Document:

Exhibit
10.3

 

AGREEMENT FOR PRIVATE
REDEVELOPMENT

 

 

By and Between

 

 

THE CITY OF MASON CITY,
IOWA

 

 

AND

 

 

GOLDEN GRAIN ENERGY,
L.L.C.

 

 

AGREEMENT FOR

 

PRIVATE REDEVELOPMENT

 

THIS AGREEMENT FOR PRIVATE REDEVELOPMENT (hereinafter
called “Agreement”), is made on or as of the 17th day of December,
2003, by and among the CITY OF MASON CITY, IOWA, a municipality (hereinafter
called “City”), established pursuant to the Code of Iowa of the State of Iowa
and acting under the authorization of Chapter 403 of the Code of Iowa, 2003, as
amended (hereinafter called “Urban Renewal Act”) and GOLDEN GRAIN ENERGY,
L.L.C., an Iowa limited liability company having an office for the transaction
of business at P.O. Box 435, New Hampton, Iowa 50659 (the “Developer”).

 

WITNESSETH:

 

WHEREAS, in furtherance of the objectives of the Urban
Renewal Act, the City has undertaken a program for the clearance and
reconstruction or rehabilitation of an economic development area within the
area of operation of the City and, in this connection, is engaged in carrying
out urban renewal project activities in an area known as the Area #2: South
Federal/Gateway Urban Renewal Area, which area is described in the Urban
Renewal Plan, as amended, approved for such area by Resolution No. 03-296 on November
4, 2003; and

 

WHEREAS, a copy of the foregoing Urban Renewal Plan
has been recorded among the land records in the office of the Recorder of Cerro
Gordo County, Iowa; and

 

WHEREAS, the Developer has an option to acquire
certain real property located in the foregoing Urban Renewal Area as more
particularly described in Exhibit A annexed hereto and made a part hereof
(which property as so described is hereinafter referre to as the “Development
Property”); and

 

WHEREAS, the Developer is willing to exercise said
option, acquire said property, and cause certain improvements to be constructed
on the Development Property and thereafter to cause the same to be operated in
accordance with this Agreement; and

 

WHEREAS, the City is willing to construct certain public
improvements which will benefit the Development Property; and

 

WHEREAS, the City believes that the development of the
Development Property pursuant to this Agreement and the fulfillment generally
of this Agreement, are in the vital and best interests of the City and in
accord with the public purposes and provisions of the applicable State and
local laws and requirements under which the foregoing project has been
undertaken and is being assisted.

 

NOW, THEREFORE, in consideration of the premises and
the mutual obligations of the parties hereto, each of them does hereby covenant
and agree with the other as follows:

 

ARTICLE I. DEFINITIONS

 

Section 1.1. Definitions. In addition to other
definitions set forth in this Agreement, all capitalized terms used and not
otherwise defined herein shall have the following meanings unless a different
meaning clearly appears from the context:

 

Agreement
means this Agreement and all appendices hereto, as the same may be from time to
time modified, amended or supplemented.

 

Area #2: South
Federal/Gateway TIF Account means a separate account within
the Area #2: South Federal/Gateway Urban Renewal Tax Increment Revenue Fund of
the City, in which there shall be

 

 

deposited all Tax Increments received by the City with respect to the
Minimum Improvements and the Development Property.

 

Area #2: South
Federal/Gateway Urban Renewal Tax Increment Revenue Fund
means the special fund of the City created under the authority of Section
403.19(2) of the Code and the Ordinance, which fund was created in order to pay
the principal of and interest on loans, monies advanced to or indebtedness,
whether funded, refunded, assumed or otherwise, including bonds or other
obligations issued under the authority of Section 403.9 or 403.12 of the Code,
incurred by the City to finance or refinance in whole or in part projects
undertaken pursuant to the Urban Renewal Plan for the Project Area.

 

Certificate of Completion
means a certification in the form of the certificate attached hereto as Exhibit
C and hereby made a part of this Agreement, provided to the Developer pursuant
to Section 3.4 of this Agreement.

 

City
means the City of Mason City, Iowa, or any successor to its functions.

 

City Improvements
mean the public improvements to be constructed by the City, as outlined more
fully in Article IV, and Exhibit E, herein.

 

Code
means the Code of Iowa, 2003, as amended.

 

Commencement Date
means the date of the issuance by the City of an occupancy permit for the
Minimum Improvements.

 

Construction Plans
means the plans, specifications, drawings and related documents reflecting the
construction work to be performed by the Developer on the Development Property
and the other properties upon which the Public Improvements will be located;
the Construction Plans shall be as detailed as the plans, specifications,
drawings and related documents which are submitted to the building inspector of
the City as required by applicable City codes.

 

County  means
the County of Cerro Gordo, Iowa.

 

Developer means
Golden Grain Energy, L.L.C., an Iowa limited liability company, and its
successors and assigns.

 

Development Property
means that portion of the Area #2: South Federal/Gateway Urban Renewal Area of
the City described in Exhibit A hereto.

 

Economic Development
Grants mean the Tax Increment payments to be made by the City
to the Developer under Article VIII of this Agreement.

 

Event of Default
means any of the events described in Section 10.1 of this Agreement.

 

First Mortgage
means any Mortgage granted to secure any loan made pursuant to either a
mortgage commitment obtained by the Developer from a commercial lender or other
financial institution to fund any portion of the construction costs and initial
operating capital requirements of the Minimum Improvements, or all such Mortgages
as appropriate.

 

Full Time Employment Unit
means either (i) a “full time” employee who works at least 37.5 hours per week
or 1,950 hours per year or (ii) any combination of “part time” employees, who,
in the aggregate, work at least 1,950 hours per year.

 

Minimum Improvements
shall mean the construction, of a 67,000 square foot ethanol plant with a
minimum nameplate capacity of 40 million gallonsXand°-ma-x umtogether with all
related site improvements described in the Construction Plans, as outlined in
Exhibit B hereto.

 

 

Mortgage
means any mortgage or security agreement in which the Developer has granted a
mortgage or other security interest in the Development Property, or any portion
or parcel thereof, or any improvements constructed thereon.

 

Net Proceeds
means any proceeds paid by an insurer to the Developer under a policy or
policies of insurance required to be provided and maintained by the Developer,
as the case may be, pursuant to Article V of this Agreement and remaining after
deducting all expenses (including fees and disbursements of counsel) incurred
in the collection of such proceeds.

 

Ordinance
means Ordinance No.03-23of the City, under which the taxes levied on the
taxable property in the Project Area shall be divided and a portion paid into
the South Federal/Gateway Urban Renewal Tax Increment Revenue Fund.

 

Project
shall mean the construction of the Minimum Improvements on the Development
Property, as described in this Agreement.

 

Rate Ordinance
shall mean Ordinance No. 03-25, establishing the City’s Water Utility rates,
approved and adopted on December 16, 2003, as may be amended from time to time.

 

State means
the State of Iowa.

 

Tax Increments
means the property tax revenues divided and made available to the City for
deposit in the Area #2: South Federal/Gateway Urban Renewal Tax Increment
Revenue Fund under the provisions of Section 403.19 of the Code and the
Ordinance.

 

Termination Date
means the date of termination of this Agreement, as established in Section 12.9
of this Agreement.

 

Unavoidable Delays
means delays resulting from acts or occurrences outside the reasonable control
of the party claiming the delay including but not limited to storms, floods,
fires, explosions or other casualty losses, unusual weather conditions, strikes,
boycotts, lockouts or other labor disputes, delays in transportation or
delivery of material or equipment, litigation commenced by third parties, or
the acts of any federal, State or local governmental unit (other than the
City).

 

Urban Renewal Plan
means the Urban Renewal Plan approved in respect of the Area #2: South
Federal/Gateway Urban Renewal Area, described in the preambles hereof.

 

 

ARTICLE II. REPRESENTATIONS
AND WARRANTIES

 

Section 2.1.                                   Representations
and Warranties of the City. The City makes the following representations
and warranties:

 

(a)                                  The
City is a municipal corporation and political subdivision organized under the
provisions of the Constitution and the laws of the State and has the power to
enter into this Agreement and carry out its obligations hereunder.

 

(b)                                 The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of or compliance with the terms and
conditions of this Agreement are not prevented by, limited by, in conflict
with, or result in a breach of, the terms, conditions or provisions of any
contractual restriction, evidence of indebtedness, agreement or instrument of
whatever nature to which the City is now a party or by which it is bound, nor
do they constitute a default under any of the foregoing.

 

Section 2.2.                                   Representations
and Warranties of Developer. The Developer makes the following
representations and warranties:

 

 

(a)                                  The
Developer is a limited liability company duly organized and validly existing
under the laws of the State of Iowa, and has all requisite power and authority
to own and operate its properties, to carry on its business as now conducted
and as presently proposed to be conducted, and to enter into and perform its
obligations under the Agreement.

 

(b)                                 This
Agreement has been duly and validly authorized, executed and delivered by the
Developer and, assuming due authorization, execution and delivery by the City,
is in full force and effect and is a valid and legally binding instrument of the
Developer enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors’ rights generally.

 

(c)                                  The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of or compliance with the terms and
conditions of this Agreement are not prevented by, limited by, in conflict
with, or result in a violation or breach of, the terms, conditions or provisions
of the articles of organization of the Developer or of any contractual
restriction, evidence of indebtedness, agreement or instrument of whatever
nature to which the Developer is now a party or by which it or its property is
bound, nor do they constitute a default under any of the foregoing.

