Document:

Exhibit
10.2

 

EXECUTION VERSION

 

LLC INTEREST PURCHASE AGREEMENT

 

This LLC Interest Purchase Agreement (“Agreement”)
is made as of November 20, 2009, by Illinois Corn Processing
Holdings LLC, a Delaware limited liability company (“Buyer”),
and MGP Ingredients, Inc., a Kansas
corporation (“Seller”).

 

RECITALS

 

Seller desires to sell, and Buyer desires to
purchase, 50% (the “Purchased Interest”) of the issued and outstanding
limited liability company interest of Illinois Corn Processing, LLC, a Delaware
limited liability company (the “Company”), for the consideration and on
the terms set forth in this Agreement.

 

AGREEMENT

 

The parties, intending to be legally bound,
agree as follows:

 

1.                                       DEFINITIONS

 

For purposes of this Agreement, the following
terms have the meanings specified or referred to in this Section 1:

 

“Additional
Capital Investment”—all additional equity
capital contributions and total capital expenditures made by each of Buyer and
Seller pursuant to the LLC Agreement.

 

“Applicable Contract”—any Contract (a) under
which the Company has or may acquire any rights, (b) under which the
Company has or may become subject to any obligation or liability, or (c) by
which the Company or any of the assets owned or used by it is or may become
bound.

 

“Breach”—a “Breach” of a
representation, warranty, covenant, obligation, or other provision of this
Agreement or any instrument delivered pursuant to this Agreement will be deemed
to have occurred if there is or has been (a) any inaccuracy in or breach
of, or any failure to perform or comply with, such representation, warranty,
covenant, obligation, or other provision, or (b) any claim (by any Person)
or other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation, or other provision, and the
term “Breach” means any such inaccuracy, breach, failure, claim, occurrence, or
circumstance.

 

“Business” —the business operations, activities,
Plant assets and practices associated with the production of fuel ethanol, food
grade and industrial grade alcohol and associated by-products at the Plant.

 

“Buyer”—as defined in the first
paragraph of this Agreement.

 

“Buyer Indemnified Persons” —as
defined in Section 10.2.

 

 

“Cleanup” — any environmental
investigation, cleanup, removal, response, remedial action, corrective action,
containment, monitoring, sampling, testing or other remediation or response
actions, including related consulting activities.  The terms “removal,” “remedial,” and “response
action,” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq. (“CERCLA”), the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6973 et seq. (“RCRA”), or
applicable and analogous state statutes, as each has been amended.

 

“Closing” —the consummation of the
transactions contemplated by this Agreement, as provided in Section 2.3.

 

“Closing Date”—the date of this
Agreement, or such other date as may be agreed by the parties.

 

“Company”—as defined in the Recitals
of this Agreement.

 

“Consent”—any approval, consent,
ratification, waiver, or other authorization (including any Governmental
Authorization).

 

“Contemplated Transactions”—all of the
transactions contemplated by this Agreement, including:

 

(a)                                  the sale of the
Purchased Interest by Seller to Buyer;

 

(b)                                 the execution
and delivery at Closing of the LLC Agreement, the Ethanol Off-Take Agreement,
the Food Grade Alcohol Off-Take Agreement and the Loan Documents;

 

(c)                                  the performance
by Buyer and Seller of their respective covenants and obligations under this
Agreement; and

 

(d)                                 Buyer’s
acquisition and ownership of the Purchased Interest.

 

“Contract”—any agreement, contract,
obligation, promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding.

 

“Contribution” —the contribution of
assets made by the Seller to the Company pursuant to the Contribution
Agreement.

 

“Contribution Agreement” —that certain
Contribution Agreement dated this date between Seller and the Company whereby
Seller contributed the Plant and related assets to the Company immediately
prior to the Closing under this Agreement.

 

“Damages”—as defined in Section 10.2.

 

“Disclosure Letter”—the disclosure
letter delivered by Seller to Buyer concurrently with the execution and
delivery of this Agreement.

 

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“Encumbrance”—any charge, claim,
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal, security interest, mortgage,
indenture, deed of trust, easement, assessment, lease, agreement, license,
covenant, levy, or other encumbrance or restriction of any kind, or any
conditional sale agreement, title retention agreement or other agreement to
give any of the foregoing, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.

 

“Environment”—soil, land surface or
subsurface strata, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.

 

“Environmental, Health, and Safety
Liabilities”—any costs, damages, expenses, liabilities, obligations, fines,
penalties, judgments, awards, settlements, claims, demands, in or other
responsibility arising from or under Environmental Law or Occupational Safety
and Health Law and consisting of or relating to:

 

(a)                                  any
environmental, health, or safety matters or conditions (including on-site or
off-site contamination, occupational safety and health, and regulation of
chemical substances or products);

 

(b)                                 legal or
administrative proceedings under Environmental Law or Occupational Safety and
Health Law;

 

(c)                                  any Cleanup;

 

(d)                                 financial
responsibilities under any Environmental Law or Occupational Safety and Health
Law;

 

(e)                                  any natural
resource damages; or

 

(f)                                    any other
compliance, corrective, investigative, or remedial measures required under
Environmental Law or Occupational Safety and Health Law.

 

“Environmental Law”—any Legal
Requirement that requires or relates to:

 

(a)                                  advising
appropriate authorities, employees, and the public of intended or actual
releases of pollutants or hazardous substances or materials, violations of
discharge limits, or other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have significant impact
on the Environment;

 

(b)                                 preventing or
reducing to acceptable levels the release of pollutants or hazardous substances
or materials into the Environment;

 

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(c)                                  reducing the quantities,
preventing the release, or minimizing the hazardous characteristics of wastes
that are generated;

 

(d)                                 assuring that
products are designed, formulated, packaged, and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;

 

(e)                                  protecting
resources, species, or ecological amenities;

 

(f)                                    reducing to
acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful substances;

 

(g)                                 cleaning up
pollutants that have been released, preventing the threat of release, or paying
the costs of such clean up or prevention;

 

(h)                                 making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment, or permitting self-appointed representatives
of the public interest to recover for injuries done to public assets; or

 

(i)                                     any legal
requirements related to CERCLA, RCRA or applicable and analogous state
statutes.

 

“ERISA”—the Employee Retirement Income
Security Act of 1974 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.

 

“Ethanol Off-Take Agreement”—that
certain Marketing Agreement dated the Closing Date between the Company and
SEACOR Energy Inc., an affiliate of Buyer, with respect to ethanol produced at
the Plant.

 

“Excluded Equipment”—the equipment
located in the wheat starch and wheat protein plant that is part of the
facilities at the Plant, which shall remain the sole property of MGPI.

 

“Food Grade Alcohol Off-Take Agreement”—that
certain Marketing Agreement dated the Closing Date between the Company and
Seller with respect to food-grade and industrial-grade alcohol produced at the
Plant.

 

“Governmental Authorization”—any
approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.

 

“Governmental Body”—any:

 

(a)                                  nation, state,
county, city, town, village, district, or other jurisdiction of any nature;

 

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(b)                                 federal, state,
local, municipal, foreign, or other government;

 

(c)                                  governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal);

 

(d)                                 multi-national
organization or body; or

 

(e)                                  body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.

 

“Hazardous Activity”—the distribution,
generation, handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer, transportation, treatment,
or use (including any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about, or from the Plant or any part thereof into the
Environment, and any other act, business, operation, or thing that increases
the danger, or risk of danger, or poses a risk of harm to persons or property
on or off the Plant, or that may affect the value of the Plant or the Company.

 

“Hazardous Materials”—any waste or
other substance that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or
a contaminant under or pursuant to any Environmental Law, including any
admixture or solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, and asbestos or
asbestos-containing materials.

 

“Indemnified Party”—as defined in Section 10.8(a).

 

“Indemnifying Party”—as defined in Section 10.8(a).

 

“Intellectual
Property” —all intellectual property, including all:

 

(a)                                  patents,
applications for patents, and rights to apply for patents in any part of the
world;

 

(b)                                 copyrights,
design rights, topography rights, Internet domain name registrations, and
database rights whether registered or unregistered;

 

(c)                                  trademark and
service mark applications, registered trademarks and service marks, registered
designations of origin, registered designations of geographic origin,
refilings, renewals and reissues of the foregoing, unregistered trademarks and
service marks, including common law trademarks and service marks, rights to
trade dress and company names, in each case with any and all associated
goodwill; and

 

(d)                                 all rights in
respect of any Know How.

 

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“IRC”—the Internal Revenue Code of
1986 or any successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.

 

“IRS”—the United States Internal
Revenue Service or any successor agency, and, to the extent relevant, the
United States Department of the Treasury.

 

“Knowledge”—an individual will be
deemed to have “Knowledge” of a particular fact or other matter if such
individual is actually aware of such fact or other matter.  A Person (other than an individual) will be
deemed to have “Knowledge” of a particular fact or other matter if any
individual who is serving as the President, Chief Financial Officer or Chief
Operating Officer of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.

 

“Know How” —trade secrets and
confidential business information including details of supply arrangements,
customer lists and pricing policy; sales targets, sales statistics, market
share statistics, marketing surveys and reports; unpatented technical and other
information that is not publicly available including inventions, discoveries,
processes and procedures, ideas, concepts, formulae, notebooks, specifications,
procedures for experiments and tests and results of experimentation and
testing; information comprised in software and materials; together with all
common law or statutory rights protecting the same and any similar or analogous
rights to any of the foregoing whether arising or granted under any Laws.

 

“Known Environmental Condition”—any
Hazardous Activity or Release of Hazardous Materials actually or constructively
known by any current or former officer, director, employee or agent of Seller
at the time of Closing, or referenced in any documents maintained by or
provided to Seller or any Governmental Body, including, but not limited to
those documents posted in the electronic data room created in connection with
the transaction contemplated by this Agreement and the Enercon Phase I and II
Environmental Site Assessments, each dated November 18, 2009.

 

“Law” —any statute, law, ordinance,
decree, order, injunction, rule, directive, or regulation of any Governmental
Body or quasi-governmental authority, and includes rules and regulations
of any regulatory or self-regulatory authority compliance with which is
required by any of the foregoing.

 

“Legal Requirement”—any federal,
state, local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.

 

“LLC Agreement”—that certain Limited
Liability Company Agreement of the Company dated the Closing Date between Buyer
and Seller.

 

“Loan Agreements” — collectively, (i) the
Term Loan Agreement and (ii) until refinancing with a third party, the
Revolving Loan Agreement.

 

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“Loan Documents”— the Loan Agreements
and each note, mortgage, security agreement, instrument, agreement and
certificate delivered to the lender pursuant to the Loan Agreements.

 

“Occupational Safety and Health Law”—any
Legal Requirement designed to provide safe and healthful working conditions and
to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.

 

“Order”—any award, decision,
injunction, judgment, order, ruling, subpoena, or verdict entered, issued,
made, or rendered by any court, administrative agency, or other Governmental
Body or by any arbitrator.

 

“Organizational Documents”—(a) the
articles or certificate of formation and the limited liability company
agreement or operating agreement of a limited liability company; (b) the
articles or certificate of incorporation and the bylaws of a corporation; (c) the
partnership agreement and any statement of partnership of a general
partnership; (d) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (e) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (f) any amendment to any of the foregoing.

 

“Permitted Encumbrances”—(i) any
liens for current taxes and, to the extent set forth in Part 3.4(B) of
the Disclosure Letter, special assessments, if any, not yet due; (ii) existing
Encumbrances that are set forth in Part 3.4(B) of the Disclosure
Letter; (iii) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of the Company, and (iv) zoning
laws and other land use restrictions that do not impair the present use of the
property subject thereto.

 

“Person”—any individual, corporation
(including any non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Body.

 

“Plant”— the alcohol production
facility acquired by the Company from Seller located at 1301 S. Front Street,
Pekin, Illinois 61554 (as more particularly described on the attached Exhibit A),
including all related real estate, improvements, equipment and other real and
personal property at such location, other than the Excluded Equipment.

 

“Proceeding”—any action, arbitration,
audit, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or
arbitrator.

 

“Purchased Interest”—as defined in the
Recitals of this Agreement.

 

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“Reasonable Efforts”—the efforts that
a prudent Person desirous of achieving a result would use in similar
circumstances to ensure that such result is achieved as expeditiously as
possible; provided, however, that an obligation to
use Reasonable Efforts under this Agreement does not require the Person subject
to that obligation to take actions that would result in a materially adverse
change in the benefits to such Person of this Agreement and the Contemplated
Transactions.

 

“Related Person”—with respect to a
particular individual:

 

(a)                                  each other
member of such individual’s Family;

 

(b)                                 any Person that
is directly or indirectly controlled by such individual or one or more members
of such individual’s Family;

 

(c)                                  any Person in
which such individual or members of such individual’s Family hold (individually
or in the aggregate) a Material Interest; and

 

(d)                                 any Person with
respect to which such individual or one or more members of such individual’s
Family serves as a director, officer, partner, executor, or trustee (or in a
similar capacity).

 

With respect to a specified Person other than
an individual:

 

(e)                                  any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person;

 

(f)                                    any Person that
holds a Material Interest in such specified Person;

 

(g)                                 each Person
that serves as a director, officer, partner, executor, or trustee of such
specified Person (or in a similar capacity);

 

(h)                                 any Person in
which such specified Person holds a Material Interest;

 

(i)                                     any Person with
respect to which such specified Person serves as a general partner or a trustee
(or in a similar capacity); and

 

(j)                                     any Related
Person of any individual described in clause (b) or (c).

 

For purposes of this definition, (a) the
“Family” of an individual includes (i) the individual, (ii) the
individual’s spouse, (iii) any other natural person who is related to the
individual or the individual’s spouse within the second degree, and (iv) any
other natural person who resides with such individual, and (b) “Material
Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of voting securities or
other voting interests representing at least 10% of the outstanding voting
power of a Person or equity securities or other equity 

 

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interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.

 

“Release”—any spilling, leaking,
emitting, discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or unintentional.

 

“Representative”—with respect to a
particular Person, any director, officer, employee, agent, consultant, advisor,
or other representative of such Person, including legal counsel, accountants,
and financial advisors.

 

“Revolving Loan Agreement”—that
certain Revolving Loan and Security Agreement dated the Closing Date between
SEACOR Capital Corporation (an affiliate of Buyer), as lender, and the Company,
as borrower, whereby SEACOR Capital Corporation is providing up to $20 million
in revolving credit facility financing secured by substantially all of the
Company’s assets.

 

“Securities Act”—the Securities Act of
1933 or any successor law, and regulations and rules issued pursuant to
that Act or any successor law.

 

“Seller”—as defined in the first
paragraph of this Agreement.

 

“Subsidiary”—with respect to any
Person (the “Owner”), any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation’s or other Person’s board of directors or similar governing body,
or otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred) are
held by the Owner or one or more of its Subsidiaries.

 

“Tax” or “Taxes” —(i) any
and all federal, state, provincial, local, municipal and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
of any kind, including taxes or other charges based upon or measured by gross
receipts, income, profits, sales, capital, use and occupation, admission,
entertainment and value added, goods and services, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, personal property,
excise, duty, customs, Pension Benefit Guaranty Corporation premiums and real
estate taxes, together, in each case, with all interest, penalties and
additions imposed with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of
being a member of an affiliated, consolidated, combined or unitary group for
any period; and (iii) any liability for the payments of the amounts of the
types described in clause (i) or (ii) as a result of being a
transferee of, or a successor in interest to, any Person or as a result of an
express or implied obligation to indemnify any Person (other than an
indemnification obligation arising under this Agreement).

 

“Tax Return”—any return (including any
information return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the 

 

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determination, assessment,
collection, or payment of any Tax, including Taxes payable by, pursuant to or
in connection with employee benefit plans or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.

 

“Term Loan Agreement”—that certain
Term Loan and Security Agreement dated the Closing Date between SEACOR Capital
Corporation, as lender, and the Company, as borrower, whereby SEACOR Capital
Corporation is providing $10 million in term loan financing secured by
substantially all of the Company’s assets.

 

“Threat of Release”—a substantial
likelihood of a Release that may require action in order to prevent or mitigate
damage to the Environment that may result from such Release.

 

“Third Person”—as defined in Section 10.8(b).

 

“Third Person Claim”—as defined in Section 10.8(b).

 

“Threatened”—a claim, Proceeding,
dispute, action, or other matter will be deemed to have been “Threatened” if
any demand or statement has been made (orally or in writing) or any notice has
been given (orally or in writing), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.

 

“Transaction Taxes”—as defined in Section 2.4(d).

 

“Unknown Environmental Condition” —any
Hazardous Activity or Release of Hazardous Materials which is not a Known
Environmental Condition and which originated (in whole or in part) at any time
prior to Closing.

 

2.                                       SALE AND TRANSFER OF PURCHASED UNITS; CLOSING

 

2.1.                              PURCHASED UNITS

 

Subject to the terms and conditions of this
Agreement, at the Closing, Seller will sell, assign, convey and transfer the
Purchased Interest to Buyer, and Buyer will purchase, acquire, and accept from
Seller all of Seller’s right, title and interest in and to the Purchased
Interest.

 

2.2.                              PURCHASE PRICE

 

The consideration that Buyer will pay to
Seller for the Purchased Interest will be Fifteen Million Dollars ($15,000,000)
(the “Purchase Price”), payable in immediately available funds at the
Closing.

 

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2.3.                              CLOSING

 

The Closing will take place at the offices of
the Company at 1301 S. Front Street, Pekin, Illinois 61554, at 10:00 a.m.
Central Time on the Closing Date. Subject to the provisions of Section 9,
failure to effectuate the Closing on the date and time and at the place
determined pursuant to this Section will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.

 

2.4.                              CLOSING OBLIGATIONS

 

At the Closing:

 

(a)                                  Seller will
deliver to Buyer:

 

(i)                                     an LLC Interest
Assignment transferring the Purchased Interest to Buyer, free and clear of all
Encumbrances;

 

(ii)                                  the LLC
Agreement, duly executed by Seller;

 

(iii)                               the Food Grade
Alcohol Off-Take Agreement, duly executed by Seller;

 

(iv)                              a certificate
executed by Seller representing and warranting to Buyer that each of Seller’s
representations and warranties in this Agreement was accurate in all respects
as of the date of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date, and further certifying that,
except as may be set forth in Buyer’s closing certificate delivered pursuant to
Section 2.4(b)(v), Seller has no Knowledge of any Breach by Buyer of any
of its representations, warranties and covenants set forth in this Agreement as
of the Closing Date; and

 

(v)                                 such other
customary documents, instruments or certificates as shall be reasonably
required by Buyer.

 

(b)                                 Buyer will
deliver or cause its affiliates to deliver to Seller:

 

(i)                                     the Purchase Price
by wire transfer of immediately available funds;

 

(ii)                                  the LLC
Agreement, duly executed by Buyer;

 

(iii)                               the Ethanol
Off-Take Agreement, duly executed by SEACOR Energy Inc.;

 

(iv)                              the Loan
Documents, duly executed by SEACOR Capital Corporation;

 

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(v)                                 a certificate
executed by Buyer to the effect that, except as otherwise stated in such
certificate, each of Buyer’s representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate
in all respects as of the Closing Date as if made on the Closing Date, and
further certifying that, except as may be set forth in Seller’s closing
certificate delivered pursuant to Section 2.4(a)(iv), Buyer has no
Knowledge of any Breach by Seller of any of its representations, warranties and
covenants set forth in this Agreement as of the Closing Date; and

 

(vi)                              such other
customary documents, instruments or certificates as shall be reasonably
required by Seller.

 

(c)                                  Seller will
cause the Company to deliver to Buyer and Seller, as applicable:

 

(i)                                     the Food Grade
Alcohol Off-Take Agreement, duly executed by the Company;

 

(ii)                                  the Ethanol
Off-Take Agreement, duly executed by the Company;

 

(iii)                               the Loan
Documents, duly executed by the Company; and

 

(iv)                              such other
customary documents, instruments or certificates as shall be reasonably
required by Buyer and Seller, as applicable.

 

(d)                                 Any sales, use,
transfer, documentary, registration, stamp, duties, gains, recording, and other
similar taxes (including related penalties (civil or criminal), additions to
tax and interest) imposed by any Governmental Body with respect to the
transactions contemplated by this Agreement (“Transaction Taxes”) shall
be the sole obligation of the Seller. 
Seller shall provide written notice to Buyer of the payment of and/or a
written response to Buyer upon any request for information regarding the status
of any Transaction Taxes.  Seller shall
be responsible for (i) administering the payment of such Transaction
Taxes, (ii) defending or pursuing any proceedings related thereto, and (iii) paying
any expenses related thereto.

 

2.5.                              PURCHASE OPTION

 

Between the second and fifth
anniversaries of the Closing Date, Buyer may give Seller written notice of its
election to purchase for cash additional Interests (as defined in the LLC
Agreement) from Seller up to an aggregate of 20% of all issued and outstanding
Interests.  The purchase price payable
for such Interests shall be the percentage of such Interests multiplied by the
greater of (i) four times the immediately proceeding twelve months EBITDA
of the Company or (ii) $40 million, adjusted for pro-rata Additional
Capital Investment.

 

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3.                                       REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as
follows:

 

3.1.                              ORGANIZATION AND GOOD STANDING

 

The Company is a limited liability company
duly organized, validly existing, and in good standing under the laws of
Delaware, with all requisite entity power and authority to conduct the
Business, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. The Company
is duly qualified to do business as a foreign limited liability company and is
in good standing under the laws of Illinois, the only jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification.

 

3.2.                              AUTHORITY; NO CONFLICT

 

(a)                                  This Agreement
constitutes the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to the application of any
laws relating to bankruptcy, insolvency or the rights of creditors generally.
Upon the execution and delivery by Seller of the documents required to be
executed and delivered by it in Section 2.4 (collectively, the “Seller
Closing Documents”), the Seller Closing Documents will constitute the
legal, valid, and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, subject to the application of any laws
relating to bankruptcy, insolvency or the rights of creditors generally. Seller
has the absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and the Seller Closing Documents and to
perform its obligations under this Agreement and the Seller Closing Documents,
subject to the application of any laws relating to bankruptcy, insolvency or
the rights of creditors generally.

 

(b)                                 The Company has
the absolute and unrestricted right, power, authority, and capacity to execute
and deliver the documents required to be executed and delivered by it in Section 2.4
(collectively, the “Company Closing Documents”) and to perform its
obligations under the Company Closing Documents, subject to the application of
any laws relating to bankruptcy, insolvency or the rights of creditors
generally.

 

(c)                                  Except as set
forth in Part 3.2 of the Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):

 

(i)                                     contravene,
conflict with, or result in a violation of (A) any provision of the
Organizational Documents of the Company or Seller, or (B) any resolution
adopted by the member of the Company or the board of directors or shareholders
of Seller;

 

13

 

(ii)                                  contravene,
conflict with, or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which the Company or Seller, or any of the assets owned or used by the
Company, may be subject;

 

(iii)                               contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or any of the assets
owned or used by, the Company;

 

(iv)                              contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; or

 

(v)                                 result in the
imposition or creation of any Encumbrance upon or with respect to any of the
assets owned or used by the Company or the Purchased Interest.

 

(d)                                 Except as set
forth in Part 3.2 of the Disclosure Letter, neither Seller nor the Company
is or will be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.

 

3.3.                              CAPITALIZATION

 

Seller is and will be on the Closing Date the
record and beneficial sole owner and holder of the Purchased Interest, free and
clear of all Encumbrances. With the exception of the Purchased Interest and the
50% of limited liability company interest retained by Seller, there are no
other outstanding limited liability company interests issued and outstanding of
the Company.  Except for the Company’s
existing Limited Liability Company Agreement dated October 5, 2009 and the
Contribution Agreement, there are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities of the Company.

 

3.4.                              TITLE TO PROPERTIES; ENCUMBRANCES

 

(a)                                  Part 3.4
of the Disclosure Letter contains a complete and accurate list of all material
real property, leaseholds, licenses or other interests therein owned by the
Company. Seller has delivered or made available to Buyer copies of the deeds
and other instruments (as recorded) by which the Company acquired such real
property and interests, and copies of all title insurance policies, opinions, abstracts,
and surveys in the possession of Seller or the Company and 

 

14

 

relating
to such property or interests.  Except
with respect to Permitted Encumbrances, the Company is the sole and exclusive
owner of all right, title and interest in and to all of the real property
comprising the Plant.  Except with
respect to the steam boiler at the Plant or the Permitted Encumbrances, the
Company is the sole and exclusive owner of all right, title and interest in and
to or has the lawful right to use all of the personal and other property
(whether tangible or intangible) located at the Plant.  Except for any investment needed to acquire
inventory and other materials and parts necessary to restart the Plant, the
Plant contains all equipment necessary for the Company to conduct the
Business.  Except for Permitted
Encumbrances, all properties and assets of the Company are free and clear of
all Encumbrances and are not, in the case of real property, subject to any
leases, licenses, rights to acquire or occupy, covenants, agreements,
encumbrances, rights of way, building use restrictions, exceptions, variances,
reservations, limitations or other Encumbrances of any nature, recorded and, to the Knowledge of the Seller, unrecorded.  Except as set
forth in Part 3.4 of the Disclosure Letter, the Company does not lease (as the lessor), sublease or permit any third
party to occupy or use the Plant.

