Agent promptly in writing upon the acquisition by any Grantor of any Pledged Securities,
which notice shall (i) set forth all information with respect to such Pledged
Securities as is set forth on Schedule 3 hereto with respect to the
Pledged Securities owned by the Grantors on the date hereof, and (ii) be
accompanied by an Acknowledgment and Consent to Pledge duly executed by the
Issuer of such Securities (unless such Issuer is also a Grantor). Nothing
contained in this Section 4.8 shall permit any Grantor to invest in or
hold any Security to the extent such investment is prohibited pursuant to the
Indenture.

 

(b) If any Grantor shall
become entitled to receive or shall receive any Security Certificate
(including, without limitation, any certificate representing a stock dividend
or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the

 

12

 

Securities of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Pledged Securities, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Collateral Agent, the Secured Parties, hold the same in trust for the
Collateral Agent, the Secured Parties and, subject to the Intercreditor
Agreement, deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by such Grantor in blank or accompanied by an undated
stock power covering such certificate duly executed in blank by such Grantor
and with, if the Collateral Agent so requests, signature guaranteed, to be held
by the Collateral Agent, subject to the terms hereof, as additional Pledged
Securities.

 

(c) Any sums paid upon or in
respect of the Pledged Securities including any dividend or distribution or any
amount paid upon the liquidation or dissolution of any Issuer shall be paid
deposited directly into the Blocked Account in accordance with Section 4.2
hereof. Subject to the terms of the Intercreditor Agreement, in case any
distribution of property upon or with respect to the Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, such non-cash Proceeds so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Collateral Agent for the ratable benefit of the Secured Parties,
be delivered to the Collateral Agent to be held by it hereunder as additional
collateral security for the Secured Obligations.

 

(d) Without the prior
written consent of the Collateral Agent, such Grantor will not (i) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Securities or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Indenture), (ii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Pledged Securities or Proceeds thereof, or any interest
therein, except for Permitted Liens, or (iii) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the Collateral
Agent to dispose of any of the Pledged Securities or Proceeds thereof (except
for restrictions that exist on the date hereof which are expressly set forth in
the organizational documents of Marketing Alliance Partners in which any
Grantor owns Capital Stock as of the Closing Date).

 

(e) If such Grantor is an
Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Securities issued by it and will comply with
such terms insofar as such terms are applicable to it, (ii) it will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 4.8(a) hereof with respect to the Pledged
Securities issued by it, and (iii) the terms of Section 5.1 hereof shall
apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section
6.1 hereof with respect to the Pledged Securities issued by it.

 

Section 4.8
Receivables.

 

(a) Other than in the
ordinary course of business, not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable or (v) amend,

 

13

 

supplement or modify any Receivable in any manner that could adversely
affect in any material respect the value thereof.

 

(b) Subject to the terms of
the Intercreditor Agreement, if at any time the aggregate amount owing to such
Grantor on all Accounts as to which a Governmental Authority is an obligor
exceeds 5% of the aggregate amount owing to the Grantor on all Accounts, such
Grantor shall so notify the Collateral Agent and, if requested by the
Collateral Agent, at such Grantor’s sole cost and expense, from and after the
date on which such aggregate amount first exceeds such percentage, deliver to
the Collateral Agent such assignments, notices of assignment and other
documents or information as shall be necessary or otherwise requested by the
Collateral Agent to permit the assignment hereunder of all Accounts as to which
a Governmental Authority is an obligor pursuant to all applicable Governmental
Requirements (including, without limitation, the Assignment of Claims Act of
1940, as amended).

 

(c) Subject to the terms of
the Intercreditor Agreement, upon the request of the Collateral Agent at any
time after the occurrence and during the continuance of an Event of Default,
each Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the Collateral Agent for the ratable benefit of the Secured
Parties and that payments in respect thereof shall be made directly to the
Collateral Agent.

 

(d) Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
Receivables to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. No Secured Party shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Party of any payment relating thereto, nor shall the
Collateral Agent or any other Secured Party he obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party thereunder, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.

 

Section 4.9
Intellectual Property.

 

(a) Notify the Collateral
Agent promptly, in writing upon the acquisition by Grantor of any Intellectual
Property which notice shall set forth (i) all information with respect to such
Intellectual Property as is set forth on Schedule 4 hereto with respect
to Intellectual Property owned by the Grantors on the date hereof, and (ii)
shall be accompanied by a Copyright Security Agreement, Patent Security
Agreement and/or Trademark Security Agreement, as applicable, duly executed and
completed by the applicable Grantor.

 

(b) Grantor (either itself
or through licensees) will, with respect to each Trademark which is material to
the operation of its business, (i) continue to use such Trademark

 

14

 

on each and every trademark class of goods applicable to its current
line as reflected in its then-current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain the quality of products and services
offered under such Trademark, (iii) use such Trademark with all notices and
legends required by applicable law or regulations, and (iv) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby such Trademark may become invalidated or impaired in any way.

 

(c) No Grantor will, and no
Grantor will permit any licensee to do any act, whereby any Patent which is
material to the operation of its business may become forfeited, abandoned or
dedicated to the public.

 

(d) No Grantor will, and no
Grantor will permit any licensee to do any act or omit to do any act whereby
any portion of any Copyright which is material to the operation of its business
may become invalidated or otherwise impaired. Such Grantor will not (either
itself or through licensees) do any act whereby any of the Copyrights may fall
into the public domain.

 

(e) No Grantor will, and no
Grantor will permit any licensee to do any act that results in any Intellectual
Property held by such Grantor infringing on the Intellectual Property rights of
a third party.

 

(f) Such Grantor will
promptly notify the Collateral Agent immediately if it knows, or has reason to
know, that any application or registration relating to any Patent, Copyright or
Trademark may become abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding Grantor’s ownership of, or the
validity of, any Intellectual Property or such Grantor’s right to register the
same or to own and maintain the same.

 

(g) To the extent any
Grantor, either by itself or through an authorized agent, employee, licensee or
designee, shall file an application for any Patent or Trademark with the United
States Patent and Trademark Office or any Copyright in the U.S. Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the Collateral
Agent within five Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Collateral Agent, such Grantor
shall execute and deliver, and have recorded, a Copyright Security Agreement, a
Patent Security Agreement, a Trademark Security Agreement and any and all other
agreements, instruments, documents, and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in any Copyright,
Patent or Trademark and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby.

 

(h) Grantor will take all
commercially reasonable and necessary steps, including, without limitation, in
any proceeding before the United States Patent and Trademark Office, the U.S.
Copyright Office or any similar office or agency in any other country or any

 

15

 

political subdivision thereof, to maintain each registration of
Patents, Trademarks and Copyrights held by, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability, to the extent such Patents, Trademarks or Copyrights are
material to the operation of its business.

 

(i) In the event that any
Intellectual Property of any Grantor which is material to the operation of its
business is infringed, misappropriated or diluted by a third party, such
Grantor shall take such actions as such Grantor shall reasonably deem
appropriate under the circumstances, or as otherwise requested by the
Collateral Agent, to protect such Intellectual Property.

 

(j) Take all steps
reasonably necessary to protect the secrecy of all Trade Secrets, including,
without limitation, entering into confidentiality agreements with employees
with access to such Trade Secrets and labeling and restricting access to secret
information and documents.

 

Section
4.10 Commercial Tort Claims. Notify the Collateral Agent promptly, in writing in the event that
any Grantor shall at any time after the date hereof hold any Commercial Tort
Claims which notice shall set forth (i) all information with respect to such
Commercial Tort Claims as is set forth on Schedule 6 hereto with respect
to Commercial Tort Claims held by the Grantors on the date hereof, and (ii)
shall include the express grant by such Grantor to the Collateral Agent of a
security interest in such Commercial Tort Claim (and the proceeds thereof). In
the event that such notice does not include such grant of a security interest,
the sending thereof by such Grantor to the Collateral Agent shall be deemed to
constitute such grant to the Collateral Agent. Upon the sending of such notice,
any Commercial Tort Claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of the Collateral Agent provided in the Indenture or otherwise
arising by such Grantor’s execution of this Agreement or any of the other
Indenture Documents, the Collateral Agent is hereby irrevocably authorized from
time to time and at any time to file such financing statements naming the
Collateral Agent or its designee as secured party and such Grantor as debtor,
or any amendments to any financing statements, covering any such Commercial
Tort Claim as Collateral. In addition, such Grantor shall promptly upon the
Collateral Agent’s request, execute and deliver, or cause to be executed and
delivered, to the Collateral Agent such other agreements, documents and
instruments as the Collateral Agent may require in connection with such
Commercial Tort Claim.

 

Section
4.11 Negotiable Documents. No Grantor shall permit any Inventory or other Property of such
Grantor to be evidenced by a negotiable Document. If, notwithstanding the
foregoing, any such Inventory or other Property is or becomes evidenced by a
negotiable Document, the Grantor shall cause such negotiable Document, subject
to the terms of the Intercreditor Agreement, to be duly negotiated to the
Collateral Agent.

 

16

 

Section
4.12 Inventory and Equipment.

 

(a) Take all actions
necessary or advisable to maintain the continuous validity, perfection and the
same or better priority of the Collateral Agent’s security interest in such
Inventory and Equipment intended to be granted and agreed to hereby, or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder, subject to the terms of the Intercreditor Agreement, with respect to
such Equipment and Inventory.

 

(b) Keep materially correct
and accurate records of the Inventory, itemizing and describing the kind, type
and quantity of Inventory, such Grantor’s cost therefor and (where applicable)
the current list prices for the Inventory, in each case, in reasonable detail.

 

(c) Not deliver any Document
evidencing any Equipment and Inventory to any Person other than to the issuer
of such Document to claim the Goods evidenced therefor, or to the
Administrative Agent.

 

(d) Take commercially
reasonable measures to maintain, keep and preserve the Inventory in good and
merchantable condition, maintain and preserve each item of Equipment in good
operating condition, ordinary wear and tear and immaterial impairments of value
and damage by the elements excepted, and provide all maintenance, service and
repairs necessary for such purpose.

 

(e) Prevent any Equipment
from becoming attached to real estate in such a manner that the same may become
a Fixture or otherwise becomes permanently attached to, affixed to or otherwise
incorporated into any real property or improvements of any Person other than
real property and improvements owned in fee by such Grantor and with respect to
which such Grantor has delivered to the Collateral Agent a Mortgage granting to
the Collateral Agent (i) with respect to the Pekin Property, a first and prior
mortgage Lien on such real property and improvements (subject to Permitted
Liens) to secure the Secured Obligations and (ii) with respect to all other
Property not related to the Pekin Property, a second mortgage Lien on such real
property and improvements (subject to Permitted Liens) to secure the Secured
Obligations.

 

ARTICLE 5

REMEDIAL PROVISIONS

 

Section 5.1
Pledged Securities.

 

(a) Unless an Event of
Default shall have occurred and be continuing, each Grantor shall be permitted
to exercise all voting and corporate rights with respect to the Pledged
Securities; provided, however, that subject to the terms of the
Intercreditor Agreement, no vote shall be cast or corporate right exercised or
other action taken which, in the Collateral Agent’s reasonable judgment, would
be inconsistent with or result in any violation of any provision of the
Indenture, this Agreement or any other Indenture Document.

 

(b) Subject to the terms of
the Intercreditor Agreement, if an Event of Default shall occur and be
continuing and upon the written request of the Collateral Agent, any or all of

 

17

 

the Pledged Securities shall be registered in the name of the
Collateral Agent or its nominee, and the Collateral Agent or its nominee may
thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Securities at any meeting of shareholders or members of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the night to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the applicable Grantor or the
Collateral Agent of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Collateral Agent may determine), all without liability except to account
for property actually received by it, but the Collateral Agent and the other
Secured Parties shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.

 

(c) Each Grantor hereby authorizes
and instructs each Issuer of Pledged Securities pledged by such Grantor
hereunder to, subject to the Intercreditor Agreement (i) comply with any
instruction received by such Issuer from the Collateral Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and such Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) pay any dividends or
other payments with respect to the Pledged Securities directly to the
Collateral Agent.

 

Section 5.2
Application of Proceeds. Subject to the terms of the Intercreditor Agreement, at any time
after the occurrence and during the continuance of an Event of Default, at the
Collateral Agent’s election, the Collateral Agent may apply all or any part of
Proceeds, including, without limitation, any such Proceeds held in any
Collateral Account in payment of the Secured Obligations. Any balance of such
Proceeds remaining after the Notes shall have been paid in full, and the
Indenture shall have terminated shall be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive the same.

 

Section 5.3
UCC and Other Remedies. Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall occur and be continuing, the Collateral Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Notes, all rights and remedies of a
secured party under the UCC or any other applicable law. Without limiting the
generality of the foregoing and subject to the Intercreditor Agreement, the
Collateral Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind, including, without limitation,
notice of intent to accelerate or notice of acceleration, (except any notice
required by law as referred to below) to or upon the Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate

 

18

 

and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker’s board or office of the Collateral Agent or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Collateral Agent’s request, to assemble the Collateral and make
it available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere. Subject to
the Intercreditor Agreement, the Collateral Agent shall apply the net proceeds
of any action taken by it pursuant to this Section 5.3, after deducting
all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Collateral Agent
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Notes and to any other
Person legally entitled thereto in accordance with the terms of the
Intercreditor Agreement and the Indenture. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Collateral Agent or any other Secured Party arising out of
the exercise by them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least ten days before such sale or
other disposition.