 

(d)                                 There
are no actions, suits or proceedings pending or threatened against or affecting
the Developer in any court or before any arbitrator or before or by any
governmental body in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the business (present or
prospective), financial position or results of operations of the Developer or
which in any manner raises any questions affecting the validity of the Agreement
or the Developer’s ability to perform its obligations under this Agreement.

 

(e)                                  The
Developer will cause the Minimum Improvements to be constructed in accordance
with the terms of this Agreement, the Urban Renewal Plan and all local, State
and federal laws and regulations, except for variances necessary to construct
the Minimum Improvements contemplated in the Construction Plans.

 

(f)                                    The
Developer will use its best efforts to obtain, or cause to be obtained, in a
timely manner, all required permits, licenses and approvals, and will meet, in
a timely manner, all requirements of all applicable local, State, and federal
laws and regulations which must be obtained or met before the Minimum
Improvements may be lawfully constructed.

 

(g)                                 The
construction of the Minimum Improvements will require a total investment of not
less than $51,000,000.

 

(h)                                 The
Developer has not received any notice from any local, State or federal official
that the activities of the Developer with respect to the Development Property
may or will be in violation of any environmental law or regulation (other than
those notices, if any, of which the City has previously been notified in
writing). The Developer is not currently aware of any State or federal claim
filed or planned to be filed by any party relating to any violation of any
local, State or federal environmental law, regulation or review procedure
applicable to the Development Property, and the Developer is not currently
aware of any violation of any local, State or federal environmental law,
regulation or review procedure which would give any person a valid claim under
any State or federal environmental statute with respect thereto.

 

(i)                                     The
Developer has firm commitments for construction or acquisition and permanent
financing for the Project in an amount sufficient, together with equity
commitments, to successfully complete the Minimum Improvements in accordance
with the Construction Plans contemplated in this Agreement.

 

(j)                                     The
Developer will cooperate fully with the City in resolution of any traffic,
parking, trash removal or public safety problems which may arise in connection
with the construction and operation of the Minimum Improvements.

 

 

(k)                                  The
Developer expects that, barring Unavoidable Delays, the Minimum Improvement will
be substantially completed by March 1, 2005.

 

(l)                                     The
Developer would not undertake its obligations under this Agreement without the
payment by the City of the Economic Development Grants being made to the
Developer pursuant to this Agreement.

 

 

ARTICLE III. CONSTRUCTION
OF MINIMUM IMPROVEMENTS

 

Section 3.1.                                   Construction of
Minimum Improvements. The Developer agrees that it will cause the Minimum
Improvements to be constructed on the Development Property in conformance with
the Construction Plans submitted to the City. The Developer agrees that the
scope and scale of the Minimum Improvements to be constructed shall not be
significantly less than the scope and scale of the Minimum Improvements as
detailed and outlined in the Construction Plans, and shall in no event require
a total investment of less than $51,000,000.

 

Section 3.2.                                   Construction
Plans. The Developer shall cause Construction Plans to be provided for the
Minimum Improvements which shall be subject to approval by the City as provided
in this Section 3.2. The Construction Plans shall be in conformity with the
Urban Renewal Plan, this Agreement, and all applicable State and local laws and
regulations. The City shall approve the Construction Plans in writing if: (a)
the Construction Plans conform to the terms and conditions of this Agreement;
(b) the Construction Plans conform to the terms and conditions of the Urban
Renewal Plans; (c) the Construction Plans conform to all applicable federal,
State and local laws, ordinances; rules and regulation and City permit
requirements; (d) the Construction Plans are adequate for purposes of this
Agreement to provide for the construction of the Minimum Improvements and (e)
no Event of Default under the terms of this Agreement has occurred; provided,
however, that any such approval of the Construction Plans pursuant to this
Section 3.2 shall constitute approval for the purposes of this Agreement only
and shall not be deemed to constitute approval or waiver by the City with
respect to any building, fire, zoning or other ordinances or regulation of the
City, and shall not be deemed to be sufficient plans to serve as the basis for
the issuance of a building permit if the Construction Plans are not as detailed
or complete as the plans otherwise required for the issuance of a building
permit. The site plans submitted to the building official of the City for the
Development Property and the surrounding areas where the Minimum Improvements
are to be constructed by the Developer shall be adequate to serve as the Construction
Plans, if such site plans are approved by the building official.

 

Approval of the Construction Plans by the City shall
not relieve the Developer of any obligation to comply with the terms and
provisions of this Agreement, or the provision of applicable federal, State and
local laws, ordinances and regulations, nor shall approval of the Construction
Plans by the City be deemed to constitute a waiver of any Event of Default.

 

Approval of Construction Plans hereunder is solely for
purposes of this Agreement, and shall not constitute approval for any other
City purpose nor subject the City to any liability for the Minimum Improvements
as constructed.

 

Section 3.3.                                   Commencement and
Completion of Construction. Subject to Unavoidable Delays, the Developer
shall cause construction of the Minimum Improvements to be undertaken and
completed (i) by no later than March 1, 2005 or (ii) by such other date as the
parties shall mutually agree upon in writing. Time lost as a result of
Unavoidable Delays shall be added to extend this date by a number of days equal
to the number of days lost as a result of Unavoidable Delays. All work with
respect to the Minimum Improvements to be constructed or provided by the
Developer shall be in conformity with the Construction Plans approved by the
building official or any amendments thereto as may be approved by the building
official.

 

 

The Developer agrees that it shall permit designated
representatives of the City, upon reasonable notice to the Developer (which
does not have to be written), to enter upon the Development Property during the
construction of the Minimum Improvements to inspect such construction and the
progress thereof.

 

Section 3.4.                                   Certificate of
Completion. Upon written request of the Developer after issuance of an
occupancy permit for the Minimum Improvements, the City will furnish the
Developer with a Certificate of Completion in the recordable form, in
substantially the form set forth in Exhibit C attached hereto. Such Certificate
of Completion shall be conclusive determination of satisfactory termination of
the covenants and conditions of this Agreement with respect to the obligations
of the Developer to construct the Minimum Improvements.

 

The Certificate of Completion may be recorded in the
proper office for the recordation of deeds and other instruments pertaining to
the Development Property at the Developer’s sole expense. If the City shall
refuse or fail to provide a Certificate of Completion in accordance with the
provisions of this Section 3.4, the City shall, within twenty (20) days after
written request by the Developer, provide the Developer with a written
statement indicating in adequate detail in what respects the Developer has
failed to complete the Minimum Improvements in accordance with the provisions
of this Agreement, or is otherwise in default under the terms of this
Agreement, and what measures or acts it will be necessary, in the opinion of
the City, for the Developer to take or perform in order to obtain such
Certificate of Completion.

 

Prior to issuing its Certificate of Completion, the
City shall be entitled to a review of the Minimum Improvements for compliance
with the Construction Plans previously approved in accordance with this
Agreement.

 

Section 3.5.Annexation. Developer agrees to
submit an application for voluntary annexation of the Development Property into
the City pursuant to Section 368.7 of the Iowa Code, in substantially the form
attached hereto as Exhibit D. The Developer agrees to cooperate with the City
in regards to the City’s time schedule with regard to said annexation.

 

 

ARTICLE IV. CONSTRUCTION
OF CITY IMPROVEMENTS

 

Section 4.1.                                   Construction of
City Improvements. The City agrees that it will cause the City Improvements
to be constructed on or before October 31, 2004. The scope of the City
Improvements is outlined in Exhibit E, attached hereto and incorporated herein
by this reference. With the connection of the City Improvements, the City shall
provide water service to the Development Property.

 

Section 4.2.                                   User Fee. In
accordance with the Rate Ordinance, the Developer shall pay a User Fee for the
services provided to the Development Property. This User Fee shall be made up
of two parts:

 

A.                                   Part
1 being the special user fee. Developer shall pay said special user fee amount
in monthly installments of $3,333.33. This special user fee shall be subject to
and collected in accordance with the Rate Ordinance, and shall expire ten (10)
years after its inception upon connection of the Development Property to the
City Improvements.

 

B.                                     Part
2 being the excess use charge. Upon connection to the City Improvements,
Developer shall install a water meter to calculate its monthly usage. Developer
shall pay for the City potable drinking water services to the extent used by
the Developer at the Development Property in accordance with the Rate
Ordinance. Developer shall also install a second water meter for the line which
shall provide back-up water processing. There shall be no minimum monthly
charge for this “back-up” water line unless water is delivered through the
meter at any time during the billing cycle. Finally, a third un-metered line
shall be run from the City Improvements solely and only for purposes of fire
protection at the Development Property. City review and approval of the Construction

 

 

Plans for purposes of this Agreement shall include a
verification that the designated “fire line” is used solely and only for
purposes of on-site fire protection.

 

In accordance with the Rate Ordinance, failure of the
Developer to pay the above user fee shall result in a lien in the amount of
non-payment to be placed upon the Development Property.

 

 

ARTICLE V. INSURANCE

 

Section 5.1.                                   Insurance
Requirements.

 

(a)                                  The
Developer will provide and maintain or cause to be maintained at all times
during the process of constructing the Minimum Improvements (and, from time to
time at the request of the City, furnish the City with proof of payment of
premiums on):

 

(i)                                     Builder’s
risk insurance, written on the so-called “Builder’s Risk -Completed Value Basis”,
in an amount equal to one hundred percent (100%) of the insurable value of the
Minimum Improvements at the date of completion, and with coverage available in
nonreporting form on the so-called “all risk” form of policy;

 

(ii)                                  Comprehensive
general liability insurance (including operations, contingent liability,
operations of subcontractors, completed operations and contractual liability
insurance) together with an Owner’s Contractor’s Policy with limits against
bodily injury and property damage of not less than $500,000 for each occurrence
(to accomplish the above-required limits, an umbrella excess liability policy
may be used); and

 

(iii)                               Worker’s compensation
insurance, with statutory coverage.