 

(b)                                 Except for “cap and trade” carbon emission legislation, to the Knowledge of
the Seller, there is no pending, proposed or Threatened change in any code,
ordinance, regulation, standard or zoning classification which would, or may
reasonably be expected to have, an material adverse effect on the Plant.

 

(c)                                  There is no pending or, to the Knowledge of the Seller, Threatened
condemnation proceeding against the Plant. 
To the Knowledge of the Seller, no part of any improvements on the Plant
encroaches upon any property adjacent thereto or upon any easement, nor is
there any encroachment or overlap upon the Plant other than Permitted
Encumbrances.

 

(d)                                 Except as set forth in Part 3.4 of the Disclosure Letter: (i) the Plant is not located within any flood
plain, flood area, wetlands or conservation area or subject to any similar type
of restriction for which any permits necessary to the use thereof by the
Company have not been obtained; (ii) to the Knowledge of the Seller,
neither the current use of the Plant nor the operations of the Company,
violates (A) any instrument of record, any Permitted Encumbrances, any
agreement of the Company, or any other agreement affecting the Plant or (B) any
applicable Legal Requirements; (iii) all utilities serving the Plant are
sufficient and have the capacity to conduct the Business; (iv) other than
commitments to pay property taxes, there are no development agreements or
similar agreements (oral or written) with or commitments to governmental
authorities, agencies, utilities or quasi-governmental entities with respect to
the Real Property or any portion thereof, including any agreement which imposes
an obligation upon the Company to make any contribution or dedication of money
or land or to construct, install or maintain any improvements of a public or
private nature on or off the Plant, or which requires the Company to maintain
certain employment levels at the Plant; (v) the Plant has reasonable
access to public roads and utilities; and (vi) to the Knowledge of the
Seller, the Plant and its continued use, 

 

15

 

occupancy and operation as currently used, occupied and
operated, does not in any material respect constitute a nonconforming use under
any applicable building, zoning, subdivision and other land use and similar
laws, regulations and ordinances.

 

(e)                                  To the Knowledge of the Seller, there has been no cleanup performed at the
Plant that would entitle a third party to a lien for reimbursement of its
cleanup costs.

 

3.5.                              CONDITION AND SUFFICIENCY OF ASSETS

 

The buildings, plants, structures and
equipment of the Plant were structurally sound and in good operating condition
and repair at the time the Plant was shutdown in February 2009, ordinary
wear and tear excepted.  The buildings,
plants, structures and equipment of the Plant are structurally sound and in good
operating condition and repair in light of the current Plant shutdown.  The building, plants, structures and
equipment of the Company are sufficient for the conduct of the Business after
the Closing in the manner contemplated by the LLC Agreement.

 

3.6.                              TAXES

 

Except as set forth in Part 3.6 of the
Disclosure Letter:

 

(a)                                  The Company is
a newly-formed entity and has filed no tax returns.  The Seller has timely filed all Tax Returns
required to be filed by it with respect to the Business.  All such Tax Returns, as the same may have
been amended, are true, complete, and correct. 
The Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return relating to the Business.

 

(b)                                 All Taxes
(whether or not reflected on any Tax Return) owed by the Seller with respect to
the Business have been timely and fully paid.

 

(c)                                  There are no
audits or examinations of any Tax Returns of the Seller relating to the
Business, pending or Threatened.  The
Seller is not a party to any action or proceeding by any Tax authority for the
assessment or collection of Taxes of the Business, nor has such event been
asserted or Threatened.

 

(d)                                 The Seller,
with respect to the Business, has timely and properly withheld and paid to the
proper Tax authorities all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, including, but not limited to,
amounts required to be withheld under Sections 1441 and 1442 of the IRC (or
similar provisions of state, local or foreign Law).

 

(e)                                  The Seller,
with respect to the Business, has not waived any statutory period of
limitations for the assessment of any Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency other than in the 

 

16

 

case
of any such waivers or extensions in respect of an assessment or deficiency of
Tax the liability of which has been satisfied or settled.

 

(f)                                    No claim has
been made by a Tax authority in a jurisdiction where the Seller, with respect
to the Business, does not file Tax Returns that the Business is or may be
subject to taxation by that jurisdiction.

 

(g)                                 None of the
assets of the Business (i) is required to be treated as being owned by any
other person pursuant to the so-called safe harbor lease provisions of former Section 168(f)(8) of
IRC, (ii) secure any debt the interest on which is tax-exempt under Section 103(a) of
the IRC, (iii) is tax-exempt use property within the meaning of Section 168(h) of
the IRC, or (iv) is leased pursuant to a section 467 rental agreement
within the meaning of Section 467 of the IRC.

 

(h)                                 The Seller,
with respect to the Business, has not agreed to or is required to make any
adjustment pursuant to Section 481(a) of the IRC by reason of a
change in accounting method initiated by the Business and the Seller, with
respect to the Business, has no knowledge that the IRS has proposed any such
adjustment or change in accounting method.

 

(i)                                     Neither the
Seller, with respect to the Business, nor the Company has any obligation under
any Tax indemnity, Tax allocation or sharing agreement or arrangement, and
after the Closing Date, neither the Seller, with respect to the Business, nor
the Company will be a party to, bound by or have any obligation under any Tax
allocation or Tax sharing agreement or arrangement, or have any liability
thereunder, for amounts due in respect of periods prior to and including the
Closing Date.

 

(j)                                     There are no
Liens related to Taxes on any of the assets of the Business, other than for
current Taxes not yet due and payable.

 

(k)                                  The Company is
not a party to any agreement, contract, arrangement or plan that has resulted,
or would result, in a payment that would not be fully deductible as a result of
Section 280G of the IRC or any similar provision of state, local or
foreign Law.  There is no agreement that
binds the Company to be liable for an amount based on an excise tax to the
recipient of such payment pursuant to Section 4999 of the IRC.

 

(l)                                     The Company
will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) “closing agreement”
as described in Section 7121 of the IRC (or any corresponding or similar
provision of state, local or foreign income Tax Law) executed on or prior to
the Closing Date; (ii) installment sale or open transaction disposition
made on or prior to the Closing Date; or (iii) prepaid amount received on
or prior to the Closing Date.

 

17

 

(m)                               None of the
property or assets of the Business has been financed with or directly or
indirectly secures any industrial revenue bonds or debt the interest on which
is tax-exempt under Section 103(a) of the IRC.  The Seller, with respect to the Business, is
not a borrower or guarantor of any outstanding industrial revenue bonds, and is
not a principal user or related person to any principal user (within the
meaning of Section 144(a) of the IRC) of any property that has been
financed or improved with the proceeds of any industrial revenue bonds.

 

(n)                                 The Company,
since its organization, has been a disregarded entity for federal, state and
local income Tax purposes.

 

(o)                                 The Company is
not a party to any joint venture, partnership or other arrangement or contract
that could be treated as a partnership for federal income tax purposes and none
of the Company assets are a partnership interest or other arrangement or
contract that could be treated as a partnership for federal income tax
purposes.

 

(p)                                 The Company
does not have any liability for the Taxes of any Person as a transferee or
successor, by contract or otherwise.

 

(q)                                 The Seller,
with respect to the Business, is not liable for Taxes (other than any accrued
Taxes not yet due and payable) to any foreign taxing authority and do not have
and has not had a permanent establishment in any foreign country, as defined in
any applicable tax treaty or convention between the United States and such
foreign country.

 

(r)                                    True, correct
and complete copies of all income Tax Returns, tax examination reports and
statements of deficiencies assessed against, or agreed to of the Seller, with
respect to the Business, with respect to the five (5) taxable years prior
to December 31, 2008 with the Internal Revenue Service or any taxing
authority have been delivered to Purchaser.

 

3.7.                              COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

 

(a)                                  Except as set
forth in Part 3.7 of the Disclosure Letter:

 

(i)                                     The Plant is
not in violation of any material Legal Requirement that is applicable to it or
to its operation, subject to obtaining all Governmental Authorizations required
after transfer of the Plant to the Company; and

 

(ii)                                  Seller has not
received, at any time since January 1, 2008, any written notice or other
communication from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of 

 

18

 

the
Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.

 

(b)                                 Part 3.7
of the Disclosure Letter contains a complete and accurate list of each
Governmental Authorization that is held by the Company or that otherwise
relates to the Plant.  Part 3.7 of
the Disclosure Letter specifically identifies and distinguishes each such
Governmental Authorization required to operate the Plant that is not held by
the Company as of the date hereof.  The
Governmental Authorizations listed in Part 3.7 of the Disclosure Letter
collectively constitute all of the Governmental Authorizations necessary to
permit the Company (i) to lawfully conduct and operate the Business in the
manner the Company currently conducts and operates the Business (and in the
manner the Company anticipates conducting and operating the Business) and (ii) to
own and use the Plant in accordance with Seller’s historical use.

 

3.8.                              LEGAL PROCEEDINGS; ORDERS

 

(a)                                  There is no
pending Proceeding:

 

(i)                                     that has been
commenced by or against the Company or Seller (with respect to the Business) or
that otherwise relates to or may affect the business of, or any of the assets,
including the Plant, owned or used by, the Company; or

 

(ii)                                  that
challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.

 

(b)                                 Except as set
forth in Part 3.8 of the Disclosure Letter, there is no Order to which any
of the Company or Seller (with respect to the Business), or any of the assets,
including the Plant, owned or used by the Company are subject.

 

3.9.                              NEWLY-FORMED ENTITY

 

The Company is a newly-formed entity that has
no Contracts or other obligations with respect to the Plant, except as created
or specifically incurred in connection with the Contemplated Transactions or as
described in the last sentence of Section 3.3.

 

3.10.                        ENVIRONMENTAL MATTERS

 

Except as set forth in Part 3.10 of the
Disclosure Letter:

 

(a)                                  The Plant is,
and at all times has been, in full compliance with all Environmental Laws.  Seller has properly obtained and is in
compliance with all Governmental Authorizations and has properly made all
filings with and submissions to any Governmental Body or other authority
required pursuant to any Environmental Law. 
No deficiencies have been asserted by any such Governmental Body with
respect to such items.

 

19

 

(b)                                 Neither Seller
nor the Company has received any actual or Threatened order, notice, notification, demand, request for information,
citation, summons or order or other communication from (i) any
Governmental Body or private citizen, (ii) the current or prior owner or
operator of the Plant, or (iii) any Person of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or
Threatened obligation to undertake or bear the cost of any Environmental,
Health, and Safety Liabilities with respect to the Plant.  In addition,
no complaint has been filed, no penalty has been assessed, and no
investigation, action, claim, suit, proceeding or review (or any reasonable
basis therefor) is pending or, to the Knowledge of the Seller or the Company,
is Threatened by any Governmental Authority or other Person relating to the
Company or the Plant relating to or arising out of any Environmental Law or
relating to any Environmental, Health, and Safety Liabilities.

 

(c)                                  There has been
no Release of any Hazardous Materials on, beneath, above, into, at or from the
Plant or into the Environment.

 

(d)                                 There are no Environmental, Health, and Safety
Liabilities regarding or relating to the Plant
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise arising under or relating to any Environmental Law or
any Hazardous Materials and there is no condition, situation or set of
circumstances that could reasonably be expected to result in or be the basis for
any Environmental, Health, and Safety Liabilities regarding or relating
to the Plant.

 

(e)                                  No Hazardous Materials are present in, on, under or at
the Plant.

 

(f)                                    Neither Seller nor the Company has transported, stored, used, manufactured,
disposed of, sold, released or exposed its employees or any other Person to any
Hazardous Materials, or arranged for the disposal, discharge, storage or
release of any Hazardous Materials, and does not currently engage in any of the
foregoing activities, in violation of any applicable Environmental Law.

 

(g)                                 There are and have been no asbestos fibers or materials, lead,
polychlorinated biphenyls, or underground storage tanks or related piping on or
beneath the Plant.

 

(h)                                 There has been no environmental investigation, study, audit, test, report,
review or other analysis conducted regarding the Plant or any part thereof that
identifies any actual or potential Hazardous Materials, Release, or
Environmental, Health, and Safety Liabilities regarding or related to the Plant
that has not been provided to the Buyer prior to the date of this Agreement.

 

(i)                                     Neither Seller
nor the Company has ever received from any Person any notice of, nor does
Seller or the Company have any Knowledge of, any past, present or anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions, agreements or plans that could: (i) interfere with, 

 

20

 

prevent,
or increase the costs of compliance or continued compliance with any
Environmental Law or any renewal or transfer thereof of any Environmental Law; (ii) make
more stringent any restriction, limitation, requirement or condition under any
permit or any other Environmental Law in connection with the ownership, use, or
operation at or on the Plant; or (iii) give rise to any Environmental,
Health, and Safety Liabilities or form the basis of any civil, criminal or
administrative action, suit, summons, citation, complaint, claim, notice,
demand, request, judgment, order, lien, proceeding, hearing, study, inquiry or
investigation involving the Plant or Seller, based on or related to any
Environmental Law or to the presence, manufacture, generation, refining,
processing, distribution, use, sale, treatment, recycling, receipt, storage,
disposal, transport, handling, emission, discharge, release or threatened
release of any Hazardous Materials.

 

(j)                                     The Plant and
all of its current and previous conditions on and uses of, do not cause and
have not caused any Environmental, Health, and Safety Liabilities or any other
liability to be incurred by Seller under any present and future Environmental
Law.

 

(k)                                  No expenditure
will be required in order for Seller or the Company to comply with any
Environmental Law in effect at the time of the Closing in connection with the
operation or continued operation of the Plant in a manner consistent with the
prior, current or anticipated ownership, use, or operation thereof by Seller or
the Company.

 

3.11.                        INTELLECTUAL PROPERTY

 

(a)                                  Part 3.11
of the Disclosure Letter accurately describes and lists all (i) Intellectual
Property owned by the Company and (ii) all Intellectual Property licensed
by the Company and material to the Business (the “Business IP”).

 

(b)                                 Except as set
forth in Part 3.11 of the Disclosure Letter:

 

(i)                                     The Company is
the sole owner of the Business IP identified as owned by it, free and clear of
all Liens except as provided in the Loan Documents, and all such items are
valid and subsisting;

 

(ii)                                  The Business IP
is valid and enforceable and encompasses all Intellectual Property rights
necessary for the operation of the Business as proposed to be conducted;

 

(iii)                               The Company
(and prior to the Contribution, the Seller) and, to the Seller’s Knowledge, the
owners of the Business IP licensed to the Company have taken all actions
necessary to maintain and protect the Business IP;

 

(iv)                              There has been
no claim made or, to the Seller’s Knowledge, Threatened against the Seller or
the Company asserting the 

 

21

 

invalidity,
misuse or unenforceability of any of the Business IP or challenging the Company’s
(or the Seller’s prior to the Contribution) right to use or ownership of any of
the Business IP, and there are no valid grounds for any such claim or
challenge;

 

(v)                                 No loss of any
of the Business IP is pending or, to the Seller’s Knowledge, Threatened;

 

(vi)                              The
consummation of the Contemplated Transactions will not alter, impair or
extinguish the Company’s rights in and to any of the Business IP, except as
provided in the Loan Documents;

 

(vii)                           There exists no
restriction on the Company’s use of the Business IP, or on the transfer of any
rights of the Company in and to any of the Business IP, and, except as provided
in the Loan Documents or the Food Grade Off-Take Agreement, the Company has the
right to use each item of Business IP without obligations to third parties;

 

(viii)                        To Seller’s
Knowledge, the conduct of the Business and operations of the Company and the
ownership, production, purchase, sale, licensing and use of the Company’s
products do not, and will not, contravene, conflict with, violate or infringe
upon any Intellectual Property of a Third Person or the terms of any license
with respect thereto. No proprietary information or trade secret included in
the Contribution has been misappropriated by the Seller from any third party
and no proprietary information or trade secret has been misappropriated by the
Company from any third party; and

 

(ix)                                The Business IP
and the products of the Business are not subject to a current claim of
infringement, interference or unfair competition or other similar claim and, to
the Seller’s Knowledge, the Business IP is not being infringed upon or violated
by any Third Person.

 

3.12.                        LABOR RELATIONS; COMPLIANCE

 

Except as set forth on Part 3.12 of the
Disclosure Letter, since January 1, 2008 neither Seller nor the Company
has been or is a party to any collective bargaining or other labor Contract nor
is the Company a successor to any such Contract or any other labor obligation
or liability required by Law or otherwise. Except as set forth on Part 3.12
of the Disclosure Letter, since January 1, 2008, there has not been, and
there is not presently pending or existing, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any
Proceeding against or affecting the Company relating to the alleged violation
of any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission,
federal Department of Labor (wage and hour), Office of Federal Contract
Compliance Programs (affirmative action/equal opportunity), or any comparable 

 

22

 

Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting any of the Company or their premises, or (c) any application for
certification of a collective bargaining agent. The Company is not liable for
the payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any Legal Requirements
related to employment matters.

 

3.13.                        BROKERS OR FINDERS

 

Except for the fees of BMO Capital to be paid
by Seller, Seller has not incurred any obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.

 

4.                                       REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as
follows:

 

4.1.                              ORGANIZATION AND GOOD STANDING

 

Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.

 

4.2.                              AUTHORITY; NO CONFLICT

 

(a)                                  This Agreement
constitutes the legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. Upon the execution and delivery by
Buyer of the LLC Agreement, the LLC Agreement will constitute the legal, valid,
and binding obligations of Buyer, enforceable against Buyer in accordance with
its terms. Buyer has the absolute and unrestricted right, power, and authority
to execute and deliver this Agreement and the LLC Agreement and to perform its
obligations under this Agreement and the LLC Agreement.

 

(b)                                 Neither the
execution and delivery of this Agreement by Buyer nor the consummation or
performance of any of the Contemplated Transactions by Buyer will give any
Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:

 

(i)                                     any provision
of Buyer’s Organizational Documents;

 

(ii)                                  any resolution
adopted by the member of Buyer;

 

(iii)                               any Legal
Requirement or Order to which Buyer may be subject; or

 

(iv)                              any Contract to
which Buyer is a party or by which Buyer may be bound.

 

23

 

Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.

 

4.3.                              INVESTMENT INTENT

 

Buyer is acquiring the Purchased Interest for
its own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.

 

4.4.                              CERTAIN PROCEEDINGS

 

There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been
Threatened.

 

4.5.                              BROKERS OR FINDERS

 

Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payment in connection
with this Agreement and will indemnify and hold Seller harmless from any such
payment alleged to be due by or through Buyer as a result of the action of
Buyer or its officers or agents.

 

5.                                       START-UP OF PLANT

 

Promptly following closing, Buyer and Seller will,
and will cause the Company to:

 

(a)                                  commence
preparations to resume operating status for the Plant as soon as practicable;

 

(b)                                 reasonably
consult with each other concerning start-up efforts for the Plant; and

 

(c)                                  use Reasonable
Efforts to satisfactorily resolve the steam boiler issues related to the Plant
with Ameren Energy Resources Generating Company, including each of Seller and
Buyer paying one-half of the costs of any resolution; provided that any such
resolution of the foregoing issues subject to the prior written consent of each
of Buyer, Seller and the Company.

 

6.                                       RESERVED

 

7.                                       CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

 

Buyer’s obligation to purchase the Purchased
Interest and to take the other actions required to be taken by Buyer at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Buyer, in whole or in
part):

 

24

 

7.1.                              ACCURACY OF REPRESENTATIONS

 

All of Seller’s representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been true,
accurate and complete as of the date hereof, and must be accurate in all
material respects as of the Closing Date as if made on the Closing Date.

 

7.2.                              CONSENTS

 

Each of the Consents
identified in Part 3.2 of the Disclosure Letter must have been obtained
and must be in full force and effect.

 

7.3.                              SELLER’S PERFORMANCE

 

(a)                                  All of the
covenants and obligations that Seller is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects.

 

(b)                                 Each document
required to be delivered by Seller and the Company pursuant to Section 2.4
must have been delivered.

 

7.4.                              NO PROCEEDINGS

 

Since the date of this Agreement, there must
not have been commenced or Threatened any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.

 

7.5.                              NO CLAIM REGARDING UNIT OWNERSHIP OR SALE PROCEEDS

 

There must not have been made or Threatened
by any Person any claim asserting that such Person (a) is the holder or
the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any membership interest in, or any other voting, equity, or
ownership interest in, the Company, or (b) is entitled to all or any
portion of the Purchase Price payable for the Purchased Interest.

 

7.6.                              NO PROHIBITION

 

Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated with
Buyer to suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that 

 

25

 

has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.

 

8.                                       CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

 

Seller’s obligation to sell the Purchased
Interest and to take the other actions required to be taken by Seller at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Seller, in whole or in
part):

 

8.1.                              ACCURACY OF REPRESENTATIONS

 

All of Buyer’s representations and warranties
in this Agreement (considered collectively), and each of these representations
and warranties (considered individually), must have been true, accurate and
complete as of the date hereof and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.

 

8.2.                              BUYER’S PERFORMANCE

 

(a)                                  All of the
covenants and obligations that Buyer is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered collectively),
and each of these covenants and obligations (considered individually), must
have been performed and complied with in all material respects.

 

(b)                                 Buyer must have
delivered each of the documents required to be delivered by Buyer pursuant to Section 2.4.

 

8.3.                              CONSENTS

 

Each of the Consents
identified in Part 3.2 of the Disclosure Letter must have been obtained
and must be in full force and effect.

 

8.4.                              NO PROCEEDINGS

 

Since the date of this Agreement, there must
not have been commenced or Threatened against Seller, or against any Person
affiliated with Seller, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the Contemplated
Transactions.

 

8.5.                              NO PROHIBITION

 

Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Seller or any Person affiliated
with Seller to suffer any material adverse consequence under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or
Order that 

 

26

 

has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.

 

9.                                       TERMINATION

 

9.1.                              TERMINATION EVENTS

 

This Agreement may, by notice given prior to
or at the Closing, be terminated:

 

(a)                                  by either Buyer
or Seller if a material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been waived or cured
within ten (10) days of the breaching party’s receipt of written notice of
such Breach;

 

(b)                                 (i) by
Buyer if satisfaction of any of the conditions in Section 7 is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller if satisfaction of any of the
conditions in Section 8 is or becomes impossible (other than through the
failure of Seller to comply with its obligations under this Agreement) and Seller
has not waived such condition on or before the Closing Date;

 

(c)                                  by mutual
consent of Buyer and Seller; or

 

(d)                                 by either Buyer
or Seller if the Closing has not occurred (other than through the failure of
any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before December 1, 2009, or such
later date as the parties may agree upon.

 

9.2.                              EFFECT OF TERMINATION

 

Each party’s right of termination under Section 9.1
is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1 (Expenses) and 11.3 (Confidentiality)
will survive; provided, however, that if this
Agreement is terminated by a party because of the Breach of the Agreement by
the other party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
other party’s failure to comply with its obligations under this Agreement, the
terminating party’s right to pursue indemnification under Article 10 and
all other legal remedies will survive such termination unimpaired.

 

27

 

10.                                 INDEMNIFICATION; REMEDIES

 

10.1.                        SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE

 

All representations, warranties, covenants,
and obligations in this Agreement, the Disclosure Letter, the supplements to
the Disclosure Letter, the certificate delivered pursuant to Section 2.4(a),
and any other certificate or document delivered pursuant to this Agreement will
survive the Closing. The right to indemnification, payment of Damages or other
remedy based on such representations, warranties, covenants, and obligations
will not be affected by any investigation conducted, whether before or after
the execution and delivery of this Agreement or the Closing Date, with respect
to the accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation, except to the extent the recipient of such
representation and warranty has Knowledge (i) of the inaccuracy and (ii) that
such inaccuracy was likely to cause damage without disclosing such Knowledge to
the party giving the representation and warranty prior to the Closing Date.