 

Section 5.4
Registration Rights.

 

(a) Subject to the terms of
the Intercreditor Agreement, if the Collateral Agent shall determine to
exercise its right to sell any or all of the Pledged Securities pursuant to Section
5.3 hereof, and if in the opinion of the Collateral Agent it is necessary
or advisable to have the Pledged Securities, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause any Issuer thereof to: (i) execute and deliver, and cause
the directors, members, managers and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Collateral Agent, necessary or
advisable to register the Pledged Securities, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Securities, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Collateral Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause any Issuer to comply with the provisions of the securities or “Blue Sky”
laws of any and all jurisdictions which the Collateral Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.

 

19

 

(b) Each Grantor recognizes
that the Collateral Agent may be unable to effect a public sale of any or all
the Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any of the Pledged Securities for the period of time necessary to
permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.

 

(c) Each Grantor agrees to
use its best efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the Pledged
Securities pursuant to this Section 5.4 valid and binding and in
compliance with any and all other applicable Governmental Requirements. Each
Grantor further agrees that a breach of any of the covenants contained in this Section
5.4 will cause irreparable injury to the Collateral Agent and the other
Secured Parties, that the Collateral Agent and the other Secured Parties have
no adequate remedy at law in respect of such breach and as a consequence, that
each and every covenant contained in this Section 5.4 shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Indenture.

 

Section 5.5
Waiver; Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Collateral Agent or any other Secured Party to collect such deficiency.

 

ARTICLE 6

THE COLLATERAL AGENT

 

Section 6.1
The Collateral Agent’s Appointment as Attorney-in-Fact etc.

 

(a) Each Grantor hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, such Grantor hereby
gives the Collateral

 

20

 

Agent the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, to do any or all of the following, subject to the
terms of the Intercreditor Agreement:

 

(1) in the name of such
Grantor or its own name, or otherwise, take possession of and indorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Collateral Agent
for the purpose of collecting any and all such moneys due under any Receivable
or with respect to any other Collateral whenever payable;

 

(2) in the case of any
Copyright, Patent or Trademark, execute, deliver and have recorded, any and all
agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in such Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;

 

(3) pay or discharge Taxes
and Liens levied or placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;

 

(4) execute, in connection
with any sale provided for in Section 6.3 or 6.4 hereof, any
endorsements, assignments or other instruments or documents of conveyance or
transfer with respect to the Collateral; and

 

(5) (A) direct any party
liable for any payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to the Collateral Agent or
as the Collateral Agent shall direct; (B) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (C) sign and indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents (including, without limitation, any
negotiable Documents) in connection with any of the Collateral; (D) commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (E) defend
any suit, action or proceeding brought against such Grantor with respect to any
Collateral; (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as
the Collateral Agent may deem appropriate; (G) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Collateral Agent shall in its sole
discretion determine; and (H) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Collateral Agent were the absolute owner thereof
for all

 

21

 

purposes, and do, at the
Collateral Agent’s option and such Grantor’s expense, at any time, or from time
to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.

 

Anything in this Section 6.1(a) to the contrary notwithstanding,
the Collateral Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 6.1 (a) unless an Event
of Default shall have occurred and be continuing.

 

(b) The Collateral Agent may
(but without any obligation to do so) (i) perform or satisfy any of the
Grantor’s and any other Obligated Party’s obligations under or pursuant to this
Agreement and the other Indenture Documents which remain unsatisfied (after
providing any notice and opportunity to cure to which such Grantor or other
Obligated Party is entitled under any other provision of any Indenture
Document, if any), and (ii) take all other actions and pay such amounts and
claims as Collateral Agent determines in its sole but reasonable discretion, is
necessary or appropriate to protect the rights and interests of the Collateral
Agent and the other Secured Parties under this Agreement and the other
Indenture Documents and otherwise with respect to the Notes or to preserve and
protect the Collateral or any part thereof from loss.

 

(c) The expenses of the
Collateral Agent incurred in connection with actions undertaken as provided in
this Section 6.1 , together with interest thereon at a rate per annum
equal to the rate per annum at which interest would then be payable under the
Indenture on past due amounts, from the date of payment by the Collateral Agent
to the date reimbursed by any Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.

 

(d) Each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done pursuant
to the powers granted in this Section 6.1. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

 

Section 6.2
Duty of the Collateral Agent. Subject to the terms of the Intercreditor Agreement, the Collateral
Agent’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under the UCC or otherwise,
shall be to deal with it in the same manner as the Collateral Agent deals with
similar property for its own account. None of the Collateral Agent, any other
Secured Party, nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent
hereunder are solely to protect the Collateral Agent’s interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any other
Secured Party to exercise any such powers. The Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Grantor or any other Credit

 

22

 

Party for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.

 

Section 6.3
Financing Statements. Subject to the terms of the Intercreditor Agreement and pursuant to
the UCC and any other applicable laws, each Grantor authorizes the Collateral
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral in such form and in
such offices as the Collateral Agent reasonably determines appropriate to
perfect the security interests of the Collateral Agent under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.

 

Section 6.4
Authority of the Collateral Agent. Each Grantor acknowledges that the rights
and responsibilities of the Collateral Agent under this Agreement with respect
to any action taken by the Collateral Agent or the exercise or non-exercise by
the Collateral Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral Agent and the other Secured Parties,
be governed by the Indenture, and by such other agreements with respect thereto
as may exist from time to time among them, but, as between the Collateral Agent
and such Grantor, the Collateral Agent shall be conclusively presumed to be
acting as Collateral Agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and such Grantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.1
Amendments in Writing. None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Article
IX of the Indenture and in accordance with the Intercreditor Agreement.

 

Section 7.2
Notices. All
notices, requests and demands to or upon the Collateral Agent, any other
Secured Party, or any Grantor hereunder shall be effected in the manner
provided for in Section 13.2 of the Indenture.

 

Section 7.3
No Waiver; Remedies Cumulative. No failure or delay on the part of any Grantor or the Collateral
Agent in exercising any right or remedy under this Agreement or any other
Indenture Document and no course of dealing between such Grantor and the
Collateral Agent or any Secured Party shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy under this
Agreement or any other Indenture Document preclude any other or further
exercise thereof or the exercise of any other right or remedy under this
Agreement or any other Indenture Document. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which any Grantor, the Collateral Agent or any Secured Party would otherwise
have. No notice to or demand on any Grantor not required under this Agreement
or any other Indenture Document in any case shall entitle such

 

23

 

Grantor or any other Grantor to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Collateral Agent or the Secured Parties to any other or further action in any
circumstances without notice or demand.

 

Section 7.4
Enforcement Expenses; Indemnification.

 

(a) Each Grantor agrees to
pay or reimburse the Collateral Agent for all of its costs and expenses
incurred in enforcing or preserving any rights under this Agreement and the
other Indenture Documents to which such Grantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the Collateral
Agent.

 

(b) Each Grantor agrees to
pay, and to save the Collateral Agent and the Secured Parties harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.

 

(c) Each Grantor agrees to
pay, and to save the Collateral Agent and the Secured Parties harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, to the same extent each Grantor would be
required to do so pursuant to Sections 7.7 and 10.1(a) of the Indenture.

 

(d) The agreements in this Section
7.4 shall survive repayment of the Notes and all other amounts payable
under the Indenture and the other Indenture Documents.

 

Section 7.5
Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Grantor may assign or otherwise transfer any
of its rights or obligations hereunder except in accordance with the terms of
the Indenture (and any attempted assignment or transfer by such Grantor without
such consent shall be null and void).

 

Section 7.6
Set-Off.
Subject to the terms of the Intercreditor Agreement, in addition to and not in
limitation of all rights of offset that the Collateral Agent, the Trustee or
any Holder may have under applicable law, the Trustee and each Holder shall,
upon the occurrence of any Event of Default and at any time during the
continuance thereof and whether or not such Holder or the Trustee has made any
demand or the Notes are matured, have the right at any time and from time to
time, without notice to any Grantor (any such notice being expressly waived by
each Grantor) to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by any Holder or the Trustee to or for the credit or the
account of any Grantor against any and all of the Notes owing to such Holder or
the Trustee.

 

24

 

Section 7.7
Counterparts.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original but all of which shall together
constitute one and the same instrument.

 

Section 7.8
Severability.
In the event that any one or more of the provisions contained in this Agreement
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, (a) each Grantor agrees that such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement and (b)
each Grantor and the Collateral Agent (acting on behalf and at the direction of
the Trustee and the Holders) will negotiate in good faith to amend such
provision so as to be legal, valid, and enforceable.

 

Section 7.9
ENTIRE AGREEMENT.
THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE COLLATERAL AGENT, THE TRUSTEE, THE OTHER HOLDERS,
THE GRANTORS AND THE OTHER RESPECTIVE PARTIES HERETO AND THERETO AND SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

Section
7.10 Governing Law; Submission to Jurisdiction; etc.

 

(a) Governing Law. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND, TO
THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY OTHER STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED NECESSARILY GOVERN THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY OF, OR THE EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE, IN WHICH CASE THE LAWS OF SUCH OTHER STATE SHALL GOVERN
SUCH VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY AND SUCH EXERCISE OF
REMEDIES.

 

(b) SUBMISSION TO JURISDICTION. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE OTHER
INDENTURE DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY

 

25

 

IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

(c) WAIVER OF JURY TRIAL & CONSEQUENTIAL DAMAGES.
TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, EACH OF THE GRANTORS, THE
COLLATERAL AGENT, THE TRUSTEE, AND THE OTHER HOLDERS: (1) IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY INDENTURE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN;
(2) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (3) CERTIFIES THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (IV)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
INDENTURE DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BASED
UPON, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS SECTION.

 

(d) Service of Process. Each party hereto
irrevocably consents to service of process by notice delivered in accordance
with Section 8.2 hereof. Nothing herein or in any other Indenture
Document shall affect the right of the Collateral Agent, the Trustee or any
other Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Grantor in any
other jurisdiction.

 

Section
7.11 Acknowledgments. Each Grantor hereby acknowledges that:

 

(a) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the
other Indenture Documents;

 

(b) neither the Collateral
Agent nor the Trustee nor any other Holder has any fiduciary relationship with
or duty to such Grantor arising out of or in connection with this Agreement or
any of the other Indenture Documents, and the relationship between the
Collateral Agent, the Trustee and the other Holders, on one hand, and such
Grantor, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

 

(c) no joint venture is
created hereby or by the other Indenture Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Holder or among the
Grantor and the Holders.

 

26

 

Section
7.12 Section Headings. The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.

 

Section
7.13 Additional Grantors. Each Subsidary of the Parent that is required to become a party to
this Agreement pursuant to Sections 4.15 or 10.2(c) of the Indenture shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex I
hereto.

 

Section
7.14 Releases

 

(a) At such time as the
obligations of Holdings and the Guarantors shall have been defeased or
discharged in accordance with the provisions of Article VIII of the Indenture,
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such termination)
of the Collateral Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the applicable Grantor. At the request
and joint and several expense of the Grantors following any such termination,
the Collateral Agent shall promptly deliver to the appropriate Grantor any
Collateral held by the Collateral Agent hereunder, and promptly execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.

 

(b) If any of the Collateral
shall be sold, transferred or otherwise disposed of by any Grantor in a
transaction permitted by the Indenture, then the Collateral Agent, at the
request and sole expense of such Grantor, shall promptly execute and deliver to
such Grantor all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral.

 

(c) At such time as (1) the
First Priority Lien Obligations have been satisfied in full in cash in
accordance with the terms thereof and all commitments and letters of credit
thereunder have been terminated or (2) the holders of the First Priority Liens
have released their First Priority Liens on all or any portion of the
Collateral, the Liens will also be automatically released to the same extent;
provided, however, that (A) in the case of clause (1) of this sentence, in the
event that an Event of Default under the Indenture exists as of the date on
which the First Priority Lien Obligations are repaid in full and terminated as
described in clause (1), the Liens on the Collateral will not be released,
except to the extent the Collateral or any portion thereof was disposed of in
order to repay the First Priority Lien Obligations secured by the Collateral,
and the Collateral Agent (acting at the director of the Holders of a majority
of outstanding principal amount of Notes) will have the right to foreclose upon
the Collateral (but in such event the Liens will be released when such Event of
Default and all other Events of Defaults under the Indenture cease to exists);
or (B) if the First Priority Lien Obligations are thereafter secured by assets
that would constitute Collateral, the Notes and the Note Guarantees will then
be secured by second priority Lines on such assets to the same extent provided
pursuant to the Security Documents. If Aventine subsequently incurs obligations
under other First Priority Lien Obligations which are secured by assets of Aventine
and its Subsidiaries of the type constituting Collateral, then the

 

27

 

Notes and the Note Guarantees will be secured at such time by second
priority Liens on the collateral securing such First Priority Lien Obligations
pursuant to the Security Documents.

