Document:

Exhibit 10.1

Amendment No. 2

to the

Terms and Conditions of Employment

Between

Ronald Cooper (“RC”)

and

Adelphia Communications Corporation (the “Company”)

WHEREAS, RC and the Company (collectively, the “Parties”)
wish to amend that certain employment agreement executed on January 17, 2003,
and amended by Amendment No. 1 thereto on February 21, 2003 (the “Employment
Agreement”);

WHEREAS, at the time of the execution of the
Employment Agreement, RC and the Company contemplated that the Company would
emerge from bankruptcy as part of a plan of reorganization where the Company
would be an on-going publicly traded company;

WHEREAS, on April 21, 2005, the Company announced that
it had reached a definitive agreement with Time Warner NY Cable LLC (“Time
Warner”) and Comcast Corporation, whereby Time Warner and Comcast Corporation
agreed to purchase substantially all of the Company’s and its affiliates’
assets (the “Sale Transaction”).  The
Sale Transaction may be consummated pursuant to a plan of reorganization and/or
pursuant to section 363 of title 11 of the United States Code;

WHEREAS, the Employment Agreement provides for awards
of restricted stock and stock options upon the Company’s emergence from
bankruptcy;

WHEREAS, the Company may not be able to award restricted
stock upon the closing of the Sale Transaction; and

WHEREAS, RC and the Company desire to amend the
Employment Agreement as hereinafter set forth.

NOW, THEREFORE, the Parties hereby agree to the
amendment of the Employment Agreement (“Amendment No. 2”) as follows:

1.             The heading to Section 9 of the Employment Agreement is
hereby amended to read as follows:  “Initial
Equity Award or Sale Transaction Closing Award.”

2.             The following is hereby added after the last sentence of
Section 9 of the Employment Agreement:  “Notwithstanding
anything contained herein to the contrary, upon consummation of the Sale
Transaction, RC shall be entitled to receive $6.8 million, in cash (the “Sale
Transaction Closing Award”) in lieu of the Initial Equity Award described above
in this Section 9.  The Sale Transaction
Closing Award shall be paid in cash on the Amendment Payment Date (as such term
is defined in Section 7 of Amendment No. 2 to this agreement).”

3.             The heading to Section 10 of the Employment Agreement is
hereby amended to read as follows:  “Potential
Equity and Cash Awards.”

 

 

4.             The heading to Section 1.0(e) of the Employment
Agreement is hereby amended to read as follows: 
“Emergence Date Special Award or Sale Transaction Closing Special Award.”

5.             The following is hereby added after the last sentence of
Section 10(e) of the Employment Agreement: 
“Notwithstanding anything contained herein to the contrary, upon
consummation of the Sale Transaction, if the Board determines that RC’s
performance prior to the closing of the Sale Transaction has been exemplary or
significantly exceeded the level of performance that could reasonably have been
expected, RC shall be entitled to receive a cash payment of up to $3.4 million
(the “Sale Transaction Closing Special Award”) in lieu of the additional grant
of restricted shares described above in this Section 10(e).  If approved by the Board, the Sale
Transaction Closing Special Award shall be paid on the Amendment Payment Date.

6.             Upon consummation of the Sale Transaction, the second
sentence of Section 13 of the Employment Agreement is hereby amended to read as
follows:  “For purposes of this
Agreement, “Competing Enterprise” shall mean Qwest Communications International
Inc., Verizon Communications Inc., BellSouth Corporation, AT&T Inc., any
Direct Broadcast Satellite or other multi-channel video provider (including,
but not limited to, EchoStar Communications Corp. or DirecTV Broadband, Inc.),
any multiple system operator (including, but not limited to Comcast) or any Digital
Subscriber Line provider in the continental United States and/or Puerto Rico,
in each case that has a service area that overlaps with 10% or more of the
service area of the Company.”

7.             This Amendment No. 2 is expressly conditioned upon:  (a) approval of the United States Bankruptcy
Court for the Southern District of New York; (b) the end of the 7-day period
following RC’s execution of the Waiver and Release Agreement attached hereto as
Exhibit A (which may be executed by RC at any time); and (c) the consummation
of the Sale Transaction.  The first
business day after the date that all of these three conditions are satisfied
shall be the “Amendment Payment Date.” In the event that all of these three
conditions are not satisfied, this Amendment No. 2 shall be null and void ab
initio and without any further force or effect.

8.             Except as provided in this Amendment No. 2, the terms
and conditions of the Employment Agreement shall remain unchanged.

 

	
  /s/ Ronald Cooper

  	
   

  	
  ADELPHIA COMMUNICATIONS CORPORATION

  
	
  Ronald Cooper

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Constance P. Campbell

  
	
   

  	
   

  	
  By 

  	
  Constance P. Campbell

  
	
   

  	
   

  	
  Its:

  	
  SVP, Finance

  

 

 

 2

EXHIBIT A

MUTUAL
WAIVER. AND RELEASE AGREEMENT

This Mutual Waiver and
Release Agreement (hereinafter “Agreement”) is executed on the dates indicated
below, by Adelphia Communications Corporation, and any parent, predecessor, or
current or former subsidiary or affiliated company of any of them, or successor
of any of them, or benefit plan maintained by any of them, and the directors,
officers, employees, shareholders (solely in their capacity as such), and
agents of any or all of them (collectively, the “Company”) and Ronald Cooper
individually, and on behalf of all successors, heirs and assigns (“Individual”).

A.            Individual and Company are party to an employment
agreement, as amended on February 21, 2003 and August 14, 2006 (the “Employment
Agreement”).

B.            In consideration for the benefits afforded to Individual
by Amendment No. 3 to the Employment Agreement, and other than claims for
vested benefits and compensation, unemployment compensation, worker’s
compensation, indemnification and liability insurance as described in the
Employment Agreement, and other payments, compensation and benefits otherwise
due to Individual under Sections 3, 4, 6, 7, 8, 9, 10(e), 14, 16 and 19 of the
Employment Agreement, including reimbursement of any business expenses incurred
prior to Individual’s last day of employment with Company and submitted in
accordance with Company policy, due to Individual, Individual hereby knowingly
and voluntarily fully hereby irrevocably and unconditionally releases, acquits
and forever discharges Company from any and all charges, complaints, claims (as
defined in 11 U.S.C. §105(5)), liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorney’s fees and costs actually
incurred) of any nature whatsoever, known or unknown, suspected or unsuspected,
including, but not limited to, rights arising out of alleged violations of any
contracts, express or implied, any covenant of good faith and fair dealing,
express or implied, or any tort including defamation, or any legal restrictions
on Company’s right to hire, refuse to hire or terminate employees, or any
federal, state or other governmental statute, regulation or ordinance, including,
without limitation: (1) the Civil Rights Act of 1964, as amended; (2) 42 U.S.C.
§ 1981; .(3) Section 503 of the Rehabilitation Act of 1973; (4) the Americans
with Disabilities Act; (5) the Fair Labor Standards Act (including the Equal
Pay Act); (6) the Age Discrimination in Employment Act, as amended (“ADEA”);
(7) the Family and Medical Leave Act; (8) the Employee Retirement Income
Security Act, as amended, and (9) any other federal statute; any State civil
rights act, wage claim, or statute; any claim of retaliatory treatment; any
claim of wrongful discharge against public policy or the Sarbanes-Oxley Act;
any common law Claims in tort, contract, for quasi-contact, for promissory
estoppel, or for violation of the covenant of good faith and fair dealing
(hereinafter collectively referred to as “Individual Claim” or “Individual
Claims”), which Individual now has, owns or holds, or claims to have, own or
hold, or which Individual at any time heretofore had, owned or held, or claimed
to have, own or hold against Company up to and including the Amendment Payment
Date (as defined in Amendment No. 2 to the Employment Agreement).

 

 

Individual agrees Individual has not filed any Claim,
complaint or charge with any local, State, or federal agency or enforcement body,
and that if such a Claim, complaint or charge is filed, Individual shall
immediately withdraw such Claim, complaint or charge.

C.            For and in consideration of the
obligations upon the Individual as set forth in the Agreement, and for other
good and valuable consideration, the Company hereby, on its behalf releases the
Individual and his heirs, executors, successors and assigns (the “Individual
Released Parties”) of and from all debts, obligations, promises, covenants,
collective bargaining obligations, agreements, contracts, endorsements, bonds,
controversies, suits, claims or causes, of every kind and nature whatsoever
(each, a “Company Claim”), which the Company now has, owns or holds, or claims
to have, own or hold, or which Company at any time heretofore had, owned or
held, or claimed to have, own or hold against Individual up to and including
the Amendment Payment Date: provided, however, that nothing herein shall
release or waive the Individual Released Parties from any claims or actions
arising by reason of the Individual Released Parties having committed a crime
or an act or omission to act which constitutes fraud or willful misconduct.

D.            Individual
has not disclosed and will not disclose Company Information (defined below) at
any time prior to or after the effective date of this Agreement, other than
pursuant to his performance of duties for Company. Individual has returned to
Company, or will return to Company by the date payment hereunder is due, all
Company Property (defined below) not purchased from Company and will return to
Company if requested by Company all documents containing Company Information
and any copies, duplicates, reproductions or excerpts of Company Information.

1.                                       “Company
Information” means any confidential or proprietary legal, financial, marketing,
business, technical, management or business plans, business strategies,
software, software evaluations, systems designs, trade secrets, personnel
information, marketing methods and techniques, customer lists, or other
information, including, but not limited to, information which Individual
prepared, caused to be prepared, or received in connection with Individual’s
employment with Company, as it relates to Company, its employees or its
customers. Company Information does not include: information or knowledge: (a)
which may subsequently come into the public domain after the Individual’s
termination of employment (or is in the public domain prior to Individual’s
termination of employment) other than by way of unauthorized disclosure by
Individual; (b) which Individual is required to disclose by applicable law,
subpoena, or order of a governmental agency or court after ten (10) days notice
(if such notice is practicable) has been provided to Company of such order or
(c) .

2.                                       “Company Property”
shall include, but not be limited to, keys, access cards, files, memoranda,
reports, software, credit cards, computer disks, instructional and management
manuals, books, cellular phones and computer equipment.

E.             Individual
and Company have had an adequate opportunity to negotiate these terms, have had
an adequate opportunity to consult with counsel if so desired, and this
Agreement sets forth the complete agreement between Individual and Company. No
other

 2
 

 

covenants or representations, express or implied, have
been made or relied upon, and no other consideration, other than that set forth
herein, is due or owing.

F.             Individual
acknowledges that Individual has been advised by Company to consult with an
attorney prior to executing this Agreement. Individual also acknowledges being
given at least twenty-one (21) days within which to consider this Agreement,
and Individual has been advised that for a period of seven (7) days following
execution of this Agreement, Individual may revoke this Agreement and that it
shall not become effective or enforceable until the later of (i) the expiration
of said seven (7) day
period or (ii) the date this Agreement is approved by the U.S. Bankruptcy Court
for the Southern District of New York; provided, however, that
if the Sale Transaction does not close, then this Agreement shall be null and
void ab initio and without any further force
or effect. Individual agrees that changes in this Agreement will not restart
the running of the aforementioned 21-day consideration period. Individual also
agrees that Individual may sign this Agreement at any time during the 21-day
period, and that any decision by Individual to do so has not been induced by
Company through fraud, misrepresentation, coercion, or a threat to withdraw or
alter the offer contained in this Agreement prior to the expiration of the
21-day time period, or by offering different terms if the Agreement is signed
prior to the expiration of the 21-day time period.

G.            Individual
represents that Individual has read this Agreement and fully understands each
of its terms. Individual further represents that no representations, promises,
agreements, stipulations, or other statements have been made by Company to
induce this Agreement, beyond those contained herein. Individual further
represents that Individual is of sound mind, and knowingly and voluntarily
signs this Agreement as Individual’s own free act, and that Individual is not
acting under any coercion or duress.

H.            If
any provision of this Agreement should be declared to be unenforceable by any
administrative agency or court of law, the remainder of the Agreement shall
remain in full force and effect, and shall be binding upon the parties hereto
as if the invalidated provision were not part of this Agreement.

I.              As
a free and voluntary act, the parties agree that they will make no written or
oral statements that directly or indirectly disparage each other in any manner
whatsoever, including but not limited to: (a) the working conditions or
employment practices of Company or (b) Company as a provider of cable
television services or other products and services.

J.             Subject
to Section 14 of the Individual’s Employment Agreement, all payments under this
Agreement will be subject to applicable withholding taxes.