 

10.2.                        INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER

 

Seller will indemnify, defend and hold
harmless Buyer, the Company, and their respective Representatives,
stockholders, controlling persons, and affiliates (collectively, the “Buyer
Indemnified Persons”) for, and will pay to the Buyer Indemnified Persons
the amount of, any loss, liability, claim, damage (including incidental and
consequential damages and a devaluation of the Purchased Interest related to a
Breach of this Agreement by Seller), expense (including costs of investigation
and defense and reasonable attorneys’ fees) (collectively, “Damages”),
arising, directly or indirectly, from or in connection with:

 

(a)                                  any Breach of
any representation or warranty made by Seller in this Agreement (after giving
effect to any supplement to the Disclosure Letter), the Disclosure Letter, the
supplements to the Disclosure Letter, or any other certificate or document
delivered by Seller pursuant to this Agreement;

 

(b)                                 any Breach by
Seller of any covenant or obligation of Seller in this Agreement; or

 

(c)                                  any claim by
any Person for brokerage or finder’s fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by any such
Person with either Seller or the Company (or any Person acting on their behalf)
in connection with any of the Contemplated Transactions.

 

Except in the case of fraud, intentional
misrepresentation, willful misconduct or the indemnification provided under Section 10.3,
the remedies provided in this Section 10.2 will be the exclusive remedy
available to Buyer, the Company and the other Buyer 

 

28

 

Indemnified Persons with
respect to condition of the Plant and the Contemplated Transactions.

 

10.3.                        INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER—ENVIRONMENTAL MATTERS

 

(a)                                  Seller will
release, indemnify, defend and hold harmless Buyer, the Company, and the other
Buyer Indemnified Persons for, and will pay to Buyer, the Company, and the
other Buyer Indemnified Persons the amount of, any Damages (including costs of
cleanup, containment, or other remediation) and any Environmental Health and
Safety Liabilities arising, directly or indirectly, from or in connection with
each of the following:

 

(i)                                     any violations
or alleged violations of Environmental Law relating to the Plant or the
Business originating (in whole or in part) prior to Closing or in connection
with the recommencement of production operations at the Plant subsequent to
Closing.

 

(ii)                                  any bodily
injury (including illness, disability, and death, and regardless of when any
such bodily injury occurred, was incurred, or manifested itself), personal
injury, property damage (including trespass, nuisance, wrongful eviction, and
deprivation of the use of real property), or other damage of or to any Person,
including any employee or former employee of Seller or the Company, in any way
arising from or allegedly arising from any Hazardous Activity conducted or
allegedly conducted with respect to the Plant or the operation of the Company
prior to the Closing Date, or from Hazardous Material that was (A) present
or suspected to be present on or before the Closing Date on, under or from the
Plant or (B) Released or allegedly Released by Seller or the Company, at
any time on or prior to the Closing Date.

 

(iii)                               any Known
Environmental Condition (to the extent not covered by Sections 10.3(a)(i) or
(ii)): (A) where Buyer, Seller, the Plant or the Company is required by an
Environmental Law or a Governmental Body to Cleanup such Known Environmental
Condition; or (B) arising out of or in response to any actual or
Threatened claim, allegation, or Proceeding by any third party, including, but
not limited to, a Governmental Body. 
Seller’s indemnity obligation under this Section 10.3(a)(iii) for
Damages related to the diminution of the fair market value of the Plant shall
be limited to 50% of such Damages provided that the Seller undertakes and
completes in an expeditious manner all Cleanup of the Plant associated with the
Environmental, Safety and Health Liability at issue, by entering the Plant into
the Illinois Site Remediation Program (or a substantially similar program if
the Site Remediation Program is not in existence at such time) and obtaining a “No
Further Remediation” Letter from the applicable Governmental Body (currently,
the Illinois Environmental Protection Agency) such that the Known Environmental

 

29

 

Condition
at the Plant is Cleaned-up to cleanup standards published by the applicable
Governmental Body applicable to commercial or industrial property and Seller
shall not impose upon the Plant any institutional, engineering, or land use
controls except to the extent approved in advance in writing by Buyer, in its
reasonable discretion.

 

(iv)                              any Known
Environmental Condition (to the extent not covered by Sections 10.3(a)(i),
(ii), or (iii)): (A) where Buyer, Seller, the Plant or the Company is not
required by an Environmental Law or a Governmental Body to Cleanup such Known
Environmental Condition; or (B) which does not arise out of or is not in
response to any actual or Threatened claim, allegation, or Proceeding by any
Third Person, including, but not limited to, a Governmental Body.  Seller’s indemnity obligation under this Section 10.3(a)(iv) shall
be limited to 50% of any such Damages or Environmental Health and Safety
Liabilities.

 

(v)                                 any Unknown
Environmental Condition (to the extent not covered by Sections 10.3(a)(i) or
(ii)): (A) where Buyer, Seller, the Plant or the Company is required by an
Environmental Law or a Governmental Body to Cleanup such Unknown Environmental
Condition; or (B) arising out of or in response to any actual or
Threatened claim, allegation, or Proceeding by any Third Person, including, but
not limited to, a Governmental Body. 
Seller’s indemnity obligation under this Section 10.3(a)(v) for
Damages related to the diminution of the fair market value of the Plant shall
be limited to 50% of such Damages provided that the Seller undertakes and
completes in an expeditious manner all Cleanup of the Plant associated with the
Environmental, Safety and Health Liability at issue, by entering the Plant into
the Illinois Site Remediation Program (or a substantially similar program if
the Site Remediation Program is not in existence at such time) and obtaining a “No
Further Remediation” Letter from the applicable Governmental Body (currently,
the Illinois Environmental Protection Agency) such that the Unknown
Environmental Condition at the Plant is Cleaned-up to cleanup standards
published by the applicable Governmental Body applicable to commercial or
industrial property and Seller shall not impose upon the Plant any
institutional, engineering, or land use controls except to the extent approved
in advance in writing by Buyer, in its reasonable discretion.

 

(vi)                              any Unknown
Environmental Condition (to the extent not covered by Sections 10.3(a)(i),
(ii), or (v)): (A) where Buyer, Seller, the Plant or the Company is not
required by an Environmental Law or a Governmental Body to Cleanup such Unknown
Environmental Condition; or (B) which does not arise out of or is not in
response to any actual or Threatened claim (including any claim which could legally
be lodged but has not been Threatened), allegation, or Proceeding by any Third
Person, including, but not limited to, a Governmental Body.  Seller’s indemnity 

 

30

 

obligation
under this Section 10.3(a)(vi) shall be limited to 50% of any such
Damages or Environmental Health and Safety Liabilities.

 

(b)                                 Subject to the
above and Seller providing prompt prior written notice to Buyer of any Cleanup
or any Proceeding related thereto, Seller will be entitled to control any
Cleanup, any related Proceeding, and, except as provided in the following
sentence, any other Proceeding with respect to which indemnity may be sought
under this Section 10.3. The procedure described in Section 10.8 will
apply to any claim solely for monetary damages relating to a matter covered by
this Section 10.3.

 

(c)                                  Any
indemnification with respect to environmental matters that could be brought
under this Section 10.3 shall be governed by this Section 10.3 and
not by Section 10.2 as it relates to a Breach of Section 3.10 caused
by such environmental matter; provided, that
the foregoing limitation shall not affect Buyer’s right to seek indemnification
pursuant to Section 10.2 for any Breach of Section 3.10 not addressed
by this Section 10.3.

 

10.4.                        INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER

 

Buyer will indemnify, defend and hold
harmless Seller, and will pay to Seller the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any Breach of any
representation or warranty made by Buyer in this Agreement or in any
certificate delivered by Buyer pursuant to this Agreement, (b) any Breach
by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any
claim by any Person for brokerage or finder’s fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
such Person with Buyer (or any Person acting on its behalf) in connection with
any of the Contemplated Transactions.

 

10.5.                        TIME LIMITATIONS

 

Except with respect to Sections 3.6 (Taxes)
and 3.10 (Environmental Matters) (which will survive Closing through the
applicable statute of limitations), if the Closing occurs, Seller will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, unless on or before the second anniversary of the Closing
Date, Buyer notifies Seller of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Buyer; a claim for
indemnification or reimbursement based upon any covenant or obligation to be
performed and complied with after the Closing Date may be made at any time. If
the Closing occurs, Buyer will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before the second anniversary of the Closing Date Seller notifies Buyer
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Seller.

 

31

 

10.6.                        LIMITATIONS ON AMOUNT—SELLER

 

Except with respect to Sections 3.6 (Taxes)
and 3.10 (Environmental Matters) (which will survive Closing through the
applicable statute of limitations and any claim on which shall not be subject
to this Section 10.6), Seller will have no liability (for indemnification
or otherwise) with respect to the matters described in clause (a) or
clause (b) of Section 10.2 until the total of all Damages with
respect to such matters exceeds $150,000, and then to the full extent of all
such Damages, up to a maximum of $15,000,000. Notwithstanding anything herein
to the contrary, Seller will have no liability (for indemnification or
otherwise) with respect to this Agreement or the Contemplated Transactions in
excess of $15,000,000 other than in the case of a claim for Breach of Section 3.6
(Taxes) or Section 3.10 (Environmental Matters) or a claim under Section 10.3.  However, this Section 10.6 will not
apply (i) in the case of fraud, willful misconduct or intentional
misrepresentation by Seller and (ii) to any Breach of any of Seller’s
representations and warranties of which Seller had Knowledge at any time prior
to the date on which such representation and warranty is made, and Seller will
be liable for all Damages with respect to such Breaches.

 

10.7.                        LIMITATIONS ON AMOUNT—BUYER

 

Buyer will have no liability (for
indemnification or otherwise) with respect to the matters described in clause (a) or
(b) of Section 10.4 until the total of all Damages with respect to
such matters exceeds $150,000, and then to the full extent of all such Damages,
up to a maximum of $15,000,000. However, this Section 10.7 will not apply
to any Breach of any of Buyer’s representations and warranties of which Buyer
had Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional Breach by Buyer of any covenant or
obligation, and Buyer will be liable for all Damages with respect to such
Breaches.

 

10.8.                        PROCEDURE FOR INDEMNIFICATION

 

(a)                                  Promptly after
receipt by an indemnified party under Section 10.2, 10.4, or (to the
extent provided in the last sentence of Section 10.3(c)) Section 10.3
of notice of the commencement of any Proceeding against it, such party seeking
indemnification (the “Indemnified Party”) shall give written notice to
the indemnifying party (the “Indemnifying Party”) specifying the facts
constituting the basis for such claim and the amount, to the extent known, of
the claim asserted; provided, that
the failure to notify the Indemnifying Party will not relieve the Indemnifying
Party of any liability that it may have to any Indemnified Party, except to the
extent that the Indemnifying Party is prejudiced by the Indemnified Party’s
failure to give such notice.

 

(b)                                 If any
Proceeding referred to in Section 10.8(a) is brought against the
Indemnified Party by any claimant other than the Indemnifying Party (a “Third
Person”), the Indemnified Party shall give reasonably prompt notice to the
Indemnifying Party of the commencement of such Proceeding after such
commencement is actually known to the Indemnified Party; provided, that the 

 

32

 

failure
to notify the Indemnifying Party will not relieve the Indemnifying Party of any
liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Party is prejudiced by the Indemnified Party’s failure to give
such notice.  The Indemnifying Party will
be entitled to, upon written notice to the Indemnified Party, and using counsel
reasonably satisfactory to the Indemnified Party, to assume the defense, investigate,
contest or settle such Proceeding brought by such Third Person (a “Third
Person Claim”); provided that
the Indemnifying Party has unconditionally acknowledged to the Indemnified
Party in writing its obligation to indemnify the Persons to be indemnified
hereunder with respect to such Third Person Claim and, subject to Sections 10.6
and 10.7, to discharge any cost or expense arising out of such investigation,
contest or settlement and provided that any settlement shall include an
unconditional release of such claim against the Indemnified Party. The
Indemnifying Party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Party under this Section 10 for any fees of
other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the Indemnified Party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the Indemnifying Party assumes the defense of a Proceeding, (i) it
will be conclusively established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject to indemnification;
and (ii) no compromise or settlement of such claims may be effected by the
Indemnifying Party without the Indemnified Party’s consent unless (A) there
is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that
may be made against the Indemnified Party, and (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party.
If notice is given to an Indemnifying Party of the commencement of any
Proceeding and the Indemnifying Party does not, within ten days after the
Indemnified Party’s notice is given, give notice to the Indemnified Party of
its election to assume the defense of such Proceeding, the Indemnifying Party
will be bound by any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Party.

 

(c)                                  Notwithstanding
the foregoing, if an Indemnified Party determines in good faith that there is a
reasonable probability that a Proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Party may, by
notice to the Indemnifying Party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the Indemnifying Party will not be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).

 

(d)                                 Notwithstanding
the provisions of Section 11.5 but solely as between Seller and Buyer for
the purposes of carrying out the intent of this Section 10.8, Seller and
Buyer hereby consent to the non-exclusive jurisdiction of any court in which a
Proceeding is brought by a Third Person against any 

 

33

 

Indemnified
Party for purposes of any claim that an Indemnified Party may have under this
Agreement with respect to such Proceeding or the matters alleged therein.

 

10.9.                        COORDINATION WITH CONTRIBUTION AGREEMENT

 

Notwithstanding anything in
this Agreement or the Contribution Agreement to the contrary, to the extent
that any party is entitled to indemnification under both this Agreement and the
Contribution Agreement based on the same fact(s), circumstance(s), transaction(s) or
event(s) constituting the basis for such claim(s) and the same
damages with respect to such claim(s), said party shall be entitled only to a
single recovery for such damages.  Any
resolution of any claim(s) under this Agreement or the Contribution
Agreement pursuant to the foregoing sentence shall resolve the claim(s) as
to both such agreements.

 

11.                                 GENERAL PROVISIONS

 

11.1.                        EXPENSES

 

Except as otherwise expressly provided in
this Agreement or the other Contemplated Transaction documents, each party to
this Agreement will bear its respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Seller will pay all amounts payable
to BMO Capital in connection with this Agreement and the Contemplated
Transactions.  In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a Breach of
this Agreement by another party.

 

11.2.                        PUBLIC ANNOUNCEMENTS

 

Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions is subject to
the prior written approval of both Buyer and Seller, except that either Buyer
or Seller shall be permitted to make any public announcement required by
applicable Legal Requirements or the rules of any stock exchange upon
which Buyer or Seller (or their affiliates) are listed; provided
that the party making such public announcement shall provide the other party a
reasonable opportunity to review and comment on any such public
announcement.  Seller and Buyer will
consult with each other concerning the means by which the Company’ employees,
customers, and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions.

 

11.3.                        CONFIDENTIALITY

 

The existing Mutual Non-Disclosure Agreement
dated February 6, 2009 between SEACOR Energy Inc. and Seller will remain
in full force and effect.

 

34

 

11.4.                        NOTICES

 

All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the
other parties):

 

Seller:

MGP
Ingredients, Inc.

Cray
Business Plaza

100
Commercial St., P.O. Box 130

Atchison,
Kansas 66002

Attention:
Timothy W. Newkirk, President

Facsimile
No.: (913) 367-

 

with
a copy to: 

Lathrop &
Gage LLP

2345
Grand Blvd, Suite 2200

Kansas
City, Missouri 64108

Attention:
Wallace E. Brockhoff, Esq.

Facsimile
No.:  (816) 292-2001

 

Buyer:

Illinois
Corn Processing Holdings LLC

c/o
SEACOR Energy Inc. 

11200
Richmond Avenue, Suite 400

Houston,
Texas 77082

Attention:
Peter Coxon

Facsimile
No.: (281) 670-0680

 

with
a copy to:                 

Bryan
Cave LLP

211
N. Broadway, Suite 3600

Saint
Louis, MO 63102

Attention:
J. Powell Carman

Facsimile
No.: (314) 552-8070

 

11.5.                        JURISDICTION; SERVICE OF PROCESS

 

Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of Illinois,
County of Cook, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Illinois, and each of the 

 

35

 

parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.

 

11.6.                        FURTHER ASSURANCES

 

The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and
things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement and the documents referred to in this
Agreement.

 

11.7.                        WAIVER

 

The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power,
or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice
to or demand on one party will be deemed to be a waiver of any obligation of
such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.

 

11.8.                        ENTIRE AGREEMENT AND MODIFICATION

 

Except as provided in Section 11.3, this
Agreement (along with the documents referred to in this Agreement) supersedes
all prior agreements between the parties with respect to its subject matter
(including the Letter of Intent between Buyer and Seller dated September 15,
2009) and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.

 

11.9.                        ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS

 

Neither party may assign any of its rights
under this Agreement without the prior consent of the other party.  Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or 

 

36

 

equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.

 

11.10.                  SEVERABILITY

 

If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.

 

11.11.                  SECTION HEADINGS,
CONSTRUCTION

 

The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to “Section” or “Sections” refer to the
corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word “including”
does not limit the preceding words or terms.

 

11.12.                  TIME OF
ESSENCE

 

With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

 

11.13.                  GOVERNING
LAW

 

This Agreement will be governed by the laws
of the State of Delaware without regard to conflicts of laws principles.

 

11.14.                  COUNTERPARTS

 

This Agreement may be executed in multiple
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, regardless of whether all of
the parties have executed the same counterpart. 
Counterparts may be delivered via facsimile, electronic mail (including
pdf) or other transmission method and any counterpart so delivered shall be
deemed to have been duly and validly delivered and be valid and effective for
all purposes.

 

[Signature Page follows]

 

37

 

IN WITNESS WHEREOF, the parties have executed
and delivered this Agreement as of the date first written above.

 

	
  Buyer:

  	
  Seller:

  
	
  Illinois
  Corn Processing Holdings LLC

  	
  MGP
  Ingredients, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Peter Coxon

  	
   

  	
  By:

  	
  /s/
  Timothy W. Newkirk

  
	
   

  	
  Peter
  Coxon, President

  	
   

  	
   

  	
  Timothy
  W. Newkirk, President

  

 

SIGNATURE
PAGE TO

LLC
INTEREST PURCHASE AGREEMENT

 

 

Exhibit A

 

Legal Description of Plant real estate

 

Tract I:

 

A part of the Northeast
Quarter of Fractional Section 9, and a part of Lots 6 and 8 in the
Southeast Quarter of Fractional Section 4, said Lots 6 and 8 being shown
on plat recorded on page 57 of Plat Book “B”, in the Recorder’s Office of
Tazewell County, Illinois, all being in Township 24 North, Range 5 West of the
Third Principal Meridian, Tazewell County, Illinois, and more particularly
described as follows:

 

Commencing at the Northeast
corner of said Northeast Quarter of Fractional Section 9; thence South 89
degrees 29 minutes 14 seconds West, along the North line of said Fractional Section 9,
a distance of 1,629.48 feet to the place of beginning; thence from said place
of beginning South 20 degrees 05 minutes 14 seconds West a distance of 13.41
feet; thence South 86 degrees 48 minutes 22 seconds East a distance of 267.42
feet; thence South 00 degrees 56 minutes 03 seconds West a distance of 159.82
feet to the North line of The Quaker Oats Company by deed recorded in Book
2045, page 72, of the Tazewell County Recorder’s Office; thence South 89
degrees 27 minutes 16 seconds West along said North line a distance of 104.33
feet; thence South 00 degrees 56 minutes 03 seconds West along the West line of
The Quaker Oats Company property as described in aforementioned deed, a
distance of 253.00 feet to the South line of The American Distilling Company
property; thence South 89 degrees 27 minutes 16 seconds West along the South
line of The American Distilling property, a distance of 850.76 feet to the
Southeast corner of a parcel conveyed by The American Distilling Company to
Pekin River and Warehouse Terminal, Inc. by deed recorded in Book 2351, page 208,
of the Tazewell County Recorder’s Office; thence North 25 degrees 40 minutes 22
seconds West along Easterly line of said parcel, a distance of 371.70 feet,
thence North 00 degrees 02 minutes 54 seconds West along Easterly line of said
parcel, a distance of 106.63 feet to the South line of said Fractional Section 4;
thence continuing North 00 degrees 02 minutes 54 seconds along Easterly line of
said parcel 77.64 feet to the Northerly corner of Pekin River and Warehouse
Terminal Inc. property, and also being a point on the Northwesterly line of Lot
8 as recorded in Plat Book “B”, page 57, of the Tazewell County Recorder’s
Office; thence North 46 degrees 59 minutes 11 seconds East along the
Northwesterly line, of said Lot 8 a distance of 1,110.92 feet; thence South 43
degrees 00 minutes 54 seconds East a distance of 280.47 feet; thence South 42
degrees 00 minutes 08 seconds West, a distance of 188.94 feet; thence South 19
degrees 51 minutes 12 seconds West, a distance of 276.07 feet; thence South 69
degrees 54 minutes 46 seconds East, a distance of 148.90 feet; thence South 20
degrees 05 minutes 14 seconds West, a distance of 182.59 feet to the place of
beginning; situate, lying and being in the County of Tazewell and State of
Illinois.

 

EXHIBIT
TO

LLC
INTEREST PURCHASE AGREEMENT

 

 

Tract II:

 

A part of the Northeast
Quarter of Fractional Section 9, and a part of Lots 6 and 8 in the
Southeast Quarter of Fractional Section 4, said Lots 6 and 8 being shown
on plat recorded in page 57 of Plat Book “B” in the Recorder’s Office of
Tazewell County, Illinois, all being in Township 24 North, Range 5 West of the
Third Principal Meridian, Tazewell County, Illinois and more particularly
described as follows:

 

Commencing
at the Southeast corner of the Southeast Quarter of said Fractional Section 4;
thence South 89 degrees 29 minutes 14 seconds West, along the South line of the
Southeast Quarter of said Fractional Section 4, a distance of 1,020.92
feet to a concrete monument being the Place of Beginning for the Tract herein
being described; thence North 37 degrees 03 minutes 04 seconds East a distance
of 1,013.11 feet; thence North 57 degrees 55 minutes West a distance of 292.65
feet to the Northwesterly right-of-way line of South Front Street; thence North
29 degrees 56 minutes 48 seconds East, along the Northeasterly right-of-way
line of South Front Street, a distance of 481.39 feet to a concrete monument;
thence North 46 degrees 54 minutes 36 seconds West a distance of 263.31 feet to
a point on the Northeasterly line of Lot 6 as recorded in Plat Book “B”, page 57,
of the Tazewell County Recorder’s Office; thence North 24 degrees 46 minutes 48
seconds West, along the Northeasterly line of said Lot 6 a distance of 35.6
feet; thence North 87 degrees 04 minutes 48 seconds West a distance of 214.55
feet to a point on the Northwesterly line of said Lot 6; said point being 200
feet from the Northerly corner of said Lot 6; thence South 46 degrees 59
minutes 11 seconds West, along the Northwesterly line of said Lot 6 and Lot 8
as recorded in Plat Book “B”, page 57 of the Tazewell County Recorder’s
Office, a distance of 1,146.23 feet to the Northerly corner of Tract I
previously described; thence South 43 degrees 00 minutes 54 seconds East, along
said Tract I, a distance of 280.47 feet; thence South 42 degrees 00 minutes 08
seconds West, along said Tract I, a distance of 188.94 feet; thence South 19
degrees 51 minutes 12 seconds West, along said Tract I, a distance of 276.07
feet; thence South 69 degrees 54 minutes 46 seconds East, along said Tract I, a
distance of 148.90 feet; thence South 20 degrees 05 minutes 14 seconds West,
along said Tract I, a distance of 196.00 feet; thence South 86 degrees 48
minutes 22 seconds East, along said Tract I, a distance of 267.42 feet; thence
South 00 degrees 56 minutes 03 seconds West, along said Tract I, a distance of
159.82 feet to the property line of Quaker Oats Company; thence North 89
degrees 27 minutes 16 seconds East, along said property line a distance of
345.67 feet; thence North 00 degrees 56 minutes 03 seconds East, along said
property line, a distance of 189.47 feet of the Place of Beginning; situate,
lying and being in the County of Tazewell and State of Illinois.

 

40Exhibit 10.3

 

Execution Version

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

ILLINOIS CORN PROCESSING, LLC

 

A DELAWARE LIMITED LIABILITY COMPANY

 

 

Dated:  November 20,
2009

 

 

The Interests represented
by this Limited Liability Company Agreement have not been registered under the
Securities Act of 1933 or any other securities laws, and the transferability of
the Interests is restricted.  Article X
of this Limited Liability Company Agreement imposes further restrictions upon
the transfer, sale, hypothecation or assignment of the Interests.