 

(d) Additional releases of
Collateral shall be provided as set forth in the Intercreditor Agreement.

 

Section
7.15 Reinstatement. The provisions of this Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Grantor for liquidation or reorganization, should such Grantor become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any part of such Grantor’s assets or should any
other financial impairment occur, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Notes, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned to any obligee of
the Notes, whether as a “voidable preference”, “fraudulent conveyance”, or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored,
or returned, the Notes shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

Section
7.16 Avoidance of Conflict.

 

Notwithstanding anything in
this Agreement to the contrary, to the extent the provisions contained herein
conflict with the terms of the Guaranty and Security Agreement among Holdings,
Aventine and certain of its Subsidiaries and the Administrative Agent dated as
of May 30, 2003 (as amended, the “ABL Security Agreement”) with respect to ABL
Priority Collateral (as defined in the Intercreditor Agreement), the terms of
the ABL Security Agreement shall govern except as otherwise provided in the
Intercreditor Agreement.

 

[signature page to follow]

 

28

 

IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be duly executed and delivered as of
the date first above written.

 

	
  GRANTORS:

  	
  AVENTINE RENEWABLE ENERGY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Brennan

  	
   

  
	
   

  	
  Name:

  	
   William J. Brennan

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVENTINE RENEWABLE ENERGY,

  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Brennan

  	
   

  
	
   

  	
  Name:

  	
   William J. Brennan

  	
   

  
	
   

  	
  Title:

  	
   Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  COLLATERAL AGENT:

  	
  WELLS FARGO BANK, N.A., as

  Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

Signature Page

 

 

IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be duly executed and delivered as of
the date first above written.

 

	
  GRANTORS: 

  	
  AVENTINE RENEWABLE ENERGY, 

  INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

	
   

  	
  AVENTINE RENEWABLE ENERGY, 

  LLC 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
						

 

	
  COLLATERAL AGENT: 

  	
  WELLS FARGO BANK, N.A., as 

  
	
   

  	
  Collateral 

  
	
   

  	
  Agent 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey Rose

  	
   

  
	
   

  	
  Name: 

  	
  Jeffrey Rose

  	
   

  
	
   

  	
  Title: 

  	
  Corporate [     ] Officer

  	
   

  
						

 

Signature Page

 

 

ANNEX I

TO SECURITY AGREEMENT

 

ASSUMPTION
AGREEMENT

 

THIS ASSUMPTION AGREEMENT,
dated as of                                          
, 200  , by                                          
, a                                              (the
“Additional Grantor”), in
favor of WELLS FARGO BANK, N.A.,
as the Collateral Agent (in such capacity, the “Collateral Agent”) for the Trustee and Holders party to
the Indenture referred to below. All capitalized terms not defined herein shall
have the meaning ascribed to them in such Indenture.

 

WITNESSETH:

 

WHEREAS, Holdings, the
Grantors, the Trustee and the Holders, have entered into a Indenture, dated as
of December     , 2004, (as amended, supplemented or
otherwise modified from time to time, the “Indenture”);

 

WHEREAS, the Additional
Grantor has executed an Addendum to the Indenture pursuant to which it has
become a Grantor under the Indenture;

 

WHEREAS, in connection with
the Indenture, Aventine and the other Grantors (other than the Additional
Grantor) have entered into the Security Agreement, dated as of December 17,
2004 (as amended, supplemented or otherwise modified from time to time, the “Security  Agreement”) in favor of
the Collateral Agent for the ratable benefit of the Trustee and the Holders;

 

WHEREAS, Sections 4.15 or
10.1(c) of the Indenture requires the Additional Grantor to become a party to
the Security Agreement; and

 

WHEREAS, the Additional
Grantor has agreed to execute and deliver this Assumption Agreement in order to
become a party to the Security Agreement.

 

NOW, THEREFORE, IT IS
AGREED:

 

1. Security Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 7.13 of the Security Agreement, hereby becomes a party to the Security
Agreement as a Grantor thereunder with the same force and effect as if
originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder and hereby assigns and transfers to the Collateral Agent,
and hereby grants to the Collateral Agent, for the ratable benefit of the
Secured Parties, a security interest in the Collateral now owned or hereafter
acquired by the Additional Grantor. The information set forth in Annex I-A
hereto is hereby added to the information set forth in Schedules              
* to the Security Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and

 

I-1

 

warranties contained in Section 3 of the Security Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.

 

2. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND, TO
THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY OTHER STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED NECESSARILY GOVERN THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY OF, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN
OR SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE, IN WHICH CASE THE LAWS OF SUCH OTHER STATE SHALL GOVERN
SUCH VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY AND SUCH EXERCISE OF
REMEDIES.

 

* Refer to each Schedule which needs to be supplemented.

 

IN WITNESS WHEREOF, the
undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.

 

	
   

  	
  [ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

ACKNOWLEDGMENT BY [GRANTOR]:

 

By execution of this
Assumption Agreement in the space provided below, [INSERT RELEVANT GRANTOR] hereby acknowledges and agrees that
the Securities described on Annex I-A hereto have been issued by the Additional
Grantor identified herein and is held by [RELEVANT
GRANTOR] and constitute “Pledged Securities” comprising part of the
Pledged Securities under the Security Agreement.

 

	
  Dated:

  
	
   

  
	
  [RELEVANT GRANTOR]

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

Signature Page

 

 

ANNEX II TO

SECURITY AGREEMENT

 

ACKNOWLEDGMENT
AND CONSENT TO PLEDGE

 

[date]

 

[NAME OF ISSUER] 

[ADDRESS OF ISSUER]

 

Attention:

 

	
  Re:

  	
   

  	
  Pledge of                
  [describe the equity interest] (the “Pledged
  Securities”) in               ,
  a              (the “Company”), held
  by [Grantor’s Name], a                (“Grantor”)

  

 

Ladies and Gentlemen:

 

Reference is made herein to
that certain Security Agreement dated as of December 17, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Security Agreement”), by Aventine
Renewable Energy, Inc., a Delaware corporation (“Aventine”), Aventine Renewable Energy, LLC, a Delaware
limited liability company (together with any other entity that may become a
party thereto), in favor of Wells Fargo Bank, N.A., as the Collateral Agent (in
such capacity, the “Collateral Agent”)
for the ratable benefit of Trustee and the Holders party to the Indenture dated
as of December 17, 2004 (as amended, supplemented or otherwise modified from
time to time, the “Indenture”),
among Holdings, the Trustee and the Holders.

 

Pursuant to the terms of the
Security Agreement and/or the terms of the Indenture, the Trustee and the
Holders have required that Grantor grant to the Collateral Agent, for the
benefit of the Trustee and the Holders, a security interest in the Pledged Securities
to secure the Secured Obligations.

 

By executing this letter
(this “Letter Agreement”),
the Company and each shareholder/member, as may be required under the
applicable organization documents hereby (a) acknowledges and confirms that the
Pledged Securities represents all of Grantor’s Securities (as defined in the
Security Agreement) in the Company, (b) agrees to enter a notation in the stock
transfer register or other appropriate records of the Company reflecting the
pledge of the Pledged Securities pursuant to the Security Agreement, (c)
consents to the pledge by Grantor of the Pledged Securities to secure the
Secured Obligations and subject to the terms of the Intercreditor Agreement,
consents to the transfer of the Pledged Securities pursuant to the exercise of
the remedies provided for in the Security Agreement (or any transfer in lieu
thereof), (d) waives any breach or violation of the terms or provisions of the
Company’s organizational documents

 

II-1

 

caused by such pledge or transfer, (e) agrees that it will be bound by
the terms of the Security Agreement relating to the Pledged Securities issued
by it and will comply with such terms insofar as such terms are applicable to
it, (f) agrees that it will notify the Collateral Agent promptly in writing
upon the acquisition by Grantor of any Securities (as defined in the Uniform
Commercial Code as from time to time in effect in the State of New York or,
where applicable as to specific Collateral, any other relevant state) issued by
the Company, which notice shall set forth in reasonable detail all information
with respect to such Securities, (g) agrees, subject to the Intercreditor
Agreement, to comply with any instruction received from the Collateral Agent in
writing that states that (1) an Event of Default under and as defined in the
Indenture has occurred and is continuing and (2) such instructions are
otherwise in accordance with the terms of the Indenture and Security Agreement,
without any other or further instructions from Grantor, and (h) agrees that any
sums paid upon or in respect of the Pledged Securities, including, without
limitation any dividend or distribution or any amount paid upon the liquidation
or dissolution of the Company shall be paid deposited directly into Account No.
801 804 701 established by Aventine with the Administrative Agent or such other
account hereafter established by Aventine or Grantor with the Collateral Agent
or the Administrative Agent which Aventine or Grantor and the Collateral Agent
jointly designate as the “Blocked Account.”

 

This Letter Agreement may be
executed in counterparts, and all parties need not execute the same
counterpart. This Letter Agreement shall be binding on, enforceable against and
inure to the benefit of the Collateral Agent and the Trustee and the Holders.
Facsimiles shall be effective as originals.

 

Evidence your agreement to
each of the terms and conditions set forth above by executing this Letter
Agreement in the space indicated below.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed

  
	
   

  	
  As of this                
  day of     , 20    

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF THE COMPANY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

II-2

 

ANNEX III
TO 

SECURITY AGREEMENT

 

COPYRIGHT
SECURITY AGREEMENT

 

THIS COPYRIGHT SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS FARGO BANK, N.A., as the Collateral
Agent (the “Collateral Agent”) for the Trustee and the Holders.
Capitalized terms not otherwise defined herein have the meanings set forth in
the Security Agreement dated as of December 17, 2004 among the Grantors and the
Collateral Agent (the “Security Agreement”).

 

WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Copyrights whether now owned or existing or
hereafter acquired or arising and wherever located, including the Copyrights
listed on Schedule A hereto (“Secured Copyrights”).

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:

 

1. Grant of Security
Interest.

 

(a) Each Grantor hereby
grants to the Collateral Agent, a security interest in and continuing lien on
all of such Grantor’s right, title and interest in, to and under all the
Secured Copyrights, subject to the terms and conditions of the Security
Agreement and the Intercreditor Agreement.

 

(b) The security interest
granted hereby is granted in conjunction with the security interest granted to
the Collateral Agent under the Security Agreement. In the event of any conflict
between the terms of this Agreement and the terms of the Security Agreement,
the terms of the Security Agreement shall control.

 

2. Modification of
Agreement.

 

This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A hereto to include reference to any right, title or
interest in any existing Copyrights or any Copyrights acquired or developed by
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights in which Grantor no longer has or claims
any right, title or interest.

 

III-1

 

3. Governing Law.

 

THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.

 

4. Successors and Assigns.

 

This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.

 

5. Counterparts.

 

This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Facsimiles shall be effective as originals.

 

III-2

 

IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

	
   

  	
  AVENTINE RENEWABLE ENERGY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

	
   

  	
  WELLS FARGO BANK, N.A.,

  
	
   

  	
  as the Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

III-3

 

SCHEDULE A

 

COPYRIGHT SECURITY AGREEMENT

 

I.     REGISTERED COPYRIGHTS

 

	
  Copyright

  	
   

  	
  Country

  	
   

  	
  Reg. No.

  (App. No.)

  	
   

  	
  Reg. Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

II.    COPYRIGHT APPLICATIONS

 

III-4

 

	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  

 

On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                    ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                    ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.

 

WITNESS MY HAND AND/OR OFFICIAL SEAL.

 

(NOTARIAL STAMP OR SEAL)

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

III-5

 

ANNEX IV TO

SECURITY AGREEMENT

 

PATENT
SECURITY AGREEMENT

 

THIS PATENT SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS
FARGO BANK, N.A., as the Collateral Agent (the “Collateral Agent”) for
the Trustee and the Holders. Capitalized terms not otherwise defined herein
have the meanings set forth in the Security Agreement dated as of December 17,
2004 among the Grantors and the Collateral Agent (the “Security Agreement”).

 

WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Patents whether now owned or existing or hereafter
acquired or arising and wherever located, including the Patents listed on Schedule
A hereto (“Secured Patents”).

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:

 

1. Grant of Security
Interest.

 

(a) Each Grantor hereby
grants to the Collateral Agent, a security interest in and continuing lien on
all of such Grantor’s right, title and interest in, to and under the Secured
Patents, subject to the terms and conditions of the Security Agreement and the
Intercreditor Agreement.

 

(b) The security interest
granted hereby is granted in conjunction with the security interest granted to
the Collateral Agent under the Security Agreement. In the event of any conflict
between the terms of this Agreement and the terms of the Security Agreement,
the terms of the Security Agreement shall control.

 

2. Modification of
Agreement.

 

This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A hereto to include reference to any right, title or
interest in any existing Patents or any Patents acquired or developed by
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights in which Grantor no longer has or claims
any right, title or interest.

