Document:

Exhibit 4.4

 

WARRANT AGREEMENT

 

between

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

 

and

 

AMERICAN
STOCK TRANSFER & TRUST COMPANY, LLC,

As
Warrant Agent

 

Dated
as of March 15, 2010

 

Warrants
To Purchase Common Stock

 

1

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Warrant Certificates

  	
  11

  
	
   

  	
  2.1.

  	
  Issuance of Warrants

  	
  11

  
	
   

  	
  2.2.

  	
  Form of Warrant Certificates

  	
  11

  
	
   

  	
  2.3.

  	
  Execution and Delivery of Warrant Certificates

  	
  12

  
	
   

  	
  2.4.

  	
  Restrictions on Transfer

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Exercise and Expiration of Warrants

  	
  14

  
	
   

  	
  3.1.

  	
  Right to Acquire Common Stock Upon Exercise

  	
  14

  
	
   

  	
  3.2.

  	
  Exercise and Expiration of Warrants

  	
  14

  
	
   

  	
   

  	
  (a)

  	
  Exercise of Warrants

  	
  14

  
	
   

  	
   

  	
  (b)

  	
  Expiration of Warrants

  	
  15

  
	
   

  	
   

  	
  (c)

  	
  Method of Exercise

  	
  15

  
	
   

  	
   

  	
  (d)

  	
  Partial Exercise

  	
  16

  
	
   

  	
   

  	
  (e)

  	
  Issuance of Common Stock

  	
  17

  
	
   

  	
   

  	
  (f)

  	
  Time of Exercise

  	
  17

  
	
   

  	
  3.3.

  	
  Application of Funds Upon Exercise of Warrants

  	
  17

  
	
   

  	
  3.4.

  	
  Payment of Taxes

  	
  18

  
	
   

  	
  3.5.

  	
  Surrender of Certificates

  	
  18

  
	
   

  	
  3.6.

  	
  Shares Issuable

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Adjustments

  	
  18

  
	
   

  	
  4.1.

  	
  Adjustments

  	
  18

  
	
   

  	
   

  	
  (a)

  	
  Subdivisions and Combinations

  	
  18

  
	
   

  	
   

  	
  (b)

  	
  Common Stock Dividends

  	
  19

  
	
   

  	
   

  	
  (c)

  	
  Reclassifications

  	
  19

  
	
   

  	
   

  	
  (d)

  	
  Property Dividends

  	
  20

  
	
   

  	
   

  	
  (e)

  	
  Self-Tender Offers

  	
  20

  
	
   

  	
   

  	
  (f)

  	
  Distributions of Warrants

  	
  21

  
	
   

  	
   

  	
  (g)

  	
  Superseding Adjustment

  	
  22

  
	
   

  	
   

  	
  (h)

  	
  Other Provisions Applicable to Adjustments

  	
  22

  
	
   

  	
   

  	
  (i)

  	
  Adjustment to Shares Obtainable Upon Exercise

  	
  23

  
	
   

  	
   

  	
  (j)

  	
  Changes in Common Stock

  	
  23

  
	
   

  	
   

  	
  (k)

  	
  Compliance with Governmental Requirements

  	
  24

  
	
   

  	
   

  	
  (l)

  	
  Optional Tax Adjustment

  	
  25

  
	
   

  	
   

  	
  (m)

  	
  Warrants Deemed Exercisable

  	
  25

  
	
   

  	
   

  	
  (n)

  	
  Notice of Adjustment

  	
  25

  
	
   

  	
   

  	
  (o)

  	
  Statement on Warrant Certificates

  	
  25

  
	
   

  	
   

  	
  (p)

  	
  Certain Actions During Specified Period

  	
  26

  
	
   

  	
   

  	
  (q)

  	
  Certain Actions Respecting Received Cash Dividends

  	
  26

  
	
   

  	
  4.2.

  	
  Fractional Interest

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Loss or Mutilation

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Reservation and Authorization of Common Stock

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Warrant Transfer Books

  	
  28

  

 

i

 

	
  8.

  	
  Warrant Holders

  	
  29

  
	
   

  	
  8.1.

  	
  No Voting or Dividend Rights

  	
  29

  
	
   

  	
  8.2.

  	
  Rights of Action

  	
  29

  
	
   

  	
  8.3.

  	
  Treatment of Holders of Warrant Certificates

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Concerning the Warrant Agent

  	
  30

  
	
   

  	
  9.1.

  	
  Nature of Duties and Responsibilities Assumed

  	
  30

  
	
   

  	
  9.2.

  	
  Right to Consult Counsel

  	
  32

  
	
   

  	
  9.3.

  	
  Compensation, Reimbursement and Indemnification

  	
  32

  
	
   

  	
  9.4.

  	
  Warrant Agent May Hold Company Securities

  	
  32

  
	
   

  	
  9.5.

  	
  Resignation and Removal; Appointment of Successor

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Notices

  	
  33

  
	
   

  	
  10.1.

  	
  Notices Generally

  	
  33

  
	
   

  	
  10.2.

  	
  Required Notices to Holders

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Inspection

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Amendments

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Waivers

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Successor to Company

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Headings

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Counterparts

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Severability

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Persons Benefiting

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Applicable Law

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Entire Agreement

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Warrant Certificate

  	
   

  

 

ii

 

WARRANT
AGREEMENT

 

AGREEMENT dated as of March 15,
2010 between Aventine Renewable Energy Holdings, Inc., a Delaware corporation (referred to
herein as the “Company”), and American Stock
Transfer & Trust Company, LLC, a New York limited liability trust
company, as warrant agent (referred to herein as the “Warrant
Agent”).

 

As contemplated by that
certain First Amended Joint Plan of Reorganization dated as of January 13,
2009 (as amended or supplemented from time to time, including any exhibits, supplements,
annexes, appendices and schedules thereto, and as confirmed by the United
States Bankruptcy Court for the District of Delaware in a Confirmation Order,
the “Plan”) pursuant to Chapter 11 of
Title 11 of the United States Code, the Company proposes to issue and deliver
to the holders of Allowed Class 9(a) Equity Interests its Warrant
Certificates (as defined below) evidencing Warrants (as defined below) to
purchase, under certain circumstances, up to an aggregate of 450,000 shares of
its Common Stock (as defined below), subject to adjustment as provided
herein.  Each such Warrant shall entitle
the registered owner thereof to purchase one share of the Common Stock, subject
to adjustment as provided herein.

 

In consideration of the
foregoing and for the purpose of defining the terms and provisions of the
Warrants and the respective rights and obligations thereunder of the Company,
the Warrant Agent and the record holders of the Warrant Certificates, the
Company and the Warrant Agent each hereby agree as follows:

 

1.                                       Definitions.

 

“Affiliate,”
of any specified Person, means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes
of this definition, “control” when used with respect to any Person means the
power to direct the management and policies of such specified Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

“Agreement”
means this agreement as originally executed or as it may from time to time be
supplemented or amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.

 

“Applicable Value Percentage”
means, with respect to any Property Dividend designated as an “Excluded
Dividend” pursuant to the definition of “Excluded Dividend”, the percentage
determined by dividing (i) the portion applicable to one share of Common
Stock of the  fair market
value (as determined reasonably and in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution
filed with the Warrant Agent) of any and all securities, cash or other assets
distributed in such Property Dividend
by (ii) the Current Market Price of the Common Stock on the date for
determination of stockholders entitled to receive such Property Dividend.

 

“Applicable
Value Percentage” means, with respect to any Company Offer
designated as an “Excluded Company Offer” pursuant to the definition of “Excluded
Company Offer”, the percentage determined by dividing (A) the difference
between (i) the fair market value (as 

 

 

determined
in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution filed with the Warrant Agent) of
the aggregate consideration payable to stockholders based on the acceptance (up
to any maximum specified in the terms of the tender offer) of Purchased Shares,
and (ii) the product of the Current Market Price per share on the date of
the Company Offer Expiration Time and the number of Purchased Shares, by (B) the
product of (i) the Current Market Price per share of the Common Stock on
the date of the Company Offer Expiration Time and (ii) the number of
shares of Common Stock outstanding (including any tendered shares) on the date
of the Company Offer Expiration Time.

 

“Backstop
Purchasers” means Brigade Capital Management LLC, Nomura
Corporate Research & Asset Management, Inc., Whitebox Advisors,
Senator Investment Group LP, and SEACOR Capital Corporation, each as investment
manager, for and on behalf of certain funds.

 

“Board
of Directors” means either the board of directors of the Company
or any duly authorized committee of that board.

 

“Board
Resolution” means a copy of a resolution certified by the
secretary or an assistant secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Warrant Agent.

 

“Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a legal holiday in the State of New York or a day on which banking
institutions and trust companies in the state in which the Corporate Agency
Office is located are authorized or obligated by law, regulation or executive
order to close.

 

“Cash Transaction” means any
Transaction as a result of which in accordance with Section 4.1(j) the
Substituted Property receivable upon exercise of Warrants on or after the
consummation thereof consists solely of cash.

 

“Cash Transaction Effective Time”
means the time at which a Cash Transaction is consummated if (but only if) the
Substituted Property receivable upon exercise of a Warrant as a result of such
Cash Transaction exceeds the Exercise Price therefor.

 

“Cashless Exercise” has the meaning
set forth in Section 3.2(c)(ii).

 

“Change of Control” means the
occurrence of any of the following:

 

(i)            any Person or Persons acting together that would
constitute a group (for purposes of Section 13(d) of the Exchange
Act, or any successor provision thereto) (a “group”), together with any
Affiliates or related Persons thereof, other than any such Person, Persons,
Affiliates or related Person who are Permitted Holders, is or shall become the “beneficial
owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any
particular “person” (as that term is used in Section 13(d)(3) of the
Exchange Act), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time or only upon the occurrence of a
subsequent condition), directly or indirectly, of at least 35% of the voting 

 

2

 

power
of the Company’s outstanding capital stock that is at the time entitled to vote
in the election of the Board of Directors (“Voting
Stock”), and the Permitted Holders own less than such Person or
group (in performing the “own less than” comparison, the holdings of the
Permitted Holders who are members of the new group shall not be counted in the
shares held in the aggregate by Permitted Holders);

 

(ii)           any sale, lease or other transfer (other than by way of
merger or consolidation), in one transaction or a series of related
transactions, is made by the Company or any of its Subsidiaries of all or
substantially all of the consolidated assets of the Company and the
Subsidiaries, taken as a whole, to any Person;

 

(iii)          the Company consolidates with or merges with or into
another Person or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which immediately after
the consummation thereof Persons owning a majority of the Company’s Voting
Stock voting immediately prior to such consummation shall cease to own a
majority of such Voting Stock or, if the Company is not the surviving entity, a
majority of such Voting Stock of such surviving entity; or

 

(iv)          the Company’s stockholders approve any plan or proposal for
the Company’s liquidation or dissolution;

 

provided, however,
that in no event shall the sale of the Common Stock to an underwriter or group
of underwriters in privity of contract with the Company (or any other Person in
privity of contract with such underwriters) be deemed to be a Change of Control
unless such Common Stock is held in an investment account, in which case the
investment account would be treated without giving effect to the foregoing part
of this proviso.

 

“Change
of Control Expiration Time” means, with respect to any Change of
Control, the later of:

 

(A)          5:00 p.m., New York time on the date 20 days after the
earlier of (x) the date on which notice of the consummation of such Change
of Control has been duly given by the Company under and in accordance with the
fourth paragraph of Section 10.2 and (y) the date (if any) on
which notice of the possible future occurrence thereof was duly given by the
Company under and in accordance with the second paragraph of Section 10.2,
and

 

(B)           immediately after the time of consummation of such Change
of Control.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Commission”
means the Securities and Exchange Commission, or any other federal agency at
the time administering the Securities Act or the Exchange Act, whichever is the
relevant statute for the particular purpose.

 

“Common
Stock” means any capital stock of any class or series of the
Company (including, on the Original Issue Date, the Common Stock, par value
$0.001 per share, of the Company) which has no preference in respect of
dividends or of amounts payable in the event of 

 

3

 

any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.  However, subject to the provisions of Section 4.1(j), shares issuable upon
exercise of Warrants shall include only shares of the class of capital stock of
the Company designated as Common Stock, par value $0.00l per share, of the
Company on the Original Issue Date or shares of any class or classes resulting
from any reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; provided, however,
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

 

“Company”
means the corporation identified in the preamble hereof and its successors and
assigns.

 

“Company
Offer” means any tender offer (including any exchange offer) as
amended from time to time made by the Company or any of its Subsidiaries for
the purchase (including the acquisition pursuant to an exchange offer) of all
or any portion of the outstanding shares of Common Stock.

 

“Company
Offer  Expiration Time”
has the meaning set forth in Section 4.1(e).

 

“Company
Order” means a written request or order signed in the name of
the Company by its Chairman or any Co-Chairman of the Board, its Chief
Executive Officer, its President, any Vice President, its Treasurer, any
Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to
the Warrant Agent.

 

“Constituent
Person” has the meaning set forth in Section 4.1(j).

 

“Corporate
Agency Office” has the meaning set forth in Section 7.

 

“Corporation”
means a corporation, association, company (including limited liability
company), joint-stock company, business trust or other similar entity.

 

“Countersigning
Agent” means any Person authorized by the Warrant Agent to act
on behalf of the Warrant Agent to countersign Warrant Certificates.

 

“Current
Market Price” means on any date:

 

(i)            if the reference is to the per share price of Common
Stock on any date herein specified and if on such date the Common Stock is
listed or admitted to trading on any national securities exchange or otherwise
traded in the over-the-counter market in the United States:

 

(A)          for the purpose of any computation under this Agreement
(except under Section 4.1(e) in
respect of a Company Offer), the average of the Quoted Prices for the five
consecutive Trading Days selected by the Company 

 

4

 

commencing
not more than 20 Trading Days before, and ending not later than, the earlier of
(x) the date in question and (y) in the case of any computation under
Section 4.1(d) or 4.1(f), the day before the “ex” date for the
issuance or distribution requiring such computation; provided, however,
that if the “ex” date for any event (other than the issuance or distribution
requiring such computation) that requires (or for any distribution which, but
for the Company giving written notice to the Warrant Agent that the Company
intends to treat such distribution as a Receivable Dividend or Received
Dividend hereunder, would have required) an adjustment to the Exercise Price
pursuant to Sections 4.1(a), 4.1(b), 4.1(d),
4.1(e) or 4.1(f) occurs on
or after the 20th Trading Day prior to the day in question and prior to the “ex”
date for the issuance or distribution requiring such computation, the Quoted
Price for each Trading Day prior to the “ex” date for such other event shall be
adjusted by multiplying such Quoted Price by the same fraction by which the
Exercise Price is so required (or would have been required) to be adjusted
pursuant to Sections 4.1(a), 4.1(b), 4.1(d),
4.1(e) or 4.1(f), as applicable, as a result of such other
event; or

 

(B)           for the purpose of any computation under Section 4.1(e), the average of the Quoted
Prices for the five consecutive Trading Days selected by the Company commencing
on or after the latest (the “Commencement Date”)
of (i) the date 20 Trading Days before the date in question, (ii) the
date of commencement of the tender offer requiring such computation, and (iii) the
date of the last amendment, if any, of such tender offer involving a change in
the maximum number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the date of the Expiration
Time (as defined in Section 4.1(e)) of
such tender offer; provided, however, that if the “ex” date for
any event (other than the tender offer requiring such computation) that
requires (or for any distribution for which, but for the Company giving written
notice to the Warrant Agent that the Company intends to treat such distribution
as a Receivable Dividend or Received Dividend hereunder, would have required)
an adjustment to the Exercise Price pursuant to Sections
4.1(a), 4.1(b), 4.1(d), 4.1(e) or 4.1(f) occurs on
or after the Commencement Date and prior to the Expiration Time for the tender
offer requiring such computation, the Quoted Price for each Trading Day prior
to the “ex” date for such other event shall be adjusted by multiplying such
Quoted Price by the same fraction by which the Exercise Price is so required
(or would have been required) to be adjusted pursuant to such Sections 4.1(a), 4.1(b),
4.1(d), 4.1(e) or 4.1(f), as applicable, as a result of such other
event; or

 

(ii)           if the reference is to the per share price of Common Stock
on any date herein specified and if on such date the Common Stock is not listed
or admitted to trading on any national securities exchange or otherwise traded
in the over-the-counter market in the United States, the amount which a willing
buyer would pay a willing seller in an arm’s length transaction on such date
(neither being under any compulsion to buy or sell) for one share of the Common
Stock as determined as of such date for the purposes of any computation under
this Agreement, by an Independent Financial Expert as set forth in 

 

5

 

value
report thereof using one or more valuation methods that such Independent
Financial Expert, in its best professional judgment, determines to be most
appropriate.

 

“Disbursing
Agent” means the Company or any party designated by the Company
in accordance with the Plan to make or facilitate distributions under and in
accordance with the Plan.

 

“‘ex’
date” means:

 

(iii)          when used with respect to any issuance or distribution, the
first date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Quoted Price was obtained
without the right to receive such issuance or distribution;

 

(iv)          when used with respect to any subdivision or combination of
shares of Common Stock, the first date on which the Common Stock trades regular
way on the relevant exchange or in the relevant market after the time at which
such subdivision or combination becomes effective; or

 

(v)           when used with respect to any tender offer, the first date
on which the Common Stock trades regular way on the relevant exchange or in the
relevant market after the Expiration Time of such tender offer.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or
any successor statute thereto, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.

 

“Excluded
Company Offer” means any Company Offer that is designated by the
Company as such by written notice to the Warrant Agent if (but only if) the
Applicable Value Percentage for such Company Offer, when added to the
Applicable Value Percentages for all other Excluded Company Offers expiring,
and for all Excluded Dividends paid by the Company, after the date 12 months
prior to the Company Offer Expiration Time for such Company Offer and on or
prior to such Company Offer Expiration Time, does not exceed 12.5%.

 

“Excluded
Dividend” means any Property Dividend (other than any Received
Dividend or Receivable Dividend or any dividend or distribution of rights or
warrants referred to in Section 4.1(f))
that is designated by the Company as such by
written notice to the Warrant Agent if (but only if) the Applicable Value
Percentage for such dividend, when added to the Applicable Value Percentages
for all other Excluded Dividends paid by the Company, and for all Excluded
Company Offers expiring, after the date 12 months prior to the date for
determination of stockholders entitled to receive such Property Dividend and on
or prior to such date, does not exceed 12.5%.

 

“Exercise
Period” means the period from and including the Original Issue
Date to and including the Expiration Date.

 

6

 

“Exercise
Price” means the exercise price per share of Common Stock,
initially set at $40.94 subject to adjustment as provided in Section 4.1; provided in no event shall
the Exercise Price be less than the par value per share of Common Stock.

 

“Exercise
Requirements” has the meaning set forth in Section 3.2(c)(ii).

 

“Expiration
Time” means the earlier of (a) 5:00 p.m., New York
time on March 15, 2015,  and (b) if
a Change of Control occurs, the Change of Control Expiration Time therefor or,
in either event, such earlier date as the Company has designated pursuant to
and in accordance with Section 3.2(b).

 

“Financial
Expert” means any broker or dealer registered as such under the
Exchange Act that conducts an investment banking business of nationally
recognized standing.

 

“Holder”
means any Person in whose name at the time any Warrant Certificate is
registered upon the Warrant Register and, when used with respect to any Warrant
Certificate, the Person in whose name such Warrant Certificate is registered in
the Warrant Register.

 

“Independent
Financial Expert” means any Financial Expert selected by the
Company that either (i) is reasonably acceptable to the Holders of Warrant
Certificates evidencing a majority of the outstanding Warrants or (ii) is
a firm (x) which does not (and whose directors, officers, employees and
affiliates, to the knowledge of the Company, do not) have a material direct or
indirect financial interest in the Company or any of its Affiliates (other than
by virtue of compensation paid for advice or opinions referred to in the
exception to clause (z)), as determined by the Board of Directors of the
Company in its reasonable good faith judgment, (y) which has not been,
within the last two years, and, at the time it is called upon to give
independent financial advice to the Company or any of its Affiliates, is not
(and none of whose directors, officers, employees or affiliates, to the
knowledge of the Company, is) a promoter, director or officer of the Company or
any of its Affiliates or an underwriter with respect to any of the securities
of the Company or any of its Affiliates and (z) which does not provide any
advice or opinions to the Company or Affiliates except as an independent
financial expert in connection with this Agreement.

 

“Non-Electing
Share” has the meaning set forth in Section 4.1(j).

 

“Non-Surviving
Transaction” has the meaning set forth in Section 4.1(j).

 

“Original
Issue Date” means March 15, 2010, the date on which
Warrants are originally issued under this Agreement.

 

“Original
Restricted Holder” means any Holder of Warrant Certificates
evidencing Original Restricted Warrants executed and delivered upon
registration of transfer from the Disbursing Agent to such Holder pursuant to
the Plan.

 

“Original
Restricted Warrants” means
Warrants evidenced by Warrant Certificates bearing the legends set forth in Sections 2.4(a) and (e).

 

7

 

“outstanding”
when used with respect to any Warrants, means, as of the time of determination,
all Warrants theretofore originally issued under this Agreement except (i) Warrants
that have been exercised pursuant to Section 3.2(a),
(ii) Warrants that have expired pursuant to Section 3.2(b) and
(iii) Warrants that have otherwise been acquired by the Company; provided,
however, that in determining whether the Holders of the requisite amount
of the outstanding Warrants have given any request, demand, authorization,
direction, notice, consent or waiver under the provisions of this Agreement,
Warrants owned by the Company or any Subsidiary or Affiliate of the Company
shall be disregarded and deemed not to be outstanding.

 

“Permitted
Holders” means each of the Backstop Purchasers, its Affiliates
and its and its Affiliates’ managed funds and accounts and (1) entities
controlled by any such Persons, (2) trusts for the benefit of any such
individual Persons or the spouses, issue, parents or other relatives of such
individual Persons and (3) in the event of the death of any such
individual Person, heirs or testamentary legatees of such Person.  For purposes of this definition, “control”,
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.

 

“Person”
means any individual, Corporation, partnership, joint venture, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

 

“Plan”
has the meaning specified in the Recitals of this Agreement.

 

“Property
Dividend” means any payment by the Company to all holders of its
Common Stock of any dividend, or any other distribution by the Company to such
holders, of any shares of capital stock of the Company, evidences of
indebtedness of the Company, cash or other assets (including rights, warrants
or other securities (of the Company or any other Person)), other than any
dividend or distribution (i) upon a merger or consolidation or sale to
which Section 4.1(j) applies
or (ii) of any Common Stock referred to in Section 4.1(b).

 

“Purchased
Shares” has the meaning set forth in Section 4.1(e).

 

“Quoted
Price” means, on any Trading Day, with respect to any security,
the last reported sales price regular way or, in case no such reported sale
takes place on such Trading Day, the average of the reported closing bid and
asked prices regular way, in either case on the NASDAQ Stock Market or, if such
security is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, or, if such security is not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices in the over-the-counter market in the United States as furnished by any
New York Stock Exchange member firm that shall be selected from time to time by
the Company for that purpose.

 

“Receivable
Dividend” means any Property Dividend if (but only if):

 

(i)            on a date at least 30 days prior to the date for the
determination of holders entitled to receive such dividend or distribution the
Company has given notice in 

 

8

 

accordance
with Section 10.1 to all Holders of
Warrant Certificates and the Warrant Agent, in each case stating:

 

(A)          the date for such determination;

 

(B)           the fair market value (determined as specified in clause (iv) below)
of the securities, cash or other assets so to be distributed applicable to one
share of Common Stock;

 

(C)           the Exercise Price then in effect;

 

(D)          that the Warrants will be exercisable at all times during
the period from the opening of business on the date such notice is given to the
close of business on such date for determination (the “Specified
Period”);

 

(E)           the number of shares of Common Stock into which one
Warrant is then exercisable;

 

(F)           that the Company intends to treat such distribution as a “Receivable
Dividend” hereunder and, therefore, that no adjustment to the Exercise Price or
the number of shares of Common Stock into which the Warrants are exercisable
will be made as a result of such distribution; and

 

(G)           the rights thereafter generally available to a Holder if
such Holder’s Warrants are not exercised during the Specified Period;

 

(ii)           the Specified Period is at least 30 days long;

 

(iii)          at any time during the Specified Period that any Warrant
has been outstanding, such Warrant has been exercisable (or would have been exercisable but for the presence
of the legend set forth in Section 2.4(e) on any
Warrant Certificates); and

 

(iv)          the fair market value
(as determined reasonably and in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution filed
with the Warrant Agent) of the securities, cash or other assets
so to be distributed applicable to one share of Common Stock exceeds 150% of the Exercise Price in
effect at any time during the Specified Period.

 

“Received
Dividend” means any Property Dividend if (but only if):

 

(i)            prior to the date for determination of holders of shares
of Common Stock entitled to receive such dividend or distribution the Company
has delivered a written notice to the Warrant Agent that the Company intends to
treat such distribution as a “Received Dividend” hereunder; and

 

(ii)           at the same time the Company makes such distribution to
holders of Common Stock, the Company pays or otherwise distributes, to each
Person who was the Holder of a Warrant Certificate evidencing a Warrant that
was outstanding immediately 

 

9

 

after
the close of business on such date for determination (whether or not such
Warrant is outstanding on the date of such distribution), an amount equal to
the amount of securities, cash or other assets that would have been receivable
upon such distribution by a holder of the number of shares of Common Stock into
which all Warrants evidenced by such Warrant Certificate are exercisable if
such Warrants had been exercised in full immediately prior to such date for
determination, assuming that the Warrants were exercisable (or would have been exercisable but for the presence
of the legends set forth in Sections 2.4(a) and (e) on any
Warrant Certificates) at the time of such date for
determination into the initial number of shares of Common Stock into which a Warrant
is exercisable, as adjusted from the date of this Warrant Agreement to such
date for determination pursuant to Section 4
(other than any adjustment in respect of which the deferral provisions of Section 4.1(h)(iv) are then
applicable).

 

“Recipient”
has the meaning set forth in Section 3.2(e).

 

“Restricted
Securities” has the meaning set forth in Section 2.4(a).

 

“Securities
Act” means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.

 

“Specified
Period” has the meaning specified in the definition of “Receivable
Dividend” in this Section 1.

 

“Subsidiary”
means a Corporation more than 50% of the outstanding voting stock or equity of
which is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.  For purposes of this definition, “voting
stock” means stock or equity which ordinarily has voting power for the election
of directors (or member of a governing body that is equivalent to a board of
directors), whether at all times or only so long as no senior class of stock or
equity has such voting power by reason of any contingency.

 

“Substituted
Property” has the meaning set forth in Section 4.1(j).

 

“Surviving
Transaction” has the meaning set forth in Section 4.1(j).

 

“Trading
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.

 

“Transaction”
has the meaning set forth in Section 4.1(j).

 

“Voting
Stock” has the meaning set forth in the definition of “Change of
Control”.

 

“Warrant Agent” means the warrant
agent set forth in the preamble hereof or the successor or successors of such
Warrant Agent appointed in accordance with the terms hereof.

 

10

 

“Warrant
Certificates” means those certain warrant certificates evidencing
the Warrants, substantially in the form of Exhibit A attached
hereto.

 

“Warrant
Register” has the meaning set forth in Section 7.

 

“Warrants”
means those certain warrants to purchase initially up to an aggregate of
450,000 shares of Common Stock at the Exercise Price, subject to adjustment
pursuant to Section 4, issued
hereunder.

 

2.                                       Warrant Certificates.

 

2.1.          Issuance of
Warrants.  Each Warrant Certificate
shall evidence the number of Warrants specified therein, and each Warrant
evidenced thereby shall represent the right, subject to the provisions
contained herein and therein, to purchase one share of Common Stock, subject to
adjustment as provided in Section 4.

 

2.2.          Form of
Warrant Certificates.

 

(a)           The
Warrant Certificates evidencing the Warrants shall be in registered form only
and substantially in the form attached hereto as Exhibit A,
shall be dated the date on which countersigned by the Warrant Agent, shall have
such insertions as are appropriate or required or permitted by this Agreement
and may have such letters, numbers or other marks of identification and such
legends and endorsements typed, stamped, printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation pursuant thereto or
with any rule or regulation of any securities exchange on which the
Warrants may be listed, or to conform to usage.

 

(b)           Pending
the preparation of definitive Warrant Certificates, temporary Warrant
Certificates may be issued, which may be printed, lithographed, typewritten,
mimeographed or otherwise produced, and which will be substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued.

 

If temporary Warrant
Certificates are issued, the Company will cause definitive Warrant Certificates
to be prepared without unreasonable delay. 
After the preparation of definitive Warrant Certificates, the temporary
Warrant Certificates shall be exchangeable for definitive Warrant Certificates
evidencing Warrants of the same number and tenor upon surrender by the Holder
of the temporary Warrant Certificates to the Warrant Agent at its Corporate
Agency Office, without charge to such Holder. 
Upon surrender for cancellation of any one or more temporary Warrant
Certificates the Company shall execute and the Warrant Agent shall countersign
and deliver in exchange therefor Warrant Certificates of the same tenor and for
a like aggregate number of Warrants. 
Until so exchanged the temporary Warrant Certificates shall in all
respects be entitled to the same benefits under this Agreement as definitive
Warrant Certificates.

 

11

 

2.3.          Execution and
Delivery of Warrant Certificates.

 

(a)           Warrant
Certificates evidencing the Warrants which may be countersigned and delivered
under this Agreement are limited to Warrant Certificates evidencing 450,000
Warrants except for Warrant Certificates countersigned and delivered upon
registration of transfer of, or in exchange for, or in lieu of, one or more
previously countersigned Warrant Certificates pursuant to Sections 2.2(b), 3.2(d),
5 and 7.