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  Article I
  THE COMPANY

  	
  1

  
	
  1.1

  	
  Formation

  	
  1

  
	
  1.2

  	
  Company
  Name

  	
  1

  
	
  1.3

  	
  Purposes

  	
  1

  
	
  1.4

  	
  Principal
  Place of Business

  	
  1

  
	
  1.5

  	
  Term

  	
  1

  
	
  1.6

  	
  Filings;
  Agent for Service of Process

  	
  1

  
	
  1.7

  	
  Title
  to Property

  	
  2

  
	
  1.8

  	
  Payments
  of Individual Obligations

  	
  2

  
	
  1.9

  	
  Independent
  Activities; Transactions With Affiliates

  	
  2

  
	
  1.10

  	
  Definitions

  	
  3

  
	
  Article II
  MEMBERS’ CAPITAL CONTRIBUTIONS

  	
  8

  
	
  2.1

  	
  Capital
  Contributions

  	
  8

  
	
  2.2

  	
  Other
  Matters

  	
  9

  
	
  2.3

  	
  Effect
  of Disproportionate Additional Capital Contributions

  	
  9

  
	
  Article III
  ALLOCATIONS

  	
  10

  
	
  3.1

  	
  Profits

  	
  10

  
	
  3.2

  	
  Losses

  	
  10

  
	
  Article IV
  DISTRIBUTIONS

  	
  10

  
	
  4.1

  	
  Net
  Cash Flow

  	
  10

  
	
  4.2

  	
  Amounts
  Withheld

  	
  11

  
	
  Article V
  MANAGEMENT

  	
  11

  
	
  5.1

  	
  Powers
  of the Members

  	
  11

  
	
  5.2

  	
  Limitation
  on Powers of the Members

  	
  12

  
	
  5.3

  	
  Quorum;
  Required Vote

  	
  13

  
	
  5.4

  	
  Procedure
  for Consent

  	
  14

  
	
  5.5

  	
  Meetings

  	
  14

  
	
  5.6

  	
  Officers

  	
  14

  
	
  5.7

  	
  Affiliate
  Transactions

  	
  15

  
	
  5.8

  	
  Cessation
  of Business

  	
  16

  
	
  5.9

  	
  Indemnification
  of Advisors, Officers and Members

  	
  16

  
	
  5.10

  	
  Compensation
  and Loans

  	
  18

  
	
  5.11

  	
  Issuance
  of Additional Interests in Company

  	
  18

  
	
  5.12

  	
  Tax
  Matters Member

  	
  19

  
	
  Article VI
  ROLE OF ADVISORY BOARD

  	
  19

  
	
  6.1

  	
  Creation
  of Advisory Board

  	
  19

  
	
  6.2

  	
  Appointment
  of Advisors

  	
  20

  
	
  6.3

  	
  Board
  Meetings

  	
  20

  
	
  6.4

  	
  Governance
  of Advisory Board

  	
  21

  
	
  Article VII
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
  21

  
	
  7.1

  	
  In
  General

  	
  21

  
	
  7.2

  	
  Representations and Warranties

  	
  21

  

 

 

	
  7.3

  	
  Confidentiality

  	
  23

  
	
  7.4

  	
  Nonsolicitation

  	
  23

  
	
  Article VIII
  BOOKS AND RECORDS

  	
  24

  
	
  8.1

  	
  Books
  and Records

  	
  24

  
	
  8.2

  	
  Reports

  	
  24

  
	
  8.3

  	
  Tax
  Information

  	
  25

  
	
  Article IX
  AMENDMENTS

  	
  25

  
	
  9.1

  	
  Amendments

  	
  25

  
	
  Article X
  TRANSFERS OF INTERESTS

  	
  25

  
	
  10.1

  	
  Restriction
  on Transfers

  	
  25

  
	
  10.2

  	
  Permitted
  Transfers

  	
  25

  
	
  10.3

  	
  Conditions
  to Permitted Transfers

  	
  26

  
	
  10.4

  	
  Involuntary
  Transfer — Purchase Rights

  	
  27

  
	
  10.5

  	
  Drag
  Along Rights

  	
  28

  
	
  10.6

  	
  Prohibited
  Transfers

  	
  29

  
	
  10.7

  	
  Rights
  of Transferee or Assignees

  	
  29

  
	
  10.8

  	
  Admission
  of Substituted Members

  	
  30

  
	
  10.9

  	
  Distributions
  and Applications in Respect to Transferred Interests

  	
  30

  
	
  10.10

  	
  Covenants

  	
  31

  
	
  10.11

  	
  Co-Sale
  Rights

  	
  31

  
	
  Article XI
  MEMBER EVENTS

  	
  32

  
	
  11.1

  	
  Certain
  Events

  	
  32

  
	
  11.2

  	
  Remedies
  for Certain Events

  	
  32

  
	
  11.3

  	
  Voluntary
  Buy-Sell

  	
  32

  
	
  11.4

  	
  Buy-Sell
  Offers in General

  	
  32

  
	
  11.5

  	
  Terms
  of the Buy-Sell Offer

  	
  32

  
	
  11.6

  	
  Offeree’s
  Response to Buy-Sell Offer

  	
  33

  
	
  11.7

  	
  Closing
  and Date of the Buy-Sell Closing

  	
  33

  
	
  Article XII
  POWER OF ATTORNEY

  	
  33

  
	
  12.1

  	
  Board
  as Attorney-In-Fact

  	
  33

  
	
  12.2

  	
  Nature
  as Special Power

  	
  34

  
	
  Article XIII
  DISSOLUTION, WINDING UP AND SALE OF BUSINESS

  	
  34

  
	
  13.1

  	
  Liquidating
  Events

  	
  34

  
	
  13.2

  	
  Winding
  Up

  	
  35

  
	
  13.3

  	
  Compliance
  With Certain Requirements of Regulations; Deficit Capital Accounts

  	
  35

  
	
  13.4

  	
  Deemed
  Distribution and Recontribution

  	
  36

  
	
  13.5

  	
  Rights
  of Members

  	
  36

  
	
  13.6

  	
  Sale
  of the Business

  	
  36

  
	
  Article XIV
  MISCELLANEOUS

  	
  37

  
	
  14.1

  	
  Notices

  	
  37

  
	
  14.2

  	
  Binding
  Effect

  	
  38

  
	
  14.3

  	
  Construction

  	
  38

  
	
  14.4

  	
  Time

  	
  38

  
	
  14.5

  	
  Headings

  	
  38

  
	
  14.6

  	
  Severability

  	
  38

  
	
  14.7

  	
  Incorporation
  by Reference

  	
  38

  

 

ii

 

	
  14.8

  	
  Further
  Action

  	
  38

  
	
  14.9

  	
  Variation
  of Pronouns

  	
  38

  
	
  14.10

  	
  Governing
  Law

  	
  38

  
	
  14.11

  	
  Waiver
  of Action for Partition; No Bill for Company Accounting

  	
  38

  
	
  14.12

  	
  Counterpart
  Execution

  	
  39

  
	
  14.13

  	
  Electronic
  Signatures

  	
  39

  
	
  14.14

  	
  Specific
  Performance

  	
  39

  
	
  14.15

  	
  Dispute Resolution; Jurisdiction

  	
  39

  
	
  EXHIBIT A CAPITAL ACCOUNTS

  	
  1

  
	
  EXHIBIT B TAX EXHIBIT

  	
  1

  
	
  B.1

  	
  Definitions

  	
  1

  
	
  B.2

  	
  Capital Accounts

  	
  4

  
	
  B.3

  	
  Special Allocations

  	
  5

  
	
  B.4

  	
  Curative Allocations

  	
  7

  
	
  B.5

  	
  Other Allocation Rules

  	
  7

  
	
  B.6

  	
  Tax Allocations: Code Section 704(c)

  	
  8

  
	
  EXHIBIT C Cessation of Business
  Allocations Example

  	
  1

  
				

 

iii

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

ILLINOIS CORN PROCESSING, LLC

(a Delaware limited liability company)

 

This LIMITED LIABILITY
COMPANY AGREEMENT (this “Agreement”) is entered into and shall be
effective as of November 20, 2009 (the “Effective Date”), by and
between MGP Ingredients, Inc., a Kansas
corporation (“MGPI”), and Illinois Corn Processing
Holdings LLC, a Delaware limited liability company (“ICPH”),
as the Members, pursuant to the provisions of the Delaware Limited Liability
Company Act, on the following terms and conditions:

 

Article I

THE COMPANY

 

1.1                           Formation. 
The Company was formed on October 5, 2009 as a limited liability
company pursuant to the provisions of the Act. 
MGPI adopted a limited liability company agreement as the sole member of
the Company as of such date.  From and
after the Effective Date, the Company shall operate upon the terms and
conditions set forth in this Agreement, and as of the Effective Date this
Agreement shall supercede and replace in their entirety all prior limited
liability company agreements of the Company.

 

1.2                           Company Name. 
The name of the Company shall be “Illinois Corn Processing, LLC”, and
all business of the Company shall be conducted in such name.  The Members may change the name of the
Company at any time.

 

1.3                           Purposes. 
The Company shall have the power to conduct any lawful business
permitted under the Act.  However, the
Company shall not engage in any business other than owning and operating the
Plant for the purpose of engaging in any and all aspects of the fuel ethanol
and alcohol business (including associated by-products) without the unanimous
prior consent of the Members.

 

1.4                           Principal Place of Business. 
The principal place of business of the Company shall be at 1301 S. Front
Street, Pekin, Illinois 61554.  The
Members may change the principal place of business of the Company to any other
place within or without the State of Illinois.

 

1.5                           Term. 
The term of the Company commenced on the date the Company’s certificate
of formation described in, and complying with the requirements of, the Act (the
“Certificate”) was filed in the office of the Secretary of State of
Delaware in accordance with the Act and shall continue until the winding up and
liquidation of the Company and its business is completed following a
Liquidating Event, as provided in Article XIII hereof.

 

1.6                           Filings; Agent for Service of
Process.

 

(a)                                  The Members shall take any and all other
actions reasonably necessary to perfect and maintain the status of the Company
as a limited liability company under the laws of 

 

1

 

Delaware.  The
Members shall cause amendments to the Certificate to be filed whenever required
by the Act.

 

(b)                                 The Members shall take any and all other
actions as may be reasonably necessary to perfect and maintain the status of
the Company as a limited liability company or similar type of entity under the
laws of any other states or jurisdictions in which the Company engages in
business.

 

(c)                                  The registered agent for service of
process on the Company shall be as appointed by the Members in accordance with
the Act.

 

(d)                                 Upon the dissolution of the Company, the
Board (or, in the event there is no remaining Advisor, any Person elected
pursuant to Section 13.2 hereof) shall promptly execute and cause to be
filed a certificate of cancellation in accordance with the Act and the laws of
any other states or jurisdictions in which the Company has qualified as a
foreign limited liability company.

 

1.7                           Title to Property. 
All real and personal property owned by the Company shall be owned by
the Company as an entity and no Member shall have any ownership interest in
such property in its individual name or right, and each Member’s interest in
the Company shall be personal property for all purposes.  Except as otherwise provided in this
Agreement, the Company shall hold all of its real and personal property in the
name of the Company and not in the name of any Member.

 

1.8                           Payments of Individual
Obligations.  The Company’s credit and assets shall be used
solely for the benefit of the Company, and no asset of the Company shall be
transferred or encumbered for or in payment of any individual obligation of any
Member.

 

1.9                           Independent Activities;
Transactions With Affiliates.

 

(a)                                  Each Member and their Affiliates,
including any individuals appointed by a Member to the Board, shall be required
to devote only such time to the affairs of the Company as such Person
determines in its reasonable discretion may be necessary to manage and operate
the Company, and each such Person shall be free to serve any other Person or
enterprise in any capacity that it may deem appropriate in its discretion.

 

(b)                                 Except (i) as provided in Section 7.3
(Confidentiality) and Section 7.4 (Nonsolicitation, (ii) as prohibited
by applicable law or (ii) as prohibited by any other written contract
restricting such Person’s activities vis a vis the
Company, any Member and any Affiliate of a Member, including any individual
appointed by a Member to the Board, may, notwithstanding this Agreement, engage
on its own behalf in whatever activities they choose, whether the same are
competitive with the Company or otherwise, without having or incurring any
obligation to offer any interest in such activities to the Company or any Member
and neither this Agreement nor any activity undertaken pursuant hereto shall
prevent any Member or any Affiliate of a Member, including any individual
appointed by a Member to the Board, from engaging in such activities, or
require any Member to permit the Company or any Member to participate in any
such activities, and as a material part of the consideration for the execution
of 

 

2

 

this Agreement by each Member, each Member hereby
waives, relinquishes, and renounces any such right or claim of participation.

 

(c)                                  To the extent permitted by applicable law
and except as otherwise provided in this Agreement, the officers of the
Company, when acting on behalf of the Company, are hereby authorized to
purchase Property from, sell Property to, or otherwise deal with any Member,
acting on its own behalf, or any Affiliate of any Member, provided that any
such purchase, sale or other transaction shall be made on terms and conditions
which are no less favorable to the Company than if the sale, purchase, or other
transaction had been entered into with an independent third party.

 

1.10                    Definitions. 
Capitalized words and phrases used in this Agreement have the following
meanings:

 

(a)                                  “Act” means the Delaware Limited
Liability Company Act, as amended from time to time (or any corresponding
provisions of succeeding law).

 

(b)                                 “Advisors” has the meaning set
forth in Section 6.1(a).

 

(c)                                  “Affiliate” means, with respect to
any Person, (i) any Person directly or indirectly controlling, controlled
by or under common control with such Person and (ii) any director or
officer of such Person.  For purposes of
this paragraph (c), the terms “control,” “controlled” or “controlling”
shall include, without limitation (i) the ownership, control or power to
vote fifty percent (50%) or more of (A) the outstanding shares of any
class of voting securities, or (B) the partnership, limited liability
company or beneficial interests of any Person, directly or indirectly, or
acting through one or more Persons, (ii) the control in any manner over
the general partner(s) or manager(s) or the electing of more than one
director or trustee (or persons exercising similar functions) of such Person,
or (iii) the power to exercise, directly or indirectly, control over the
management or policies of such Person.

 

(d)                                 “Affiliate Transaction” has the
meaning set forth in Section  5.7.

 

(e)                                  “Agreement” means this Limited
Liability Company Agreement, as amended from time to time.

 

(f)                                    “Annual Budget” means an annual budget
prepared by the President and the Chief Financial Officer at the direction of
the Board with respect to the Company’s operation of the Plant for the next
Fiscal Year, which budget shall be prepared sufficiently in advance of each
Fiscal Year to be approved by the Members prior to commencement of the Fiscal
Year for which the budget relates.  In
the event that the Members do not approve a new annual budget, the Company
shall continue to operate under the prior Fiscal Year budget.

 

(g)                                 “Board” means the Board of
Advisors appointed and acting as a group in accordance with this Agreement.

 

(h)                                 “Bankruptcy” means, with respect
to any Person, a “Voluntary Bankruptcy” or an “Involuntary Bankruptcy.”  A “Voluntary Bankruptcy” means, with
respect to any Person, the inability of such Person generally to pay its debts
as such debts become due, or 

 

3

 

an admission in writing by such Person of its
inability to pay its debts generally or a general assignment by such Person for
the benefit of creditors; the filing of any petition or answer by such Person
seeking to adjudicate it a bankrupt or insolvent, or seeking for itself any
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of such Person or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking,
consenting to, or acquiescing in the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property; or corporate action
taken by such Person to authorize any of the actions set forth above.  An “Involuntary Bankruptcy” means,
with respect to any Person, without the consent or acquiescence of such Person,
the entering of an order for relief or approving a petition for relief or
reorganization or any other petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other similar relief
under any present or future bankruptcy, insolvency or similar statute, law or
regulation, or the filing of any such petition against such Person which
petition shall not be dismissed within ninety (90) days, or, without the
consent or acquiescence of such Person, the entering of an order appointing a
trustee, custodian, receiver, or liquidator of such Person or of all or any
substantial part of the property of such Person which order shall not be
dismissed within sixty (60) days.

 

(i)                                     “Business Day” means a day of the
year on which banks are not required or authorized to close in Pekin, Illinois.

 

(j)                                     “Capital Contributions” means,
with respect to any Member or Interest Holder, the amount of money and the
initial Gross Asset Value of any property (other than money) contributed to the
Company with respect to the interest in the Company held by such Person.  The principal amount of a promissory note
which is not readily traded on an established securities market and which is
contributed to the Company by the maker of the note (or a Person related to the
maker of the note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c))
shall not be included in the Capital Account of any Person until the Company
makes a taxable disposition of the note or until (and to the extent) principal
payments are made on the note, all in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).  Any reference in this Agreement to the
Capital Contribution of a Member shall include the Capital Contribution made by
any predecessor holder of the Interest of that Member.  In the event of a revaluation of Capital
Accounts pursuant to Section 5.11, such revalued Capital Account of a
Member or Interest Holder shall be treated as the Capital Contribution of such
Member or Interest Holder from such point forward, subject to any future
revaluation.

 

(k)                                  “Certificate” has the meaning set
forth in Section 1.5 hereof.

 

(l)                                     “Change of Control” means any of
the following: (i) the merger, reorganization, or consolidation of the
Company or any Subsidiary into or with another corporation such that the
Members holding Common Units immediately preceding such merger, reorganization,
or consolidation shall own less than fifty percent (50%) of the voting
securities of the surviving entity; (ii) the sale, transfer, or lease (but
not including a transfer or lease by pledge or mortgage to a bona fide lender)
of all or substantially all the consolidated assets of the Company, whether
pursuant to a single transaction or a series of related transactions; or (iii) the
sale or transfer, whether in a single transaction or pursuant to a series of
related transactions, of Interests such that the Members holding a majority of
the Interests immediately prior to such sale 

 

4

 

or transfer or series of transfers cease to hold a
shall own less than fifty percent (50%) of the Interests after such sale or
transfer or series of transfers.  A
Permitted Transfer shall not be taken into account in determining whether a
change in control or sale of a majority of the voting equity securities of the
Company has occurred.  In determining
whether a “Change in Control” has occurred within the meaning of this
provision, the substance, rather than the form, of the transaction(s) shall
control, and that beneficial or equitable, rather than merely legal, title
shall be examined to determine whether a Change in Control has occurred.

 

(m)                               “Code” means the Internal Revenue
Code of 1986, as amended from time to time (or any corresponding provisions of
succeeding law).

 

(n)                                 “Company” means the limited
liability company formed and operated pursuant to this Agreement.

 

(o)                                 “Confidential Information” has the
meaning set forth in Section 7.3 hereof.

 

(p)                                 “Contribution Agreement” means
that certain Contribution Agreement dated this date between the Company and
MGPI whereby MGPI contributed the Plant and related assets to the Company,
immediately prior to the sale of Intersts to ICPH pursuant to the LLC Interest
Purchase Agreement, as a Capital Contribution valued at $30 million.

 

(q)                                 “Debt” means, without duplication,
all indebtedness, liabilities and obligations which in accordance with GAAP are
required to be classified by the Company upon a balance sheet as liabilities,
and in any event shall include all (i) obligations for borrowed money or
which have been incurred by the Company in connection with the purchase or
other acquisition of property (including trade accounts payable incurred in the
ordinary course of business), (ii) obligations secured by any lien on, or
payable out of the proceeds of or production from, any property, whether or not
the Company has assumed or become liable for the payment of such obligations, (iii) indebtedness,
liabilities and obligations of third parties, including joint ventures and
partnerships of which the Company is a venturer or general partner, recourse to
which may be had against the Company, (iv) obligations created or arising
under any conditional sale or other title retention agreement with respect to property
acquired by the Company, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of such property, (v) Capitalized
Lease Obligations (as defined in the Loan Agreements), (vi) the aggregate
undrawn face amount of all letters of credit and/or surety bonds issued for the
account of and/or upon the application of the Company together with all
unreimbursed drawings with respect thereto, (vii) the Termination Value
(as defined in the Loan Agreements) under any Commodities Contract (as defined
in the Loan Agreements) to which the Company is a party to the extent the
Termination Value is owed or would be owed by the Company and (viii) and
indebtedness, liabilities and obligations of the Company under guarantees.  Debt shall not include obligations in respect
of any accounts payable that are incurred in the ordinary course of the Company’s
business and are not delinquent or are being contested in good faith by
appropriate proceedings.

 

(r)                                    “Effective Date” has the meaning
given in the introductory paragraph hereof.

 

5

 

(s)                                  “Environmental Laws” means any
federal, state, or local law, regulation or ordinance for protection of human
health or the environment.

 

(t)                                    “Ethanol Off-Take Agreement” means
that certain Marketing Agreement dated the Effective Date between the Company
and SEACOR Energy Inc., an Affiliate of ICPH, with respect to ethanol produced
at the Plant.

 

(u)                                 “Excluded Equipment” means the
equipment located in the wheat starch and wheat protein plant that is part of
the facilities at the Plant, which shall remain the sole property of MGPI and
is not Property of the Company but which may be stored at the Plant pursuant
to, and in accordance with the terms of, the Contribution Agreement.

 

(v)                                 “Family” means, with respect to a
Person who is an individual, such person’s spouse, natural or adoptive lineal
ancestors or descendants, and trusts for his or any of their exclusive benefit.

 

(w)                               “Fiscal Year” means the calendar
year or any portion of the calendar year for which the Company is required to
allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to Article III hereof.

 

(x)                                   “Food Grade Alcohol Off-Take Agreement”
means that certain Marketing Agreement dated the Effective Date between the
Company and MGPI with respect to food-grade and industrial-grade alcohol
produced at the Plant.

 

(y)                                 “GAAP” means U.S. generally
accepted accounting principles, as in effect from time to time.

 

(z)                                   “Hazardous Substances” means any
chemical, substance or material which is regulated by or establishes liability
under any Environmental Law.

 

(aa)                            “ICPH” has the meaning given in
the introductory paragraph hereof.

 

(bb)                          “ICPH Option” means ICPH’s option
to acquire up to an additional 20% of the Company from MGPI as set forth in the
LLC Interest Purchase Agreement.

 

(cc)                            “Interest” means those ownership
interests in the Company received by the Members in exchange for certain
specified Capital Contributions made pursuant to Section 2.1 hereof,
including any and all benefits to which the holder of such Interests may be
entitled as provided in this Agreement, together with all obligations of such
Persons to comply with the terms and provisions of this Agreement.

 

(dd)                          “Interest Holder” means any Person
who holds an Interest, regardless of whether such Person has been admitted to
the Company as a Member.  “Interest
Holders” means all such Persons.

 

(ee)                            “Liquidating Event” has the
meaning set forth in Section 13.1 hereof.

 

6

 

(ff)                                “LLC Interest Purchase Agreement”
means that certain LLC Interest Purchase Agreement dated the Effective Date
between ICPH and MGPI whereby ICPH purchased 50% of the Interests of the
Company for $15 million cash from MGPI.

 

(gg)                          “Loan Agreements” means,
collectively, (i) the Term Loan Agreement and (ii) until refinancing
with a third party, the Revolving Loan Agreement.

 

(hh)                          “Loan Documents” means the Loan
Agreements and each note, mortgage, security agreement, instrument, agreement
and certificate delivered to the lender pursuant to the Loan Agreement.

 

(ii)                                  “Majority in Interest” means any
individual Member or group of Members holding an aggregate of more than 50% of
the Interests (i) held by all Members or (ii) held by a lesser number
of Members than all of the Members if one or more Members is excluded from the
vote.

 

(jj)                                  “Member” means any Person (i) whose
name is set forth in the first paragraph of this Agreement or who has become a
Member pursuant to the terms of Section 10.8 hereof, and (ii) who
holds an Interest.  “Members” means
all such Persons.

 

(kk)                            “MGPI” has the meaning given in
the introductory paragraph hereof.

 

(ll)                                  “Net Cash Flow” means the
consolidated gross cash proceeds from Company and Subsidiary operations and
from all sales and other dispositions and refinancings of Property, less the
portion thereof used to pay or establish reserves for all Company and
Subsidiary expenses, debt payments, capital investments (including improvements
to existing assets and acquisition of additional assets), replacements,
guaranteed payments to Interest Holders and contingencies, all as determined by
the Board.  “Net Cash Flow” shall not be
reduced by depreciation, amortization, cost recovery deductions, or similar
allowances, but shall be increased by any reductions of reserves previously
established pursuant to the first sentence of this Section.

 

(mm)                      “Net Working Capital” means (i) the
total amount reflected as total current assets, minus (ii) the total
amount reflected as current liabilities as reported on the most recent financial
statements of the Company as prepared in accordance with generally accepted
accounted principals applied in a manner consistent with the Company’s audited
financial statements;. minus (iii) any amount payable with respect to the
Company’s revolving credit facility which is not classified as a current
liability in the Company’s financial statements.  For the avoidance of doubt the amount of
current liabilities shall include amounts payable in one year with respect to
the Term Loan Agreement.