K.            Any Individual Claims or Company Claims arising
under this Agreement, whether arising in contract, statute, tort, fraud,
misrepresentation, discrimination, common law or any other legal theory,
including, but not limited to disputes relating to the making, performance or
interpretation of this Agreement; whenever brought, shall be brought in the
United States District Court for
the Southern District of New York. By signing this Agreement,
Individual and the Company voluntarily, knowingly and intelligently waive any
right they each may have to a jury trial in the event of a breach of this Agreement.

 3
 

 

L.             This
Agreement shall be governed by and construed in accordance with the laws of the
state of New York applicable to contracts made and t be performed entirely
within such state, without regard to its conflict of laws rules to the extent
such laws are not preempted by federal law including but not limited to federal
bankruptcy law.

M.           This
Agreement constitutes the full and complete integration of the parties’
agreement and all statements, negotiations and prior agreements or
understandings with respect to these matters are merged herein. This Agreement
may be modified only by a written instrument signed by all parties hereto.
Except as otherwise provided by this Agreement, the Employment Agreement will
continue in full force and effect pursuant to its terms.

N.            This
Agreement and all documents to be executed hereunder may be executed in
multiple counterparts, each of which may be treated as an original document.

O.            This
Agreement and all documents to be executed hereunder may be executed by
facsimile, and both facsimile and photocopies may be treated as original
documents.

P.             Each
person signing this Agreement represents that he or she has the full authority
to bind the party on behalf of whom or which he or she
signs to the terms of this Agreement.

Q.            Notwithstanding
anything to the contrary herein, in the event (i) the Sale Transaction is not
consummated, (ii) the approval of Amendment No. 2 by the U.S. Bankruptcy Court
for the Southern District of New York is not received, or (iii) the Company
does not pay to Individual on the Amendment Payment Date (x) the Sale
Transaction Closing Award (as defined in Section 9 of the Employment Agreement)
or (y) if and only if approved by the Board of Directors of the Company in
accordance with the procedures set forth in Section 10(e) of the Employment
Agreement, the Sale Transaction Closing Special Award (as defined in Section 10(e) of the Employment
Agreement), this Mutual Waiver and Release Agreement shall be null and void ab initia and
without any further force or effect.

THIS IS A RELEASE - READ CAREFULLY BEFORE
SIGNING

By signing below, I acknowledge that I have read,
understood and accept the terms and conditions of this AGREEMENT, including the Dispute Resolution Provision set forth in
paragraph K above.

 4
 

 

IN WITNESS THEREOF, and intending to be legally bound,
the parties have executed this agreement

	
  /s/ Ronald Cooper

  	
   

  	
   

  
	
  Ronald Cooper

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STATE OF

  	
  Colorado

  	
   )

  	
   

  	
   

  
	
   

  	
   

  	
   ) ss.

  	
   

  	
   

  
	
  COUNTY OF

  	
  Arapahoe

  	
   )

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The foregoing instrument was acknowledged before me
  this 8th day of August, 2006, by                                 
  .

  
	
   

  	
   

  	
   

  
	
  Witness my hand and official seal.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My commission
  expires

  	
  4/27/2010

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kathy Porter

  
	
  [SEAL]

  	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
  ADELPHIA COMMUNICATIONS
  CORPORATION

  
	
  “Company”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Constance P.
  Campbell

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STATE OF

  	
  Colorado

  	
   )

  	
   

  	
   

  
	
   

  	
   

  	
   ) ss.

  	
   

  	
   

  
	
  COUNTY OF

  	
  Arapahoe

  	
   )

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The foregoing instrument was acknowledged before me
  this 14th day of August, 2006, by                                      .

  
	
   

  	
   

  	
   

  
	
  Witness my hand and official seal.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My commission
  expires

  	
  4/27/2010

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kathy Porter

  
	
  [SEAL]

  	
   

  	
  Notary Public

  
								

 

 5Exhibit
10.1

 

MASTER

AMENDED AND RESTATED

CREDIT AGREEMENT

dated as
of June 10, 2006

between

EAST KANSAS AGRI-ENERGY, L.L.C.

as
Borrower

and

HOME FEDERAL SAVINGS BANK

as Lender

 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I. GENERAL
  TERMS

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  Section 1.02

  	
   

  	
  Master Agreement;
  Supplements

  	
   

  	
  1

  	
   

  
	
  Section 1.03

  	
   

  	
  Notes

  	
   

  	
  2

  	
   

  
	
  Section 1.04

  	
   

  	
  Default Interest

  	
   

  	
  2

  	
   

  
	
  Section 1.05

  	
   

  	
  Additional Interest

  	
   

  	
  2

  	
   

  
	
  Section 1.06

  	
   

  	
  Interest Generally;
  Maximum Rate

  	
   

  	
  2

  	
   

  
	
  Section 1.07

  	
   

  	
  Payments Generally

  	
   

  	
  2

  	
   

  
	
  Section 1.08

  	
   

  	
  Computations

  	
   

  	
  3

  	
   

  
	
  Section 1.09

  	
   

  	
  Prepayments

  	
   

  	
  3

  	
   

  
	
  Section 1.10

  	
   

  	
  Advances and Paying
  Procedure

  	
   

  	
  3

  	
   

  
	
  Section 1.11

  	
   

  	
  Free Cash Flow Payments

  	
   

  	
  3

  	
   

  
	
  Section 1.12

  	
   

  	
  Administrative Fee

  	
   

  	
  3

  	
   

  
	
  Section 1.13

  	
   

  	
  Reaffirmation of
  Existing Loan Documents

  	
   

  	
  4

  	
   

  
	
  Section 1.14

  	
   

  	
  Collateral

  	
   

  	
  4

  	
   

  
	
  Section 1.15

  	
   

  	
  Final Maturity

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. CONDITIONS
  PRECEDENT

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Conditions To Effectiveness

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Existence; Power

  	
   

  	
  6

  	
   

  
	
  Section 3.02

  	
   

  	
  Organizational Power;
  Authorization

  	
   

  	
  6

  	
   

  
	
  Section 3.03

  	
   

  	
  Governmental Approvals;
  No Conflicts

  	
   

  	
  6

  	
   

  
	
  Section 3.04

  	
   

  	
  Financial Statements

  	
   

  	
  6

  	
   

  
	
  Section 3.05

  	
   

  	
  Litigation and
  Environmental Matters

  	
   

  	
  7

  	
   

  
	
  Section 3.06

  	
   

  	
  Compliance with Laws
  and Agreements

  	
   

  	
  7

  	
   

  
	
  Section 3.07

  	
   

  	
  Investment Company Act,
  Etc

  	
   

  	
  7

  	
   

  
	
  Section 3.08

  	
   

  	
  Taxes

  	
   

  	
  7

  	
   

  
	
  Section 3.09

  	
   

  	
  Margin Regulations

  	
   

  	
  7

  	
   

  
	
  Section 3.10

  	
   

  	
  ERISA

  	
   

  	
  7

  	
   

  
	
  Section 3.11

  	
   

  	
  Ownership of Property

  	
   

  	
  8

  	
   

  
	
  Section 3.12

  	
   

  	
  Disclosure

  	
   

  	
  8

  	
   

  
	
  Section 3.13

  	
   

  	
  Labor Relations

  	
   

  	
  8

  	
   

  
	
  Section 3.14

  	
   

  	
  Subsidiaries

  	
   

  	
  8

  	
   

  
	
  Section 3.15

  	
   

  	
  Permits

  	
   

  	
  8

  	
   

  
	
  Section 3.16

  	
   

  	
  Projections

  	
   

  	
  8

  	
   

  
	
  Section 3.17

  	
   

  	
  Material Contracts

  	
   

  	
  9

  	
   

  
	
  Section 3.18

  	
   

  	
  Anti-Terrorism Laws

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. AFFIRMATIVE
  COVENANTS

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Financial Statements
  and Other Information

  	
   

  	
  9

  	
   

  
	
  Section 4.02

  	
   

  	
  Notices of Material
  Events

  	
   

  	
  10

  	
   

  

 

 

 

	
  Section 4.03

  	
   

  	
  Existence; Conduct of
  Business

  	
   

  	
  11

  	
   

  
	
  Section 4.04

  	
   

  	
  Compliance with Laws,
  Etc

  	
   

  	
  11

  	
   

  
	
  Section 4.05

  	
   

  	
  Payment of Obligations

  	
   

  	
  11

  	
   

  
	
  Section 4.06

  	
   

  	
  Books and Records

  	
   

  	
  11

  	
   

  
	
  Section 4.07

  	
   

  	
  Visitation, Inspection,
  Audit, Etc

  	
   

  	
  12

  	
   

  
	
  Section 4.08

  	
   

  	
  Maintenance of
  Properties; Insurance

  	
   

  	
  12

  	
   

  
	
  Section 4.09

  	
   

  	
  Use of Proceeds

  	
   

  	
  12

  	
   

  
	
  Section 4.10

  	
   

  	
  Subsidiaries

  	
   

  	
  12

  	
   

  
	
  Section 4.11

  	
   

  	
  Assignment of Material
  Contracts

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. FINANCIAL
  COVENANTS

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Fixed Charge Coverage
  Ratio

  	
   

  	
  13

  	
   

  
	
  Section 5.02

  	
   

  	
  Tangible Balance Sheet
  Equity Ratio

  	
   

  	
  13

  	
   

  
	
  Section 5.03

  	
   

  	
  Capital Expenditures

  	
   

  	
  13

  	
   

  
	
  Section 5.04

  	
   

  	
  Working Capital

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. NEGATIVE
  COVENANTS

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Indebtedness

  	
   

  	
  13

  	
   

  
	
  Section 6.02

  	
   

  	
  Negative Pledge

  	
   

  	
  13

  	
   

  
	
  Section 6.03

  	
   

  	
  Fundamental Changes

  	
   

  	
  13

  	
   

  
	
  Section 6.04

  	
   

  	
  Investments, Loans, Etc

  	
   

  	
  13

  	
   

  
	
  Section 6.05

  	
   

  	
  Restricted Payments

  	
   

  	
  14

  	
   

  
	
  Section 6.06

  	
   

  	
  Sale of Assets

  	
   

  	
  14

  	
   

  
	
  Section 6.07

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  14

  	
   

  
	
  Section 6.08

  	
   

  	
  Restrictive Agreements

  	
   

  	
  14

  	
   

  
	
  Section 6.09

  	
   

  	
  Sale and Leaseback
  Transactions

  	
   

  	
  15

  	
   

  
	
  Section 6.10

  	
   

  	
  Lease Obligations

  	
   

  	
  15

  	
   

  
	
  Section 6.11

  	
   

  	
  Hedging Agreements

  	
   

  	
  15

  	
   

  
	
  Section 6.12

  	
   

  	
  Amendment to Material
  Documents

  	
   

  	
  15

  	
   

  
	
  Section 6.13

  	
   

  	
  Accounting Changes

  	
   

  	
  15

  	
   

  
	
  Section 6.14

  	
   

  	
  Deposit and Investment
  Accounts

  	
   

  	
  15

  	
   

  
	
  Section 6.15

  	
   

  	
  Use of Proceeds

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Events of Default

  	
   

  	
  15

  	
   

  
	
  Section 7.02

  	
   

  	
  Remedies

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.
  MISCELLANEOUS

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Notices

  	
   

  	
  18

  	
   

  
	
  Section 8.02

  	
   

  	
  Waiver; Amendments

  	
   

  	
  19

  	
   

  
	
  Section 8.03

  	
   

  	
  Expenses;
  Indemnification

  	
   

  	
  20

  	
   

  
	
  Section 8.04

  	
   

  	
  Successors and Assigns

  	
   

  	
  21

  	
   

  
	
  Section 8.05

  	
   

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
   

  	
  21

  	
   

  
	
  Section 8.06

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  22

  	
   

  
	
  Section 8.07

  	
   

  	
  Right of Setoff

  	
   

  	
  22

  	
   

  
	
  Section 8.08

  	
   

  	
  Counterparts;
  Integration

  	
   

  	
  22

  	
   

  

 

 ii
 

 

 

	
  Section 8.09

  	
   

  	
  Survival

  	
   

  	
  22

  	
   

  
	
  Section 8.10

  	
   

  	
  Severability

  	
   

  	
  23

  	
   

  
	
  Section 8.11

  	
   

  	
  Transferable Record

  	
   

  	
  23

  	
   

  
	
  Section 8.12

  	
   

  	
  Confidentiality

  	
   

  	
  23

  	
   

  
	
  Section 8.13

  	
   

  	
  Copies

  	
   

  	
  23

  	
   

  
	
  Section 8.14

  	
   

  	
  Notice of Claims
  Against Lender; Limitation of Certain Damages

  	
   

  	
  24

  	
   

  
	
  Section 8.15

  	
   

  	
  Effect of Amendment

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attachment I —
  Definitions

  	
   

  	
  I-1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 2.01(c)(6) -
  Opinion Requirements

  	
   

  	
  2.01(c)(6)-1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 6.04 — Investments

  	
   

  	
  6.04-1

  	
   

  

 

 iii

 

MASTER AMENDED AND RESTATED CREDIT AGREEMENT

THIS MASTER AMENDED AND RESTATED CREDIT AGREEMENT
is made and entered into as of June 10 2006, by and between EAST KANSAS
AGRI-ENERGY, L.L.C., a Kansas limited liability company, (“Borrower”) and HOME
FEDERAL SAVINGS BANK, a federally chartered stock savings bank organized under
the laws of the United States (“Lender”).