 

IV-1

 

3. Governing Law.

 

THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.

 

4. Successors and Assigns.

 

This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.

 

5. Counterparts.

 

This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.

 

IV-2

 

IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

	
   

  	
  AVENTINE RENEWABLE ENERGY,

  INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

	
   

  	
  WELLS FARGO BANK, N.A., as the

  Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

IV-3

 

SCHEDULE A

 

PATENT SECURITY AGREEMENT

 

I.     REGISTERED PATENTS

 

	
  Patent

  	
   

  	
  Country

  	
   

  	
  Reg. No.

  (App. No.)

  	
   

  	
  Reg. Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

II.    PATENT APPLICATIONS

 

IV-4

 

	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  

 

On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                               ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                               ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.

 

WITNESS MY HAND AND/OR OFFICIAL SEAL.

 

(NOTARIAL STAMP OR SEAL)

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

IV-5

 

ANNEX V TO

SECURITY AGREEMENT

 

TRADEMARK
SECURITY AGREEMENT

 

THIS TRADEMARK SECURITY
AGREEMENT (this “Agreement”), dated as of December 17, 2004 is entered
into by AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (the “Grantor”)
and certain of its affiliates (collectively, the “Grantors”) and WELLS
FARGO BANK, N.A., as the Collateral Agent (the “Collateral Agent”) for
the Trustee and the Holders. Capitalized terms not otherwise defined herein
have the meanings set forth in the Security Agreement dated as of December 17,
2004 among the Grantor and the Collateral Agent (the “Security Agreement”).

 

WHEREAS, pursuant to the
Security Agreement, Grantors are granting a security interest to the Trustee
and the Holders in certain Trademarks whether now owned or existing or
hereafter acquired or arising and wherever located, including the Trademarks
listed on Schedule A (“Secured Trademarks”).

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Grantors and the
Collateral Agent hereby agree as follows:

 

1. Grant of Security
Interest.

 

Section 1.1 Each Grantor
hereby grants to the Collateral Agent, a security interest in and continuing
lien on all of such Grantor’s right, title and interest in, to and under all
the Secured Trademarks, subject to the terms and conditions of the Security
Agreement and the Intercreditor Agreement.

 

Section 1.2 The security
interest granted hereby is granted in conjunction with the security interest
granted to the Collateral Agent under the Security Agreement. The rights and
remedies of the Trustee and the Holders with respect to the security interest
granted hereby are in addition to those set forth in the Security Agreement. In
the event of any conflict between the terms of this Agreement and the terms of
the Security Agreement, the terms of the Security Agreement shall control.

 

2. Modification of
Agreement.

 

This Agreement or any
provision hereof may not be changed, waived, or terminated except in accordance
with the amendment provisions of the Security Agreement and the Intercreditor
Agreement pursuant to which the Collateral Agent may modify this Agreement,
after obtaining Grantor’s approval of or signature to such modification, by
amending Schedule A to include reference to any right, title or interest
in any existing Trademarks or any Trademarks acquired or developed by Grantor
after the execution hereof or to delete any reference to any

 

V-1

 

right, title or interest in any Trademarks in which Grantor no longer
has or claims any right, title or interest.

 

3. Governing Law.

 

THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, TO THE EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED NECESSARILY GOVERNS THE VALIDITY, PERFECTION, PRIORITY AND
ENFORCEABILITY, AND THE EXERCISE OF ANY REMEDIES WITH RESPECT TO ANY LIEN OR
SECURITY INTEREST INTENDED TO BE CREATED OR GRANTED HEREBY ON COLLATERAL
LOCATED IN SUCH STATE.

 

4. Successors and Assigns.

 

This Agreement shall be
binding upon and inure to the benefit of the Collateral Agent and Grantor and
their respective successors and assigns. Grantor shall not, without the prior
written consent of the Collateral Agent given in accordance with the Indenture,
assign any right, duty or obligation hereunder.

 

5. Counterparts.

 

This Agreement may be
executed in any number of counterparts and by the parties hereto on separate
counterparts, each of which when so executed, shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Facsimiles shall be effective as originals.

 

[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 

V-2

 

IN WITNESS WHEREOF, the
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

	
   

  	
  AVENTINE RENEWABLE ENERGY, INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

	
   

  	
  WELLS FARGO BANK, N.A., as the Collateral

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

V-3

 

SCHEDULE A

 

TRADEMARKS SECURITY AGREEMENT

 

I.     REGISTERED PATENTS

 

	
  Trademark

  	
   

  	
  Country

  	
   

  	
  Reg.
  No.

  (App. No.)

  	
   

  	
  Reg.
  Date

  (App. Date)

  	
   

  	
  Record

  Owner/Liens

  	
   

  	
  Status/

  Comment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

II.    TRADEMARK APPLICATIONS

 

V-4

 

	
  STATE OF                       

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss

  
	
  COUNTY OF                   

  	
  )

  	
   

  	
   

  

 

On [ ], before me, the
undersigned, a notary public in and for said state and county, personally
appeared                               ,
personally known to me (or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as the                               ,
on behalf of [GRANTOR], a [ ] corporation, the corporation therein named, and
acknowledged to me that the corporation executed the within instrument pursuant
to its bylaws or a resolution of its board of directors.

 

WITNESS MY HAND AND/OR OFFICIAL SEAL.

 

(NOTARIAL STAMP OR SEAL)

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My Commission Expires:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

V-5

 

SCHEDULE 1

 

PERFECTION
INFORMATION

 

	
  Grantor

  	
   

  	
  Filing Office

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Delaware

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Delaware

  

 

 

SCHEDULE 2

 

ORGANIZATIONAL
INFORMATION

 

	
   

  	
   

  	
   

  	
   

  	
  Federal Tax

  	
   

  	
  Organizational

  
	
   

  	
   

  	
   

  	
   

  	
  Identification

  	
   

  	
  Identification

  
	
  Grantor

  	
   

  	
  Jurisdiction

  	
   

  	
  Number

  	
   

  	
  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aventine Renewable Energy,

  	
   

  	
  Delaware

  	
   

  	
  [AVENTINE TO

  	
   

  	
  3334328

  
	
  LLC

  	
   

  	
   

  	
   

  	
  PROVIDE]

  	
   

  	
   

  
	
  Aventine Renewable Energy,

  	
   

  	
  Delaware

  	
   

  	
  75-3108352

  	
   

  	
  2505911

  
	
  Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3

 

SECURITIES

 

	
  Grantor

  	
   

  	
  Issuer

  	
   

  	
  Ownership Interest

  	
   

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Aventine
  Renewable Energy, Inc.

  	
   

  	
   

  	
  100

  	
  %

  
	
  Aventine Renewable Energy, LLC

  	
   

  	
  Nebraska Energy, L.L.C.

  	
   

  	
   

  	
  78.42

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Ace Ethanol,
  LLC

  	
   

  	
   

  	
  7.6

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Adkins
  Energy, LLC

  	
   

  	
   

  	
  0.1

  	
   

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Fluid
  Technologies

  	
   

  	
   

  	
  1.9

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Heartland
  Grain Fuels

  	
   

  	
   

  	
  5.0

  	
  %

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Northeast
  Iowa Ethanol

  	
   

  	
   

  	
  22.8

  	
  %**

  
	
  Aventine Renewable Energy, Inc.

  	
   

  	
  TnStates
  Ethanol Company, LLC

  	
   

  	
   

  	
  14.8

  	
  %*

  

 

* TriStates has been
liquidated in bankruptcy court, and this investment has been written down to
$0.

 

** These investments are
likely to be unrecoverable and have been written down to $0.

 

 

SCHEDULE 4

 

INTELLECTUAL
PROPERTY

 

Copyrights

 

None.

 

Patents

 

None.

 

Trademarks

 

	
   

  	
   

  	
   

  	
   

  	
  Application

  	
   

  	
  Application

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Country

  	
   

  	
  Number

  	
   

  	
  Date

  	
   

  	
  Record Owner

  	
   

  	
  Status

  
	
  AVENTINE 

  	
   

  	
  United States

  	
   

  	
  76/513,723

   

  	
   

  	
  5/13/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Accepted and set to register in due course.

  
	
  AVENTINE & logo

  	
   

  	
  United States

  	
   

  	
  76/564,747

  	
   

  	
  12/11/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Application set for publication.

  
	
  AVENTINE RENEWABLE

  ENERGY, INC.

  & design

  	
   

  	
  United States

   

  	
   

  	
  76/564,750

   

  	
   

  	
  12/11/2003

  	
   

  	
  Aventine Renewable Energy, Inc.

  	
   

  	
  Application act for publication.

  

 

 

SCHEDULE 5

 

INSTRUMENTS
AND CHATTEL PAPER

 

None.

 

 

SCHEDULE 6

 

COMMERCIAL
TORT CLAIMS

 

On December 11, 2002, Aventine Renewable Energy, Inc. made demand for
return of its $1,000,000 investment in Northeast Iowa Ethanol, LLC. Litigation
commenced on November 3, 2003. The action is pending in Iowa District Court,
Delaware County under case number LACV005370. The case is currently in
discovery.EXHIBIT 10.2 

 

Execution Copy

 

 

SECURITY AND ESCROW AGREEMENT

 

dated as of December 17, 2004

 

among

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

 

as Pledgor,

 

WELLS FARGO BANK, N.A.,

 

as Trustee and Collateral Agent,

 

and

 

JPMORGAN CHASE BANK, N.A.

 

as Escrow Agent and as Securities Intermediary 

 

 

 

SECURITY AND ESCROW AGREEMENT

 

This
SECURITY AND ESCROW AGREEMENT (this “Agreement”)
is made and entered into as of December 17, 2004 by AVENTINE RENEWABLE
ENERGY HOLDINGS, INC., a Delaware corporation (“Aventine”), having an office at 1300 South Second Street, P.O. Box
10, Pekin, Illinois 61555-0010, WELLS FARGO BANK, N.A., as trustee (in such
capacity, the “Trustee”) and
collateral agent (in such capacity, the “Collateral
Agent”) under the Indenture referred to below, and JPMORGAN CHASE
BANK, N.A., a national banking association, as securities intermediary (in such
capacity, the “Securities Intermediary”)
and escrow agent (in such capacity, the “Escrow
Agent”) with respect to the Escrow Account (as hereinafter defined).

 

W I T N E S S E T H

 

WHEREAS,
Aventine and certain other guarantors named therein, and Morgan Stanley &
Co., Incorporated, J.P. Morgan Securities, Inc., Banc of America
Securities LLC and Bear, Steams & Co., Inc., each acting as a
Placement Agent (collectively, the “Placement
Agents”), are parties to a Purchase Agreement dated December 17,
2004 (the “Purchase Agreement”),
pursuant to which Aventine is issuing and selling to the Placement Agents
$160,000,000 aggregate principal amount of Senior Secured Floating Rate Notes
due 2011 (the “Notes”); and 

 

WHEREAS,
Aventine and the Trustee have entered into that certain indenture, dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from
time to time, the “Indenture”), pursuant
to which Aventine is issuing the Notes on the date hereof; 

 

WHEREAS,
pursuant to the Purchase Agreement and the Indenture, Aventine is required to
deposit into the Escrow Account (as defined below) on December 17, 2004
(the “Closing Date”) $62.5 million
(the “Deposit Amount”) of the net
proceeds from the offering of the Notes to be held by the Escrow Agent pending
application of the funds therein to the construction of the planned expansion
of Aventine Renewable Energy, Inc.’s Pekin, Illinois facility, and to
provide a security interest therein for the benefit of the Secured Parties, to
secure the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration, or otherwise) of the Notes, the Indenture and
the Security Documents (such obligations being the “Obligations”); and 

 

WHEREAS,
Aventine has opened a collateral account, Account No. 10209533.1 (the “Escrow Account”) with JPMorgan Chase Bank,
N.A. at its office at 600 Travis Street, Suite 1150, Houston, Texas 77002,
in the name of Aventine; and 

 

 

WHEREAS,
it is a condition precedent to the initial purchase of the Notes by the
Placement Agents pursuant to the Purchase Agreement that Aventine shall have
granted the security interest and made the pledge contemplated by this
Agreement; and 

 

WHEREAS,
unless otherwise defined herein or in the Indenture, terms defined in Articles
8 or 9 of the Uniform Commercial Code as in effect in the State of New
York (“UCC”) are used in this
Agreement as such terms are defined in such Article 8 or 9. 

 

NOW,
THEREFORE, in consideration of the mutual promises herein contained, and in
order to induce the Holders of the Notes to purchase the Notes, Aventine hereby
agrees with the Escrow Agent, the Securities Intermediary, and the Collateral
Agent, for the ratable benefit of the Secured Parties, as follows: 

 

ARTICLE 1

CERTAIN DEFINITIONS; APPOINTMENT OF THE ESCROW AGENT; PLEDGE AND

GRANT OF SECURITY INTEREST; DEPOSIT OF DEPOSIT AMOUNT. 