 

(nn)                          “Percentage Interest” of a Member
means, at any particular time, a ratio, expressed as a percentage, which is the
ratio that the Capital Contribution of such Member bears to the total Capital
Contributions of all Members, as may be modified by Section 2.3.

 

(oo)                          “Permitted Transfer” has the
meaning set forth in Section 10.2 hereof.

 

7

 

(pp)                          “Person” means any individual,
partnership, corporation, trust, limited liability company or other entity.

 

(qq)                          “Plant” means the alcohol
production facility acquired by the Company from MGPI located at 1301 S. Front
Street, Pekin, Illinois 61554, including all related real estate, improvements,
equipment and other real and personal property at such location, other than the
Excluded Equipment.

 

(rr)                                “Property” means all real and
personal property acquired by the Company and any improvements thereto, and
shall include both tangible and intangible property.

 

(ss)                            “Regulations” means the Income Tax
Regulations, including Temporary Regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

 

(tt)                                “Revolving Loan Agreement” means
that certain Revolving Loan and Security Agreement dated the Closing Date
between SEACOR Capital Corporation (an Affiliate of ICPH), as lender, and the
Company, as borrower, whereby SEACOR Capital Corporation is providing up to $20
million in revolving credit facility financing secured by substantially all of
the Company’s assets.

 

(uu)                          “Subsidiaries” means all of the
corporations, limited liability companies, partnerships and other entities in
which the Company, directly or indirectly, owns more than 50% of the equity
interests.  “Subsidiary” means any
of the Subsidiaries.

 

(vv)                          “Supermajority in Interest” means
any individual Member or group of Members holding an aggregate of more than 662/3% of the
Interests (i) held by all Members or (ii) held by a lesser number of
Members than all of the Members if one or more Members is excluded from the
vote.

 

(ww)                      “Tax Due” has the meaning set
forth in Section 4.1(a) hereof.

 

(xx)                              “Tax Matters Member” has the
meaning set forth in Section 5.12 hereof.

 

(yy)                          “Term Loan Agreement” means that
certain Term Loan and Security Agreement dated the Closing Date between SEACOR
Capital Corporation, as lender, and the Company, as borrower, whereby SEACOR
Capital Corporation is providing $10 million in term loan financing secured by
substantially all of the Company’s assets.

 

(zz)                              “Transfer” means, as a noun, any
voluntary or involuntary transfer, sale, or other disposition and, as a verb,
voluntarily or involuntarily to transfer, sell, or otherwise dispose of.

 

Article II

MEMBERS’ CAPITAL CONTRIBUTIONS

 

2.1                           Capital Contributions. 
The name, address, Capital Account balances and Interests in the Company
of each Member are stated on Exhibit A.  The Members acknowledge

 

8

 

that (a) MGPI contributed the Plant immediately
prior to the Effective Date as the sole member of the Company; (b) ICPH
purchased 50% of the Interests from MGPI on the Effective Date; (c) for
federal income tax purposes, the purchase of Interests by ICPH shall be treated
by the Members and the Company in a manner consistent with Revenue Ruling 99-5;
and (d) the Company shall make the election described in Section B.3(g) of
Exhibit B.

 

2.2                           Other Matters.

 

(a)                                  Except as otherwise provided in this
Agreement, no Member or Interest Holder shall demand or receive a return of its
Capital Contributions or withdraw from the Company without the consent of all
Members.  Under circumstances requiring a
return of any Capital Contributions, no Member shall have the right to receive
property other than cash except as may be specifically provided herein.

 

(b)                                 No Member or Interest Holder shall
receive any interest, salary or drawing with respect to its Capital
Contributions or its Capital Account or for services rendered on behalf of the
Company or otherwise in its capacity as a Member or Interest Holder, except as
otherwise provided in this Agreement.

 

(c)                                  Except as otherwise provided by a
separate written agreement, no Member shall be liable for the debts,
liabilities, contracts, or any other obligations of the Company.  Except as otherwise provided by any other
agreements among the Members or mandatory provisions of applicable state law, a
Member shall be liable only to make its Capital Contribution pursuant to Section 2.1
hereof and shall not be required to lend any funds to the Company or, after its
Capital Contribution has been made, to make any additional Capital
Contributions to the Company, but any Member may make an additional Capital
Contribution through the purchase of Interests from the Company in accordance
with Section 5.11.

 

(d)                                 No Advisor shall have personal liability
for the repayment of any Capital Contribution of any Member.

 

2.3                           Effect of Disproportionate
Additional Capital Contributions..  If any
additional Capital Contributions are made by Members (or other Interest Holders
or new Members) pursuant to Section 5.11 but not in proportion to their
respective Percentage Interests immediately prior to such Capital
Contributions, then the Percentage Interest of each Member (or other Interest
Holder or new Members) shall be amended or determined (as applicable) as
follows:

 

(a)                                  Prior to receipt of any additional
Capital Contributions, the Board shall revalue the Capital Account balances of
the Members and Interest Holders consistent with the provisions of Treasury
Regulations § 1.704-1(b)(2)(iv)(f) and (g) in order to establish the
then-current value of the Company in the aggregate and also of each Member’s
and each Interest Holder’s Interests in the Company, based on their Percentage
Interests in the current value of the Company as so determined.

 

(b)                                 The amount of the additional Capital
Contributions in the aggregate shall be added to the value of the Company in
the aggregate determined pursuant to paragraph (a) and the amount of
additional Capital Contributions by each Member and each Interest Holder shall 

 

9

 

be added to the value of such Member’s and such
Interest Holder’s Interests determined pursuant to paragraph (a).

 

(c)                                  The Percentage Interest of each Member
and Interest Holder shall be equal the percentage resulting from dividing such
Member’s (or other Interest Holder’s) total amount determined pursuant to
paragraph (b) by the aggregate value of the Company after the additional
Capital Contributions as determined pursuant to paragraph (b).

 

Article III

ALLOCATIONS

 

3.1                           Profits. 
After giving effect to the special allocations set forth in Exhibit B
and subject to the allocations set forth in Section 5.8(a), if applicable,
and subject further to the allocations set forth in Section B.5(e) of
Exhibit B, if applicable, the Profits for any Fiscal Year shall be
allocated to the Interest Holders in proportion to the Percentage Interests of
each Interest Holder.

 

3.2                           Losses. 
After giving effect to the special allocations set forth in Exhibit B
and subject to the allocations set forth in Section 5.8(a), if applicable,
and subject further to the allocations set forth in Section B.5(e) of
Exhibit B, if applicable, the Losses for any Fiscal Year shall be
allocated among the Interest Holders in proportion to the Percentage Interests
of each Interest Holder.

 

Article IV

DISTRIBUTIONS

 

4.1                           Net Cash Flow. 
The Interest Holders shall be entitled to receive distributions of Net
Cash Flow from the Company only at the following times:

 

(a)                                  Distributions to Fund Interest
Holders’ Tax Liabilities.  Except as otherwise provided
in Article XIII hereof, to the extent of Net Cash Flow, the Company will
make periodic cash distributions among the Interest Holders in proportion to
the allocations of Profits and Losses applicable if this paragraph (a) were
not in this Agreement, no less than ten (10) days prior to the quarterly
federal estimated income tax payment due dates for corporate taxpayers, in
amounts sufficient to enable each of them (and, if they are pass-through
entities for federal income tax purposes, their stockholders, partners, members
and beneficiaries, and the members, partners, stockholders and beneficiaries of
their members who are pass-through entities) to pay timely Federal, state and
local taxes (the “Tax Due”) attributable to allocations to them for any
Fiscal Year of tax items from the Company (including without limitation the
benefit of any and all federal income tax credits) and any items of income,
gain, loss or deduction arising out of any adjustments under Code Section 743
that are attributable to any Interest Holder. 
In determining the amount that will enable each Interest Holder to pay
such taxes on a timely basis:  one, the
Company shall take into account the maximum effective combined rates of
Federal, state and local taxes (taking into account the deductibility of state
and local taxes for Federal income tax purposes) applicable to any Interest
Holder or any such holder of a beneficial interest in any Interest Holder who
or which is subject to tax on such tax items and of which the Company has
received written notice, and shall use such maximum effective 

 

10

 

combined rates in making distributions to all Interest
Holders; and two, shall annualize the Company’s tax items as appropriate to
determine the Tax Due.  If Net Cash Flow
at the time any distribution is to be made is less than the proportion of Tax
Due that is to be paid by the next federal estimated income tax due date, Net
Cash Flow shall be distributed among the Interest Holders in proportion to
their respective Percentage Interests at the time of such distribution.

 

(b)                                 Other Distributions of Net Cash
Flow.  Except as otherwise provided in Article XIII
hereof and subject to any contractual limitations imposed on the Company,
including pursuant to any of the Loan Documents, if Net Cash Flow is greater
than the Tax Due, the excess of the Net Cash Flow over the Tax Due may be
distributed, at such times as the Board may determine, to the Interest Holders
in accordance with their respective Percentage Interests.

 

4.2                           Amounts Withheld. 
All amounts withheld pursuant to the Code or any provision of any state
or local tax law with respect to any payment, distribution or allocation to the
Company or the Members shall be treated as amounts distributed to the Members
pursuant to this Article IV for all purposes under this Agreement.  The Company is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over
to any federal, state or local government any amounts required to be so
withheld pursuant to the Code or any provisions of any other federal, state or
local law and shall allocate any such amounts to the Members with respect to
which such amount was withheld.

 

Article V

MANAGEMENT

 

5.1                           Powers of the Members.

 

(a)                                  Except as otherwise provided hereunder,
the business and affairs of the Company shall be managed by the Members acting
by a Majority in Interest.  No Member,
acting solely in its capacity as a Member, shall act as an agent of the Company
or have any authority to act for or to bind the Company except when authorized
by a Majority in Interest or such greater vote as may be required
hereunder.  In addition to the rights and
duties of the Members set forth elsewhere in this Agreement and subject to the
other provisions of this Agreement, including Section 5.2 below, the
Members shall be responsible for and are hereby authorized to:

 

(i)                                     control the day to day operations of the
Company;

 

(ii)                                  carry out and effect all directions of
the Members and the Board;

 

(iii)                               select and engage the Company’s accountants,
attorneys, engineers and other professional advisors;

 

(iv)                              apply for and obtain appropriate
insurance coverage for the Company;

 

(v)                                 temporarily invest funds of the Company
in short term investments where there is appropriate safety of principal;

 

11

 

(vi)                              acquire in the name of the Company by
purchase, lease or otherwise, any real or personal property which may be
necessary, convenient or incidental to the accomplishment of the purposes of
the Company;

 

(vii)                           engage in any kind of activity and perform and carry
out contracts of any kind necessary to, in connection with, or incidental to
the accomplishment of the purposes of the Company described in Section 1.3,
so long as said activities and contracts may be lawfully carried on or
performed by a limited liability company under the Act and are in the ordinary
course of the Company’s business; and

 

(viii)                        negotiate, execute and perform all agreements,
contracts, leases, loan documents and other instruments and exercise all rights
and remedies of the Company in connection with the foregoing.

 

(b)                                 If, at any time, MGPI is in default of
any provision of the Food Grade Alcohol Off-Take Agreement or SEACOR Energy
Inc. is in default of any provision of the Ethanol Off-Take Agreement, the
non-defaulting party (or the Affiliate of such non-defaulting party that is a
Member of the Company) shall assume sole control of the rights provided in
Sections 5.1(a)(i), (iii), (v), (vii) and (viii) until such default
is cured.

 

(c)                                  If the Company is in default of the Loan
Agreement for failure to pay principal or interest for two consecutive months,
ICPH shall assume sole control of the rights provided in Sections 5.1(a)(i),
(iii), (v), (vii) and (viii) until the Company has produced positive
EBITDA and is current on the payment of principal and interest.

 

5.2                           Limitation on Powers of the
Members.

 

(a)                                  Notwithstanding the provisions of Section 5.1,
the Company may not do any of the following acts without the prior approval of
a Supermajority in Interest:

 

(i)                                     make any investment in any Person except
to the extent permitted by Section  5.1(a)(v);

 

(ii)                                  incur Debt, grant any lien upon any
Property, undertake any capital expenditure, dispose of any Property or issue
any Company guaranty, in each case in excess of $10,000, other than pursuant to
the Loan Documents or as otherwise provided in an approved Annual Budget;

 

(iii)                               sell, exchange, lease, mortgage, pledge or otherwise
dispose of all or substantially all of the Property in a single transaction or
series of related transactions;

 

(iv)                              terminate, dissolve or wind-up the
Company;

 

(v)                                 (1) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of the Company or
of all or a substantial part of the assets of the Company, (2) admit in
writing the Company’s inability to pay its debts as they become due, (3) make
a general assignment for the benefit of creditors, (4) have an order for
relief entered against the Company under applicable federal bankruptcy law, or (5) file
a 

 

12

 

voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or taking advantage of any
insolvency law or any answer admitting the material allegations of a petition
filed against the Company in any bankruptcy, reorganization or insolvency
proceeding;

 

(vi)                              engage in any transaction that would
result in a Change in Control of the Company;

 

(vii)                           commingle the Company’s funds with those of any other
Person;

 

(viii)                        amend the Certificate;

 

(ix)                                issue an Interest to any Person who is
not a Member prior to such Issuance and admit such Person as an additional
Member;

 

(x)                                   approve a merger or consolidation of the
Company with or into another Person or the acquisition by the Company of
another business (either by asset, stock or interest purchase) or any equity of
another entity;

 

(xi)                                authorize any transaction, agreement or
action on behalf of the Company that is unrelated to its purpose as set forth
in this Agreement, that otherwise contravenes this Agreement or that is not
within the usual course of the business of the Company; or

 

(xii)                             redeem any Interests or recapitalize the Company.

 

(b)                                 In addition to the foregoing, no Member
or officer of the Company may do any of the following acts, without the
unanimous consent of all Members:

 

(i)                                     Cause or permit the Company to engage in
any activity that is not consistent with the purposes of the Company as set
forth in Section 1.3 hereof;

 

(ii)                                  Knowingly do any act in contravention of
this Agreement;

 

(iii)                               Do any act in violation of applicable laws or
regulations;

 

(iv)                              Knowingly do any act which would make it
impossible to carry on the ordinary business of the Company, except as
otherwise provided in this Agreement;

 

(v)                                 Possess Property, or assign rights in
specific Property, for other than a Company purpose; or

 

(vi)                              Perform any act that would subject any
Member to liability as a partner or otherwise as a result of its ownership of
an Interest in any jurisdiction.

 

5.3                           Quorum; Required Vote. 
The presence, in person or by proxy, of a Majority in Interest shall
constitute a quorum for the transaction of business by the Members.  The

 

13

 

affirmative vote of a Majority in Interest shall
constitute a valid decision of the Members, except where a larger vote is
required by the Act, the Certificate or this Agreement.

 

5.4                           Procedure for Consent.

 

(a)                                  In any circumstances requiring the
approval or consent of the Members as specified in this Agreement, such
approval or consent shall, except as expressly provided to the contrary in this
Agreement, be given or withheld in the sole and absolute discretion of the
Members and conveyed in writing to the Board not later than ten (10) Business
Days after such approval or consent was requested by the Board or any
Member.  If the necessary approval or
consent of the Members to such action is received, the appropriate officers of
the Company shall be authorized and empowered to implement such action without
further authorization by the Members.

 

(b)                                 Notwithstanding any other provision of
this Agreement to the contrary, any approval or consent required of all or any
portion of the Members may be given at a meeting, in writing sent by U.S. first
class mail, by electronic transmission, or by facsimile transmission, and such
approval or consent need not be given simultaneously or in the same meeting or
conversation.

 

5.5                           Meetings. 
Meetings of the Members shall be called upon the written request of any
Member.  The call shall state the nature
of the business to be transacted.  Notice
of any such meeting shall be given to all Members not less than ten (10) days
nor more than sixty (60) days prior to the date of such meeting.  Members may vote in person or by proxy at any
such meeting.

 

5.6                           Officers.

 

(a)                                  Establishment; Nomination and
Election.  The officers of the Company shall be
nominated and elected by a Majority in Interest, and may consist of a President and General Manager, one or more
Vice Presidents, a Chief Financial Officer, a Treasurer, and a Secretary.  Additional offices may be created by Members
from time to time.  Any number of
offices may be held by the same person. 
The Members may choose not to fill any office for any period as they may
deem advisable, except that the offices of President and Secretary shall be
filled as expeditiously as possible.

 

(b)                                 Election and Term of Office. 
The officers of the Company shall be so nominated and elected annually
by a Majority in Interest at the Members’ first meeting held after January 1
of each year, or as soon thereafter as convenient.  Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided. 
The Members hereby appoint Randy Schrick as President and General
Manager of the Company, to serve in such capacity until his successor is duly
elected and qualified or until his earlier resignation or removal.

 

(c)                                  Removal. 
Any officer or agent elected in accordance with this Section 5.6
may be removed by the Board whenever in its judgment the best interests of the
Company would be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.

 

14

 

(d)                                 Vacancies. 
Any vacancy occurring in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board for the
unexpired portion of the term.

 

(e)                                  Compensation. 
Compensation of all officers, if any, shall be fixed by the Board, and
no officer shall be prevented from receiving such compensation by virtue of his
or her also being any employee, officer, director or agent of a Member or any
Member’s Affiliate(s).

 

(f)                                    Powers and Duties. 
The powers and duties of the officers will be those usually pertaining
to their respective offices, subject to the general direction and supervision
of the Members in consultation with the Board. 
Such powers and duties will include the following:

 

(i)                                     President and General Manager. 
The President and General Manager shall be the chief executive officer
of the Company and shall be responsible for the general and active management
of the operation of the Company subject to the authority of the Members.  The President and General Manager shall be
responsible for the administration of the Company, including general
supervision of the policies of the Company, general and active management of
the financial affairs of the Company, and the day-to-day operations of the
Company (including the hiring and firing of other officers and employees), and
shall execute bonds, mortgages, or other contracts in the name and on behalf of
the Company.

 

(ii)                                  Vice Presidents. 
Each Vice President shall familiarize himself or herself with the
affairs of the Company, and shall have such powers and perform such duties as
may be prescribed from time to time by the Board or the President.  At the request of the President, any Vice
President may act temporarily in the place of the President and when so acting
shall possess all the powers of and perform all the duties of that officer.

 

(iii)                               Chief Financial Officer.  The Chief
Financial Officer shall have charge of the accounting affairs of the Company
and shall be responsible for keeping the financial books and records of the
Company.

 

(iv)                              Secretary.  The Secretary
shall attend all meetings of the Board and all meetings of the Members, and
shall record all votes and the minutes of all such proceedings in books to be
kept for that purpose.  The Secretary
shall give, or cause to be given, any notice required to be given of any
meetings of the Board and the Members, and shall perform such other duties as
may be prescribed by the Board or the President, under whose supervision he
shall be.

 

5.7                           Affiliate Transactions.  Notwithstanding
anything herein to the contrary, any contract or transaction between the
Company or its Subsidiaries, on one hand, and one of the Members or its
Affiliates (excluding the Company and its Subsidiaries), on the other hand (an “Affiliate
Transaction”) may only be approved, amended, modified or waived on behalf
of the Company or its Subsidiaries by a majority of the Advisors then in office
who were not appointed by the Member that is a party to the Affiliate
Transaction, even though less than a quorum.

 

15

 

However, the Company shall be authorized to enter into
and execute the Loan Documents, the Ethanol Off-Take Agreement and the Food
Grade Alcohol Off-Take Agreement on the Effective Date without further action
by the Board or the Members.

 

5.8                           Cessation of Business.

 

(a)                                  If there is an EBITDA Loss in any one
fiscal quarter in excess of $500,000, MGP or ICPH shall have the right to cause
the Company to shut down the Plant.  If
either such Member elects to shut down the Plant (the “Electing Party”)
and the other Member objects to shutting down the Plant (the “Objecting
Party”), the Electing Party shall have ten days to withdraw its
election.  If the Electing Party fails to
withdrawal its election during such ten-day period, the Plant will remain open
and the Objecting Party shall be allocated eighty percent of each subsequent
quarter’s EBITDA Loss or EBITDA Profit. 
At the end of such quarter, the Electing Party may withdraw its
election.  If the election is withdrawn,
the allocation of Losses shall revert to being in accordance with Percentage
Interests under Section 3.2.  If the
election is withdrawn, the allocation of Profits, if any, shall be 80% to the
Objecting Party and 20% to the Electing Party until the amount of Profits
allocated to the Members on an 80-20 basis equals the prior amount of Losses
allocated to the Members on an 80-20 basis. 
Thereafter, subsequent Profits shall be allocated to the Members in
accordance with their respective Percentage Interests under Section 3.1.  Notwithstanding anything herein to the
contrary, if upon liquidation of the Company there have been insufficient
Profits to allocate on an 80-20 basis to fully offset the Losses allocated on
an 80-20 basis (including Profits or gain, if any, in connection with sale or
other liquidation of the Company), then the “Excess Loss” (as defined below)
allocated to the Objecting Party shall reduce on a dollar for dollar basis the
amount of the Capital Contribution otherwise distributable to such Member
pursuant to Section 13.2 and such amount shall instead be distributed to
the Electing Member.  For purposes of
this Section 5.8, “Excess Loss” equals the amount of Losses allocated to
the Objecting Party pursuant to this Section 5.8 in excess of the amount
of Losses that would have been allocated to such Member in accordance with its
Percentage Interest and not offset by allocations of Profits (on an 80-20
basis) pursuant to this Section 5.8. 
An example of such allocations of Profits and Losses is set forth on Exhibit C.

 

(b)                                 If there are three consecutive quarters
of Losses totaling $1,500,000 then either MGP or ICPH shall have the absolute
right to cause the Company to shut down the Plant, with neither Member having
the right to continue operating the plant.

 

(c)                                  Notwithstanding the provisions of Section 5.8(a):

 

(i)                                     if Net Working Capital drops below
$2,500,000, either Member shall have the right to cause the Company to shut
down the Plant; and

 

(ii)                                  if the Company is in default of the Loan
Agreement for failure to pay principal or interest for two months, ICPH may
elect to cause the Company to shut down the Plant.

 

5.9                           Indemnification of Advisors,
Officers and Members.

 

(a)                                  To the fullest extent permitted by law,
the Company, its receiver, or its trustee (in the case of its receiver or
trustee, to the extent of any Property) shall indemnify, save 

 

16

 

harmless, and pay all expenses, costs, or liabilities
of or judgments, fines, and claims against each Advisor and officer relating to
any liability or damage incurred by reason of such Advisor or officer being an
Advisor or officer or any act performed or omitted to be performed by such
Advisor or officer in connection with the business of the Company, including
attorneys’ fees incurred by such Advisor or officer in connection with the
defense of any such action (whether pursuant to a direct suit or derivative
suit), including all such liabilities under federal and state securities laws
(including the Securities Act of 1933, as amended).  Furthermore, the Company shall make advances
for expenses to such Advisor or officer with respect to the matters described
in this Section 5.9(a) to the maximum extent permitted by law.

 

(b)                                 To the fullest extent permitted by law,
the Company, its receiver, or its trustee (in the case of its receiver or
trustee, to the extent of Company Property) shall indemnify and hold harmless,
to the maximum extent permitted by law, each Member from and against any and
all liabilities, sums paid in settlement of claims, obligations, charges,
actions (formal or informal), claims (including, without limitation, claims for
personal injury under any theory or for real or personal property damage),
liens, taxes, damages (including, without limitation, punitive damages),
penalties, fines, investigation and remediation costs, and any other costs and
reasonable expenses (including, without limitation, reasonable attorneys’,
experts’, and consultants’ fees) imposed upon or incurred by any Member
(whether or not indemnified against by any other party) arising directly or
indirectly out of:

 

(i)                                     the past, present, or future treatment,
storage, disposal, arrangement for disposal, generation, use, presence, release
or threatened release of any Hazardous Substances at or from any past, present,
or future properties or assets of the Company, including, but not limited to,
actions brought under the Comprehensive Environmental Response Compensation and
Liability Act; and/or

 

(ii)                                  the violation or alleged violation by the
Company or any third party of any Environmental Laws;

 

provided, however, that
MGPI shall not be entitled to any indemnification under this Section  5.9(b) to
the extent that MGPI is obligated to indemnify, or is otherwise liable to, the
Company or ICPH under the Contribution Agreement or the LLC Interest Purchase
Agreement, as applicable.

 

(c)                                  The Company shall indemnify, save
harmless, and pay all expenses, costs, or liabilities of each Member if, for
the benefit of the Company, it makes any deposit, acquires any option, or makes
any other similar payment or assumes any obligation in connection with any
property proposed to be acquired by the Company and the Member suffers any
financial loss as the result of such action.