 

(b)           At
any time and from time to time on or after the date of this Agreement, Warrant
Certificates evidencing the Warrants may be executed by the Company and
delivered to the Warrant Agent for countersignature, and the Warrant Agent
shall, upon receipt of a Company Order and at the direction of the Company set
forth therein, countersign and deliver such Warrant Certificates to the Company
for original issuance to the respective Persons entitled thereto.  The Warrant Agent is further hereby authorized
to countersign and deliver Warrant Certificates as required by this Section 2.3 or by Sections
2.2, 3.2(d), 5 or  7.

 

(c)           The
Warrant Certificates shall be executed in the corporate name and on behalf of
the Company by the Chairman (or any Co-Chairman) of the Board, the Chief
Executive Officer, the President, the Chief Accounting and Compliance Officer
or any one of the Vice Presidents of the Company under corporate seal
reproduced thereon and attested to by the Secretary or one of the Assistant Secretaries
of the Company, either manually or by facsimile signature printed thereon.  The Warrant Certificates shall be
countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned.  In case any
officer of the Company whose signature shall have been placed upon any of the
Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent
and issued and delivered with the same force and effect as though such person
had not ceased to be such officer of the Company, and any Warrant Certificate
may be signed on behalf of the Company by such person as, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company, although at the date of the execution of this Warrant Agreement any
such person was not such officer.

 

(d)           Upon the request of the Company, the Warrant Agent
shall cause any Warrant Certificate issued upon original issuance to bear the
legends set forth in Sections 2.4(a) and (e), the Warrants evidenced thereby constituting “Original Restricted Warrants” for purposes of Section 2.4.

 

2.4.          Restrictions on Transfer.

 

(a)           Each
Holder of a Warrant Certificate evidencing Original Restricted Warrants, by
accepting the same, agrees not to sell, assign, transfer or pledge any Original
Restricted Warrants or any Common Stock issued upon any exercise of any such
Original Restricted Warrants (collectively “Restricted
Securities”) except upon satisfaction of the conditions
specified in this Section 2.4, which conditions are intended to
ensure compliance with the provisions of the Securities Act.  The holders of the Restricted Securities will
cause any proposed purchaser, assignee, transferee or pledgee of the Restricted
Securities to agree to take and hold such securities subject to the provisions
and conditions specified in this Section 2.4.  

 

12

 

Each
certificate representing Restricted Securities shall be stamped or otherwise
imprinted with a legend in the following form (in addition to any legend
required under applicable state securities laws):

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE
REGISTERED UNDER SUCH ACT, AND SUCH STATE LAW, OR THE COMPANY RECEIVES A
WRITTEN OPINION OF LEGAL COUNSEL (WHO SHALL BE, AND WHOSE LEGAL OPINION SHALL
BE, REASONABLY SATISFACTORY TO THE COMPANY) ADDRESSED TO THE COMPANY TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. 
THE TRANSFERABILITY OF THIS SECURITY IS ALSO SUBJECT TO RESTRICTIONS
CONTAINED IN THE WARRANT AGREEMENT, DATED AS OF MARCH 15, 2010, BETWEEN
THE COMPANY AND A WARRANT AGENT, WHICH WARRANT AGREEMENT THE COMPANY WILL
FURNISH TO THE HOLDER HEREOF UPON REQUEST.”

 

(b)           The
Holders of any Restricted Securities and the holders of Common Stock
constituting Restricted Securities will cause any proposed purchaser, assignee,
transferee or pledgee of Restricted Securities to agree to take and hold such
securities subject to the provisions and conditions specified in this Section 2.4
and Section 3.2(a).

 

(c)           The
holder of each certificate representing Restricted Securities, by accepting the
same, agrees to comply in all respects with the provisions of this Section 2.4.  Prior to any proposed transfer (including any
transfer by means of exercising Original Restricted Warrants in such a manner
as to cause the Common Stock to be registered in the name of another holder),
sale, assignment or pledge of any such Restricted Securities, unless there is
in effect a registration statement under the Securities Act covering the
proposed transfer, sale, assignment or pledge the holder thereof shall give
written notice to the Company of such holder’s intention to effect such
transfer, sale, assignment or pledge. 
Each such notice shall describe the manner and circumstances of the
proposed transfer, sale, assignment or pledge in sufficient detail and shall be
accompanied, at such holder’s expense, by a written opinion of legal counsel
(who shall be, and whose legal opinion shall be, reasonably satisfactory to the
Company) addressed to the Company to the effect that the proposed transfer of
the securities may be effected without registration under the Securities Act.

 

(d)           The
legend specified in Section 2.4(a) shall also be placed on all
certificates issued upon registration of transfer of, or in exchange for, or in
lieu of, any certificates bearing the legend set forth in Section 2.4(a),
except if such transfer is made pursuant to an effective registration statement
or Rule 144 or if the holder (at such holder’s expense) shall deliver a
written opinion of legal counsel (who shall be, and whose legal opinion shall
be, 

 

13

 

reasonably
satisfactory to the Company) addressed to the Company to the effect that such
legend set forth in Section 2.4(a) is not required in order to
establish compliance with any provision of the Securities Act.

 

(e)           The
following legend shall be placed by the Warrant Agent on all Warrant Certificates
issued upon original issuance and as to which the Company has made a request
for the placement of such legend thereon pursuant to Section 2.3(d) and
on all Warrant Certificates subsequently issued under this Agreement upon
registration of transfer of, or in exchange for, or in lieu of, any Warrant
Certificates bearing such legend:

 

“NOTWITHSTANDING ANY OTHER PROVISION OF THE
WARRANTS EVIDENCED HEREBY OR THE RELATED WARRANT AGREEMENT, THE WARRANTS
EVIDENCED BY THIS WARRANT CERTIFICATE MAY BE EXERCISED ONLY IF (1) THE
REGISTERED HOLDER IS AN ORIGINAL RESTRICTED HOLDER, (2) A REGISTRATION
STATEMENT IS IN EFFECT AS TO SUCH EXERCISE OR (3) THE COMPANY RECEIVES A
WRITTEN OPINION OF LEGAL COUNSEL (WHO SHALL BE, AND WHOSE LEGAL OPINION SHALL
BE, REASONABLY SATISFACTORY TO THE COMPANY) ADDRESSED TO THE COMPANY TO THE
EFFECT THAT THE PROPOSED EXERCISE OF THE WARRANTS MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT.”

 

3.                                       Exercise and Expiration of Warrants.

 

3.1.          Right to Acquire
Common Stock Upon Exercise.  Each
Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the
Holder thereof, subject to the provisions thereof and of this Agreement, to
acquire from the Company, for each Warrant evidenced thereby one share of
Common Stock at the Exercise Price, subject to adjustment as provided in this
Agreement.  The Exercise Price, and the
number of shares of Common Stock obtainable upon exercise of each Warrant,
shall be adjusted from time to time as required by Section 4.1.

 

3.2.          Exercise and
Expiration of Warrants.

 

(a)           Exercise of
Warrants.  Subject to and upon
compliance with the terms and conditions set forth herein, a Holder of a
Warrant Certificate may exercise all or any whole number of the Warrants
evidenced thereby, on any Business Day from and after the Original Issue Date
until the Expiration Time, for the shares of Common Stock obtainable
thereunder; provided, however, that any Warrant evidenced by a
Warrant Certificate bearing the legend set forth in Section 2.4(e) shall
not be exercisable unless (1) the registered holder is an Original
Restricted Holder, (2) a registration statement under the Securities Act
is in effect as to such exercise or (3) the Company receives a written
opinion of legal counsel (who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company) addressed to the Company to the effect
that the proposed exercise of the Warrant may be effected without registration
under the Securities Act.

 

14

 

(b)           Expiration of
Warrants.  The Warrants shall
terminate and become void as of the Expiration Time.

 

The Company shall have the right to accelerate the time of expiration
of the Warrants to 5:00 p.m., New York time, on any date after the Original
Issue Date if:

 

(i)              (A) the Quoted Price of the Common Stock has been at least 150% of
the then effective Exercise Price on at least 20 of 30 successive Trading Days
in a period ending not more than 15 days prior to the date notice of such
acceleration is given, (B) on each date in such period the Common Stock
was listed or admitted to trading on a national securities exchange or
otherwise traded in the over-the-counter market in the United States such that
the Quoted Price shall be capable of determination and (C) less than 20%
of the Warrants issued on the Original Issue Date remain outstanding on the
date such notice of acceleration is given;

 

(ii)             a Cash Transaction has occurred on
or prior to the date notice of such acceleration is given;

 

(iii)            a Transaction (other than a Cash
Transaction) has occurred on or prior to the date notice of such acceleration
is given and as a result hereof the Substituted Property receivable upon
exercise of Warrants does not include any equity securities (as defined in Rule 3a-11-1
under the Exchange Act or any successor provision); or

 

(iv)            less than 5% of the Warrants issued
on the Original Issue Date remain outstanding on the date such notice of
acceleration is given.

 

In the event the time of expiration is accelerated by the Company
pursuant to this Section 3.2(b), the
term “Expiration Time” shall mean such accelerated time for all purposes of
this Agreement.

 

If the Company elects to accelerate the time of expiration of the
Warrants pursuant to this Section 3.2(b), the Company shall, on a
date at least 30 days prior to the designated time of expiration, give notice
of such designated time to the Warrant Agent and the Holders in accordance with
the provisions of Section 10.1.

 

(c)           Method of
Exercise.  In order to exercise all
or any of the Warrants represented by a Warrant Certificate, the Holder thereof
must:

 

(i)              at the Corporate Agency Office (x) surrender
to the Warrant Agent the Warrant Certificate evidencing such Warrants and (y) deliver
to the Warrant Agent a written notice of the Holder’s election to exercise the
number of the Warrants specified therein, duly executed by such Holder, which
notice shall be in the form of the notice on the reverse of, or attached to,
such Warrant Certificate; and

 

(ii)             either (x) pay to the Warrant
Agent an amount, equal to the aggregate of the Exercise Price in respect of
each share of Common Stock into which such Warrants are proposed to be
exercised, in any combination of the following elected by such Holder: (A) certified
bank check or official bank check in New York
Clearing House 

 

15

 

funds
payable to the order of the Company and delivered to the Warrant Agent at the
Corporate Agency Office; or (B) wire transfer in immediately available
funds, to the account (National City Bank — Account No. 0988246827; ABA No. 072000915;
Account Name: Aventine Renewable Energy, Inc.) of the Company at the
Warrant Agent or such other account designated by the Company for such purpose
in a notice to the Warrant Agent and such Holder in accordance with Section 10.1(b) or (y) if (but only
if) a Cash Transaction Effective Time has occurred, in lieu of
payment of the Exercise Price as provided in clause (ii)(x) hereof, elect
a cashless exercise (such exercise in accordance with this Section 3.2(c)(ii),
a “Cashless Exercise”)
of such Warrant by written designation to such effect specified on the exercise
notice referred to in clause (i) hereof (this subsection (ii) together
with subsection (i) of this Section 3.2(c) collectively,
the “Exercise Requirements”).

 

If the Holder duly elects a
Cashless Exercise of any Warrant pursuant to clause (ii)(y) of the
previous sentence, the Company shall pay to the Holder upon exercise of such
Warrants a cash amount computed using the following formula:

 

X = Y x (A-B)

 

where:

 

X = the amount of cash to be
paid to the Holder;

 

Y = the aggregate number of
Warrants being exercised;

 

A = the Substituted Property
receivable in accordance with Section 4.1(j) upon exercise of each
Warrant on or after the Cash Transaction Effective Time; and

 

B = the aggregate Exercise
Price applicable to the Substituted Property receivable upon exercise of each
Warrant on or after the Cash Transaction Effective Time.

 

During the period from and after delivery to Holders of notice of the
possible future occurrence of a Change of Control pursuant to the second
paragraph of Section 10.2 until the earlier of the time of
consummation of such Change of Control or delivery to Holders of notice of the
cancellation thereof pursuant to Section 10.2, exercise of all or
any of the Warrants represented by a Warrant Certificate (including a Cashless
Exercise pursuant to clause (ii)(y) of the first paragraph of this Section 3.2(c))
may be made subject to and contingent upon the consummation of such Change of
Control by written notice to such effect set forth on the notice of exercise
delivered pursuant to this Section 3.2(c), in which event, if such
Change of Control is consummated, such exercise will be effective (subject to
the other conditions to exercise specified in Section 3.2(f)) at
the time of consummation of such Change of Control.

 

(d)           Partial Exercise.  If fewer than all the Warrants represented by
a Warrant Certificate are exercised, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the number
of Warrants which were not exercised shall be executed by the Company.  The Warrant Agent shall countersign the new
Warrant Certificate, registered in such name or names, subject to the
provisions of Section 7 regarding
registration of transfer and payment of governmental charges in respect
thereof, as may be directed in writing 

 

16

 

by
the Holder, and shall deliver the new Warrant Certificate to the Person or
Persons in whose name such new Warrant Certificate is so registered.  The Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrant Certificates duly executed on
behalf of the Company for such purpose.

 

(e)           Issuance of
Common Stock.  Upon satisfaction of
the Exercise Requirements, the Warrant Agent shall, when such payment is
received (or promptly after receipt of such notice of exercise in the event
such Holder has elected a Cashless Exercise in accordance with Section 3.2(c)), (i) requisition from the
Company’s Common Stock transfer agent for issuance and delivery to or upon the
written order of the registered holder of such Warrant and in such name or
names as such Holder may designate, the shares of Common Stock issuable upon
the exercise of such Warrants, (ii) deliver to the Company the notice of
exercise received pursuant to Section 3.2(c) and
(iii) (unless a Cashless Exercise) deliver or deposit, if applicable, all
funds received as instructed in writing by the Company. The Company shall
thereupon, as promptly as practicable, and in any event within five Business
Days after receipt by the Company of such notice of exercise, (i) except
in the case of a Cashless Exercise, execute or cause to be executed and deliver
or cause to be delivered to the Recipient (as defined below) a certificate or
certificates representing the aggregate number of shares of Common Stock
issuable upon such exercise (based upon the aggregate number of Warrants so
exercised), determined in accordance with Section 3.6, or (ii) in
the case of a Cashless Exercise, pay the cash amount payable upon exercise,
determined pursuant to the formula set forth in Section 3.2(c), to the Recipient.  The certificate or certificates so delivered
(unless a Cashless Exercise) shall be, to the extent possible, in such
denomination or denominations as such Holder shall request in such notice of
exercise and such certificate or certificates shall be registered or otherwise
placed in the name of, and delivered to, or, in the case of a Cashless
Exercise, such cash amount shall be delivered to, in each case, the Holder or,
subject to Section 2.4(c) and Section 3.4,
such other Person as shall be designated by the Holder in such notice (the
Holder or such other Person being referred to herein as the “Recipient”).

 

(f)            Time of Exercise.  Each exercise of this Warrant shall be deemed
to have been effected (i) immediately prior to the close of business on
the day on which the Warrant Certificate representing such Warrant shall have
been surrendered for exercise as provided above, together with the notice of
exercise referred to above, the opinion of counsel and the notice required by Section 2.4(c) and
(except in the case of a Cashless Exercise) the applicable Exercise Price, and
all taxes required to be paid by Holder, if any, pursuant to Section 3.4 prior to the exercise of such
Warrant have been paid or (ii) in the case of any exercise contingent upon
consummation of a Change of Control pursuant to the last paragraph of Section 3.2(c), if such Change of Control is
consummated, at the later of time of consummation of such Change of Control and
the time specified in clause (i).  At
such time, subject to Section 3.2(c) and
Section 4.1(h)(iv), except in the case
of a Cashless Exercise, the certificates for the shares of Common Stock
issuable upon such exercise as provided in Section 3.2(e) shall,
if applicable, be deemed to have been issued and, for all purposes of this
Agreement, the Recipient shall, to the fullest extent permitted by law, as
between such Person and the Company, be deemed to be and entitled to all rights
of the holder of record of such Common Stock.

 

3.3.          Application of
Funds Upon Exercise of Warrants.  Any
funds delivered to the Warrant Agent upon exercise of any Warrant(s) shall
be held by the Warrant Agent in trust for the

 

17

 

Company.  The Warrant Agent shall promptly deliver and
pay to or upon the written order of the Company all funds received by it upon
the exercise of any Warrants by bank wire transfer to an account designated by
the Company or as the Warrant Agent otherwise may be directed in writing by the
Company.

 

3.4.                              Payment of
Taxes.  The Company shall pay any and
all taxes (other than income taxes) that may be payable in respect of the issue
or delivery of shares of Common Stock or except in the case of a Cashless Exercise,
payment of any cash amount on exercise of Warrants pursuant hereto.  The Company shall not be required, however,
to pay any tax or other charge imposed in respect of any transfer involved in
the issue and delivery of any certificates for shares of Common Stock or
payment of cash or other property to any Recipient other than the Holder of the
Warrant Certificate surrendered upon the exercise of a Warrant, and in case of
such transfer or payment, the Warrant Agent and the Company shall not be required
to issue or deliver any certificate or pay any cash until (a) such tax or
charge has been paid or an amount sufficient for the payment thereof has been
delivered to the Warrant Agent or the Company or (b) it has been
established to the Company’s satisfaction that any such tax or other charge
that is or may become due has been paid.

 

3.5.                              Surrender of
Certificates.  Any Warrant
Certificate surrendered for exercise (including in connection with a Cashless
Exercise) shall, if surrendered to the Company, be delivered to the Warrant
Agent, and all Warrant Certificates surrendered or so delivered to the Warrant
Agent shall be promptly cancelled by the Warrant Agent and shall not be
reissued by the Company.

 

3.6.                              Shares Issuable.  The number of shares of Common Stock “obtainable
upon exercise” of Warrants at any time shall be the number of shares of Common
Stock into which such Warrants are then exercisable.  The number of shares of Common Stock “into
which each Warrant is exercisable” shall be one share, subject to adjustment as
provided in Section 4.1.

 

4.                                       Adjustments.

 

4.1.                              Adjustments.  In order to prevent dilution of the rights
granted under the Warrants and to grant the Holders certain additional rights,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 4.1 and the number of
shares of Common Stock obtainable upon exercise of Warrants shall be subject to
adjustment from time to time as provided in this Section 4.1.

 

(a)                                  Subdivisions
and Combinations.  In the
event the Company shall, at any time or from time to time after the Original
Issue Date while the Warrants remain outstanding and unexpired in whole or in
part, effect a subdivision (by any stock split or otherwise) of the outstanding
shares of Common Stock into a greater number of shares of Common Stock (other
than (x) a subdivision upon a merger or consolidation or sale to which Section 4.1(j) applies or
(y) a stock split effected by means of a stock dividend or distribution to
which Section 4.1(b) applies),
then and in each such event the Exercise Price in effect at the opening of
business on the day after the date upon which such subdivision becomes
effective shall be proportionately decreased. 
Conversely, if the Company shall, at any time or from time to time after
the Original Issue Date while the Warrants remain outstanding and unexpired in
whole or in part, effect a 

 

18

 

combination
(by any reverse stock split or otherwise) of the outstanding shares of Common
Stock into a smaller number of shares of Common Stock (other than a combination
upon a merger or consolidation or sale to which Section 4.1(j) applies),
then and in each such event the Exercise Price in effect at the opening of
business on the day after the date upon which such combination becomes
effective shall be proportionately increased. 
Any adjustment under this Section 4.1(a) shall
become effective immediately after the opening of business on the day after the
date upon which the subdivision or combination becomes effective.

 

(b)                                 Common Stock
Dividends.  In the
event the Company shall, at any time or from time to time after the Original
Issue Date while the Warrants remain outstanding and unexpired in whole or in
part, make or issue to the holders of its Common Stock a dividend or
distribution payable in, or otherwise make or issue a dividend or other
distribution on any class of its capital stock payable in, shares of Common
Stock (other than a dividend or distribution upon a merger or consolidation or
sale to which Section 4.1(j) applies),
then and in each such event the Exercise Price in effect at the opening of
business on the day after the date for the determination of the holders of
shares of Common Stock entitled to receive such dividend or distribution shall
be decreased by multiplying such Exercise Price by a fraction (not to be
greater than 1):

 

(i)                                          the numerator of which shall be the total
number of shares of Common Stock issued and outstanding at the close of
business on such date for determination; and

 

(ii)                                       the denominator of which shall be the
total number of shares of Common Stock issued and outstanding at the close of
business on such date for determination plus the number of shares of Common
Stock issuable in payment of such dividend or distribution.

 

Any adjustment under this Section 4.1(b) shall,
subject to Section 4.1(h)(iv), become
effective immediately after the opening of business on the day after the date
for the determination of the holders of shares of Common Stock entitled to
receive such dividend or distribution.

 

(c)                                  Reclassifications.  A reclassification of the Common Stock (other
than any such reclassification in connection with a merger or consolidation or
sale to which Section 4.1(j) applies)
into shares of Common Stock and shares of any other class of stock shall be
deemed:

 

(i)                                          a distribution by the Company to the
holders of its Common Stock of such shares of such class of stock other than
Common Stock for the purposes and within the meaning of Section 4.1(d) (and
the effective date of such reclassification shall be deemed to be “the date for
the determination of the holders of Common Stock entitled to receive such
dividend or distribution” for the purposes and within the meaning of Section 4.1(d)); and

 

(ii)                                       if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock for
the purposes and within the meaning of Section 4.1(a) (and
the effective date of such reclassification shall be deemed to be “the 

 

19

 

date upon which
such subdivision becomes effective” or “the date upon which such combination
becomes effective,” as applicable, for the purposes and within the meaning of Section 4.1(a)).

 

(d)                                 Property
Dividends.  In the
event the Company shall, at any time or from time to time after the Original
Issue Date while the Warrants remain outstanding and unexpired in whole or in
part, make or issue a dividend or distribution to holders of Common Stock a
Property Dividend (other than (x) a Receivable Dividend, a Received
Dividend or an Excluded Dividend or (y) any dividend or distribution of
any rights or warrants referred to in Section 4.1(f)),
then and in each such event the Exercise Price in effect immediately prior to
the close of business on the date for the determination of the holders of
Common Stock entitled to receive such dividend or distribution shall be
decreased by multiplying such Exercise Price by a fraction (not to be greater
than 1):

 

(i)                                          the numerator of which shall be the
Current Market Price per share of Common Stock on such date for determination
minus the portion applicable to one share of Common Stock of the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution filed
with the Warrant Agent) of such Property Dividend so distributed; and

 

(ii)                                       the denominator of which shall be such
Current Market Price per share of Common Stock.

 

Any adjustment under this Section 4.1(d) shall,
subject to Section 4.1(h)(iv), become
effective immediately prior to the opening of business on the day after the
date for the determination of the holders of Common Stock entitled to receive
such dividend or distribution.  If the
Board of Directors determines the fair market value of any Property Dividend
for purposes of this Section 4.1(d) by
reference to the actual or when issued trading market for any securities
comprising such Property Dividend, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price per
share of Common Stock.

 

(e)                                  Self-Tender
Offers.  In the event, at any time or
from time to time after the Original Issue Date while the Warrants remain
outstanding and unexpired in whole or in part, a Company Offer, other than an
Excluded Company Offer, shall expire, then and in each such event the Exercise
Price in effect immediately prior to the close of business on the date of the
last time (the “Company Offer  Expiration Time”) tenders could have
been made pursuant to such Company Offer shall be decreased by multiplying such
Exercise Price by a fraction (not to be greater than 1):

 

(i)                                          the numerator of which shall be equal to (A) the
product of (1) the Current Market Price per share of the Common Stock on
the date of the Company Offer Expiration Time and (2) the number of shares
of Common Stock outstanding (including any tendered shares) on the Company
Offer Expiration Time less (B) the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution filed with the Warrant Agent) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the Company Offer) of all shares validly
tendered and 

 

20

 

not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any maximum
amount provided for in connection with such Company Offer, being referred to as
the “Purchased Shares”);
and

 

(ii)                                       the denominator of which shall be equal
to the product of (A) the Current Market Price per share of the Common
Stock on the date of the Company Offer Expiration Time and (B) the number
of shares of Common Stock outstanding (including any tendered shares) on the
Company Offer Expiration Time less the number of Purchased Shares.

 

Any adjustment under this Section 4.1(e) shall
become effective immediately prior to the opening of business on the day after
the Company Offer Expiration Time.

 

(f)                                    Distributions
of Warrants.  In the
event the Company shall, at any time or from time to time after the Original
Issue Date while the Warrants remain outstanding and unexpired in whole or in
part, make or issue a dividend or distribution to all holders of its Common
Stock of any warrants or other rights to subscribe for or purchase any shares
of Common Stock (other than (x) a Received Dividend or a Receivable
Dividend or (y) a distribution of such warrants or rights upon a merger or
consolidation or sale to which Section 4.1(j) applies),
whether or not the rights to subscribe or purchase thereunder are immediately
exercisable, and the consideration per share for which shares of Common Stock
may at any time thereafter be issuable pursuant to such warrants or other
rights shall be less than the Current Market Price per share of Common Stock on
the date fixed for determination of the holders of Common Stock entitled to
receive such dividend or distribution, then and in each such event the Exercise
Price at the opening of business on the day after such date for determination
shall be decreased by multiplying such Exercise Price by a fraction (not to be
greater than 1):

 

(i)                                          the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business on such
date for determination plus the number of shares of Common Stock that the
minimum consideration received and receivable by the Company for the issuance
of such maximum number of shares of Common Stock pursuant to the terms of such
warrants or other rights would purchase at such Current Market Price; and

 

(ii)                                       the denominator of which shall be the
number of shares of Common Stock outstanding at the close of business on such
date for determination plus the maximum number of shares of Common Stock
issuable pursuant to all such warrants or other rights.

 

Any adjustment under this Section 4.1(f) shall,
subject to Section 4.1(h)(iv), become
effective immediately after the opening of business on the day after the date
for the determination of the holders of shares of Common Stock entitled to receive
such dividend or distribution.

 

Rights or warrants issued by the Company to all holders of its Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock, which rights or warrants (A) are deemed to be transferred with
such shares of Common Stock, (B) are not exercisable and (C) are also
issued in respect of future issuances of Common Stock, in each case 

 

21

 

in clauses (A) through (C) until the occurrence of a specified
event or events (“Trigger Event”), shall for
purposes of this Section 4.1(f) and
Section 4.1(d) not be
deemed distributed until the occurrence of the earliest Trigger Event.

 

(g)                                 Superseding
Adjustment.  In the
event at any time after any adjustment of the number of shares of Common Stock
into which each Warrant is exercisable shall have been made pursuant to Section 4.1(f) on the
basis of the distribution of warrants or other rights or after any new
adjustment of the number of shares of Common Stock into which each Warrant is
exercisable shall have been made pursuant to this Section 4.1(g),
such warrants or rights shall expire, and all or a portion of such warrants or
rights shall not have been exercised, then, and in each such case, upon the
election of the Company by written notice to the Warrant Agent, such previous
adjustment in respect of such warrants or rights which have expired without
exercise shall be rescinded and annulled as to any then outstanding Warrants,
and the shares of Common Stock that were deemed for purposes of the
computations set forth in Section 4.1(f) to
have been issued by virtue of such adjustment in respect of such warrants or
rights shall no longer be deemed to have been issued.

 

(h)                                 Other
Provisions Applicable to Adjustments. The following provisions
shall be applicable to the making of adjustments to the Exercise Price and the
number of shares of Common Stock into which each Warrant is exercisable under
this Section 4.1:

 

(i)                                          Treasury Stock. 
The dividend or distribution of any issued shares of Common Stock owned
or held by or for the account of the Company shall be deemed a dividend or
distribution of shares of Common Stock for purposes of this Section 4.1. 
The Company shall not make or issue any dividend or distribution on
shares of Common Stock held in the treasury of the Company, including on shares
of Common Stock issued on the Original Issue Date in accordance with the Plan
and set aside for delivery subsequent to the Original Issue Date as provided in
the Plan (until such delivery).  For the
purposes of this Section 4.1, the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company, including shares of Common Stock
issued on the Original Issue Date in accordance with the Plan and set aside for
delivery subsequent to the Original Issue Date as provided in the Plan (until
such delivery), but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock.

 

(ii)                                       When Adjustments Are to be Made. 
The adjustments required by Sections 4.1(a),
4.1(b), 4.1(c),
4.1(d), 4.1(e) and
4.1(f) shall be
made whenever and as often as any specified event requiring an adjustment shall
occur, except that no adjustment of the Exercise Price that would otherwise be
required shall be made unless and until such adjustment either by itself or
with other adjustments not previously made increases or decreases the Exercise
Price immediately prior to the making of such adjustment by at least 1%.  Any adjustment representing a change of less
than such minimum amount (except as aforesaid) shall be carried forward and
made as soon as such adjustment, together with other adjustments required by Sections 4.1(a), 4.1(b),
4.1(c), 4.1(d),
4.1(e) and 4.1(f) and not
previously made, would result in such minimum adjustment.

 

22

 

(iii)                                    Fractional Interests. 
In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.