RECITALS:

A.            Borrower and Lender are parties to a Credit Agreement
dated as of November 23, 2004, as amended (the “Original Credit Agreement”), and
promissory notes, instruments, and other documents and agreements, pursuant to
which Lender has made certain loans, credit facilities and other credit
accommodations available to Borrower.

B.            Subject to certain terms and conditions, Lender agrees to
make additional loans, credit facilities and other credit accommodations
available to Borrower at this time.

C.            The parties wish to amend and restate the terms of the
loans, credit facilities and other credit accommodations which are presently
outstanding and/or in effect.

AGREEMENT:

In consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

Article I.

GENERAL
TERMS

Section 1.01         Definitions.  Capitalized terms used herein have the
meanings set forth on Attachment I.

Section 1.02         Master Agreement; Supplements.  Additional terms of each of the existing and
future loans, credit facilities and other credit accommodations are set forth
in supplements (“Supplements”) to this Master Amended and Restated
Credit Agreement (“Master
Agreement”).  The terms of
this Master Agreement and the Supplements supersede all prior agreements and
arrangements between Borrower and Lender related to the Loans and govern the
relationship and agreements between Borrower and Lender.  In the event Borrower and Lender agree to
additional loans, credit facilities, and/or other credit accommodations from
time to time in the future, Borrower and Lender will enter into additional
Supplements to this Master Agreement. 
Each Supplement will set forth additional terms and conditions specific
to such loans and credit facilities, including without limitation, the
applicable:

(a)           amount
of the loan and/or credit facility;

 

(b)           interest
rate and rate options,

(c)           fees,
costs and expenses; and

(d)           repayment
terms.

In the event of any inconsistency between the terms
set forth in the Master Agreement and any Supplement, the terms of the
applicable Supplement will control to the extent provided in such
Supplement.  Unless otherwise provided in
a Supplement, each Supplement applies solely to the Loans described
therein.  The Supplements, including all
Supplements entered into as the date hereof and all future Supplements (when
they become effective) are hereby incorporated by reference.

Section 1.03         Notes.  Each Supplement may be accompanied by one or
more Notes made by Borrower.

Section 1.04         Default
Interest.  Upon the
occurrence and during the continuance of a Default or Event of Default or after
acceleration, Borrower will pay interest (“Default Interest”) with respect to the Loans at the rate
otherwise applicable plus an
additional two hundred basis points per annum (2.00%).  Default Interest is payable on demand.  The Default Interest rate will apply whether
or not Lender has exercised its option to accelerate the maturity of the Loans
and declare the entire principal balance due and payable.

Section 1.05         Additional
Interest.  In the
event any Deposit Account or Investment Account other than the Permitted
Operating Bank Accounts is maintained with any Person other than Lender,
Borrower will pay interest on all Loans at the rate otherwise applicable plus
an additional 100 basis points (1.00%) per annum.

Section 1.06         Interest
Generally; Maximum Rate. 
Lender’s internal records of applicable interest rates are determinative
in the absence of manifest error.  In the
event any Governmental Authority subjects Lender to any new or additional
charge, fee, withholding or tax of any kind with respect to any Loan, or
changes the method of taxation of any Loan, or changes the reserve, capital or
deposit requirements applicable to any Loan, Borrower will pay such additional
amounts as will compensate Lender for such cost (including opportunity cost) or
lost income resulting therefrom as reasonably determined by Lender.  Notwithstanding anything to the contrary
herein or in any Supplement, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which may be treated as
interest on such Loan under applicable law (collectively, the “Charges”) exceed the maximum
lawful rate of interest (the “Maximum
Rate”) which may be contracted for, charged, taken, received or
reserved by Lender, the rate of interest payable in respect of the Loans,
together with all Charges payable in respect thereof, will be limited to the
Maximum Rate.  Any amount paid in excess
of the Maximum Rate will be applied to principal and other amounts outstanding
in the order Lender deems appropriate.

Section 1.07         Payments Generally.  All payments will be made to Lender at the
address set forth in Section 8.01 in U.S. Dollars and in immediately
available funds, without set-off, deduction, or counterclaim, not later than
11:00 A.M. (Rochester, Minnesota time) on the date on which such payment
is due (each such payment made after such time on such due date to be 

 2
 

 

deemed to have been made on the next succeeding
Business Day).  All payments may be
applied by Lender to principal, interest, fees and other amounts in any order
which Lender elects in its sole discretion; provided unscheduled principal and
interest payments received during the continuance of an Event of Default will
be applied ratably to the Loans based on their respective outstanding principal
balances.  Whenever any payment is stated
to be due on a day that is not a Business Day, such payment will be due and
payable on the next succeeding Business Day, not later than 11:00 A.M.,
and such extension of time will in such case be included in the computation of
the payment of interest and fees, as the case may be.

Section 1.08         Computations.  Computations of interest and fees (to the
extent computed on the basis of days elapsed) hereunder will be made on the
basis of a year of 360 days (including the first day but excluding the
last day) occurring in the period for which such interest or fees are
payable.  All interest and fees will be
considered earned when due.

Section 1.09         Prepayments.  Subject to applicable fees and charges,
Borrower may prepay the Loans, in whole or in part at any time and from time to
time, by giving irrevocable written notice (or telephonic notice promptly
confirmed in writing) to Lender not less than three Business Days prior to any
such prepayment.  Each such notice will
be irrevocable and will specify the proposed date of such prepayment and the
principal amount to be prepaid.  The
amount specified in such notice will be due and payable on the date designated
in such notice, together with accrued interest on the amount so prepaid and any
prepayment fee or premium payable in connection therewith.

Section 1.10         Advances and Paying
Procedure.  Lender is
authorized and directed to credit any of the Borrower’s accounts with Lender
(or to the account Borrower designates in writing) for all Advances made
hereunder, and Lender is authorized to debit such account or any other account
of Borrower with Lender for the amount of any principal, interest, or other
amount due hereunder on the due date with respect thereto.

Section 1.11         Free
Cash Flow Payments. 
Within 45 days after the end of each quarter, Borrower will pay to
Lender, for application to the Obligations, an amount equal to 25% of Borrower’s
Free Cash Flow for such quarter.  If 25%
of Borrower’s Free Cash Flow as stated on Borrower’s annual audited report
delivered to Lender pursuant to Section 4.01(a) is greater than the sum
of the quarterly payments made pursuant to the previous sentence during the
year for which such financial statements are based, then Borrower will pay to
Lender, for application to the Obligations, within 10 days of Borrower’s annual
audited report delivered to Lender pursuant to Section 4.01(a), an
amount equal to the difference between 25% of Borrower’s Free Cash Flow for the
year and the aggregate amount of payments actually paid during such fiscal
year.  The payments required under this Section
1.11 are in addition to all other payments required on the
Obligations.  The sum total of all
payments under this Section 1.11 will not exceed $2,000,000 for any year
or $7,500,000 in the aggregate.

Section 1.12         Administrative
Fee.  Borrower
agrees to pay to Lender an annual administrative fee in the amount of $20,000
on each anniversary of the Closing Date, until all Obligations have been paid
or satisfied in full and all Commitments have been terminated.

 3
 

 

Section 1.13         Reaffirmation
of Existing Loan Documents.  Except to the extent modified by the
Amendment Documents, Borrower and Lender reaffirm their respective obligations
under each of the Loan Documents in effect as of the date hereof.

Section 1.14         Collateral.  The Obligations are secured by Lender’s first
priority Lien on the Collateral.  To the
extent not otherwise in effect, Borrower hereby pledges, mortgages, sets aside,
and grants a security interest to Lender in the Collateral.

Section 1.15         Final
Maturity.  All
Obligations remaining outstanding on October 15, 2015, are due and payable on
that day.

Article
II.

CONDITIONS PRECEDENT

Section 2.01         Conditions
To Effectiveness. 
Lender will have no obligation under this Agreement or any other
Amendment Document until each of the following conditions is satisfied or
waived in accordance with Section 8.02:

(a)           Lender
has received all fees and other amounts due and payable on or prior to the
Closing Date, including the Fees and amounts for reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by Borrower
pursuant to this Agreement, under any other Loan Document, or any other
agreement with Lender.

(b)           Borrower
has delivered to Lender duly executed counterparts of the following, each in
form and substance acceptable to Lender in all respects:

(1)                                  Each of the First
Supplement and the Second Supplement to this Master Agreement, along with all
Notes and other documents, instruments and agreements required thereunder;

(2)                                  all Control
Agreements which may be required to be delivered under Section 6.14, if
any; and

(3)                                  the Third Mortgage
Amendment, fully notarized, together with evidence that it has been recorded in
all places to the extent necessary or desirable, in the judgment of Lender, to
create a valid and enforceable first priority Lien (subject to Permitted
Encumbrances) on the fee simple estate of the Real Estate.

(c)           Lender
has received the following, each in form and substance acceptable to Lender in
all respects:

(1)                                  a commitment by a
recognized title insurance company to issue a date down endorsement to the
original lender’s title insurance policy assuring Lender that the Mortgage (as
amended by the Third Mortgage Amendment) creates a valid and enforceable
encumbrance on the Real Estate, free and clear of all defects and encumbrances
except Permitted 

 4
 

 

Encumbrances, as well as such other endorsements and additional
coverages as Lender may require;

(2)                                  copies of favorable
UCC, tax, judgment, bankruptcy and fixture lien search reports (or other
evidence of the same satisfactory to Lender) in all necessary or appropriate
jurisdictions and under all legal and trade names of Borrower and all other
parties requested by Lender, indicating that there are no prior Liens on any of
the Collateral other than Permitted Encumbrances;

(3)                                  duly executed
landlord waivers and/or warehouseman, or bailee agreements with respect to all
inventory of Borrower located at leased locations or other locations not owned
by Borrower in fee simple, if any, along with a certified copy of all leases of
Borrower, if any;

(4)                                  certified copies of
the articles of organization or other charter documents of Borrower, together
with certificates of good standing or existence, as are available from the
Secretary of State (or other applicable Governmental Authority) of the
jurisdiction of organization of Borrower and each other jurisdiction where
Borrower is required to be qualified to do business as a foreign entity;

(5)                                  a certificate, dated as
of the date hereof and signed by an appropriate Responsible Officer, attaching
and certifying copies of the bylaws or similar documents, and appropriate
resolutions authorizing the execution, delivery and performance of the
Amendment Documents and certifying the name, title and the signature of each
officer executing the Amendment Documents;

(6)                                  a favorable written
opinion of counsel to Borrower, addressed to Lender, addressing the matters set
forth on Exhibit 2.01(c)(6); and

(7)                                  certificates of
insurance, in form and substance acceptable to Lender, describing the types and
amounts of insurance (property and liability) carried by Borrower, in each case
naming Lender as loss payee or additional insured, as the case may be, and
which include a stipulation that coverages will not be cancelled or diminished
without at least 30 days’ prior written notice to Lender, together with a
lender’s loss payable endorsement.

(d)           The
representations and warranties set forth in the Loan Documents are true and
correct in all material respects.

(e)           All
conditions precedent in the other Loan Documents have been satisfied or waived
in accordance with Section 8.02.

(f)            No
Default or Event of Default has occurred and is continuing.

 5
 

 

Article
III.

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender, as of the
date hereof, the date of each Supplement, and the date of each Advance (unless
otherwise specified) as follows:

Section 3.01         Existence;
Power.  Borrower (a) is duly organized, validly
existing and in good standing as a limited liability company under the laws of
the State of Kansas, (b) has all requisite power and authority to carry on its
businesses as now conducted, and (c) is duly qualified to do business, and is
in good standing, in each jurisdiction where such qualification is required,
except where a failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect.

Section 3.02         Organizational
Power; Authorization.  The execution, delivery
and performance by Borrower of the Amendment Documents to which it is a party
are within its limited liability company powers and have been duly authorized
by all necessary board, manager, and if required, member action.  This Agreement and the other Amendment
Documents have been duly executed and delivered by Borrower, and constitute valid and binding obligations of Borrower,
enforceable against it in accordance with their re­spective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity.

