Document:

Exhibit
4.2

 

THIS WARRANT HAS BEEN, AND THE UNITS WHICH
MAY BE RECEIVED PURSUANT TO THE EXERCISE OF THIS WARRANT WILL BE, ACQUIRED
SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR SUCH UNITS HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER
APPLICABLE STATE SECURITIES LAWS.

 

	
  No. 1

  	
   

  	
  October 17, 2007

  

 

WARRANT TO PURCHASE UNITS OF ADVANCED
BIOENERGY, LLC

 

This Warrant to Purchase Units (this “Warrant”) certifies
that, for good and valuable consideration, PJC CAPITAL LLC,
a Delaware limited liability company  (along
with its permitted assignees, the “Holder”) is entitled to
purchase from ADVANCED BIOENERGY, LLC, a
Delaware limited liability company (the “Company”), 450,000 fully paid
and nonassessable Units (as defined in the Company’s Third Amended and Restated
Operating Agreement dated February 1, 2006 (the “LLC
Agreement”, the “Units”) of the Company, as adjusted pursuant to Section
3 hereof (the “Warrant
Units”), at an exercise price per Unit equal to $14.00 (as adjusted pursuant to Section 3
hereof) (the “Exercise Price”),
subject to the provisions and upon the terms and conditions hereinafter set
forth. This Warrant is issued in connection with the Secured Term Loan Note
made by the Company in favor of the initial Holder dated as of the date hereof
(the “Note”). Unless otherwise
defined in this Warrant, capitalized terms defined in the Note are used in this
Warrant as defined in the Note.

 

1.                                      Exercise;
Payment.

 

(a)                                  Exercise
Period. This Warrant may be exercised in whole or part by the Holder during
the term (as set forth in Section 11) and in compliance with the
provisions of this Warrant at any time after the date of issuance set forth
above (the “Warrant
Date”), by the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A (the “Notice of Exercise”)
duly executed) at the principal office of the Company. If this Warrant shall
have been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Units, deliver to the Holder a
new Warrant evidencing the rights of the Holder to purchase the unpurchased
Warrant Units, which new Warrant shall in all other respects be identical with
this Warrant, or at the request of the Holder, appropriate notation may be made
on this Warrant and the same returned to the Holder.

 

(b)                                  Cash
Exercise. Upon exercise of this Warrant, the Holder shall pay the Company
an amount equal to the product of (x) the Exercise Price multiplied by (y) the total number of Warrant Units purchased
pursuant to the Exercise of this Warrant, by wire transfer or check payable to
the order of the Company. The Holder shall be deemed to have become the holder
of 

 

 

record of, and
shall be treated for all purposes as the record holder of, the Warrant Units
represented by such exercise (and such Warrant Units shall be deemed to have
been issued) immediately prior to the close of business on the date upon which
this Warrant is exercised.

 

(c)                                  Net
Exercise. The Exercise Price also may be paid at the Holder’s election by
surrender of all or a portion of the Warrant for Units to be exercised under
this Warrant (“Net
Exercise”). If the Holder elects the Net Exercise method, the
Company will issue Warrant Units in accordance with the following formula:

 

X = Y(A-B)

A

 

Where:

 

X =                             the number
of Warrant Units to be issued upon exercise of the Warrant

 

Y =                              the
number of Warrant Units requested to be exercised

 

A =                            the
fair market value of 1 Unit on the date of exercise of this Warrant

 

B =                              the
Exercise Price

 

For purposes of the above calculation, the fair market value of a Unit
shall mean:

 

(i)                                    if
at any time the Units are not listed on any securities exchange or traded in
the over-the-counter market, the fair market value of the Units shall be the
highest price per Unit which the Company could obtain from a willing buyer
(other than an employee, director or “Affiliate” of the Company, as such term
is defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”) for
Units sold by the Company, as determined in good faith by its Directors (as
defined in the LLC Agreement);

 

(ii)                                if
the exercise is in connection with the conversion of the Units to common stock
of the Company (“Common Stock”) in order to
facilitate a public offering of such Common Stock, and if the Company’s
Registration Statement relating to such initial public offering has been
declared effective by the SEC, then the fair market value per Unit shall be the
initial “Price to Public” of the Common Stock specified in the final prospectus
with respect to the offering, giving effect to the conversion mechanism with
respect to such conversion of the Units to Common Stock;

 

(iii)                            if
the exercise is not in connection with a public offering, and:

 

(A)                               if
the Units (or the Common Stock, if the Units have been converted to Common
Stock) are traded on a securities exchange, the fair market value shall be
deemed to be the average of the closing prices over a 5 day period ending 3
days before the day the fair market value of the Units or the Common Stock, as
applicable, is being determined; or

 

2

 

(B)                               if
the Units (or the Common Stock, if the Units have been converted to Common
Stock) are traded over-the-counter, the fair market value shall be deemed to be
the average of the closing bid and asked prices quoted on the principal market
on which or through which the Units or the Common Stock, as applicable, are
traded over the 5 day period ending 3 days before the day the fair market value
of the Units or the Common Stock, as applicable, is being determined;

 

(iv)                               if
property or securities in addition to or in substitution for Units shall be
issuable upon exercise of the Warrant, the fair market value of such property
(to the extent such property does not include a security which is listed on any
securities exchange or traded in the over-the-counter market, in which fair
market value shall be calculated as provided in Section 1(c)(i) - (iii)
above) shall be determined in good faith by the Company’s Directors (as defined
in the LLC Agreement).

 

(d)                                  Exercise
Prior to Expiration. To the extent this Warrant has not been previously
exercised as to any Warrant Units issuable hereunder, and if the fair market
value of one Warrant Unit immediately before expiration of the Warrant is greater
than the Exercise Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to the Net Exercise provisions in Section
1(c) (even if not surrendered) immediately before its expiration. In such
event, the fair market value of one Warrant Unit shall be determined pursuant
to Section 1(c). To the extent this Warrant or any portion thereof is
deemed automatically exercised pursuant to this Section 1(d), the
Company agrees to promptly notify the Holder of the number of Units, if any,
and any other property, which the Holder is entitled to receive by reason of
such automatic exercise.

 

(e)                                  Unit
Certificates. In the event of the exercise of this Warrant, certificates
for the Warrant Units so purchased shall be delivered to the Holder within a
reasonable time after exercise, to the extent that the Units are certificated.

 

2.                                      Units Fully Paid; Reservation of Units. All
of the Units issuable upon the exercise of this Warrant, upon issuance and
receipt by the Company of the Exercise Price therefor (or upon Net Exercise
thereof, as provided in Section 1(c)), shall be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer, taxes, liens and charges with respect to the issuance thereof.
During the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved for
issuance a sufficient number of Units to provide for the exercise of this
Warrant.

 

3.                                      Adjustment of Exercise Price and Number of
Units. The number and kind of Warrant Units purchasable upon the
exercise of this Warrant and the Exercise Price payable therefor shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:

 

(a)                                  Unit
Distributions, Subdivisions, Combinations. If the Company shall (i) make a
distribution in respect of the Units in additional Units (or securities
convertible into, exchangeable for or otherwise entitling the registered holder
to receive Units), (ii) subdivide the outstanding Units into a greater number
of Units or (iii) combine the outstanding Units into a smaller number of Units,
the number of Units purchasable upon exercise of this Warrant immediately prior
to the record date applicable to such event shall be adjusted so that the
Holder 

 

3

 

shall
thereafter be entitled to receive that kind and number of Units or other
securities of the Company that the Holder would have owned or have been
entitled to receive after the happening of any of the events described above,
had the Warrant been exercised immediately prior to the happening of such event
or any record date with respect thereto. The Exercise Price per Warrant Unit
purchasable upon exercise of any Warrant shall be subject to adjustment from
time to time such that upon each adjustment of the number of Warrant Units
purchasable pursuant to this Section 3(a), the Exercise Price shall
be reduced or increased, as the case may be, to a price determined by dividing
the aggregate Exercise Price of all Warrant Units in effect prior to such
adjustment by the total maximum number of Warrant Units purchasable upon the
exercise of all Warrants immediately after such adjustment.