 

(iv)                                   Deferral Of Issuance Upon Exercise. 
In any case in which Sections 4.1(b),
4.1(d) or 4.1(f) shall
require that a decrease in the Exercise Price be made effective prior to the
occurrence of a specified event and any Warrant is exercised after the time at
which the adjustment became effective but prior to the occurrence of such
specified event and, in connection therewith, Section 4.1(i) shall
require a corresponding increase in the number of shares of Common Stock into
which each Warrant is exercisable, the Company may elect to defer until the
occurrence of such specified event (A) the issuance to the Holder of the
Warrant Certificate evidencing such Warrant (or other Person entitled thereto)
of, and the registration of such Holder (or other Person) as the record holder
of, the Common Stock over and above the Common Stock issuable upon such
exercise on the basis of the number of shares of Common Stock obtainable upon
exercise of such Warrant immediately prior to such adjustment and to require
payment in respect of such number of shares the issuance of which is not
deferred on the basis of the Exercise Price in effect immediately prior to such
adjustment and (B) the corresponding reduction in the Exercise Price; provided,
however, that the Company shall deliver to such Holder or other person a
due bill or other appropriate instrument that meets any applicable requirements
of the principal national securities exchange or other market on which the
Common Stock is then traded and evidences the right of such Holder or other
Person to receive, and to become the record holder of, such additional shares
of Common Stock, upon the occurrence of such specified event requiring such
adjustment (without payment of any additional Exercise Price in respect of such
additional shares).

 

(i)                                     Adjustment to
Shares Obtainable Upon Exercise.  Whenever the Exercise Price is adjusted as
provided in this Section 4.1, the
number of shares of Common Stock into which a Warrant is exercisable shall
simultaneously be adjusted by multiplying such number of shares of Common Stock
into which a Warrant is exercisable immediately prior to such adjustment by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment, and the denominator of which shall be the Exercise Price
immediately thereafter.

 

(j)                                     Changes in
Common Stock.  In case at
any time or from time to time after the Original Issue Date while the Warrants
remain outstanding and unexpired in whole or in part, the Company shall be a
party to or shall otherwise engage in any transaction or series of related
transactions constituting:

 

(i)                                          a merger of the Company into, a
consolidation of the Company with, or a sale of all or substantially all of the
Company’s assets to, any other Person (a “Non-Surviving
Transaction”), or

 

(ii)                                       any merger of another Person into the
Company in which the previously outstanding shares of Common Stock shall be
cancelled, reclassified or converted or changed into or exchanged for
securities of the Company or other property (including 

 

23

 

cash) or any
combination of the foregoing (a “Surviving
Transaction”; any Non-Surviving Transaction or Surviving
Transaction being herein called a “Transaction”),

 

then, as a condition to the
consummation of such Transaction, the Company shall (or, in the case of any
Non-Surviving Transaction, the Company shall cause such other Person to)
execute and deliver to the Warrant Agent a written instrument providing that:

 

(x)                                   so long as any
Warrant remains outstanding on such terms and subject to such conditions as
shall be as nearly equivalent as may be practicable to the provisions set forth
in this Agreement, each Warrant, upon the exercise thereof at any time on or
after the consummation of such Transaction, shall be exercisable into, in lieu
of the Common Stock issuable upon such exercise prior to such consummation,
only the securities or other property (“Substituted Property”)
that would have been receivable upon such Transaction by a holder of the number
of shares of Common Stock into which such Warrant was exercisable immediately
prior to such Transaction, assuming such holder of Common Stock:

 

(A)                              is not a Person
with which the Company consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer was made, as the case
may be (“Constituent Person”), or an
Affiliate of a Constituent Person; and

 

(B)                                failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such Transaction (provided
that if the kind or amount of securities, cash and other property receivable
upon such Transaction is not the same for each share of Common Stock held
immediately prior to such Transaction by other than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not
have been exercised (“Non-Electing Share”),
then, for the purposes of this Section 4.1(j),
the kind and amount of securities, cash and other property receivable upon such
Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by a plurality of the Non-Electing Shares); and

 

(y)                                 the rights and
obligations of the Company (or, in the event of a Non-Surviving Transaction,
such other Person) and the Holders in respect of Substituted Property shall be
as nearly equivalent as may be practicable to the rights and obligations of the
Company and Holders in respect of Common Stock hereunder as set forth in Section 3.1 hereof and elsewhere herein.

 

Such written instrument
shall provide for adjustments which, for events subsequent to the effective
date of such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.  The above provisions of this Section 4.1(j) shall
similarly apply to successive Transactions.

 

(k)                                  Compliance with
Governmental Requirements. 
Before taking any action in accordance with this Agreement that would
cause an adjustment reducing the Exercise Price 

 

24

 

below
the then par value of any of the shares of Common Stock into which the Warrants
are exercisable, the Company will, to the fullest extent permitted by law, take
any corporate action that may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Exercise Price.

 

(l)                                     Optional Tax
Adjustment.  The Company
may at its option, at any time during the term of the Warrants, increase the
number of shares of Common Stock into which each Warrant is exercisable, or
decrease the Exercise Price, in addition to those changes required by Sections 4.1(a), 4.1(b),
4.1(c), 4.1(d),
4.1(e) or 4.1(f), as deemed advisable by the Board of
Directors of the Company, in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.

 

(m)                               Warrants Deemed
Exercisable.  For
purposes solely of this Section 4, the
number of shares of Common Stock which the holder of any Warrant would have
been entitled to receive had such Warrant been exercised in full at any time or
into which any Warrant was exercisable at any time shall be determined assuming
such Warrant was exercisable in full at such time, although such Warrant may
not be exercisable in full at such time pursuant to Section 3.2(a).

 

(n)                                 Notice of
Adjustment.  Upon the
occurrence of each adjustment of the Exercise Price or the number of shares of
Common Stock into which a Warrant is exercisable pursuant to this Section 4.1, the Company at its expense
shall promptly:

 

(i)                                          compute such adjustment in accordance
with the terms hereof;

 

(ii)                                       after such adjustment becomes effective,
cause to be delivered to all Holders in accordance with Section 10.1(b) a
notice setting forth such adjustment (including the kind and amount of
securities, cash or other property for which the Warrants shall be exercisable
and the Exercise Price) and showing in detail the facts upon which such
adjustment is based; and

 

(iii)                                    deliver to the Warrant Agent a
certificate of the principal financial officer or the Treasurer of the Company
setting forth the Exercise Price and the number of shares of Common Stock into
which each Warrant is exercisable after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and the computation by
which such adjustment was made (including a description of the basis on which
the Current Market Price of the Common Stock or the fair market value of any
evidences of indebtedness, shares of capital stock, securities, cash or other
assets or consideration used in the computation was determined).  As provided in Section 9.1,
the Warrant Agent shall be entitled to rely on such certificate and shall be
under no duty or responsibility with respect to any such certificate, except to
exhibit the same from time to time to any Holder desiring an inspection thereof
during reasonable business hours.

 

(o)                                 Statement on
Warrant Certificates. 
Irrespective of any adjustment in the Exercise Price or amount or kind
of shares into which the Warrants are exercisable, Warrant Certificates
theretofore or thereafter issued may continue to express the same Exercise
Price 

 

25

 

initially
applicable or amount or kind of shares initially issuable upon exercise of the
Warrants evidenced thereby pursuant to this Agreement.

 

(p)                                 Certain Actions
During Specified Period. 
During any Specified Period, the Company shall not combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, effect a reclassification of its Common Stock or effect any Transaction.

 

(q)                                 Certain Actions
Respecting Received Cash Dividends.  If the Company shall have given notice to the
Warrant Agent of its intention to treat a distribution as a Received Dividend
hereunder, the Company shall not permit the date for the determination of
holders of shares of Common Stock entitled to receive any other dividend or
distribution referred to in Sections 4.1(b) or
4.1(d) or to
receive any rights, options or warrants referred to in Section 4.1(f),
the date of any Company Offer Expiration Time referred to in Section 4.1(e), the effective date of any
subdivision or combination referred to in Section 4.1(a) or
the date of consummation of any Transaction to be the same date as the date
which is, or is the day before, the date for determination of holders of Common
Stock entitled to receive such Received Dividend.

 

4.2.                              Fractional
Interest.  The Company
shall not issue fractions of shares of Common Stock upon exercise of Warrants
or distribute stock certificates which evidence fractional shares of Common
Stock.  Whenever any fraction of a share
of Common Stock would otherwise be required to be issued or distributed, the
actual issuance or distribution made shall reflect a rounding of such fraction
to the nearest whole share (up or down), with half shares or less being rounded
down and fractions in excess of half of a share being rounded up.  The holder of a Warrant by the acceptance of
the Warrant expressly waives his right to receive any fractional share of
Common Stock upon exercise of a Warrant. 
If Warrant Certificates evidencing more than one Warrant shall be
presented for exercise at the same time by the same Holder, the number of full
shares of Common Stock which shall be issuable upon such exercise thereof shall
be computed on the basis of the aggregate number of Warrants so to be
exercised.

 

5.                                       Loss or Mutilation.

 

If (a) any mutilated
Warrant Certificate is surrendered to the Warrant Agent or (b) both (i) there
shall be delivered to the Company and the Warrant Agent (A) a claim by a
Holder as to the destruction, loss or wrongful taking of any Warrant
Certificate of such Holder and a request thereby for a new replacement Warrant
Certificate, and (B) such indemnity bond as may be required by them to
save each of them and any agent of either of them harmless and (ii) such
other reasonable requirements as may be imposed by the Company as permitted by Section 8-405
of the Uniform Commercial Code have been satisfied, then, in the absence of
notice to the Company or the Warrant Agent that such Warrant Certificate has
been acquired by a “protected purchaser” within the meaning of Section 8-405
of the Uniform Commercial Code, the Company shall execute and upon its written
request the Warrant Agent shall countersign and deliver to the registered
Holder of the lost, wrongfully taken, destroyed or mutilated Warrant
Certificate, in exchange therefor or in lieu thereof, a new Warrant Certificate
of the same tenor and for a like aggregate number of Warrants.  At the written request of such registered
Holder, the new Warrant Certificate so issued shall be retained by the Warrant
Agent as having been surrendered for exercise, in lieu of delivery thereof to
such Holder, and shall be deemed for 

 

26

 

purposes
of Section 3.2 to have been surrendered
for exercise on the date the conditions specified in clauses (a) or (b) of
the preceding sentence were first satisfied.

 

Upon the issuance of any new
Warrant Certificate under this Section 5,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and other
expenses (including the fees and expenses of the Warrant Agent and of counsel
to the Company) in connection therewith.

 

Every new Warrant
Certificate executed and delivered pursuant to this Section 5
in lieu of any lost, wrongfully taken or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the allegedly lost, wrongfully taken or destroyed Warrant Certificate shall be
at any time enforceable by anyone, and shall be entitled to the benefits of
this Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder.

 

The provisions of this Section 5 are exclusive and shall preclude
(to the extent lawful) all other rights or remedies with respect to the
replacement of mutilated, lost, wrongfully taken, or destroyed Warrant
Certificates.

 

6.                                       Reservation and Authorization of Common
Stock.

 

The Company covenants that,
for the duration of the Exercise Period, the Company will at all times reserve
and keep available, from its authorized and unissued Common Stock solely for
issuance and delivery upon the exercise of the Warrants and free of preemptive
rights, such number of shares of Common Stock and other securities, cash or
property as from time to time shall be issuable upon the exercise in full of
all outstanding Warrants.  The Company
further covenants that it shall, to the fullest extent permitted by law, from
time to time, take all steps necessary to increase the authorized number of
shares of its Common Stock if at any time the authorized number of shares of
Common Stock remaining unissued would otherwise be insufficient to allow
delivery of all the shares of Common Stock then deliverable upon the exercise
in full of all outstanding Warrants.  The
Company covenants that all shares of Common Stock issuable upon exercise of the
Warrants will, upon issuance, be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer, other than as specified in Section 2.4,
and will be free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein).  The Company shall take all such lawful
actions as may be necessary to ensure that all such shares of Common Stock may
be so issued without violation of any applicable law or governmental regulation
or any requirements of any domestic stock exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance).  The Company covenants that all shares of
Common Stock will, at all times that Warrants are exercisable, be duly approved
for listing subject to official notice of issuance on each securities exchange,
if any, on which the Common Stock is then listed.  The Company covenants that the stock
certificates issued to evidence any shares of Common Stock issued upon exercise
of Warrants will comply with the General
Corporation Law of the State of Delaware and any other
applicable law.

 

27

 

The Company hereby
authorizes and directs its current and future transfer agents for the Common
Stock at all times to reserve stock certificates for such number of authorized
shares as shall be requisite for such purpose. 
The Warrant Agent is hereby authorized to requisition from time to time
from any such transfer agents stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement,
and the Company hereby authorizes and directs such transfer agents to comply
with all such requests of the Warrant Agent. 
The Company will supply such transfer agents with duly executed stock
certificates for such purposes.

 

7.                                       Warrant Transfer Books.

 

The Warrant Agent will
maintain an office (the “Corporate Agency Office”)
in the United States of America, where Warrant Certificates may be surrendered
for registration of transfer or exchange and where Warrant Certificates may be
surrendered for exercise of Warrants evidenced thereby, which office is located
at 59 Maiden Lane, Plaza Level, New York, New York 10038 on the Original Issue
Date.  The Warrant Agent will give prompt
written notice to all Holders of Warrant Certificates of any change in the
location of such office.

 

The Warrant Certificates
evidencing the Warrants shall be issued in registered form only.  The Company shall cause to be kept at the
office of the Warrant Agent designated for such purpose a warrant register (the
“Warrant Register”) in which, subject
to such reasonable regulations as the Warrant Agent may prescribe and such
regulations as may be prescribed by law or the rules of the exchange on
which the Warrants or Common Stock are listed, the Company shall provide for
the registration of Warrant Certificates and of transfers or exchanges of Warrant
Certificates as herein provided.

 

Upon surrender for
registration of transfer of any Warrant Certificate at the Corporate Agency
Office, the Company shall execute, and the Warrant Agent shall countersign and
deliver, in the name of the designated transferee or transferees, one or more
new Warrant Certificates evidencing a like aggregate number of Warrants.

 

At the option of the Holder,
Warrant Certificates may be exchanged at the office of the Warrant Agent upon
payment of the charges hereinafter provided for other Warrant Certificates
evidencing a like aggregate number of Warrants. 
Whenever any Warrant Certificates are so surrendered for exchange, the
Company shall execute, and the Warrant Agent shall countersign and deliver, the
Warrant Certificates of the same tenor and evidencing the same number of
Warrants as evidenced by the Warrant Certificates surrendered by the Holder
making the exchange.

 

All Warrant Certificates
issued upon any registration of transfer or exchange of Warrant Certificates shall
be the valid obligations of the Company, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.

 

Every Warrant Certificate
surrendered for registration of transfer or exchange shall (if so required by
the Company or the Warrant Agent) be duly endorsed, or be accompanied by a 

 

28

 

written
instrument of transfer in form satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or his attorney duly authorized in
writing.

 

No service charge shall be
made for any registration of transfer or exchange of Warrant Certificates; provided,
however, the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates.

 

The Warrant Agent shall,
upon request of the Company from time to time, deliver to the Company such
reports of registered ownership of the Warrants and such records of
transactions with respect to the Warrants and the shares of Common Stock as the
Company may request.  The Warrant Agent
shall also make available to the Company for inspection by the Company’s agents
or employees, from time to time as the Company may request, such original books
of accounts and records maintained by the Warrant Agent in connection with the
issuance and exercise of Warrants hereunder, such inspections to occur at the
Corporate Agency Office during normal business hours.

 

The Warrant Agent shall keep
copies of this Agreement and any notices given to Holders hereunder available
for inspection by the Holders during normal business hours at the Corporate
Agency Office.  The Company shall supply
the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.

 

8.                                       Warrant Holders.

 

8.1.                              No Voting or
Dividend Rights.  Subject to
the provisions of Sections 4.1 and 10.2 hereof and except as may be specifically
provided for herein, until the exercise of any Warrant:

 

(i)                                          no Holder of a Warrant Certificate
evidencing any Warrant shall have or exercise any rights by virtue hereof as a
holder of Common Stock of the Company, including, without limitation, the right
to vote, to receive dividends and other distributions as a holder of Common
Stock or to receive notice of, or attend, meetings of, stockholders or any
other proceedings of the Company;

 

(ii)                                       the consent of any such Holder shall not
be required with respect to any action or proceeding of the Company;

 

(iii)                                    except with respect to any Received
Dividend, no such Holder, by reason of the ownership or possession of a Warrant
or the Warrant Certificate representing the same, shall have any right to
receive any cash dividends, stock dividends, allotments or rights or other
distributions paid, allotted or distributed or distributable to the
stockholders of the Company prior to, or for which the relevant record date
preceded, the date of the exercise of such Warrant; and

 

(iv)                                   no such Holder shall have any right not
expressly conferred hereunder or under, or by applicable law with respect to,
the Warrant Certificate held by such Holder.

 

8.2.                              Rights of
Action.  All rights of action against
the Company in respect of this Agreement, except rights of action vested in the
Warrant Agent, are vested in the Holders of the 

 

29

 

Warrant
Certificates, and any Holder of any Warrant Certificate, without the consent of
the Warrant Agent or the Holder of any other Warrant Certificate, may, in such
Holder’s own behalf and for such Holder’s own benefit, enforce and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder’s right to
exercise such Holder’s Warrants in the manner provided in this Agreement.

 

8.3.                              Treatment of
Holders of Warrant Certificates.  Every Holder of a Warrant Certificate, by
accepting the same, consents and agrees with the Company, with the Warrant
Agent and with every subsequent holder of such Warrant Certificate that, prior
to due presentment of such Warrant Certificate for registration of transfer,
the Company and the Warrant Agent may treat the Person in whose name the
Warrant Certificate is registered as the owner thereof for all purposes and as
the Person entitled to exercise the rights granted under the Warrants, and
neither the Company, the Warrant Agent nor any agent thereof shall be affected
by any notice to the contrary.

 

9.                                       Concerning the Warrant Agent.

 

9.1.                              Nature of
Duties and Responsibilities Assumed.  The Company hereby appoints the Warrant Agent
to act as agent of the Company as set forth in this Agreement.  The Warrant Agent hereby accepts the
appointment as agent of the Company and agrees to perform that agency upon the
terms and conditions set forth in this Agreement and in the Warrant
Certificates or as the Company and the Warrant Agent may hereafter agree, by all
of which the Company and the Holders of Warrant Certificates, by their
acceptance thereof, shall be bound; provided, however, that the
terms and conditions contained in the Warrant Certificates are subject to and
governed by this Agreement or any other terms and conditions hereafter agreed
to by the Company and the Warrant Agent.

 

The Warrant Agent shall not,
by countersigning Warrant Certificates or by any other act hereunder, be deemed
to make any representations as to validity or authorization of (i) the
Warrants or the Warrant Certificates (except as to its countersignature
thereon), (ii) any securities or other property delivered upon exercise of
any Warrant, (iii) the accuracy of the computation of the number or kind
or amount of stock or other securities or other property deliverable upon
exercise of any Warrant, (iv) the independence of any Independent
Financial Expert or (v) the correctness of any of the representations of
the Company made in such certificates that the Warrant Agent receives.  The Warrant Agent shall not at any time have
any duty to calculate or determine whether any facts exist that may require any
adjustments pursuant to Section 4
hereof with respect to the kind and amount of shares or other securities or any
property issuable to Holders upon the exercise of Warrants required from time
to time.  The Warrant Agent shall have no
duty or responsibility to determine the accuracy or correctness of such
calculation or with respect to the methods employed in making the same.  The Warrant Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any shares of
Common Stock or of any securities or property which may at any time be issued
or delivered upon the exercise of any Warrant or upon any adjustment pursuant
to Section 4 hereof, and it makes no
representation with respect thereto.  The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any 

 

30

 

Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to Section 4 hereof or to comply with any of
the covenants of the Company contained in Section 4
hereof.

 

The Warrant Agent shall not (i) be
liable for any recital or statement of fact contained herein or in the Warrant
Certificates or for any action taken, suffered or omitted by it in good faith
on the belief that any Warrant Certificate or any other documents or any
signatures are genuine or properly authorized, (ii) be responsible for any
failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in the Warrant Certificates or (iii) be
liable for any act or omission in connection with this Agreement except for its
own gross negligence, bad faith or willful misconduct.

 

The Warrant Agent is hereby
authorized to accept and protected in accepting instructions with respect to
the performance of its duties hereunder by Company Order and to apply to any
such officer named in such Company Order for instructions (which instructions
will be promptly given in writing when requested), and the Warrant Agent shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with the instructions in any Company Order.

 

The Warrant Agent may
execute and exercise any of the rights and powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys, agents
or employees, provided, however, reasonable care has been
exercised in the selection and in the continued employment of any such
attorney, agent or employee.  The Warrant
Agent shall not be under any obligation or duty to institute, appear in or
defend any action, suit or legal proceeding in respect hereof, unless first
indemnified to its satisfaction, but this provision shall not affect the power
of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without such indemnity. 
The Warrant Agent shall promptly notify the Company in writing of any
claim made or action, suit or proceeding instituted against it arising out of
or in connection with this Agreement.

 

The Company shall perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further acts, instruments and assurances as
may reasonably be required by the Warrant Agent in order to enable it to carry
out or perform its duties under this Agreement.

 

The Warrant Agent shall act
solely as agent of the Company hereunder and does not assume any obligation or
relationship of agency or trust for or with any of the Holders or any
beneficial owners of Warrants.  The
Warrant Agent shall not be liable except for the failure to perform such duties
as are specifically set forth herein or specifically set forth in the Warrant
Certificates, and no implied covenants or obligations shall be read into this
Agreement against the Warrant Agent whose duties and obligations shall be
determined solely by the express provisions hereof or the express provisions of
the Warrant Certificates.

 

31

 

9.2.                              Right to
Consult Counsel.  The Warrant
Agent may at any time consult with legal counsel satisfactory to it (who may be
legal counsel for the Company), and the Warrant Agent shall incur no liability
or responsibility to the Company or to any Holder for any action taken,
suffered or omitted by it in good faith in accordance with the opinion or
advice of such counsel.

 

9.3.                              Compensation,
Reimbursement and Indemnification.  The Company agrees to pay the Warrant Agent
from time to time compensation for all fees and expenses relating to its services
hereunder as the Company and the Warrant Agent may agree from time to time and
to reimburse the Warrant Agent for reasonable expenses and disbursements,
including reasonable counsel fees incurred in connection with the execution and
administration of this Agreement.  The
Company further agrees to indemnify the Warrant Agent for and save it harmless
against any losses, liabilities or reasonable expenses arising out of or in
connection with the acceptance and administration of this Agreement, including
the reasonable costs, legal fees and expenses of investigating or defending any
claim of such liability, except that the Company shall have no liability
hereunder to the extent that any such loss, liability or expense results from
the Warrant Agent’s own gross negligence, bad faith or willful misconduct.

 

9.4.                              Warrant Agent May Hold
Company Securities.  The Warrant
Agent, any Countersigning Agent and any stockholder, director, officer or
employee of the Warrant Agent or any Countersigning Agent may buy, sell or deal
in any of the warrants or other securities of the Company or its Affiliates,
become pecuniarily interested in transactions in which the Company or its
Affiliates may be interested, contract with or lend money to the Company or its
Affiliates or otherwise act as fully and freely as though it were not the
Warrant Agent or the Countersigning Agent, respectively, under this
Agreement.  Nothing herein shall preclude
the Warrant Agent or any Countersigning Agent from acting in any other capacity
for the Company or for any other legal entity.

 

9.5.                              Resignation and
Removal; Appointment of Successor.

 

(a)                                  The Warrant Agent may resign its duties
and be discharged from all further duties and liability hereunder (except
liability arising as a result of the Warrant Agent’s own gross negligence, bad
faith or willful misconduct) after giving 30 days’ prior written notice to the
Company.  The Company may remove the
Warrant Agent upon 30 days’ written notice, and the Warrant Agent shall
thereupon in like manner be discharged from all further duties and liabilities
hereunder, except as aforesaid.  The
Warrant Agent shall, at the expense of the Company, cause notice to be given in
accordance with Section 10.1(b) to
each Holder of a Warrant Certificate of said notice of resignation or notice of
removal, as the case may be.  Upon such
resignation or removal, the Company shall appoint in writing a new Warrant
Agent.  If the Company shall fail to make
such appointment within a period of 30 calendar days after it has been notified
in writing of such resignation by the resigning Warrant Agent or after such
removal, then the Holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent.  Any new Warrant Agent, whether appointed by
the Company or by such a court, shall be a Corporation doing business under the
laws of the United States or any state thereof in good standing, authorized
under such laws to act as Warrant Agent, and having a combined capital and
surplus of not less than $25,000,000.  The combined capital and surplus of any such
new Warrant Agent shall be deemed to be the combined capital and surplus as set
forth in the most recent annual report of its condition 

 

32

 

published
by such Warrant Agent prior to its appointment, provided, however,
such reports are published at least annually pursuant to law or to the
requirements of a Federal or state supervising or examining authority.  After acceptance in writing of such
appointment by the new Warrant Agent, it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein
as the Warrant Agent, without any further assurance, conveyance, act or deed;
but if for any reason it shall be reasonably necessary or expedient to execute
and deliver any further assurance, conveyance, act or deed, the same shall be
done at the reasonable expense of the Company and shall be legally and validly
executed and delivered by the resigning or removed Warrant Agent.  Not later than the effective date of any such
appointment, the Company shall file notice thereof with the resigning or
removed Warrant Agent.  Failure to give
any notice provided for in this Section 9.5(a),
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Warrant Agent or the appointment of a new
Warrant Agent as the case may be.

 

(b)                                 Any Corporation into which the Warrant
Agent or any new Warrant Agent may be merged, or any Corporation resulting from
any consolidation to which the Warrant Agent or any new Warrant Agent shall be
a party, shall be a successor Warrant Agent under this Agreement without any
further act, provided that such Corporation would be eligible for appointment
as successor to the Warrant Agent under the provisions of Section 9.5(a).  Any such successor Warrant Agent shall
promptly cause notice of its succession as Warrant Agent to be given in
accordance with Section 10.1(b) to
each Holder of a Warrant Certificate at such Holder’s last address as shown on
the Warrant Register.

 

10.                                 Notices.

 

10.1.                        Notices
Generally.

 

(a)                                  Any request, notice, direction,
authorization, consent, waiver, demand or other communication permitted or
authorized by this Agreement to be made upon, given or furnished to or filed
with the Company or the Warrant Agent by the other party hereto or by any
Holder shall be sufficient for every purpose hereunder if in writing (including
telecopy communication) and shall be deemed to have been duly given or made, (i) when
delivered, if delivered by hand, (ii) on the first Business Day after
being delivered to a recognized courier (whose stated terms of delivery are one
Business Day to the destination of such notice), (iii) three days after
being deposited in the mail, first class and postage prepaid, or (iv) upon
confirmation of receipt in the case of telecopy communication as follows:

 

If to the Company, to it at:

 

Aventine Renewable Energy Holdings, Inc.

120 North Parkway Drive

Pekin, IL  61555-1800

Attention: Corporation Counsel

Telecopy no.: 309-347-8541

 

or

 

33

 

If to the Warrant Agent, to it at:

 

American Stock Transfer & Trust Company, LLC

59 Maiden Lane, Plaza Level

New York, New York 10038

Attention: Compliance Department

Telecopy no.: 718-921-8310

 

or, in either case, such
other address as shall have been set forth in a notice delivered in accordance
with this Section 10.1(a).

 

(b)                                 Where this Agreement provides for notice
to Holders of any event, such notice shall be deemed given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at the address of such Holder
as it appears in the Warrant Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Where
this Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.

 

In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made by a method approved by the
Warrant Agent as one which would be most reliable under the circumstances for
successfully delivering the notice to the addressees shall constitute a
sufficient notification for every purpose hereunder.

 

10.2.                        Required Notices
to Holders.  In the
event the Company shall propose:

 

(i)                                          to make or issue any dividend or other
distribution to holders of Common Stock of any stock, other securities, cash,
assets or property or of any rights to subscribe for or purchase any shares of
stock of any class or any other securities, rights or options; or

 

(ii)                                       to effect any Transaction; or

 

(iii)                                    to effect the voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or

 

(iv)                                   to effect any reclassification of its Common
Stock; or

 

(v)                                      to commence a Company Offer for all or a
portion of the outstanding shares of Common Stock (or shall amend any such
Company Offer),

 

then, and in each such case,
the Company shall cause to be filed with the Warrant Agent and shall give to
each Holder of a Warrant Certificate, in accordance with Section 10.1(b),
a notice of such proposed action.  Such
notice shall specify: (x) the date on which a record is to be taken for 

 

34

 

the purposes of such
dividend or distribution; (y) the date on which such reclassification,
Transaction, liquidation, dissolution or winding up is expected to become
effective, the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
Transaction, liquidation, dissolution or winding up (in the case of a
Transaction) and whether the Transaction is a Cash Transaction; or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto).  Such notice shall be given, in the case of
any action covered by clause (i) above, at least 10 days prior to the
record date for determining holders of the Common Stock for purposes of such
action or, in the case of any action covered by clauses (ii) through (v) above,
at least 20 days prior to the applicable effective or expiration date specified
above or, in any such case, prior to such earlier time as notice thereof shall
be required to be given pursuant to Rule l0b-17 under the Exchange Act.

 

The Company may, in its sole discretion, cause to be filed with the
Warrant Agent and give to each Holder of a Warrant Certificate, in accordance
with Section 10.1(b), a notice
of the possible further occurrence of any proposed Change of Control that has
been publicly announced.  Such notice
shall specify the date on which such Change of Control is expected to be
consummated and (assuming such Change of Control is consummated) the Expiration
Time (after giving effect to such notice) and a statement to the effect that
all Warrants will terminate and become void at the Expiration Time.