 

(d)                                 Notwithstanding the provisions of
paragraphs (a)-(c) above, no Member, Advisor, or officer of the Company,
or officer, director or shareholder of the any Member be indemnified from any
liability for fraud, bad faith, willful misconduct, or gross negligence, or
intentional breach of this Agreement.

 

17

 

(e)                                  Notwithstanding anything to the contrary
in any of paragraphs (a)-(c) above, in the event that any provision in any
of such Sections is determined to be invalid in whole or in part, such Section shall
be enforced to the maximum extent permitted by law.

 

5.10                    Compensation and Loans.

 

(a)                                  Compensation and Reimbursement. 
Except as otherwise provided in this Section 5.10 and except for
compensation approved by the Board for any Member or Advisor who is employed by
the Company, no Member or Advisor shall receive any salary, fee, or draw for
services rendered to or on behalf of the Company, nor shall any Member be
reimbursed for any expenses incurred by such Member on behalf of the Company.

 

(b)                                 Expenses. 
Each Member and Advisor may charge the Company for any direct expenses
reasonably incurred in connection with the Company’s business.  Any duty or obligation imposed upon a Member
or an Advisor under this Agreement shall be performed at the Company’s expense,
and no Member or Advisor shall have a duty or obligation to act if the Company
does not have adequate funds to pay any expense associated with such act.

 

(c)                                  Loans. Subject to Section 5.2(a)(ii), any
Person may, with the consent of a Majority in Interest, lend or advance money
to the Company.  If any Member shall make
any loan or loans to the Company or advance money on its behalf, the amount of
any such loan or advance shall not be treated as a Capital Contribution but
shall be a debt due from the Company. 
The amount of any such loan or advance by a lending Member shall be
repayable out of the Company’s cash and shall bear interest at such rate as the
Board and the lending Member shall agree but not in excess of the maximum rate
permitted by law.  Except as contemplated
by the Loan Documents (as the same may be amended from time to time), none of
the Members shall be obligated to make any loan or advance to, or on behalf of,
the Company.

 

5.11                    Issuance of Additional Interests
in Company.

 

(a)                                  If the Board shall determine that the
Company needs funds which cannot be borrowed from a third-party lender on
reasonable terms, any Member may make an additional Capital Contribution to the
Company in exchange for the issuance of additional Interests and/or, subject
the final approval of a Supermajority in Interest as required by Section 5.2(a)(xii),
the Board may seek additional investors in the Company.  Any such additional Capital Contributions
shall be made in accordance with Section 2.3.

 

(b)                                 If the Company issues and sells
additional Interests or a new class of interests in the Company pursuant to
this Section 5.11, the Company shall first offer to sell said additional
Interests or new class of interests to the then Members, who shall have the
preemptive right, for a period of ten (10) days following such offer, to
subscribe for and to purchase at the price fixed therefor up to an amount of
said additional Interests or said new interests in the Company (in such minimum
increments as the Board may require) which will allow, as nearly as practicable
as determined by the Board, each then Member to retain, in the aggregate with
respect to all Interests and the new class of interests in the Company, if any,
held by it, the same Percentage Interest as such Member has immediately before
the issuance of such additional Interests or said new class of interests in the
Company.

 

18

 

(c)                                  Each Person purchasing any additional
Interest or new class of interest in the Company pursuant to this Section 5.11
who is not a member of the Company immediately prior to such purchase shall be
deemed admitted to the Company as a Member upon the consent of a Supermajority
in Interest and shall be subject to and bound by this Agreement as if it were
an original party hereto.  No further
action or consent of any other Member shall be required for the admission of a
Member pursuant to this Section 5.11, and each Person who is or shall
become a Member hereby consents to each and every admission to the Company
pursuant to this Section 5.11.

 

5.12                    Tax Matters Member. 
ICPH is authorized to act as the “Tax Matters Partner” under the Code
and in any similar capacity under state or local law.

 

Article VI

ROLE OF ADVISORY BOARD

 

6.1                           Creation of Advisory Board.

 

(a)                                  The Company shall have a Board of
Advisors (the members of such Board referred to herein as “Advisors”) to advise
and consult with the Members or to act on behalf of the Members as expressly
permitted by this Agreement or a subsequent resolution of the Members.  The Board shall assist and make
recommendations to the Members with respect all aspects of the business and
affairs of the Company, including without limitation, the following matters:

 

(i)                                     strategic business planning;

 

(ii)                                  investment activities, including private
equity and venture capital investments;

 

(iii)                               major acquisitions or dispositions;

 

(iv)                              implementation of best practices in
effecting the Company’s business and operating strategies;

 

(v)                                 providing management performance
assessments and recommendations; and

 

(vi)                              assisting in resolving and mediating
differences that may, from time to time, arise with respect to the philosophy,
policies (including, without limitation, distribution and redemption policies)
and interests of the Members (including, without limitation, the valuation of
Interests), and the performance of the Company’s officers.

 

(b)                                 Except as otherwise expressly set forth
in this Agreement, the decisions of the Board shall be advisory only, and no
decision of the Board shall bind or control the authority of the Members in the
management and control of the Company. 
Notwithstanding the foregoing limitation, it is the intent of the Members
that Board recommendations be seriously and prudently considered by the Members
and the officers of the Company in carrying out their respective
responsibilities on behalf of the Company and the Members.

 

19

 

6.2                           Appointment of Advisors.

 

(a)                                  At all times prior to ICPH exercising its
purchase rights pursuant to the ICPH Option, the Board shall be comprised of
six (6) Advisors as follows: (i) MGPI shall have the sole right to
designate one-half of the Advisors to the Board; and (i) ICPH shall have
the sole right to designate one-half of the Advisors to the Board.

 

(b)                                 At all times after ICPH exercises its
purchase rights pursuant to the ICPH Option, the Board shall be comprised of
six Advisors as follows: (i) MGPI shall have the sole right to designate
two Advisors to the Board; and (i) ICPH shall have the sole right to
designate four Advisors to the Board.

 

(c)                                  The initial MGPI designees to the Board
shall be Timothy W. Newkirk, John Speirs and Randy Schrick.  The initial ICPH designees to the Board shall
be Peter Coxon, Evan Behrens and Timothy Power.

 

(d)                                 Advisors designated to serve on the Board
may only be removed (with or without cause) by the Member having the right to
designate such Advisors, and any vacancy caused by the death or resignation or
removal from the Board of any Advisor shall be filled by only the Member who
designated the Advisor creating such vacancy.

 

(e)                                  Each Advisor shall be required, as a
condition of service on the Board, to execute and deliver a confidentiality
agreement in form and substance consistent with Section  7.3, respecting
the maintenance of the Company’s confidential information and trade secrets.

 

6.3                           Board Meetings.

 

(a)                                  Regular meetings of the Advisors shall be
held on a quarterly basis or more frequently as determined by the Board.  In addition, any Advisor may call a meeting
of the Board upon at least 5 days’ Notice to the other Advisors.  A written waiver of such notice, signed by
each Advisor entitled to notice, whether before or after the date stated therein,
shall be deemed equivalent to notice; provided that
neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Advisors need be specified in such written waiver of
notice.  Attendance of an Advisor at a
meeting also shall constitute a waiver of notice of such meeting. Meetings of
the Board shall be held at the principal offices of the Company as set forth in
Section 1.4 hereof, or at such other place as shall be designated from
time to time by the Advisor calling the meeting.  At any meeting, any Advisor may participate
by telephone or similar communication equipment, provided that the Advisors
participating in such meeting can hear each other.  Meetings shall be held in accordance with a
schedule established by the Chairman of the Advisory Board.

 

(b)                                 No action may be taken at a meeting of
the Board unless a quorum is present. A quorum shall consist of at least a
majority of the total number of Advisors then in office; provided that such
majority present includes at least one Advisor appointed by MGPI and at least
one Advisor appointed by ICPH. 
Notwithstanding the foregoing, the requirement for the presence of at
least one Advisor appointed by each Member shall not apply to a meeting for
which notice is given pursuant to Section 6.3(a) unless the absence
of all such Advisors appointed by a Member is due to unavoidable circumstances
as determined by a majority of the 

 

20

 

total number of Advisors then sitting on the Board in
their reasonable discretion.  Each
Advisor shall be entitled to cast one vote with respect to any decision
requiring the approval of the Board.  All
actions by the Board must be approved by a majority of the total number of
Advisors then sitting on the Board.

 

(c)                                  Any action requiring the approval of the
Board may be taken in any manner convenient to the Board (including by meetings
in person, telephonic and video conference meetings, votes by electronic mail
or other electronic means or by written consent), so long as (i) such
action is taken or approved by a majority of the total number of the Advisors
then in office and (ii) each Advisor is provided with reasonable prior
notice of any such proposed action or meeting. 
Minutes or comparable written records of all Board meetings or actions
shall be maintained by the Company at the direction of the Board.

 

6.4                           Governance of Advisory Board. 
The Board shall establish procedures for (i) the purposes of
conducting the business of the Board, including the appointment of a chairman, (ii) recommendations
in connection with the appointment and/or filling of vacancies, and (iii) the
general governance of its affairs.  The
failure to establish any such procedures shall not affect the validity of any
action taken by the Board in accordance with this Agreement.

 

Article VII

REPRESENTATIONS, WARRANTIES AND
COVENANTS

 

7.1                           In General. 
As of the date hereof, each of the Members hereby makes each of the
representations, warranties and covenants applicable to such Member as set
forth in Article VII to each other Member and to the Company, and all of
which shall survive the execution of this Agreement.

 

7.2                           Representations and Warranties. 
Each Member hereby represents and warrants that:

 

(a)                                  Due Incorporation or Formation;
Authorization of Agreement.  If such Member
is a corporation, a limited liability company or a partnership, it is duly
organized or duly formed, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, organization or formation and has the
corporate, limited liability company or partnership power and authority to own
its property and carry on its business as owned and carried on at the date
hereof and as contemplated hereby.  Such
Member is duly licensed or qualified to do business and in good standing in
each of the jurisdictions in which the failure to be so licensed or qualified
would have a material adverse effect on its financial condition or its ability
to perform its obligations hereunder. 
Such Member has the individual, corporate, limited liability company or
partnership power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and, if such partner is a corporation,
limited liability company or partnership, the execution, delivery, and
performance of this Agreement has been duly authorized by all necessary
corporate, limited liability company or partnership action.  This Agreement constitutes the legal, valid,
and binding obligation of such Member.

 

(b)                                 No Conflict With Restrictions; No
Default.  Neither the execution, delivery and
performance of this Agreement nor the consummation by such Member of the 

 

21

 

transactions contemplated hereby (i) will
conflict with, violate, or result in a breach of any of the terms, conditions
or provisions of any law, regulation, order, writ, injunction, decree,
determination, or award of any court, any governmental department, board,
agency, or instrumentality, domestic or foreign, or any arbitrator, applicable
to such Member, (ii) will conflict with, violate, result in a breach of,
or constitute a default under any of the terms, conditions or provisions of the
articles of incorporation, bylaws, articles of organization, operating agreement
or partnership agreement of such Member or of any material agreement or
instrument to which such Member is a party or by which such Member is or may be
bound or to which any of its material properties or assets is subject, (iii) will
conflict with, violate, result in a breach of, constitute a default under
(whether with notice or lapse of time or both), accelerate or permit the
acceleration of the performance required by, give to others any material
interests or rights, or require any consent, authorization or approval under
any indenture, mortgage, lease agreement or instrument to which such Member is
a party or by which such Member is or may be bound, or (iv) will result in
the creation or imposition of any lien upon any of the material properties or
assets of such Member.

 

(c)                                  Governmental Authorizations. 
Any registration, declaration or filing with, or consent, approval,
license, permit or other authorization or order by, any governmental or
regulatory authority, domestic or foreign, that is required in connection with
the valid execution, delivery, acceptance and performance by such Member under
this Agreement or the consummation by such Member of any transaction
contemplated hereby has been completed, made or obtained on or before the
effective date of this Agreement.

 

(d)                                 Litigation. 
There are no actions, suits, proceedings or investigations pending or,
to the knowledge of such Member, threatened against or affecting such Member or
any of its properties, assets or businesses in any court or before or by any
governmental department, board, agency or instrumentality, domestic or foreign,
or any arbitrator which could, if adversely determined (or, in the case of an
investigation could lead to any action, suit, or proceeding, which if adversely
determined could) reasonably be expected to materially impair such Member’s
ability to perform its obligations under this Agreement or to have a material
adverse effect on the consolidated financial condition of such Member; and such
Member has not received any currently effective notice of any default, and such
Member is not in default, under any applicable order, writ, injunction, decree,
permit, determination, or award of any court, any governmental department,
board, agency, or instrumentality, domestic or foreign, or any arbitrator which
could reasonably be expected to materially impair such Member’s ability to
perform its obligations under this Agreement or to have a material adverse
effect on the consolidated financial condition of such Member.

 

(e)                                  Investigation. 
Such Member is acquiring its Interest in the Company based upon its own
investigation and, in the case of ICPH, in reliance on the representations,
warranties and covenants of MGPI set forth in the Contribution Agreement and
the LLC Interest Purchase Agreement, and the exercise by such Member of its
rights and the performance of its obligations under this Agreement will be
based upon its own investigation, analysis and expertise and, in the case of
ICPH, the representations, warranties and covenants of MGPI set forth in the
Contribution Agreement and the LLC Interest Purchase Agreement.  Such Member’s acquisition of its Interest in
the Company is being made for its own account for investment, and not with a
view to the sale or distribution thereof. 
Such Member is a sophisticated investor possessing an 

 

22

 

expertise in analyzing the benefits and risks
associated with acquiring investments that are similar to the acquisition of
its Interest in the Company.

 

7.3                           Confidentiality. 
Each Member hereby agrees to keep confidential all non-public
proprietary information of the Company (“Confidential Information”)
including financial information, customer lists, supplier lists, budgets,
concepts, ideas, projects and proposals, and any and all other intellectual
property or trade secrets of the Company. 
Each Member shall hold Confidential Information in confidence and
protect it with the same degree of care with which it protects its own
information of like importance but in no event less than reasonable care.  Notwithstanding the foregoing, the
restrictions contained in this Section 7.3 shall not apply to any
information that: (a) is now, or subsequently becomes, publicly available
other than as the result of an unauthorized disclosure by such Member or any of
its employees or agents; (b) was known to such Member or any of its
employees or agents and was legitimately in such party’s possession, without
any prior obligation to the Company to keep such information confidential,
prior to such Member obtaining such information in its capacity as a Member; (c) such
Member or any of its employees or agents receives from a third party having
legitimate possession of such information and who is not under any obligation
to keep such information confidential; or (d) such Member or any of its
employees or agents independently acquires or develops without use of any
information obtained by such Member in its capacity as a Member.

 

7.4                           Nonsolicitation. 
Each Member hereby agrees as follows:

 

(a)                                  While a Member and for a period of two
years thereafter, such Member shall not, directly or indirectly, and shall
cause any of his or her Affiliates not to: (i) induce or attempt to induce
any employee of the Company and its Subsidiaries to leave such employment; or (ii) induce
or attempt to induce any customer, supplier, vendor, licensee, distributor,
contractor, or other business relation of the Company and its Subsidiaries to
cease doing business with, or materially and adversely alter its business
relationship with, the Company and its Subsidiaries; provided,
however, that general advertising or
other recruiting efforts not specifically targeting such persons shall not be
deemed to be a breach of the restrictions set forth in this paragraph.

 

(b)                                 While a Member and for a period of two
years thereafter, such Member shall not make or solicit, or encourage others to
make or solicit, directly or indirectly, any derogatory or negative statement
or communication about the Company and its Subsidiaries or their businesses,
services, or activities; provided, however,
that such restriction shall not prohibit truthful testimony compelled by legal
process.  Notwithstanding anything herein
to the contrary, nothing in this paragraph (b) shall prevent any Member
from exercising such Member’s authority, or enforcing such Member’s rights or
remedies, under this Agreement, under any other contract, or applicable law.

 

(c)                                  The provisions of this Section shall
be in addition to and not in lieu of the provisions of any other written
agreement between the Company or its Subsidiaries and any Member.

 

23

 

Article VIII

BOOKS AND RECORDS

 

8.1                           Books and Records. 
The Company shall maintain at its principal place of business separate
books of accounts for the Company which shall show a true and accurate record
of all costs and expenses incurred, all changes made, all credits made and
received, and all income derived in connection with the conduct of the Company
and the operation of its business in accordance with GAAP consistently applied,
and, to the extent inconsistent therewith, in accordance with this Agreement.  The Company shall also maintain at its
principal place of business such books and records as may be required under the
Act.  The Company shall use either the
cash or accrual method of accounting (as determined by the Board) in
preparation of its annual reports and for tax purposes and shall keep its books
and records accordingly.  Any Member or
its designated representative shall have the right, at any reasonable time, to
have access to and inspect and copy (at such Member’s expense) the contents of such
books or records.

 

8.2                           Reports.

 

(a)                                  In General. 
The Chief Financial Officer, or, in the absence of a Chief Financial
Officer, the Board, shall be responsible for the preparation of financial
reports of the Company and the coordination of financial matters of the Company
with the Company’s attorneys and accountants.

 

(b)                                 Annual Reports. 
Within ninety (90) days after the end of each Fiscal Year and at such
time as distributions are made to the Members pursuant to Section 13.2
hereof following the occurrence of a Liquidating Event, the Chief Financial
Officer, or, in the absence of a Chief Financial Officer, the Board, shall
cause to be prepared and each Member to be furnished with financial statements,
audited or unaudited as determined by the Board, prepared in all material
respects on an accrual income tax basis, and, to the extent inconsistent
therewith, in accordance with this Agreement, including the following:

 

(i)                                     A copy of the balance sheet of the
Company as of the last day of such Fiscal Year;

 

(ii)                                  A statement of income or loss for the
Company for such Fiscal Year;

 

(iii)                               A statement of the Members’ Capital Accounts and
changes therein for such Fiscal Year; and

 

(iv)                              A statement of the Company’s Net Cash
Flow for such Fiscal Year.

 

(c)                                  Quarterly Reports. 
Within thirty (30) days after the completion of each fiscal quarter, the
Chief Financial Officer, or, in the absence of a Chief Financial Officer, the
Board, shall cause the Company’s regularly prepared unaudited financial
statements to be distributed to the Members.

 

24

 

(d)                                 Monthly Reports. 
Within fifteen (15) days after the completion of each calendar month,
the Chief Financial Officer, or, in the absence of a Chief Financial Officer,
the Board, shall cause the Company’s regularly prepared unaudited financial
statements to be distributed to the Members.

 

8.3                           Tax Information. 
Necessary tax information shall be delivered to each Member after the
end of each Fiscal Year of the Company together with the annual reports
described in Section 8.2(b) hereof.

 

Article IX

AMENDMENTS

 

9.1                           Amendments.

 

(a)                                  Amendments to this Agreement may be
proposed by Members holding ten percent (10%) or more of the Interests.  Following such proposal, the Secretary, or,
in the absence of a Secretary, the Board, shall submit to the Members a
verbatim statement of any proposed amendment, providing that counsel for the
Company shall have approved of the same in writing as to form, and the
Secretary, or in the absence of a Secretary, the Board shall include in any
such submission a recommendation as to the proposed amendment.  The Members shall vote on the proposed
amendment by written consent or shall call a meeting to vote thereon and to
transact any other business that it may deem appropriate.  A proposed amendment shall be adopted and be
effective as an amendment hereto if it receives the affirmative vote of a
Supermajority in Interest.

 

(b)                                 Notwithstanding Section 9.1(a) hereof,
this Agreement shall not be amended without the consent of each Member
adversely affected if such amendment would 
(i) modify the limited liability of a Member, (ii) alter in a
manner disproportionate to the other Members and such Member’s Percentage
Interest the interest of a Member in Profits, Losses, Net Cash Flow, other
items, or any Company distribution, except upon the sale of additional
Interests, or (iii) reduce the percentage of Members or Advisors required
to approve, or consent to, any action to be taken by the Members or Advisors on
behalf of the Company.

 

Article X

TRANSFERS OF INTERESTS

 

10.1                    Restriction on Transfers. 
Except as otherwise permitted by this Agreement, no Member or Interest
Holder shall Transfer all or any portion of its Interests without the consent
of a Supermajority in Interest.  In the
event that any Member or Interest Holder shall Transfer any of its Interests,
any such transfer, pledge, hypothecation, collateral assignment or encumbrance
may only be made pursuant to the foregoing consent requirement and to an agreement
that requires the transferee, pledgee or secured party to be bound by all of
the terms and conditions of this Article X, and regardless of whether such
an agreement is executed, the transferee, pledgee or secured party shall, in
fact, be bound by all of the terms and conditions of this Article X.

 

10.2                    Permitted Transfers. 
Subject to the conditions and restrictions set forth in Section 10.3
hereof and below in this Section 10.2, a Member may at any time Transfer
all or any portion of its Interests to (a) any other Member, (b) any
member of the transferor’s Family,

 

25

 

(c) any Affiliate of the transferor, including
any equity owner of the transferor, (d) the transferor’s administrator or
trustee to whom such Interests are transferred involuntarily by operation of
law, (e) in the case of a transferor which is a trust or estate, any
beneficiary of such transferor trust or estate or any trust for the exclusive
benefit of one or more of the beneficiaries of the transferor trust or estate
or of members of any such beneficiary’s Family, (f) subject to compliance
with Section 10.1, any purchaser approved by a Supermajority in Interest
or (g) a pledge to a commercially acceptable lender providing financing to
a Member, but any foreclosure of such pledge shall be treated as an Involuntary
Transfer.  Any Transfer permitted by this
Section 10.2 is referred to in this Agreement as a “Permitted Transfer”.  ICPH acknowledges that MGPI has pledged, or
contemporaneously with the execution of this Agreement will pledge, its
Interest to Wells Fargo Bank, National Association.

 

10.3                    Conditions to Permitted Transfers. 
A Transfer shall not be treated as a Permitted Transfer under Section 10.2
hereof unless and until each of the following conditions is satisfied or is
waived by the Board:

 

(a)                                  Except in the case of a Transfer of
Interests involuntarily by operation of law (an “Involuntary Transfer”), the
transferor and transferee shall execute and deliver to the Company such documents
and instruments of conveyance as may be necessary or appropriate in the opinion
of counsel to the Company to effect such Transfer and to confirm the agreement
of the transferee to be bound by the provisions of this Article X.  In the case of a Transfer of Interests
involuntarily by operation of law, the Transfer shall be confirmed by
presentation to the Company of legal evidence of such Transfer, in form and
substance satisfactory to counsel to the Company and shall be subject to the
purchase rights set forth in Section 10.4. 
In all cases, the Company shall be reimbursed by the transferor and/or
transferee for all costs and expenses that it reasonably incurs in connection
with such Transfer, including any and all accounting and other expenses
incurred as a result of adjustments to basis of the Company’s assets pursuant
to Code Section 743(b).

 

(b)                                 Except in the case of an Involuntary
Transfer, the transferor shall furnish to the Company an opinion of counsel,
which counsel and opinion shall be satisfactory to the Company, that the
Transfer will not cause the Company to terminate for federal income tax
purposes and that such Transfer will not cause the application of the rules of
Code Sections 168(g)(1)(B) and 168(h) (generally referred to as
the “tax exempt entity leasing rules”) or similar rules to apply to the
Company, the Property, or the Members.

 

(c)                                  The transferor and transferee shall
furnish the Company with the transferee’s taxpayer identification number,
sufficient information to determine the transferee’s initial tax basis in the
Interests transferred, and any other information reasonably necessary to permit
the Company to file all required federal and state tax returns and other
legally required information statements or returns.  Without limiting the generality of the
foregoing, the Company shall not be required to make any distribution otherwise
provided for in this Agreement with respect to any transferred Interests until
it has received such information.

 

(d)                                 Except in the case of an Involuntary
Transfer, either (a) such Interests shall be registered under the
Securities Act of 1933, as amended, and any applicable state securities laws,
or (b) the transferor shall provide an opinion of counsel, which opinion
and 

 

26

 

counsel shall be satisfactory to the Company, to the
effect that such Transfer is exempt from all applicable registration
requirements and that such Transfer will not violate any applicable laws
regulating the Transfer of securities.

 

10.4                    Involuntary Transfer — Purchase
Rights.

 

(a)                                  Upon an Involuntary Transfer, a Majority
in Interest (determined by excluding any affected Member) may, but is not
required to, elect to cause the Company to purchase such Member’s Interest as
provided in this Section 10.4 by providing written notice to the
withdrawing Member or such withdrawing Member’s successors or personal
representative (the “Withdrawing Member”).  Such notice shall be given to the Withdrawing
Member within ninety (90) days following the date of the Event of Withdrawal
(the “Valuation Date”).  The
purchase price for any Interest to be purchased by the Company pursuant to this
Section 10.4 shall be the fair market value of such Interest as agreed to
among the Members, including the Withdrawing Member, or otherwise determined in
accordance with this Section 10.4.