 

Section 1.01. Certain Definitions. Capitalized terms
used herein will have the respective meanings described to them below: 

 

“Additional Provisions” has the meaning
given to it in the seventh Whereas clause hereof. 

 

“Aventine” has the meaning given to it in
the introductory paragraph hereof.

 

“Business Day” means any day of the year,
excluding Saturday, Sunday and any other day on which national banks are
required or authorized to close in Houston, Texas, New York, New York, or
Minneapolis, Minnesota. 

 

“Closing Date” has the meaning given to it
in the third Whereas clause hereof.

 

“Collateral” has the meaning specified in Section 1.03.

 

“Collateral Agent” has the specified in the
introductory paragraph hereof.

 

“Collateral Investments” means (i) Treasury
Securities, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing not later than one year, in each
case, entitled to U.S. Federal deposit insurance for the full amount thereof or
issued by a bank or trust company (including the Escrow Agent or the Collateral
Agent or an Affiliate of the Escrow Agent or the Collateral Agent) that is
organized under the laws of the United States of America or any State thereof
having capital, surplus and undivided 

 

3

 

profits aggregating in
excess of $500.0 million, and (iii) investments in commercial paper
maturing not later than 270 days and having, at the date of acquisition, a
rating no lower than A-1 from Standard & Poor’s Ratings Service, P-1
from Moody’s Investors Service, Inc. or F-1 from Fitch Ratings Ltd. 

 

“Completion
Certificate”
has the meaning specified in Article 6. 

 

“Deposit Amount” has the meaning specified
in the third Whereas clause hereof.

 

“Disbursement Request Certificate” has the
meaning specified in Article 6.

 

“Entitlement Order” has the meaning
specified in Article 5. 

 

“Escrow Account” has the meaning specified
in the fifth Whereas clause hereof.

 

“Escrow Agent” has the meaning specified in
the introductory paragraph hereof.

 

“Events of Default” means an Event of
Default as defined in the Indenture. 

 

“Federal Book-Entry Regulations” has the
meaning given to it in the seventh Whereas clause hereof. 

 

“Holders” means the registered holders of
the Notes. 

 

“Indenture” has the meaning specified in the
second Whereas clause hereof.

 

“JPMorgan Chase Money Market Account” means
an interest bearing account at JPMorgan Chase Bank, N.A. 

 

“Lien” means any mortgage, lien, pledge,
claim, charge, security interest or encumbrance of any kind, whether or not filed,
recorded or otherwise perfected under applicable law. 

 

“Material Adverse Effect” means a material
adverse effect on Aventine and its subsidiaries, taken as a whole. 

 

“Notes” has the meaning specified in the
first Whereas clause hereof.

 

“Obligations” has the meaning specified in
the third Whereas clause hereof.

 

4

 

“Offering Memorandum” means the Offering
Memorandum, dated December 10, 2004, relating to the offering of the Notes
issued on the Closing Date. 

 

“Officer” means the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Treasurer or the Secretary of Aventine,
the Trustee or the Collateral Agent, as applicable. 

 

“Officers’ Certificate” means a certificate
signed by two Officers of Aventine. 

 

“Pekin Expansion” means the expansion of
annual ethanol production capacity of Aventine Renewable Energy, Inc.’s,
ethanol production facility in Pekin, Illinois, by 56.5 million gallons
(utilizing a dry milling process). 

 

“Placement Agents” has the meaning specified
in the first Whereas clause hereof.

 

“Pledged Financial Assets” has the meaning
specified in Section 1.03.

 

“Pledged Security Entitlements” has the
meaning specified in Section 1.03.

 

“Purchase Agreement” has the meaning
specified in the first Whereas clause hereof. 

 

“Secured Parties” has the meaning specified
in Section 1.03.

 

“Securities Intermediary” has the meaning
specified in the introductory paragraph hereof. 

 

“Special Offer to Purchase Notice” means a
written notice provided by Aventine or the Trustee to the Escrow Agent that
Aventine will consummate a Special Offer to Purchase (as defined in the
Indenture) on the Payment Date (as defined in the Indenture), which notice
shall expressly set forth the calendar date of the Payment Date, the name,
address and wiring instructions for the Paying Agent and the amount required to
be paid. 

 

“Treasury Securities” means any investment
in obligations issued or guaranteed by the United States government or agency
thereof, in each case, maturing not later than one year. 

 

“Trustee” has the meaning specified in the
introductory paragraph hereof.

 

“UCC” has the meaning specified in the sixth
Whereas clause hereof. 

 

5

 

Capitalized terms used but
not defined herein shall have the meanings assigned thereto in the Indenture. 

 

Section 1.02. Appointment of the Escrow Agent. The
Trustee and Aventine hereby appoint JPMorgan Chase Bank, N.A., as Escrow Agent
in accordance with the terms and conditions set forth herein and the Escrow
Agent hereby accepts such appointment. 

 

Section 1.03. Grant of Security Interest. Aventine
hereby assigns and transfers to the Collateral Agent and hereby grants to the
Collateral Agent for the benefit of the Trustee and the Holders (the Holders,
Trustee and Collateral Agent, collectively the “Secured Parties”) a continuing security interest in and to all
of Aventine’s right, title and interest in, to and under the following
(collectively, the “Collateral”)
as collateral security for the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations: 

 

(a) the
Escrow Account, all funds and financial assets (collectively, the “Pledged Financial Assets”) credited to the
Escrow Account from time to time (including any Collateral Investments) and all
security entitlements of Aventine with respect to the Pledged Financial Assets
(all such security entitlements collectively the “Pledged Security Entitlements”), including, without
limitation, all dividends, if any, interest, cash, instruments, if any, and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Pledged Security
Entitlements or such Pledged Financial Assets; and 

 

(b) all
proceeds of the property and assets described in clause (a) of this Section 1.03
and cash proceeds). 

 

Section 1.04. Deposit of Deposit Amount. On the
Closing Date, Aventine shall deposit the Deposit Amount into the Escrow
Account. 

 

ARTICLE 2 

DELIVERY OF SECURITY COLLATERAL

 

All
securities, financial assets or other property credited to the Escrow Account
shall be registered in the name of the Securities Intermediary, indorsed to the
Securities Intermediary or in blank. In no case will any financial asset
credited to the Escrow Account be registered in the name of Aventine, payable
to the order of Aventine or specially indorsed to Aventine unless the foregoing
have been specially indorsed to the Securities Intermediary or in blank. All
financial assets delivered to the Securities Intermediary pursuant to this
Agreement will be promptly credited to the Escrow Account. 

 

6

 

ARTICLE 3

CREATION AND MAINTENANCE OF THE ESCROW ACCOUNT

 

(a) Concurrently
with or prior to the Closing Date, Aventine shall have established (and at all
times until the Obligations shall have been paid in full and this Agreement shall
have been terminated, or the escrow terminates pursuant to Section 13.07,
the Securities Intermediary shall maintain and administer in accordance with
this Agreement), the Escrow Account with JPMorgan Chase Bank, N.A. at its
office at 600 Travis Street, Suite 1150, Houston, Texas 77002 Attn.: ITS -
Houston Escrow, Attn: Ms. Ruth Chipongian. 

 

(b) The
Securities Intermediary shall cause the Escrow Account to be, and the Escrow
Account shall be, separate from all other accounts (including any other escrow
account). 

 

(c) The
Securities Intermediary shall deposit all other property, assets and items in,
and credit such other assets, property and items, in each case belonging to
Aventine, to, the Escrow Account. 

 

ARTICLE 4

INVESTING OF AMOUNTS IN THE ESCROW ACCOUNT

 

As
long as the Collateral is deposited in the Escrow Account, the Collateral will
be invested by the Escrow Agent at the instruction of Aventine in Treasury
Securities and other Collateral Investments. Unless directed otherwise, the
Collateral will be invested and reinvested in the JPMorgan Chase Money Market
Account to the extent that such account is or contains exclusively a Collateral
Investment. The Escrow Agent or any of its Affiliates may receive
compensation with respect to any investment directed hereunder. 

 

ARTICLE 5 

SECURITIES INTERMEDIARY

 

The
Securities Intermediary, and with respect to subsection (d) below,
Aventine, represent and warrant to, and agree with each of the other parties
hereto as follows: 

 

(a) Collateral
held by the Securities Intermediary for the account of Aventine is, and will
continue to be, credited to the Escrow Account. 

 

(b) The
Escrow Account is a “securities account” as defined in Section 8-501 of
the UCC. The Securities Intermediary is acting as a “securities intermediary”
as defined in Section 8-102 of the UCC with respect to the Escrow Account.
Aventine is the entitlement holder with respect to the property credited from
time to time to the Escrow Account. 

 

7

 

(c) The
Securities Intermediary has credited and will continue to credit such assets,
property and items to the Escrow Account in accordance with instructions given
in accordance with the terms and conditions of this Agreement. 

 

(d) For
the purposes of Section 8-102(a)(9)(iii) of the UCC, all assets,
property and items from time to time carried in the Escrow Account shall
constitute “financial assets” under Article 8 of the UCC, and the
Securities Intermediary and Aventine agree to treat all such assets, property
and items as financial assets. 

 

(e) The
Securities Intermediary’s jurisdiction with respect to the Escrow Account for
purposes of Section 8-1 10(e) of the UCC is, and will continue to be
for so long as the security interest hereunder shall be in effect, the State of
New York. 

 

(f) The
Securities Intermediary will comply with all notifications it receives
directing it to transfer or redeem any property in the Escrow Account (each an “Entitlement Order”) or other directions
concerning the Escrow Account (including, without limitation, Entitlement
Orders, directions to distribute to the Escrow Agent proceeds of any such
transfer or redemption or interest or dividends on property in the Escrow
Account) originated by the Collateral Agent without further consent by Aventine
or any other Person. The Collateral Agent hereby instructs the Securities
Intermediary to follow instructions of (i) the Escrow Agent pursuant to Article 6,
and (ii) subject to Article 5(g), Aventine pursuant to Article 4,
until such time as the Collateral Agent has delivered a written notice of
exclusive control (a “Notice of Exclusive
Control”) to the Securities Intermediary, with a copy to the Escrow
Agent, at which time the Collateral Agent will be deemed to have the exclusive
ability to direct the Collateral. The Collateral Agent hereby agrees with
Aventine that it will not deliver a Notice of Exclusive Control unless an Event
of Default (as defined in the Indenture) has occurred and is continuing, and
shall rescind any such notice if any such Event of Default is cured or waived. 

 

(g) If
the Securities Intermediary receives conflicting Entitlement Orders or
directions from the Collateral Agent and Aventine, it will follow the
Entitlement Orders and directions from the Collateral Agent and not from
Aventine. 

 

(h) The
Securities Intermediary has not entered into and will not enter into any
agreement with any other Person relating to the Escrow Account and/or any
financial assets credited thereto pursuant to which it has agreed to comply
with Entitlement Orders of such Person. The Securities Intermediary has not
entered into any other agreement with Aventine or any other Person purporting
to limit or condition the obligation of the Securities Intermediary to comply
with Entitlement Orders originated by the Collateral Agent as set forth in
paragraph (f) above. 

 

8

 

(i) The
Securities Intermediary hereby waives and releases any Lien, right of set-off
or other right it may have against the Escrow Account or any financial
asset carried in the Escrow Account or any credit balance in the Escrow Account
and agrees that it will not assert any such Lien or right against the Escrow
Account or any financial asset carried in the Escrow Account or any credit
balance in the Escrow Account. 

 

(j)
Anything herein to the contrary notwithstanding, the Securities Intermediary
will not be required to follow any instruction that would violate any
applicable law, decree, regulation or order of any government or governmental
body (including any court or tribunal). 

 

(k)
The Securities Intermediary does not know of any claim to or interest in the
Escrow Account or any property credited to the Escrow Account, except for
claims and interests of the parties referred to in this Agreement. 

 

(l)
When the Securities Intermediary has received any written notice of any claim
or interest in the Escrow Account or any property credited to the Escrow
Account other than the claims and interests of the parties referred to in this Agreement,
the Securities Intermediary will promptly notify the Escrow Agent, the
Collateral Agent, the Trustee and Aventine of such claim or interest. 

 

ARTICLE 6 

DISBURSEMENTS

 

Prior
to the receipt of a Notice of Exclusive Control, the Escrow Agent shall
instruct the Securities Intermediary to hold the assets in the Escrow Account
and release the same, or a portion thereof, as follows: 

 

(a) If
the Escrow Agent receives, prior to 12:00 p.m., New York City time, on any
Business Day, or if after 12:00 p.m., New York City time, the next
preceding Business Day, a resolution from the Board of Directors of Aventine
set forth in an Officers’ Certificate (a “Completion
Certificate”) certifying that, as of the date of such certificate, (i) the
Pekin Expansion has been completed, (ii) such expansion has increased
production capacity by approximately 56.5 million gallons of ethanol annually,
and (iii) all material consents, approvals and licenses necessary for the
commercial operation of such expansion have been obtained from the relevant
governmental authorities, with a copy sent to the Trustee, the Escrow Agent
shall instruct the Securities Intermediary to liquidate, by the close of
business on such date, all funds and/or Cash Equivalents and/or Collateral
Investments from the Escrow Account and to cause the disbursement of such funds
and/or Collateral Investments as directed by Aventine. 