 

If at any time the Company shall cancel any of the proposed
transactions for which notice has been given under the first two paragraphs of
this Section 10.2 prior to the
consummation thereof, the Company shall give each Holder prompt notice of such
cancellation in accordance with Section 10.1(b) hereof.

 

The Company shall cause to be filed with the Warrant Agent and shall
give to each Holder of a Warrant Certificate, in accordance with Section 10.1(b), a notice of the consummation of any
Change of Control no later than the fifth Business Day after the consummation
thereof.  Such notice shall specify the
time at which such Change of Control was consummated and the Expiration Time
arising as a result thereof and a statement to the effect that all Warrants
will terminate and become void at the Expiration Time.

 

11.                                 Inspection.

 

The Warrant Agent shall
cause a copy of this Agreement to be available at all reasonable times at the
office of the Warrant Agent for inspection by the Holder of any Warrant
Certificate.  The Warrant Agent may
require such Holder to submit his Warrant Certificate for inspection by it.

 

12.                                 Amendments.

 

The Company and the Warrant
Agent may, without the consent or concurrence of the Holders of the Warrant
Certificates, by supplemental agreement or otherwise, amend this Agreement for
the purpose of making any changes or corrections in this Agreement that (i) are

 

35

 

required
to cure any ambiguity or to correct or supplement any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained or
(ii) add to the covenants and agreements of the Company in this Agreement
further covenants and agreements of the Company thereafter to be observed, or
surrender any rights or powers reserved to or conferred upon the Company in
this Agreement; provided, however, that in either case such
amendment shall not adversely affect the rights or interests of the Holders of
the Warrant Certificates hereunder in any material respect.  This Agreement may otherwise be amended by
the Company and the Warrant Agent only with the consent of the Holders of
Warrant Certificates evidencing a majority of the then outstanding Warrants,
except that no amendment or waiver that affects Sections 2.4 or 3.2(a) or this Section 12
shall be effective without the approval of a majority of the Original
Restricted Holders.

 

The Warrant Agent shall join
with the Company in the execution and delivery of any such amendment unless
such amendment affects the Warrant Agent’s own rights, duties or immunities
hereunder, in which case the Warrant Agent may, but shall not be required to,
join in such execution and delivery. 
Upon execution and delivery of any amendment pursuant to this Section 12, such amendment shall be
considered a part of this Agreement for all purposes and every Holder of a
Warrant Certificate theretofore or thereafter countersigned and delivered
hereunder shall be bound thereby.

 

Promptly after the execution
by the Company and the Warrant Agent of any such amendment, the Company shall
give notice to the Holders of Warrant Certificates, setting forth in general
terms the substance of such amendment, in accordance with the provisions of Section 10.1(b).  Any failure of the Company to mail such
notice or any defect therein, shall not, however, in any way impair or affect
the validity of any such amendment.

 

13.                                 Waivers.

 

The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if (i) the Company has obtained the written consent
of Holders of Warrant Certificates evidencing a majority of the then
outstanding Warrants, and (ii) any consent required pursuant to Section 12 has been obtained.

 

14.                                 Successor to Company.

 

So long as Warrants remain
outstanding, the Company will not enter into any Non-Surviving Transaction (as
defined in Section 4.1(j)) unless the
acquirer shall expressly assume by a supplemental agreement, executed and
delivered to the Warrant Agent, in form reasonably satisfactory to the Warrant
Agent, the due and punctual performance of every covenant of this Agreement on
the part of the Company to be performed and observed and shall have provided
for exercise rights in accordance with Section 4.1(j).  Upon the consummation of such Non-Surviving
Transaction, the acquirer shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such acquirer had been named as the Company herein.

 

36

 

15.                                 Headings.

 

The section headings
contained in this Agreement are inserted for convenience only and will not
affect in any way the meaning or interpretation of this Agreement.

 

16.                                 Counterparts.

 

This Agreement may be
executed in two or more counterparts, each of which will be deemed to be an
original, but all of which together constitute one and the same instrument.

 

17.                                 Severability.

 

The provisions of this
Agreement will be deemed severable and the invalidity or unenforceability of
any provision hereof will not affect the validity or enforceability of the
other provisions hereof; provided that if any provision of this Agreement, as
applied to any party or to any circumstance, is adjudged by a court or
governmental body not to be enforceable in accordance with its terms, the
parties agree that the court or governmental body making such determination
will have the power to modify the provision in a manner consistent with its
objectives such that it is enforceable, and/or to delete specific words or
phrases, and in its reduced form, such provision will then be enforceable and
will be enforced.

 

18.                                 Persons Benefiting.

 

This Agreement shall be
binding upon and inure to the benefit of the Company and the Warrant Agent, and
their respective successors and assigns and the Holders from time to time of
the Warrant Certificates.  Nothing in
this Agreement, express or implied, is intended to confer upon any person other
than the Company, the Warrant Agent and the Holders of the Warrant
Certificates, any rights or remedies under or by reason of this Agreement or
any part hereof.  Each Holder, by
acceptance of a Warrant Certificate, agrees to all of the terms and provisions
of this Agreement applicable thereto.

 

19.                                 Applicable Law.

 

THIS AGREEMENT, EACH WARRANT
CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO, INCLUDING THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEABILITY THEREOF, SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE CORPORATION LAW OF THE STATE OF INCORPORATION OF
THE COMPANY SPECIFICALLY AND MANDATORILY APPLIES.

 

20.                                 Entire Agreement.

 

This Agreement sets forth
the entire agreement of the parties hereto as to the subject matter hereof and
supersedes all previous agreements among all or some of the parties hereto with
respect thereto, whether written, oral or otherwise.

 

37

 

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

 

 

	
   

  	
  AVENTINE
  RENEWABLE ENERGY HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William J. Brennan

  
	
   

  	
   

  	
  Name:

  	
  William
  J. Brennan

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN
  STOCK TRANSFER & TRUST COMPANY, LLC, as Warrant Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  H.J. Lemmer

  
	
   

  	
   

  	
  Name:

  	
  H.J.
  Lemmer

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Warrant
Agreement

 

 

EXHIBIT A

 

Face
of Warrant Certificate

 

[Insert if required pursuant to Section 2.4(a) of the
Warrant Agreement — THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
SUCH SECURITIES ARE REGISTERED UNDER SUCH ACT, AND SUCH STATE LAW, OR THE
COMPANY RECEIVES A WRITTEN OPINION OF LEGAL COUNSEL (WHO SHALL BE, AND WHOSE
LEGAL OPINION SHALL BE, REASONABLY SATISFACTORY TO THE COMPANY) ADDRESSED TO
THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.  THE TRANSFERABILITY OF THIS SECURITY IS ALSO
SUBJECT TO RESTRICTIONS CONTAINED IN THE WARRANT AGREEMENT, DATED                 
    , 2010, BETWEEN THE COMPANY AND A WARRANT AGENT, WHICH
WARRANT AGREEMENT THE COMPANY WILL FURNISH TO THE HOLDER HEREOF UPON REQUEST.]

 

[Insert if required pursuant to Section 2.4(e) of the
Warrant Agreement — NOTWITHSTANDING ANY OTHER PROVISION OF THE
WARRANTS EVIDENCED HEREBY OR THE RELATED WARRANT AGREEMENT, THE WARRANTS
EVIDENCED BY THIS WARRANT CERTIFICATE MAY BE EXERCISED ONLY IF (1) THE
REGISTERED HOLDER IS AN ORIGINAL RESTRICTED HOLDER, (2) A REGISTRATION
STATEMENT IS IN EFFECT AS TO SUCH EXERCISE OR (3) THE COMPANY RECEIVES A
WRITTEN OPINION OF LEGAL COUNSEL (WHO SHALL BE, AND WHOSE LEGAL OPINION SHALL
BE, REASONABLY SATISFACTORY TO THE COMPANY) ADDRESSED TO THE COMPANY TO THE
EFFECT THAT THE PROPOSED EXERCISE OF THE WARRANTS MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT.]

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

 

WARRANT CERTIFICATE

 

EVIDENCING

 

WARRANTS TO PURCHASE COMMON STOCK

 

	
  No.

  	
  ,
      ,       Warrants

  

 

 

THIS CERTIFIES THAT, for
value received,                                               ,
or registered assigns, is the registered owner of       ,      ,      
Warrants to Purchase Common Stock of Aventine Renewable Energy Holdings, Inc.,
a Delaware corporation
(the “Company”, which term includes
any successor thereto under the Warrant Agreement (as defined on the reverse of
this Warrant Certificate), and is entitled, subject to and upon compliance with
the provisions hereof and of the Warrant Agreement, at such Holder’s option, at
any time when the Warrants evidenced hereby

 

A-1

 

are
exercisable, to purchase from the Company one share of Common Stock of the
Company for each Warrant evidenced hereby, at the purchase price of $40.94 per
share (as adjusted from time to time in accordance with the Warrant Agreement,
the “Exercise Price”), payable in full at
the time of purchase, the number of shares of Common Stock into which and the
Exercise Price at which each Warrant shall be exercisable each being subject to
adjustment as provided in Section 4 of
the Warrant Agreement, subject to the right of the Holder from and after a Cash
Transaction Effective Time (as defined in the Warrant Agreement) to elect to
receive a cash amount upon a Cashless Exercise (as so defined) in lieu of
payment of the Exercise Price and receipt of such shares of Common Stock, with
such cash amount calculated in accordance with the formula set forth in the
Warrant Agreement.

 

All shares of Common Stock
issuable by the Company upon the exercise of Warrants shall, upon such
issuance, be duly and validly issued and fully paid and nonassessable.  The Company shall pay any and all taxes
(other than income taxes) that may be payable in respect of the payment of any
cash amount or the issue or delivery of shares of Common Stock on exercise of
Warrants.  The Company shall not be
required, however, to pay any tax or other charge imposed in respect of any
transfer involved in the issue and delivery of any certificates for shares of
Common Stock or payment of cash to any Person (as defined in the Warrant
Agreement) other than the Holder of the Warrant Certificate surrendered upon
the exercise of a Warrant, and in case of such transfer or payment, the Warrant
Agent and the Company shall not be required to issue or deliver any certificate
or pay any cash until (a) such tax or charge has been paid or an amount
sufficient for the payment thereof has been delivered to the Warrant Agent or
to the Company or (b) it has been established to the Company’s
satisfaction that any such tax or other charge that is or may become due has
been paid.

 

Each Warrant evidenced
hereby may be exercised by the Holder hereof at the Exercise Price then in
effect at any time during the period commencing on the Original Issue Date (as
defined in the Warrant Agreement) and ending at the Expiration Time (as defined
on the reverse side of this Warrant Certificate), subject to any restrictions
on exercise set forth on the face of this Warrant Certificate or in the Warrant
Agreement.

 

Subject to the provisions
hereof and of the Warrant Agreement, the Holder of this Warrant Certificate may
exercise all or any whole number of the Warrants evidenced hereby by
surrendering this Warrant Certificate to the Warrant Agent at its office
maintained for such purpose (the “Corporate Agency Office”)
with the form of exercise on the reverse hereof duly executed, together with
(unless a Cashless Exercise permitted by the Warrant Agreement) payment in full
of the Exercise Price as then in effect for each share of Common Stock
receivable upon exercise of each Warrant being submitted for exercise and (in
the case of a Cashless Exercise permitted by the Warrant Agreement) designation
of such Cashless Exercise on such form of exercise.  Any such payment of the Exercise Price
(unless a Cashless Exercise permitted by the Warrant Agreement) is to be, at
the option of the Holder, in any combination of (i) certified bank check
or official bank check in New York
Clearing House funds payable to the order of the Company and
delivered to the Warrant Agent at the Corporate Agency Office or (ii) wire
transfer in immediately available funds to such other account of the Company at
such banking institution as the Company shall have designated from time to time
for such purpose.

 

A-2

 

Reference is hereby made to
the further provisions of (i) this Warrant Certificate set forth on the
reverse hereof and (ii) the Warrant Agreement, each of which further
provisions shall for all purposes have the same effect as if set forth at this
place.

 

Unless this Warrant
Certificate has been countersigned by the Warrant Agent by manual signature of
an authorized officer on behalf of the Warrant Agent, this Warrant Certificate
shall not be valid for any purpose and no Warrant evidenced hereby shall be
exercisable.

 

IN WITNESS WHEREOF, the
Company has caused this certificate to be duly executed.

 

Dated:                  
    , 20

 

	
   

  	
   

  	
  AVENTINE
  RENEWABLE ENERGY HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AMERICAN
  STOCK TRANSFER & TRUST COMPANY, LLC, as Warrant Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Authorized Agent

  	
   

  	
   

  
					

 

A-3

 

Reverse
of Warrant Certificate

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

 

WARRANT CERTIFICATE

 

EVIDENCING

 

WARRANTS TO PURCHASE COMMON STOCK

 

The Warrants evidenced
hereby are one of a duly authorized issue of Warrants of the Company designated
as its Warrants to Purchase Common Stock (“Warrants”),
limited in aggregate number to 450,000, issued under and in accordance with the
Warrant Agreement, dated as of [                
    ], 2010 (the “Warrant Agreement”), between the
Company and American Stock Transfer & Trust Company, LLC, as warrant
agent (the “Warrant Agent”, which term
includes any successor thereto permitted under the Warrant Agreement), to which
Warrant Agreement and all amendments thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Warrant Agent, the Holders of Warrant
Certificates and the owners of the Warrants evidenced thereby and of the terms
upon which the Warrant Certificates are, and are to be, countersigned and
delivered.  A copy of the Warrant Agreement
shall be available at all reasonable times at the office of the Warrant Agent
for inspection by the Holder hereof.

 

The Warrant Agreement
provides that, in addition to certain adjustments to the number of shares of
Common Stock into which a Warrant is exercisable and the Exercise Price
required to be made in certain circumstances, in the case of any Transaction
(as defined in the Warrant Agreement), the Company shall (or, in the case of
any Non-Surviving Transaction (as defined in the Warrant Agreement), the
Company shall cause the other Person involved in such Transaction to) execute
and deliver to the Warrant Agent a written instrument providing that (i) the
Warrants evidenced hereby, if then outstanding, will be exercisable thereafter,
during the period the Warrants evidenced hereby shall be exercisable as
specified herein, only into the Substituted Property (as defined in the Warrant
Agreement) that would have been receivable upon such Transaction by a holder of
the number of shares of Common Stock that would have been issued upon exercise
of such Warrant if such Warrant had been exercised in full immediately prior to
such Transaction (upon certain assumptions specified in the Warrant Agreement),
assuming that the Warrants evidenced hereby were exercisable at the time of
such Transaction at the Exercise Price as then in effect; and (ii) the
rights and obligations of the Company (or, in the case of any Non-Surviving
Transaction, the other Person involved in such Transaction) and the holders in
respect of Substituted Property shall be as nearly equivalent as may be
practicable to the rights and obligations of the Company and Holders in respect
of Common Stock.

 

Except as provided in the
Warrant Agreement, all outstanding Warrants shall expire and all rights of the
Holders of Warrant Certificates evidencing such Warrants shall terminate and
cease to exist, at the Expiration Time.  “Expiration Time” shall mean the
earlier of 5:00 p.m., New York time on [                ], 20[    ],  and (b) if
a Change of Control occurs, the Change of Control Expiration Time therefor or,
in either event, such earlier date as the Company shall have designated
pursuant to the Warrant Agreement upon satisfaction of certain conditions set
forth in

 

A-4

 

the
Warrant Agreement.  “Change
of Control Expiration Time” means, with respect to any Change of
Control, the later of (A) 5:00 p.m., New York time on the date 20
days after the later of (x) the date on which notice of the consummation
of such Change of Control has been duly given by the Company under and in
accordance with the fourth paragraph of Section 10.2
and (y) the date (if any) on which notice of the possible future
occurrence thereof was duly given by the Company under and in accordance with
the second paragraph of Section 10.2
and (B) immediately after the time of consummation of such Change of
Control.

 

In the event of the exercise
of less than all of the Warrants evidenced hereby, a new Warrant Certificate of
the same tenor and for the number of Warrants which are not exercised shall be
issued by the Company in the name or upon the written order of the Holder of
this Warrant Certificate upon the cancellation hereof.

 

The Warrant Certificates are
issuable only in registered form in denominations of whole numbers of
Warrants.  Upon surrender at the office
of the Warrant Agent and payment of the charges specified herein and in the
Warrant Agreement, this Warrant Certificate may be exchanged for Warrant
Certificates in other authorized denominations or the transfer hereof may be
registered in whole or in part in authorized denominations to one or more
designated transferees; provided, however, that such other
Warrant Certificates issued upon exchange or registration of transfer shall
evidence the same aggregate number of Warrants as this Warrant
Certificate.  The Company shall cause to
be kept at the office of the Warrant Agent the Warrant Register in which,
subject to such reasonable regulations as the Warrant Agent may prescribe and
such regulations as may be prescribed by law, the Company shall provide for the
registration of Warrant Certificates and of transfers or exchanges of Warrant
Certificates.  No service charge shall be
made for any registration of transfer or exchange of Warrant Certificates; provided,
however, the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates.

 

Prior to due presentment of
this Warrant Certificate for registration of transfer, the Company, the Warrant
Agent and any agent of the Company or the Warrant Agent may treat the Person in
whose name this Warrant Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Warrant Agent nor any such agent shall
be affected by notice to the contrary.

 

The Warrant Agreement
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of Warrant Certificates under the Warrant Agreement at any time by
the Company and the Warrant Agent with the consent of the Holders of Warrant
Certificates evidencing a majority of the then outstanding Warrants.

 

Until the exercise of any
Warrant, subject to the provisions of the Warrant Agreement and except as may
be specifically provided for in the Warrant Agreement, (i) no Holder of a
Warrant Certificate evidencing any Warrant shall have or exercise any rights by
virtue hereof as a holder of Common Stock of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions or
to receive notice of, or attend meetings of, stockholders or any other proceedings
of the Company; (ii) the consent of any such Holder shall not be required

 

A-5

 

with
respect to any action or proceeding of the Company; (iii) except with
respect to any Received Dividend, no such Holder, by reason of the ownership or
possession of a Warrant or the Warrant Certificate representing the same, shall
have any right to receive any cash dividends, stock dividends, allotments or
rights or other distributions (except as specifically provided in the Warrant
Agreement), paid, allotted or distributed or distributable to the stockholders
of the Company prior to or for which the relevant record date preceded the date
of the exercise of such Warrant; and (iv) no such Holder shall have any
right not expressly conferred by the Warrant Agreement or under, or by
applicable law with respect to, the Warrant Certificate held by such Holder.

 

This Warrant Certificate,
each Warrant evidenced thereby and the Warrant Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the corporation law of the state of incorporation of the
Company specifically and mandatorily applies.

 

All terms used in this
Warrant Certificate which are defined in the Warrant Agreement shall have the
meanings assigned to them in the Warrant Agreement.

 

Form of Exercise

 

In accordance with and
subject to the terms and conditions hereof and of the Warrant Agreement, the
undersigned registered Holder of this Warrant Certificate hereby irrevocably
elects to exercise                               
Warrants evidenced by this Warrant Certificate and represents that such Holder
has tendered (unless a Cash Transaction Effective Time has occurred and the
fifth box below has been checked by the Holder) the Exercise Price for each of
the Warrants evidenced hereby being exercised in the aggregate amount of $                  ,
in the indicated combination of:

 

o                                    CERTIFIED BANK CHECK PAYABLE TO THE ORDER OF THE COMPANY ($                      );

 

o                                    OFFICIAL BANK
CHECK IN NEW YORK CLEARING HOUSE FUNDS PAYABLE TO THE ORDER OF THE COMPANY ($                      );

 

o                                    WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO THE ACCOUNT
DESIGNATED BY THE COMPANY FOR SUCH PURPOSE ($                      );
OR

 

o                                    IF (BUT ONLY IF) A CASH TRANSACTION EFFECTIVE TIME HAS
OCCURRED, CASHLESS EXERCISE IN ACCORDANCE WITH THE FORMULA SET FORTH IN SECTION 3.2(c) OF
THE WARRANT AGREEMENT.

 

If (but only if) the Company
has given written notice under and in accordance with Section 10.2 of the Warrant Agreement of the possible
future occurrence of a Change of Control, exercise of                 
of the Warrants is subject to and contingent upon and to be effective (subject
to the other conditions to exercise specified in the Warrant Agreement) at the
time of

 

A-6

 

consummation
of such Change of Control referred to in the Company’s notice dated                     ,
20     given pursuant to Section 10.2 of the Warrant Agreement.

 

The undersigned requests
that the shares of Common Stock issuable upon exercise be in fully registered
form in such denominations and registered in such names and delivered, together
with any other property receivable upon exercise, in such manner as is specified
in the instructions set forth below.

 

If the number of Warrants
exercised is less than all of the Warrants evidenced hereby, the undersigned
requests that a new Warrant Certificate representing the remaining Warrants
evidenced hereby be issued and delivered to the undersigned unless otherwise
specified in the instructions below.

 

A-7

 

	
  Dated:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  (Please Print)

  
	
  (Insert
  Social Security or Other Identifying Number of Holder)

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  (Signature
  must conform in all respects to name of Holder as specified on the face of
  this Warrant Certificate and must bear a signature medallion guarantee by a
  bank or broker, trust company or member firm of a national securities exchange.)

  
						

 

Signature Guaranteed:

 

Instructions (i) as to
denominations and names of Common Stock issuable upon exercise and as to
delivery of such securities and any other property issuable upon exercise and (ii) if
applicable, as to Warrant Certificates evidencing unexercised Warrants:

 

Assignment

 

(Form of
Assignment To Be Executed If Holder Desires To Transfer Warrant Certificate)

 

FOR VALUE RECEIVED                                                               
hereby sells, assigns and transfers unto

 

Please insert social security or

other identifying number

 

(Please print name and
address including zip code)

 

the Warrants represented by
the within Warrant Certificate and does hereby irrevocably constitute and
appoint                                     
Attorney, to transfer said Warrant Certificate on the books of the within-named
Company with full power of substitution in the premises.

 

	
  Dated:

  	
   

  	
  Signature

  
	
   

  	
   

  	
  (Signature
  must conform in all respects to name of Holder as specified on the face of
  this Warrant Certificate and must bear a signature medallion guarantee by a
  bank or broker, trust company or member firm of a national securities
  exchange.)

  
	
   

  	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  

 

A-8Exhibit
10.1

 

REVOLVING
CREDIT

 

AND

 

SECURITY
AGREEMENT

 

PNC BANK,
NATIONAL ASSOCIATION

(AS LENDER
AND AS AGENT)

 

WITH

 

AVENTINE
RENEWABLE ENERGY HOLDINGS, INC.

 

AND

 

AVENTINE
RENEWABLE ENERGY — AURORA WEST, LLC

AVENTINE RENEWABLE ENERGY, INC.

AVENTINE RENEWABLE ENERGY — MT VERNON, LLC

AVENTINE POWER, LLC

NEBRASKA ENERGY, LLC

 

(BORROWERS)

 

March 15,
2010

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1.

  	
  Accounting Terms

  	
  1

  
	
  1.2.

  	
  General Terms

  	
  1

  
	
  1.3.

  	
  Uniform Commercial Code Terms

  	
  25

  
	
  1.4.

  	
  Certain Matters of Construction

  	
  26

  
	
   

  	
   

  	
   

  
	
  II.

  	
  ADVANCES, PAYMENTS

  	
  27

  
	
   

  	
   

  	
   

  
	
  2.1.

  	
  Revolving Advances

  	
  27

  
	
  2.2.

  	
  Procedure for Revolving Advances
  Borrowing

  	
  28

  
	
  2.3.

  	
  Disbursement of Advance Proceeds

  	
  30

  
	
  2.4.

  	
  Intentionally Omitted

  	
  30

  
	
  2.5.

  	
  Maximum Advances

  	
  30

  
	
  2.6.

  	
  Repayment of Advances

  	
  30

  
	
  2.7.

  	
  Repayment of Excess Advances

  	
  31

  
	
  2.8.

  	
  Statement of Account

  	
  31

  
	
  2.9.

  	
  Letters of Credit

  	
  31

  
	
  2.10.

  	
  Issuance of Letters of Credit

  	
  31

  
	
  2.11.

  	
  Requirements For Issuance of
  Letters of Credit

  	
  32

  
	
  2.12.

  	
  Disbursements, Reimbursement

  	
  33

  
	
  2.13.

  	
  Repayment of Participation
  Advances

  	
  34

  
	
  2.14.

  	
  Documentation

  	
  34

  
	
  2.15.

  	
  Determination to Honor Drawing
  Request

  	
  34

  
	
  2.16.

  	
  Nature of Participation and
  Reimbursement Obligations

  	
  35

  
	
  2.17.

  	
  Indemnity

  	
  36

  
	
  2.18.

  	
  Liability for Acts and Omissions

  	
  36

  
	
  2.19.

  	
  Additional Payments

  	
  38

  
	
  2.20.

  	
  Manner of Borrowing and Payment

  	
  38

  
	
  2.21.

  	
  Mandatory Prepayments

  	
  39

  
	
  2.22.

  	
  Use of Proceeds

  	
  40

  
	
  2.23.

  	
  Defaulting Lender

  	
  40

  
	
   

  	
   

  	
   

  
	
  III.

  	
  INTEREST AND FEES

  	
  41

  
	
   

  	
   

  	
   

  
	
  3.1.

  	
  Interest

  	
  41

  
	
  3.2.

  	
  Letter of Credit Fees

  	
  41

  
	
  3.3.

  	
  Closing Fee and Facility Fee

  	
  42

  
	
  3.4.

  	
  Collateral Evaluation Fee and
  Collateral Monitoring Fee

  	
  43

  
	
  3.5.

  	
  Computation of Interest and Fees

  	
  43

  
	
  3.6.

  	
  Maximum Charges

  	
  43

  
	
  3.7.

  	
  Increased Costs

  	
  43

  
	
  3.8.

  	
  Basis For Determining Interest
  Rate Inadequate or Unfair

  	
  44

  

 

i

 

	
  3.9.

  	
  Capital Adequacy

  	
  45

  
	
  3.10.

  	
  Gross Up for Taxes

  	
  45

  
	
  3.11.

  	
  Withholding Tax Exemption

  	
  46

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  COLLATERAL:  GENERAL
  TERMS

  	
  47

  
	
   

  	
   

  	
   

  
	
  4.1.

  	
  Security Interest in the
  Collateral

  	
  47

  
	
  4.2.

  	
  Perfection of Security Interest

  	
  47

  
	
  4.3.

  	
  Disposition of Collateral

  	
  47

  
	
  4.4.

  	
  Preservation of Collateral

  	
  47

  
	
  4.5.

  	
  Ownership of Collateral

  	
  48

  
	
  4.6.

  	
  Defense of Agent’s and Lenders’
  Interests

  	
  48

  
	
  4.7.

  	
  Books and Records

  	
  49

  
	
  4.8.

  	
  Financial Disclosure

  	
  49

  
	
  4.9.

  	
  Compliance with Laws

  	
  49

  
	
  4.10.

  	
  Inspection of Premises

  	
  50

  
	
  4.11.

  	
  Insurance

  	
  50

  
	
  4.12.

  	
  Failure to Pay Insurance

  	
  51

  
	
  4.13.

  	
  Payment of Taxes

  	
  51

  
	
  4.14.

  	
  Payment of Leasehold Obligations

  	
  51

  
	
  4.15.

  	
  Receivables

  	
  51

  
	
  4.16.

  	
  Inventory

  	
  54

  
	
  4.17.

  	
  [Intentionally omitted.]

  	
  54

  
	
  4.18.

  	
  Exculpation of Liability

  	
  54

  
	
  4.19.

  	
  Environmental Matters

  	
  54

  
	
  4.20.

  	
  Financing Statements

  	
  56

  
	
  4.21.

  	
  Appraisals

  	
  56

  
	
   

  	
   

  	
   

  
	
  V.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  56

  
	
   

  	
   

  	
   

  
	
  5.1.

  	
  Authority

  	
  56

  
	
  5.2.

  	
  Formation and Qualification

  	
  57

  
	
  5.3.

  	
  Survival of Representations and
  Warranties

  	
  57

  
	
  5.4.

  	
  Tax Returns

  	
  57

  
	
  5.5.

  	
  Financial Statements

  	
  58

  
	
  5.6.

  	
  Entity Names

  	
  58

  
	
  5.7.

  	
  O.S.H.A. and Environmental
  Compliance

  	
  59

  
	
  5.8.

  	
  Solvency; No Litigation,
  Violation, Indebtedness or Default; ERISA Compliance

  	
  59

  
	
  5.9.

  	
  Patents, Trademarks, Copyrights
  and Licenses

  	
  60

  
	
  5.10.

  	
  Licenses and Permits

  	
  60

  
	
  5.11.

  	
  Default of Indebtedness

  	
  61

  
	
  5.12.

  	
  No Default

  	
  61

  
	
  5.13.

  	
  No Burdensome Restrictions

  	
  61

  
	
  5.14.

  	
  No Labor Disputes

  	
  61

  
	
  5.15.

  	
  Margin Regulations

  	
  61

  
	
  5.16.

  	
  Investment Company Act

  	
  61

  
	
  5.17.

  	
  Disclosure

  	
  61

  
	
  5.18.

  	
  Delivery of Indenture Loan
  Documentation

  	
  62

  

 

ii

 

	
  5.19.

  	
  Swaps

  	
  62

  
	
  5.20.

  	
  Application of Certain Laws and
  Regulations

  	
  62

  
	
  5.21.

  	
  Business and Property of
  Borrowers

  	
  62

  
	
  5.22.