 

(b)                                  Reorganization
or Reclassification. In case of any capital reorganization or
reclassification of the equity interests of the Company, or the conversion of
the Company into a corporation (whether pursuant to a merger, consolidation,
statutory conversion or otherwise), each Warrant shall thereafter be
exercisable from the number of Units or other securities or property receivable
upon such capital reorganization, reclassification or conversion, as the case
may be, by a holder of the number of Units into which the Warrant was
exercisable immediately prior to such capital reorganization, reclassification
or conversion; and, in any such case, appropriate adjustment shall be made in
the application of the provisions herein set forth with respect to the rights
and interests thereafter of the Holder of the Warrant to the end that the
provisions set forth herein shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other securities or
property thereafter deliverable upon the exercise of the Warrant.

 

(c)                                  Issuance
of Securities Under Certain Circumstances.

 

(i)                                    If,
at any time after the date hereof and prior to October 17, 2009, the Company
shall issue or sell (or, in accordance with clause (ii) below, shall be deemed
to have issued or sold) any Units (other than Excluded Units, as defined below)
without consideration or for a consideration per unit that is less than the
Exercise Price, as adjusted for any unit splits, combinations, unit dividends
or similar transactions after the date hereof, then, effective immediately upon
such issuance or sale, this Warrant shall immediately become exercisable for
such additional Warrant Units as are necessary to maintain the percentage
ownership interest in the Company’s Units (calculated on an as-converted, fully
diluted basis assuming the issuance of all outstanding options and warrants)
held by the Holder immediately prior to such issuance. Upon any such adjustment
of the number of Warrant Units purchasable upon the exercise of this Warrant,
the Exercise Price shall be adjusted by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Warrant Units purchasable upon the exercise of this
Warrant immediately prior to such adjustment and the denominator of which shall
be the number of Warrant Units so purchasable immediately thereafter.
Adjustments shall be made successively whenever such an issuance or sale is
made.

 

(ii)                                For
the purpose of determining the adjusted Exercise Price under Section 3(c),
the following shall be applicable:

 

(A)                               If
the Company in any manner issues or grants any Option Rights or Convertible
Securities (each as defined below) and the price per unit for which Units are 

 

4

 

issuable upon
the exercise of such Option Rights or upon conversion or exchange of such
Convertible Securities is less than the Trigger Price, then the total maximum
number of Units issuable upon the exercise of such Option Rights or upon
conversion or exchange of the total maximum amount of such Convertible
Securities (or any Convertible Securities issuable upon the exercise of such
Option Rights) shall be deemed to be outstanding and to have been issued and
sold by the Company for such lesser price per unit. For purposes of this
paragraph, the price per unit for which a Unit is issuable upon exercise of
Option Rights or upon conversion or exchange of Convertible Securities (or any
Convertible Securities issuable upon exercise of Option Rights) shall be determined
by dividing (x) the total amount, if any, received or receivable by the Company
as consideration for the issuing or granting of such Option Rights or
Convertible Securities, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Option
Rights or the exchange or conversion of all such Convertible Securities (plus
in the case of such Option Rights which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof) by (y) the total maximum number of Units
issuable upon exercise of such Option Rights or Convertible Securities (or upon
the conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Option Rights).

 

(B)                               If
the purchase price provided for in any Option Rights, the additional
consideration, if any, payable upon the issuance, conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Units decreases at any time, then the
number of Warrant Units issuable upon the exercise of this Warrant and the
Exercise Price (each as in effect at the time of such decrease) shall be
readjusted to number of Warrant Units and the Exercise Price which would have
been in effect at such time had such Option Rights or Convertible Securities
still outstanding provided for such decreased purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.

 

(C)                               If
any Units, Option Rights or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, then the consideration received therefor
shall be deemed to be the gross amount received by the Company therefor. If any
Units, Option Rights or Convertible Securities are issued or sold for
consideration other than cash, then the amount of consideration received by the
Company shall be the fair value of such consideration determined in good faith
by the Directors of the Company.

 

(iii)                            For
purposes of this Section 3(c):

 

(A)                               “Convertible Securities” means any securities or other
obligations issued or issuable by the Company or any other Person that are
exchangeable for, or convertible into, (i) any Units or (ii) any securities
exchangeable for, or convertible into, any Units.

 

(B)                               “Excluded Units”  means,
collectively, (i) Units or Option Rights issued in any of the transactions
described in Sections 3(a) or 3(b), (ii) Units issued or issuable to
officers, directors or employees of, or consultants to, the Company pursuant to
equity incentive plans or agreements on terms approved by the Directors of the
Company (including Units issuable upon exercise of the options outstanding on
the date hereof), (iii) Units issued after the 

 

5

 

date hereof
upon the exercise of other Option Rights or the exchange or conversion of
Convertible Securities outstanding on the date hereof and (iv) the issuance of
this Warrant or any Warrant Units pursuant to this Warrant.

 

(C)                               “Option Rights” means any warrants, options or other
rights to subscribe for or purchase, or obligations to issue, any Units, or any
Convertible Securities, including, without limitation, any options or similar
rights issued or issuable under any employee equity incentive plan, pension
plan or other employee benefit plan of the Company.

 

(d)                                  Notice
of Certain Transactions. In the event that the Company shall propose at any
time to effect any action of the type described in Sections 3(a), (b) or (c),
or any right to subscribe for or purchase any evidences of its indebtedness,
any units or capital stock of any class or any other securities or property, or
to receive any other right, or take any similar extraordinary action affecting
the Company’s Units or equity capital (including but not limited to the
transfer of substantially all of the Company’s assets), then, in connection
with each such event, the Company shall send notice thereof to all Holders no
later than 10 days after the earlier to occur of (i) the date on which such
event became effective or (ii) the record date for such event, in each case
specifying in reasonable detail what the transaction or event consists of and,
if applicable, the aggregate amount or value of any cash or property
distributed, paid, purchased or received by the Company in connection
therewith.

 

(e)                                  Adjustment
to Exercise Price. Until the first anniversary of the issuance of this
Warrant, if the Company, Heartland Grain Fuels, LP (“HGF”)  or ABE Fairmont shall borrow, request any
advance, receive any proceeds from or otherwise draw under the HGF Debt Service
Reserve or the HGF Contingency Reserve (as such terms are defined below) (a “Draw”), to the extent that the
proceeds from such Draw(s) are not applied to a Permitted Use (as defined
below), then the Exercise Price shall be reduced by an amount equal to
(x) the aggregate amount of such Draw(s) to the extent the same is not
applied to a Permitted Use, divided  by (y) 11,926,848. The
Company will promptly notify Holder in writing upon the occurrence of any Draw,
stating the date on which such Draw occurred as well as the amount thereof, and
will provide such other written documentation supporting the determination of
whether the application of any amounts obtained from such Draw constitutes a
Permitted Use as Holder shall reasonably request.

 

For purposes
of this Warrant, “Permitted Use” means any of
the following:  (i) a dollar-for-dollar
reduction in outstanding Indebtedness of the Company or HGF; (ii) a
dollar-for-dollar increase in the debt service reserve, initially set at
$2,782,669 (the “HGF Debt Service Reserve”),
as described in and established under the Credit Agreement dated as of October
1, 2007 (the “HGF Credit Agreement”) by and
between HGF, as the borrower, and WestLB, New York branch as the lead arranger,
which reserves shall be deposited in an account as approved by the Holder,
which approval shall not be unreasonably withheld or delayed; (iii) use of up
to an aggregate of $2,000,000 from the contingency reserve, initially set at
$10,000,000 (the “HGF Contingency Reserve”), as described in and established
under the HGF Credit Agreement, for construction-related expenses prior to
conversion of the “construction loan” under the HGF Credit Agreement; and (iv)
creation of a separate contingency reserve in the amount of up to $2,500,000,
which reserve shall be used to support the potential of ICM’s failure to meet
its 

 

6

 

obligations to
the Company under the License Agreement between the Company and ICM, Inc.,
dated as of March 13, 2006.

 

4.                                      Investment Representations of Holder; Transfer
of Warrant and Warrant Units.

 

(a)                                  Holder
represents and warrants to the Company that: (i) it is an “Accredited Investor”
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act; and (ii) it has the ability to bear the economic risks of such
Holder’s prospective investment, including a complete loss of Holder’s
investment in the Warrants and the Warrant Units; and (iii) the Warrants
and the Warrant Units are purchased for the Holder’s own account, and not with
view to distribution of either the Warrants or any securities purchasable upon
exercise thereof; provided however that the Holder may transfer the Warrant and
any Warrant Units to any Affiliate of the Holder.