 

(b)                                 Upon
completion of construction of the Minimum Improvements and at all times prior
to the Termination Date, the Developer shall maintain, or cause to be
maintained, at its cost and expense (and from time to time at the request of
the City shall furnish proof of the payment of premiums on) insurance as follows:

 

(i)                                     Insurance
against loss and/or damage to the Minimum Improvements under a policy or
policies covering such risks as are ordinarily insured against by similar
businesses, including (without limitation the generality of the foregoing)
fire, extended coverage, vandalism and malicious mischief, explosion, water
damage, demolition cost, debris removal, and collapse in an amount not less
than the full insurable replacement value of the Minimum Improvements, but any
such policy may have a deductible amount of not more than $50,000. No policy of
insurance shall be so written that the proceeds thereof will produce less than
the minimum coverage required by the preceding sentence, by reason of
co-insurance provisions or otherwise, without the prior consent thereto in
writing by the City. The term “full insurable replacement value” shall mean the
actual replacement cost of the Minimum Improvements (excluding foundation and
excavation costs and costs of underground flues, pipes, drains and other
uninsurable items) and equipment, and shall be determined from time to time at
the request of the City, but not more frequently than once every three years,
by an insurance consultant or insurer selected and paid for by the Developer
and approved by the City.

 

(ii) Comprehensive general public liability insurance,
including personal injury liability for injuries to persons and/or property,
including any injuries resulting from the operation of automobiles or other
motorized vehicles on or about the Development Property, in the minimum amount
for each occurrence and for each year of $1,000,000.

 

(iii) Such other insurance, including worker’s
compensation insurance respecting all employees of the Developer, in such
amount as is customarily carried by like organizations engaged in like
activities of comparable size and liability exposure; provided that the
Developer may be self-insured with respect to all or any part of its liability
for worker’s compensation.

 

 

(c)                                  All
insurance required by this Article V to be provided prior to the Termination
Date shall be taken out and maintained in responsible insurance companies
selected by the Developer which are authorized under the laws of the State to
assume the risks covered thereby. The Developer will deposit annually with the
City copies of policies evidencing all such insurance, or a certificate or
certificates or binders of the respective insurers stating that such insurance
is in force and effect. Unless otherwise provided in this Article V, each
policy shall contain a provision that the insurer shall not cancel or modify it
without giving written notice to the Developer and the City at least thirty
(30) days before the cancellation or modification becomes effective. Not less
than fifteen (15) days prior to the expiration of any policy, the Developer
shall furnish the City evidence satisfactory to the City that the policy has
been renewed or replaced by another policy conforming to the provisions of this
Article V, or that there is no necessity therefor under the terms hereof. In lieu
of separate policies, the Developer may maintain a single policy, or blanket or
umbrella policies, or a combination thereof, which provide the total coverage
required herein, in which event the Developer shall deposit with the City a
certificate or certificates of the respective insurers as to the amount of
coverage in force upon the Minimum Improvements.

 

(d)                                 The
Developer agrees to notify the City immediately in the case of damage exceeding
$200,000 in amount to, or destruction of, the Minimum Improvements or any
portion thereof resulting from fire or other casualty. Net Proceeds of any such
insurance shall be paid directly to the Developer, and the Developer will
forthwith repair, reconstruct and restore the Minimum Improvements to
substantially the same or an improved condition or value as they existed prior
to the event causing such damage and, to the extent necessary to accomplish
such repair, reconstruction and restoration, the Developer will apply the Net
Proceeds of any insurance relating to such damage received by the Developer to
the payment or reimbursement of the costs thereof.

 

(e)                                  The
Developer shall complete the repair, reconstruction and restoration of the
Minimum Improvements, whether or not the Net Proceeds of insurance received by
the Developer for such purposes are sufficient.

 

 

ARTICLE VI. COVENANTS
OF THE DEVELOPER

 

Section 6.1.                                   Maintenance of
Properties.  The Developer will
maintain, preserve and keep its properties (whether owned in fee or a leasehold
interest), including but not limited to the Minimum Improvements, in good
repair and working order, ordinary wear and tear accepted, and from time to
time will make all necessary repairs, replacements, renewals and additions.

 

Section 6.2.                                   Maintenance of
Records. The Developer will keep at all times proper books of record and
account in which full, true and correct entries will be made of all dealings
and transactions of or in relation to the business and affairs of the
Developer. in accordance with generally accepted accounting principles,
consistently applied throughout the period involved, and the Developer will
provide reasonable protection against loss or damage to such books of record
and account.

 

Section 6.3.                                   Compliance with
Laws. The Developer will comply with all laws, rules and regulations
relating to the Minimum Improvements, other than laws, rules and regulations
the failure to comply with which or the sanctions and penalties resulting
therefrom, would not have a material adverse effect on the business, property,
operations, or condition, financial or otherwise, of the Developer.

 

Section 6.4.                                   Non-Discrimination.
In operating the Minimum Improvements, the Developer shall not discriminate
against any applicant, employee or tenant because of race, creed, color, sex,
national origin, age or disability. The Developer shall ensure that applicants,
employees and tenants are considered and are treated without regard to their
race, creed, color, sex, national origin, age or disability.

 

Section 6.5.                                   Available
Information. Upon request, the Developer shall promptly provide the City
with copies of its financial statements for the preceding fiscal year, prepared
in accordance with generally accepted accounting principles and accompanied by
a report of an independent public

 

 

accountant selected by the Developer to the effect that such financial
statements have been prepared in conformity with generally accepted accounting
principles and present fairly, in all material respects, the financial
condition of the Developer and that the examination of such financial
statements by such accountant has been undertaken in accordance with generally
accepted auditing standards.

 

Section 6.6.                                   Employment.
Commencing March 1, 2005, or upon the issuance of the Certificate of Completion
by the City, the Developer agrees that it will maintain a monthly average of at
least thirty (30) Full Time Employment Units at the Minimum Improvements at all
times until at least the Termination Date set forth in Section 12.8 hereof.

 

Section 6.7.                                   Annual
Certification. To assist the City in monitoring and performance of the
Developer hereunder, a duly authorized officer of the Developer shall annually
certify to the City (a) the number of Full Time Employment Units employed at
the Minimum Improvements as of the anniversary of the Commencement Date and as
of the first day of each of the preceding eleven (11) months and (b) to the
effect that such officer has re-examined the terms and provisions of this
Agreement and that at the date of such certificate, and during the preceding
twelve (12) months, the Developer is not, or was not, in default in the
fulfillment of any of the terms and conditions of this Agreement and that no
Event of Default (or event which, with the lapse of time or the giving of
notice, or both, would become an Event of Default) is occurring or has occurred
as of the date of such certificate or during such period, or if the signer is
aware of any such default, event or Event of Default, said officer shall
disclose in such statement the nature thereof, its period of existence and what
action, if any, has been taken or is proposed to be taken with respect thereto.
Such certificate shall be provided not later than November I of each year,
commencing November I, 2005 and ending on November 1, 2014, both dates inclusive.

 

 

ARTICLE VII. ASSIGNMENT
AND TRANSFER

 

Section 7.1.                                   Status of the
Developer; Transfer of Substantially All Assets. As security for the
obligations of the Developer under this Agreement, the Developer represents
‘and agrees that, prior to the issuance of the Certificate of Completion and
prior to the Termination Date, the Developer will maintain its existence as a
limited liability company and will not wind up or otherwise dispose of all or
substantially all of its assets or assign their interest in this Agreement to
any other party unless (i) the transferee partnership, corporation, limited
liability company or individual assumes in writing all of the obligations of
the Developer under this Agreement and (ii) the City consents thereto in
writing in advance thereof. Notwithstanding the foregoing, however, or any
other provisions of this Agreement, the Developer may pledge any and/or all of
its assets as security for any financing of the Minimum Improvements, and the
City agrees that Developer may assign its interest under this Agreement for
such purpose.

 

 

ARTICLE VIII. ECONOMIC
DEVELOPMENT GRANTS

 

Section 8.1.                                   Economic
Development Grants. (a) For and in consideration of the obligations being
assumed by the Developer hereunder, and in furtherance of the goals and
objectives of the Urban Renewal Plan for the Project Area and the Urban Renewal
Act, the City agrees, subject to the Developer being and remaining in
compliance with the terms of this Agreement and to the terms of this Article
VIII, to assume an obligation to make up to twenty (20) consecutive semi-annual
payments to the Developer commencing in October 2006, pursuant to Section 403.9
of the Urban Renewal Act, equal in amount to one hundred percent (100%) the Tax
Increments collected by the City under the terms of the Ordinance (without
regard to any averaging that may otherwise be utilized under Section 403.19 and
excluding any interest that may accrue thereon prior to payment to the
Developer) during the preceding six-month period in respect of the Development
Property and the Minimum Improvements, but subject to adjustment as provided in
this Article (such payments being referred to collectively as the “Economic
Development Grants”).

 

(b)                                 The
obligation of the City to make an Economic Development Grant to the Developer
in any year shall be subject to and conditioned upon the timely filing by the
Developer of the annual

 

 

certificate required under Section 6.7 hereof and the City Council’s
approval thereof. If the Developer’s annual certificate is timely filed and
contains the information required under Section 6.7 and the City Council
approves of the same, the City shall certify to the County prior to December 1
of that year its request for the available Tax Increments resulting from the
assessments imposed by the County as of January 1 of that year, to be collected
by the City as taxes are paid during the following fiscal year and which shall
thereafter be disbursed to the Developer in October and April of that fiscal
year. (Example: if the Developer and the City each so certify in November and
December, 2005, respectively, the first Economic Development Grant would be
paid to the Developer in October, 2006).