  	
  Section 20 Subsidiaries

  	
  62

  
	
  5.23.

  	
  Anti-Terrorism Laws

  	
  62

  
	
  5.24.

  	
  Trading with the Enemy

  	
  63

  
	
  5.25.

  	
  Federal Securities Laws

  	
  63

  
	
  5.26.

  	
  Equity Interests

  	
  63

  
	
  5.27.

  	
  Delivery of Plan of
  Reorganization, Confirmation Order and Related Documentation

  	
  64

  
	
  5.28.

  	
  Effectiveness of Plan of
  Reorganization

  	
  64

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  AFFIRMATIVE COVENANTS

  	
  64

  
	
   

  	
   

  	
   

  
	
  6.1.

  	
  Payment of Fees

  	
  64

  
	
  6.2.

  	
  Conduct of Business and
  Maintenance of Existence and Assets

  	
  64

  
	
  6.3.

  	
  Violations

  	
  64

  
	
  6.4.

  	
  Government Receivables

  	
  64

  
	
  6.5.

  	
  Intentionally Omitted

  	
  65

  
	
  6.6.

  	
  Execution of Supplemental
  Instruments

  	
  65

  
	
  6.7.

  	
  Payment of Indebtedness

  	
  65

  
	
  6.8.

  	
  Standards of Financial Statements

  	
  65

  
	
  6.9.

  	
  Federal Securities Laws

  	
  65

  
	
  6.10.

  	
  Exercise of Rights

  	
  65

  
	
  6.11.

  	
  Substantial Consummation of 
  Plan of Reorganization

  	
  65

  
	
  6.12.

  	
  Post Closing Conditions

  	
  65

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  NEGATIVE COVENANTS

  	
  66

  
	
   

  	
   

  	
   

  
	
  7.1.

  	
  Merger, Consolidation,
  Acquisition and Sale of Assets

  	
  66

  
	
  7.2.

  	
  Creation of Liens

  	
  66

  
	
  7.3.

  	
  Guarantees

  	
  66

  
	
  7.4.

  	
  Investments

  	
  66

  
	
  7.5.

  	
  Loans

  	
  68

  
	
  7.6.

  	
  Capital Expenditures

  	
  68

  
	
  7.7.

  	
  Distributions

  	
  68

  
	
  7.8.

  	
  Indebtedness

  	
  68

  
	
  7.9.

  	
  Nature of Business

  	
  69

  
	
  7.10.

  	
  Transactions with Affiliates

  	
  70

  
	
  7.11.

  	
  Leases

  	
  70

  
	
  7.12.

  	
  Subsidiaries

  	
  70

  
	
  7.13.

  	
  Fiscal Year and Accounting
  Changes

  	
  70

  
	
  7.14.

  	
  Pledge of Credit

  	
  70

  
	
  7.15.

  	
  Amendment of Articles of
  Incorporation, By-Laws, Certificate of Formation, Operating Agreement

  	
  70

  
	
  7.16.

  	
  Compliance with ERISA

  	
  70

  
	
  7.17.

  	
  Prepayment of Indebtedness

  	
  71

  
	
  7.18.

  	
  Anti-Terrorism Laws

  	
  71

  
	
  7.19.

  	
  Membership/Partnership Interests

  	
  71

  

 

iii

 

	
  7.20.

  	
  Trading with the Enemy Act

  	
  72

  
	
  7.21.

  	
  Indenture

  	
  72

  
	
  7.22.

  	
  Other Agreements

  	
  72

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  CONDITIONS PRECEDENT

  	
  72

  
	
   

  	
   

  	
   

  
	
  8.1.

  	
  Conditions to Initial Advances

  	
  72

  
	
  8.2.

  	
  Conditions to Each Advance

  	
  75

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  INFORMATION AS TO BORROWERS

  	
  76

  
	
   

  	
   

  	
   

  
	
  9.1.

  	
  Disclosure of Material Matters

  	
  76

  
	
  9.2.

  	
  Schedules

  	
  76

  
	
  9.3.

  	
  Intentionally Omitted

  	
  76

  
	
  9.4.

  	
  Litigation

  	
  77

  
	
  9.5.

  	
  Material Occurrences

  	
  77

  
	
  9.6.

  	
  Government Receivables

  	
  77

  
	
  9.7.

  	
  Annual Financial Statements

  	
  77

  
	
  9.8.

  	
  Quarterly Financial Statements

  	
  77

  
	
  9.9.

  	
  Monthly Financial Statements

  	
  78

  
	
  9.10.

  	
  Other Reports

  	
  78

  
	
  9.11.

  	
  Additional Information

  	
  78

  
	
  9.12.

  	
  Projected Operating Budget

  	
  78

  
	
  9.13.

  	
  Variances From Operating Budget

  	
  78

  
	
  9.14.

  	
  Notice of Suits, Adverse Events

  	
  79

  
	
  9.15.

  	
  ERISA Notices and Requests

  	
  79

  
	
  9.16.

  	
  Daily Inventory Reporting

  	
  79

  
	
  9.17.

  	
  Background Checks

  	
  80

  
	
  9.18.

  	
  Additional Documents

  	
  80

  
	
   

  	
   

  	
   

  
	
  X.

  	
  EVENTS OF DEFAULT

  	
  80

  
	
   

  	
   

  	
   

  
	
  10.1.

  	
  Nonpayment

  	
  80

  
	
  10.2.

  	
  Breach of Representation

  	
  80

  
	
  10.3.

  	
  Financial Information

  	
  80

  
	
  10.4.

  	
  Judicial Actions

  	
  80

  
	
  10.5.

  	
  Noncompliance

  	
  80

  
	
  10.6.

  	
  Judgments

  	
  80

  
	
  10.7.

  	
  Bankruptcy

  	
  81

  
	
  10.8.

  	
  Inability to Pay

  	
  81

  
	
  10.9.

  	
  Intentionally omitted;

  	
  81

  
	
  10.10.

  	
  Material Adverse Effect

  	
  81

  
	
  10.11.

  	
  Lien Priority

  	
  81

  
	
  10.12.

  	
  Indenture Loan Default

  	
  81

  
	
  10.13.

  	
  Cross Default

  	
  81

  
	
  10.14.

  	
  Breach of Guaranty or Pledge
  Agreements

  	
  81

  
	
  10.15.

  	
  Change of Ownership

  	
  81

  
	
  10.16.

  	
  Invalidity

  	
  81

  
	
  10.17.

  	
  Licenses

  	
  81

  
	
  10.18.

  	
  Seizures

  	
  82

  

 

iv

 

	
  10.19.

  	
  Operations

  	
  82

  
	
  10.20.

  	
  Pension Plans

  	
  82

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

  	
   82

  
	
   

  	
   

  	
   

  
	
  11.1.

  	
  Rights and Remedies

  	
  82

  
	
  11.2.

  	
  Agent’s Discretion

  	
  84

  
	
  11.3.

  	
  Setoff

  	
  84

  
	
  11.4.

  	
  Rights and Remedies not Exclusive

  	
  84

  
	
  11.5.

  	
  Allocation of Payments After
  Event of Default

  	
  84

  
	
   

  	
   

  	
   

  
	
  XII.

  	
  WAIVERS AND JUDICIAL PROCEEDINGS

  	
  85

  
	
   

  	
   

  	
   

  
	
  12.1.

  	
  Waiver of Notice

  	
  85

  
	
  12.2.

  	
  Delay

  	
  85

  
	
  12.3.

  	
  Jury Waiver

  	
  85

  
	
   

  	
   

  	
   

  
	
  XIII.

  	
  EFFECTIVE DATE AND TERMINATION

  	
  86

  
	
   

  	
   

  	
   

  
	
  13.1.

  	
  Term

  	
  86

  
	
  13.2.

  	
  Termination

  	
  86

  
	
   

  	
   

  	
   

  
	
  XIV.

  	
  REGARDING AGENT

  	
   87

  
	
   

  	
   

  	
   

  
	
  14.1.

  	
  Appointment

  	
  87

  
	
  14.2.

  	
  Nature of Duties

  	
  87

  
	
  14.3.

  	
  Lack of Reliance on Agent and
  Resignation

  	
  87

  
	
  14.4.

  	
  Certain Rights of Agent

  	
  88

  
	
  14.5.

  	
  Reliance

  	
  88

  
	
  14.6.

  	
  Notice of Default

  	
  88

  
	
  14.7.

  	
  Indemnification

  	
  89

  
	
  14.8.

  	
  Agent in its Individual Capacity

  	
  89

  
	
  14.9.

  	
  Delivery of Documents

  	
  89

  
	
  14.10.

  	
  Borrowers’ Undertaking to Agent

  	
  89

  
	
  14.11.

  	
  No Reliance on Agent’s Customer
  Identification Program

  	
  89

  
	
  14.12.

  	
  Other Agreements

  	
  90

  
	
   

  	
   

  	
   

  
	
  XV.

  	
  BORROWING AGENCY

  	
  90

  
	
   

  	
   

  	
   

  
	
  15.1.

  	
  Borrowing Agency Provisions

  	
  90

  
	
  15.2.

  	
  Waiver of Subrogation

  	
  91

  
	
   

  	
   

  	
   

  
	
  XVI.

  	
  MISCELLANEOUS

  	
  91

  
	
   

  	
   

  	
   

  
	
  16.1.

  	
  Governing Law

  	
  91

  
	
  16.2.

  	
  Entire Understanding

  	
  91

  
	
  16.3.

  	
  Successors and Assigns;
  Participations; New Lenders

  	
  94

  
	
  16.4.

  	
  Application of Payments

  	
  96

  
	
  16.5.

  	
  Indemnity

  	
  96

  
	
  16.6.

  	
  Notice

  	
  96

  
	
  16.7.

  	
  Survival

  	
  98

  
	
  16.8.

  	
  Severability

  	
  98

  
	
  16.9.

  	
  Expenses

  	
  98

  

 

v

 

	
  16.10.

  	
  Injunctive Relief

  	
  99

  
	
  16.11.

  	
  Consequential Damages

  	
  99

  
	
  16.12.

  	
  Captions

  	
  99

  
	
  16.13.

  	
  Counterparts; Facsimile
  Signatures

  	
  99

  
	
  16.14.

  	
  Construction

  	
  99

  
	
  16.15.

  	
  Confidentiality; Sharing
  Information

  	
  99

  
	
  16.16.

  	
  Publicity

  	
  100

  
	
  16.17.

  	
  Certifications
  From Banks and Participants; USA PATRIOT Act

  	
  100

  

 

vi

 

LIST
OF EXHIBITS AND SCHEDULES

 

Exhibits

 

	
  Exhibit 1.2

  	
   

  	
  Borrowing
  Base Certificate

  
	
  Exhibit 2.1(a)

  	
   

  	
  Revolving
  Credit Note

  
	
  Exhibit 5.5(b)

  	
   

  	
  Financial
  Projections

  
	
  Exhibit 8.1(j)

  	
   

  	
  Financial
  Condition Certificate

  
	
  Exhibit 16.3

  	
   

  	
  Commitment
  Transfer Supplement

  

 

Schedules

 

	
  Schedule
  1.2

  	
   

  	
  Permitted
  Encumbrances

  
	
  Schedule
  4.5

  	
   

  	
  Equipment
  and Inventory Locations

  
	
  Schedule
  4.15(h)

  	
   

  	
  Deposit
  and Investment Accounts

  
	
  Schedule
  4.19

  	
   

  	
  Real
  Property

  
	
  Schedule
  5.1

  	
   

  	
  Consents

  
	
  Schedule
  5.2(a)

  	
   

  	
  States
  of Qualification and Good Standing

  
	
  Schedule
  5.2(b)

  	
   

  	
  Subsidiaries

  
	
  Schedule
  5.4

  	
   

  	
  Federal
  Tax Identification Number

  
	
  Schedule
  5.6

  	
   

  	
  Prior
  Names

  
	
  Schedule
  5.7

  	
   

  	
  Environmental

  
	
  Schedule
  5.8(b)

  	
   

  	
  Litigation

  
	
  Schedule
  5.8(d)

  	
   

  	
  Plans

  
	
  Schedule
  5.9

  	
   

  	
  Intellectual
  Property, Source Code Escrow Agreements

  
	
  Schedule
  5.10

  	
   

  	
  Licenses
  and Permits

  
	
  Schedule
  5.14

  	
   

  	
  Labor
  Disputes

  
	
  Schedule
  5.27

  	
   

  	
  Equity
  Interests

  

 

vii

 

REVOLVING
CREDIT

 

AND

 

SECURITY
AGREEMENT

 

Revolving Credit and
Security Agreement dated as of March 15, 2010 among AVENTINE RENEWABLE
ENERGY HOLDINGS, INC., a Delaware corporation (“Holdings”), AVENTINE RENEWABLE
ENERGY — AURORA WEST, LLC, a Delaware limited liability company (“Aventine
Renewable Aurora”), AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation (“Aventine
Renewable Inc.”), AVENTINE RENEWABLE ENERGY — MT VERNON, LLC, a Delaware
limited liability company (“Aventine Renewable Mt Vernon”), AVENTINE POWER,
L.L.C., a Delaware limited liability company (“Aventine Power”), NEBRASKA
ENERGY, LLC, a Kansas limited liability company (“Nebraska Energy” and together
with Holdings, Aventine Renewable Aurora, Aventine Renewable Inc., Aventine
Renewable Mt Vernon, Aventine Power and Nebraska Energy, the “Borrowers”, and
each individually a “Borrower”), the financial institutions which are now or
which hereafter become a party hereto (collectively, the “Lenders” and each
individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent
for Lenders (PNC, in such capacity, the “Agent”).

 

IN CONSIDERATION of the
mutual covenants and undertakings herein contained, Borrowers, Lenders and
Agent hereby agree as follows:

 

I.              DEFINITIONS.

 

1.1.          Accounting
Terms.  As used in this Agreement, the
Other Documents or any certificate, report or other document made or delivered
pursuant to this Agreement, accounting terms not defined in Section 1.2 or
elsewhere in this Agreement and accounting terms partly defined in Section 1.2
to the extent not defined, shall have the respective meanings given to them
under GAAP.

 

1.2.          General Terms.  For purposes of this Agreement the following
terms shall have the following meanings:

 

“Accountants” shall
have the meaning set forth in Section 9.7 hereof.

 

“Advance Rates” shall
have the meaning set forth in Section 2.1(a)(y)(ii) hereof.

 

“Advances” shall mean
and include the Revolving Advances and the Letters of Credit.

 

“Affiliate” of any
Person shall mean (a) any Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any
Person described in clause (a) above. 
For purposes of this definition, control of a Person shall mean the power,
direct or indirect, (x) to vote 10% or more of the Equity Interests having
ordinary voting power for the election of directors of such Person or other
Persons performing similar functions for any such Person, or (y) to direct
or 

 

 

cause
the direction of the management and policies of such Person whether by
ownership of Equity Interests, contract or otherwise.

 

“Agent” shall have
the meaning set forth in the preamble to this Agreement and shall include its
successors and assigns.

 

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

 

“Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the highest of (i) the
Base Rate in effect on such day, (ii) the Federal Funds Open Rate in
effect on such day plus one half of one-percent (1/2 of 1%), and (iii) the
sum of the Daily LIBOR Rate in effect on such day plus one percent (1.0%), so
long as a Daily LIBOR Rate is offered, ascertainable and not unlawful.

 

“Anti-Terrorism Laws”
shall mean any Applicable Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA PATRIOT Act, the Applicable
Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the foregoing Applicable Laws may from time to time be
amended, renewed, extended, or replaced).

 

“Applicable Law”
shall mean all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Other Document or contract in question,
including all applicable common law and equitable principles; all provisions of
all applicable state, federal and foreign constitutions, statutes, rules,
regulations, treaties, directives and orders of any Governmental Body, and all
orders, judgments and decrees of all courts and arbitrators.

 

“Aurora West Kiewit Note”
shall mean the note payable by Aventine Renewable Aurora to Kiewit Energy
Company in the original principal amount of $5,251,808, as the same may be
amended, restated or modified in accordance with its terms

 

“Authority” shall
have the meaning set forth in Section 4.19(d) hereof.

 

“Availability Block”
shall mean Two Million Dollars ($2,000,000).

 

“Backstop Purchasers”
shall mean Brigade Capital Management LLC, Nomura Corporate Research &
Asset Management, Inc., Whitebox Advisors, Senator Investment Group LP,
and SEACOR Capital Corporation, each as investment manager, for and on behalf of
certain funds.

 

“Bankruptcy
Code” shall mean the Bankruptcy Reform Act of 1978, as amended, and
codified as 11 U.S.C. §§101 et seq.

 

“Base Rate” shall
mean the base commercial lending rate of PNC as publicly announced to be in
effect from time to time, such rate to be adjusted automatically, without
notice, on the effective date of any change in such rate.  This rate of interest is determined from time
to time by PNC as a means of pricing some loans to its customers and is neither
tied to any external rate of interest or index nor does it necessarily reflect
the lowest rate of interest actually charged by PNC to any particular class or
category of customers of PNC.

 

2

 

“Benefited Lender”
shall have the meaning set forth in Section 2.20(d) hereof.

 

“Blocked Account Bank”
shall have the meaning set forth in Section 4.15(h) hereof.

 

“Blocked Accounts”
shall have the meaning set forth in Section 4.15(h) hereof.

 

“Blocked Person”
shall have the meaning set forth in Section 5.24(b) hereof.

 

“Borrower” or “Borrowers”
shall have the meaning set forth in the preamble to this Agreement and shall
extend to all permitted successors and assigns of such Persons.

 

“Borrowers on a Consolidated
Basis” shall mean the consolidation in accordance with GAAP of the accounts
or other items of the Borrowers and their respective Subsidiaries.

 

“Borrowers’ Account”
shall have the meaning set forth in Section 2.8 hereof.

 

“Borrowing Agent”
shall mean Holdings.

 

“Borrowing Base
Certificate” shall mean a certificate in substantially the form of Exhibit 1.2
duly executed by the President, Chief Executive Officer, Chief Financial
Officer, Chief Accounting and Compliance Officer or Controller of the Borrowing
Agent and delivered to the Agent, appropriately completed, by which such
officer shall certify to Agent the Formula Amount and calculation thereof as of
the date of such certificate.

 

“Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
East Brunswick, New Jersey or Chicago, Illinois and, if the applicable Business
Day relates to any Eurodollar Rate Loans, such day must also be a day on which
dealings are carried on in the London interbank market.

 

“Capital Expenditures”
shall mean expenditures made or liabilities incurred for the acquisition of any
fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations, which, in accordance with GAAP, would
be classified as capital expenditures.

 

“Capitalized Lease
Obligation” shall mean any Indebtedness of any Borrower represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“CERCLA” shall mean
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. §§9601 et seq.

 

“Change of Ownership”
shall mean (a) 100% of the Equity Interests of any Borrower (other than
Holdings) is no longer owned or controlled, directly or indirectly, by
Holdings, (b) any Person or Persons acting together that would constitute
a group (for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto) (a “group”), together with any Affiliates or
related Persons thereof, other than any such Person, Persons, Affiliates or
related 

 

3

 

Person
who are Permitted Holders, is or becomes the “Beneficial Owner,” directly or
indirectly, of at least 35% of the voting power of Holdings’ outstanding Equity
Interests, and the Permitted Holders own less than such Person or group (in
performing the “own less than” comparison, the holdings of the Permitted
Holders who are members of the new group shall not be counted in the shares
held in the aggregate by Permitted Holders), (c) Continuing Directors
cease to constitute at least a majority of the Board of Directors of Holdings
or (d) any merger, consolidation or sale of substantially all of the
property or assets of any Borrower; provided, that the sale by Holdings of any
Equity Interests of any Borrower shall be deemed a sale of substantially all of
Holding’s assets.

 

“Charges” shall mean
all taxes, charges, fees, imposts, levies or other assessments, including all
net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Borrower or any of its Affiliates.

 

“Closing Date” shall
mean March 15, 2010 or such other date as may be agreed to by the parties
hereto.

 

“Code” shall mean the
Internal Revenue Code of 1986, as the same may be amended or supplemented from
time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

 

“Collateral” shall
mean and include:

 

(a)           all Receivables;

 

(b)           all General Intangibles
arising out of or related to Receivables and Inventory;

 

(c)           all Intellectual Property;

 

(d)           all Inventory;

 

(e)           all Investment Property
(including Subsidiary Stock);

 

(f)            all Instruments and rights
to payments arising out of or related to the foregoing;

 

(g)           all of each Borrower’s
right, title and interest in and to, whether now owned or hereafter acquired
and wherever located; (i) its respective goods and other property
including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of
each Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to
any Borrower from any 

 

4

 

Customer relating to the Receivables; (iv) other
property, including warranty claims, relating to any goods securing the
Obligations; (v) to the extent arising out of or related to Receivables
and Inventory, all of each Borrower’s contract rights, rights of payment which
have been earned under a contract right, instruments (including promissory
notes), documents, chattel paper (including electronic chattel paper),
warehouse receipts, deposit accounts, letters of credit and money; (vi) if
and when obtained by any Borrower, all personal property of third parties in
which such Borrower has been granted a lien or security interest as security
for the payment or enforcement of Receivables; (vii) all letter of credit
rights (whether or not the respective letter of credit is evidenced by a
writing); (viii) all supporting obligations; and (ix) any other goods
or personal property now owned or hereafter acquired in which any Borrower has
expressly granted a security interest or may in the future grant a security
interest to Agent hereunder, or in any amendment or supplement hereto or
thereto, or under any other agreement between Agent and any Borrower;

 

(h)           all of each Borrower’s
ledger sheets, ledger cards, files, correspondence, records, books of account,
business papers, computers, computer software (owned by any Borrower or in
which it has an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f) or (g) of this paragraph;
and

 

(i)            all proceeds and products of
(a), (b), (c), (d), (e), (f), (g) and (h) in whatever form,
including, but not limited to: cash, deposit accounts (whether or not comprised
solely of proceeds), certificates of deposit, insurance proceeds (including
hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds provided, however, that notwithstanding the foregoing (a) through
(j) “Collateral” shall not include Excluded Collateral.

 

“Commitment Percentage”
of any Lender shall mean the percentage set forth below such Lender’s name on
the signature page hereof as same may be adjusted upon any assignment by a
Lender pursuant to Section 16.3(c) or (d) hereof.

 

“Commitment Transfer
Supplement” shall mean a document in the form of Exhibit 16.3 hereto,
properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation
of Lenders to make Advances under this Agreement.

 

“Compliance Certificate”
shall mean a compliance certificate to be signed by the President, Chief
Executive Officer, Chief Financial Officer, Chief Accounting and Compliance
Officer or Controller of Borrowing Agent, which shall state that, based on an
examination sufficient to permit such officer to make an informed statement, no
Default or Event of Default has occurred and is continuing, or if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, and the steps being taken by Borrowers with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrowers’ compliance with the requirements or restrictions imposed by Sections
7.4, 7.5, 7.6, 7.7, 7.8, 7.10 and 7.11.

 

5

 

“Confirmation Order”
shall mean that certain order confirming the Plan of Reorganization pursuant to
Section 1129 of the Bankruptcy Code entered by the United States
Bankruptcy Court for the District of Delaware on February 24, 2010.

 

“Consents” shall mean
all filings and all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Bodies and other third parties,
domestic or foreign, necessary to carry on any Borrower’s business or necessary
(including to avoid a conflict or breach under any agreement, instrument, other
document, license, permit or other authorization) for the execution, delivery
or performance of this Agreement, the Other Documents, the Indenture Loan
Documentation, including any Consents required under all applicable federal,
state or other Applicable Law.

 

“Consigned Inventory”
shall mean Inventory of any Borrower that is in the possession of another
Person on a consignment, sale or return, or other basis that does not
constitute a final sale and acceptance of such Inventory.

 

“Continuing
Directors” means, as of any date of determination, any member of the
Board of Directors of Holdings who: (a) was a member of such Board of
Directors on the Closing Date (following consummation of the transactions
contemplated by the Plan of Reorganization); or (b) was elected to such
Board of Directors with the approval of, or whose nomination for election was
approved or ratified by, a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.

 

“Controlled Group”
shall mean, at any time, each Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are
treated as a single employer under Section 414 of the Code.

 

“Customer” shall mean
and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract
or contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with any Borrower, pursuant to which such
Borrower is to deliver any personal property or perform any services.

 

“Customs” shall have
the meaning set forth in Section 2.11(b) hereof.

 

“Daily  LIBOR 
Rate”  shall  mean, 
for  any  day, the rate per annum determined  by  the
Agent by dividing (x) the Published Rate by (y) a number equal to
1.00 minus the Reserve Percentage.

 

“Default” shall mean
an event, circumstance or condition which, with the giving of notice or passage
of time or both, would constitute an Event of Default.

 

“Default Rate” shall
have the meaning set forth in Section 3.1 hereof.

 

“Defaulting Lender”
shall have the meaning set forth in Section 2.23(a) hereof.

 

“Depository Accounts”
shall have the meaning set forth in Section 4.15(h) hereof.

 

6

 

“Designated Lender”
shall have the meaning set forth in Section 16.2(b) hereof.

 

“Documents” shall
have the meaning set forth in Section 8.1(k) hereof.

 

“Dollar” and the sign
“$” shall mean lawful money of the United States of America.

 

“Domestic Rate Loan”
shall mean any Advance that bears interest based upon the Alternate Base Rate.

 

“Drawing Date” shall
have the meaning set forth in Section 2.12(b) hereof.

 

“Early Termination Date”
shall have the meaning set forth in Section 13.1 hereof.

 

“Eligible Inventory”
shall mean and include Inventory, excluding work in process (other than as
specifically provided herein), with respect to each Borrower, valued at the
lower of cost or market value, determined on a weighted averages cost basis (or
any other costing method in compliance with GAAP and consented to in writing by
Agent prior to implementation), which is not, in Agent’s Permitted Discretion,
obsolete, slow moving or unmerchantable and which Agent, in its Permitted
Discretion, shall not deem ineligible Inventory, based on such considerations
as Agent may from time to time deem appropriate including whether the Inventory
is subject to a perfected, first priority security interest in favor of Agent
and no other Lien (other than a Permitted Encumbrance).  In addition, Inventory shall not be Eligible
Inventory if it (i) does not conform to all material standards imposed by
any Governmental Body which has regulatory authority over such goods or the use
or sale thereof, (ii) except as provided below, is in transit, (iii) is
located outside the continental United States or at a location that is not
otherwise in compliance with this Agreement, (iv) constitutes Consigned
Inventory, (v) is the subject of an Intellectual Property Claim, (vi) is
subject to a License Agreement or other agreement that limits, conditions or
restricts any Borrower’s or Agent’s right to sell or otherwise dispose of such
Inventory, unless Agent is a party to a Licensor/Agent Agreement with the
Licensor under such License Agreement, (vii) is situated at a location not
owned by a Borrower unless the owner or occupier of such location has executed
in favor of Agent a Lien Waiver Agreement or Agent has otherwise instituted a
reserve for charges as deemed appropriate by Agent, (viii) or if the sale
of such Inventory would result in an ineligible Receivable or (viii) is
Inventory constituting Excluded Collateral. 
Eligible Inventory shall include all Inventory in-transit for which
title has passed to a Borrower, which is insured to the full value
thereof.  Eligible Inventory shall
include finished undenatured ethanol, finished denatured ethanol, denaturant
and coal.  Eligible Inventory shall not
include Inventory being acquired pursuant to a trade Letter of Credit to the
extent such trade Letter of Credit remains outstanding.

 

“Eligible Receivables”
shall mean and include with respect to each Borrower, each Receivable of such
Borrower arising in the Ordinary Course of Business and which Agent, in its
Permitted Discretion, shall deem to be an Eligible Receivable. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent.  In addition, no
Receivable shall be an Eligible Receivable if:

 

7

 

(a)           it arises out of a sale made
by any Borrower to an Affiliate (other than SEACOR Capital Corporation or
Seacor Energy, Inc.) of any Borrower or to a Person controlled by an
Affiliate (other than SEACOR Capital Corporation or Seacor Energy) of any
Borrower;

 

(b)           it is due or unpaid more than
fifteen (15) days after the original due date or thirty (30) days after the
original invoice date;

 

(c)           fifty percent (50%) or more
of the Receivables from such Customer are not deemed Eligible Receivables
hereunder.  Such percentage may, in Agent’s
Permitted Discretion, be increased or decreased from time to time;

 

(d)           any covenant, representation
or warranty contained in this Agreement with respect to such Receivable has
been breached;

 

(e)           the Customer shall (i) apply
for, suffer, or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or call a meeting of its creditors, (ii) admit
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary
case or proceeding under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file
a petition seeking to take advantage of any other law providing for the relief
of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws,
or (viii) take any action for the purpose of effecting any of the
foregoing;

 

(f)            the sale is to a Customer
outside the continental United States of America or Canada (other than Quebec),
unless the sale is on letter of credit, guaranty or acceptance terms, in each
case acceptable to Agent in its Permitted Discretion;

 

(g)           the sale to the Customer is
on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment or any other repurchase or return basis or is evidenced by chattel
paper;

 

(h)           Agent believes, in its
Permitted Discretion, that collection of such Receivable is insecure or that
such Receivable will likely not be paid by reason of the Customer’s financial
inability to pay;

 

(i)            the Customer is the United
States of America, any state or any department, agency or instrumentality of
any of them, unless the applicable Borrower assigns its right to payment of
such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15
et seq.) or has otherwise complied with other applicable statutes or
ordinances;

 

(j)            the goods giving rise to
such Receivable have not been delivered to and accepted by the Customer or the
services giving rise to such Receivable have not been performed by the
applicable Borrower and accepted by the Customer or the Receivable otherwise
does not represent a final sale;

 

8

 

(k)           the Receivables of the
Customer exceed a credit limit determined by Agent, in its Permitted
Discretion, to the extent such Receivable exceeds such limit;

 

(l)            the Receivable is subject to
any offset, deduction, defense, dispute, or counterclaim (to the extent of such
offset, deduction, defense or counterclaim), the Customer is also a creditor or
supplier of a Borrower (to the extent of indebtedness to such Customer) or the
Receivable is contingent in any respect or for any reason;

 

(m)          the applicable Borrower has
made any agreement with any Customer for any deduction therefrom, except for
discounts or allowances made in the Ordinary Course of Business for prompt
payment, all of which discounts or allowances are reflected in the calculation
of the face value of each respective invoice related thereto other than in the
case of Receivables invoiced on a provisional price basis where the final price
is adjusted at a subsequent measurement date;

 

(n)           any return, rejection or
repossession of the merchandise has occurred or the rendition of services has
been disputed (to the extent of such return, rejection repossession or
dispute);

 

(o)           such Receivable is not
payable to a Borrower; or

 

(p)           such Receivable is not
otherwise satisfactory to Agent as determined by Agent in its Permitted
Discretion.