 

(b)                                  This
Warrant and the Warrant Units may only be Transferred (as defined in the LLC
Agreement) in compliance with federal and state securities laws. At the time of
the surrender of this Warrant in connection with any Transfer of this Warrant
or the Transfer of the Warrant Units (except to an Affiliate), the Company may
require, as a condition of allowing such Transfer (i) that the Holder or
transferee of this Warrant or the Warrant Units, as the case may be, furnish to
the Company a written opinion of counsel that is reasonably acceptable to the
Company to the effect that such Transfer may be made without registration under
the Securities Act or qualification under any state securities laws and/or
(ii) that the Holder or transferee execute and deliver to the Company an
investment representation letter in form and substance acceptable to the
Company and substantially in the form of Exhibit B hereto and the
transfer application used by the Company, a form of which has previously been
provided to the Holder. Transfer of this Warrant and all rights hereunder, in
whole or in part, in accordance with the foregoing provisions, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company or the office
or agency designated by the Company, together with a written assignment of this
Warrant substantially in the form of Exhibit C hereto duly executed by
the Holder or its attorney-in-fact. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the Holder a new warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
be deemed cancelled.

 

(c)                                  Subject
to the requirements of Section 4(b) of this Warrant and Section 9.2 of
the LLC Agreement, the Holder shall be entitled to Transfer all or any portion
of the Warrant Units to any Person, whether or not such Person is an Affiliate
of the Holder, provided that notwithstanding the provisions of Section
9.2(b)(i) of the LLC Agreement, a Transfer to any Person that would otherwise
require the consent of the Directors in writing under such section, shall be
subject to the consent of a majority of the Directors (as defined in the LLC
Agreement), such consent not to be unreasonably withheld, delayed or
conditioned.

 

7

 

5.                                      Legend.

 

(a)                                  Each
certificate evidencing the Warrant Units issued upon exercise of this Warrant
shall be stamped or imprinted with a legend substantially in the following
form:

 

THE TRANSFERABILITY OF THE
MEMBERSHIP UNITS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED. SUCH UNITS MAY
NOT BE SOLD, ASSIGNED, OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE,
TRANSFEREE OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS
FOR ANY PURPOSES, UNLESS AND TO THE EXTENT SUCH SALE, TRANSFER, HYPOTHECATION,
OR ASSIGNMENT IS PERMITTED BY, AND IS COMPLETED IN STRICT ACCORDANCE WITH, THE
TERMS AND CONDITIONS SET FORTH IN THE OPERATING AGREEMENT OF THE COMPANY.

 

THE UNITS REPRESENTED BY
THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR SALE, OR TRANSFERRED IN ABSENCE
OF AN EFFECTIVE REGISTRATION OR EXEMPTION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAW.

 

(b)                                  Removal of Legend and Transfer Restrictions. Any
legend endorsed on a certificate pursuant to this Section 5 shall be
removed, and the Company shall issue a certificate without such legend to the
holder of such Warrant Units if (i) such Warrant Units are resold pursuant to
an effective registration statement under the Securities Act, (ii) if such
holder satisfies the requirements of Rule 144(k) under the Securities Act
or (iii) if such holder provides the Company with an opinion of counsel for
such holder of the Warrant Units, in form and substance reasonably satisfactory
to the Company, to the effect that a sale, transfer or assignment of such
Warrant Units may be made without registration and that upon such sale,
transfer or assignment such Warrant Units will not be deemed “restricted
securities,” as such term is defined in Rule 144 under the Securities Act.

 

6.                                      Fractional Units. No fractional
Warrant Units will be issued in connection with any exercise of this Warrant,
but in lieu of such fractional Units the Company shall make a cash payment
therefor upon the basis of the Exercise Price then in effect.

 

7.                                      Rights as a Member. Except as set
forth in Section 3, the Holder shall not be entitled to vote, or receive
dividends or distributions, or be deemed a holder of Units or a member of the
Company, nor shall anything contained herein be construed to confer upon the
Holder any of the rights of a member of the Company or any right to vote for
the election of directors or upon any matter submitted to members at any
meeting thereof, or to give or withhold consent to any action with respect to
the Warrant Units, until this Warrant shall have been exercised and the Warrant
Units purchasable upon the exercise of this Warrant shall have become
deliverable, as provided in Section 1(b). Upon exercise of this Warrant,
the Holder shall automatically be deemed to be a Member (as defined in the LLC
Agreement) of the Company with all rights of a Member, including the Membership
Voting Interest (as defined in the LLC Agreement), without any further approval
of the members, directors, officers or managers of the Company required;

 

8

 

provided
that the Holder shall execute such documents as are reasonably requested by the
Company to document the Holder’s agreement to be bound by the terms and
provisions of the LLC Agreement and evidence of the authority of the Holder to
execute and deliver such agreement to be so bound.

 

8.                                      Information Rights. At all times
when Holder is holding this Warrant (whether or not exercised in part) or any Warrant Units, and if not
already delivered pursuant to another agreement, the Company will deliver to
the Holder the financial statements delivered to the Members of the Company
pursuant to the LLC Agreement, including, without limitation, Section 7.3
thereof.

 

9.                                      Registration
Rights; Resales Under Rule 144.

 

(a)                                  Registration
Rights. If the Company at any time converts into a corporation, and the
Company, as converted, proposes to register any Common Stock solely for cash
pursuant to a registration statement under the Securities Act, other than a
registration solely for the sale of securities to participants in a Company
stock or other incentive plan or in connection with a transaction under Rule
145 promulgated under the Securities Act, the Company shall use its best
efforts to cause to be registered for resale under the Securities Act all of
the Common Stock that the Holder has requested to be registered on such
registration statement.

 

(b)                                  Compliance
with Rule 144(c). If the Holder proposes to sell Common Stock, the Warrant
or any Warrant Units in compliance with Rule 144 under the Securities Act,
then, upon Holder’s written request the Company shall furnish to the Holder,
within 3 days after receipt of such request, a written statement confirming the
Company’s compliance with the “Current Public Information” requirements of Rule
144(c), as such Rule may be amended from time to time.

 

10.                               Parallel Rights; No Impairment.
The Holder shall be entitled, but not required, to become a signatory to and
entitled to the benefits of, any investor rights agreement to the extent any
such agreement is entered into on or after the Warrant Date until the consummation
of a Change of Control (as defined in the Note), including any such agreement
entered into in connection with a Change of Control. The Company shall not, by
amendment of its certificate of formation or the LLC Agreement or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Warrant and in taking all such
action as may be necessary or appropriate to protect Holder’s rights under this
Warrant against impairment.

 

11.                               Term of Warrant; Early Termination.

 

(a)                                  This
Warrant shall become exercisable on the Warrant Date and shall no longer be
exercisable as of 5:00 p.m., Central Time, on the date that is the 5 year anniversary of the Warrant Date
(the “Exercise Period”).

 

(b)                                  Notwithstanding
Section 11(a), in the case of any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in any reclassification,
conversion,

 

9

 

exchange or
cancellation of outstanding securities as to which Warrants may then be
exercised and other than a merger solely to change the jurisdiction of
organization of the Company) or any sale, transfer or lease of all or
substantially all of the assets of the Company to any Person, in each case
during the Exercise Period, the Company shall provide the Holder with written
notice of such proposed transaction, in reasonable detail, no less than 10 days
prior to the consummation thereof, and this Warrant shall terminate upon the
consummation of such transaction unless exercised prior to such consummation.

 

12.                               Registry of Warrants.

 

The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant. Holder’s initial address, for purposes
of such registry, is set forth below Holder’s signature on this Warrant. Holder
may change such address by giving written notice of such changed address to the
Company.

 

13.                               Miscellaneous.

 

(a)                                  This
Warrant shall be construed and enforced in accordance with and governed by the
laws of the State of Delaware, without giving effect to principles of conflicts
of laws.

 

(b)                                  The
Company shall pay all expenses (including attorneys fees and expenses) in
connection with, and all taxes and other governmental charges that may be
imposed in respect of, the issue or delivery of any Warrant Units issuable upon
the exercise of any Warrant (excluding any applicable income taxes payable by
the Holder); provided that the Company shall not be required to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of Warrant Units in any name other than that of the Holder.

 

(c)                                  The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.

 

(d)                                  The
terms of this Warrant shall be binding upon and shall inure to the benefit of
any successors or assigns of the Company and of the Holder and of the Warrant
Units issued or issuable upon the exercise hereof.