 

(b) If
at any time prior to the presentation by Aventine of a Completion Certificate
the Escrow Agent receives, prior to 12:00 p.m., New York City time, on any
Business Day, or if after 12:00 p.m., New York City time, the next 

 

9

 

preceding Business Day, a
request by Aventine for the disbursement of funds from the Escrow Account set forth
in an Officers’ Certificate (a “Disbursement
Request Certificate”) (i) indicating in reasonable detail the
purpose or purposes to which such funds will be applied and (ii) certifying
that (x) the use of such funds for such purpose or purposes will not violate
the terms of the Indenture, and (y) such funds will be applied as set forth in
clause (i) within no more than seven days after their release from the
Escrow Account, with a copy sent to the Trustee, the Escrow Agent shall
instruct the Securities Intermediary to liquidate, by the close of business on
such date, the funds and/or Collateral Investments from the Escrow Account in
an amount equal to the amount specified in the Disbursement Request Certificate
and to cause the disbursement of such amount of funds and/or Collateral
Investments as directed by Aventine; provided,
however, that in the event that
the amount requested by Aventine under a Disbursement Request Certificate is
equal to or greater than $10 million or such requested amount is less than $10
million but, when added to all other amounts released pursuant to this Article 6(b) during
the preceding 30 days, would aggregate to $25 million or more, the Escrow Agent
shall not honor such Disbursement Request Certificate unless such Certificate
is accompanied by a resolution of the Board of Directors of Aventine approving
such disbursement request. 

 

(c) In
the event that the Escrow Agent receives a Special Offer to Purchase Notice,
the Escrow Agent shall instruct the Securities Intermediary to liquidate and
release to the Paying Agent (as defined in the Special Offer to Purchase
Notice), not later than the last Business Day prior to the Payment Date (as set
forth in the Special Offer to Purchase Notice), the funds and/or Collateral
Investments from the Escrow Account in an amount equal to the lesser of (I) the
amount required to pay the purchase price, plus accrued and unpaid interest to
the date of purchase, for all notes tendered pursuant to a Special Offer to
Purchase Notice and (II) the amount of funds and/or Collateral Investments then
in the Escrow Account. Concurrently with the release of funds to the Paying
Agent, the Escrow Agent will release any excess of escrowed funds over the
purchase price to Aventine, and Aventine will be permitted to use the excess
funds for any purpose not otherwise prohibited by the Indenture. 

 

(d) Upon
the release of any Collateral from the Escrow Account in accordance with the
terms of this Agreement, the security interest evidenced by this Agreement in
such released Collateral will automatically terminate and be of no further
force and effect. 

 

(e) The
Escrow Agent shall not be required to instruct the Securities Intermediary to
liquidate any Collateral Investment in order to make any payment hereunder
except as required under Article 6(a), (b) or (c). 

 

(f) Aventine
acknowledges, confirms and agrees that the Collateral Agent holds the Pledged
Security Entitlements to the Collateral Investments solely as Collateral Agent
for the Trustee and the Holders of the Notes and not as a securities
intermediary or financial intermediary. 

 

10

 

(g) Nothing
in this Article 6 shall affect the Escrow Agent’s rights, upon instruction
from the Collateral Agent, to instruct the Securities Intermediary to release
Collateral for application thereof to payment of amounts due on the Notes upon
acceleration thereof. 

 

ARTICLE 7 

REPRESENTATIONS AND WARRANTIES

 

To
induce the Secured Parties to purchase the Notes and to induce the Escrow Agent
and the Securities Intermediary to enter into this Agreement, Aventine hereby
represents and warrants that: 

 

(a) The
execution and delivery by Aventine and the performance by Aventine of its
obligations under this Agreement will not contravene (i) any provision of
applicable law or the certificate of incorporation or by-laws of Aventine, (ii) any
material agreement or other material instrument binding upon Aventine or any of
its subsidiaries or (iii) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over Aventine or any of
its subsidiaries, or result in the creation or imposition of any Lien on any
assets of Aventine, except for the security interests granted under this
Agreement and except, in the case of the foregoing clauses (ii) and (iii),
such contraventions as would not, singly or in the aggregate, have a Material
Adverse Effect. 

 

(b) No
consent of any other Person and no approval, authorization, order of,
declaration or qualification with, any governmental body or agency or other
third party is required (i) for the execution, delivery or performance by
Aventine of its obligations under this Agreement or (ii) for the pledge by
Aventine of the Collateral pursuant to this Agreement or for the perfection and
maintenance of such pledge, except for (A) those already obtained which
are in full force and effect, (B) any such consents, approvals,
authorizations or orders as may be required to be obtained by the
Collateral Agent (or the Holders) for the exercise by the Collateral Agent of
the rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement and (iii) as would not, singly or in
the aggregate, have a Material Adverse Effect. 

 

(c) Aventine
is the legal and beneficial owner of the Collateral, free and clear of any Lien
or claims of any Person (except for the security interests created by this
Agreement). No financing statement or instrument similar in effect covering all
or any part of Aventine’s interest in the Collateral is on file in any
public or recording office. 

 

(d) This
Agreement has been duly authorized, validly executed and delivered by Aventine
and constitutes a valid and binding agreement of Aventine, enforceable against
Aventine in accordance with its terms, except as the enforceability hereof may be
limited by (i) applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally, or (ii) general principles of 

 

11

 

equity, whether considered
at law or at equity, including, without limitation, concepts or materiality,
reasonableness, good faith and fair dealing. 

 

(e) Upon
the filing of all necessary Uniform Commercial Code financing statements
in the proper filing offices and all other actions necessary or desirable to
perfect a security interest in the Escrow Account, the security interests in
the Escrow Account granted to the Collateral Agent, for the ratable benefit of
the Secured Parties, will constitute a valid and perfected first priority
security interest in the Escrow Account, securing the Obligations, subject only
to Permitted Liens and other Liens expressly permitted under the Indenture. As
of the Closing Date, except for the filing of all necessary Uniform Commercial
Code financing statements in the proper filing offices and the other filings
and actions contemplated hereby and by the Indenture, all other filings and
other actions necessary or desirable to perfect the security interest in the
Escrow Account will have been duly made or taken and will be in full force and
effect. 

 

(f) There
are no legal or governmental proceedings pending or, to the best of Aventine’s
knowledge, threatened to which Aventine or any of its subsidiaries is a party
or to which any of the properties of Aventine or any such subsidiary is subject
that would materially adversely affect the power or ability of Aventine to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby. 

 

(g) The
pledge of the Collateral pursuant to this Agreement is not prohibited by law or
governmental regulation (including, without limitation, Regulations T, U and X
of the Board of Governors of the Federal Reserve System) applicable to
Aventine. 

 

(h) No
Event of Default exists. 

 

(i) Aventine’s
exact legal name, as defined in Section 9-503(a) of the UCC, is “Aventine
Renewable Energy Holdings, Inc.”. The chief place of business and chief
executive office of Aventine are located at 1300 South 2nd Street, P.O. Box
10, Pekin, Illinois 61555-0010, and Aventine keeps its records concerning the
Collateral at such location. 

 

(j)
Aventine is the sole account holder of the Escrow Account and Aventine has not
consented to, and is not otherwise aware of any Person (other than the
Collateral Agent) having “control” (within the meaning of Section 9-104 of
the UCC) over the Escrow Account or any money or other property deposited
therein. 

 

12

 

ARTICLE 8

POWER OF ATTORNEY; COLLATERAL AGENT MAY PERFORM

 

Subject
to the terms of this Agreement, Aventine hereby appoints and constitutes the
Collateral Agent as Aventine’s attorney-in-fact (with full power of
substitution), with full authority in the place and stead of Aventine and in
the name of Aventine or otherwise, from time to time to take any action and to
execute any instrument that is necessary or advisable or that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation: 

 

(a) to
ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral, 

 

(b) to
receive, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) above, 

 

(c) to
file any claims or take any action or institute any proceedings that are
necessary or desirable or that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Trustee with respect to any of the Collateral, 

 

(d) to
pay or discharge taxes or Liens levied or placed upon the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same to
be determined by the Collateral Agent, and such payments made by the Collateral
Agent to become part of the Obligations of Aventine to the Trustee, due
and payable immediately upon demand, and 

 

(e) to
convey any item of Collateral to any purchaser thereof and give any notices or
recordings of any Liens under Article 11 hereof; 

 

provided, however,
that the Collateral Agent shall have no duty or obligation to perform any
of the foregoing actions. The Collateral Agent’s authority under this Article 8
shall include, without limitation, the authority to execute or endorse (a) any
checks or instruments representing proceeds of Collateral in the name of
Aventine, (b) any receipts for any certificate of ownership or any
document constituting Collateral or transferring title to any item of
Collateral, (c) any financing statements (to the extent permitted by
applicable law) or (d) any other documents deemed necessary or appropriate
by the Collateral Agent or otherwise to preserve, protect or perfect the security
interest in the Collateral and to file the same, prepare, file and sign
Aventine’s name on any notice of Lien, and to take any other actions arising
from or incident to the powers granted to the Collateral Agent in this
Agreement. This power of attorney, which will terminate upon the termination of
this Agreement, is coupled with an interest and is irrevocable by Aventine. 

 

13

 

ARTICLE 9

NO ASSUMPTION OF DUTIES; REASONABLE CARE

 

The
rights and powers conferred on the Collateral Agent hereunder are solely to
preserve and protect the security interest of the Secured Parties in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties or obligations on the Collateral Agent in connection therewith other
than those expressly provided herein or imposed under applicable law. Except as
provided by applicable law or by the Indenture, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords similar property
held by the Collateral Agent for its own account, it being understood that the
Collateral Agent in its capacity as such shall not have any responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters, (b) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral or (c) investing or reinvesting any of the Collateral or any
loss on any investment. 

 

ARTICLE 10

INDEMNITY; ESCROW AGENT’S LIMITATION OF LIABILITY TO AVENTINE

 

(a) Aventine
shall indemnify, reimburse, hold harmless and defend the Escrow Agent, the
Collateral Agent and the Securities Intermediary and their affiliates and their
directors, officers, agents and employees, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, and reasonable legal fees and
damages arising from the Escrow Agent’s or Securities Intermediary’s or
Collateral Agent’s performance or lack of performance as Escrow Agent or
Securities Intermediary or Collateral Agent, respectively, under this
Agreement, except to the extent that such claim, action, obligation, liability
or expense is directly caused by the bad faith, gross negligence or willful
misconduct of such indemnified person; provided,
however, that the Securities
Intermediary (i) shall not be excused from, and shall not be excused from
liability for, acting or refraining from acting and (ii) shall not be
indemnified or held harmless under this Article 10 for the taking or the
failure to take any action, in each case, hereunder in its capacity as
Securities Intermediary to the extent the taking or the failure to take any
such action violates the duties and obligations expressly imposed upon the
Securities Intermediary under the Federal Book-Entry Regulations or Article 8,
Part 5 of the UCC. This indemnity shall be a continuing obligation of
Aventine, its respective successors and assigns, notwithstanding the
termination of this Agreement and the resignation or removal of the Escrow
Agent or the Securities Intermediary or the Collateral Agent. 

 

14

 

(b) If
at any time the Escrow Agent is served with any judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative
process which in any way affects Collateral (including, but not limited to,
orders of attachment or garnishment or other forms of levies or injunctions or
stays relating to the transfer of Collateral), the Escrow Agent is authorized
to comply therewith in any manner as it or its legal counsel of its own
choosing deems appropriate and if the Escrow Agent complies with any such
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to
Aventine even though such order, judgment, decree, writ or process may be
subsequently modified or vacated or otherwise determined to have been without
legal force or effect. 

 

(c) Should
any controversy arise involving the parties hereto or any of them or any other
person, firm or entity with respect to this Agreement or the Collateral, or
should a substitute escrow agent fail to be designated as provided in Section 13.14
hereof, or if Escrow Agent should be in doubt as to what action to take, Escrow
Agent shall have the right, but not the obligation, either to (a) withhold
delivery of the Collateral until the controversy is resolved, the conflicting
demands are withdrawn or its doubt is resolved or (b) institute a petition
for interpleader in any court of competent jurisdiction to determine the rights
of the parties hereto. In the event Escrow Agent is a party to any dispute,
Escrow Agent shall have the additional right to refer such controversy to
binding arbitration. Should a petition for interpleader be instituted, or
should Escrow Agent be threatened with litigation or become involved in
litigation or binding arbitration in any manner whatsoever in connection with
this Escrow Agreement or the Collateral, Aventine agrees to reimburse Escrow
Agent for its attorneys’ fees and any and all other expenses, losses, costs and
damages incurred by Escrow Agent in connection with or resulting from such
threatened or actual litigation or arbitration prior to any disbursement
hereunder. 