 

“Environmental Complaint”
shall have the meaning set forth in Section 4.19(d) hereof.

 

“Environmental Laws”
shall mean all federal, state and local environmental, land use, zoning,
health, chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances and the rules, regulations,
policies, guidelines, interpretations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect
thereto.

 

“Equipment” shall
mean and include as to each Borrower all of such Borrower’s goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements and
substitutions therefor or accessions thereto.

 

“Equity Interests” of
any Person shall mean any and all shares, rights to purchase, options,
warrants, general, limited or limited liability partnership interests, member
interests, participation or other equivalents of or interest in (regardless of
how designated) equity of such Person, whether voting or nonvoting, including
common stock, preferred stock, convertible securities or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time and the rules and regulations promulgated thereunder.

 

9

 

“Eurodollar Rate”
shall mean for any Eurodollar Rate Loan for the then current Interest Period
relating thereto, the interest rate per annum determined by Agent by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th
of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1
(or on such other substitute Bloomberg page that displays rates at which
US dollar deposits are offered by leading banks in the London interbank deposit
market), or, if unavailable, the rate which is quoted by another source selected
by Agent which has been approved by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying rates at which U.S.
dollar deposits are offered by leading banks in the London interbank deposit
market (an “Alternate Source”), at approximately 11:00 a.m., London time,
two (2) Business Days prior to the commencement of such Interest Period as
the London interbank offered rate for U.S. Dollars for an amount comparable to
such Eurodollar Rate Loan and having a borrowing date and a maturity comparable
to such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any
Alternate Source, a comparable replacement rate determined by Agent at such
time (which determination shall be conclusive absent manifest error)), by (ii) a
number equal 1.00 minus the Reserve Percentage. The Eurodollar Rate may also be
expressed by the following formula:

 

	
   

  	
   

  	
  Average of London
  interbank offered rates quoted by Bloomberg or appropriate Successor as shown
  on

  
	
   

  	
   

  	
   

  
	
  Eurodollar Rate =

  	
   

  	
  Bloomberg
  Page BBAM1

  1.00 - Reserve
  Percentage

  

 

The Eurodollar Rate shall be
adjusted with respect to any Eurodollar Rate Loan that is outstanding on the
effective date of any change in the Reserve Percentage as of such effective
date.  The Agent shall give prompt notice
to the Borrowing Agent of the Eurodollar Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.

 

“Eurodollar Rate Loan”
shall mean an Advance at any time that bears interest based on the Eurodollar
Rate.

 

“Event of Default”
shall have the meaning set forth in Article X hereof.

 

“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Collateral”
shall mean:

 

(i)            any General Intangible or
any lease, license, contract, property right or agreement to which any Borrower
is a party or in which any Borrower has any right, title or interest if and to
the extent the grant of a security interest hereunder would constitute or
result in a breach, termination or default under such General Intangible or
such lease, license, contract, property right or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC); provided that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Borrower shall be deemed to have granted a lien on and
security interest in, all its right, title and interest in and to such General
Intangible, lease, license, contract, 

 

10

 

property right or agreement as if such
provision had never been in effect (any such General Intangible, lease,
license, contract, property right or agreement, solely to the extent and so
long as not included in the “Collateral”, an “Excluded General Intangible”); or

 

(ii)           any Equity Interests of any
Foreign Subsidiary;

 

(iii)          any “Collateral Account” or “Collateral
Monies” as defined in the Indenture;

 

(iv)          any Excluded Money;

 

(v)           any Inventory located on the
Indiana Port Lease Premises;

 

(vi)          any proceeds (other than
Subsidiary Stock) arising from a Disposition, casualty or condemnation of
Indenture Exclusive Collateral;

 

(vii)         in the event of a
Disposition of Subsidiary Stock which results in a Disposition of assets
constituting Indenture Exclusive Collateral, the portion of the proceeds of
such Disposition attributable to such assets;

 

(viii)        cash collateral account in
the amount of up to $10,500,000 pledged in favor of JP Morgan Chase to cash
collateralize all letters of credit issued by JP Morgan and existing on the
Closing Date and accounts used solely to meet payroll obligations, to the
extent the amounts in such accounts as of any date of determination do not
exceed the greater of (1) the checks outstanding against such accounts as
of that date and (2) amounts necessary to meet minimum balance
requirements; and

 

(ix)           Excluded Intellectual
Property.

 

For purposes of this
definition, “Disposition,” “Indenture Exclusive Collateral” and “Excluded
Intellectual Property” shall have the meanings ascribed thereto in the
Intercreditor Agreement.

 

“Excluded Money”
shall mean any Money that is not, and is not required by the terms hereof to
be, directly or indirectly, held by, or in or under the control of, the Agent.

 

“Excluded Personal
Property” shall mean with respect to any Borrower, Non-UCC Property of such
Borrower which when combined with the Non-UCC Property of all other Borrowers,
has a fair market value not in excess of $250,000 in the aggregate for all
Borrowers.

 

“Executive Order No. 13224”
shall mean the Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

 

“Federal Funds Effective
Rate” for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed and rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor) on such
day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal 

 

11

 

funds
brokers on the previous trading day, as computed and announced by such Federal
Reserve Bank (or any successor) in substantially the same manner as such
Federal Reserve Bank computes and announces the weighted average it refers to
as the “Federal Funds Effective Rate” as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the “Federal Funds Effective Rate” for such day shall be
the Federal Funds Effective Rate for the last day on which such rate was
announced.

 

“Federal Funds Open Rate”
for any day shall mean the rate per annum (based on a year of 360 days and
actual days elapsed) which is the daily federal funds open rate as quoted by
ICAP North America, Inc. (or any successor) as set forth on the Bloomberg
Screen BTMM for that day opposite the caption “OPEN” (or on such other
substitute Bloomberg Screen that displays such rate), or, if unavailable, as
set forth on such other recognized electronic source used for the purpose of
displaying such rate as selected by PNC (an “Alternate Source”) (or if such
rate for such day does not appear on the Bloomberg Screen BTMM (or any
substitute screen) or on any Alternate Source, or if there shall at any time,
for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Alternate Source, a comparable replacement rate determined by
the PNC at such time (which determination shall be conclusive absent manifest
error); provided however, that if such day is not a Business Day, the Federal
Funds Open Rate for such day shall be the “open” rate on the immediately
preceding Business Day.  If and when the
Federal Funds Open Rate changes, the rate of interest with respect to any
advance to which the Federal Funds Open Rate applies will change automatically
without notice to the Borrowers, effective on the date of any such change.

 

“Foreign Subsidiary”
of any Person, shall mean any Subsidiary of such Person that is not organized
or incorporated in the United States or any State or territory thereof.

 

“Formula Amount”
shall have the meaning set forth in Section 2.1(a) hereof.

 

“GAAP” shall mean
generally accepted accounting principles in the United States of America in
effect from time to time.

 

“General Intangibles”
shall mean and include as to each Borrower all of such Borrower’s general
intangibles, whether now owned or hereafter acquired, including all payment
intangibles, all choses in action, causes of action, corporate or other
business records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trademark applications, service marks, trade secrets, goodwill, copyrights,
design rights, software, computer information, source codes, codes, records and
updates, registrations, licenses, franchises, customer lists, tax refunds, tax
refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Receivables by a Customer (other than to the extent
covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).

 

“Governmental Acts”
shall have the meaning set forth in Section 2.17 hereof.

 

12

 

“Governmental Body”
shall mean any nation or government, any state or other political subdivision
thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.

 

“Guarantor” shall
mean any Person who may hereafter guarantee payment or performance of the whole
or any part of the Obligations and “Guarantors” means collectively all such
Persons.

 

“Guarantor Security
Agreement” shall mean any security agreement executed by any Guarantor in
favor of Agent securing the Obligations or the Guaranty of such Guarantor, in
form and substance satisfactory to Agent.

 

“Guaranty” shall mean
any guaranty of the Obligations executed by a Guarantor in favor of Agent for
its benefit and for the ratable benefit of Lenders, in form and substance
satisfactory to Agent.

 

“Hazardous Discharge”
shall have the meaning set forth in Section 4.19(d) hereof.

 

“Hazardous Substance”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or toxic substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 5101, et seq.), RCRA, or any other applicable Environmental Law and in
the regulations adopted pursuant thereto.

 

“Hazardous Wastes”
shall mean all waste materials subject to regulation under RCRA or applicable
state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.

 

“Hedge Liabilities”
shall have the meaning provided in the definition of “Lender-Provided Interest
Rate Hedge”.

 

“Hedging Obligations”
means, with respect to any specified Person, the obligations of such Person
under: (a) interest rate swap agreements (whether from fixed to floating
or from floating to fixed), interest rate protection agreements, interest rate
cap agreements, interest rate collar agreements, interest rate hedge agreements
and other agreements (including any ISDA agreements) or arrangements designed
to manage interest rates or interest rate risk; (b) commodity swap agreements,
commodity option agreements, forward contracts and other agreements (including
any ISDA agreements) or arrangements designed to protect such Person against
fluctuations in commodity prices or the prices of other raw materials used in
its business; and (c) foreign exchange contracts, currency swap
agreements, futures contracts, currency options, synthetic caps and other
agreements (including any ISDA agreements) or arrangements designed to protect
such Person against fluctuations in currency exchange rates.

 

“Holdings” shall have
the meaning given to such term in the Preamble.

 

“Indebtedness” of a
Person at a particular date shall mean all obligations of such Person which in
accordance with GAAP would be classified upon a balance sheet as liabilities (except

 

13

 

capital
stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar
monetary obligations of such Person whether direct or guaranteed, and all
premiums, if any, due at the required prepayment dates of such indebtedness,
and all indebtedness secured by a Lien on assets owned by such Person, whether
or not such indebtedness actually shall have been created, assumed or incurred
by such Person.  Any indebtedness of such
Person resulting from the acquisition by such Person of any assets subject to
any Lien shall be deemed, for the purposes hereof, to be the equivalent of the
creation, assumption and incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.

 

“Indenture” shall
mean that certain Indenture dated as of the Closing Date (as amended, restated,
supplemented or otherwise modified from time to time) among Holdings, Borrowers
from time to time guarantors thereunder and Wilmington Trust FSB, as indenture
trustee and collateral agent on behalf of the holders from time to time of the
notes issued thereunder.

 

“Indenture Loan
Documentation” shall mean, collectively, the Indenture and each other
document, instrument or agreement executed and/or delivered in connection
therewith.

 

“Indiana Port Lease
Agreement” means the Lease Agreement, dated as of October 31, 2006,
between the Indiana Port Lessor and the Indiana Port Lessee, as amended as of
the Closing Date and as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time after the date hereof in
accordance with its terms.

 

“Indiana Port Lease
Collateral” means any inventory, equipment or fixtures of the Indiana Port
Lessee that are (a) now or hereafter located on the Indiana Port Lease
Premises or (b) at any time used in connection with the business of the
Indiana Port Lessee carried out on the Indiana Port Lease Premises.

 

“Indiana Port Lease
Premises” shall mean the real property leasehold interest leased by
Aventine Renewable Mt Vernon pursuant to the Lease Agreement dated as of October 31,
2006 between the Indiana Port Commission and Aventine Renewable Mt Vernon, as
amended, restated, supplemented or otherwise modified from time to time.

 

“Indiana Port Lessee”
means Aventine Renewable Mt Vernon.

 

“Indiana Port Lessor”
means the Indiana Port Commission, a body corporate and politic existing under
the laws of the State of Indiana, and its successors and assigns.

 

“Ineligible Security”
shall mean any security which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of
1933 (12 U.S.C. Section 24, Seventh), as amended.

 

“Intellectual Property”
shall mean property constituting under any Applicable Law a patent, patent
application, copyright, trademark, service mark, trade name, mask work, trade
secret or license or other right to use any of the foregoing.

 

“Intellectual Property
Claim” shall mean the assertion by any Person of a claim (whether asserted
in writing, by action, suit or proceeding or otherwise) that any Borrower’s
ownership, 

 

14

 

use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other property or asset is violative of any ownership of or right
to use any Intellectual Property of such Person.

 

“Intercreditor Agreement”
shall mean that certain Intercreditor Agreement dated as of the Closing Date
(as amended, restated, supplemented or otherwise modified from time to time)
among Agent and Wilmington Trust FSB as collateral agent on behalf of the
holders from time to time of the notes issued under the Indenture.

 

“Interest Period”
shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b) hereof.

 

“Interest Rate Hedge”
shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap,
adjustable strike corridor or similar agreements entered into by any Borrower
or its Subsidiaries in order to provide protection to, or minimize the impact
upon, such Borrower, any Guarantor and/or their respective Subsidiaries of
increasing floating rates of interest applicable to Indebtedness.

 

“Inventory” shall
mean and include as to each Borrower all of such Borrower’s now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any consignment arrangement, contract of service
or held for sale or lease, all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Borrower’s business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.

 

“Inventory Advance Rate”
shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.

 

“Investment Property”
shall mean and include as to each Borrower, (a) all of such Borrower’s now
owned or hereafter acquired securities (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
contracts and commodities accounts and (b) all Subsidiary Stock.

 

“Issuer” shall mean
any Person who issues a Letter of Credit and/or accepts a draft pursuant to the
terms hereof.

 

“Leasehold Interests”
shall mean all of each Borrower’s right, title and interest in and to, and as
lessee, of the premises identified on Schedule 4.19(A) hereto.

 

“Lender” and “Lenders”
shall have the meaning ascribed to such term in the preamble to this Agreement
and shall include each Person which becomes a transferee, successor or assign
of any Lender.

 

“Lender Default”
shall have the meaning set forth in Section 2.23(a) hereof.

 

“Lender-Provided Interest
Rate Hedge” shall mean an Interest Rate Hedge which is provided by any
Lender and with respect to which the Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard International
Swap 

 

15

 

Dealer
Association Agreement, (ii) provides for the method of calculating the
reimbursable amount of the provider’s credit exposure in a reasonable and
customary manner, and (iii) is entered into for hedging (rather than
speculative) purposes.  The liabilities
of any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the
“Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed obligations
under any Guaranty and secured obligations under any Guarantor Security
Agreement and otherwise treated as Obligations for purposes of each of the
Other Documents. The Liens securing the Hedge Liabilities shall be pari  passu
with the Liens securing all other Obligations under this Agreement and the
Other Documents.

 

“Letter of Credit
Borrowing” shall have the meaning set forth in Section 2.12(d) hereof.

 

“Letter of Credit Fees”
shall have the meaning set forth in Section 3.2 hereof.

 

“Letter of Credit Cash
Collateral” shall mean, on any date of determination, the amount of cash
(excluding the $5,000,000 pledged to Agent pursuant to Deposit Account
Assignment Agreement described in subclause (ii) of the definition of “Pledge
Agreements”) which Borrowers have pledged to Agent for the benefit of Lenders
pursuant to documentation acceptable to Agent in its reasonable discretion and
in which Agent has a first priority security interest.

 

“Letter
of Credit Sublimit” shall mean Twelve Million Dollars ($12,000,000).

 

“Letters of Credit”
shall have the meaning set forth in Section 2.9 hereof.

 

“License Agreement”
shall mean any agreement between any Borrower and a Licensor pursuant to which
such Borrower is authorized to use any Intellectual Property in connection with
the manufacturing, marketing, sale or other distribution of any Inventory of
such Borrower or otherwise in connection with such Borrower’s business
operations.

 

“Licensor” shall mean
any Person from whom any Borrower obtains the right to use (whether on an
exclusive or non-exclusive basis) any Intellectual Property in connection with
such Borrower’s manufacture, marketing, sale or other distribution of any
Inventory or otherwise in connection with such Borrower’s business operations.

 

“Licensor/Agent Agreement”
shall mean an agreement between Agent and a Licensor, in form and content
satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis
such Licensor, to enforce Agent’s Liens with respect to and to dispose of any
Borrower’s Inventory with the benefit of any Intellectual Property applicable
thereto, irrespective of such Borrower’s default under any License Agreement
with such Licensor.

 

“Lien” shall mean any
mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or nature whatsoever
including any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.

 

16

 

“Lien Waiver Agreement”
shall mean an agreement which is executed in favor of Agent by a Person who
owns or occupies premises at which any Collateral may be located from time to
time and by which such Person shall waive any Lien that such Person may ever
have with respect to any of the Collateral and shall authorize Agent from time
to time to enter upon the premises to inspect or remove the Collateral from
such premises or to use such premises to store or dispose of such Inventory.

 

“Material Adverse Effect”
shall mean a material adverse effect on (a) the condition (financial or
otherwise), results of operations, assets, business, properties or prospects of
the Borrowers, taken as a whole, (b) any Borrower’s ability to duly and punctually
pay or perform the Obligations in accordance with the terms thereof, (c) the
value of the Collateral, or Agent’s Liens on the Collateral or the priority of
any such Lien or (d) the practical realization of the benefits of Agent’s
and each Lender’s rights and remedies under this Agreement and the Other
Documents.

 

“Maximum Face Amount”
shall mean, with respect to any outstanding Letter of Credit, the face amount
of such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.

 

“Maximum Revolving
Advance Amount” shall mean Twenty Million Dollars ($20,000,000).

 

“Maximum Undrawn Amount”
shall mean with respect to any outstanding Letter of Credit, the amount of such
Letter of Credit that is or may become available to be drawn, including all
automatic increases provided for in such Letter of Credit, whether or not any
such automatic increase has become effective.

 

“Modified Commitment
Transfer Supplement” shall have the meaning set forth in Section 16.3(d) hereof.

 

“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of
ERISA to which contributions are required by any Borrower or any member of the
Controlled Group.

 

“Multiple Employer Plan”
shall mean a Plan which has two or more contributing sponsors (including any
Borrower or any member of the Controlled Group) at least two of whom are not
under common control, as such a plan is described in Section 4064 of ERISA.

 

“Non-Defaulting Lender”
shall have the meaning set forth in Section 2.23(b) hereof.

 

“Non-UCC
Property” shall mean any personal property of the Borrowers a security
interest in which may not be perfected pursuant to the UCC and in which the
security interest granted to the Agent for the ratable benefit of the Lenders
pursuant to this Agreement has not been duly perfected under other applicable
law.

 

“Note” shall mean
collectively, the Revolving Credit Note.

 

17

 

“Obligations” shall
mean and include any and all loans (including without limitation, all
Advances), advances, debts, liabilities, obligations, covenants and duties
owing by any Borrower to Lenders or Agent or to any other direct or indirect
subsidiary or affiliate of Agent or any Lender of any kind or nature, present
or future (including any interest or other amounts accruing thereon, and any
costs and expenses of any Person payable by Borrower and any indemnification
obligations payable by Borrower arising or payable after maturity, or after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to any Borrower, whether or not a
claim for post-filing or post-petition interest or other amounts is allowable
or allowed in such proceeding), whether or not evidenced by any note, guaranty
or other instrument, whether arising under any agreement, instrument or
document, (including this Agreement and the Other Documents) whether or not for
the payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, equipment lease or guarantee, under any
interest or currency swap, future, option or other similar agreement, or in any
other manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent’s or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of any Borrower’s Indebtedness
and/or liabilities under this Agreement, the Other Documents or under any other
agreement between Agent or Lenders and any Borrower and any amendments,
extensions, renewals or increases and all costs and expenses of Agent and any
Lender incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys’ fees and expenses and all obligations of
any Borrower to Agent or Lenders to perform acts or refrain from taking any
action.

 

“Ordinary Course of
Business” shall mean with respect to any Borrower, the ordinary course of
such Borrower’s business as conducted on the Closing Date.

 

“Other Documents” shall
mean the Note, the Perfection Certificates, any Guaranty, any Guarantor
Security Agreement, the Pledge Agreements, any Lender-Provided Interest Rate
Hedge, the Intercreditor Agreement and any and all other agreements,
instruments and documents, including, subordination or intercreditor
agreements, guaranties, pledges, powers of attorney, consents, interest or
currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or
delivered to Agent or any Lender in respect of the transactions contemplated by
this Agreement.

 

“Out-of-Formula Loans”
shall have the meaning set forth in Section 16.2(b) hereof.

 

“Parent” of any
Person shall mean a corporation or other entity owning, directly or indirectly
at least 50% of the shares of stock or other ownership interests having
ordinary voting power to elect a majority of the directors of the Person, or
other Persons performing similar functions for any such Person.

 

18

 

“Participant” shall
mean each Person who shall be granted the right by any Lender to participate in
any of the Advances and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.

 

“Participation Advance”
shall have the meaning set forth in Section 2.12(d) hereof.

 

“Participation Commitment”
shall mean each Lender’s obligation to buy a participation of the Letters of
Credit issued hereunder.

 

“Payee” shall have
the meaning set forth in Section 3.10 hereof.

 

“Payment Office”
shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey
08816; thereafter, such other office of Agent, if any, which it may designate
by notice to Borrowing Agent and to each Lender to be the Payment Office.

 

“PBGC” shall mean the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA or any successor.

 

“Pension Benefit Plan”
shall mean at any time any employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of
the Code and either (i) is maintained or to which contributions are
required by any member of the Controlled Group for employees of any member of
the Controlled Group; or (ii) has at any time within the preceding five
years been maintained or to which contributions have been required by any
entity which was at such time a member of the Controlled Group for employees of
any entity which was at such time a member of the Controlled Group.

 

“Perfection Certificates”
shall mean collectively, the Perfection Certificates and the responses thereto
provided by each Borrower and delivered to Agent.

 

“Permitted Business”
shall mean (a) the business of the Borrowers engaged in on the Closing
Date and (b) any business or activity ancillary, reasonably related or
complementary thereto.

 

“Permitted Discretion”
shall mean a determination made in good faith and in the exercise of
commercially reasonable (from the perspective of a secured asset-based lender)
business judgment.

 

“Permitted Encumbrances”
shall mean: (a) Liens in favor of Agent for the benefit of Agent and
Lenders; (b) Liens for taxes, assessments or other governmental charges
not delinquent or being Properly Contested; (c) Liens disclosed in the
financial statements referred to in Section 5.5, the existence of which
Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or
under unemployment insurance; (e) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, leases, utility agreements, insurance agreements,
construction agreements, performance bonds, surety and appeal bonds and other
obligations of like nature arising in the Ordinary Course of Business; (f) Liens
arising by virtue of the rendition, entry or issuance against any Borrower or
any Subsidiary, or any property 

 

19

 

of
any Borrower or any Subsidiary, of any judgment, writ, order, or decree for so
long as each such Lien (I) is in existence for less than 20 consecutive
days after it first arises or is being Properly Contested and (II) is at
all times junior in priority to any Liens in favor of Agent; (g) mechanics’,
workers’, materialmen’s, Liens of landlords imposed by law securing obligations
to pay lease amounts or other like Liens arising in the Ordinary Course of
Business with respect to obligations which are not due or which are being
Properly Contested; (h) Liens placed upon fixed assets hereafter acquired
to secure a portion of the purchase price thereof, provided that (I) any
such lien shall not encumber any other property of any Borrower and (II) the
aggregate amount of Indebtedness secured by such Liens incurred as a result of
such purchases during any fiscal year shall not exceed the amount provided for
in Section 7.6; (i) Liens set forth in the Indenture Loan
Documentation and as permitted in accordance with the Intercreditor Agreement;
and (j) Liens disclosed on Schedule 1.2 provided that such Liens
shall secure only those obligations which they secure on the Closing Date (and
extensions, renewals and refinancings such obligations permitted by Section 7.8
hereof) and shall not subsequently apply to any other property or assets of any
Borrower other than the property and assets to which they apply as of the
Closing Date; (k) Liens in favor of any Borrower; (l) Liens on
property of a Person existing at the time such Person is merged with or into or
consolidated with any Borrower; provided that such Liens were in existence
prior to, and not incurred in contemplation of, such merger or consolidation
and do not extend to any property other than that property of the Person merged
into or consolidated with such Borrower that were so subject to such Liens
(plus improvements and accessions to such property); (m) Liens on property
(including Equity Interests) existing at the time of acquisition of the
property, including by way of merger, consolidation or otherwise, by any
Borrower; provided that such Liens were in existence prior to, and not incurred
in contemplation of, such acquisition and do not extend to any other property
owned by such Borrower (plus improvements and accessions to such property); (n) Liens
on cash or cash equivalents or other investment property deposited to secure
the performance of statutory obligations (including obligations under worker’s
compensation, unemployment insurance or similar legislation), surety or appeal
bonds, leases, agreements or other obligations under arrangements with
utilities, insurance agreements, construction agreements, performance bonds or
other obligations of a like nature incurred in the Ordinary Course of Business,
in each case if (but only if) such obligations are not for borrowed money; (o) the
Lien in favor of the Indiana Port Lessor pursuant to the Indiana Port Lease
Agreement on any Indiana Port Lease Collateral securing the obligations of the
Indiana Port Lessee under the Indiana Port Lease Agreement; (p) survey
exceptions, encumbrances, restrictions, easements or reservations of, or rights
of others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property that, in each case, were not incurred in connection
with Indebtedness and that do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the operation of
the business of any Borrower; (q) Liens arising pursuant to an order of
attachment, condemnation, eminent domain, distraint or similar legal process
arising in connection with legal proceedings and any Liens that are required to
protect or enforce rights in any administrative, arbitration or other court
proceedings in the Ordinary Course of Business, in each case, not giving rise
to an Event of Default; (r) any Lien on property (real or personal), plant
or equipment, all or any part of the purchase price or cost of design,
development, construction, installation or improvement of which was financed by
Indebtedness permitted to be incurred pursuant to clause (d) of Section 7.8
solely to the extent securing such Indebtedness; (s) leases or subleases
granted to others that 

 

20

 

do
not materially interfere with the Ordinary Course of Business of the Borrowers;
(t) bankers’ Liens, rights of setoff and similar Liens with respect to
cash and cash equivalents on deposit in one or more bank accounts in the
Ordinary Course of Business; (u) Liens on goods imported by any Borrower
in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of such
goods (it being understood that any such goods shall not constitute Eligible
Inventory during such time); (v) Liens consisting of conditional sale,
title retention, consignment or similar arrangements for the sale of goods
acquired by any Borrower in the Ordinary Course of Business in accordance with
the past practices of the Borrowers prior to the Closing Date (it being
understood that any such goods shall not constitute Eligible Inventory during
such time); (w) Liens securing insurance premium financing arrangements,
provided that such Lien is limited to the applicable insurance contracts; (x) Liens
arising from filing Uniform Commercial Code financing statements regarding
operating leases; (z) any interest or title of a lessor, licensor or
sublicensor in property leased, licensed or sublicensed to any Borrower
pursuant to any lease, license or sublicense not constituting Indebtedness; and
(y) Liens encumbering deposits and margin deposits and other Liens on cash
or cash equivalents or other investment property that are within the general
parameters customary in the industry and incurred in the Ordinary Course of
Business, in each case, securing Hedging Obligations designed solely to protect
any Borrower from fluctuations in interest rates, currencies or the price of
commodities.

 

“Permitted
Holders” shall mean each of the Backstop Purchasers, its Affiliates and its
and its Affiliates’ managed funds and accounts and (a) entities controlled
by any such Persons, (b) trusts for the benefit of any such individual
Persons or the spouses, issue, parents or other relatives of such individual
Persons and (c) in the event of the death of any such individual Person,
heirs or testamentary legatees of such Person. 
For purposes of this definition, “control”, as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.

 

“Person” shall mean
any individual, sole proprietorship, partnership, corporation, business trust,
joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit
corporation, joint venture, entity or Governmental Body (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).

 

“Plan” shall mean any
employee benefit plan within the meaning of Section 3(3) of ERISA
(including a Pension Benefit Plan and a Multiemployer Plan), maintained for
employees of any Borrower or any member of the Controlled Group or any such
Plan to which any Borrower or any member of the Controlled Group is required to
contribute.

 

“Plan of Reorganization”
means that certain Joint Plan of Reorganization filed by the Holdings and its
affiliates on December 4, 2009 in the United States Bankruptcy Court for
the District of Delaware, as amended or supplemented from time to time prior to
entry of the Confirmation Order, including any exhibits, supplements, annexes,
appendices and schedules thereto, as confirmed by such Bankruptcy Court
pursuant to the Confirmation Order.