 

(e)                                  Any
notice provided for or permitted under this Warrant shall be treated as having
been given (i) upon receipt, when delivered personally, (ii) one day
after sending, when sent by commercial overnight courier with written verification
of receipt, (iii) upon confirmed transmission when sent via facsimile on a
business day prior to 5:00 pm (Central Time) or, if sent after 5:00 pm (Central
Time), the next business day after confirmed transmission, or (iv) three
business days after deposit with the United States Postal Service, when mailed
postage prepaid by certified or registered mail, return receipt requested,
addressed at such address or facsimile number as set forth on the signature
page below, or at such other place of which the other party has been notified
in accordance with the provisions of this Section 13(e).

 

(f)                                    This
Warrant constitutes the full and entire understanding and agreement between the
parties with regard to the matters contained herein.

 

10

 

(g)                                 Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Company at the
Holder’s expense will execute and deliver to the holder of record, in lieu
thereof, a new Warrant of like date and tenor.

 

(h)                                 This
Warrant and any provision hereof may be amended, waived or terminated only by
an instrument in writing signed by the Company and the Holder.

 

11

 

IN WITNESS WHEREOF, the Company has caused
this Warrant to be signed by its duly authorized officer, all as of the day and
year first above written.

 

	
  COMPANY:

  	
   

  
	
   

  	
   

  
	
   

  	
  ADVANCED BIOENERGY, LLC

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   /s/ Revis L. Stephenson III

  	
   

  
	
   

  	
  Name: 

  	
     Revis L. Stephenson III

  	
   

  
	
   

  	
  Title:  

  	
   Chairman & CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Notice Address:

  	
   

  	
  10201 Wayzata Blvd., Suite 250

  
	
   

  	
  Minneapolis, MN 55305

  
	
   

  	
  Attn: Revis L. Stephenson III

  
	
   

  	
  Facsimile: (763) 226-2728

  
	
   

  	
   

  
	
   

  	
   

  
	
  WARRANTHOLDER:

  	
  PJC CAPITAL LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Scott LaRue

  	
   

  
	
   

  	
  Name:

  	
     Scott LaRue

  	
   

  
	
   

  	
  Title:

  	
   MD

  	
   

  
	
   

  	
   

  
	
  Notice Address:

  	
   

  	
  c/o Piper, Jaffray & Co.

  
	
   

  	
   

  	
  1950 University Avenue, Suite 200

  
	
   

  	
   

  	
  Menlo Park, CA 94303

  
	
   

  	
   

  	
  Attn: Scott La Rue, Managing Director

  
	
   

  	
   

  	
  Facsimile: (650) 838-1419

  
											

 

 

EXHIBIT
A

 

NOTICE
OF EXERCISE

 

TO:

 

 

1. Cash Exercise.        The undersigned hereby elects to purchase                      
Units (“Units”),
of ADVANCED BIOENERGY, LLC, a Delaware limited liability company (the “Company”) pursuant
to the terms of Section 1(b) of the Warrant to Purchase Units dated
October 17, 2007, (the “Warrant”),
and tenders herewith payment of the Exercise Price (as such term is defined in
the Warrant) therefor.

 

2. Net Exercise. The undersigned hereby elects to effect a Net
Exercise for                      
Units pursuant to Section 1(c) of the Warrant.

 

Please issue a certificate or certificates representing said                      
Units in the name of the undersigned or in such other name as is specified
below:

 

Name:

 

Address:

 

 

The undersigned hereby represents and
warrants that the aforesaid Units are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present
intention of distributing or reselling such shares.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
									

 

 

EXHIBIT
B

 

FORM
OF INVESTMENT REPRESENTATION LETTER

 

In connection
with the acquisition of [warrants (the “Warrants”) to purchase                      
Units of ADVANCED BIOENERGY, LLC (the “Company”)] [Units of ADVANCED
BIOENERGY, LLC (the “Company”)] (the “Units”), by                                 
(the “Holder”) from                      ,
the Holder hereby represents and warrants to the Company as follows:

 

The Holder has
such knowledge and experience in financial and business matters that the Holder
is capable of evaluating the merits and risks of an investment in the Warrants
and the Units issuable upon the exercise thereof (collectively, the “Securities”);
and, has the ability to bear the economic risks of such Holder’s investment,
including a complete loss of the Holder’s investment in Securities.

 

The Holder, by
acceptance of the [Warrants/Units], represents to the Company that the Warrants
and all securities acquired upon any and all exercises of the Warrants are
purchased for the Holder’s own account, and not with view to distribution of
either the Warrants or any securities purchasable upon exercise thereof in
violation of applicable securities laws.

 

The Holder
acknowledges that (i) the Securities have not been registered under the Act,
(ii) the certificate(s) representing the Securities shall bear a legend as set
forth in the Warrant Agreement until such Securities shall have been registered
for resale by the Holder under the Act that has been declared effective by the
SEC; or (ii) in the opinion of counsel in form and substance reasonably
satisfactory to the Company, such Securities may be sold without registration
under the Act.

 

IN WITNESS
WHEREOF, the Holder has caused this Investment Representation Letter to be
executed in its corporate name by its duly authorized officer this [        ]
day of [                     ],
20[   ].

 

[Name]

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT
C

 

ASSIGNMENT
FORM

 

FOR VALUE
RECEIVED, the undersigned owner of this Warrant for the purchase of Units of
ADVANCED BIOENERGY, LLC, a Delaware limited liability company (the “Company”) hereby
sells, assigns and transfers unto the assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of Units set
forth below:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Name and
  Address of Assignee)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Number of
  Units)

  	
   

  

 

and does
hereby irrevocably constitute and appoint                       
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
  [Name]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit
10.1

 

MEMBERSHIP
INTEREST PLEDGE AGREEMENT

 

This MEMBERSHIP
INTEREST PLEDGE AGREEMENT (this
“Agreement”) dated as of October 17,
2007, is entered into by ADVANCED BIOENERGY, LLC,
a Delaware limited liability company (“Pledgor”), in
favor of the Secured Party (as defined below).

 

RECITALS

 

A.            Concurrently
herewith, Pledgor is entering into a Secured Term Loan Note dated of even date
herewith (as the same from time to time hereafter may be amended, modified,
supplemented or restated, the “Note”) among
Pledgor, as borrower, and PJC Capital LLC, a Delaware limited liability company
(the “Secured Party”), as lender, pursuant to
which the Secured Party has agreed to extend certain loans of money (the “Loans”) to Pledgor on the terms and subject to the conditions
set forth in the Note and the other Loan Documents.

 

B.            Pledgor
is the record and beneficial owner of 100.0% of the outstanding membership
interests in ABE Fairmont, LLC, a Delaware limited liability company (the “Company”) as set forth on Exhibit
A attached hereto, which Exhibit is incorporated herein by this
reference and may be amended or supplemented pursuant to the terms of this
Agreement.

 

C.            The
Secured Party is willing to make, extend and maintain the Loans to Pledgor on
and after the date of the Note, but only upon the condition, among others, that
Pledgor shall have executed this Agreement and delivered this Agreement and the
Pledged Collateral (as defined below) to the Secured Party.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the foregoing Recitals and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, Pledgor hereby represents, warrants, covenants
and agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1          Definitions.
All capitalized terms used but not defined herein shall have the respective
meanings given to them in the Note. In addition, the following terms shall have
the following meanings:

 

“Operating Agreement” means the Limited Liability Company
Agreement of the Company dated as of September 25, 2006, as amended by that
Amendment to Limited Liability Company dated as of October 4, 2007 (as the same
may be amended, supplemented, and restated or otherwise modified and in effect
from time to time, as permitted hereunder), by and between the Company and
Pledgor as the sole member.

 

“Pledged Collateral” has
the meaning set forth in Section 2.1,
below.

 

1

 

“UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Secured Party’s security interest in
any collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC”
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection
of priority and for purposes of definitions related to such provisions.

 

1.2          UCC
Definitions. Unless otherwise defined herein or the context otherwise
requires, terms for which meanings are provided in the UCC are used in this
Agreement, including its preamble and recitals, with such meanings.