 

(c)                                  In
the event that the annual certificate required to be delivered by the Developer
under Section 6.7 is not delivered to the City by November 1 of any year, the
Developer recognizes and agrees that the City may have insufficient time to
review and approve the same and certify its request for Tax Increments to the
County and that, as a result, no Economic Development Grant may be made to the
Developer in respect thereof. The City covenants to act in good faith to
appropriately review and consider any late certification on the part of the
Developer, but the City shall not be obligated to make any certification to the
County for the available Tax Increments or make any corresponding payment of
the Economic Development Grant to the Developer if, in the reasonable judgment
of the City, it is not able to give appropriate consideration (which may
include, but not be limited to, specific discussion before the City Council at
a regular City Council meeting with respect thereto) to the Developer’s
certification due to its late filing.

 

(d)                                 In
order to receive semi-annual Economic Development Grants, Developer shall
submit a request to the City within thirty (30) days of the payment of ad
valorem taxes on the Project Area. Said request shall include documentation
satisfactory to the City evidencing payment of all ad valorem taxes due. Upon
receipt of such request, the City shall issue Developer’s Economic Development
Grant within thirty (30) days, contingent upon the additional conditions
precedent set out in Article III.

 

Failure of Developer to file a request for an Economic
Development Grant within the requisite time period shall waive Developer’s
right to, and the City’s obligation of, payment of said Economic Development
Grant. Waiver shall be in an individual semiannual grant basis. Such waiver
shall not waive Developer’s right to any subsequent grant payment as they may
come due.

 

(e)                                  The
aggregate amount of the Economic Development Grants that may be paid to the
Developer under this Agreement shall be equal to the sum of the total amount of
all Tax Increments collected in respect of the assessments imposed on the
Development Property and Minimum Improvements as of January 1, 2005 and on
January 1 of each of the following ten (10) years, but such Economic
Development Grants shall at all times be subject to termination in accordance
with the terms of this Article VIII. Thereafter the taxes levied on the
Development Property and Minimum Improvements shall be divided and applied in
accordance with the Urban Renewal Act and the Ordinance.

 

(f)                                    In
the event that any certificate filed by the Developer under Section 6.7
discloses the existence or prior occurrence of an Event of Default that was not
cured or cannot reasonably be cured under the provisions of Section 10.2 (or an
event that, with the passage of time or giving of notice, or both, would become
an Event of Default that cannot reasonably be cured under the provisions of
Section 10.2), the City shall have no obligation thereafter to make any further
payments to the Developer in respect of the Economic Development Grants and may
proceed to take one or more of the actions described in Section 10.2 hereof.

 

Section 8.2.                                   Source of Grant
Funds Limited. (a) The Economic Development Grants shall be payable from
and secured solely and only by amounts deposited and held in the Area #2: South
Federal/Gateway TIF Account of the City. The City hereby covenants and agrees
to maintain the Ordinance in force during the term hereof and to apply the
incremental taxes collected in respect of the Development Property and Minimum
Improvements and allocated to the Area #2: South Federal/Gateway TIF Account to
pay the Economic Development Grants, as and to the extent set forth in Section
8.1 hereof. The Economic Development Grants shall not be payable in any manner
by other tax increment revenues or by general taxation or from any other City
funds.

 

 

(b)                                 Notwithstanding
the provisions of Section 8.1 hereof, the City shall have no obligation to make
an Economic Development Grant to the Developer if at any time during the term
hereof the City receives an opinion of its legal counsel to the effect that the
use of Tax Increments resulting from the Minimum Improvements to fund an
Economic Development Grant to the Developer, as contemplated under said Section
8.1, is not authorized or otherwise an appropriate project activity permitted
to be undertaken by the City under the Urban Renewal Act or other applicable
provisions of the Code, as then constituted, or under a controlling decision of
an Iowa court having jurisdiction over the subject matter hereof. Upon receipt
of such an opinion, the City shall promptly forward a copy of the same to the
Developer. If the circumstances or legal constraints giving rise to the opinion
continue for a period during which two (2) Economic Development Grants would
otherwise have been paid to the Developer under the terms of Section 8.1, the
City may terminate this Agreement, without penalty or other liability to the
Developer, by written notice to the Developer.

 

(c)                                  The
City makes no representation with respect to the amounts that may finally be paid
to the Developer as the Economic Development Grants, and under no.
circumstances shall the City in any manner be liable to the Developer so long
as the City timely applies the Tax Increments actually collected and held in
the Area #2: South Federal/Gateway TIF Account (regardless of the amounts
thereof) to the payment of the Economic Development Grants to the Developer, as
and to the extent described in this Article.

 

Section 8.3.                                   Use of Other Tax
Increments. Subject to this Article VIII, the City shall be free to use any
and all Tax Increments collected in respect of any other properties within the
Project Area, or any available Tax Increments resulting from the suspension or
termination of the Economic Development Grants under Section 8.1 hereof, for any
purpose for which the Tax Increments may lawfully be used pursuant to the
provisions of the Urban Renewal Act, and the City shall have no obligations to
the Developer with respect to the use thereof.

 

 

ARTICLE IX. INDEMNIFICATION

 

Section 9.1.                                   Release and
Indemnification Covenants.

 

(a)                                  The
Developer releases the City and the governing body members, officers, agents,
servants and employees thereof (hereinafter, for purposes of this Article IX,
the “indemnified parties”) from, covenant and agree that the indemnified
parties shall not be liable for, and agree to indemnify, defend and hold
harmless the indemnified parties against, any loss or damage to property or any
injury to or death of any person occurring at or about or resulting from any
defect in the Minimum Improvements.

 

(b)                                 Except
for any willful misrepresentation or any willful or wanton misconduct or any
unlawful act of the indemnified parties, the Developer agrees to protect and
defend the indemnified parties, now or forever, and further agree to hold the
indemnified parties harmless, from any claim, demand, suit, action or other
proceedings whatsoever by any person or entity whatsoever arising or
purportedly arising from (i) any violation of any agreement or condition of
this Agreement (except with respect to any suit, action, demand or other
proceeding brought by the Developer against the City to enforce its rights
under this Agreement), (ii) the acquisition and condition of the Development
Property and the construction, installation, ownership, and operation of the
Minimum Improvements or (iii) any hazardous substance or environmental
contamination located in or on the Development Property.

 

(c)                                  The
indemnified parties shall not be liable for any damage or injury to the persons
or property of the Developer or its officers, agents, servants or employees or
any other person who may be about the Minimum Improvements due to any act of
negligence of any person, other than any act of negligence on the part of any
such indemnified party or its officers, agents, servants or employees.

 

(d)                                 All
covenants, stipulations, promises, agreements and obligations of the City
contained herein shall be deemed to be the covenants, stipulations, promises,
agreements and obligations of the

 

 

City, and not of any governing body member, officer, agent, servant or
employee of the City in the individual capacity thereof.

 

(e)                                  The
provisions of this Article IX shall survive the termination of this Agreement.

 

 

ARTICLE X. REMEDIES

 

Section 10.1. Events of Default Defined. The
following shall be “Events of Default” under this Agreement and the term “Event
of Default” shall mean, whenever it is used in this Agreement, any one or more
of the following events:

 

(a)                                  Failure
by the Developer to cause the construction of the Minimum Improvements to be
commenced and completed pursuant to the terms, conditions and limitations of
Article III of this Agreement;

 

(b)                                 Transfer
of any interest in this Agreement or the assets of the Developer in violation
of the provisions of Article VII of this Agreement;

 

(c)                                  Failure
by the Developer to substantially observe or perform any covenant, condition,
obligation or agreement on its part to be observed or performed under this
Agreement;

 

(d)                                 The
holder of any Mortgage on the Development Property, or any improvements
thereon, or any portion thereof, commences foreclosure proceedings as a result
of any default under the applicable Mortgage documents;

 

(e)                                  The
Developer shall:

 

(A)                              file
any petition in bankruptcy or for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act of 1978, as amended, or under any similar federal or
state law; or

 

(B)                                make
an assignment for the benefit of its creditors; or due; or

 

(C)                                admit
in writing its inability to pay its debts generally as they become

 

(D)                               be
adjudicated a bankrupt or insolvent; or if a petition or answer proposing the
adjudication of the Developer as a bankrupt or its reorganization under any
present or future federal bankruptcy act or any similar federal or state law
shall be filed in any court and such petition or answer shall not be discharged
or denied within ninety (90) days after the filing thereof; or a receiver,
trustee or liquidator of the Developer or the Minimum Improvements, or part
thereof, shall be appointed in any proceedings brought against the Developer,
and shall not be discharged within ninety (90) days after such appointment, or
if the Developer shall consent to or acquiesce in such appointment; or

 

(f)                                    Any
representation or warranty made by the Developer in this Agreement, or made by
the Developer in any written statement or certificate furnished by the
Developer pursuant to this Agreement, shall prove to have been incorrect,
incomplete or misleading in any material respect on or as of the date of the
issuance or making thereof.