 

21

 

“Pledge Agreements”
shall mean, collectively, (i) that certain Collateral Pledge Agreement
executed by Holdings and Aventine Renewable Inc. in favor of Agent dated as of
the Closing Date pursuant to which Holdings pledges the Equity Interests of
certain of its Subsidiaries and (ii) that certain Deposit Account
Assignment Agreement executed by Holdings in favor of Agent dated as of the
Closing Date pursuant to which Holdings pledges $5,000,000 to Agent to be held
as cash collateral for the Obligations, (iii) that certain Deposit Account
Assignment Agreement executed by Holdings in favor of Agent dated as of the
Closing Date pursuant to which Holdings pledges cash from time to time to Agent
to be held as cash collateral (the cash pledged in subclauses (ii) and
(iii), the “Pledged Cash Collateral”) for the Obligations and (iv) any
other pledge agreements executed subsequent to the Closing Date by any other
Person to secure the Obligations.

 

“Pledged Cash Collateral”
shall have the meaning set forth in the definition of Pledge Agreements.

 

“PNC” shall have the
meaning set forth in the preamble to this Agreement and shall extend to all of
its successors and assigns.

 

“Pro Forma Balance Sheet”
shall have the meaning set forth in Section 5.5(a) hereof.

 

“Pro Forma Financial
Statements” shall have the meaning set forth in Section 5.5(b) hereof.

 

“Properly Contested”
shall mean, in the case of any Indebtedness or Lien, as applicable, of any
Person (including any taxes) that is not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay same
or concerning the amount thereof: (i) such Indebtedness or Lien, as
applicable, is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Person
has established appropriate reserves as shall be required in conformity with
GAAP; (iii) the non-payment of such Indebtedness could not reasonably be
expected to have a Material Adverse Effect or result in the forfeiture of any
assets of such Person; (iv) no Lien is imposed upon any of such Person’s
assets with respect to such Indebtedness unless such Lien is at all times
junior and subordinate in priority to the Liens in favor of the Agent (except
only with respect to property taxes that have priority as a matter of
applicable state law) and enforcement of such Lien is stayed during the period
prior to the final resolution or disposition of such dispute; (v) if such
Indebtedness or Lien, as applicable, results from, or is determined by the
entry, rendition or issuance against a Person or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order or
decree is stayed pending a timely appeal or other judicial review; and (vi) if
such contest is abandoned, settled or determined adversely (in whole or in
part) to such Person, such Person forthwith pays such Indebtedness and all
penalties, interest and other amounts due in connection therewith.

 

“Projections” shall
have the meaning set forth in Section 5.5(b) hereof.

 

“Published Rate”  shall mean the rate of interest published
each Business Day in the Wall Street Journal “Money Rates” listing under the caption
“London Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published 

 

22

 

Rate
shall be the Eurodollar Rate for a one month period as published in another
publication selected by the Agent).

 

“Purchasing CLO”
shall have the meaning set forth in Section 16.3(d) hereof.

 

“Purchasing Lender”
shall have the meaning set forth in Section 16.3(c) hereof.

 

“RCRA” shall mean the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may
be amended from time to time.

 

“Real Property” shall
mean all of each Borrower’s right, title and interest in and to the owned and
leased premises identified on Schedule 4.19 hereto or which is hereafter owned
or leased by any Borrower.

 

“Receivables” shall
mean and include, as to each Borrower, all of such Borrower’s accounts,
contract rights, instruments (including those evidencing indebtedness owed to
such Borrower by its Affiliates), documents, chattel paper (including
electronic chattel paper), general intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing
to such Borrower arising out of or in connection with the sale or lease of Inventory
or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to Agent hereunder.

 

“Receivables Advance Rate”
shall have the meaning set forth in Section 2.1(a)(y)(i) hereof.

 

“Register” shall have
the meaning set forth in Section 16.3(e) hereof.

 

“Reimbursement Obligation”
shall have the meaning set forth in Section 2.12(b)hereof.

 

“Release” shall have
the meaning set forth in Section 5.7(c)(i) hereof.

 

“Reportable Event”
shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.

 

“Required Lenders”
shall mean Lenders holding at least fifty-one percent (51%) of the Advances
and, if no Advances are outstanding, shall mean Lenders holding fifty-one
percent (51%) of the Commitment Percentages; provided, however, if there are
fewer than three (3) Lenders, Required Lenders shall mean all Lenders.

 

“Reserve Percentage”
shall mean as of any day the maximum percentage in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities”.

 

“Revolving Advances”
shall mean Advances made other than Letters of Credit.

 

23

 

“Revolving Credit Note”
shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof.

 

“Revolving Interest Rate”
shall mean (a) with respect to Domestic Rate Loans, an interest
rate per annum equal to the sum of three percent (3.00%) plus the
Alternate Base Rate and (b) with respect to Eurodollar Rate Loans, an
interest rate per annum equal to the sum of six percent (6.00%) plus
the Eurodollar Rate.

 

“SEC” shall mean the
Securities and Exchange Commission or any successor thereto.

 

“Section 20
Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.

 

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

 

“Settlement Date”
shall mean the Closing Date and thereafter Wednesday or Thursday of each week
or more frequently if Agent deems appropriate unless such day is not a Business
Day in which case it shall be the next succeeding Business Day.

 

“Specified Equity
Interests” shall mean the Equity Interest by Aventine Renewable Inc. in
each of Northeast Iowa Ethanol, TriStates Ethanol Company and Fluid
Technologies n/k/a Micap Plc.

 

“Subsidiary” of any
Person shall mean a corporation or other entity of whose Equity Interests
having ordinary voting power (other than Equity Interests having such power
only by reason of the happening of a contingency) to elect a majority of the
directors of such corporation, or other Persons performing similar functions
for such entity, are owned, directly or indirectly, by such Person.

 

“Subsidiary Stock”
shall mean all of the issued and outstanding Equity Interests of any Subsidiary
owned by any Borrower (excluding the Equity Interests of any Foreign Subsidiary).

 

“Term” shall have the
meaning set forth in Section 13.1 hereof.

 

“Termination Event”
shall mean: (i) a Reportable Event with respect to any Pension Benefit
Plan; (ii) the withdrawal of any Borrower or any member of the Controlled
Group from a Pension Benefit Plan during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Pension Benefit Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Pension Benefit Plan; (v) any
event or condition (a) which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Benefit Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the
partial or complete withdrawal within the meaning of Section 4203 or 4205
of ERISA, of any Borrower or any member of the Controlled Group from a
Multiemployer Plan.

 

24

 

“Toxic Substance”
shall mean and include any material present on the Real Property or the
Leasehold Interests which has been shown to have significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any
other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances.  “Toxic
Substance” includes but is not limited to asbestos, polychlorinated biphenyls
(PCBs) and lead-based paints.

 

“Trading with the Enemy
Act” shall mean the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
enabling legislation or executive order relating thereto.

 

“Transactions” shall
have the meaning set forth in Section 5.5 hereof.

 

“Transferee” shall
have the meaning set forth in Section 16.3(d) hereof.

 

“Undrawn Availability”
at a particular date shall mean an amount equal to (a) the lesser of (i) the
Formula Amount or (ii) the Maximum Revolving Advance Amount, less
the Maximum Undrawn Amount of all outstanding Letters of Credit, less
the Availability Block, minus (b) the sum of (i) the
outstanding amount of Advances, plus (ii) all amounts due and owing
to any Borrower’s trade creditors which are outstanding sixty (60) days past
their due date (but not as a result of a bona fide dispute), plus (iii) fees
and expenses for which Borrowers are liable but which have not been paid or
charged to Borrowers’ Account.

 

“Unfunded Capital
Expenditures” shall mean Capital Expenditures made through Revolving
Advances or out of Borrowers’ own funds other than through equity contributed
subsequent to the Closing Date or purchase money or other financing or lease
transactions permitted hereunder.

 

“Uniform Commercial Code”
shall have the meaning set forth in Section 1.3 hereof.

 

“USA PATRIOT Act”
shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or
replaced.

 

“Week” shall mean the
time period commencing with the opening of business on a Wednesday and ending
on the end of business the following Tuesday.

 

1.3.                              Uniform
Commercial Code Terms.  All
terms used herein and defined in the Uniform Commercial Code as adopted in the
State of Illinois from time to time (the “Uniform Commercial Code”) shall have
the meaning given therein unless otherwise defined herein.  Without limiting the foregoing, the terms “accounts”,
“chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”,
“goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”,
“investment property”, “documents”, “deposit accounts”, “software”, “letter of
credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in
the description of Collateral shall have the meanings given to such terms in
Articles 8 or 9 of the Uniform Commercial Code. 
To the extent the definition of any category or type of collateral is
expanded by any amendment, modification or revision to the Uniform Commercial
Code, such 

 

25

 

expanded definition will apply automatically
as of the date of such amendment, modification or revision.

 

1.4.                              Certain Matters
of Construction.  The terms “herein”,
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision.  All references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all
genders.  Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice
versa.  All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations.  Unless
otherwise provided, all references to any instruments or agreements to which
Agent is a party, including references to any of the Other Documents, shall
include any and all modifications, supplements or amendments thereto, any and
all restatements or replacements thereof and any and all extensions or renewals
thereof.  All references herein to the
time of day shall mean the time in New York, New York.  Unless otherwise provided, all financial calculations
shall be performed with Inventory valued on a weighted averages cost basis (or
any other costing method in compliance with GAAP and consented to in writing by
Agent prior to implementation).  Whenever
the words “including” or “include” shall be used, such words shall be
understood to mean “including, without limitation” or “include, without
limitation”.  A Default or Event of
Default shall be deemed to exist at all times during the period commencing on
the date that such Default or Event of Default occurs to the date on which such
Default or Event of Default is waived in writing pursuant to this Agreement or,
in the case of a Default, is cured within any period of cure expressly provided
for in this Agreement; and an Event of Default shall “continue” or be “continuing”
until such Event of Default has been waived in writing by the Required Lenders
or all Lenders, as applicable.  Any Lien
referred to in this Agreement or any of the Other Documents as having been
created in favor of Agent, any agreement entered into by Agent pursuant to this
Agreement or any of the Other Documents, any payment made by or to or funds
received by Agent pursuant to or as contemplated by this Agreement or any of
the Other Documents, or any act taken or omitted to be taken by Agent, shall,
unless otherwise expressly provided, be created, entered into, made or
received, or taken or omitted, for the benefit or account of Agent and Lenders.
Wherever the phrase “to the best of Borrowers’ knowledge” or words of similar
import relating to the knowledge or the awareness of any Borrower are used in
this Agreement or Other Documents, such phrase shall mean and refer to (i) the
actual knowledge of a senior officer of any Borrower or (ii) the knowledge
that a senior officer would have obtained if he had engaged in good faith and
diligent performance of his duties, including the making of such reasonably
specific inquiries as may be necessary of the employees or agents of such
Borrower and a good faith attempt to ascertain the existence or accuracy of the
matter to which such phrase relates.  All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or otherwise within the limitations of,
another covenant shall not avoid the occurrence of a default if such action is
taken or condition exists.  In addition,
all representations and warranties hereunder shall be given independent effect
so that if a particular representation or warranty proves to be incorrect or is
breached, the fact that another representation or warranty concerning the same
or similar subject matter is correct or is not breached will not affect the
incorrectness of a breach of a representation or warranty hereunder.

 

26

 

II.                                     ADVANCES, PAYMENTS.

 

2.1.                              Revolving
Advances.

 

(a)                                  Amount of
Revolving Advances.  Subject to
the terms and conditions set forth in this Agreement including Sections 2.1(b) and
(c), each Lender, severally and not jointly, will make Revolving Advances to
Borrowers in aggregate amounts outstanding at any time equal to such Lender’s
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance
Amount less the aggregate Maximum Undrawn Amount of all outstanding
Letters of Credit less the Availability Block or (y) an amount
equal to the sum of:

 

(i)                                     up to 85%,
subject to the provisions of Section 2.1(b) hereof (“Receivables
Advance Rate”), of Eligible Receivables, plus

 

(ii)                                  up to 50%,
subject to the provisions of Sections 2.1(b) and (c) hereof, of the
value of the Eligible Inventory, (as applicable, the “Inventory Advance Rate”
and together with the Receivables Advance Rate, collectively, the “Advance
Rates”), plus

 

(iii)                               100% of the
Letter of Credit Cash Collateral, minus

 

(iv)                              the aggregate
Maximum Undrawn Amount of all outstanding Letters of Credit, minus

 

(v)                                 the
Availability Block and such other reserves as Agent may reasonably deem proper
and necessary from time to time.

 

The amount derived from the
sum of (x) Sections 2.1(a)(y)(i), (ii) and (iii) minus (y) Sections
2.1(a)(y)(iv) and (v) at any time and from time to time shall be
referred to as the “Formula Amount”. The Revolving Advances shall be evidenced
by one or more secured promissory notes (collectively, the “Revolving Credit
Note”) substantially in the form attached hereto as Exhibit 2.1(a).

 

(b)                                 Discretionary
Rights.  The Advance Rates may be
increased or decreased by Agent at any time and from time to time in the
exercise of its in the exercise of its Permitted Discretion.  Each Borrower consents to any such increases
or decreases and acknowledges that decreasing the Advance Rates or increasing
or imposing reserves may limit or restrict Advances requested by Borrowing
Agent.  Agent shall give Borrowing Agent
five (5) days prior written notice of its intention to decrease the
Advance Rates.   The rights of Agent under this subsection are
subject to the provisions of Section 16.2(b).

 

(c)                                  Sublimit for
Revolving Advances.  The
aggregate amount of Revolving Advances made to Borrower against (i) Eligible
Inventory shall not exceed Ten Million Dollars ($10,000,000) at any time and (ii) Eligible
Receivables due from BioUrja Trading LLC shall not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000) at any time.

 

27

 

2.2.                              Procedure for
Revolving Advances Borrowing.

 

(a)                                  Borrowing Agent
on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a
Business Day of a Borrower’s request to incur, on that day, a Revolving Advance
hereunder.  Should any amount required to
be paid as interest hereunder, or as fees or other charges under this Agreement
or any other agreement with Agent or Lenders, or with respect to any other
Obligation, become due, same shall be deemed a request for a Revolving Advance
maintained as a Domestic Rate Loan as of the date such payment is due, in the
amount required to pay in full such interest, fee, charge or Obligation under
this Agreement or any other agreement with Agent or Lenders, and such request
shall be irrevocable.

 

(b)                                 Notwithstanding
the provisions of subsection (a) above, in the event any Borrower desires
to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written
notice by no later than 10:00 a.m. on the day which is three (3) Business
Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the
date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be in a minimum amount of $500,000 and in integral multiples
of $100,000 thereafter, and (iii) the duration of the first Interest
Period therefor.  Interest Periods for
Eurodollar Rate Loans shall be for one, two or three months; provided, if an
Interest Period would end on a day that is not a Business Day, it shall end on
the next succeeding Business Day unless such day falls in the next succeeding
calendar month in which case the Interest Period shall end on the next
preceding Business Day.  No Eurodollar
Rate Loan shall be made available to any Borrower during the continuance of a
Default or an Event of Default.  After
giving effect to each requested Eurodollar Rate Loan, including those which are
converted from a Domestic Rate Loan under Section 2.2(d), there shall not
be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.

 

(c)                                  Each Interest
Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar
Rate Loan is made and shall end on such date as Borrowing Agent may elect as
set forth in subsection (b)(iii) above provided that the exact length of
each Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the last day of the Term.

 

Borrowing Agent shall elect
the initial Interest Period applicable to a Eurodollar Rate Loan by its notice
of borrowing given to Agent pursuant to Section 2.2(b) or by its
notice of conversion given to Agent pursuant to Section 2.2(d), as the
case may be.  Borrowing Agent shall elect
the duration of each succeeding Interest Period by giving irrevocable written
notice to Agent of such duration not later than 10:00 a.m. on the day
which is three (3) Business Days prior to the last day of the then current
Interest Period applicable to such Eurodollar Rate Loan.  If Agent does not receive timely notice of
the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed
to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.

 

(d)                                 Provided that
no Event of Default shall have occurred and be continuing, Borrowing Agent may,
on the last Business Day of the then current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or on any Business Day with respect to
Domestic Rate Loans, convert any such loan into a loan of another type in the
same aggregate principal amount 

 

28

 

provided that any conversion of a Eurodollar
Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such Eurodollar Rate Loan.  If Borrowing Agent desires to convert a loan,
Borrowing Agent shall give Agent written notice by no later than 10:00 a.m.
(i) on the day which is three (3) Business Days’ prior to the date on
which such conversion is to occur with respect to a conversion from a Domestic
Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business
Day prior to the date on which such conversion is to occur with respect to a
conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in
each case, the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor.

 

(e)                                  At its option
and upon written notice given prior to 10:00 a.m. (New York time) at least
three (3) Business Days’ prior to the date of such prepayment, any
Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part
from time to time with accrued interest on the principal being prepaid to the
date of such repayment.  Such Borrower
shall specify the date of prepayment of Advances which are Eurodollar Rate
Loans and the amount of such prepayment. 
In the event that any prepayment of a Eurodollar Rate Loan is required
or permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, such Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.

 

(f)                                    Each Borrower
shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and
against any and all losses or expenses that Agent and Lenders may sustain or
incur as a consequence of any prepayment, conversion of or any default by any
Borrower in the payment of the principal of or interest on any Eurodollar Rate
Loan or failure by any Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
lenders of funds obtained by it in order to make or maintain its Eurodollar
Rate Loans hereunder.  A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted
by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest
error.

 

(g)                                 Notwithstanding
any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this subsection
(g), the term “Lender” shall include any Lender and the office or branch where
any Lender or any corporation or bank controlling such Lender makes or maintains
any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith
be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are
then outstanding, promptly upon request from Agent, either pay all such
affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans
into loans of another type.  If any such
payment or conversion of any Eurodollar Rate Loan is made on a day that is not the
last day of the Interest Period applicable to such Eurodollar Rate Loan,
Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may
be necessary to compensate Lenders for any loss or expense sustained or
incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such
payment or conversion, including (but not limited to) any interest or other
amounts payable by Lenders to lenders of funds obtained by Lenders in order to
make or maintain such 

 

29

 

Eurodollar Rate Loan.  A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing
Agent shall be conclusive absent manifest error.

 

2.3.                              Disbursement of
Advance Proceeds.  All
Advances shall be disbursed from whichever office or other place Agent may
designate from time to time and, together with any and all other Obligations of
Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s
books.  During the Term, Borrowers may
use the Revolving Advances by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions hereof.  The proceeds of each Revolving Advance
requested by Borrowing Agent on behalf of any Borrower or deemed to have been
requested by any Borrower under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the applicable Borrower on the day so
requested by way of credit to such Borrower’s operating account at PNC, or such
other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or,
with respect to Revolving Advances deemed to have been requested by any
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.

 

2.4.                              Intentionally
Omitted.

 

2.5.                              Maximum
Advances.  The
aggregate balance of Revolving Advances outstanding at any time shall not
exceed the lesser of (a) the Maximum Revolving Advance Amount less
the Maximum Undrawn Amount of all issued and outstanding Letters of Credit less
the Availability Block or (b) the Formula Amount.

 

2.6.                              Repayment of
Advances.

 

(a)                                  The Advances
shall be due and payable in full on the last day of the Term subject to earlier
prepayment as herein provided.

 

(b)                                 Each Borrower
recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. 
In consideration of Agent’s agreement to conditionally credit Borrowers’
Account as of the next Business Day following Agent’s receipt of those items of
payment, each Borrower agrees that, in computing the charges under this
Agreement, all items of payment shall be deemed applied by Agent on account of
the Obligations one (1) Business Day after (i) the Business Day
following Agent’s receipt of such payments via wire transfer or electronic depository
check or (ii) in the case of payments received by Agent in any other form,
the Business Day such payment constitutes good funds in Agent’s account.  Agent is not, however, required to credit
Borrowers’ Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrowers’ Account for the amount
of any item of payment which is returned to Agent unpaid.

 

(c)                                  All payments of
principal, interest and other amounts payable hereunder, or under any of the
Other Documents shall be made to Agent at the Payment Office not later than
1:00 P.M. (New York time) on the due date therefor in lawful money of the
United States of 

 

30

 

America in federal funds or other funds immediately
available to Agent.  Agent shall have the
right to effectuate payment on any and all Obligations due and owing hereunder
by charging Borrowers’ Account or by making Advances as provided in Section 2.2
hereof.

 

(d)                                 Borrowers shall
pay principal, interest, and all other amounts payable hereunder, or under any
related agreement, without any deduction whatsoever, including, but not limited
to, any deduction for any setoff or counterclaim.

 

2.7.                              Repayment of
Excess Advances.  The
aggregate balance of Advances outstanding at any time in excess of the maximum
amount of Advances permitted hereunder shall be immediately due and payable
without the necessity of any demand, at the Payment Office, whether or not a
Default or Event of Default has occurred.

 

2.8.                              Statement of
Account.  Agent shall maintain, in
accordance with its customary procedures, a loan account (“Borrowers’ Account”)
in the name of Borrowers in which shall be recorded the date and amount of each
Advance made by Agent or any Lender and the date and amount of each payment in
respect thereof; provided, however, the failure by Agent to record the date and
amount of any Advance shall not adversely affect Agent or any Lender.  Each month, Agent shall send to Borrowing
Agent a statement showing the accounting for the Advances made, payments made
or credited in respect thereof, and other transactions between Agent and
Borrowers during such month.  The monthly
statements shall be deemed correct and binding upon Borrowers in the absence of
manifest error and shall constitute an account stated between Lenders and
Borrowers unless Agent receives a written statement of Borrowers’ specific
exceptions thereto within thirty (30) days after such statement is received by
Borrowing Agent.  The records of Agent
with respect to the loan account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments
applicable thereto.

 

2.9.                              Letters of
Credit.  Subject to the terms and
conditions hereof, Agent shall issue or cause the issuance of standby and/or
trade letters of credit (“Letters of Credit”) for the account of any Borrower
to the extent that the issuance thereof would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount
of all outstanding Letters of Credit to exceed the lesser of (x) the
Maximum Revolving Advance Amount less the Availability Block or (y) the
Formula Amount.  The Maximum Undrawn
Amount of outstanding Letters of Credit shall not exceed in the aggregate at
any time the Letter of Credit Sublimit. 
All disbursements or payments related to Letters of Credit shall be
deemed to be Domestic Rate Loans consisting of Revolving Advances and shall
bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters
of Credit that have not been drawn upon shall not bear interest.

 

2.10.                        Issuance of
Letters of Credit.

 

(a)                                  Borrowing
Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior to
10:00 a.m. (New York time), at least five (5)  Business Days’ prior
to the proposed date of issuance, Agent’s form of Letter of Credit Application
(the “Letter of Credit Application”) completed to the satisfaction of Agent; and,
such other certificates, documents and other papers and information as Agent
may reasonably request.  Borrowing Agent,
on behalf of Borrowers, 

 

31

 

also has the right to give instructions and
make agreements with respect to any application, any applicable letter of
credit and security agreement, any applicable letter of credit reimbursement
agreement and/or any other applicable agreement, any letter of credit and the
disposition of documents, disposition of any unutilized funds, and to agree
with Agent upon any amendment, extension or renewal of any Letter of Credit.

 

(b)                                 Each Letter of
Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances of usance drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry
date not later than twelve (12) months after such Letter of Credit’s date of issuance;
provided that such Letters of Credit may have provisions automatically
extending the expiry date of such letter of Credit subject to certain
limitations and/or conditions, but in no event later than the last day of the
Term.  Each standby Letter of Credit
shall be subject either to the Uniform Customs and Practice for Documentary
Credits as most recently published by the International Chamber of Commerce at
the time a Letter of Credit is issued (the “UCP”) or the International Standby
Practices (ISP98-International Chamber of Commerce Publication Number 590) (the
“ISP98 Rules”), and any subsequent revision thereof at the time a standby
Letter of Credit is issued, as determined by Agent, and each trade Letter of
Credit shall be subject to the UCP.

 

(c)                                  Agent shall use
its reasonable efforts to notify Lenders of the request by Borrowing Agent for
a Letter of Credit hereunder.

 

2.11.                        Requirements
For Issuance of Letters of Credit.

 

(a)                                  Borrowing Agent
shall authorize and direct any Issuer to name the applicable Borrower as the “Applicant”
or “Account Party” of each Letter of Credit. 
If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent’s instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit, the application therefor or any acceptance thereof.

 

(b)                                 In connection
with all Letters of Credit issued or caused to be issued by Agent under this
Agreement, each Borrower hereby appoints Agent, or its designee, as its
attorney, with full power and authority if an Event of Default shall have
occurred and be continuing, (i) to sign and/or endorse such Borrower’s
name upon any warehouse or other receipts, letter of credit applications and
acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to
clear Inventory through the United States of America Customs Department (“Customs”)
in the name of such Borrower or Agent or Agent’s designee, and to sign and
deliver to Customs officials powers of attorney in the name of such Borrower
for such purpose; and (iv) to complete in such Borrower’s name or Agent’s,
or in the name of Agent’s designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds
thereof.  Neither Agent nor its attorneys
will be liable for any acts or omissions nor for any error of judgment or
mistakes of fact or law, except for Agent’s or its attorney’s gross negligence
or willful misconduct.  This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit
remain outstanding.

 

32

 

2.12.                        Disbursements,
Reimbursement.

 

(a)                                  Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such
Letter of Credit and the amount of such drawing, respectively.

 

(b)                                 In the event of
any request for a drawing under a Letter of Credit by the beneficiary or
transferee thereof, Agent will promptly notify Borrowing Agent.  Provided that Borrowing Agent shall have
received such notice, the Borrowers shall reimburse (such obligation to
reimburse Agent shall sometimes be referred to as a “Reimbursement Obligation”)
Agent prior to 12:00 Noon, New York time on each date that an amount is paid by
Agent under any Letter of Credit (each such date, a “Drawing Date”) in an
amount equal to the amount so paid by Agent. 
In the event Borrowers fail to reimburse Agent for the full amount of
any drawing under any Letter of Credit by 12:00 Noon, New York time, on the
Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers
shall be deemed to have requested that a Revolving Advance maintained as a Domestic
Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the lesser
of (i) the Maximum Revolving Advance Amount, less the Availability
Block, less the Maximum Undrawn Amount of all outstanding Letters of
Credit, or (ii) the Formula Amount and, in each case, subject to Section 8.2
hereof.  Any notice given by Agent
pursuant to this Section 2.12(b) may be oral if immediately confirmed
in writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

 

(c)                                  Each Lender
shall upon any notice pursuant to Section 2.12(b) make available to
Agent an amount in immediately available funds equal to its Commitment
Percentage of the amount of the drawing, whereupon the participating Lenders
shall (subject to Section 2.12(d)) each be deemed to have made a Revolving
Advance maintained as a Domestic Rate Loan to Borrowers in that amount.  If any Lender so notified fails to make
available to Agent the amount of such Lender’s Commitment Percentage of such
amount by no later than 2:00 p.m., New York time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment, from
the Drawing Date to the date on which such Lender makes such payment (i) at
a rate per annum equal to the Federal Funds Effective Rate during the first
three days following the Drawing Date and (ii) at a rate per annum equal
to the rate applicable to Revolving Advances maintained as a Domestic Rate
Loans on and after the fourth day following the Drawing Date.  Agent will promptly give notice of the
occurrence of the Drawing Date, but failure of Agent to give any such notice on
the Drawing Date or in sufficient time to enable any Lender to effect such
payment on such date shall not relieve such Lender from its obligation under
this Section 2.12(c), provided that such Lender shall not be obligated to
pay interest as provided in Section 2.12(c) (i) and (ii) until
and commencing from the date of receipt of notice from Agent of a drawing.

 

(d)                                 With respect to
any unreimbursed drawing that is not converted into a Revolving Advance
maintained as a Domestic Rate Loan to Borrowers in whole or in part as
contemplated by Section 2.12(b), because of Borrowers’ failure to satisfy
the conditions set forth 

 

33

 

in Section 8.2 hereof (other than any
notice requirements) or for any other reason, Borrowers shall be deemed to have
incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the
amount of such drawing. Such Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the rate
per annum applicable to a Revolving Advance maintained as a Domestic Rate
Loan.  Each Lender’s payment to Agent
pursuant to Section 2.12(c) shall be deemed to be a payment in
respect of its participation in such Letter of Credit Borrowing and shall
constitute a “Participation Advance” from such Lender in satisfaction of its
Participation Commitment under this Section 2.12.

 

(e)                                  Each Lender’s
Participation Commitment shall continue until the last to occur of any of the
following events: (x) Agent ceases to be obligated to issue or cause to be
issued Letters of Credit hereunder; (y) no Letter of Credit issued or
created hereunder remains outstanding and uncancelled; and (z) all Persons
(other than the Borrowers) have been fully reimbursed for all payments made
under or relating to Letters of Credit.

 

2.13.                        Repayment of
Participation Advances.

 

(a)                                  Upon (and only
upon) receipt by Agent for its account of immediately available funds from
Borrowers (i) in reimbursement of any payment made by the Agent under the
Letter of Credit with respect to which any Lender has made a Participation
Advance to Agent, or (ii) in payment of interest on such a payment made by
Agent under such a Letter of Credit, Agent will pay to each Lender, in the same
funds as those received by Agent, the amount of such Lender’s Commitment
Percentage of such funds, except Agent shall retain the amount of the
Commitment Percentage of such funds of any Lender that did not make a
Participation Advance in respect of such payment by Agent.

 

(b)                                 If Agent is
required at any time to return to any Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any
portion of the payments made by Borrowers to Agent pursuant to Section 2.13(a) in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of Agent, forthwith return to Agent the
amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.