 

ARTICLE II

 

PLEDGE

 

2.1          Pledge
and Grant Of Security Interest. As security for the full, complete and
final payment and performance when due (whether at stated maturity, by
accelerations or otherwise) of the Obligations under the Note and the other
Loan Documents and any and all other debts, liabilities and reimbursement
obligations, indemnity obligations and other obligations for monetary amounts
(including reimbursement and indemnity obligations), fees, expenses, costs or
other sums (including attorneys’ fees and expenses) chargeable to Pledgor under
or pursuant to any of the Loan Documents (collectively, the “Secured Obligations”), Pledgor hereby assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Secured Party, and hereby
grants to the Secured Party, a security interest in and to all of Pledgor’s
right, title and interest in, to and under each of the following, whether now
existing or hereafter acquired (all of which being hereinafter collectively
called the “Pledged Collateral”):

 

(a)           the
Operating Agreement and all membership interests and the certificates
representing such interests now owned or hereafter acquired by Pledgor in the
Company, whether as a result of exchange offers, direct investments or
contributions or otherwise,  including
Pledgor’s rights, now existing or hereafter arising or acquired, to receive
from time to time its share of profits, income, surplus, compensation, return
of capital, distributions and other reimbursements and payments from the
Company (including specific properties of the Company upon dissolution and
otherwise), in respect of all such membership interests;

 

(b)           all
additional Equity Interests, including shares of capital stock or other equity securities
in or of the Company and voting trust certificates from time to time acquired
by Pledgor in any manner, and the certificates representing such additional
shares, and all dividends, cash, instruments, and other property or proceeds
from time to time received, receivable, or otherwise distributed in respect of
or in exchange for any or all of such shares; and

 

(c)           The
rents, issues, profits, returns, income, allocations, distributions and
proceeds of and from any and all of the foregoing.

 

Pledgor hereby agrees to cause the Company to register pursuant to the
UCC the pledge of the membership interests covered in this Section 2.1.

 

2

 

2.2          Continuing
Security Interest. This Agreement shall create a continuing security
interest in the Pledged Collateral and shall:

 

(a)           remain
in full force and effect until the Payment in Full of the Secured Obligations;

 

(b)           be
binding upon Pledgor and its successors, transferees and assigns; and

 

(c)           inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party.

 

Upon the Payment in Full of the Secured
Obligations, the security interest granted herein shall terminate and all
rights to the Pledged Collateral shall revert to Pledgor. Upon any such
termination, the Secured Party then shall, at Pledgor’s sole expense, deliver
to Pledgor, without any representations, warranties or recourse of any kind
whatsoever, any and all certificates and instruments representing or evidencing
Pledgor’s interest in the Company that had been previously delivered by Pledgor
to the Secured Party, together with all other Pledged Collateral held by the
Secured Party hereunder, and execute and deliver to Pledgor, at Pledgor’s sole
expense, such documents as Pledgor shall reasonably request to evidence such
termination.

 

2.3          No
Assumption. This Agreement is executed and delivered to the Secured Party
for collateral security purposes only. Notwithstanding anything herein to the
contrary:

 

(a)           Pledgor
shall remain liable under the contracts and agreements included in the Pledged
Collateral to the extent set forth therein, and shall perform all of its duties
and obligations under such contracts and agreements to the same extent as if
this Agreement had not been executed;

 

(b)           the
exercise by the Secured Party of any of its rights hereunder shall not release
Pledgor from any of its duties or obligations under any such contracts or
agreements included in the Pledged Collateral; and

 

(c)           the
Secured Party shall not have any obligation or liability under any such
contracts or agreements included in the Pledged Collateral by reason of this
Agreement, nor shall the Secured Party be obligated to perform any of the
obligations or duties of Pledgor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder, and the Secured Party shall
not hereunder or otherwise (i) assume any obligation or liability under or in
connection with the Operating Agreement to any Person, and any such assumption
is hereby expressly disclaimed, or (ii) be deemed to be, or otherwise have the
duties or responsibilities of, a member or a managing member vested with the
powers and responsibilities of the management of the Company.

 

2.4          Distributions
Under Operating Agreement. Unless and until a Default or an Event of
Default has occurred and is continuing, Pledgor shall be entitled to receive
any and all distributions on account of its membership interests in the Company
to the extent entitled thereto under the Operating Agreement.

 

3

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations
And Warranties. Pledgor hereby represents and warrants to the Secured
Party, as at the date of each pledge and delivery hereunder by Pledgor to the
Secured Party of any Pledged Collateral, as set forth in the following Sections 3.1(a) through 3.1(q),
inclusive.

 

(a)           Organization.
Pledgor is duly formed and validly existing under the laws of the State of
Delaware and has full power and authority to enter into and perform its
obligations under this Agreement.

 

(b)           Capacity;
Due Authorization; Non-Contravention. The execution, delivery and
performance by Pledgor of this Agreement and each other Loan Document executed
or to be executed by it have been duly authorized by all necessary action, and
do not contravene its organizational documents; and in each case do not:

 

(i)            contravene
any material contractual restriction, law or governmental regulation or court
decree or order binding on or affecting Pledgor; or

 

(ii)           result
in, or require the creation or imposition of, any Lien on any of Pledgor’s
properties except as contemplated hereby.

 

(c)           Binding
Obligations. This Agreement constitutes, and each other Loan Document
executed by Pledgor will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of Pledgor, enforceable
against Pledgor in accordance with their respective terms, except as
enforcement hereof may be limited by bankruptcy, insolvency or other laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.

 

(d)           Filing.
No presently effective UCC financing statement covering any of the Pledged
Collateral is on file in any public office, except for UCC financing statements
in favor of the Secured Party.

 

(e)           Ownership;
No Liens. Pledgor is the legal and beneficial owner of, and has all rights
and good title to (and has full right and authority to pledge and assign) all
Pledged Collateral pledged by Pledgor hereunder, free and clear of all adverse
claims or other Liens, except the Lien granted herein to the Secured Party.

 

(f)            Operating
Agreement. Pledgor has furnished to the Secured Party a true and correct
copy of the Operating Agreement and all amendments thereto, which Operating
Agreement, as so amended, constitutes the valid, binding and enforceable
obligation of all parties thereto, sets forth the entire agreement of the
parties thereto with respect to the subject matter thereof, has not been
further amended or modified (except as permitted under Section 4.8
hereof) and remains in full force and effect.

 

4

 

(g)           Membership
Interests. Pledgor owns 100% of the membership interests in the Company and
in the Company’s profits, and there are no other members of the Company other
than Pledgor, all as set forth in Exhibit A.

 

(h)           Certificate;
Operating Agreement. The interest of Pledgor in the Company is represented
by such certificates or instruments (together with all necessary instruments of
transfer or assignment, duly executed in blank) as have been delivered to the
Secured Party or the Secured Party’s designated bailee and are held in its
possession. The Operating Agreement provides that any membership interests,
units or limited liability company interests in the Company are securities
governed by Article 8 of the UCC and the Company has not otherwise “opted-out”
of Article 8 of the UCC.

 

(i)            Performance
Of Obligations. Pledgor has performed all of its material obligations to
date under the Operating Agreement.

 

(j)            Compliance
With Securities Laws. The offering and sale of all units of membership
interests in the Company have been conducted, in all material respects, in
compliance with all applicable state and federal securities laws and
regulations and, without limiting the generality of the foregoing, no offering
document furnished, to any member in connection therewith contained, any
misstatement of a material fact or omitted, to state any fact necessary to make
such document not materially misleading.

 

(k)           Information.
All information with respect to the Pledged Collateral set forth in any
schedule, certificate or other writing at any time furnished by Pledgor to the
Secured Party, and all other written information at any time furnished by
Pledgor to the Secured Party, is and shall be true and correct in all material
respects as of the date furnished.

 

(l)            Records.
The address of the location of the records of Pledgor concerning the
Pledged Collateral and the address of Pledgor’s principal place of business and
chief executive office is set forth in Schedule I
to this Agreement.

 

(m)          Authorization;
Approval. No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority, or any other Person is required
either:

 

(i)            for
the pledge by Pledgor of any Pledged Collateral pursuant to this Agreement or
for the execution, delivery, and performance of this Agreement by Pledgor; or

 

(ii)           for
the exercise by the Secured Party of (a) the voting or other rights provided
for in this Agreement, or (b) the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except, in the case of this clause (ii)(b), as may
be required in connection with a disposition of such Pledged Collateral by laws
affecting the offering and sale of securities generally, or as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and regulations
issued relating thereto.

 

(n)           Litigation.
To Pledgor’s knowledge, there is no claim, investigation, action, suit or
proceeding affecting either of Pledgor or the Company pending or overtly
threatened by or before any court, arbitrator or Governmental Authority which
could with 

 

5

 

reasonable likelihood
have a material adverse effect on the ability of Pledgor to perform its
obligations under this Agreement.

 

(o)           No
Offset or Defense. The Secured Obligations are not subject to any offset or
defense of any kind against the Secured Party or the Company.