Section 3.03         Governmental
Approvals; No Conflicts.  The execution, delivery
and performance by Borrower of the Amendment Documents (a) does not require any
consent or approval of, registration or filing with, or any action by, any
Governmental Authority, except those as have been obtained or made and are in
full force and effect or where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, (b) will not violate any applicable law or regulation or the
charter, articles of incorporation, bylaws, or other organization documents of
Borrower or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, material agreement or other material
instrument binding on Borrower or any of its assets or give rise to a right
thereunder to require any payment to be made by Borrower, and (d) will not result
in the creation or imposition of any Lien on any asset of Borrower except Liens
created under the Loan Documents.

Section 3.04         Financial
Statements.  Borrower has furnished to Lender copies of
Borrower’s (a) audited financial statements (consistent with the requirements
of Section 4.01(a)) as of its most recent fiscal year end and (b)
internally prepared financial statements (consistent with the requirements of Section
4.01(b)) as of the last day of the most recent quarter.  Such financial statements fairly present the
financial condition of Borrower as of such dates and the results of operations
for such periods in conformity with GAAP consistently applied, subject in the
case of interim financial statements, to year-end audit adjustments and the
absence of footnotes.  Since the date of
such financial statements, there have been no changes with respect to Borrower
which have had or could reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect on the
business, results of operations, financial condition, assets, liabilities or
prospects of Borrower.

 6
 

 

Section 3.05         Litigation
and Environmental Matters.

(a)           No
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending against or, to the knowledge of Borrower,
threatened against or affecting Borrower (1) as to which there is a reasonable
possibility of an adverse determination that could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect or (2)
which in any manner draws into question the validity or enforceability of this
Agreement or any other Loan Document.

(b)           Borrower
(1) has not failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any
Environmental Law, (2) has not become subject to any Environmental Liability,
(3) has not received notice of any claim with respect to any Environmental
Liability, or (4) does not know of any basis for any Environmental Liability.

Section 3.06         Compliance
with Laws and Agreements.  Borrower is in compliance
with all (a) applicable laws, rules, and regulations, (b) orders of any
Governmental Authority, and (c) all indentures, agreements or other instruments
binding upon it or its properties; except where non-compliance, either singly
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

Section 3.07         Investment
Company Act, Etc.  Borrower is not (a) an “investment company,”
as defined in, or subject to regulation under, the Investment Company Act of
1940, as amended, (b) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended,
or (c) otherwise subject to any other regulatory scheme limiting its
ability to incur debt.

Section 3.08         Taxes. 
Borrower and each other Person for whose taxes Borrower could become
liable have timely filed or caused to be filed all tax returns and other
filings that are required to be filed by any of them, and have paid all taxes
shown to be due and payable (or with respect to real estate taxes, have paid
all taxes prior to the time the same become delinquent) on such returns or on
any assessments made against it or its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority, except (a) to the extent the failure to do so would not have a
Material Adverse Effect or (b) where the same
are currently being contested in good faith by appropriate proceedings and for
which Borrower has set aside adequate reserves on its books.  The charges, accruals and reserves on the
books of Borrower in respect of such taxes are adequate, and no tax liabilities
that could be materially in excess of the amount so provided are anticipated.

Section 3.09         Margin
Regulations.  None of the proceeds
of the Loans have been used, directly or indirectly, for “purchasing” or “carrying”
any “margin stock” with the respective meanings of each of such terms under
Regulation U of the Board of Governors of the Federal Reserve System as now in
effect, or for any purpose that violates the provisions of Regulation U, T or X
of the Board of Governors of the Federal Reserve System.

Section 3.10         ERISA. 
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is
reasonably 

 7
 

 

expected to occur, could reasonably be expected to
result in a Material Adverse Effect.  The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used under GAAP) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of
the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used under GAAP)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $10,000 the fair market value of the assets of all
such underfunded Plans.

Section 3.11         Ownership
of Property.  Borrower has good title to or a valid
leasehold interest in all of the real and personal property material to
operation of Borrower’s businesses. 
Borrower owns, or is licensed or otherwise has the right to use, all
patents, trademarks, service marks, tradenames, copyrights and other
intellectual property material to its business, and the use thereof by Borrower
does not infringe on the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

Section 3.12         Disclosure.  Borrower has disclosed to Lender all
agreements, instruments, and corporate or other restrictions to which Borrower
is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  None of the reports, financial
statements, certificates or other information furnished by or on behalf of
Borrower pursuant to this Agreement or any other Loan Document or delivered
hereunder or thereunder (as modified or supplemented by any other information
so furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, not misleading.

Section 3.13         Labor
Relations.  There are no strikes, lockouts or other
material labor disputes or grievances against Borrower, or, to the knowledge of
Borrower, threatened against or affecting Borrower, and no significant unfair
labor practice, charges or grievances are pending against Borrower, or to the
knowledge of Borrower, threatened against Borrower before any Governmental
Authority.  All payments due from Borrower
pursuant to any collective bargaining agreement have been paid or accrued as a
liability except where the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.

Section 3.14         Subsidiaries.  Borrower
has no Subsidiaries other than those for which Borrower has complied with the
requirements of Section 4.10.

Section 3.15         Permits.  Borrower has obtained all licenses, consents,
approvals, authorizations and permits of Governmental Authorities which
Borrower is required to obtain in connection with the operation of Borrower’s
business, including but not limited to any of the foregoing related to
Environmental Laws, zoning and land-use laws (including any requirement to
obtain a special exception, if applicable), water use laws, waste disposal
laws, laws requiring construction permits, and occupancy certificates.  Borrower has provided true and correct copies
of such licenses, consents, approvals, authorizations and permits to Lender.

Section 3.16         Projections.  As of
the Closing Date, the Projections fairly present Borrower’s reasonable
forecast of the results of operations and changes in cash flows for the 

 8
 

 

periods covered thereby, based on the assumptions set
forth therein, which assumptions are reasonable based on historical experience
and presently known facts.

Section 3.17         Material Contracts.  There
are no Material Contracts other than those for which Borrower has complied with
Section 4.11.

Section 3.18         Anti-Terrorism Laws.  Neither Borrower nor any of its Affiliates is
in violation of (a) any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto, (b) Executive Order
No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism) or (c) the
anti-money laundering provisions of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001) amending the
Bank Secrecy Act, 31 U.S.C. Section 5311 et seq.

Article
IV.

AFFIRMATIVE COVENANTS

Borrower covenants and agrees that so long as any
Commitment is in effect or the principal of or interest on any Loan or any fee
remains unpaid:

Section 4.01         Financial
Statements and Other Information.  Borrower will deliver to Lender:

(a)           as
soon as available and in any event (1) within 120 days after the end of each
fiscal year of Borrower, a copy of the annual audited report for such fiscal
year for Borrower as of the end of such fiscal year and the related combined
and combining balance sheets, statements of income, owners’ equity and cash
flows (together with all footnotes thereto) of Borrower for such fiscal year,
(2) setting forth in comparative form (for all reports delivered after Borrower’s
first fiscal year of plant operations) the figures for the previous fiscal
year, all in reasonable detail and reported on by a firm of independent public
accountants acceptable to Lender (without a “going concern” or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit), and a statement from such accountants to
the effect that such financial statements present fairly in all material
respects the financial condition and the results of operations of Borrower for
such fiscal year in accordance with GAAP, that the examination by such accountants
in connection with such financial statements has been made in accordance with
GAAP;

(b)           as
soon as available and in any event within 30 days after the end of each month,
an unaudited balance sheet of Borrower as of the end of such month and the
related unaudited statements of income, owner’s equity and cash flow of
Borrower for such month and the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of Borrower’s previous fiscal
year; in either case all certified by an appropriate Responsible Officer of
Borrower as presenting fairly in 

 9
 

 

all material respects the financial condition and results of operations
of Borrower in accordance with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes;

(c)           concurrently
with the delivery of the financial statements referred to in clauses (a) and
(b) above, a certificate of a Responsible Officer, (1) certifying as to
whether there exists a Default or Event of Default on the date of such
certificate, and if a Default or an Event of Default then exists, specifying
the details thereof and the action which Borrower has taken or proposes to take
with respect thereto, (2)  setting forth in reasonable detail calculations
demonstrating compliance with Article V, (3) stating whether any change
in GAAP or the application thereof has occurred since the date of Borrower’s
most recent previously delivered audited financial statements and, if any
change has occurred, specifying the effect 
of such change on the financial statements accompanying such
certificate, and (4) attaching a production report, certified as to accuracy,
which sets forth pertinent information in respect of the amount of ethanol
produced and other information as Lender may request from time to time;

(d)           concurrently
with the financial statements referred to in clause (a) above, a certificate of
the accounting firm that reported on such financial statements stating whether
it obtained any knowledge during the cause of its examination of such financial
statements of the occurrence of any Default or Event of Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

(e)           promptly
after the same become available, copies of all periodic reports distributed by
Borrower to its members generally, or to any national securities exchange, as
applicable;

(f)            concurrently
with the delivery of the financial statements referred to in clause (a)
above, a copy of Borrower’s pro forma
budget and business plan for the subsequent fiscal year for Borrower,
containing a combined and combining pro
forma balance sheet of Borrower as of the end of such subsequent
fiscal year and the related pro forma
combined and combining statements of income, owners’ equity and cash flows
(together with all footnotes thereto) of Borrower for such subsequent fiscal
year; and

(g)           within
45 days of the end of each quarter and concurrently with delivery of the
financial statements referred to in clause (a) above, a report certified by a
Responsible Officer setting forth in reasonable detail calculations
demonstrating compliance with the Free Cash Flow payment requirement under Section
1.11;

(h)           promptly
following any request therefor, such other information regarding the results of
operations, business affairs and 
financial condition of Borrower as Lender may reasonably request.

Section 4.02         Notices
of Material Events. 
Borrower will promptly furnish written notice to Lender of the
following, in each case accompanied by a written statement of a Responsible
Officer setting forth the details of the event or development requiring such
notice and any action take nor proposed to be taken with respect thereto:

(a)           the
occurrence of any Default or Event of Default;

 10
 

 

(b)           the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or, to the knowledge of Borrower,
affecting Borrower which, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect;

(c)           the
occurrence of any event or any other development by which Borrower (1) fails to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval 
required under any Environmental Law, (2) becomes subject to any
Environmental Liability, (3) receives notice of any claim with respect to any
Environmental Liability, or (4) becomes aware of any basis for any
Environmental Liability and in each of the preceding clauses, which
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;

(d)           the
occurrence of any ERISA Event that alone, or together with any other ERISA
Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect;

(e)           the
incurrence of any Indebtedness, including Indebtedness permitted under this
Agreement; and

(f)            any
other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect.

Section 4.03         Existence;
Conduct of Business. 
Borrower will do all things necessary to preserve, renew and maintain in
full force and effect its legal existence and its rights, licenses, permits,
privileges, franchises, patents, copyrights, trademarks and trade names
material to the conduct of its business, and will continue to engage in the
same business as presently conducted or such other businesses that are
reasonably related thereto.

Section 4.04         Compliance
with Laws, Etc.  Borrower will comply with all laws,
rules, regulations and requirements of any Governmental Authority applicable to
it or its properties, except where the failure to do so, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.  Borrower will in all
respects conform to and comply with all applicable covenants, conditions,
restrictions and reservations, and with all requirements of Governmental
Authorities, including, without limitation, all building codes and zoning,
environmental, hazardous substance, energy and pollution control laws,
ordinances and regulations affecting Borrower’s business, and the Real Estate
and the related improvements.

Section 4.05         Payment
of Obligations. 
Borrower will pay and discharge all of its obligations and liabilities
(including without limitation all tax liabilities and claims that could result
in a statutory Lien) before the same become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, and (c) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.

Section 4.06         Books
and Records. 
Borrower will keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in 

 11
 

 

relation to its business and activities to the extent
necessary to prepare the combined financial statements of Borrower in
conformity with GAAP.

Section 4.07         Visitation,
Inspection, Audit, Etc.

(a)           Borrower
will permit any representative or agent of Lender to visit and inspect its
properties, to conduct audits of the Collateral, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with any of its officers, employees and its
independent certified public accountants, all at such reasonable times and as
often as Lender, may reasonably request after reasonable prior notice to
Borrower; provided, if a Default or an Event of Default has occurred and
is continuing, no prior notice will be required.  Borrower will bear all expenses incurred by
Lender in connection with any such visit, inspection, audit, examination, or
discussion.