 

Section 10.2. Remedies
on Default. Whenever any Event of Default referred to in Section 10.1 of
this Agreement occurs and is continuing, the City, as specified below, may take
any one or more of the following actions after (except in the case of an Event
of Default under subsections (e) or (f) of said Section 10.1) the giving of
thirty (30) days’ written notice by the City to the Developer and the holder of
the First Mortgage (but only to the extent the City has been informed in
writing of the existence of a First Mortgage and been provided with the address
of the holder thereof) of the Event of Default, but only if the 

 

 

Event of Default has not been cured within said thirty (30) days, or if
the Event of Default cannot reasonably be cured within thirty (30) days and the
Developer does not provide assurances reasonably satisfactory to the City that
the Event of Default will be cured as soon as reasonably possible:

 

(a)                                  The
City may suspend its performance under this Agreement until it receives
assurances from the Developer, deemed adequate by the City, that the Developer
will cure its default and continue its performance under this Agreement;

 

(b)                                 The
City may terminate this Agreement;

 

(c)                                  The
City may withhold the Certificate of Completion;

 

(d)                                 The
City may take any action, including legal, equitable or administrative action,
which may appear necessary or desirable to enforce performance and observance
of any obligation, agreement, or covenant of the Developer, as the case may be,
under this Agreement; or

 

(e)                                  The
City shall be entitled to recover from the Developer, and the Developer shall
re-pay to the City, an amount equal to the most recent Economic Development
Grant previously made to the Developer under Article VIII hereof, and the City
may take any action, including any legal action it deems necessary, to recover
such amount from the Developer.

 

Section 10.3. No Remedy Exclusive. No remedy
herein conferred upon or reserved to the City is intended to be exclusive of
any other available remedy or remedies, but each and every remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient.

 

Section 10.4. No Implied Waiver. In the event
any agreement contained in this Agreement should be breached by any party and
thereafter waived by any other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other
concurrent, previous or subsequent breach hereunder.

 

Section 10.5. Agreement to Pay Attorneys’ Fees and
Expenses. Whenever any Event of Default occurs and the City shall employ
attorneys or incur other expenses for the collection of payments due or to
become due or for the enforcement or performance or observance of any
obligation or agreement on the part of the Developer herein contained, the
Developer agrees that it shall, on demand therefor, pay to the City the reasonable
fees of such attorneys and such other expenses as may be reasonably and
appropriately incurred by the City in connection therewith.

 

 

ARTICLE XI. OPTION TO
TERMINATE AGREEMENT

 

Section 11.1. Option to Terminate. This
Agreement may be terminated by the Developer if (i) the Developer is in
compliance with all material terms of this Agreement and no Event of Default
has occurred which has not been cured in accordance with the provisions of
Section 10.2 hereof; and (ii) the City fails to comply with any material term
of this Agreement, and, after written notice by the Developer of such failure,
the City has failed to cure such noncompliance within ninety (90) days of
receipt of such notice, or, if such noncompliance cannot reasonably be cured by
the City within ninety (90) days of receipt of such notice, the City has not
provided assurances reasonably satisfactory to the Developer that such
noncompliance will be cured as soon as reasonably possible.

 

Section 11.2. Effect of Termination. If this
Agreement is terminated pursuant to this Article XI, this Agreement shall be
from such date forward null and void and of no further effect; provided,
however, that the City’s rights to indemnification under Article IX hereof
shall in all events survive and provided further that the termination of this
Agreement shall not affect the rights of any party to institute any action,
claim

 

 

or demand for damages suffered as a result of breach or default of the
terms of this Agreement by another party, or to recover amounts which had
accrued and become due and payable as of the date of such termination. In any
such action, the prevailing party shall be entitled to recover its reasonable
attorneys fees and related expenses incurred in connection therewith (but only,
in the case of the City, to the extent permitted by applicable law).  Upon termination of this Agreement pursuant
to this Article XI, the Developer shall be free to proceed with the
construction and operation of the Minimum Improvements at its own expense and
without regard to the provisions of this Agreement.

 

 

ARTICLE XII. MISCELLANEOUS

 

Section 12.1. Conflict of Interest. The
Developer represents and warrants that, to its best knowledge and belief after
due inquiry, no officer or employee of the City, or its designees or agents,
nor any consultant or member of the governing body of the City, and no other
public official of the City who exercises or has exercised any functions or
responsibilities with respect to the Project during his or her tenure, or who
is in a position to participate in a decision-making process or gain insider
information with regard to the Project, has had or shall have any interest,
direct or indirect, in any contract or subcontract, or the proceeds thereof,
for work or services to be performed in connection with the Project, or in any
activity, or benefit therefrom, which is part of the Project at any time during
or after such person’s tenure.

 

Section 12.2. Notices and Demands. A notice,
demand or other communication under this Agreement by any party to the other
shall be sufficiently given or delivered if it is dispatched by registered or
certified mail, postage prepaid, return receipt requested, or delivered
personally, and

 

(a)                                  In
the case of the Developer, is addressed or delivered personally to the
Developer at P.O. Box 435, New Hampton, Iowa 50659; Attn: Stan Laures; and

 

(b)                                 In
the case of the City, is addressed to or delivered personally to the City at
City Hall, 10 First Street NW, Mason City, Iowa 50401-3224, Attn: Mayor;

 

or to such other designated individual or officer or to such other
address as any party shall have furnished to the other in writing in accordance
herewith.

 

Section 12.3. Titles of Articles and Sections.
Any titles of the several parts, Articles, and Sections of this Agreement are
inserted for convenience of reference only and shall be disregarded in
construing or interpreting any of its provisions.

 

Section 12.4. Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall constitute one
and the same instrument.

 

Section 12.5. Governing Law. This Agreement
shall be governed and construed in accordance with the laws of the State of
Iowa.

 

Section 12.6. Entire Agreement. This Agreement
and the exhibits hereto reflect the entire agreement between the parties
regarding the subject matter hereof, and supersedes and replaces all prior
agreements, negotiations or discussions, whether oral or written. This
Agreement may not be amended except by a subsequent writing signed by all
parties hereto.

 

Section 12.7. Successors and Assigns. This
Agreement is intended to and shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.

 

Section 12.8. Recording. Upon execution, this
Agreement shall be filed for record in the office of the County Recorder of the
County in which the Development Property is located.

 

Section 12.9. Termination Date. This Agreement
shall terminate and be of no further force or effect on and after June 30,
2015.

 

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)

 

 

IN WITNESS
WHEREOF, the City has caused this Agreement to be duly executed in its name and
behalf by its Mayor and its seal to be hereunto duly affixed and attested by
its City Clerk, the Developer has caused this Agreement to be duly executed in
its name and behalf by its President and Project Coordinator, all on or as of
the day first above written.

 

 

	
  (SEAL)

  	
  CITY OF MASON CITY, IOWA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean Marinos

  	
   

  
	
   

  	
   

  	
  Mayor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tim Moerman

  	
   

  	
   

  
	
   

  	
  City Clerk

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDEN GRAIN ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter Wendland

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Stanley Laures

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Project Coordinator

  	
   

  	
   

  

 

 

	
  STATE OF IOWA

  	
  )

  
	
   

  	
  ) SS

  
	
  COUNTY OF CERRO GORDO

  	
  )

  

 

 

On this 17th day of December, 2003, before
me a Notary Public in and for said County, personally appeared Jean Marinos and
Tim Moerman, to me personally known, who being duly sworn, did say that they
are the Mayor and City Clerk, respectively of the City of Mason City, Iowa, a
Municipal Corporation, created and existing under the laws of the State of
Iowa, and that the seal affixed to the foregoing instrument is the seal of said
Municipal Corporation, and that said instrument was signed and sealed on behalf
of said Municipal Corporation by authority and resolution of its City Council
and said Mayor and City Clerk acknowledged said instrument to be the free act
and deed of said Municipal Corporation by it voluntarily executed.

 

	
   

  	
  /s/ Diana L. Black

  
	
   

  	
  Notary Public in and for Said County and State

  

 

 

	
  STATE OF IOWA

  	
  )

  
	
   

  	
  ) SS

  
	
  COUNTY OF CERRO GORDO

  	
  )

  

 

On this 12th day of January, 2004, before
me the undersigned, a Notary Public in and for said County, in said State,
personally appeared Walter Wendland and Stanley Laures, to me personally known,
who, being by me duly sworn, did say that they are the President and Project
Coordinator of Golden Grain Energy, LLC, and that said instrument was signed on
behalf of said limited liability company; and that the said President and
Project Coordinator as such officers acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation, by them
voluntarily executed.

 

	
   

  	
  /s/ Colleen M. Kruger

  
	
   

  	
  Notary Public in and for Said County and State

  

 

 

EXHIBIT A

 

DEVELOPMENT
PROPERTY

 

The Development Property is described as consisting of
all that certain parcel or parcels of land located generally at 14542 240`h
Street, in the County of Cerro Gordo, State of Iowa, which is located within
two miles of the City of Mason City’s corporate boundary and within its “area
of operation” for purposes of Chapter 403 of the Iowa Code, and is more
particularly described as follows:

 

Parcel B of the Survey dated September 7, 2002, and
filed December 3, 2002, as instrument 02-12865 of the Cerro Gordo County
Recorder’s Office, said real estate being a part of Section 20, Township 96
North, Range 20 West of the 5`h P.M., Cerro Gordo County, Iowa, more
particularly described as follows:

 

Beginning at the South 1/4 corner of said Section 20;
thence N89°57’54”W (assumed bearing) along the south line of the SW 1/4 of said
Section 20, a distance of 66.38 feet to the easterly railroad right-of-way
line; then N 00°19’05” E along said easterly right-of-way line 2,638.85 feet to
the north line of said SW 1/4; thence continuing along said easterly
right-of-way line N00°16’08” E 229.0 feet; thence S 89°47’35” E 65.98 feet to
the east line of the NW 1/4 of said Section 20; thence S 89°45’24” E 834.02
feet; thence S00° 16’08” W 229.00 feet to the north line of said SE 1/4 of said
Section 20; thence South 00°19’05” W 2,643.59 feet to the south line of said SE
1/4; thence N89°25’03” W along said south line 833.61 feet to the point of
beginning. Said Parcel B contains 59.30 acres more or less, including 0.93
acres of county road easement across the South 45.00 feet thereof, and is
subject to other recorded and unrecorded easements, restrictions and
servitudes, if any; and