 

(p)           Continuation
of Representations and Warranties. Pledgor covenants, warrants and
represents to the Secured Party that all representations and warranties
contained in this Agreement shall be true, accurate and complete in all
material respects at the time of Pledgor’s execution of this Agreement and,
shall continue to be true, accurate and complete in all material respects until
the Secured Obligations have been Paid in Full.

 

ARTICLE IV

 

COVENANTS

 

4.1          Protect
Pledged Collateral; Further Assurances. Pledgor shall not sell, assign,
transfer, pledge or otherwise encumber the Pledged Collateral in any manner
(except for the pledge granted herein to the Secured Party), except to the
extent permitted by the Note. Pledgor shall warrant and defend the right and
title granted by this Agreement to the Secured Party in and to the Pledged
Collateral (and all right, title and interest represented by the Pledged
Collateral) against the claims and demands of all Persons whomsoever, but nothing
contained herein shall prevent the Company from issuing additional Equity
Interests. Pledgor agrees, at any time, and from time to time, at the expense
of Pledgor, Pledgor shall promptly execute and deliver all further instruments,
and take all further action that may be necessary or desirable, or that the
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any of the Pledged Collateral as set forth in Article V hereof.

 

4.2          Voting
Rights. If an Event of Default shall have occurred and be continuing and
the Secured Party shall have notified Pledgor of the Secured Party’s intention
to exercise its voting power under this Section 4.2,
Pledgor agrees:

 

(a)           that
the Secured Party may exercise (to the exclusion of Pledgor) the voting power
to the extent, if any, provided in the Operating Agreement, and all other
incidental rights of ownership with respect to the Pledged Collateral and
Pledgor hereby grants the Secured Party, from the date hereof until the Payment
in Full of the Secured Obligations, an irrevocable proxy, coupled with an
interest exercisable under such circumstances, to vote such Pledged Collateral;
and

 

(b)           promptly
to deliver to the Secured Party such additional proxies and other documents as
may be necessary to allow the Secured Party to exercise such voting power.

 

All payments and proceeds which may at any time
and from time to time be held by Pledgor but which Pledgor is obligated to
deliver to the Secured Party shall be held by Pledgor separate and apart from
its other property in trust for the Secured Party. Unless an Event of Default
shall have occurred and be continuing and the Secured Party shall have given
the notice referred to in this

 

6

 

Section 4.2, Pledgor
shall have the exclusive voting power with respect to the Pledged Collateral
and the Secured Party shall, upon the written request of Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Pledgor which are necessary to allow Pledgor to exercise voting
power with respect to the Pledged Collateral; provided,
however, that no vote shall be cast, or consent, waiver or
ratification given or action taken by Pledgor that would impair any Pledged
Collateral or be inconsistent with or violate any provision of the Note or any
other Loan Document (including this Agreement) or that would amend or modify
the Operating Agreement without the prior written consent of the Secured Party.

 

4.3          Filings;
Recordings. Pledgor authorized the Secured Party to file such financing
statements and Pledgor shall execute and deliver certificates evidencing the
Pledged Collateral, together with assignments in blank, and shall execute and
deliver or cause to be file or registered any other documents (and Pledgor
shall pay the cost of filing or recording the same in all public offices deemed
necessary or appropriate by the Secured Party), and do such other acts and
things, all as the Secured Party may from time to time reasonably request to
establish and maintain a valid, perfected pledge of, and security interest in,
the Pledged Collateral in favor of the Secured Party.

 

4.4          Notice
Of This Agreement. Pledgor (i) shall notify the Company of the existence of
this Agreement by sending to it a notice in substantially the form set forth in
Exhibit B to this Agreement and
(ii) shall cause the Company to execute and deliver to the Secured Party an
initial transaction statement in substantially the form set forth in Exhibit C to this Agreement on the
date hereof.

 

4.5          Maintenance
Of Records. Subject to the provisions of Section 4.6,
Pledgor shall keep at its address indicated on Schedule I all
its records concerning the Pledged Collateral.

 

4.6          Notice
Of Change Of Address; Change of Jurisdiction of Registration. Pledgor shall
furnish to the Secured Party prior written notice of any change in the address
of Pledgor’s principal place of business or chief executive office (as
described on Schedule I) or in the name of
Pledgor. Pledgor shall not change its state of registration from the State of
Delaware without the prior written consent of the Secured Party.

 

4.7          Information.
Pledgor shall furnish to the Secured Party such information concerning the
Pledged Collateral as the Secured Party may from time to time reasonably
request, and will permit the Secured Party and its designees, from time to time
during normal business hours, to inspect, audit and make copies of and extracts
from all records and all other papers in the possession of Pledgor which
pertain to the Pledged Collateral, and shall upon the request of the Secured
Party, deliver to the Secured Party copies of all of such records and papers.

 

4.8          No
Amendment of Operating Agreement or Other Organizational Documents. Pledgor
shall not enter into any amendment or supplement to, or modification or waiver
of, any term or provision of the Operating Agreement or any other
organizational documents of the Company, including to provide that the
membership interests, units or limited liability company interests in the
Company are not securities governed by Article 8 of the UCC

 

7

 

or otherwise “opt out” of
the UCC, without the prior written approval of the Secured Party or except as
otherwise expressly permitted by the Note.

 

4.9          Notice
Of Dissolution. Pledgor shall promptly notify the Secured Party in writing
upon learning of the occurrence of any event which might or would cause
termination and/or dissolution of the Company.

 

ARTICLE V

 

THE SECURED PARTY

 

5.1          The
Secured Party Appointed Attorney-in-Fact. Pledgor hereby irrevocably
appoints the Secured Party to be Pledgor’s attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in the Secured Party’s discretion after the
occurrence and during the continuance of an Event of Default, to take any
action and to execute any instrument which the Secured Party may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement,
including:

 

(a)           after
the occurrence and during the continuance of an Event of Default, to ask, demand,
collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;

 

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

 

(c)           to
file any claims or take any action or institute any proceedings which the
Secured Party may deem necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of the Secured Party with
respect to any of the Pledged Collateral.

 

Pledgor hereby acknowledges, consents and
agrees that the power of attorney granted pursuant to this Section 5.1 is
irrevocable and coupled with an interest; provided that
the foregoing power of attorney shall terminate upon the Payment in Full of the
Obligations.

 

5.2          The
Secured Party May Perform. If Pledgor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance
of, such agreement for the benefit of itself and not for Pledgor and the
reasonable expenses of the Secured Party incurred in connection therewith shall
be payable by Pledgor pursuant to Section 6.5.

 

5.3          The
Secured Party Has No Duty. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty on it to exercise any such powers. The Secured Party
shall have no duty as to any Pledged Collateral or responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral,
whether or not the Secured Party has or is deemed to have knowledge of such
matters, or (b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Pledged Collateral. Without
limiting the generality of the preceding sentence, the Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the

 

8

 

Pledged Collateral if it
takes such action for that purpose as Pledgor reasonably requests in writing at
times other than upon the occurrence and during the continuance of any Event of
Default. Failure of the Secured Party to comply with any such request at any
time shall not in itself be deemed a failure to exercise reasonable care.

 

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

6.1          Events
Of Default. It shall be an “Event of Default”
hereunder if any Event of Default (as defined in the Note) shall occur.

 

6.2          Certain
Remedies. If any Event of Default shall have occurred and be continuing:

 

(a)           The
Secured Party may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Pledged Collateral) and also may, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Secured
Party’s offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially reasonable. Pledgor
agrees that, to the extent notice of sale shall be required by law, at least
ten (10) days’ prior notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.

 

(b)           The
Secured Party may:

 

(i)            transfer
all or any part of the Pledged Collateral into the name of the Secured Party or
its nominee, with or without disclosing that such Pledged Collateral is subject
to the Lien hereunder;

 

(ii)           notify
the parties obligated on any of the Pledged Collateral to make payment to the
Secured Party of any amount due or to become due thereunder;

 

(iii)         enforce
collection of any of the Pledged Collateral by suit or otherwise, and
surrender, release or exchange all or any part thereof, or compromise or extend
or renew for any period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto;

 

(iv)          endorse
any checks, drafts, or other writings in Pledgor’s name to allow collection of
the Pledged Collateral;

 

(v)            take
control of any proceeds of the Pledged Collateral; and

 

9

 

(vi)          execute
(in the name, place and stead of Pledgor) endorsements, assignments and other
instruments of conveyance or transfer with respect to all or any of the Pledged
Collateral.