(b)           Borrower
will deliver to Lender such appraisals of the Real Estate and other fixed
assets of Borrower as Lender may request at any time and from time to time,
such appraisals to be conducted by an appraiser, and to be presented in form
and substance, reasonably satisfactory to Lender, in each case conducted at the
expense of Borrower if the appraisal is delivered in connection with a request
by Borrower for an accommodation, waiver, or other credit action.

Section 4.08         Maintenance
of Properties; Insurance. 
Borrower will (a) keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
expected, except where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and (b) maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily carried by companies in the
same or similar business operating in the same of similar locations and under
the same or similar circumstances.

Section 4.09         Use
of Proceeds.  No
part of the proceeds of any Loan will be used, directly or indirectly, for any
purpose that would violate Regulation T, U or X of the Board of Governors of
the Federal Reserve System or for speculative purposes, including, without
limitation, speculating in the commodities and/or futures markets.

Section 4.10         Subsidiaries.  Within 10 Business Days after Borrower
acquires or forms any Subsidiary, Borrower will notify Lender and will cause
such Subsidiary to execute a Guarantee of the Obligations, a joinder to the
Security Agreement, and a joinder to such other instruments, agreements, and
documents as Lender requires, each in form and substance satisfactory to
Lender, and will cause such Subsidiary to deliver simultaneously therewith
similar documents applicable to such Subsidiary required under Section 2.01
as requested by Lender.

Section 4.11         Assignment
of Material Contracts. 
Borrower will notify Lender of the existence of any Material Contract
promptly upon entering into the same. 
Borrower agrees to promptly execute and deliver to Lender such
Collateral Assignments and take such other actions as Lender requests in
furtherance of Borrower’s collateral assignment of Borrower’s rights under such
Material Contracts.

 12

 

Article
V.

FINANCIAL COVENANTS

Borrower covenants and agrees that so long as any
Obligation remains unpaid or any Commitment is in effect:

Section 5.01         Fixed
Charge Coverage Ratio. 
Beginning December 31, 2006, Borrower’s Fixed Charge Coverage Ratio will not be less than 1.25:1.00 at any fiscal year
end.  Borrower’s Fixed Charge Coverage Ratio will not be less than 1.15:1.00 at any fiscal year
end prior to December 31, 2006.

Section 5.02         Tangible
Balance Sheet Equity Ratio.  Borrower’s Tangible Balance Sheet Equity
Ratio will be at least 0.40:1.00 at all times.

Section 5.03         Capital
Expenditures. 
Borrower will not make Capital Expenditures in excess of $500,000 during
any fiscal year without Lender’s prior written consent.

Section 5.04         Working
Capital.  Beginning
December 31, 2006, Borrower will maintain working capital of at least
$4,000,000 at all times.  Borrower will
maintain working capital of at least $3,000,000 at all times prior to December
31, 2006.  (Solely for purposes of
computing working capital under this Section 5.04, Borrower’s current
assets will include (a) the un-advanced portion of Lender’s revolving loan
commitment in favor of Borrower, less
(b) the amount of required step-down payments due within the next 12 months.)

Article
VI.

NEGATIVE COVENANTS

Borrower covenants and agrees that so long as Lender
has a Commitment hereunder or the principal of or interest on any Loan or any
fee remains unpaid:

Section 6.01         Indebtedness.  Borrower will not create, incur, assume or
suffer to exist any Indebtedness other than Indebtedness created pursuant to
the Loan Documents and Indebtedness in the amount presently outstanding related
to the bond/lease transaction which occurred in December, 2005 between Borrower
and the city of Garnett, Kansas.

Section 6.02         Negative
Pledge.  Except
Permitted Encumbrances, Borrower will not create, incur, assume or suffer to
exist any Lien on any of its assets or property now owned or hereafter
acquired.

Section 6.03         Fundamental
Changes.  Borrower
will not, and will not permit any Subsidiary to, engage in any business other
than businesses of the type conducted by Borrower on the date hereof and
businesses reasonably related thereto.

Section 6.04         Investments,
Loans, Etc. 
Borrower will not purchase, hold or acquire any common stock, evidence
of indebtedness or other securities (including any option, warrant, or other
right to acquire any of the foregoing) of, make or permit to exist any loans or
advances 

 13
 

 

to, Guarantee any obligations of, or make or permit to
exist any investment or any other interest in, any other Person (all of the
foregoing being collectively called “Investments”),
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person that constitute a business unit,
or create or form any Subsidiary, except:

(a)           Investments
(other than Permitted Investments) existing on the date hereof and set forth on
Schedule 6.04;

(b)           Permitted
Investments in which Lender maintains a first priority, perfected security
interest therein; and

(c)           loans
or advances to employees, officers or directors of Borrower in the ordinary
course of business for travel, relocation and related expenses; provided,
however, that the aggregate amount of all such loans and advances does
not exceed $100,000 at any time;

Section 6.05         Restricted
Payments.  Other
than Permitted Distributions and dividends or distributions by Borrower
consisting solely of one or more classes of its membership units, Borrower will
not pay, declare or make, or agree to pay, declare or make, directly or
indirectly, any dividend or distribution on any class of its membership units,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement, defeasance or other
acquisition of, any membership units or any options, warrants, or other rights
to purchase any of the foregoing, whether now or hereafter outstanding, or any
payment in respect of Indebtedness subordinated to the Obligations. In
addition, notwithstanding the foregoing, Borrower may make payments in respect
of subordinate Indebtedness to the extent such payments are allowed under an
intercreditor agreement between Lender and the other creditor to which such
payments are made.

Section 6.06         Sale
of Assets.  Borrower will not convey, sell, lease,
assign, transfer or otherwise dispose of, any of its assets, business or
property, whether now owned or hereafter acquired, to any Person except (a) the
sale or other disposition for fair market value of obsolete or worn out
property or other property not necessary for operations disposed of in the
ordinary course of business; and (b) the sale of inventory and Permitted
Investments in the ordinary course of business.

Section 6.07         Transactions
with Affiliates.  Borrower will not sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to Borrower
than could be obtained on an arm’s-length basis from unrelated third parties in
comparable transactions, and (b) transactions solely between Borrower and any
wholly-owned Subsidiary of Borrower.

Section 6.08         Restrictive
Agreements.  Borrower will not directly or
indirectly, enter into, incur or permit to exist any agreement that prohibits,
restricts or imposes any condition upon the ability of Borrower to create,
incur or permit any Lien upon any of its assets or properties, whether now
owned or hereafter acquired, except restrictions or conditions imposed 

 14
 

 

by any agreement relating to secured Indebtedness
permitted under this Agreement if such restrictions and conditions apply only
to the property or assets securing such Indebtedness.

Section 6.09         Sale
and Leaseback Transactions.  Borrower will not enter
into any arrangement, directly or indirectly, whereby it sells or transfers any
property, real or personal, used or useful in its business, whether now owned
or hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred.

Section 6.10         Lease
Obligations.  Borrower will not create or suffer to
exist any obligations for the payment under operating leases or agreements to
lease (but excluding any obligations under leases required to be classified as
capital leases under GAAP) having a term of five years or more which would
cause the direct or contingent liabilities of Borrower under such leases or
agreements to lease to exceed $100,000 in the aggregate in any year.

Section 6.11         Hedging
Agreements.  Borrower will not enter into any
Hedging Agreement other than Hedging Agreements entered into in the ordinary
course of business to hedge or mitigate risks to which Borrower is exposed in
the conduct of its business or the management of its liabilities.

Section 6.12         Amendment
to Material Documents. 
Except to the extent as could not reasonably be expected to result in a
Material Adverse Effect, Borrower will not amend, modify or waive any of its
rights under (a) its certificate or articles of organization, operating
agreement, bylaws or other organizational documents or (b) any Material
Contract.

Section 6.13         Accounting
Changes.  Borrower
will not make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or change its fiscal year.

Section 6.14         Deposit
and Investment Accounts. 
Except for the Permitted Operating Bank Accounts or as consented to in
writing by Lender (which consent will be conditioned on, among other things,
the Person who will maintain the funds entering into a Control Agreement
acceptable to Lender in all respects), Borrower will not maintain, deposit or
invest funds with any Person other than Lender.

Section 6.15         Use
of Proceeds. 
Borrower will not use the proceeds of any Loan, directly or indirectly,
for “purchasing” or “carrying” any “margin stock” with the respective meanings
of each of such terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect, or for
any purpose that violates the provisions of Regulation U, T or X of the Board of
Governors of the Federal Reserve System.

Article
VII.

EVENTS OF DEFAULT AND REMEDIES

Section 7.01         Events
of Default.  The
following will be considered events of default (each an “Event of Default”) hereunder:

 15
 

 

(a)           Borrower
fails to pay any amount payable under this Agreement or any other Loan Document
within five days of when such amount becomes due;

(b)           any
representation or warranty made or deemed made by or on behalf of Borrower in
or in connection with this Agreement or any other Loan Document (including the
Schedules attached hereto and thereto) and any amendments or modifications
hereof or waivers hereunder, or in any certificate, report, financial statement
or other document submitted to Lender by Borrower or any representative of
Borrower pursuant to or in connection with this Agreement or any other Loan
Document proves to be materially incorrect when made or deemed made or
submitted;

(c)           Borrower
fails to observe or perform any covenant or agreement in Sections 4.01,
4.02, or 4.03, or Article V or VI;

(d)           Borrower
fails to observe or perform any covenant or agreement in this Agreement (other
than those referred to in clauses (a), (b), or (c) above) or in any other Loan
Document, and such failure continues for 30 days after the earlier of the date
(1) Borrower becomes aware of such failure, or (2) written notice
thereof is given to Borrower by Lender; or any Event of Default otherwise
occurs under any Loan Document;

(e)           Borrower
or any guarantor of any portion of the Obligations, (whether as primary obligor
or as guarantor or other surety) fails to pay any principal of or premium or
interest on any Material Indebtedness that is outstanding, when and as the same
becomes due and payable (whether at scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure continues after the
applicable grace period, if any, specified in the agreement or instrument
evidencing such Indebtedness; or any other event occurs or condition exists
under any agreement or instrument relating to such Indebtedness and continues
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness
is declared to be due and payable; or required to be prepaid or redeemed
(other  than by a regularly scheduled
required prepayment or redemption), purchased or defeased, or any offer to
prepay, redeem, purchase or defease such Indebtedness is required to be made,
in each case prior to the stated maturity thereof;

(f)            Borrower
or any guarantor of any portion of the Obligations, (1) commences a voluntary
case or other proceeding or files any petition seeking liquidation,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a custodian, trustee, receiver, liquidator or other similar
official of it or any substantial part of its property, (2) consents to the
institution of, or fails to contest in a timely and appropriate manner, any
proceeding or petition described in clause (1) of this Section 7.01(f),
(3) applies for or consents to the appointment of a custodian, trustee,
receiver, liquidation or other similar official for Borrower or such guarantor
or for a substantial part of the assets of Borrower or such guarantor, (4)
files an answer admitting the material allegations of a petition filed against
it in any such proceeding, (5) makes a general assignment for the benefit of
creditors, or (6) takes any action for the purpose of effecting  any of the foregoing;

 16
 

 

(g)           an
involuntary proceeding is commenced or an involuntary petition is filed seeking
(1) liquidation, reorganization or other relief in respect of Borrower or any
guarantor of any portion of the Obligations, or the debts, or any substantial
part of the assets of Borrower or such guarantor under any federal, state or
foreign bankruptcy, insolvency or other similar law now or hereafter in effect
or (2) the appointment of a custodian, trustee, receiver, liquidator or other
similar official for Borrower or any guarantor of any portion of the
Obligations, or for a substantial part of the assets of Borrower or such
guarantor, and in any such case, such 
proceeding or petition remains undismissed for a period of 60 days or an
order or decree approving or  ordering
any of the foregoing is entered;

(h)           Borrower
or any guarantor of any portion of the Obligations becomes unable to pay,
admits in writing its inability to pay, or fails to pay, its debts as they
become due;

(i)            an
ERISA Event occurs with respect to Borrower or any guarantor of any portion of
the Obligations that, in the opinion of Lender, when taken together with other
ERISA Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect;

(j)            any judgment or order for the payment of money
in excess of $250,000 in the
aggregate is rendered against Borrower or any guarantor of any portion of the
Obligations, and either (1) such judgment or order is final and enforcement
proceedings have been commenced by any creditor upon such judgment or order, or
(2) there is a period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, is not in effect;

(k)           any non-monetary judgment or order is rendered against Borrower or any
guarantor of any portion of the Obligations that could reasonably be expected
to have a Material Adverse Effect, and there is a period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, is not in effect;

(l)            a
Change in Control occurs or exists;

(m)          Borrower
ceases to exist or any guarantor of any portion of the Obligation dies or
ceases to exist;

(n)           Borrower
or any guarantor of any portion of the Obligations becomes the subject of any
out-of-court settlement with its creditors;

(o)           any
guarantor of any portion of the Obligations attempts to revoke such Guarantee,
or any such Guarantee becomes unenforceable in whole or in part for any reason;
or

(p)           any
other event occurs or exists which could reasonably be expected to result in a
Material Adverse Effect.