 

Parcel C of that part of the North Half of Section 20,
Township 96 North, Range 20 West of the 5`h P.M., Cerro Gordo County, Iowa,
described as follows:

 

Commencing at the southwest corner of the NE 1/4 of
said section 20; thence North 89 degrees 47 minutes 35 seconds West (assumed
bearing) along the south line of the NW 1/4 of said Section 20 a distance of
65.91 feet to the easterly railroad right-of-way line; thence North 00 degrees
16 minutes 08 seconds East along said easterly right-of-way 229.00 feet to the
point of beginning; thence continuing North 00 degrees 16 minutes 08 seconds
East along said easterly right-of-way line 450.00 feet; thence South 89 degrees
47 minutes 35 seconds East 66.12 feet to the east line of the NW 1/4 of said
Section 20; thence South 89 degrees 45 minutes 24 seconds East 833.88 feet;
thence South 00 degrees 16 minutes 08 seconds West 450.00 feet to a point
229.00 feet north of the south line of the NE 1/4 of said Section 20; thence
North 89 degrees 45 minutes 24 seconds West parallel with the said south line
834.02 feet to the east line of the NW 1/4 of said Section 20; thence North 89
degrees 47 minutes 35 seconds West parallel with the south line of the NW 1/4
of said Section 20 a distance of 65.98 feet to the point of beginning.

 

Said Parcel C contains 9.30 acres more or less, and is
subject to recorded and unrecorded easements, restrictions and servitudes, if
any.

 

 

EXHIBIT B

 

MINIMUM
IMPROVEMENTS

 

The Minimum Improvements shall consist of the
construction of a 67,000 square foot ethanol plant with a minimum nameplate
capacity of 40 million gallons or more, all as set forth in the Construction
Plans and being as more particularly shown and in substantially the same
configuration and scope as the Site Plans attached hereto and made a part
hereof.

 

All construction, signage (if any) and landscaping
shall be in accordance with said Site Plans and with the Construction Plans and
the Urban Renewal Plan.

 

Schedule of
Performance

 

	
  Activity
  to be Completed

  	
   

  	
   

  	
   

  	
  Completion Date (not later than):

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Construction Plans submitted

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issuance of Permits for Construction

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Foundation
  Permits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Building Permits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site Preparation Completed

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Substantial Completion

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issuance of Occupancy Permit

  	
   

  	
   

  	
   

  	
  March 1, 2005

  

 

 

EXHIBIT C

 

CERTIFICATE OF
COMPLETION

 

WHEREAS, the City of Mason City, Iowa (the “City”) and
Golden Grain Energy, L.L.C., an Iowa limited liability company, having an
office for the transaction of business at P.O. Box 435, New Hampton, Iowa (the
“Developer”), did on or about the                 day
of                       ,
2003, make, execute and deliver, each to the other, an Agreement for Private
Redevelopment (the “Agreement”), wherein and whereby the Developer agreed, in
accordance with the terms of the Agreement, to develop and maintain certain
real property located within the City and as more particularly described as
follows:

 

Parcel B of the Survey dated September 7, 2002, and
filed December 3, 2002, as instrument 02-12865 of the Cerro Gordo County
Recorder’s Office, said real estate being a part of Section 20, Township 96
North, Range 20 West of the 5`” P.M., Cerro Gordo County, Iowa, more
particularly described as follows:

 

Beginning at the South 1/4 corner of said Section 20;
thence N89°57’54”W (assumed bearing) along the south line of the SW 1/4 of said
Section 20, a distance of 66.38 feet to the easterly railroad right-of-way
line; then N 00°19’05” E along said easterly right-of-way line 2,63 8.85 feet
to the north line of said SW 1/4; thence continuing along said easterly right-of-way
line N00°16’08” E 229.0 feet; thence S 89°47’35” E 65.98 feet to the east line
of the NW 1/4 of said Section 20; thence S 89°45’24” E 834.02 feet; thence S00°
16’08” W 229.00 feet to the north line of said SE 1/4 of said Section 20;
thence South 00°19’05” W 2,643.59 feet to the south line of said SE 1/4; thence
N89°25’03” W along said south line 833.61 feet to the point of beginning. Said
Parcel B contains 59.30 acres more or less, including 0.93 acres of county road
easement across the South 45.00 feet thereof, and is subject to other recorded
and unrecorded easements, restrictions and servitudes, if any; and

 

Parcel C of that part of the North Half of Section 20,
Township 96 North, Range 20 West of the 5`h P.M., Cerro Gordo County, Iowa,
described as follows:

 

Commencing at the southwest corner of the NE 1/4 of
said section 20; thence North 89 degrees 47 minutes 35 seconds West (assumed
bearing) along the south line of the NW 1/4 of said Section 20 a distance of
65.91 feet to the easterly railroad right-of-way line; thence North 00 degrees
16 minutes 08 seconds East along said easterly right-of-way 229.00 feet to the
point of beginning;       thence
continuing North 00 degrees 16 minutes 08 seconds East along said easterly
right-of-way line 450.00 feet; thence South 89 degrees 47 minutes 35 seconds
East 66.12 feet to the east line of the NW 1/4 of said Section 20; thence South
89 degrees 45 minutes 24 seconds East 833.88 feet; thence South 00 degrees 16
minutes 08 seconds West 450.00 feet to a point 229.00 feet north of the south
line of the NE 1/4 of said Section 20; thence North 89 degrees 45 minutes 24
seconds West parallel with the said south line 834.02 feet to the east line of
the NW 1/4 of said Section 20; thence North 89 degrees 47 minutes 35 seconds West
parallel with the south line of the NW 1/4 of said Section 20 a distance of
65.98 feet to the point of beginning.

 

 

Said Parcel C contains 9.30 acres more or less, and is
subject to recorded and unrecorded easements, restrictions and servitudes, if
any.

 

(together, the “Development Property”); and

 

WHEREAS, the Agreement incorporated and contained
certain covenants and restrictions with respect to the development of the
Development Property, and obligated the Developer to construct certain Minimum
Improvements (as defined therein) in accordance with the Agreement; and

 

WHEREAS, the Developer has to the present date
performed said covenants and conditions insofar as they relate to the
construction of said Minimum Improvements in a manner deemed by the City to be
in conformance with the approved building plans to permit the execution and
recording of this certification.

 

NOW, THEREFORE, pursuant to Section 3.4 of the
Agreement, this is to certify that all covenants and conditions of the
Agreement with respect to the obligations of the Developer, and its successors
and assigns, to construct the Minimum Improvements on the Development Property
have been completed and performed by the Developer and are hereby released
absolutely and forever terminated insofar as they apply to the land described
herein. The County Recorder of Cerro Gordo County is hereby authorized to
accept for recording and to record the filing of this instrument, to be a
conclusive determination of the satisfactory termination of the covenants and
conditions of said Agreement with respect to the construction of the Minimum
Improvements on the Development Property.

 

All other provisions of the Agreement shall otherwise
remain in full force and effect until termination as provided therein.

 

	
  (SEAL)

  	
  CITY OF MASON CITY, IOWA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean Marinos

  	
   

  
	
   

  	
   

  	
  Mayor

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tim Moerman

  	
   

  	
   

  
	
   

  	
  City Clerk

  	
   

  	
   

  

 

 

	
  STATE OF IOWA

  	
  )

  
	
   

  	
  ) SS

  
	
  COUNTY OF CERRO GORDO

  	
  )

  

 

On this 17th day of December, 2003, before
me a Notary Public in and for said County, personally appeared Jean Marinos and
Tim Moerman to me personally known, who being duly sworn, did say that they are
the Mayor and City Clerk, respectively of the City of Mason City, Iowa, a
Municipal Corporation, created and existing under the laws of the State of
Iowa, and that the seal affixed to the foregoing instrument is the seal of said
Municipal Corporation, and that said instrument was signed and sealed on behalf
of said Municipal Corporation by authority and resolution of its City Council
and said Mayor and City Clerk acknowledged said instrument to be the free act
and deed of said Municipal Corporation by it voluntarily executed.

 

	
   

  	
  /s/ Diana L. Black

  
	
   

  	
  Notary Public in and for Said County and State

  

 

 

EXHIBIT D

 

APPLICATION FOR VOLUNTARY
ANNEXATION

PURSUANT TO IOWA CODE SECTION 368.7

 

To:                              The
City Council of the City of Mason City.