 

(d) The
Escrow Agent, the Securities Intermediary and the Collateral Agent shall not
incur any liability to Aventine for not performing any act or fulfilling any
duty, obligation or responsibility hereunder by reason of any occurrence beyond
the control of the Escrow Agent or the Collateral Agent (including, but not
limited to, any act or provision or any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication facility). 

 

(e) The
Escrow Agent, the Securities Intermediary and the Collateral Agent shall not be
responsible in any respect for the form, execution, validity, value or
genuineness of documents or securities deposited hereunder, or for any
description therein, or for the identity, authority or rights of persons
executing or delivering or purporting to execute or deliver any such document,
security or endorsement. In no event shall the Escrow Agent, the Securities
Intermediary or the Collateral Agent be liable for special, indirect or
consequential loss or damage 

 

15

 

of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent, the
Securities Intermediary or the Collateral Agent have been advised of the
likelihood of such loss or damage and regardless of the form of action. 

 

ARTICLE 11 

REMEDIES UPON EVENTS OF DEFAULT

 

If
any Event of Default shall have occurred and be continuing:

 

(a) The
Collateral Agent may exercise, in addition to all other rights given by
law or by this Agreement or the Indenture, all of the rights and remedies with
respect to the Collateral of a secured party under the UCC at that time and
also may without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at any broker’s board or at public
or private sale, in one or more sales or lots, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable. The
Collateral Agent will give Aventine reasonable notice of the time and place of
any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The purchaser of any or all Collateral so sold shall thereafter hold
the same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through Aventine. Any sale of the Collateral conducted
in conformity with reasonable commercial practices of banks, insurance
companies, commercial finance companies, or other financial institutions
disposing of property similar to the Collateral shall be deemed to be
commercially reasonable. The Trustee, the Collateral Agent or any Holder of
Notes may, in its own name or in the name of a designee or nominee, buy any of
the Collateral at any public sale and, if permitted by applicable law, at any
private sale. All expenses (including court costs and reasonable attorneys’
fees, expenses and disbursements) of, or incident to, the enforcement of any of
the provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral. 

 

(b) All
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied to, all or any part of the Obligations in such order as the Collateral
Agent shall elect consistent with Section 10.3(c) of the Indenture
and the Security Agreement. Any surplus of such 

 

16

 

cash or cash proceeds held
by the Collateral Agent and remaining after payment in full of all the
Obligations shall be paid over to Aventine. 

 

(c) Aventine
further agrees to use its reasonable best efforts to do or cause to be done all
such other acts as may be necessary to ensure that such sale or sales of
all or any portion of the Collateral pursuant to this Article 11 are valid
and binding and in compliance with any and all other applicable requirements of
law. Aventine further agrees that a breach of any of the covenants contained in
this Article 11 will cause irreparable injury to the Trustee and the
Holders of the Notes, that the Trustee and the Holders of the Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Article 11 shall be specifically
enforceable against Aventine, and Aventine hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred. 

 

(d) The
Collateral Agent may but is not obligated to exercise any and all rights
and remedies of Aventine in respect of the Collateral. 

 

(e) Subject
to and in accordance with the terms of this Agreement, all payments received by
Aventine in respect of the Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of
Aventine and shall be forthwith paid over to the Collateral Agent in the same form as
so received (with any necessary endorsement). 

 

ARTICLE 12

EXPENSES

 

Aventine
agrees to pay to the Escrow Agent the reasonable fees as may be agreed
upon from time to time in accordance with the Escrow Agent’s fee schedule attached
hereto as Schedule I, as such Schedule I may be amended from
time to time in the ordinary course of the Escrow Agent’s business. Aventine
will pay to the Trustee, the Collateral Agent and the Escrow Agent the amount
of any and all reasonable expenses, including, without limitation, the
reasonable fees, expenses and disbursements of its counsel, experts and agents
retained by the Trustee, the Escrow Agent and the Collateral Agent, that the
Trustee, the Escrow Agent and the Collateral Agent may incur in connection
with (a) the review, negotiation and administration of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (c) the exercise or enforcement
of any of the rights of the Trustee, the Escrow Agent, the Collateral Agent or
the Secured Parties hereunder or (d) the failure by Aventine to perform or
observe any of the provisions hereof. Aventine will pay all such fees and
expenses within thirty (30) days of receipt of an invoice therefor. 

 

17

 

ARTICLE 13 

MISCELLANEOUS PROVISIONS

 

Section 13.01. Notices. Any notice, direction or
communication given hereunder and any deliveries made hereunder shall be
sufficiently given if in writing and delivered in person or mailed by first class mail,
commercial courier service or telecopier communication, addressed as follows: 

 

If
to Aventine:

 

Aventine
Renewable Energy Holdings, Inc.

1300 South 2nd Street;

P.O. Box 10

Pekin, Illinois 61555-0010

Facsimile: 309-347-8541

Attention: Chief Financial Officer 

 

With
copies to:

 

Davis
Polk & Wardwell 

450 Lexington Avenue 

New York, New York 10017 

Facsimile: 312-407-0411 

Attention: Richard D. Truesdell, Jr., Esq.

 

If
to the Trustee or the Collateral Agent:

 

Wells
Fargo Bank, N.A. 

Corporate Trust Services 

Sixth Street & Marquette Avenue

Minneapolis, MN 55479 

Attn.: Jeffery T. Rose 

Telephone: (612) 667-0337 

Facsimile: (612) 667-9825 

 

If
to the Escrow Agent or the Securities Intermediary:

 

JPMorgan
Chase Bank, N.A.

600 Travis Street, Suite 1150

Houston, Texas 77002 

Attn: Ruth Chipongian 

Telephone: (713) 216-6337 

Facsimile: (713) 216-6927 

 

     With
copies to:

 

Vinson &
Elkins L.L.P. 

3700 Trammell Crow Center

 

18

 

2001
Ross Avenue 

Dallas, Texas 75201 

Facsimile: 214-999-7994 

Attention: William D. Young, Esq.

 

or, as to any such party, at
such other address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section 13.01.
All such notices and other communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt is confirmed, if telecopied; and on the next Business Day if timely
delivered to an air courier guaranteeing overnight delivery. 

 

Section 13.02. Severability. The provisions of this
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect
such clause or provision in any other jurisdiction or any other clause or
provision of this Agreement in any jurisdiction. 

 

Section 13.03. Headings. The headings in this Agreement
have been inserted for convenience of reference only, are not to be considered
a part hereof and shall in no way modify or restrict any of the terms or
provisions hereof. 

 

Section 13.04. Counterpart Originals. This
Agreement may be signed in separate counterparts, each of which shall be
deemed an original, but all of which shall together constitute one and the same
agreement. All signatures of the parties to this agreement may be
transmitted by facsimile, and such facsimile will, for all purposes, be deemed
to be the original signature of such party whose signature it reproduces, and
will be binding upon such party. 

 

Section 13.05. Benefits of Agreement. Nothing in this
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under this Agreement. 

 

Section 13.06. Amendments, Waivers and Consents. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance with Article IX of
the Indenture and pursuant to a written instrument executed by all the parties
hereto. None of the Trustee, the Escrow Agent, the Securities Intermediary, the
Collateral Agent or any Holder of Notes shall be deemed, by any act, delay,
indulgence, omission or otherwise, to have waived any right or remedy hereunder
or to have acquiesced in any default or Event of Default or in any breach of
any of the terms and conditions hereof. Failure of the Trustee, the Escrow
Agent, the Securities Intermediary, the Collateral Agent or any Holder of Notes
to exercise, or delay in 

 

19

 

exercising, any right, power
or privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the
Trustee, the Escrow Agent, the Collateral Agent, the Securities Intermediary or
any Holder of Notes of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that the Trustee, the Escrow
Agent, the Securities Intermediary, the Collateral Agent or such Holder of
Notes would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law. 

 

Section 13.07. Continuing Security Interest; Termination. (a) This
Agreement shall create a continuing security interest in and to the Collateral
and shall, unless otherwise provided in this Agreement, remain in full force
and effect until the earlier of (i) the discharge or defeasance of all
obligations of Aventine under the Indenture pursuant to Article VIII of
the Indenture or (ii) disbursement of all of the Collateral pursuant to Article 6.
This Agreement shall be binding upon Aventine and its transferees, successors
and assigns, and shall inure, together with the rights and remedies of the
Trustee and the Collateral Agent hereunder, to the benefit of the Trustee, the
Collateral Agent, the Holders of the Notes and their respective successors,
transferees and assigns. 

 

(b) This
Agreement (other than Aventine’s obligations under Articles 10 and 12) shall
terminated upon the earlier of (i) the discharge or defeasance of all
obligations of Aventine under the Indenture pursuant to Article VIII of
the Indenture or (ii) disbursement of all of the Collateral pursuant to Article 6.

 

(c) At
such time as set forth in (a) or (b) above, the Collateral Agent
shall, pursuant to a written order of Aventine, reassign and redeliver to
Aventine all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Collateral Agent in accordance with the terms of
this Agreement and the Indenture and take all actions requested by Aventine
that are necessary to release the security interest created by this Agreement
in and to the Collateral, including the filing of all termination statements
provided to it necessary to terminate any financing or continuation statements
filed with respect to the Collateral. Such reassignment and redelivery shall be
without warranty by or recourse to the Collateral Agent or the Trustee in its
capacity as such and shall be at the reasonable expense of Aventine. 

 

Section 13.08. Survival of Representations and Covenants. All
representations, warranties and covenants of Aventine contained herein shall
survive the execution and delivery of this Agreement, and shall terminate only
upon the termination of this Agreement. The obligations of Aventine under
Sections 10 and 12 hereof shall survive the termination of this Agreement. 

 

Section 13.09. Waivers. Aventine waives presentment and
demand for payment of any of the Obligations, protest and notice of dishonor or
default with respect to any of the Obligations, and all other notices to which
Aventine might 

 

20

 

otherwise be entitled,
except as otherwise expressly provided herein or in the Indenture. 

 

Section 13.10. Authority of the Collateral Agent and the Escrow
Agent. (a) The Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Collateral
Agent by the terms hereof, together with such powers as are reasonably incident
thereto but no duties, obligations or powers shall be inferred or implied. The
Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents, attorneys, experts,
accountants, advisors or employees and the exculpatory provisions provided
herein shall be equally applicable to such Persons. The Collateral Agent shall
be entitled to retain counsel and to act in reliance upon the advice of counsel
concerning any matters arising hereunder. Except as otherwise expressly
provided in this Agreement or the Indenture, neither the Collateral Agent nor
any director, officer, employee, attorney or agent of the Collateral Agent
shall be liable to Aventine for any action taken or omitted to be taken by the
Collateral Agent, in its capacity as Collateral Agent, hereunder, except for
its own bad faith, gross negligence or willful misconduct. The Collateral Agent
and its directors, officers, employees, attorneys and agents shall be entitled
to conclusively rely on any communication, instrument or document (whether in
its original or facsimile form) believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons. 

 

(b) Aventine
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the Holders of
the Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and Aventine, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and Aventine shall not be obligated
or entitled to make any inquiry respecting such authority. 

 

(c) The
Escrow Agent shall have and be entitled to exercise all powers hereunder that
are specifically granted to the Escrow Agent by the terms hereof, together with
such powers as are reasonably incident thereto but no duties, obligations or
powers shall be inferred or implied. The Escrow Agent may perform any
of its duties hereunder or in connection with the Collateral by or through
agents, attorneys, experts, accountants, advisors or employees and the
exculpatory provisions provided herein shall be equally applicable to such
Persons. The Escrow Agent shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning any matters arising hereunder.
Except as otherwise expressly provided in this Agreement or the Indenture,
neither the Escrow Agent nor any director, officer, employee, attorney or agent
of the Escrow Agent shall be liable to Aventine for any action taken or omitted
to be 

 

21

 

taken by the Escrow Agent,
in its capacity as Escrow Agent, hereunder, except for its own bad faith, gross
negligence or willful misconduct. The Escrow Agent and its directors, officers,
employees, attorneys and agents shall be entitled to conclusively rely on any
communication, instrument or document (whether in its original or facsimile
form) believed by it or them to be genuine and correct and to have been signed
or sent by the proper person or persons. 

 

(d) The
Escrow Agent shall be conclusively presumed to be acting as agent for the
Secured Parties with full and valid authority so to act or refrain from acting,
and Aventine shall not be obligated or entitled to make any inquiry respecting
such authority. 

 

Section 13.11. Removal of Escrow Agent and Securities
Intermediary; Successor Escrow Agent and Securities Intermediary by Merger,
Etc. (a) Aventine and the Trustee may remove both the
Escrow Agent and the Securities Intermediary at any time by giving to the
Escrow Agent and the Securities Intermediary thirty calendar days’ prior notice
in writing signed by both Aventine and the Trustee. 