 

(b)                                 If the Members cannot agree upon a fair
market value, the value shall be determined by an appraiser (the “Appraiser”)
agreed to by the Members (including the Withdrawing Member).  If the Members (including the Withdrawing
Member) cannot agree as to an Appraiser, then the non-withdrawing Member shall
select one appraiser, the Withdrawing Member shall select one appraiser, and a
third shall be selected by the first two appraisers chosen.  The decision of a majority of the appraisers
shall be binding on al the parties and such majority of the appraisers shall be
deemed to be the “Appraiser” for purposes of this Section 10.4.  The fair market value of the Interest to be
purchased shall be equal to the amount, if any, that the Withdrawing Member
would receive if the Property (including the non-liquid assets, valued at their
Market Value (hereinafter defined)) were sold as of the Valuation Date, the
Company was dissolved and the proceeds from the hypothetical sale of the
Property as of the Valuation Date were distributed to the Members in accordance
with Section 13.2; provided, however, that the Members shall estimate for purposes of
such calculation the reasonable selling and liquidation expenses and, except to
the extent otherwise taken into account in determining the Market Value of
non-liquid assets under Section 10.4(c), all Company debts, liabilities
and obligations as of such date.

 

(c)                                  For purposes of this Section 10.4,
the “Market Value” of the non-liquid assets of the Company shall mean the gross
fair market value thereof as determined by the Appraiser.  If appraisal of any real property of the
Company will be necessary, the Appraiser shall be an M.A.I. member of the
American Institute of Real Estate Appraisers or an S.R.A. member of the Society
of Real Estate Appraisers (or any successor association or body of comparable
standing if neither of such associations is then in existence).

 

(d)                                 Within fifteen (15) days after the Market
Value of the non-liquid assets is determined, the Company shall give notice to
the Withdrawing Member and the other Members as to the purchase price of the
Withdrawing Member’s Interest.  A
Majority in Interest (determined by excluding the Withdrawing Member) shall
then have the option (i) to not cause the Company to purchase the
Withdrawing Member’s Interest, in which event the Withdrawing Member shall have
only the rights described in Section 10.7 of a Person who acquired one or
more Interests but who is not admitted as a Substitute Member, or (ii) to
have the Company 

 

27

 

purchase the Interest, and if so, shall promptly set
the date on which the closing of the purchase shall occur (the “Closing Date”),
which date shall not be less than ten (10) days or more than thirty (30)
days from the date the notice by the Company is given.  At the closing, the Withdrawing Member shall
execute and deliver to the Company such deeds, bills of sale, assignments and
other instruments as shall reasonably be requested by the Company to effect the
Transfer, as of the Valuation Date, of all the Withdrawing Member’s right,
title and interest in the Company and its Property.   Unless otherwise agreed upon by the Company
and the Withdrawing Member, the Company shall pay the purchase price to the
Withdrawing Member as follows:

 

(i)                                     An amount equal to twenty percent (20%)
of the purchase price shall be paid to the Withdrawing Member on the Closing
Date by wire transfer of immediately available funds.

 

(ii)                                  The balance of the purchase price shall
be evidenced by a promissory note, dated as of the Closing Date, from the
Company to the Withdrawing Member providing for principal to be payable in 20
consecutive equal quarterly installments, commencing three (3) months from
the Closing Date, and for accrued interest to be payable on each principal
installment date.  The interest rate
payable on the unpaid balance of the promissory note shall be adjusted annually
and for any given period shall be an annual rate equal to the Prime Rate (as
defined in the Term Loan Agreement)  in
effect on the first banking day of such year plus one percent (1.0%).  Such promissory note shall be secured by the
Interest acquired and shall also be due and payable in full upon the
commencement of distributions upon the liquidation of the Company or the sale
or other disposition of all or substantially all the Company’s assets.  The Company shall have the right to prepay
the note, in whole or in part, from time to time, without penalty.

 

The purchase price shall be deemed a payment with respect to
the Property under Section 736(b) of the Code to the extent of the
Withdrawing Member’s Capital Account balance, and the remainder shall be deemed
a distributive share under Section 736(a) of the Code.

 

(e)                                  The Company shall pay the fees and
expenses of the Appraiser engaged pursuant to this Section 10.4, but the
cost thereof shall not be taken into account by the Appraiser in determining
the purchase price of the Withdrawing Member’s Interest.

 

(f)                                    The Company, by action of the Members,
may assign its purchase rights hereunder to any Member or other Person.

 

10.5                    Drag Along Rights.

 

(a)                                  In the event of an Approved Sale (as
defined below), each Member will (i) consent to and raise no objections
against the Approved Sale or the process pursuant to which the Approved Sale
was arranged and (ii) if the Approved Sale is structured as a sale of
Interests, each Member will agree to sell his, her or its Interest on the terms
and conditions of the Approved Sale. 
Each Member will take all necessary and desirable actions as directed by
the Board in connection with the consummation of any Approved Sale, including
without limitation executing the applicable purchase agreement and granting
indemnification rights; provided that 

 

28

 

any Member required to make indemnification payments
in connection with any Approved Sale shall have a right to recover from the
other Members to the extent that the amount required to be paid by such Member
is disproportionate to the proportion of the total consideration received by
all Members, compared to the consideration actually received by such Member.

 

(b)                                 Each Member will bear his, her or its pro rata share (based upon the number of Interests sold) of
the reasonable costs of any sale of Interests pursuant to an Approved Sale to
the extent such costs are incurred for the benefit of all selling Members and
are not otherwise paid by the Company or the acquiring Person.  Costs incurred by any Member on his, her or
its own behalf will not be considered costs of the Approved Sale.

 

(c)                                  For purposes of this Section 10.5,
an “Approved Sale” means the sale of the Company, in a single
transaction or a series of related transactions, to a third party (i) pursuant
to which such third party proposes to acquire all of the outstanding Interests
(whether by merger, consolidation, recapitalization, reorganization, purchase
of the outstanding Interests or otherwise) or all or substantially all of the
assets of the Company, (ii) which has been approved by a Supermajority in
Interest, and (iii) pursuant to which all Members will receive (whether in
such transaction or, with respect to an asset sale, upon a subsequent
liquidation) the same form and amount of consideration per Percentage Interest
or, if any Members are given an option as to the form and amount of
consideration to be received, all Members are given the same option.

 

10.6                    Prohibited Transfers.

 

(a)                                  Any purported Transfer of Interests that
is not a Permitted Transfer shall be null and void and of no force or effect
whatever; provided that, if the Company is required to recognize a Transfer
that is not a Permitted Transfer, the Interest Transferred shall be strictly
limited to the transferor’s rights to allocations and distributions as provided
by this Agreement with respect to the transferred Interests, which allocations
and distributions may be applied (without limiting any other legal or equitable
rights of the Company) to satisfy any debts, obligations, or liabilities for
damages that the transferor or transferee of such Interests may have to the
Company.

 

(b)                                 In the case of a Transfer or attempted
Transfer of Interests that is not a Permitted Transfer, the parties engaging or
attempting to engage in such Transfer shall be liable to indemnify and hold
harmless the Company and the other Members from all cost, liability, and damage
that any of such indemnified Persons may incur (including, without limitation,
incremental tax liability and lawyers’ fees and expenses) as a result of such
Transfer or attempted Transfer and efforts to enforce the indemnity granted
hereby.

 

10.7                    Rights of Transferee or Assignees. 
A Person who acquires one or more Interests but who is not admitted as a
Substituted Member pursuant to Section 10.8 hereof shall be entitled only
to allocations and distributions with respect to such Interests in accordance
with this Agreement, and shall have no right to any information or accounting
of the affairs of the Company, shall not be entitled to inspect the books or
records of the Company, and shall not have any of the rights of a Member under
the Act or this Agreement.

 

29

 

10.8                    Admission of Substituted Members. 
Subject to the other provisions of this Article X, a transferee of
Interests may be admitted to the Company as a Substituted Member only upon
satisfaction of the conditions set forth below in this Section 10.8:

 

(a)                                  A Majority in Interest other than the transferor
Member consent to such admission, and the terms and conditions of such
admission, which consent may be given or withheld in the sole and absolute
discretion of the Members (e.g., such consent may be withheld unreasonably);

 

(b)                                 The Interests with respect to which the
transferee is being admitted were acquired by means of a Permitted Transfer;

 

(c)                                  The transferee becomes a party to this
Agreement as a Member and executes such documents and instruments as the Board
may reasonably request, as may be necessary or appropriate to confirm such
transferee as a Member in the Company and such transferee’s agreement to be
bound by the terms and conditions hereof;

 

(d)                                 The transferee pays or reimburses the
Company for all reasonable legal, filing, and publication costs that the
Company incurs in connection with the admission of the transferee as a Member
with respect to the Transferred Interests;

 

(e)                                  The transferee of Interests (other than,
with respect to clauses (i) and (ii) below, a transferee that was a Member
prior to the Transfer) shall, by written instrument in form and substance
reasonably satisfactory to the Board (and, in the case of clause (iii) below,
the transferor Member), (i) make representations and warranties to each
nontransferring Member equivalent to those set forth in Section 7.2, (ii) accept
and adopt the terms and provisions of this Agreement, including this Article X,
and (iii) assume the obligations of the transferor Member under this
Agreement with respect to the transferred Interests.  The transferor Member shall be released from
all such assumed obligations except (x) those obligations or liabilities
of the transferor Member arising out of a breach of this Agreement, (y) those
obligations or liabilities of the transferor Member based on events occurring,
arising or existing prior to the date of Transfer, and (z) any Capital
Contribution or other financing obligation (including any loan guarantees) of
the transferor Member under this Agreement; and

 

(f)                                    If the transferee is not an individual of
legal majority, the transferee provides the Company with evidence satisfactory
to counsel for the Company of the authority of the transferee to become a
Member and to be bound by the terms and conditions of this Agreement.

 

10.9                    Distributions and Applications in
Respect to Transferred Interests.  If any
Interest is sold, assigned, or Transferred during any Fiscal Year in compliance
with the provisions of this Article X, Profits, Losses, each item thereof,
and all other items attributable to the Transferred Interest for such Fiscal
Year shall be divided and allocated between the transferor and the transferee
by taking into account their varying Interests during such Fiscal Year in
accordance with Code Section 706(d), using any conventions permitted by
law and selected by the Board.  All
distributions on or before the date of such Transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.  Solely for purposes

 

30

 

of making such allocations and distributions, the
Company shall recognize such Transfer not later than the end of the calendar
month during which it is given notice of such transfer, provided that, if the
Company is given notice of a Transfer at least ten (10) Business Days
prior to the transfer the Company shall recognize such Transfer as the date of
such Transfer, and provided further that, if the Company does not receive a
notice stating the date such Interest was transferred and such other information
as a Supermajority in Interest may reasonably require within thirty (30) days
after the end of the Fiscal Year during which the Transfer occurs, then all
such items shall be allocated, and all distributions shall be made, to the
Person who, according to the books and records of the Company, was the owner of
the Interest on the last day of the Fiscal Year during which the Transfer
occurs.  Neither the Company nor the
Members shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 10.9, whether or not any
such Member or the Company has knowledge of any Transfer of ownership of any
Interest.

 

10.10             Covenants. 
Each Member hereby represents, covenants and agrees with the Company for
the benefit of the Company and all Members, that (i) it is not currently
making a market in Interests and will not in the future make a market in
Interests, (ii) it will not Transfer its Interests on an established
securities market, a secondary market (or the substantial equivalent thereof)
within the meaning of Code Section 7704(b) (and any regulations,
proposed regulations, revenue rulings, or other official pronouncements of the
Internal Revenue Service or Treasury Department that may be promulgated or
published thereunder), and (iii) in the event such Regulations, revenue
rulings, or other pronouncements treat any or all arrangements which facilitate
the selling of partnership interests and which are commonly referred to as “matching
services” as being a secondary market or substantial equivalent thereof, it
will not Transfer any Interest through a matching service that is not approved
in advance by the Company.  Each Member
further agrees that it will not Transfer any Interest to any Person unless such
Person agrees to be bound by this Section 10.10 and to Transfer such
Interests only to Persons who agree to be similarly bound.

 

10.11             Co-Sale Rights.  No Member or Interest Holder may Transfer any
Interest (or equivalents) for value to any third party (except through a sale
pursuant to a public offering), unless each other Member or Interest Holder is
offered a pro rata right (with respect to any
Interests owned by such Member or Interest Holder individually at the time of
such sale, on a fully diluted basis) on not less than twenty (20)  days’ advance written notice to participate in any such
sale for a purchase price per Interest and on other terms and conditions no
less favorable to such other Members or Interest Holders than those applicable
to the Member or Interest Holder originally proposing to Transfer its
Interest.  In the event that the other
Members or Interest Holders fail to respond to such notice within such time
period, the Member or Interest Holder proposing to Transfer its Interest may
proceed with such Transfer without regard to the Co-Sale Right in this Section 10.11
provided that such Transfer is otherwise in compliance with this Agreement.

 

31

 

Article XI

MEMBER EVENTS

 

11.1                    Certain Events. 
Either Member may elect a remedy set forth in Section 11.2 if the
Members are unable to agree on a material decision with respect to the Company
within thirty (30) days of the request for a decision being raised.

 

11.2                    Remedies for Certain Events. 
A Member may, within 90 days of becoming aware of the occurrence of the
events specified in Section 11.1, give notice of the event to the other
Member. The notice must specify one of the following alternative remedies
(which are exclusive remedies):

 

(a)                                  Dissolution. 
Dissolution of the Company in accordance with Article XIII.

 

(b)                                 Mandatory Buy-Sell. 
Initiation of the sale of its Interests or the purchase of the other
Member’s Interests by giving the notice specified in Section 11.4.

 

If both Members give notices within that time period,
the notice given first prevails.

 

11.3                    Voluntary Buy-Sell. 
At any time after the first anniversary of the date of this Agreement
(but not earlier), if no prior notice under Section 11.2 has rightfully
been given, either Member may give a written notice to the other offering to
purchase the other Member’s Interest or sell its Interest to the other Member
in accordance with Section 11.4.

 

11.4                    Buy-Sell Offers in General. 
At any time after any of the events specified in Section 11.2(b) or
Section 11.3, either Member (the “Offeror”) may give written notice
(the “Offer”) to the other Member (the “Offeree”), stating that
the Offeror offers unconditionally at the option of the Offeree both:

 

(a)                                  to purchase the entire Interest of the
Offeree and

 

(b)                                 to sell the entire Interest of the
Offeror to the Offeree,

 

in each case for a purchase price equal to the dollar
amount which the Offeror would be willing to pay to the Company for all of the
Company’s Property and the proceeds of such transaction were distributed
pursuant to Section 13.2. 
Notwithstanding anything else in this Article XI, in the event that
ICPH is the Offeror within two (2) years after the Effective Date, the
purchase price offered by ICPH shall not be less than the price per Percentage
Interest that would be required for ICPH to exercise the ICPH Option.

 

11.5                    Terms of the Buy-Sell Offer. 
The Offer will be irrevocable by the Offeror until the earlier of (a) the
Buy-Sell Closing Date or (b) the date on which the Offeree elects to
purchase the Offeror’s Interest pursuant to Section 11.6(a)(ii). The Offer
will not have any other terms; provided, however,
that the purchasing Member will undertake to (i) assume at the Buy-Sell
Closing Date all known obligations of the selling Member to third parties in
connection with the selling Member’s Interest (with a corresponding reduction
in the purchase price) and (ii) use

 

32

 

commercially reasonable efforts to obtain the release
of the selling Member from known obligations between the date of the Offer and
the Buy-Sell Closing Date.

 

11.6                    Offeree’s Response to Buy-Sell
Offer.

 

(a)                                  Offeree’s Response. At any time during the 90 days following receipt of
the Offer, the Offeree may give the Offeror a written notice electing either
to:

 

(i)                                     sell the entire Interest of the Offeree
to the Offeror, or

 

(ii)                                  buy the entire Interest of the Offeror,

 

in either case upon the terms in this Article XI and
otherwise as set out in the Offer.

 

(b)                                 Effect of Offeree’s Failure to
Respond. If the
Offeree fails to give the notice within the 90-day period, then it will be
conclusively deemed to have accepted the Offer of the Offeror to purchase the
Offeree’s Member Interest pursuant to Section 11.4(a) in accordance
with the terms of the Offer.

 

11.7                    Closing and Date of the Buy-Sell
Closing.  The closing (the “Buy-Sell Closing”)
of the purchase and sale pursuant to Section 11.4 shall take place on the
45th day following the date on which the Offer under Section 11.4 is
received, or, if that day is not a Business Day, on the next following Business
Day (the “Buy-Sell Closing Date”). The Buy-Sell Closing Date will be
extended to the extent necessary for either Member to secure any required
governmental approval or consent to a date five Business Days following such
approval or consent so long as that Member is using commercially reasonable
efforts to pursue the approval or consent and every 30 days during the extension
delivers to the other Member a certificate that approval is being so pursued.
For purposes of this provision, “governmental approval or consent” includes
expiration of the Hart-Scott-Rodino waiting period and similar merger control
provisions that do not constitute formal approvals or consents. The Buy-Sell
Closing will take place at 11:00 AM local time on the Buy-Sell Closing Date at
the offices of the lawyers for the Company (or, if there are none, at the
offices of the lawyers for the purchasing Member).  At the Buy-Sell Closing, the purchasing
Member will pay the purchase price for the selling Member’s Member Interest in
immediately available funds, and the selling Member will deliver the an
assignment document with respect to the transferred Interests, free and clear
of all liens an encumbrances.

 

Article XII

POWER OF ATTORNEY

 

12.1                    Board as Attorney-In-Fact. 
Each Member hereby makes, constitutes, and appoints the Board, with full
power of substitution and resubstitution, its true and lawful attorney-in-fact
for it and in its name, place, and stead and for its use and benefit, to sign,
execute, certify, acknowledge, swear to, file, and record (a) all
certificates of formation, amended name or similar certificates, and other
articles, certificates and instruments (including counterparts of this
Agreement) which the Board may deem necessary or appropriate to be filed by the
Company under the laws of the State of Delaware or any other state or
jurisdiction in which the Company is doing or intends to do business and which
do not require the specific consent or appropriate vote of the Members; (b) any
and all amendments or changes to this

 

33

 

Agreement and the instruments described in (a), as now
or hereafter amended, which the Board may deem necessary or appropriate to
effect a change or modification of the Company in accordance with the terms of
this Agreement, including amendments or changes to reflect (i) the
exercise by the Board of any power granted to it under this Agreement and which
does not require the specific consent or appropriate vote of the Members; and (ii) any
amendments adopted by the Members in accordance with the terms of this
Agreement; (c) all certificates of cancellation and other instruments
which the Board may deem necessary or appropriate to effect the dissolution and
termination of the Company pursuant to the terms of this Agreement; and (d) any
other instrument which is now or may hereafter be required by law to be filed
on behalf of the Company or is deemed necessary or appropriate by the Board to
carry out fully the provisions of this Agreement in accordance with its
terms.  Each Member authorizes each such
attorney-in-fact to take any further action which such attorney-in-fact shall consider
necessary or advisable in connection with any of the foregoing, hereby giving
each such attorney-in-fact full power and authority to do and perform each and
every act or thing whatsoever requisite or advisable to be done in connection
with the foregoing as fully as such Member might or could do personally, and
hereby ratifying and confirming all that any such attorney-in-fact shall
lawfully do or cause to be done by virtue thereof or hereof.

 

12.2                    Nature as Special Power. 
The power of attorney granted pursuant to this Article XII:

 

(a)                                  Is a special power of attorney coupled
with an interest and is irrevocable;

 

(b)                                 May be exercised by any such
attorney-in-fact by listing the Members executing any agreement, certificate,
instrument, or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Members; and

 

(c)                                  Shall survive the death, disability,
legal incapacity, bankruptcy, insolvency, dissolution, or cessation of
existence of a Member and shall survive the delivery of an assignment by a
Member of the whole or a portion of its Interests (which assignment, the
Member, acknowledge and agree, is prohibited under this Agreement).

 

Article XIII

DISSOLUTION, WINDING UP AND SALE
OF BUSINESS

 

13.1                    Liquidating Events. 
The Company shall dissolve and commence winding up and liquidating upon
the first to occur of any of the following (“Liquidating Events”):

 

(a)                                  The sale of all or substantially all of
the Property;

 

(b)                                 Unanimous vote of the Members to
dissolve, wind up, and liquidate the Company;

 

(c)                                  At any time that the Company does not
then consist of at least one (1) Member;

 

(d)                                 A demand pursuant to Section 11.2;
or

 

34

 

(e)                                  The happening of any other event that makes
it unlawful, impossible or impractical to carry on the business of the Company.

 

Subject to paragraph (c) above, the death,
retirement, resignation, withdrawal, expulsion, dissolution, bankruptcy or any
other event causing the withdrawal with respect to any Member shall not cause
the dissolution of the Company, but rather the Company shall continue its
business notwithstanding any such occurrence with respect to a Member.  The Members hereby agree that any Member who
withdraws from the Company shall not be entitled to receive any distribution of
cash or Property from the Company as a result or consequence of such
withdrawal, but rather shall be entitled only to such allocations and
distributions with respect to its Interests as are specifically provided for in
this Agreement and shall be treated as a transferee of Interests who has not
been admitted as a Member.

 

13.2                    Winding Up. 
Upon the occurrence of a Liquidating Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members
and no Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, the winding up of the Company’s business and
affairs.  To the extent not inconsistent
with the foregoing, all covenants and obligations in this Agreement shall
continue in full force and effect until such time as the Company’s Property has
been distributed pursuant to this Section 13.2 and the Certificate has been
cancelled in accordance with the Act. 
The Board shall be responsible for overseeing the winding up and
dissolution of the Company, shall take full account of the Company’s
liabilities and Property, shall cause the Company’s Property to be liquidated as
promptly as is consistent with obtaining the fair value thereof, and shall
cause the proceeds therefrom, to the extent sufficient therefor, to be applied
and distributed in the following order:

 

(a)                                  First, to the payment and discharge of
all of the Company’s debts and liabilities to creditors, to the extent of the
Company’s liability therefor;

 

(b)                                 Second, subject to Section 5.8(a) if
applicable pro rata to the Members in proportion to
their respective unreturned Capital Contributions and Interest Holders in the
amounts equal to their then unreturned Capital Contributions; and

 

(c)                                  Third, the remaining balance, if any, to
the Members and Interest Holders, pro rata in
proportion to their respective Percentage Interests.

 

13.3                    Compliance With Certain Requirements
of Regulations; Deficit Capital Accounts.  In the event
the Company is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
(a)  distributions shall be made pursuant to this Article XIII to the
Members and Interest Holders in accordance with Section 13.2 (or, if
applicable, Section  13.6), except that (b) if any Member or Interest
Holder has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions, and allocations for all Fiscal Years, including
the Fiscal Year during which such liquidation occurs), such Member or Interest
Holder shall have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered
a debt owed to the Company or to any other Person for any purpose
whatsoever.  In the discretion of the
Board, a pro rata portion of the

 

35

 

distributions that would otherwise be made to the
Members and Interest Holders pursuant to this Article XIII may be:

 

(a)                                  distributed to a trust established for
the benefit of the Members and Interest Holders for the purposes of liquidating
Company assets, collecting amounts owed to the Company, and paying any
contingent or unforeseen liabilities or obligations of the Company or of the
Members arising out of or in connection with the Company.  The assets of any such trust shall be
distributed to the Members and Interest Holders from time to time, in the
reasonable discretion of the Board, in the same proportions as the amount
distributed to such trust by the Company would otherwise have been distributed
to the Members pursuant to Section 13.2 (or, if applicable, Section 
13.6); or

 

(b)                                 withheld to provide a reasonable reserve
for Company liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company, provided that such
withheld amounts shall be distributed to the Members and Interest Holders as
soon as practicable in accordance with Section 13.2 (or, if applicable, Section 
13.6).

 

13.4                    Deemed Distribution and
Recontribution.  Notwithstanding any other provision of this Article XIII,
in the event the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but
no Liquidating Event has occurred, the Property shall not be liquidated, the
Company’s liabilities shall not be paid or discharged, and the Company’s
affairs shall not be wound up.  Instead,
solely for federal income tax purposes, the Company shall be deemed to have
distributed the Property in kind to the Members and Interest Holders, who shall
be deemed to have assumed and taken subject to all Company liabilities, all in
accordance with their respective Percentage Interests.  Immediately thereafter, the Members and
Interest Holders shall be deemed to have recontributed the Property in kind to
the Company, which shall be deemed to have assumed and taken subject to all
such liabilities.