 

(c)           If,
at any time when the Secured Party shall determine to exercise its right to
sell the whole or any part of the Pledged Collateral hereunder, such Pledged
Collateral or the part thereof to be sold shall not, for any reason whatsoever,
be effectively registered under Securities Act of 1933, as amended (as so
amended the “Act”), the Secured Party may, in
its discretion (subject only to applicable requirements of law), sell such  Pledged Collateral or part thereof by private
sale in such manner and under such circumstances as the Secured Party may deem
necessary or advisable, but subject to the other requirements of this Section 6.2(c), and shall not be required to effect such
registration or cause the same to be effected. Without limiting the generality
of the foregoing, in any such event the Secured Party may, in its sole
discretion, (i) in accordance with applicable securities laws, proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Collateral or part thereof could be or shall have
been filed under the Act; (ii) approach and negotiate with a single possible
purchaser to effect such sale; and (iii) restrict such sale to a purchaser who
will represent and agree that such purchaser is purchasing for its own account,
for investment, and not with a view to the distribution or sale of such Pledged
Collateral or part thereof. In addition to a private sale as provided above in
this Section 6.2(c), if any of the Pledged
Collateral shall not be freely distributable to the public without registration
under the Act at the time of any proposed sale hereunder, then the Secured
Party shall not be required to effect such registration or cause the same to be
effected but may, in its sole discretion (subject only to applicable
requirements of law), require that any sale hereunder (including a sale at
auction) be conducted subject to such restrictions as the Secured Party may, in
its sole discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the Bankruptcy Code and other laws affecting the enforcement of creditors’
rights and the Act and all applicable state securities laws.

 

(d)           Pledgor
agrees that a breach of any covenants contained in this Article VI
with the effect of denying the Secured Party the realization of the practical
benefits to be provided by this Agreement will cause irreparable injury to the
Secured Party, that in such event the Secured Party would have no adequate
remedy at law in respect of such breach and, as a consequence, agrees that in
such event each and every covenant contained in this Article VI
shall be specifically enforceable against Pledgor, and Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that the Secured Obligations are not
then due and payable.

 

6.3          Compliance
With Restrictions. Pledgor agrees that in any sale of any of the Pledged
Collateral, whether at a foreclosure sale or otherwise, the Secured Party is
hereby authorized to comply with any limitation or restriction in connection
with such sale as it may be advised by counsel is necessary in order to avoid
any violation of applicable law (including compliance with such procedures as
may restrict the number of prospective bidders and purchasers, require that
such prospective bidders and purchasers have certain qualifications and
restrict such prospective bidders and purchasers to persons who will represent
and agree that they are purchasing for their own account for investment and not
with a view to the distribution or resale of such Pledged Collateral), or in
order to obtain any required approval of the sale or of 

 

10

 

the purchaser by any
Governmental Authority, and Pledgor further agrees that such compliance shall
not result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Secured Party be liable nor
accountable to Pledgor for any discount allowed by the reason of the fact that
such Pledged Collateral is sold in compliance with any such limitation or
restriction.

 

6.4          Application
Of Proceeds. All cash proceeds received by the Secured Party in respect of
any sale of, collection from, or other realization upon, all or any part of the
Pledged Collateral shall be applied, first, to the
payment of all reasonable costs and expenses of holding and selling the Pledged
Collateral, including attorneys’ fees and expenses, fees of any accountants and
court costs; second, to the full and complete
payment of all of the Secured Obligations other than the unpaid principal
balance of the Obligations; and third, to the full and complete payment of the
unpaid principal balance of the Obligations. Any surplus of such cash or cash
proceeds held by the Secured Party and remaining after Payment in Full of all
of the Secured Obligations shall be paid over to Pledgor or as required by law.

 

6.5          Indemnity
And Expenses. Pledgor hereby indemnifies and holds harmless the Secured
Party from and against any and all claims, losses, and liabilities arising out
of or resulting from this Agreement (including enforcement of this Agreement),
except claims, losses, or liabilities resulting solely from the gross
negligence or willful misconduct of the Secured Party. Upon demand, Pledgor
shall pay to the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and agents (including attorneys’ fees and expenses, whether related to
a suit or action or any reviews of or appeals from a judgment or decree therein
or in connection with non-judicial action) which the Secured Party may incur in
connection with (a) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (b) the exercise or enforcement of any of the rights of the Secured
Party hereunder, or (c) the failure by Pledgor to perform or observe any of the
provisions hereof.

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

7.1          Loan
Document. This Agreement is a Loan Document executed pursuant to the Note
and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof.

 

7.2          The
Pledged Collateral. Pledgor acknowledges that it has, independently of and
without reliance on the Secured Party, made its own credit analysis of the
Company and performed its own legal review of this Agreement and the other Loan
Documents and is not relying on the Secured Party with respect to any of the
aforesaid items. Pledgor agrees to keep adequately informed from such means of
any facts, events or circumstances which might in any way affect Pledgor’s
risks hereunder. The Secured Party makes no representation of its interest in,
or the priority or perfection of the Secured Party’s security interest in and
to, any of the Pledged Collateral.

 

11

 

7.3          Reinstatement.
This Agreement shall remain in full force and effect and continue to be
effective if at any time payment of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, avoided, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as through such payment or performance had not been made. In the
event that any payment, or any part thereof, is avoided, rescinded, reduced,
restored, or returned, the Secured Obligations, shall be reinstated and deemed
reduced only by such amount paid and not so avoided, rescinded, reduced,
restored, or returned.

 

7.4          Amendments;
Waivers. No amendment to or waiver of any provision of this Agreement nor
consent to any departure by Pledgor from any provision in this Agreement shall
in any event be effective unless the same shall be in writing and signed by the
Secured Party and Pledgor, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it is
given.

 

7.5          Protection
Of Pledged Collateral. The Secured Party may from time to time, at its
option, perform any act which Pledgor agrees hereunder to perform and which
Pledgor shall fail to perform after being requested in writing so to perform
(it being understood that no such request need be given after the occurrence
and during the continuance of any Event of Default) and the Secured Party may
from time to time take any other action which the Secured Party reasonably
deems necessary for the maintenance, preservation or protection of any of the
Pledged Collateral or of its security interest therein, all such actions being
for the express benefit of the Secured Party and not Pledgor.

 

7.6          Addresses
For Notices. All notices and other communications provided for hereunder
shall be in writing or by facsimile and addressed, delivered or transmitted to
such party at its address or facsimile number set forth below its signature on
this Agreement or at such other address or facsimile number as may be
designated by such party in a notice to the other party. Any notice, if mailed
and properly addressed with postage prepaid or if properly addressed and sent
by pre-paid courier service, shall be deemed given when received; any notice,
if transmitted by facsimile, shall be deemed given when transmitted.

 

7.7          Right
of Set-Off. Upon the occurrence and during the continuance of any Event of
Default, the Secured Party is hereby authorized, at any time and from time to
time, without notice to Pledgor (any such notice being expressly waived by
Pledgor), to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other obligations at any
time owing by the Secured Party or any of its affiliates to or for the credit
of the account of Pledgor against the Secured Obligations of Pledgor to the
Secured Party now or hereafter existing irrespective of whether or not the
Secured Party shall have made any demand under this Agreement, the Note or any
of the other Loan Documents, and although such obligations may be unmatured. The
rights of the Secured Party under this Section 7.7 are
in addition to all other rights and remedies (including other rights of
set-off) which the Secured Party may have. Pledgor grants to the Secured Party
a security interest in any and all such deposit accounts as security for
satisfaction of the foregoing obligations.

 

7.8          Section
Captions. Section captions used in this Agreement are for convenience of
reference only, and shall not affect the construction of this Agreement.

 

12

 

7.9          Severability;
Headings. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

7.10        Counterparts.
This Agreement may be executed in any number of counterparts, each of which
when so delivered shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. Each such agreement shall become
effective upon the execution of a counterpart hereof or thereof by each of the
parties hereto.