Section 7.02         Remedies.  Upon the occurrence of an Event of Default
(other than an event described in clause (f), (g) or (h) of Section 7.01),
and at any time thereafter, Lender may take any one or more or all of the
following actions, at the same or different times:

 17
 

 

(a)           terminate
the Commitments, whereupon the Commitments will terminate immediately;

(b)           declare
the principal of and any accrued interest on the Loans, and all other
Obligations to be due and payable, whereupon the same will become due and
payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by Borrower;

(c)           Setoff;

(d)           take
other steps to project or preserve Lender’s interest in any Collateral,
including, without limitation, notifying account debtors to make payments
directly to Lender, advancing funds to protect any Collateral, and insuring
Collateral; and/or

(e)           exercise
all remedies provided for in any other Loan Document or as otherwise provided
by law.

If an Event of Default specified in either clause (f),
(g) or (h) of Section 7.01 occurs, all Commitments will automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon, and all fees, and all other Obligations will
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Borrower.

Article
VIII.

MISCELLANEOUS

Section 8.01         Notices.

Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications to any party herein to be effective will be in writing and
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

	
  

  	
  To Borrower:

  	
  Attention: William R. Pracht

  
	
   

  	
   

  	
  1304 South Main

  
	
   

  	
   

  	
  Garnett, Kansas
  66032

  
	
   

  	
   

  	
  Facsimile: (785)
  448-2884

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Bill Hannigan, Esq.

  
	
   

  	
   

  	
  BrownWinick Law
  Firm

  
	
   

  	
   

  	
  666 Grand
  Avenue, Suite 2000

  
	
   

  	
   

  	
  Des Moines, Iowa
  50309

  
	
   

  	
   

  	
  Facsimile: (515)
  283-0231

  
	
   

  	
   

  	
   

  

 

 18
 

 

 

	
  

  	
  To Lender:

  	
  Attention: Eric Oftedahl

  
	
   

  	
   

  	
  Post Office Box
  6947

  
	
   

  	
   

  	
  1016 Civic
  Center Drive NW

  
	
   

  	
   

  	
  Rochester,
  Minnesota 55903

  
	
   

  	
   

  	
  Facsimile: (507)
  252-7178

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Ronald K. Vaske, Esq.

  
	
   

  	
   

  	
  Lindquist &
  Vennum P.L.L.P.

  
	
   

  	
   

  	
  4200 IDS Center

  
	
   

  	
   

  	
  80 South Eighth
  Street

  
	
   

  	
   

  	
  Minneapolis,
  Minnesota 55402

  
	
   

  	
   

  	
  Facsimile: (612)
  371-3207

  

 

Any party hereto may change its address or facsimile
number for notices and other communications hereunder by notice to the other
parties.  All notices and other
communications from Borrower will, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited in the mail or if
delivered, upon delivery.  Notices
delivered to Lender will not be effective until actually received at its
address specified in this Section 8.01.

Any agreement of Lender to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of
Borrower.  Lender will be entitled to
rely on the authority of any Person purporting to be a Person authorized by
Borrower to give such notice and Lender will not have any liability to Borrower
or any other Person as a result of any action taken or not taken by Lender in
reliance upon such telephonic or facsimile notice.  The obligation of Borrower to repay the Loans
and all other Obligations hereunder will not be affected in any way or to any
extent by any failure of Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by Lender of a confirmation which
is at variance with the terms understood by Lender to be contained in any such
telephonic or facsimile notice.

Section 8.02         Waiver;
Amendments.

(a)           No
failure or delay by Lender in exercising any right or power hereunder or any
other Loan Document, and no course of dealing between Borrower and Lender, will operate as a waiver, nor will any single or partial
exercise of any such right or power or any abandonment or discontinuance of
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power hereunder or
thereunder.  The rights and remedies of
Lender hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies provided by law.  No waiver of any provision of this Agreement
or any other Loan Document or consent to any departure by Borrower therefrom
will in any event be effective unless the same is permitted by paragraph (b) of
this Section, and then such waiver or consent will be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of an Advance will not be construed as a waiver of any
Default or Event of Default, regardless of whether Lender had notice or
knowledge of such Default or Event of Default at the time.

 19
 

 

(b)           No
amendment or waiver of any provision of this Agreement or any other Loan
Document, nor consent to any departure by Borrower therefrom, will in any event
be effective unless the same is in writing and signed by Borrower and Lender
and then such waiver or consent will be effective only in the specific instance
and for the specific purpose for which given.

Section 8.03         Expenses;
Indemnification.

(a)           Borrower
indemnifies Lender and each Participant against, and holds Lender and each
Participant harmless from, any and all costs, losses, liabilities, claims,
damages and related expenses, including the fees, charges and disbursements of
any counsel for Lender and/or any Participant, which are incurred by or
asserted against Lender and/or any Participant arising out of, in connection
with or as a result of (1) the execution or delivery of this Master
Agreement, any Supplement, any other Loan Document,  or any other agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of any of the transactions
contemplated hereby or thereby, (2) any Advances or any actual or proposed use
of the proceeds therefrom, (3) any actual or alleged presence or release of
Hazardous Materials on or from any property owned by Borrower or any
Subsidiary, or any Environmental Liability related in any way to Borrower or
any Subsidiary, or (4) actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether Lender is a party
thereto, including attorneys’ fees and all other costs and fees (i) incurred
before or after commencement of litigation or at trial, on appeal or in any
other proceeding, and (ii) incurred in any bankruptcy proceeding; provided,
that Borrower is not obligated to indemnify Lender or any Participant for any
of the foregoing arising out of Lender’s or such Participant’s gross negligence
or willful misconduct as determined by a court of competent jurisdiction in a
final and nonappealable judgment.

(b)           Borrower
will pay, and hold Lender and each Participant harmless from and against, any
and all Taxes with respect to this Agreement and any other Loan Document, any
collateral described therein, or any payments due thereunder, and will save
Lender and each Participant harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such Taxes.

(c)           To
the extent permitted by applicable law, Borrower will not assert, and Borrower
hereby waives, any claim against Lender and/or any Participant, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to actual or direct damages) arising out of, in connection with or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the transactions contemplated therein, any Advance or the use of proceeds
thereof.

(d)           All
amounts due under this Section 8.03 are due and payable promptly on
demand.

 20
 

 

Section 8.04         Successors
and Assigns.

(a)           The
provisions of this Agreement are binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights hereunder without the
prior written consent of Lender (and any attempted assignment or transfer by
Borrower without such consent will be considered null and void).

(b)           Lender
may at any time, without the consent of Borrower, assign to one or more assignees
all or a portion of its rights and obligations under this Agreement and the
other Loan Documents, including all or a portion of any Commitment and/or all
or any portion of any Loan.

(c)           Lender
may at any time, without the consent of Borrower, sell participation interests
to one or more Persons (a “Participant”)
in all or a portion of Lender’s rights and obligations under this Agreement,
including all or a portion of any Commitment and/or all or any portion of any
Loan.  In the event Lender sells one or
more participation interests, Lender’s obligations under this Agreement will
remain unchanged, and Borrower will continue to deal solely and directly with
Lender in connection with Lender’s rights and obligations under this Agreement
and the other Loan Documents.

(d)           Lender
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement and the Notes without complying with this
Section.  No such pledge or assignment
will release Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for Lender as a party hereto.

Section 8.05         Governing
Law; Jurisdiction; Consent to Service of Process.

(a)           This
Agreement and the other Loan Documents (except to the extent otherwise provided
therein) will be construed in accordance with and be governed by the law
(without giving effect to the conflict of law principles thereof) of the State
of Minnesota.

(b)           Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the non-exclusive jurisdiction of the United States District Court of the
District of Minnesota , and of any state court of the State of Minnesota
located in Olmstead County, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any
judgment.  Each of the parties
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such Minnesota state court
or, to the extent permitted by applicable law, such federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding will be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement or any other Loan Document will affect any right Lender may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against Borrower or its properties in the courts of any
jurisdiction.

(c)           Borrower
irrevocably and unconditionally waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
described in paragraph (b) of this Section and brought in any court referred to
in paragraph (b) of this Section.  

 21
 

 

Each of the parties hereto irrevocably waives, to the fullest extent
permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

Section 8.06         WAIVER
OF JURY TRIAL. 
EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 8.07         Right
of Setoff.  As
additional security for payment of the Obligations, Borrower grants to Lender a
security interest in, a lien on, and an express contractual right, at any time
or from time to time upon the occurrence and during the continuance of a
Default or Event of Default, without prior notice to Borrower, any such notice
being expressly waived by Borrower to the extent permitted by applicable law,
to set off and apply against all deposits (general or special, time or demand,
provisional or final) of Borrower at any time held or other obligations at any
time owing by Lender to or for the credit or the account of Borrower against
any and all Obligations held by Lender (“Setoff”), irrespective of
whether Lender has made demand hereunder and although such Obligations may be
unmatured.  Lender agrees to notify
Borrower after any Setoff and any application made by Lender; provided, that the failure to give such
notice will not affect the validity of such Setoff and application.  Lender’s rights under this Section 8.07
are in addition to any rights now or hereafter granted under applicable law and
do not limit any such rights.

Section 8.08         Counterparts;
Integration.  This
Agreement may be executed in any number of separate counterparts (including by
telecopy or other electronic mail, or any other electronic means), and all of
said counterparts taken together will be deemed to constitute one and the same
instrument.  This Agreement, the other
Loan Documents, and any separate letter agreement(s) relating to any fees
payable to the Lender constitute the entire agreement among the parties hereto
and thereto regarding the subject matters hereof and thereof and supersede all
prior agreements and understandings, oral or written, regarding such subject
matters.

Section 8.09         Survival.  All covenants, agreements, representations
and warranties made by Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement will be
considered to have been relied upon by Lender and will survive the execution
and delivery of this Agreement, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is 

 22
 

 

extended hereunder, and will continue in full force
and effect as long as the principal of or any accrued interest on the Loans or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as any Commitment is in effect.  The provisions of Section 8.09 will
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, and
termination of the Commitments, or this Agreement or any provision hereof.  All representations and warranties made
herein, in the certificates, reports, notices, and other documents delivered
pursuant to this Agreement will survive the execution and delivery of this
Agreement and the other Loan Documents.

Section 8.10         Severability.  Any provision of this Agreement or any other
Loan Document held to be illegal, invalid or unenforceable in any jurisdiction,
will, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the illegality,
invalidity or unenforceability of a particular provision in a particular
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 8.11         Transferable
Record.  This
Agreement, the Notes and the other Loan Documents, as amended, are “transferable
records” as defined in applicable law relating to electronic transactions.  Therefore, Lender may, on behalf of Borrower,
create a microfilm, optical disk or electronic image of such Loan Documents
that are authoritative copies under applicable law.  Lender may store such authoritative copies in
microfilm or electronic form and destroy the paper original as part of its
normal business practices.  Lender, on
its own behalf, may control and transfer such authoritative copies as permitted
by applicable law.

Section 8.12         Confidentiality.  Lender agrees to take normal and reasonable
precautions to maintain the confidentiality of any information designated in
writing as confidential and provided to it by Borrower or any Subsidiary,
except that such information may be disclosed (a) to any Affiliate, Participant
or advisor of Lender, including without limitation accountants, legal counsel
and other advisors, provided that Lender shall have taken reasonable steps to
assure that such Affiliates, participants, and advisors will maintain such
information in confidence to the same extent required of Lender hereunder, (b)
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (c) to the extent requested by any regulatory agency or
authority, (d) to the extent that such information becomes publicly available
other than as a result of a breach of this Section 8.12, or which
becomes available to Lender of any of the foregoing on a nonconfidential basis
from a source other than Borrower, (e) in connection with the exercise of any
remedy hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, and (f) subject to provisions
substantially similar to this Section 8.12, to any actual or prospective
assignee or Participant, or (g) with the consent of Borrower.  Any Person required to maintain the
confidentiality of any information as provided for in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
information as such Person would accord its own confidential information.

Section 8.13         Copies.  Borrower hereby acknowledges the receipt of a
copy of this Agreement and all other Loan Documents.