 

13.5                    Rights of Members. 
Except as otherwise provided in this Agreement, (a) each Member and
other Interest Holder shall look solely to the assets of the Company for the
return of its Capital Contribution and shall have no right or power to demand
or receive property other than cash from the Company, and (b) no Member or
Interest Holder shall have priority over any other Member or Interest Holder as
to the return of its Capital Contributions, distributions, or allocations.  If the assets of the Company remaining after
payment or discharge of the debts and liabilities of the Company are
insufficient to return such Capital Contribution, the Members and Interest
Holders shall have no recourse against the Company, the Board or any other
Member.

 

13.6                    Sale of the Business.

 

(a)                                  Notwithstanding anything to the contrary
contained in this Agreement, in the event that the Company is sold to a bona
fide third party purchaser, whether by a sale of assets, membership interests
or otherwise (a “Sale of the Business”), on or before the first
anniversary of the date of this Agreement, the following provisions shall
apply:

 

(i)                                     if the aggregate sales price received by
the Company (or the Members in the event of a sale of membership interests)
(the “Sales Price”) is equal to the 

 

36

 

Base Amount or less, the sales proceeds shall be distributed to the
Members in the same manner as set forth in Section 13.2; and

 

(ii)                                  if the Sales Price is greater than the
Base Amount, (A) an amount equal to the Base Amount shall be distributed
to the Members in the same manner as set forth in Section 13.2, (B) MGPI
shall first receive a disproportionate distribution equal to 15% of any amounts
above the Base Amount up to $50,000,000 (the “First Overage”), with the
remaining 85% of the First Overage being distributed to the Members in the same
manner as set forth in Section 13.2; and (ii) MGPI shall first
receive a disproportionate distribution equal to 20% any amounts in excess of
the First Overage (the “Second Overage”), with the remaining 80% of the Second
Overage being distributed to the Members in the same manner as set forth in Section 13.2.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Agreement, in the event of a Sale of the Business after the
first anniversary but on or before the second anniversary of the date of this
Agreement, the formulae above will remain the same, provided,
however, that MGPI shall receive as a
disproportionate distribution (i) 7.5% of the First Overage (instead of
15%) and (ii) 10% of the Second Overage (instead of 20%).

 

(c)                                  For the purposes of this Section 13.6:

 

(i)                                     “Additional Capital Investment”
means all additional equity capital contributions and total capital
expenditures made by the Members to or on behalf of the Company; and

 

(ii)                                  “Base Amount” means (x) $50,000,000
plus (y) the product of the Additional Capital Investment multiplied by
the sum of one plus (A) the Prime Rate plus 8% or (B) 12%, whichever
is greater.  The Prime Rate shall be the
average prime rate as published in the Wall Street Journal from the date of
such Capital Contribution or capital expenditure investment through the date of
the Sale of the Business.

 

Article XIV

MISCELLANEOUS

 

14.1                    Notices. 
Any notice, payment, demand, or communication required or permitted to
be given by any provision of this Agreement shall be in writing and sent by
mail or by overnight courier, or by telephone or facsimile, if such telephone
conversation or facsimile is followed by a hard copy of the telephone
conversation or facsimilied communication sent by or by overnight courier,
charges prepaid and addressed as follows, or to such other address as such
Person may from time to time specify by notice to the Company:

 

(a)                                  If to the Company, to the address set
forth in Section 1.4 hereof; and

 

(b)                                 If to a Member, to the address set forth
below its name in Exhibit A hereof.

 

Any such notice shall be deemed to be delivered,
given, and received for all purposes as of the date so delivered.

 

37

 

14.2                    Binding Effect. 
Except as otherwise provided in this Agreement, every covenant, term,
and provision of this Agreement shall be binding upon and inure to the benefit
of the Members and their respective heirs, legatees, legal representatives,
successors, transferees, and assigns.

 

14.3                    Construction. 
Every covenant, term, and provision of this Agreement shall be construed
simply according to its fair meaning and not strictly for or against any
Member.  The terms of this Agreement are
intended to embody the economic relationship among the Members and shall not be
subject to modification by, or be conformed with, any actions by the Internal
Revenue Service except as this Agreement may be explicitly so amended and
except as may relate specifically to the filing of tax returns.  Words such as “herein,” “hereinafter,” “hereof,”
“hereto,” and “hereunder,” refer to this Agreement as a whole, unless the
context otherwise requires.  The words “includes”
and “including” are used as words of illustration and not limitation.  Each reference to an specified or defined
agreement shall be to the specified or defined agreement as in effect at the
relevant time, taking into account all prior amendments to the specified or
defined agreement.

 

14.4                    Time. 
Time is of the essence with respect to this Agreement.

 

14.5                    Headings.  Section and
other headings contained in this Agreement are for reference purposes only and
are not intended to describe, interpret, define, or limit the scope, extent, or
intent of this Agreement or any provision hereof.

 

14.6                    Severability. 
Every provision of this Agreement is intended to be severable.  If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or legality of the remainder of this Agreement.

 

14.7                    Incorporation by Reference. 
Every exhibit, schedule, and other appendix attached to this Agreement
and referred to herein is not incorporated in this Agreement by reference
unless this Agreement expressly otherwise provides.

 

14.8                    Further Action. 
Each Member agrees to perform all further acts and execute, acknowledge,
and deliver any documents which may be reasonably necessary, appropriate, or
desirable to carry out the provisions of this Agreement.

 

14.9                    Variation of Pronouns. 
All pronouns and any variations thereof shall be deemed to refer to
masculine, feminine, or neuter, singular or plural, as the identity of the
person or persons may require.

 

14.10             Governing Law. 
The laws of the State of Delaware shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the Members and Interest Holders.

 

14.11             Waiver of Action for Partition;
No Bill for Company Accounting.  Each of the
Members irrevocably waives any right that he may have to maintain any action
for partition with respect to any of the Property.  To the fullest extent permitted by law, each
Member covenants that it will not (except with the consent of the Board) file a
bill for Company accounting.

 

38

 

14.12             Counterpart Execution. 
This Agreement may be executed in multiple counterparts, all of which
will be considered one and the same agreement and will become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, regardless of whether all of the parties have executed
the same counterpart.  Counterparts may
be delivered via facsimile, electronic mail (including pdf) or other
transmission method and any counterpart so delivered shall be deemed to have
been duly and validly delivered and be valid and effective for all purposes.

 

14.13             Electronic Signatures. 
Facsimile and emailed signatures of the Members and Interest Holders
shall be treated as originals for all purposes of this Agreement.

 

14.14             Specific Performance. 
The Company and each Member agrees with the other Members that the other
Members would be irreparably damaged if any of the provisions of this Agreement
are not performed in accordance with their specific terms and that monetary
damages would not provide an adequate remedy in such event.  Accordingly, it is agreed that, in addition
to any other remedy to which the nonbreaching Members may be entitled, at law
or in equity, the nonbreaching Members shall be entitled to injunctive relief
to prevent breaches of the provisions of this Agreement and specifically to
enforce the terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having subject matter jurisdiction
thereof.

 

14.15             Dispute Resolution; Jurisdiction. 
In the event of any dispute arising out of or relating to this Agreement
or the breach, termination or validity hereof the parties shall meet in a good
faith attempt to resolve such matter or matters.  If such meeting does not result in
resolution, any party may pursue any rights available to it in the federal or
state courts sitting in, or exercising jurisdiction over, the City of Chicago,
Illinois, and each Member hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts.  Each Member hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim, or
otherwise, in any action or proceeding with respect to this Agreement, (a) any
claim that it is not personally subject to the jurisdiction of the above named
court for any reason other than the failure to serve process in accordance with
this Section 14.15, (b) that it or its property is exempt or immune
from jurisdiction of any such court or from any legal process commenced in such
court (whether through judgment or otherwise), and (c) to the fullest
extent permitted by applicable law that (i) the suit, action or proceeding
in any such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper and (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such court.  Each Member hereto waives all personal
service of any and all process upon such Member related to this Agreement and
consents that all service of process upon such Member shall be made by hand
delivery, certified mail or confirmed telecopy directed to such Member at the
address specified in Section 14.1 hereof; and service made by certified
mail shall be complete seven days after the same shall have been posted.

 

[Signature page follows]

 

39

 

IN WITNESS WHEREOF, the
parties have entered into this Limited Liability Company Agreement as of the
day first above set forth.

 

	
   

  	
  MEMBERS

  
	
   

  	
   

  
	
   

  	
  MGP Ingredients, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
   

  	
  Timothy W. Newkirk,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Illinois Corn Processing
  Holdings LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Coxon

  
	
   

  	
   

  	
  Peter Coxon, President

  

 

 

EXHIBIT A

CAPITAL
ACCOUNTS

 

	
  Name and Address

  	
   

  	
  Capital Contribution

  	
   

  	
  Initial Capital

  Account

  	
   

  	
  Percentage

  Interest

  	
   

  
	
  MGP Ingredients, Inc. 

  100 Commercial Street 

  Atchison, Kansas 66002-0130

  	
   

  	
  50%
  of the Plant pursuant to the Contribution Agreement

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illinois Corn Processing Holdings LLC 

  11200 Richmond Ave., Suite 400 

  Houston, Texas 77082

  	
   

  	
  50%
  of the Plant pursuant to acquisition of Interests from MGPI pursuant to the
  LLC Interest Purchase Agreement

  	
   

  	
  $

  	
  15,00,000

  	
   

  	
  50

  	
  %

  
	
  Totals

  	
   

  	
   

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  100

  	
  %

  

 

 

EXHIBIT B

TAX
EXHIBIT

 

B.1                             Definitions. 
As used in this Exhibit B, the following terms shall have the
following meanings:

 

(a)                                  “Adjusted Capital Account Deficit”
means, with respect to any Member or Interest Holder, the deficit balance, if
any, in such Member’s or Interest Holder’s Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:

 

(i)                                     Credit to such Capital Account any
amounts which such Member or Interest Holder is obligated to restore pursuant
to any provision of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and

 

(ii)                                  Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.

 

The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of
the Regulations and shall be interpreted consistently therewith.

 

(b)                                 “Company Minimum Gain” has the
meaning set forth in Sections  1.704-2(b)(2) and 1.704-2(d) of
the Regulations for “partnership minimum gain”.

 

(c)                                  “Depreciation” means, for each
Fiscal Year, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such Fiscal Year,
except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Fiscal Year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such Fiscal Year bears to such beginning
adjusted tax basis; provided, however, that if the adjusted basis for federal
income tax purposes of an asset at the beginning of such Fiscal Year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Majority in Interest.

 

(d)                                 “Gross Asset Value” means, with
respect to any asset, the asset’s adjusted basis for federal income tax
purposes, except as follows:

 

(i)                                     The initial Gross Asset Value of any
non-cash asset contributed by a Member to the Company shall be the gross fair
market value of such asset, as determined by the contributing Member and a
Supermajority in Interest, excluding the Interest of the contributing Member;

 

 

(ii)                                  The Gross Asset Values of all Company assets
shall be adjusted to equal their respective gross fair market values, as
determined by the Majority in Interest, as of the following times:  (a) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (b) the distribution by the Company to
a Member or Interest Holder of more than a de minimis amount of Property as
consideration for an interest in the Company; and (c) the liquidation of
the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments
pursuant to clauses (a) and (b) above shall be made only if a
Supermajority in Interest reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Members and Interest Holders in the Company;

 

(iii)                               The Gross Asset Value of any Company asset distributed
to any Member or Interest Holder shall be adjusted to equal the gross fair
market value of such asset on the date of distribution as determined by the
distributee and a Supermajority in Interest; and

 

(iv)                              The Gross Asset Values of Company assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and
Sections B.1(j)(vi) and B.3(g) hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this Section B.1(d)(iv) to
the extent a Supermajority in Interest determines that an adjustment pursuant
to Section B.1(d)(ii) hereof is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this Section B.1(d)(iv).

 

If the Gross Asset Value
of an asset has been determined or adjusted pursuant to Section B.1(d)(i),
Section B.1(d)(ii), or Section B.1(d)(iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.

 

(e)                                  “Member Nonrecourse Debt” has the
meaning set forth in Section 1.704-2(b)(4) of the Regulations for “Partner
nonrecourse debt”.

 

(f)                                    “Member Nonrecourse Debt Minimum Gain”
means an amount, with respect to each Member Nonrecourse Debt, equal to the
Company Minimum Gain that would result if such Member Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Regulations.

 

(g)                                 “Member Nonrecourse Deductions”
has the meaning set forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of
the Regulations.

 

(h)                                 “Nonrecourse Deductions” has the
meaning set forth in Section 1.704-2(b)(1) of the Regulations.

 

 

(i)                                     “Nonrecourse Liability” has the
meaning set forth in Section 1.704-2(b)(3) of the Regulations.

 

(j)                                     “Profits” and “Losses” for each
Fiscal Year mean an amount equal to the Company’s taxable income or loss for
such Fiscal Year, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the following adjustments (without
duplication):

 

(i)                                     Any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this Section B.1(j) shall be added to
such taxable income or loss;

 

(ii)                                  Any expenditures of the Company described
in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this Section B.1(j) shall
be subtracted from such taxable income or loss;

 

(iii)                               In the event the Gross Asset Value of any Company
asset is adjusted pursuant to Section B.1(d)(ii) or Section B.1(d)(iii) hereof,
the amount of such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing Profits or Losses;

 

(iv)                              Gain or loss resulting from any
disposition of Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;

 

(v)                                 In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year, computed in accordance with Section B.1(c) hereof;

 

(vi)                              To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to
be taken into account in determining Capital Accounts as a result of a
distribution other than in complete liquidation of a Member’s or Interest
Holder’s Interest, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for purposes of computing Profits or Losses;
and

 

(vii)                           Notwithstanding any other provision of this Section B.1(j),
any items which are specially allocated pursuant to Section B.3 and Section B.4
hereof shall not be taken into account in computing Profits or Losses.

 

 

(k)                                  “Regulatory Allocations” has the
meaning set forth in Section B.4 hereof.

 

B.2                             Capital Accounts. 
A Capital Account shall be maintained for each Member or Interest Holder
in accordance with the following provisions:

 

(a)                                  To each Person’s Capital Account there
shall be credited such Person’s Capital Contributions, such Person’s
distributive share of Profits and any items in the nature of income or gain
which are specially allocated pursuant to Section B.3 or Section B.4
hereof, and the amount of any Company liabilities assumed by such Person or
which are secured by any Property distributed to such Person.

 

(b)                                 To each Person’s Capital Account there
shall be debited the amount of cash and the Gross Asset Value of any Property
distributed to such Person pursuant to any provision of this Agreement, such
Person’s distributive share of Losses and any items in the nature of expenses
or losses which are specially allocated pursuant to Section B.3 or Section B.4
hereof, and the amount of any liabilities of such Person assumed by the Company
or which are secured by any property contributed by such Person to the Company.

 

(c)                                  In the event all or a portion of an
interest in the Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest.

 

(d)                                 In determining the amount of any
liability for purposes of Sections B.2(a) and B.2(b) hereof,
there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.

 

The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Section 1.704-1(b),
and shall be interpreted and applied in a manner consistent with such
Regulations.  In the event the Majority
in Interest shall determine that it is prudent to modify the manner in which
the Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributions or distributed property or which are assumed by the Company or an
Interest Holder or Member), are computed in order to comply with such
Regulations, the Majority in Interest may make such modification, provided that
it is not likely to have a material effect on the amounts distributed to any
Person pursuant to Section 13 of the Agreement upon the dissolution of the
Company.  The Majority in Interest also
shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Members or Interest
Holders and the amount of Company capital reflected on the Company’s balance
sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated
events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b).

 

 

B.3                             Special Allocations. 
The following special allocations shall be made in the following order:

 

(a)                                  Minimum Gain Chargeback.  Except as otherwise provided in Section 1.704-2(f) of
the Regulations, notwithstanding any other provision of Section 3 of the
Agreement or this Exhibit B, if there is a net decrease in Company Minimum
Gain during any Fiscal Year, each Member or Interest Holder shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Person’s share
of the net decrease in Company Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). 
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member or
Interest Holder pursuant thereto.  The
items to be so allocated shall be determined in accordance with
Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the
Regulations.  This Section B.3(a) is
intended to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of
the Regulations and shall be interpreted consistently therewith.

 

(b)                                 Member Minimum Gain Chargeback.  Except as otherwise provided in Section 1.704-2(i)(4) of
the Regulations, notwithstanding any other provision of Section 3 of the
Agreement or this Exhibit B, if there is a net decrease in Member
Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Year, each Person who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Regulations, shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in an amount equal to such Person’s
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member or Interest Holder pursuant thereto.  The items to be so allocated shall be
determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of
the Regulations.  This Section B.3(b) is
intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Regulations and shall be interpreted consistently therewith.

 

(c)                                  Qualified Income Offset.  In the event any Member or Interest Holder
unexpectedly receives any adjustments, allocations, or distributions described
in Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or
Section 1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company
income and gain shall be specially allocated to each such Member or Interest
Holder in an amount and manner sufficient to eliminate, to the extent required
by the Regulations, the Adjusted Capital Account Deficit of such Member or
Interest Holder as quickly as possible, provided that an allocation pursuant to
this Section B.3(c) shall be made only if and to the extent that such
Member or Interest Holder would have an Adjusted Capital Account Deficit after
all other allocations provided for in Section 3 of the Agreement or this Exhibit B
have been tentatively made as if this Section B.3(c) were not in the
Agreement.

 

 

(d)                                 Gross Income Allocation.  In the event any Member or Interest Holder
has a deficit Capital Account at the end of any Fiscal Year which is in excess
of the sum of (i) the amount such Member or Interest Holder is obligated
to restore pursuant to any provision of this Agreement, and (ii) the
amount such Member or Interest Holder is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Member or Interest Holder shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section B.3(d) shall
be made only if and to the extent that such Member or Interest Holder would
have a deficit Capital Account in excess of such sum after all other
allocations provided for in Section 3 of the Agreement or this Tax Exhibit have
been made as if Section B.3(c) hereof and this Section B.3(d) were
not in the Agreement.

 

(e)                                  Nonrecourse Deductions.  Nonrecourse Deductions for any Fiscal Year
shall be specially allocated among the Members or Interest Holders in
proportion to their respective Percentage Interests.

 

(f)                                    Member Nonrecourse Deductions.  Any Member Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Member or Interest Holder who
bears the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).

 

(g)                                 Section 754 Adjustments.  To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to an Interest
Holder or Member in complete liquidation of its interest in the Company, the
amount of such adjustment to Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members or Interest Holders in accordance with their interests
in the Company in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies,
or to the Member or Interest Holder to whom such distribution was made in the
event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.  The Company shall make a Section 754
election in connection with the purchase of Interests by ICPH pursuant to the
LLC Interest Purchase Agreement.

 

(h)                                 Loss Limitation.  Losses allocated pursuant to Section 3.2
hereof shall not exceed the maximum amount of Losses that can be allocated
without causing any Interest Holder to have an Adjusted Capital Account Deficit
at the end of any Fiscal year.  In the
event some but not all of the Interest Holders would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to Section 3.2
hereof, the limitation set forth in this Section B.3(h) shall be
applied on an Interest Holder by Interest Holder basis and Losses not allocable
to any Interest Holder as a result of such limitation shall be allocated to the
other Interest Holders in accordance with the positive balances in 

 

 

such Interest Holder’s Capital Accounts so as to allocate the maximum
permissible Losses to each Interest Holder under Regulations Section 1.704-1(b)(2)(ii)(d)

 

B.4                             Curative Allocations. 
The allocations set forth in Sections B.3(a), B.3(b), B.3(c),
B.3(d), B.3(e), B.3(f) and B.3(g) hereof (the “Regulatory
Allocations”) are intended to comply with certain requirements of the
Regulations.  It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Company income, gain, loss or deduction pursuant to this Section B.4.  Therefore, notwithstanding any other
provision of this Exhibit B (other than the Regulatory Allocations), the
Majority in Interest shall make such offsetting special allocations of Company
income, gain, loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Member’s Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all Company items were allocated pursuant to Sections 3.1
and 3.2 of the Agreement.  In exercising
its discretion under this Section B.4, the Majority in Interest shall take
into account future Regulatory Allocations under Sections B.3(a) and
B.3(b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections B.3(e) and B.3(f).

 

B.5                             Other Allocation Rules.

 

(a)                                  For purposes of determining the Profits,
Losses, or any other items allocable to any period, Profits, Losses, and any
such other items shall be determined on a daily, monthly, or other basis, as
determined by the Majority in Interest using any permissible method under Code Section 706
and the Regulations thereunder.

 

(b)                                 The Members are aware of the income tax
consequences of the allocations made by Section 3 of the Agreement and
this Exhibit B and hereby agree to be bound by the provisions of Section 3
of the Agreement and this Exhibit B in reporting their shares of Company
income and loss for income tax purposes.

 

(c)                                  Solely for purposes of determining an
Interest Holder’s or Member’s proportionate share of the “excess nonrecourse
liabilities” of the Company within the meaning of Regulations Section 1.752-3(a)(3),
the Members’ or Interest Holders’ interests in Company profits are in
proportion to their respective Percentage Interests.

 

(d)                                 To the extent permitted by Section 1.704-2(h)(3) of
the Regulations, the Majority in Interest shall endeavor to treat distributions
of Net Cash Flow as having been made from the proceeds of a Nonrecourse
Liability or a Member Nonrecourse Debt only to the extent that such
distributions would cause or increase an Adjusted Capital Account Deficit for
any Member or Interest Holder.

 

(e)                                  The allocation of Profits and Losses for
tax purposes set forth in Section  3.1, 3.2 and Section 5.8 of this
Agreement are intended to produce final Capital Account balances that are at
levels (“Target Final Balances”) that would permit liquidating
distributions made in accordance with such final Capital Account balances to be
equal to the distribution that would occur under Section 13.2 or, if
applicable, 13.6.  However, if 

 

 

the Capital Accounts of the Members are in such ratios or balances that
distributions pursuant to Section 13.2 or, if applicable, Section 13.6
would not be in accordance with the final Capital Account balances of the
Members, such failure shall not affect or alter the distributions required by Section 13.2
or, if applicable, Section 13.6. 
Notwithstanding the other provisions of this Agreement, if the
allocation provisions of this Agreement would not result in positive Capital
Account balances necessary to support distributions consistent with such
intention upon a Sale of the Business, a dissolution of the Company or other
disposition of all or substantially all of the remaining assets of the Company
accompanied by an actual distribution of available cash, items of gross income,
gain, loss and deduction during such Fiscal Year, if necessary, shall be
allocated between the Members so as to produce such Target Final Balances.

 

B.6                             Tax Allocations:  Code Section 704(c). 
In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Members or Interest Holders so as to take account of any
variation between the adjusted basis of such property to the Company for
federal income tax purposes and its initial Gross Asset Value (computed in
accordance with Section B.1(d)(i) hereof).

 

In the event the Gross
Asset Value of any Company asset is adjusted pursuant to Section B.1(d)(ii) hereof,
subsequent allocations of income, gain, loss, and deduction with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations
thereunder.

 

Any elections or other
decisions relating to such allocations shall be made by the Majority in
Interest in any manner that reasonably reflects the purpose and intention of
this Agreement.  Allocations pursuant to
this Section B.6 are solely for purposes of federal, state, and local
taxes and shall not affect, or in any way be taken into account in computing,
any Person’s Capital Account or share of Profits, Losses, other items, or
distributions pursuant to any provision of this Agreement.

 

####

 

 

EXHIBIT C

CESSATION
OF BUSINESS ALLOCATIONS EXAMPLE

 

If a Loss allocation of
$100 occurs during a quarter when there is an Objecting Party, and at such time
the Percentage Interest of each Member is 50%, the $100 Loss would be allocated
$80 to the Objecting Party and $20 to the Electing Party.  Assuming no subsequent allocation of Profit
on an 80-20 basis prior to liquidation, the Excess Loss allocated to the
Objecting Party would equal 30 (80-50) and the amount of the Objecting Party’s unreturned
Capital Contribution otherwise due on liquidation pursuant to Section 13.2(b) would
be decreased by $30 and the Electing Party’s unreturned Capital Contribution
otherwise due on liquidation would be increased by $30.  Thereafter upon liquidation if there was
$2,000 of unreturned Capital Contributions that would otherwise be distributed
50-50 or $1,000 per Member, pursuant to this Section 5.8 the Objecting
Member would receive $970 ($1000-$30) and the Electing Member would receive
$1,030 ($1000 + $30).

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