 

(b) Within
twenty calendar days after giving the foregoing notice of removal to the Escrow
Agent and the Securities Intermediary, Aventine and the Trustee shall jointly
agree on and appoint a successor Escrow Agent and Securities Intermediary. If a
successor Escrow Agent has not accepted such appointment by the end of such
twenty-day period, the Escrow Agent and Securities Intermediary may, in their
sole discretion, apply to a court of competent jurisdiction for the appointment
of a successor Escrow Agent and Securities Intermediary or for other
appropriate relief. 

 

(c) Upon
receipt of the notice of identity of the successor Escrow Agent, the Escrow
Agent shall deliver the Collateral then held hereunder to the successor Escrow
Agent. 

 

(d) If
the Escrow Agent consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Escrow
Agent. 

 

Section 13.12. Resignation. The Escrow Agent may resign
hereunder upon sixty (60) days’ prior notice to the Aventine and Trustee. Upon
the effective date of such resignation, the Escrow Agent shall deliver the
Collateral to any substitute escrow agent designated by Aventine and Trustee in
writing. If Aventine and Trustee fail to designate a substitute escrow agent
within sixty (60) days after the giving of such notice, the Escrow Agent may institute
a petition for interpleader. The Escrow Agent’s sole responsibility after such
60-day notice period expires shall be to hold the Deposit (without any
obligation to reinvest the same) and to deliver the same to a designated
substitute escrow agent, if any, or in accordance with the directions of a
final order or judgment of a court of 

 

22

 

competent jurisdiction, at
which time of delivery the Escrow Agent’s obligations hereunder shall cease and
terminate. 

 

Section 13.13. Tax Matters. Each of Aventine and the
Trustee and the Collateral Agent shall provide the Escrow Agent with its
taxpayer identification number documented on the signature page hereto.
Failure so to provide such forms may prevent or delay disbursements from
the Collateral and may also result in the assessment of a penalty and
Escrow Agent’s being required to withhold tax on any interest or other income
earned on the Collateral. Any payments of income shall be subject to applicable
withholding regulations then in force in the United States or any other
jurisdiction, as applicable. 

 

Section 13.14. Funds Transfer. (a) In the event
funds transfer instructions are given (other than in writing at the time of
execution of the Escrow Agreement), whether in writing, by telefax, or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or person designated on Schedule II
hereto, and the Escrow Agent may rely upon the confirmations of anyone
purporting to be the person or persons so designated. If the Escrow Agent is
unable to contact any of the authorized representatives identified in Schedule II,
the Escrow Agent is hereby authorized to seek confirmation of such instructions
by telephone call-back to any one or more of your Officers, as the Escrow Agent
may select. Such Officer shall deliver to the Escrow Agent a fully
executed Incumbency Certificate, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be any such Officer. The persons and
telephone numbers for call-backs may be changed only in writing actually
received and acknowledged by the Escrow Agent. The parties to this Escrow
Agreement acknowledge that such security procedure is commercially reasonable. 

 

(b) It
is understood that the Escrow Agent and the beneficiary’s bank in any funds
transfer may rely solely upon any account numbers or similar identifying
number provided by either of the other parties hereto to identify (i) the
beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary
bank. The Escrow Agent may apply any of the escrowed funds for any payment
order it executes using any such identifying number, even where its use may result
in a person other than the beneficiary being paid, or the transfer of funds to
a bank other than the beneficiary’s bank or an intermediary bank, designated. 

 

Section 13.15. Final Expression. This Agreement,
together with the Indenture and any other agreement executed in connection
herewith, is intended by the parties as a final expression of this Agreement
and is intended as a complete and exclusive statement of the terms and
conditions thereof. 

 

Section 13.16. Rights of Holders of The Notes. No
Holder of Notes shall have any independent rights hereunder other than those
rights granted to individual Holders of the Notes pursuant to Article VI
of the Indenture; provided 

 

23

 

that nothing in this subsection shall
limit any rights granted to the Trustee under the Notes or the Indenture. 

 

Section 13.17. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial; Waiver of Damages. (a) This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New
York, and any dispute arising out of, connected with, related to, or incidental
to the relationship established between Aventine, the Trustee, the Escrow
Agent, the Collateral Agent, the Securities Intermediary, and the Holders of
the Notes in connection with this Agreement, and whether arising in contract,
tort, equity or otherwise, shall be resolved in accordance with the laws of the
State of New York. 

 

(b) Aventine
hereby waives personal service of process in any suit, action or proceeding
with respect to this Agreement and for actions brought under the U.S. Federal
or state securities laws brought in any Federal or state court located in the
City of New York (each a “New York Court”)
and consents that all service of process in any such suit, action or proceeding
shall be made by registered mail, return receipt requested, directed to
Aventine at the address indicated in Section 13.01. Each of the parties
hereto submits to the jurisdiction of any New York Court and to the courts of
its corporate domicile with respect to any actions brought against it as
defendant in any suit, action or proceeding arising out of, connected with,
related to, or incidental to the relationship established among Aventine, the
Trustee, the Collateral Agent, the Securities Intermediary, the Escrow Agent
and the Holders in connection with this Agreement, and each of the parties
hereto waives any objection that it may have to the laying of venue,
including any pleading of forum non
conveniens, with respect to any such action and waives any right to
which it may be entitled on account of place of residence or domicile. 

 

(c) Aventine
agrees that neither any Holder of Notes nor (except as otherwise provided in
this Agreement or the Indenture) the Escrow Agent in its capacity as Escrow
Agent nor the Securities Intermediary nor the Collateral Agent shall have any
liability to Aventine (whether arising in tort, contract or otherwise) for
losses suffered by Aventine in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
this Agreement, or any act, omission or event occurring in connection
therewith, unless such losses were the result of acts or omissions on the part of
the Escrow Agent, the Securities Intermediary, or the Collateral Agent or such
Holders of Notes, as the case may be, constituting bad faith, gross
negligence or willful misconduct. 

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

24

 

IN
WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly
executed and delivered as of the date first above written.

 

	
  Tax
  Certification:
  Taxpayer ID#: 05-0569368

  
	
   

  
	
  NOTE: The following
  certification shall be used by and for a U.S. resident only. Non-residents
  must use and provide Form W8-BEN Customer is a (check one):

  
	
   

  
	
  ý Corporation

  	
  o Municipality

  	
  o Partnership

  	
  o Non-profit or Charitable Org

  
	
   

  	
   

  	
   

  	
   

  
	
  o Individual

  	
  o REMIC

  	
  o Trust

  	
  o Other

  
	
   

  	
   

  	
   

  	
   

  
	
  Under
  the penalties of perjury, the undersigned certifies that:

  
	
   

  
	
  (1)

  	
  the
  entity is organized under the laws of the United States

  
	
   

  	
   

  
	
  (2)

  	
  the
  number shown above is its correct Taxpayer Identification Number (or it is
  waiting for a number to be issued to it); and

  
	
   

  	
   

  
	
  (3)

  	
  it is
  not subject to backup withholding because: (a) it is exempt from backup
  withholding or (b) it has not been notified by the Internal Revenue
  Service (IRS) that it is subject to backup withholding as a result of failure
  to report all interest or dividends, or (c) the IRS has notified it that
  it is no longer subject to backup withholding.

  
	
   

  	
   

  
	
  (If the
  entity is subject to backup withholding, cross out the words after the (3) above.)

  
	
   

  
	
  Investors
  who do not supply a tax identification number will be subject to backup withholding
  in accordance with IRS regulations

  
					

 

Note: The IRS does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.

 

	
   

  	
  Aventine:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Brennan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William J. Brennan

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
						

 

 

	
  Tax
  Certification:
  Taxpayer ID#: 94-1347393

  
	
   

  
	
  NOTE: The following
  certification shall be used by and for a U.S. resident only. Non-residents
  must use and provide Form W8-BEN Customer is a (check one):

  
	
   

  
	
  o Corporation

  	
  o Municipality

  	
  o Partnership

  	
  o Non-profit or Charitable Org

  
	
   

  	
   

  	
   

  	
   

  
	
  o Individual

  	
  o REMIC

  	
  o Trust

  	
  ý Other National Association

  
	
   

  	
   

  	
   

  	
   

  
	
  Under
  the penalties of perjury, the undersigned certifies that:

  
	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
  the
  entity is organized under the laws of the United States

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  the
  number shown above is its correct Taxpayer Identification Number (or it is
  waiting for a number to be issued to it); and

  
	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
  it is
  not subject to backup withholding because: (a) it is exempt from backup
  withholding or (b) it has not been notified by the Internal Revenue
  Service (IRS) that it is subject to backup withholding as a result of failure
  to report all interest or dividends, or (c) the IRS has notified it that
  it is no longer subject to backup withholding.

  
	
   

  	
   

  	
   

  	
   

  
	
  (If the
  entity is subject to backup withholding, cross out the words after the (3) above.)

  
	
   

  	
   

  	
   

  	
   

  
	
  Investors
  who do not supply a tax identification number will be subject to backup
  withholding in accordance with IRS regulations.

  
							

 

NOTE: The following certification shall be used by and for a U.S.
resident only. Non-residents must use and Provide Form W8-BEN Customer is
a (check one): 

 

	
   

  	
  Trustee and Collateral
  Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffery Rose

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffery Rose

  
	
   

  	
   

  	
  Title:

  	
  Corporate
  [         ] Officer

  
						

 

 

	
   

  	
  Securities Intermediary
  and Escrow Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ May Ng

  	
   

  
	
   

  	
   

  	
  Name:

  	
  May Ng

  
	
   

  	
   

  	
  Title:

  	
  Vice President Trust
  Officer

  
					

 

 

SCHEDULE I

 

 

Schedule I

Fee Schedule

 

 

JPMorgan

 

Schedule of Fees

for 

Escrow Agent Services

 

Minimum Administrative Fee
     $1,500 

Payable Upon Account Opening and in Advance each year in which we act as Escrow
Agent 

 

A one (1) year Minimum
Administrative Fee will be assessed for any account that is funded. The
Administrative Fee will cover a maximum of ten (10) annual administrative
hours for the Bank’s standard Escrow services including account setup,
safekeeping of assets, investment of funds, collection of income and other
receipts, preparation of statements comprising account activity and asset
listing, and distribution of assets in accordance with the specific terms of
the Escrow Agreement. 

 

Activity Fees:

 

Activity
fees will not be assessed for any month in which fewer than three transactions
occur.

 

	
  Disbursements

  	
   

  	
   

  	
   

  
	
  Per Check

  	
   

  	
  $

  	
  35

  	
   

  
	
  Per Wire
  U.S.

  	
   

  	
  $

  	
  35

  	
   

  
	
  International

  	
   

  	
  $

  	
  100

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Receipts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Per Deposit

  	
   

  	
  $

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Investments

  	
   

  	
   

  	
   

  
	
  Per directed
  buy/sell

  	
   

  	
  $

  	
  75

  	
   

  

 

The
investments fee will be waived if JPMorgan’s Money Market Account or Cash
Escrow sweep product offered by JPMorgan’s Escrow Group is the selected
investment.

 

	
  Legal Expenses: 

  	
   

  	
  At Cost

  	
   

  

 

There will be no legal
expense for JPMorgan Chase if our standard form escrow agreement is
employed without substantive amendments. 

 

 

Extraordinary Services and Out-of Pocket Expenses: 

 

Any additional services
beyond our standard services as specified above, such as annual administrative
activities in excess of ten (10) hours and all reasonable out-of-pocket
expenses including attorney’s fees will be considered extraordinary services
for which related costs, transaction charges, and additional fees will be
billed at the Bank’s standard rate. 

 

Modification of Fees:

 

Circumstances may arise
necessitating a change in the foregoing fee schedule. The Bank will attempt at
all times, however, to maintain the fees at a level that is fair and reasonable
in relation to the responsibilities assumed and the duties performed. 

 

Disclosure & Assumptions:

 

•                  The escrow deposit shall be continuously
invested in a JPMorgan Money Market Account or JPMorgan’s Cash Escrow sweep
product.

 

•                  The account will be invoiced in the month in
which the account is opened and annually thereafter.

 

•                  Payment of the invoice is due 30 days
following receipt.

 

•                  To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. When an account is opened, we will ask for
information that will allow us to identify relevant parties.

 

•                  This proposal is subject to (i) our
legal review and (ii) satisfactory due diligence review. 

 

 

SCHEDULE II

 

 

Schedule II 

 

Telephone Number(s) for Call-backs and Person(s) 

 

Designated to Confirm Funds Transfer Instructions 

 

If to Aventine: 

 

	
  Name

  	
   

  	
  Telephone
  Number

  
	
  1. William Brennan

  	
   

  	
  309-347-9200

  
	
  2. Ken Eckhardt

  	
   

  	
  309-347-9335

  

 

If to Trustee: 

 

	
  Name

  	
   

  	
  Telephone
  Number

  
	
  1. Jeffery T. Rose

  	
   

  	
  612-667-0337 

  
	
  2. Kim Nguyen

  	
   

  	
  612-667-7916

  

 

Telephone call-backs shall
be made to either Aventine or Trustee if joint instructions are required
pursuant to the Escrow Agreement. 

 

33

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