 23
 

 

Section 8.14         Notice
of Claims Against Lender; Limitation of Certain Damages.  In order to allow Lender to mitigate any
damages to Borrower from Lender’s alleged breach of its duties under the Loan
Documents or any other duty, if any, to Borrower, the Borrower agrees to give
Lender immediate written notice of any claim or defense it has against Lender,
whether in tort or contract, relating to any action or inaction by Lender under
any Loan Document, or the transactions related thereto, or of any defense to
payment of the Obligations for any reason. 
The requirement of providing timely notice to Lender represents the
parties’ agreed-upon standard of performance regarding claims against
Lender.  Notwithstanding any claim that
Borrower may have against Lender, and regardless of any notice Borrower may
have given Lender, Lender will not be liable to Borrower for consequential,
punitive and/or special damages.

Section 8.15         Effect
of Amendment.  This
Agreement amends, supplements, and restates the Original Credit Agreement.  The Obligations under the Original Credit
Agreement remain in effect except to the extent specifically modified herein,
and nothing in any of the Amendment Documents will be construed to have the
effect of a novation in respect of the Obligations under the Original Credit
Agreement.  All Liens in favor of Lender
grated in connection with the Original Credit Agreement remain in effect.  The Amendment Documents will not be construed
to have the effect of a refinancing of the Obligations under the Original
Credit Agreement, but will instead be construed to amend, modify and supplement
the terms in effect immediately prior to effectiveness of the Amendment
Documents.  All references to the Credit
Agreement in any Loan Document will hereafter mean the Credit Agreement as
amended hereby.  Nothing herein waives
any default, breach or violation that may have occurred under any prior version
of the Credit Agreement which may have occurred prior to the date hereof.

[Signature Page Follows]

 24
 

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EAST KANSAS AGRI-ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William R. Pracht

  
	
   

  	
  Name:

  	
  William R. Pracht

  
	
   

  	
  Title:

  	
  Chairman and President

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HOME FEDERAL SAVINGS BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Oftedahl

  
	
   

  	
  Name:

  	
  Eric Oftedahl

  
	
   

  	
  Title:

  	
  Vice President

  

 

[SIGNATURE
PAGE TO MASTER AMENDED AND RESTATED CREDIT AGREEMENT]

 

 25

 

ATTACHMENT I

DEFINITIONS

A.            Accounting
Terms and Determination. 
Unless otherwise defined or specified herein, all accounting terms used
herein will be interpreted, all accounting determinations hereunder will be
made, and all financial statements required to be delivered hereunder will be
prepared, in accordance with GAAP as in effect from time to time, in each case
net of the effect of the bond/lease transaction which occurred in December of
2005 between the Borrower and the City of Garnett, Kansas.

B.            Terms
Generally.  The
definitions of terms herein apply equally to the singular and plural forms of
the terms defined.  The words “include,” “includes”
and “including” are herein deemed to be followed by the phrase “without
limitation.”  Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein will be construed as referring to such agreement,
instrument or other document as it was originally executed or as it may from
time to time be amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person will be construed to include
such Person’s successors and permitted assigns, (c) the words “hereof,” “herein”
and “hereunder” and words of similar import will be construed to refer to this
Agreement as a whole and not to any particular provision hereof, (d) all
references to Articles, Sections, Exhibits and Schedules will be construed
to refer to Articles, Sections, Exhibits and Schedules to this Agreement, and
(e) all references to a specific time will be construed to refer to the time in
the city provided herein for Lender’s receipt of notices hereunder, unless
otherwise indicated.

C.            Supplements.  Certain terms are defined specifically in one
or more Supplements.  If there is an
inconsistency between the terms hereof and a Supplement, the definitions in the
Supplement will control to the extent provided therein.

D.            Defined
Terms.  In addition to
the other terms defined in the Agreement, the following terms have the meanings
herein specified.

“Advance” means an
advance of Loan funds by Lender to or for the benefit of Borrower.

“Affiliate” means, as
to any Person, any other Person that directly, or indirectly through one or
more intermediaries, Controls, is Controlled by, or is under common Control
with, such Person.

“Agreement”
means, collectively, the Master Agreement and each of the Supplements in effect
from time to time.

“Amendment
Documents” means the Master Agreement, the First Supplement, the
Second Supplement, and the Third Mortgage Amendment, and all Notes, (including
amended Notes), documents, instruments and agreements delivered in fulfillment
of a condition precedent to effectiveness or to Lender’s obligations under any
of the foregoing.

 I-1
 

 

“Borrower” means East Kansas Agri-Energy,
L.L.C., a Kansas limited liability company.

“Business Day” means any
day other than a Saturday, Sunday or other day on which commercial banks in the
city of Rochester, Minnesota, are authorized or required by law to close.

“Capital Expenditures” means for any period,
without duplication, (a) the additions to property, plant and equipment and
other capital expenditures of Borrower and its Subsidiaries that are (or would
be) set forth on a combined statement of cash flows of Borrower for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by
Borrower and its Subsidiaries during such period.

“Capital Lease Obligations” of any
Person means the capitalized amount, determined in accordance with GAAP, of all
obligations of such Person to pay rent or other amounts under any lease (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP.

“Change in Control” means the
occurrence of one or more of the following events: (a) any sale, lease,
exchange or other transfer (in a single transaction or a series of related
transactions) of all or substantially all of the assets of Borrower or any
guarantor of any portion of the Obligations to any Person or “group” (within
the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder in effect on the date hereof),
(b) acquisition of Control of the Borrower or any guarantor of any portion of
the Obligations by any Person who does not Control the Borrower or such guarantor
on the date of this Agreement, or (c) occupation of a majority of the seats on
the board of directors of Borrower or any guarantor of any portion of the
Obligations by Persons who were neither (1) nominated by the immediately
previous board of directors or (2) appointed by directors so nominated.

“Charges”
has the meaning set forth in Section 1.06.

“Closing Date” means
November 23, 2004, and with respect to each Supplement, the date specified in
such supplement if a different closing date is specified.

“Code” means the
Internal Revenue Code of 1986, as amended and in effect from time to time.

“Collateral” means all of Borrower’s tangible and
intangible property, real and personal, including without limitation, all
casualty insurance proceeds and condemnation awards.

“Collateral Assignment” means
each collateral assignment by Borrower in favor of Lender of a Material
Contract, including all such collateral assignments made prior to the date
hereof and all of those made hereafter.

“Commitment” means, as
to any Supplement, the meaning set forth in such Supplement.

“Control” means the power, directly or
indirectly, either to (a) vote 5% or more of securities having ordinary voting
power for the election of directors (or persons performing similar functions)
of a Person or (b) direct or cause the direction of the management and policies

 I-2
 

 

of a Person, whether through the ability to exercise
voting power, by contract or otherwise. 
The terms “Controls,”
“Controlling,” “Controlled by,” and “under common Control with”
have meanings correlative thereto.

“Control Agreements” means the agreements requested by
Lender, if any, to perfect Lender’s security interest in Deposit Accounts and
Investment Accounts, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

“Default” means any
condition or event that, with the giving of notice or the lapse of time, or
both, would constitute an Event of Default.

“Default
Interest” has the meaning set forth in Section 1.04.

“Deposit Accounts” means all
demand, time, savings, passbook or similar depository accounts of Borrower with
any Person, including Borrower’s operating, payroll, and other bank or
depository accounts.

“EBITDA” for
any period means an amount equal to (a) Net Income plus (b) to the extent
deducted in determining Net Income, the sum of (i) Interest Expense, (ii)
income taxes, (iii) depreciation and amortization, and (iv) all other non-cash
charges.

“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters.

“Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental investigation and remediation, costs of
administrative oversight, fines, related attorneys’ fees, natural resource
damages, penalties or indemnities), directly or indirectly resulting from or
based upon (a) any actual or alleged violation of any Environmental Law, (b)
the generation, use, handling, transportation, storage, treatment or disposal
of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous
Materials, (d) the Release or threatened Release of any Hazardous Materials, or
(e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

“ERISA” means the
Employee Retirement Income Secu­rity Act of 1974, as amended from time to time,
and any successor statute.

“ERISA Affiliate” means any
trade or business (whether or not incorporated), which, together with Borrower,
is treated as a single employer under Section 414(b) or (c) of the Code or,
solely for the purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable
event,” as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated

 I-3
 

 

funding deficiency” (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an application for
a waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by Borrower or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
by Borrower or the ERISA Affiliate from the PBGC or a plan administrator
appointed by the PBGC of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

“Event of Default” has the
meaning set forth in Section 7.01.

“Fixed Charges”
means the consolidated sum of (a) Interest Expense, (b) scheduled principal
payments made on Total Debt, (c) income taxes paid, (d) Permitted Distributions
paid, and (e) Non-Financed Maintenance Capital Expenditures.

“Fixed Charge Coverage
Ratio” means for any period of four consecutive quarters, the
ratio of (a) EBITDA to (b) Fixed Charges.

“Free Cash Flow”
means, for any period, EBITDA less the sum of Mandatory Debt Retirement,
interest expense, Taxes paid by Borrower, the maximum allowable Permitted
Distribution (whether or not paid or declared), and Non-Financed Maintenance
Capital Expenditures.

“GAAP” means
generally accepted accounting principles in effect from time to time in the
United States applied on a consistent basis.

“Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Guarantee”
of or by any Person, including without limitation any Governmental Authority,
providing a guarantee of any portion of the Obligations, (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner,
whether directly or indirectly and including any obligation, direct or
indirect, of the guarantor (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement 

 I-4
 

 

condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (d)
as an account party in respect of any letter of credit or letter of guarantee
issued in support of such Indebtedness or obligation.  The term “Guarantee” does not include
endorsements for collection or deposits in the ordinary course of
business.  The amount of any Guarantee is
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which Guarantee is made or, if not so stated
or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.  The term “Guarantee”
used as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

“Hedging Agreements”
means interest rate swap, cap or collar agreements, interest rate future or
option contracts, currency swap agreements, currency future or option
contracts, commodity agreements and other similar agreements or arrangements
designed to protect against fluctuations in interest rates, currency values or
commodity values, in each case to which Borrower is a party.

“Indebtedness”
of any Person means, without duplication (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person in respect of the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business; provided,
that for purposes of Section 7.01(e), trade payables overdue by more
than 120 days are included in this definition except to the extent that any of
such trade payables are being disputed in good faith and by appropriate
measures), (d) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such
Person, (e) all Capital Lease Obligations of such Person, (f) all
obligations, contingent or otherwise, of such Person in respect of letters of
credit, acceptances or similar extensions of credit, (g) all Guarantees of
such Person, (h) all Indebtedness of a third party secured by any Lien on
property owned by such Person, whether or not such Indebtedness has been
assumed by such Person, (i) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
common stock, membership unit or other capital interest of such Person, (j)
Off-Balance Sheet Liabilities and (k) all capital interests of such person
(such as preferred units) which call for a fixed or formulaic amount to be paid
to the holder thereof or that have a maturity date. The
Indebtedness of any Person includes the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor.

“Investment Accounts” means all securities or investment
accounts of Borrower with brokerage firms and other Persons.

“Investments” has the meaning set forth in Section 6.04.

 I-5
 

 

“Lender”
means Home Federal Savings Bank, a federally chartered stock savings bank, and
its successors and assigns.

“Lien” means
any mortgage, pledge, security interest, lien (statutory or otherwise), charge,
encumbrance, hypothecation, assignment, deposit arrangement, or other
arrangement having the practical effect of the foregoing or any preference,
priority or other security agree­ment or preferential arrangement of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having the same economic effect as any of the
foregoing).

“Loan” means
a loan, commitment or credit and facilities made under this Agreement as more
fully described in a Supplement.

“Loan Documents”
means collectively this Master Agreement, the Supplements, the Mortgage, the
Security Agreement, the Notes, the Financing Statements, the Collateral
Assignments, all other Amendment Documents, and any Control Agreements, draw
requests, and any and all other instruments, agreements, documents and writings
executed pursuant to any of the foregoing or which have otherwise been executed
by Borrower and delivered to Lender in connection with the Obligations or the Collateral.

“Mandatory Debt Retirement”
means the amount of principal payments required during the related period in
connection with any Indebtedness of Borrower.

“Master
Agreement” means solely this Master Amended and Restated Credit
Agreement, not including the Supplements, as amended, restated, or otherwise
modified (other than by Supplements entered into pursuant to Section 1.02)
from time to time.

“Material Adverse Effect”
means, with respect to any event, act, condition or occurrence of whatever
nature (including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singularly or in conjunction
with any other event or events, act or acts, condition or conditions,
occurrence or occurrences whether or not related, a material adverse change in,
or a material adverse effect on, (a) the business, results of operations,
financial condition, assets, or liabilities, of Borrower, (b) the ability of
Borrower to perform any of its obligations under the Loan Documents, (c) the
rights and remedies of Lender under any of the Loan Documents or (d) the
legality, validity or enforceability of any of the Loan Documents.