 

7.11        Governing
Law; Entire Agreement. IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, AND EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

7.12        Waiver
of Jury Trial. PLEDGOR AND THE SECURED PARTY HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.

 

[Remainder of this page
intentionally blank]

 

13

 

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

 

	
  PLEDGOR:

  	
   

  	
   

  	
  ADVANCED BIOENERGY, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Revis L. Stephenson III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  	
  Revis L. Stephenson III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Chairman & CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  10201 Wayzata Blvd., Suite 250

  
	
   

  	
   

  	
   

  	
  Minneapolis, MN  55305

  
	
   

  	
   

  	
   

  	
  Attn:       Revis
  L. Stephenson III, Chief

  Executive Officer

  
	
   

  	
   

  	
   

  	
  Telephone No.:     (763) 226-2701

  
	
   

  	
   

  	
   

  	
  Facsimile No.:       (763) 226-2728

  

 

 

	
  ACCEPTED AND

  	
   

  	
   

  	
  PJC CAPITAL LLC,

  
	
  ACKNOWLEDGED BY:

  	
   

  	
   

  	
  a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Scott LaRue

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  	
  Scott LaRue

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  MD

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c/o Piper, Jaffray
  & Co.

  
	
   

  	
   

  	
   

  	
  1950 University Avenue,
  Suite 200

  
	
   

  	
   

  	
   

  	
  Menlo Park, CA  94303

  
	
   

  	
   

  	
   

  	
  Attn:       Scott R. La Rue, Managing Director

  
	
   

  	
   

  	
   

  	
  Telephone No.:     (650) 838-1407

  
	
   

  	
   

  	
   

  	
  Facsimile No.:       (650) 383-1419

  

 

 

SCHEDULE I

TO PLEDGE
AGREEMENT

 

Address of the Location of Pledgor’s Records Concerning the Pledged
Collateral:

 

10201 Wayzata Blvd., Suite 250

Minneapolis, MN 
55305

 

Address of Pledgor’s Location (meaning its place of business, if it has
one, or its chief executive office if it has more than one place of business):

 

10201 Wayzata Blvd., Suite 250

Minneapolis, MN 
55305

 

 

EXHIBIT A

 

TO PLEDGE
AGREEMENT

 

I. ABE FAIRMONT, LLC (the
“Limited Liability Company”):

 

	
  Name of the Limited Liability Company, State of

  Organization and Registration, Description of

  Operating Agreement, and Filing Information

  	
   

  	
  Pledgor’s Interest in the

  
	
  Concerning Articles of Organization

  	
   

  	
  Limited Liability Company #1

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Name of the Limited Liability Company:

   

  ABE FAIRMONT, LLC

  	
   

  	
  100.0% of the membership units in the
  Limited Liability Company (being an 100.0% interest in the profits of the
  Limited Liability Company and being represented by Certificates No. 1  

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  State of Organization and Registration:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Delaware

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Description of Operating Agreement:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Limited Liability Company Agreement of the
  Company dated as of September 25, 2006, as amended by that Amendment to
  Limited Liability Company Agreement dated as of October 4, 2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Filing Information:
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Filed with the Delaware Secretary of State
  on September 22, 2006

  	
   

  	
   

  

 

 

EXHIBIT B

NOTICE OF
PLEDGE AGREEMENT

 

TO:         ABE
FAIRMONT, LLC,

a Delaware limited liability company (the “Company”)

 

Notice is hereby given that, pursuant to the Pledge Agreement (an
unexecuted copy of which is attached hereto) of even date herewith (the “Pledge Agreement”), made by Advanced BioEnergy, LLC, a
Delaware limited liability company (“Pledgor”), in
favor of PJC Capital LLC (the “Secured Party”),
as defined in the Secured Term Loan Note dated of even date herewith (as the
same may hereafter be amended, modified, supplemented or restated, the “Note”) by and among Pledgor, as borrower, and the Secured
Party, as lender, Pledgor has pledged and assigned to the Secured Party, and
granted to the Secured Party a continuing security interest in and to all
right, title and interest of Pledgor, whether now existing or hereafter arising
or acquired, in, to and under the Limited Liability Company Agreement of the
Company dated as of September 25, 2006, as amended by that Amendment to Limited
Liability Company Agreement dated as of October 4, 2007 (as so amended and as
the same may hereafter from time to time be further amended modified,
supplemented or restated, the “Operating Agreement”),
including Pledgor’s rights, now existing or hereafter arising or acquired, to
receive from time to time its share of profits, income, surplus, compensation,
return of capital, distributions and other reimbursements and payments from the
Company (including specific properties of the Company upon dissolution and
otherwise) in respect of any and all of the following:

 

(a)           All membership
interests now owned or hereafter acquired by Pledgor in the Company as a result
of exchange offers, direct investments or contributions or otherwise;

 

(b)           All other Equity
Interests (as defined in the Note), including all voting trust certificates
from time to time acquired by Pledgor in any manner, and the certificates representing
such additional shares, and all dividends, cash, instruments, and other
property or proceeds from time to time received, receivable, or otherwise
distributed in respect of or in exchange for any or all of such shares; and

 

(c)           The rents, issues,
profits, returns, income, allocations, distributions and proceeds of and from
any and all of the foregoing.

 

Pursuant to the Pledge Agreement, the Company
is hereby authorized and directed (i) to register on the Company’s books
Pledgor’s pledge of the Pledged Collateral (as such term is defined in the
Pledge Agreement and including Pledgor’s membership interests in the Company)
to the Secured Party, (ii) to make direct payment to the Secured Party of any
amounts due or to become due Pledgor under the Operating Agreement, if so
notified by the Secured Party or Pledgor, and (iii) to otherwise comply with
instructions originated by the Secured Party without further consent of
Pledgor.

 

 

Pledgor hereby requests the Company to
indicate the Company’s acceptance of this Notice of Pledge Agreement and
consent to and confirm its terms and provisions by signing a copy hereof where
indicated on the attached page and returning the same to the Secured Party.

 

Dated:  October 17, 2007

 

	
  PLEDGOR:

  	
   

  	
   

  	
  ADVANCED BIOENERGY, LLC,

  
	
   

  	
   

  	
   

  	
  a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  

 

 

ACCEPTANCE
OF NOTICE OF PLEDGE AGREEMENT

AND CONSENT TO PLEDGE AGREEMENT

 

The undersigned (the “Company”)
hereby accepts this Notice of Pledge Agreement and consents to and confirms the
terms and provisions of such Notice of Pledge Agreement and acknowledges and
consents to the pledge and assignment by Pledgor to the Secured Party, and
grant to the Secured Party, of a continuing security interest in and to all
right, title and interest of Pledgor, whether now existing or hereafter arising
or acquired, in, to and under the Operating
Agreement pursuant to the Pledge Agreement, as more fully described (and as
such terms are defined) in the Notice of Pledge.

 

	
  ABE FAIRMONT, LLC,
 a Delaware limited liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Printed Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
						

 

 

EXHIBIT C

TO PLEDGE
AGREEMENT

 

[FORM OF
INITIAL TRANSACTION STATEMENT]

 

TO:         PJC Capital LLC (the “Secured Party”)

1950 University Avenue, Suite 200

Menlo Park, CA  94303

Attention:              Scott
LaRue

 

RE:          Membership Interests
in

ABE Fairmont, LLC, a

Delaware limited liability company

(the “Company”)

 

1.             Registration Of Pledge. This is to confirm
registration by the Company of the pledge of the entire right, title and
interest in and to 100.0% of Membership Interests (the “Interest”)
held in the Company and owned of record by ABE Fairmont, LLC, a Delaware
limited liability company (the “Pledgor”), as a
member of the Company (being a 100.0% interest in the profits of the Company),
to the Secured Party listed above. Such pledge was registered on October 17,
2007. The name and address of the registered owner of the Interest is:  Advanced BioEnergy, LLC, with an address of
10201 Wayzata Blvd., Suite 250, Minneapolis, MN 
55305.

 

2.             Liens, Adverse Claims
And Restrictions.

 

(a)           The Interest is subject to all of the
terms of the operating agreement and articles of organization of the Company,
and of applicable laws. The Interest may not be transferred without compliance
with the provisions of the Limited Liability Company Agreement of the Company
dated as of September 25, 2006, as amended by that Amendment to Limited
Liability Company Agreement dated as of October 4, 2007, and compliance with
applicable federal and state securities laws.

 

(b)           At the time of registration of the
pledge described above, the Interest was not subject to any liens or
restrictions or any adverse claims as to which the Company has a duty.

 

 

This Statement is merely a record of the rights
of the addressee as of the time of its issuance. Delivery of this Statement, of
itself, confers no rights on the recipient. This Statement is neither a
negotiable instrument nor a security.

 

Dated: 
October 17, 2007

	
   

  	
   

  	
   

  	
  ABE FAIRMONT, LLC,

  
	
   

  	
   

  	
   

  	
  a Delaware limited
  liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}]]