 

The undersigned
                               ,
                      of
Golden Grain Energy, LLC, the owner of all

 

lands contained in the following described tract, to wit:

 

Parcel B of the Survey dated September 7, 2002, and
filed December 3, 2002, as instrument 02-12865 of the Cerro Gordo County
Recorder’s Office, said real estate being a part of Section 20, Township 96
North, Range 20 West of the 5`h P.M., Cerro Gordo County, Iowa, more
particularly described as follows:

 

Beginning at the South 1/4 corner of said Section 20;
thence N89°57’54”W (assumed bearing) along the south line of the SW 1/4 of said
Section 20, a distance of 66.38 feet to the easterly railroad right-of-way
line; then N 00°19’05” E along said easterly right-of-way line 2,63 8.85 feet
to the north line of said SW 1/4; thence continuing along said easterly
right-of-way line N00’ 16’08” E 229.0 feet; thence S 89’47’35” E 65.98 feet to
the east line of the NW 1/4 of said Section 20; thence S 89°45’24” E 834.02
feet; thence S00° 16’08” W 229.00 feet to the north line of said SE 1/4 of said
Section 20; thence South 00°19’05” W 2,643.59 feet to the south line of said SE
1/4; thence N89°25’03” W along said south line 833.61 feet to the point of
beginning. Said Parcel B contains 59.30 acres more or less, including 0.93
acres of county road easement across the South 45.00 feet thereof, and is
subject to other recorded and unrecorded easements, restrictions and
servitudes, if any; and

 

Parcel C of that part of the North Half of Section 20,
Township 96 North, Range 20 West of the 5`h P.M., Cerro Gordo County, Iowa,
described as follows:

 

Commencing at the southwest corner of the NE 1/4 of
said section 20; thence North 89 degrees 47 minutes 35 seconds West (assumed
bearing) along the south line of the NW 1/4 of said Section 20 a distance of
65.91 feet to the easterly railroad right-of-way line; thence North 00 degrees
16 minutes 08 seconds East along said easterly right-of-way 229.00 feet to the
point of beginning; thence continuing North 00 degrees 16 minutes 08 seconds
East along said easterly right-of-way line 450.00 feet; thence South 89 degrees
47 minutes 35 seconds East 66.12 feet to the east line of the NW 1/4 of said
Section 20; thence South 89 degrees 45 minutes 24 seconds East 833.88 feet;
thence South 00 degrees 16 minutes 08 seconds West 450.00 feet to a point
229.00 feet north of the south line of the NE 1/4 of said Section 20; thence North
89 degrees 45 minutes 24 seconds West parallel with the said south line 834.02
feet to the east line of the NW 1/4 of said Section 20; thence North 89 degrees
47 minutes 35 seconds West parallel with the south line of the NW 1/4 of said
Section 20 a distance of 65.98 feet to the point of beginning.

 

Said Parcel C contains 9.30 acres more or less, and is
subject to recorded and unrecorded easements, restrictions and servitudes, if
any.

 

 

All the above located in Cerro Gordo County, Iowa.
hereby applies in writing and requests the City of Mason City annex said tract
into the City of Mason City, as allowed by law.

 

Upon annexation applicant requests this land be
initially zoned as
                         .

 

Golden Grain Energy, LLC is the only owner of the
above described lands and it does not contain any railroad right-of-way.

 

 

EXHIBIT E

 

DESCRIPTION OF
CITY IMPROVEMENTS

 

The City of Mason City will be responsible for the installation of a
water main from South Federal Avenue and 27th Avenue to 240th
Street then west to a point approximately 2400 feet west of the intersection of
240th Street and Pierce Avenue to the Development Property.  Further, a water main will be installed
beginning at the intersection of South Pierce Avenue and 19th Street
SW, and then proceeding the intersection of South Pierce Avenue and 19th
Street SW, and the proceeding south to the intersection of Olive Avenue and 240th
Street.

 

The water main will be a 12” minimum diameter and shall include all
appurtenances.  Such appurtenances shall
include valves and hydrants.

 

 

Applicant has attached hereto a map showing the
location of the above-described tract to the City of Mason City.

 

The above-described tract is not in the urbanized area
of any city except Mason City.

 

Applicant requests the City Council approve this
request and take all steps necessary to complete this annexation.

 

Dated: 
                    ,
20   .

 

	
   

  	
  Signed:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

RESOLUTION NO. 03 –

 

RESOLUTION FIXING DATE FOR A MEETING ON THE PROPOSAL
TO ENTER INTO A DEVELOPMENT AGREEMENT WITH GOLDEN GRAIN ENERGY, LLC, AND
PROVIDING FOR PUBLICATION OF NOTICE THEREOF

 

WHEREAS, by Resolution No. 93-124, adopted July 20,
1993 this Council found and determined that certain areas located within the
City are eligible and should be designated as an urban renewal area under Iowa
law, and approved and adopted the 1993 South Federal Avenue Economic
Development Plan for the 1993 South Federal Avenue Economic Development Area,
described therein, which Plan is on file in the office of the Recorder of Cerro
Gordo County; and

 

WHEREAS, by Resolution No. 93-125, adopted July 20,
1993 this Council found and determined that certain areas located within the
City are eligible and should be designated as an urban renewal area under Iowa
law, and approved and adopted the Highway 65 Gateway Economic Development Plan
for the Highway 65 Gateway Economic Development Area, described therein, which
Plan is on file in the office of the Recorder of Cerro Gordo County; and

 

WHEREAS, by Resolution No. 01-204, adopted October 16,
2001 this Council found and determined that the 1993 South Federal Avenue
Economic Development Area, as amended, and the Highway 65 Gateway Economic
Development Area, as amended, located within the City be amended and combined
to form the Area #2: South Federal/Gateway Urban Renewal Plan Area (the “Area
#2: South Federal/Gateway Urban Renewal Area”) described in the Mason City
Urban Renewal Plan (the “Plan”), which Plan is on file in the office of the
Recorder of Cerro Gordo County; and

 

WHEREAS, by Resolution No. 03-296, adopted November 4,
2003, the City approved and adopted Amendment No. 5 to the Mason City Urban
Renewal Plan for the Area #2: South Federal/Gateway Urban Renewal Area; and

 

WHEREAS, it is desirable that properties within the
Project Area be redeveloped as part of the overall redevelopment area covered
by said Plan; and WHEREAS, the City has received a proposal from Golden Grain
Energy, LLC (the “Developer”), in the form of a proposed Development Agreement
(the “Agreement”) by and between the City and the Developer, pursuant to which,
among other things, the Developer would agree to construct certain Minimum
Improvements (as defined in the Agreement) on certain real property located
within the Mason City Urban Renewal Plan for the Area #2: South Federal/Gateway
Urban Renewal Area as defined and legally described in the Agreement and
consisting of the construction of a 67,000 square foot ethanol plant with a
minimum nameplate capacity of 40 million gallons or more, together with all
related site improvements described in the Construction Plans, and

 

 

other obligations as outlined in the proposed Development Agreement;
and WHEREAS, the Agreement further proposes that commencing in October 2006, the
City will make up to twenty (20) consecutive semi-annual payments to the
Developer, the aggregate amount of said payments shall be equal to the sum of
the total amount of all Tax Increments collected in respect of the assessments
imposed on the Development Property and Minimum Improvements as of January 1,
2003 and on January 1 of each of the following ten (10) years, under the terms
and following satisfaction of the conditions set forth in the Agreement; and

 

WHEREAS, Iowa Code Chapters 15A and 403 (the “Urban
Renewal Law”) and 15A authorize cities to make grants for economic development
in furtherance of the objectives of an urban renewal project and to appropriate
such funds and make such expenditures as may be necessary to carry out the
purposes of said Chapter, and to levy taxes and assessments for such purposes;
and WHEREAS, the Council has determined that the Agreement is in the best
interests of the City and the residents thereof and that the performance by the
City of its obligations thereunder is a public undertaking and purpose and in
furtherance of the Plan and the Urban Renewal Law and, further, that the
Agreement and the City’s performance thereunder is in furtherance of
appropriate economic development activities and objectives of the City within
the meaning of Chapters 403 and 15A of the Iowa Code, taking into account the
factors set forth therein; and

 

WHEREAS, neither the Urban Renewal Law nor any other
Code provision sets forth any procedural action required to be taken before
said economic development activities can occur under the Agreement, and
pursuant to Section 364.6 of the City Code of Iowa, it is deemed sufficient if
the action hereinafter described be taken and the Clerk publish notice of the
proposal and of the time and place of the meeting at which the Council proposes
to take action thereon and to receive oral and/or written objections from any
resident or property owner of said City to such action.

 

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF MASON CITY, IOWA:

 

Section 1:
That this Council meet in the Mason City Room of the Mason City Public Library,
225 2nd Street S.E., Mason City, Iowa, at 7:00 o’clock P.M. on the 2nd day of
December, 2003 for the purpose of taking action on the matter of the proposal
to enter into a Development Agreement with Golden Grain Energy, LLC.

 

Section 2:
That the Clerk is hereby directed to cause at least one publication to be made
of a notice of said meeting, in a legal newspaper, printed wholly in the
English language, published at least once weekly, and having general
circulation in said City, said publication to be not less than four (4) clear days
nor more than twenty (20) days before the date of said public meeting.

 

 

Section 3:
The notice of the proposed action shall be in substantially the following form:

 

“NOTICE OF MEETING OF THE COUNCIL OF THE CITY OF MASON
CITY, IOWA, ON THE MATTER OF THE PROPOSAL TO ENTER INTO A DEVELOPMENT AGREEMENT
WITH GOLDEN GRAIN ENERGY, LLC, AND THE HEARING THEREON

 

PUBLIC NOTICE is hereby given that the Council of the
City of Mason City, Iowa, will hold a public hearing on the 2nd day of
December, 2003 at 7:00 P.M o’clock P.M., in the Mason City Room of the Mason
City Public Library, 225 2”d Street S.E., Mason City, Iowa, at which meeting
the Council proposes to take additional action on the proposal to enter into a
Development Agreement (the “Agreement”) with Golden Grain Energy, LLC (the
“Developer”).

 

The Agreement would obligate the Developer to
construct certain Minimum Improvements (as defined in the Agreement) on certain
real property located within the Mason City Urban Renewal Plan for the Area #2:
South Federal/Gateway Urban Renewal Project Area as defined and legally
described in the Development Agreement, consisting of the construction of a
67,000 square foot ethanol plant with a minimum nameplate capacity of 40
million gallons or more, together with all related site improvements described
in the Construction Plans, under the terms and following satisfaction of the
conditions and other obligations set forth in the Agreement.