“Material Contract” means an
agreement to which Borrower is or hereafter becomes a party which is material
to the operation of Borrower’s business.

“Material Indebtedness”
means Indebtedness (other than the Loans) or obligations in respect of one or
more Hedging Agreements in an aggregate principal amount of $100,000 or more.  For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations in respect to any Hedging Agreement at any time is the maximum
aggregate amount (giving effect to any netting agreements) that Borrower would
be required to pay if such Hedging Agreement were terminated at such time.

“Maximum Rate”
has the meaning set forth in Section 1.06.

 I-6
 

 

“Mortgage”
means the Future Advance Mortgage and Security Agreement and Fixture Financing
Statement and Assignment of Rents and Leases between Borrower and Lender dated November
23, 2004, as amended by the First Amendment dated June 21, 2005, the Second
Amendment dated December 20, 2005, and by the Third Mortgage Amendment, and as
amended, restated, revised or otherwise modified from time to time hereafter.

“Multiemployer Plan”
has the meaning set forth in Section 4001(a)(3) of ERISA.

“Net Income”
means net income (or loss) determined on a consolidated basis in accordance
with GAAP, but excluding (a) extraordinary gains or losses, (b) gains
attributable to write-up of assets, (c) any equity interest in unremitted
earnings of any Person that is not a Subsidiary, and (d) income (or loss) of
any Person which accrued prior to the date such Person becomes a Subsidiary or
is merged into or consolidated with Borrower or any Subsidiary on the date such
Person’s assets are acquired by the Borrower or a Subsidiary.

“Non-Financed
Maintenance Capital Expenditures” means the sum of Capital Expenditures paid during the
related period in the ordinary course of Borrower’s business related to
maintenance and upkeep of property, plant and equipment, except the term does not include
Capital Expenditures for which Borrower or any Subsidiary incurred Indebtedness in connection therewith.

“Notes”
means, collectively, all notes of Borrower in favor of Lender issued pursuant
to a Supplement.

“Obligations”
means all amounts owed by Borrower to Lender pursuant to or in connection with
this Agreement or any other Loan Document, and any other obligation of Borrower
to Lender of any nature whatsoever, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to Lender incurred
pursuant to this Agreement or any other Loan Document), whether direct or
indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising hereunder or thereunder, together with all renewals,
extensions, modifications or refinancings thereof.

“Off-Balance Sheet Liabilities” of any Person means (a) any
repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person, (b) any liability of such Person
under any sale and leaseback transactions which do not create a liability on
the balance sheet of such Person, (c) any liability of such Person under any
so-called “synthetic” lease transaction, or (d) any obligation arising with
respect to any other transaction which is the functional equivalent of or takes
the place of borrowing but which does not constitute a liability on the balance
sheet of such Person.

“Participant”
has the meaning set forth in Section 8.04(c).

 I-7
 

 

“PBGC” means
the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and
any successor entity performing similar functions.

“Permitted Distribution”
means, beginning December 31, 2006, cash distributions - first approved in
writing by Lender - to Borrower’s members of up to (a) 50% of Borrower’s Net
Income for a fiscal year period if Borrower’s Tangible Balance Sheet Equity
Ratio will be, after payment of such distribution, less than 60% as determined
from Borrower’s audited financial statements as of its most recent fiscal year
end, or (b) 60% of Borrower’s Net Income for a fiscal year period if Borrower’s
Tangible Balance Sheet Equity Ratio will be, after payment of such
distribution,  60% or greater as
determined from Borrower’s audited financial statements as of its most recent
fiscal year end.  Prior to December 31, 2006,
“Permitted Distribution” means cash distributions - first approved in writing
by Lender - to Borrower’s members of up to (a) 40% of Borrower’s Net Income for
a fiscal year period if Borrower’s Tangible Balance Sheet Equity Ratio will be,
after payment of the distribution, less than 60% as determined from Borrower’s
audited financial statements as of its most recent fiscal year end, or (b) 50%
of Borrower’s Net Income for a fiscal year period if Borrower’s Tangible
Balance Sheet Equity Ratio will be, after payment of the distribution, 60% or
greater as determined from Borrower’s audited financial statements as of its
most recent fiscal year end.

“Permitted Encumbrances”
means:

(a)           Liens
imposed by law for taxes not yet due (or with respect to real estate taxes, not
yet delinquent) or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;

(b)           statutory
Liens of landlords and Liens of carriers, warehousemen, mechanic, materialmen
and other Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;

(c)           pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

(d)           deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

(e)           judgment
and attachment liens not giving rise to an Event of Default or Liens created by
or existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP;

(f)            easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of business
of Borrower and its Subsidiaries taken as a whole; and

 I-8
 

 

(g)           Liens
in favor of Lender.

“Permitted Investments” means:

(a)           direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States), in each case maturing within one year from the date of
acquisition thereof;

(b)           commercial
paper having the highest rating, at the time of acquisition thereof, of S&P
or Moody’s and in either case maturing within six months from the date of acquisition thereof;

(c)           certificates
of deposit, bankers’ acceptances and time deposits maturing within 180 days of
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
state thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000;

(d)           fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above;

(e)           mutual
funds investing solely in any one or more of the Permitted Investments
described in clauses (a) through (d) above; and

(f)            Hedging
Agreements entered into in the ordinary course of business solely to hedge or
mitigate risks to which Borrower is exposed in the conduct of its business or
management of its liabilities.

“Permitted
Operating Bank Accounts” means (a) Borrower’s payroll bank
account to the extent the amount on therein does not exceed the lesser of
Borrower’s gross payroll amount and $75,000, (b) other bank accounts to the
extent the aggregate amount on deposit therein does not exceed $10,000 in the
aggregate, and (c) an account with each of The Mission Bank and Security Bank
of Kansas City, each maintained in connection with the bond/lease transaction
which occurred in December 2005 between Borrower and the city of Garnett,
Kansas.

“Person”
means any individual, partnership, firm, corporation, association, joint
venture, limited liability company, trust or other entity, or any Governmental
Authority.

“Projections” means Borrower’s
forecasted (a) balance sheets; (b) profit and loss statements; and (c) cash
flow statements; all prepared on a combined basis and otherwise consistent with
the historical financial statements of Borrower, together with appropriate
supporting details and a statement of underlying assumptions which are believed
by Borrower to be reasonable and fair in light of the current condition and past
performance of Borrower and to reflect a reasonable estimate of the projected
balance sheets, results of operations, cash flows and other information
presented therein for five (5) years following the Closing Date.

 I-9
 

 

“Plan” means
any employee pension benefit plan (other than a Multiemployer Plan) subject to
the provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be)
an “employer” as defined in Section 3(5) of ERISA.

“Real Estate”
means all real property owned or leased by Borrower that is intended as
collateral for any Loan.

“Release”
means any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

“Responsible Officer”
means Borrower’s general manager or chief financial officer or such other
Person as may be designated in writing with the prior written consent of
Lender.

“Setoff”
has the meaning set
forth in Section 8.07.

“Subsidiary”
means, with respect to any Person (the “parent”),
any corporation, partnership, joint venture, limited liability company,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, partnership, joint venture, limited liability
company, association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity  or more than 50% of  the ordinary voting power, or in the case of
a partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or (b) that is, as of such date, otherwise
Controlled (as set forth in clause (b) of the definition thereof), by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. Unless otherwise indicated, all references to “Subsidiary”
hereunder means a Subsidiary of Borrower (including Subsidiaries formed after
the Closing Date).

“Supplements”
has the meaning set forth in Section 1.02.

“Tangible Balance Sheet Equity Ratio”
means Tangible Net Worth divided by Borrower’s total assets.

“Tangible Net Worth” means, as of any
date (a) the total assets of Borrower and its Subsidiaries that should be
reflected on Borrower’s consolidated balance sheet as of such date prepared in
accordance with GAAP, after eliminating all amounts properly attributable to minority
interests, if any, in the stock and surplus of Subsidiaries, less (b) the sum of (i) the total liabilities (including
Indebtedness subordinated to the Obligations) of Borrower and its Subsidiaries
that should be reflected on a consolidated balance sheet of Borrower and its
Subsidiaries as of such date prepared in accordance with GAAP, (ii) the amount
of appraisal surplus or any write-up in the book value of any assets resulting
from a revaluation thereof or any write-up in excess of the cost of such assets
acquired reflected on the consolidated balance sheet of Borrower and its
Subsidiaries as of such date prepared in accordance with GAAP, and 

 I-10
 

 

(iii) the net book
amount of all assets of Borrower and its Subsidiaries that should be classified
as intangible assets (including investments in other entities) on a
consolidated balance sheet of Borrower and its Subsidiaries as of such date
prepared in accordance with GAAP.

“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority arising from
payment hereunder or from the execution, delivery, or enforcement of, any Loan
Document, including, without limitation, all present or future stamp or
documentary taxes or any other excise or property taxes.  “Taxes” does not include taxes based on (or
determined solely by) Lender’s net income.

“Third Mortgage Amendment”
means the Third Amendment to Future Advance Mortgage and Security Agreement and
Fixture Financing Statement and Assignment of Leases and Rents between Lender
and Borrower dated the date hereof.

“Total Debt”
means all Indebtedness that should be reflected on Borrower’s consolidated
balance sheet prepared in accordance with GAAP.

“Uniform Commercial Code”
or “UCC” means the Uniform Commercial
Code as in effect from time to time in the State of Minnesota.

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

 

 I-11

 

EXHIBIT
2.01(c)(6)

OPINION
REQUIREMENTS

1.     Borrower
(a) is a limited liability company duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization, (b) has
the power and authority and the legal right to own and operate its property and
to conduct its business.

2.     Borrower
has the power and authority to execute, deliver and perform the Loan Documents
to which it is a party and has taken all necessary organizational action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party.

3.     No
consent, approval or authorization of, or registration or filing with, any
Person (including, without limitation, any Governmental Authority) is required
in connection with the execution, delivery or performance by Borrower of the
Loan Documents.

4.     Borrower
has duly executed and delivered the Loan Documents to which it is a party, and
the Loan Documents constitute, legal, valid and binding obligations of Borrower
enforceable against it in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.

5.     The
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party will not (a) violate the articles of organization or the
operating agreement of Borrower, (b) violate any law applicable to Borrower,
(c) insofar as known to us, violate any determination of an arbitrator or a
court or other Governmental Authority applicable to Borrower, (d) insofar as
known to us, cause a breach or default under any contractual obligation of
Borrower, or (e) result in the creation or imposition of any Lien on any
of the property or revenues of Borrower.

6.     To the
best of our knowledge, no litigation, investigation or proceeding of or before
any Governmental Authority are pending or threatened by or against Borrower, or
against any of its properties or revenues, existing or future (a) with respect
to any Loan Document or any of the transactions contemplated thereby, or (b)
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect.

7.     The rates
of interest and the fees provided for in the Credit Agreement and the
description thereof provided in the Credit Agreement and the Notes do not
violate any laws of the State of Iowa relating to interest and usury, and will
not violate any such law by virtue of any fluctuations in any base, prime,
index or equivalent rate or rates on which interest charges may be based under
such agreements.

8.     Under the
laws of the State of Kansas, the Loan Documents will be governed by the
internal laws of the State of Minnesota, including all such laws relating to
interest and usury.

9.     To the
extent Borrower has rights in the “Collateral” described in the Security
Agreement and Collateral Assignments, the provisions of the Security Agreement
and the Collateral Assignments are sufficient to grant to Lender, a security
interest in all right, title and 

 2.01(c)(6)-1
 

 

interest
of the Borrower in those items and types of Collateral in which a security
interest may be created under Article 8 or Article 9 of the UCC.  To the extent that the Borrower has rights in
the “Collateral” described in the Security Agreement and the Collateral
Assignments and to the extent that such Collateral consists of types of items
of property in which a security interest may be perfected by the filing of
financing statements in the State of Kansas, such security interests have been
perfected by the filing of the Financing Statements in the offices of the
Kansas Secretary of State and the Fixture Financing Statements in the office of
the Recorder in Anderson County, Kansas.

10.   The
Mortgage, as amended by the Third Mortgage Amendment, upon due recordation of
the Third Mortgage Amendment in the office of the Recorder in Anderson County,
Kansas, will constitute in favor of Lender, a valid and continuing lien on the
property described therein as security for the Obligations and will be
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency and other
similar laws, and equity principles of general application, relating to or
affecting the enforcement of creditors’ rights generally.

 

 2.01(c)(6)-2

 

SCHEDULE
6.04

INVESTMENTS

None

 

 6.04-1

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