 

The Agreement would further obligate the City will
make up to twenty (20) consecutive semi-annual payments to the Developer,
commencing in October 2006, the aggregate amount of said payments shall be
equal to the sum of the total amount of all Tax Increments collected in respect
of the assessments imposed on the Development Property and Minimum Improvements
as of January 1, 2003 and on January 1 of each of the following ten (10) years,
under the terms and following satisfaction of the conditions set forth in the
Agreement.

 

A copy of the Agreement is on file for public
inspection during regular business hours in the office of the City Clerk, City
Hall, Mason City, Iowa.

 

At the above meeting the Council shall receive oral or
written objections from any resident or property owner of said City, to the
proposal to enter into the Agreement with the Developer. After all objections
have been received and considered, the Council will at this meeting or at any
adjournment thereof, take additional action on the proposal or will abandon the
proposal to authorize said Agreement.

 

 

This notice is given by order of the Council of Mason
City, Iowa, as provided by Section 364.6 of the City Code of Iowa.

 

Dated this 18th day of November, 2003.

 

Tim Moerman, City Clerk

City of Mason City, Iowa”

 

(End of Notice)

 

PASSED AND APPROVED this 18th day of November, 2003.

 

	
   

  	
  /s/ Jean Marinos

  	
   

  
	
   

  	
  Jean E. Marinos, Mayor

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Tim Moerman

  	
   

  	
   

  
	
  Tim Moerman, City ClerkExhibit
4.15

 

THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW, AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS COMPANY, IS
AVAILABLE.

 

WARRANT
TO PURCHASE COMMON STOCK

OF

MDU COMMUNICATIONS INTERNATIONAL, INC.

 

W -
      

 

This is to Certify That, FOR VALUE RECEIVED,
                       
or assigns (“Holder”), is entitled to purchase, subject to the provisions of
this Warrant, from MDU Communications International, Inc., a Delaware
corporation (“Company”),
                     
fully paid, validly issued and nonassessable shares of common stock, par value
$.001 per share, of the Company (“Common Stock”), at a purchase price equal to
$1.75 per share at any time or from time to time commencing on the date hereof
until November 24, 2006.  The number
of shares of Common Stock to be received upon the exercise of this Warrant and
the price to be paid for each share of Common Stock may be adjusted from time
to time as hereinafter set forth.  The
shares of Common Stock deliverable upon such exercise, and as adjusted from
time to time, are hereinafter sometimes referred to as “Warrant Shares” and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the “Exercise Price.”

 

This Warrant was originally issued in connection with a private
offering of securities by the Company, pursuant to the terms of a Confidential
Offering Memorandum dated November 14, 2003, as supplemented (the
“Memorandum”).

 

(a)                                  EXERCISE OF WARRANT; CANCELLATION OF
WARRANT.  This Warrant may be exercised
in whole or in part at any time or from time to time commencing on the date
hereof and until November 24, 2006 (the “Exercise Period”), provided,
however, that if either such day is a day on which banking institutions in the
State of New York are authorized by law to close, then on the next succeeding
day which shall not be such a day.  This
Warrant may be exercised by presentation and surrender hereof to the Company at
its principal office, or at the office of its stock transfer agent, if any,
with the Purchase Form annexed hereto duly executed and accompanied by payment
of the Exercise Price for the number of Warrant Shares specified in such
form.  As soon as practicable after each
such exercise of this Warrant, but not later than seven days from the date of
such exercise, the Company shall issue and deliver to the Holder a certificate
or certificates for the Warrant Shares issuable upon such exercise, registered
in the name of the Holder or its designee. 
If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable thereunder. 
Upon receipt

 

 

by the Company of this Warrant at its office, or by
the stock transfer agent of the Company at its office, in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder.

 

(b)                                 RESERVATION OF SHARES.  The Company shall at all times reserve for issuance and/or
delivery upon exercise of this Warrant such number of shares of Common Stock as
shall be required for issuance and delivery upon exercise of the Warrants.

 

(c)                                  FRACTIONAL SHARES.  No fractional shares or script representing fractional shares
shall be issued upon the exercise of this Warrant.  With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of a share, determined as
follows:

 

(1)                                  If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the Nasdaq National Market, the current market value
shall be the last reported sale price of the Common Stock on such exchange or
market on the last business day prior to the date of exercise of this Warrant
or if no such sale is made on such day, the average closing bid and asked
prices for such day on such exchange or market; or

 

(2)                                  If the Common Stock is not so listed or admitted
to unlisted trading privileges, but is traded on the Nasdaq SmallCap Market,
the current market value shall be the average of the closing bid and asked
prices for such day on such market and if the Common Stock is not so traded,
the current market value shall be the mean of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of this Warrant; or

 

(3)                                  If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are not so reported,
the current market value shall be an amount, not less than book value thereof
as at the end of the most recent fiscal year of the Company ending prior to the
date of the exercise of the Warrant, determined in such reasonable manner as
may be prescribed by the Board of Directors of the Company.

 

(d)                                 EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF
WARRANT.  This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Common Stock purchasable
hereunder.  Upon surrender of this
Warrant to the Company at its principal office or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee named in
such instrument of assignment and this Warrant shall promptly be
cancelled.  This Warrant may be divided
or combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term “Warrant” as used herein includes any Warrants into which this
Warrant may be divided or exchanged. 
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. 
Any such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed, or mutilated shall be at any time
enforceable by anyone.

 

2

 

(e)                                  RIGHTS OF THE HOLDER.  The Holder shall not, by virtue hereof, be entitled to any rights
of a shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.

 

(f)                                    ANTI-DILUTION PROVISIONS.  The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:

 

(1)                                  In case the Company shall (i) declare a dividend
or make a distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or distribution
or of the effective date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined by multiplying
the Exercise Price by a fraction, the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such action, and
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action. 
Such adjustment shall be made successively whenever any event listed
above shall occur.

 

(2)                                  Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later than 10 days after
such adjustment, cause a notice setting forth the adjusted Exercise Price and
adjusted number of shares issuable upon exercise of each Warrant, and, if
requested, information describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last addresses appearing in
the Warrant Register, and shall cause a certified copy thereof to be mailed to
its transfer agent, if any.  The Company
may retain a firm of independent certified public accountants selected by the
Board of Directors (who may be the regular accountants employed by the Company)
to make any computation required by this Section (f), and a certificate
signed by such firm shall be conclusive evidence of the correctness of such
adjustment.

 

(3)                                  Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Agreement.

 

(g)                                 OFFICER’S CERTIFICATE.  Whenever the Exercise Price shall be adjusted as required by the
provisions of the foregoing Section, the Company shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office and
with its stock transfer agent, if any, an officer’s certificate showing the adjusted
Exercise Price and Warrant Shares determined as herein provided, setting forth
in reasonable detail the facts requiring such adjustment, including a statement
of the number of additional shares of Common Stock, if any, and such other
facts as shall be necessary to show the reason for and the manner of computing
such adjustment.  Each such officer’s
certificate shall be made available at all reasonable times for inspection by
the Holder or any holder of a Warrant executed and delivered pursuant to Section (a)
and the Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder or any such holder.

 

(h)                                 NOTICES TO WARRANT HOLDERS.  So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger
of the Company with or into another corporation, sale, lease or

 

3

 

transfer of all or substantially
all of the property and assets of the Company to another corporation, or
voluntary or involuntary dissolution, liquidation or winding up of the Company
shall be effected, then in any such case, the Company shall cause to be mailed
by certified mail to the Holder, at least fifteen days prior the date specified
in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record
is to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.

 

(i)                                     RECLASSIFICATION, REORGANIZATION OR MERGER.  In case of any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
Company, or in case of any consolidation or merger of the Company with or into
another corporation (other than a merger with a subsidiary in which merger the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall
have the right thereafter by exercising this Warrant at any time prior to the expiration
of the Warrant, to purchase the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance.  Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant.  The foregoing
provisions of this Section (i) shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.  In the event that in connection with any
such capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of Subsection (1) of
Section (f) hereof.

 

(j)                                     REGISTRATION
UNDER THE SECURITIES ACT OF 1933. The Holder shall have registration rights
with respect to the Warrant Shares as more particularly set forth in the
subscription agreement executed in connection with the Private Placement.

 

	
   

  	
   

  	
  MDU
  COMMUNCATIONS INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Sheldon
  Nelson, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:
  November 24, 2003

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  c/s

  	
   

  	
   

  	
   

  
						

 

4

 

PURCHASE
FORM

 

 

	
   

  	
  Dated
  

  	
   

  

 

 

The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing
               
shares of Common Stock and hereby makes payment of
$               
in payment of the actual exercise price thereof.

 

 

INSTRUCTIONS FOR REGISTRATION OF
STOCK

 

 

	
  Name:  

  	
   

  	
   

  	
   

  
	
   

  	
  (Please
  typewrite or print in block letters)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  

  	
   

  

 

 

ASSIGNMENT
FORM

 

 

FOR
VALUE RECEIVED,
                                    
hereby sells, assigns and transfers unto

 

 

	
  Name:  

  	
   

  	
   

  	
   

  
	
   

  	
  (Please
  typewrite or print in block letters)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  

 

The
right to purchase Common Stock represented by this Warrant to the extent of
           shares as to which
such right is exercisable;

 

and
does hereby irrevocably constitute and appoint [if any]
                         
Attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.

 

 

	
   

  	
   

  
	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Print
  Name

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]