 

2.14.                        Documentation.  Each Borrower agrees to be bound by the terms
of the Letter of Credit Application and by Agent’s interpretations of any
Letter of Credit issued on behalf of such Borrower and by Agent’s written
regulations and customary practices relating to letters of credit, though Agent’s
interpretations may be different from such Borrower’s own.  In the event of a conflict between the Letter
of Credit Application and this Agreement, this Agreement shall govern.  It is understood and agreed that, except in
the case of gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final non-appealable judgment), Agent shall not be
liable for any error, negligence and/or mistakes, whether of omission or
commission, in following the Borrowing Agent’s or any Borrower’s instructions
or those contained in the Letters of Credit or any modifications, amendments or
supplements thereto.

 

2.15.                        Determination
to Honor Drawing Request.  In
determining whether to honor any request for drawing under any Letter of Credit
by the beneficiary thereof, Agent shall be 

 

34

 

responsible only to determine that the
documents and certificates required to be delivered under such Letter of Credit
have been delivered and that they comply on their face with the requirements of
such Letter of Credit and that any other drawing condition appearing on the
face of such Letter of Credit has been satisfied in the manner so set forth.

 

2.16.                        Nature of
Participation and Reimbursement Obligations.  Each Lender’s obligation in accordance with
this Agreement to make the Revolving Advances or Participation Advances as a
result of a drawing under a Letter of Credit, and the obligations of Borrowers
to reimburse Agent upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Section 2.16 under all circumstances, including the
following circumstances:

 

(i)                                     any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against Agent, any Borrower or any other Person for any reason whatsoever;

 

(ii)                                  the failure of
any Borrower or any other Person to comply, in connection with a Letter of
Credit Borrowing, with the conditions set forth in this Agreement for the
making of a Revolving Advance, it being acknowledged that such conditions are
not required for the making of a Letter of Credit Borrowing and the obligation
of the Lenders to make Participation Advances under Section 2.12;

 

(iii)                               any lack of
validity or enforceability of any Letter of Credit;

 

(iv)                              any claim of
breach of warranty that might be made by Borrower or any Lender against the
beneficiary of a Letter of Credit, or the existence of any claim, set-off,
recoupment, counterclaim, cross-claim, defense or other right which any
Borrower or any Lender may have at any time against a beneficiary, any
successor beneficiary or any transferee of any Letter of Credit or the proceeds
thereof (or any Persons for whom any such transferee may be acting), Agent or
any Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or any Subsidiaries of such
Borrower and the beneficiary for which any Letter of Credit was procured);

 

(v)                                 the lack of
power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency,
accuracy, enforceability or genuineness of any draft, demand, instrument,
certificate or other document presented under or in connection with any Letter
of Credit, or any fraud or alleged fraud in connection with any Letter of
Credit, or the transport of any property or provisions of services relating to
a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has
been notified thereof;

 

(vi)                              payment by
Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; provided that the foregoing shall not be construed to excuse
the Agent from liability to the Borrowers for direct damages suffered by the
Borrowers as a result of the failure 

 

35

 

of the Agent to exercise care when
determining whether such drafts or other documents comply with the terms
thereof;

 

(vii)                           the solvency
of, or any acts or omissions by, any beneficiary of any Letter of Credit, or
any other Person having a role in any transaction or obligation relating to a
Letter of Credit, or the existence, nature, quality, quantity, condition, value
or other characteristic of any property or services relating to a Letter of
Credit;

 

(viii)                        any failure by
the Agent or any of Agent’s Affiliates to issue any Letter of Credit in the
form requested by Borrowing Agent, unless the Agent has received written notice
from Borrowing Agent of such failure within three (3) Business Days after
the Agent shall have furnished Borrowing Agent a copy of such Letter of Credit
and such error is material and no drawing has been made thereon prior to
receipt of such notice;

 

(ix)                                any Material
Adverse Effect;

 

(x)                                   any breach of
this Agreement or any Other Document by any party thereto;

 

(xi)                                the occurrence
or continuance of an insolvency proceeding with respect to any Borrower or any
Guarantor;

 

(xii)                             the fact that a
Default or Event of Default shall have occurred and be continuing;

 

(xiii)                          the fact that
the Term shall have expired or this Agreement or the Obligations hereunder
shall have been terminated; and

 

(xiv)                         any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

 

2.17.                        Indemnity.  In addition to amounts payable as provided in
Section 16.5, each Borrower hereby agrees to protect, indemnify, pay and
save harmless Agent and any of Agent’s Affiliates that have issued a Letter of
Credit from and against any and all claims, demands, liabilities, damages,
taxes (excluding taxes imposed upon or measured by the net income of Agent or
Agent’s Affiliates), penalties, interest, judgments, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of external
counsel) which the Agent or any of Agent’s Affiliates may incur or be subject
to as a consequence, direct or indirect, of the issuance of any Letter of
Credit, other than as a result of (a) the gross negligence or willful
misconduct of the Agent as determined by a final and non-appealable judgment of
a court of competent jurisdiction or (b) the wrongful dishonor by the
Agent or any of Agent’s Affiliates of a proper demand for payment made under
any Letter of Credit, except if such dishonor resulted from any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Body (all such acts or omissions herein called “Governmental
Acts”).

 

2.18.                        Liability for
Acts and Omissions.  As between
Borrowers and Agent and Lenders, each Borrower assumes all risks of the acts
and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. 
In furtherance and not in limitation of 

 

36

 

the respective foregoing, Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if Agent shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of Agent, including any governmental
acts, and none of the above shall affect or impair, or prevent the vesting of,
any of Agent’s rights or powers hereunder. Nothing in the preceding sentence
shall relieve Agent from liability for Agent’s gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment) in connection with actions or omissions described in
such clauses (i) through (viii) of such sentence.  In no event shall Agent or Agent’s Affiliates
be liable to any Borrower for any indirect, consequential, incidental,
punitive, exemplary or special damages or expenses (including without
limitation attorneys’ fees), or for any damages resulting from any change in
the value of any property relating to a Letter of Credit.

 

Without limiting the
generality of the foregoing, Agent and each of its Affiliates: (i) may
rely on any oral or other communication believed in good faith by Agent or such
Affiliate to have been authorized or given by or on behalf of the applicant for
a Letter of Credit; (ii) may honor any presentation if the documents presented
appear on their face substantially to comply with the terms and conditions of
the relevant Letter of Credit; (iii) may honor a previously dishonored
presentation under a Letter of Credit, whether such dishonor was pursuant to a
court order, to settle or compromise any claim of wrongful dishonor, or
otherwise, and shall be entitled to reimbursement to the same extent as if such
presentation had initially been honored, together with any interest paid by
Agent or its Affiliates; (iv) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt of
such statement (even if such statement indicates that a draft or other document
is being delivered separately), and shall not be liable for any failure of any
such draft or other document to arrive, or to conform in any way with the
relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or
demand made on Agent or its Affiliate in any way related to any order issued at
the applicant’s request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an “Order”) and
honor any drawing in connection with any Letter of Credit that is the subject
of such Order, 

 

37

 

notwithstanding
that any drafts or other documents presented in connection with such Letter of
Credit fail to conform in any way with such Letter of Credit.

 

In furtherance and extension
and not in limitation of the specific provisions set forth above, any action
taken or omitted by Agent under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered thereunder, if taken
or omitted in good faith and without gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable
judgment), shall not put Agent under any resulting liability to any Borrower or
any Lender.

 

2.19.                        Additional
Payments.  Any sums
expended by Agent or any Lender due to any Borrower’s failure to perform or
comply with its obligations under this Agreement or any Other Document
including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14
and 6.1 hereof, may be charged to Borrowers’ Account as a Revolving Advance and
added to the Obligations.

 

2.20.                        Manner of
Borrowing and Payment.

 

(a)                                  Each borrowing
of Revolving Advances shall be advanced according to the applicable Commitment
Percentages of Lenders.

 

(b)                                 Each payment
(including each prepayment) by any Borrower on account of the principal of and
interest on the Revolving Advances, shall be applied to the Revolving Advances
pro rata according to the applicable Commitment Percentages of Lenders.  Except as expressly provided herein, all
payments (including prepayments) to be made by any Borrower on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in
immediately available funds.

 

(c)                                  (i)                                     Notwithstanding
anything to the contrary contained in Sections 2.20(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by
any Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent.  On
or before 1:00 P.M., New York time, on each Settlement Date commencing
with the first Settlement Date following the Closing Date, Agent and Lenders
shall make certain payments as follows: (I) if the aggregate amount of new
Revolving Advances made by Agent during the preceding Week (if any) exceeds the
aggregate amount of repayments applied to outstanding Revolving Advances during
such preceding Week, then each Lender shall provide Agent with funds in an
amount equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate
amount of repayments applied to outstanding Revolving Advances during such Week
exceeds the aggregate amount of new Revolving Advances made during such Week,
then Agent shall provide each Lender with funds in an amount equal to its
applicable Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Advances.

 

(ii)                                  Each Lender
shall be entitled to earn interest at the applicable Revolving Interest Rate on
outstanding Advances which it has funded.

 

38

 

(iii)                               Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date.  Such
certificate of Agent shall be conclusive in the absence of manifest error.

 

(d)                                 If any Lender
or Participant (a “Benefited Lender”) shall at any time receive any payment of
all or part of its Advances, or interest thereon, or receive any Collateral in
respect thereof (whether voluntarily or involuntarily or by set-off) in a
greater proportion than any such payment to and Collateral received by any
other Lender, if any, in respect of such other Lender’s Advances, or interest
thereon, and such greater proportionate payment or receipt of Collateral is not
expressly permitted hereunder, such Benefited Lender shall purchase for cash
from the other Lenders a participation in such portion of each such other
Lender’s Advances, or shall provide such other Lender with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the other Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefited Lender, such purchase shall be rescinded, and the purchase price
and benefits returned, to the extent of such recovery, but without
interest.  Each Lender so purchasing a
portion of another Lender’s Advances may exercise all rights of payment
(including rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

 

(e)                                  Unless Agent
shall have been notified by telephone, confirmed in writing, by any Lender that
such Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available
to Agent on the next Settlement Date and, in reliance upon such assumption,
make available to Borrowers a corresponding amount.  Agent will promptly notify Borrowing Agent of
its receipt of any such notice from a Lender. 
If such amount is made available to Agent on a date after such next
Settlement Date, such Lender shall pay to Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Effective Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from
and including such Settlement Date to the date on which such amount becomes
immediately available to Agent.  A
certificate of Agent submitted to any Lender with respect to any amounts owing
under this paragraph (e) shall be conclusive, in the absence of manifest
error.  If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days
after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers’ rights (if any) against such Lender.

 

2.21.                        Mandatory
Prepayments.  When any
Borrower sells or otherwise disposes of any Collateral (other than Inventory in
the Ordinary Course of Business or unwinding of overnight investments or other
similar arrangements which are to be reinvested automatically in the Ordinary
Course of Business), Borrowers shall repay the Advances in an amount equal to
the lesser of the net proceeds of such sale (i.e., gross proceeds less the
reasonable costs of such sales or other dispositions) and the amount of such
outstanding Advances, such repayments to be made promptly but in no event more
than one (1) Business Day following receipt of such net 

 

39

 

proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. 
The foregoing shall not be deemed to be implied consent to any such sale
otherwise prohibited by the terms and conditions hereof.  Such repayments shall be applied to the
Advances in such order as Agent may determine, subject to Borrowers’ ability to
reborrow Revolving Advances in accordance with the terms hereof.

 

2.22.                        Use of Proceeds.

 

(a)                                  Borrowers shall
apply the proceeds of Advances to (i) pay fees and expenses relating to
this transaction, and (ii) provide for its working capital needs and
reimburse drawings under Letters of Credit.

 

(b)                                 Without
limiting the generality of Section 2.22(a) above, neither the
Borrowers, the Guarantors nor any other Person which may in the future become
party to this Agreement or the Other Documents as a Borrower or Guarantor,
intends to use nor shall they use any portion of the proceeds of the Advances,
directly or indirectly, for any purpose in violation of the Trading with the
Enemy Act.

 

2.23.                        Defaulting
Lender.

 

(a)                                  Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (y) notifies
either Agent or Borrowing Agent that it does not intend to make available its
portion of any Advance (if the actual refusal would constitute a breach by such
Lender of its obligations under this Agreement) (each, a “Lender Default”), all
rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to
which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of the express provisions of this Section 2.23
while such Lender Default remains in effect.

 

(b)                                 Advances shall
be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are not
Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances
required to be advanced by any Lender shall be increased as a result of such
Lender Default.  Amounts received in
respect of principal of any type of Advances shall be applied to reduce the
applicable Advances of each Lender (other than any Defaulting Lender) pro rata
based on the aggregate of the outstanding Advances of that type of all Lenders
at the time of such application; provided, that, Agent shall not be obligated
to transfer to a Defaulting Lender any payments received by Agent for the
Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder (including any principal, interest or
fees).  Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent.  Agent may hold and, in its discretion,
re-lend to a Borrower the amount of such payments received or retained by it
for the account of such Defaulting Lender.

 

(c)                                  A Defaulting
Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and
the Other Documents.  All amendments,
waivers and other modifications of this Agreement and the 

 

40

 

Other Documents may be made without regard to
a Defaulting Lender and, for purposes of the definition of “Required Lenders”,
a Defaulting Lender shall be deemed not to be a Lender and not to have either
Advances outstanding or a Commitment Percentage.

 

(d)                                 Other than as
expressly set forth in this Section 2.23, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged. 
Nothing in this Section 2.23 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other
Documents, shall alter such obligations, shall operate as a waiver of any
default by such Defaulting Lender hereunder, or shall prejudice any rights
which any Borrower, Agent or any Lender may have against any Defaulting Lender
as a result of any default by such Defaulting Lender hereunder.

 

(e)                                  In the event a
Defaulting Lender retroactively cures to the satisfaction of Agent the breach
which caused a Lender to become a Defaulting Lender, such Defaulting Lender
shall no longer be a Defaulting Lender and shall be treated as a Lender under
this Agreement.

 

III.                                 INTEREST AND FEES.

 

3.1.                              Interest.  Interest on Advances shall be payable in
arrears on the first day of each month with respect to Domestic Rate Loans and,
with respect to Eurodollar Rate Loans, at the end of each Interest Period or,
for Eurodollar Rate Loans with an Interest Period in excess of three months, at
the earlier of (a) each three months from the commencement of such
Eurodollar Rate Loan or (b) the end of the Interest Period.  Interest charges shall be computed on the
actual principal amount of Advances outstanding during the month at a rate per annum
equal to with respect to Revolving Advances, the applicable Revolving Interest
Rate.  Whenever, subsequent to the date
of this Agreement, the Alternate Base Rate is increased or decreased, the
Revolving Interest Rate for Domestic Rate Loans shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain
in effect.  The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve Percentage as of such
effective date.  Upon and after the
occurrence of an Event of Default, and during the continuation thereof, (i) at
the option of Agent or at the direction of Required Lenders, the Obligations
shall bear interest at the Revolving Interest Rate for Domestic Rate Loans plus
two percent (2.00%) per annum and (ii) Eurodollar Rate Loans shall bear
interest at the Revolving Interest Rate for Eurodollar Rate Loans plus
two percent (2.00%) percent per annum (the “Default Rate”).

 

3.2.                              Letter of
Credit Fees.

 

(a)                                  Borrowers shall
pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the average daily
face amount of each outstanding Letter of Credit multiplied by six percent
(6.00%) per annum, such fees to be calculated on the basis of a 360-day year
for the actual number of days elapsed and to be payable quarterly in arrears on
the first day of each quarter and on the last day of the Term, and (y) to
the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum,
together with any and all administrative, issuance, amendment, payment and
negotiation charges with respect to Letters of 

 

41

 

Credit and all fees and expenses as agreed
upon by the Issuer and the Borrowing Agent in connection with any Letter of
Credit, including in connection with the opening, amendment or renewal of any
such Letter of Credit and any acceptances created thereunder and shall
reimburse Agent for any and all fees and expenses, if any, paid by Agent to the
Issuer (all of the foregoing fees, the “Letter of Credit Fees”).  All such charges shall be deemed earned in
full on the date when the same are due and payable hereunder and shall not be
subject to rebate or pro-ration upon the termination of this Agreement for any
reason.  Any such charge in effect at the
time of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer’s prevailing charges for
that type of transaction.  All Letter of
Credit Fees payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason.  Upon and after the occurrence of an Event of
Default, and during the continuation thereof, at the option of Agent or at the
direction of Required Lenders, the Letter of Credit Fees described in clause (x) of
this Section 3.2(a) shall be increased by an additional two percent
(2.0%) per annum.

 

(b)                                 At any time following
the occurrence and during the continuation of an Event of Default or the
expiration of the Term, Borrowers will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount equal to
one hundred and five percent (105%) of the Maximum Undrawn Amount of all
outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes
Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s
name, to open such an account and to make and maintain deposits therein, or in
an account opened by such Borrower, in the amounts required to be made by such
Borrower, out of the proceeds of Receivables or other Collateral or out of any
other funds of such Borrower coming into any Lender’s possession at any time.  Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which Agent
and such Borrower mutually agree and the net return on such investments shall
be credited to such account and constitute additional cash collateral.  No Borrower may withdraw amounts credited to
any such account except upon the occurrence of all of the following: (x) payment
and performance in full of all Obligations; (y) expiration of all Letters
of Credit; and (z) termination of this Agreement.

 

3.3.                              Closing Fee and
Facility Fee.

 

(a)                                  Upon the
execution of this Agreement, Borrowers shall pay to Agent for the ratable
benefit of Lenders a closing fee of Three Hundred Thousand Dollars ($300,000) less
that portion of the commitment fee of Three Hundred Thousand Dollars $300,000
heretofore paid by Borrowers to Agent remaining after application of such fees
to out of pocket costs and expenses.

 

(b)                                 If, for any
month during the Term, the average daily unpaid balance of the Revolving Advances,
plus the Maximum Undrawn Amount of all outstanding Letters of Credit for
each day of such month does not equal the Maximum Revolving Advance Amount,
then Borrowers shall pay to Agent for the ratable benefit of Lenders a fee at a
rate equal to one percent (1.00%) per annum on the amount by which the Maximum
Revolving Advance Amount exceeds such average daily unpaid balance.  Such fee shall be payable to Agent in arrears
on the first day of each month with respect to the previous month.

 

42

 

3.4.          Collateral Evaluation Fee
and Collateral Monitoring Fee.

 

(a)           Borrowers shall pay Agent a
collateral monitoring fee equal to Two Thousand Five Hundred Dollars ($2,500)
per month commencing on the first day of the month following the Closing Date
and on the first day of each month thereafter during the Term.  The collateral monitoring fee shall be deemed
earned in full on the date when same is due and payable hereunder and shall not
be subject to rebate or proration upon termination of this Agreement for any
reason.

 

(b)           Borrowers shall pay to Agent
on the first day of each month following any month in which Agent performs any
collateral evaluation - namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent and
which evaluation is undertaken by Agent or for Agent’s benefit - a collateral
evaluation fee in an amount equal to Eight Hundred Fifty Dollars ($850) per day
for each person employed to perform such evaluation, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis.

 

(c)           All of the fees and
out-of-pocket costs and expenses of any appraisals conducted pursuant to Section 4.21
hereof shall be paid for when due, in full and without off-set, by Borrowers.

 

3.5.          Computation of Interest and
Fees.  Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed.  If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the Revolving Interest Rate for Domestic
Rate Loans during such extension.

 

3.6.          Maximum Charges.  In no event whatsoever shall interest and
other charges charged hereunder exceed the highest rate permissible under law.
In the event interest and other charges as computed hereunder would otherwise
exceed the highest rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by Borrowers, and if the then
remaining excess amount is greater than the previously unpaid principal
balance, Lenders shall promptly refund such excess amount to Borrowers and the
provisions hereof shall be deemed amended to provide for such permissible rate.

 

3.7.          Increased Costs.  In the event that any change in any
Applicable Law, treaty or governmental regulation, or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section 3.7,
the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans) with any request
or directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:

 

(a)           subject Agent or any Lender
to any tax of any kind whatsoever with respect to this Agreement or any Other
Document or change the basis of taxation of payments to Agent or any Lender of
principal, fees, interest or any other amount payable hereunder or under 

 

43

 

any Other Documents (except for changes in
the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);

 

(b)           impose, modify or hold
applicable any reserve, special deposit, assessment or similar requirement
against assets held by, or deposits in or for the account of, advances or loans
by, or other credit extended by, any office of Agent or any Lender, including
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or

 

(c)           impose on Agent or any
Lender or the London interbank Eurodollar market any other condition with
respect to this Agreement or any Other Document;

 

and the result of any of the
foregoing is to increase the cost to Agent or any Lender of making, renewing or
maintaining its Advances hereunder by an amount that Agent or such Lender deems
to be material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Advances by an amount that
Agent or such Lender deems to be material, then, in any case Borrowers shall
promptly pay Agent or such Lender, upon its demand, such additional amount as
will compensate Agent or such Lender for such additional cost or such
reduction, as the case may be, provided that the foregoing shall not apply to
increased costs which are reflected in the Eurodollar Rate, as the case may be;
provided, further that the Borrowers shall not be required to compensate the
Agent or any Lender for any increased costs or reductions incurred more than
180 days prior to the date Agent or such Lender notifies Borrowing Agent of the
change giving rise to such increased cost or reduction and its intention to
claim compensation therefor.  Agent or
such Lender shall certify the amount of such additional cost or reduced amount
to Borrowing Agent, and such certification shall be conclusive absent manifest
error.

 

3.8.          Basis For Determining
Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender shall
have determined that:

 

(a)           reasonable means do not
exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2
hereof for any Interest Period; or

 

(b)           Dollar deposits in the
relevant amount and for the relevant maturity are not available in the London
interbank Eurodollar market, with respect to an outstanding Eurodollar Rate
Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic
Rate Loan into a Eurodollar Rate Loan,

 

then Agent shall give
Borrowing Agent prompt written or telephonic notice of such determination.  If such notice is given, (i) any such
requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless
Borrowing Agent shall notify Agent no later than 10:00 a.m. (New York City
time) two (2) Business Days prior to the date of such proposed borrowing,
that its request for such borrowing shall be cancelled or made as an unaffected
type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar
Rate Loan which was to have been converted to an affected type of Eurodollar
Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if
Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York
City time) two (2) Business Days prior to the proposed conversion, shall
be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate 

 

44

 

Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans.  Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have
the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.

 

3.9.          Capital Adequacy.

 

(a)           In the event that Agent or
any Lender shall have determined that any change in any Applicable Law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Body, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Agent or any Lender (for purposes of
this Section 3.9, the term “Lender” shall include Agent or any Lender and
any corporation or bank controlling Agent or any Lender and the office or
branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar
Rate Loans) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on Agent or any Lender’s capital as a consequence of its obligations hereunder
to a level below that which Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration Agent’s and each
Lender’s policies with respect to capital adequacy) by an amount deemed by
Agent or any Lender to be material, then, from time to time, Borrowers shall
pay upon demand to Agent or such Lender such additional amount or amounts as
will compensate Agent or such Lender for such reduction; provided, however that
the Borrowers shall not be required to compensate the Agent or any Lender for
any reductions incurred more than 180 days prior to the date Agent or such
Lender notifies Borrowing Agent of the change giving rise to such reduction and
its intention to claim compensation therefor. 
In determining such amount or amounts, Agent or such Lender may use any
reasonable averaging or attribution methods. 
The protection of this Section 3.9 shall be available to Agent and
each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the Applicable Law, regulation or condition.

 

(b)           A certificate of Agent or
such Lender setting forth such amount or amounts as shall be necessary to
compensate Agent or such Lender with respect to Section 3.9(a) hereof
when delivered to Borrowing Agent shall be conclusive absent manifest error.

 

3.10.        Gross Up for Taxes.  If any Borrower shall be required by
Applicable Law to withhold or deduct any taxes from or in respect of any sum
payable under this Agreement or any of the Other Documents to Agent, or any
Lender, assignee of any Lender, or Participant (each, individually, a “Payee”
and collectively, the “Payees”), (a) the sum payable to such Payee or
Payees, as the case may be, shall be increased as may be necessary so that,
after making all required withholding or deductions, the applicable Payee or
Payees receives an amount equal to the sum it would have received had no such
withholding or deductions been made (the “Gross-

 

45

 

Up Payment”), (b) such Borrower shall
make such withholding or deductions, and (c) such Borrower shall pay the
full amount withheld or deducted to the relevant taxation authority or other
authority in accordance with Applicable Law. 
Notwithstanding the foregoing, no Borrower shall be obligated to make
any portion of the Gross-Up Payment that is attributable to any withholding or
deductions that would not have been paid or claimed had the applicable Payee or
Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11
hereof.

 

3.11.        Withholding Tax Exemption.

 

(a)           Each Payee that is not
incorporated under the Laws of the United States of America or a state thereof
(and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate
valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income
Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or foreign
person) and making a claim exemption from, U.S. withholding tax on the basis of
an income tax treaty or an exemption provided by the Code; provided that if a
Payee is not eligible to claim a complete exemption from U.S. withholding tax
as a result of any changes after it becomes a Payee (or after the
Lender assigning an interest or selling a participating interest to such
Payee became a Lender) in any Applicable Law, or in the interpretation
thereof, relating to the deducting or withholding of U.S. withholding tax, then
in such case such Payee shall make a claim of exemption, if any, from such
taxes only to the extent it is eligible. The term “Withholding Certificate”
means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY
and the related statements and certifications as required under §1.1441-1(e)(2) and/or
(3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of
the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person.

 

(b)           Each Payee required to
deliver to Borrowing Agent and Agent a valid Withholding Certificate pursuant
to Section 3.11(a) hereof shall deliver such valid Withholding
Certificate as follows:  (i) each
Payee which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first
date on which any interest or fees are payable by any Borrower hereunder for
the account of such Payee; (ii) each Payee shall deliver such valid
Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole
discretion shall permit such Payee to deliver such Withholding Certificate less
than five (5) Business Days before such date in which case it shall be due
on the date specified by Agent).  Each
Payee which so delivers a valid Withholding Certificate further undertakes to
deliver to Borrowing Agent and Agent two (2) additional copies of such
Withholding Certificate (or a successor form) on or before the date that such
Withholding Certificate expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by Borrowing Agent or Agent.

 

(c)           Notwithstanding the
submission of a Withholding Certificate claiming a reduced rate of or exemption
from U.S. withholding tax required under Section 3.11(b) hereof,
Agent shall be entitled to withhold United States federal income taxes at the
full 30% withholding rate if in its reasonable judgment it is required to do so
under the due diligence 

 

46

 

requirements imposed upon a withholding agent
under §1.1441-7(b) of the Regulations. 
Further, Agent is indemnified under §1.1461-1(e) of the Regulations
against any claims and demands of any Payee for the amount of any tax it
deducts and withholds in accordance with regulations under §1441 of the Code.

 

IV.           COLLATERAL:  
GENERAL TERMS

 

4.1.          Security Interest in the
Collateral.  To secure
the prompt payment and performance to Agent and each Lender of the Obligations,
each Borrower hereby assigns, pledges and grants to Agent for its benefit and
for the ratable benefit of each Lender a continuing security interest in and to
and Lien on all of its Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located. 
Each Borrower shall mark its books and records as may be necessary or
appropriate to evidence Agent’s security interest and shall cause its financial
statements to reflect such security interest.

 

4.2.          Perfection of Security
Interest.  Each
Borrower shall take all action that may be necessary or desirable, or that
Agent may reasonably request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in and
Lien on the Collateral or to enable Agent to protect, exercise or enforce its
rights hereunder and in the Collateral (other than Excluded Personal Property
and Specified Equity Interests), including, but not
limited to, (i) immediately discharging all Liens on the Collateral other
than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering
to Agent, endorsed or accompanied by such instruments of assignment as Agent
may specify, and stamping or marking, in such manner as Agent may specify, any
and all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering
into warehousing, lockbox and other custodial arrangements satisfactory to
Agent, and (v) executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance reasonably satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent’s security
interest and Lien under the Uniform Commercial Code or other Applicable
Law.  By its signature hereto, each
Borrower hereby authorizes Agent to file against such Borrower, one or more
financing, continuation or amendment statements describing the Collateral
pursuant to the Uniform Commercial Code in form and substance satisfactory to
Agent.  All charges, expenses and fees
Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall
be paid to Agent for its benefit and for the ratable benefit of Lenders
immediately upon demand.

 

4.3.          Disposition of Collateral.  Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether
by sale, lease or otherwise except the sale of Inventory in the Ordinary Course
of Business.

 

4.4.          Preservation of Collateral.  Following the occurrence and during the
continuation of an Event of Default, in addition to the rights and remedies set
forth in Section 11.1 hereof, Agent: (a) may at any time take such
steps as Agent deems necessary to protect Agent’s interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) may
employ and 

 

47

 

maintain at any of any Borrower’s premises a
custodian who shall have full authority to do all acts necessary to protect
Agent’s interests in the Collateral; (c) may lease warehouse facilities to
which Agent may move all or part of the Collateral; (d) may use any
Borrower’s owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and
is hereby granted, a right of ingress and egress to the places where the
Collateral is located, and may proceed over and through any of Borrowers’ owned
or leased property.  Each Borrower shall
cooperate fully with all of Agent’s efforts to preserve the Collateral and will
take such actions to preserve the Collateral as Agent may direct.  All of Agent’s expenses of preserving the
Collateral, including any expenses relating to the bonding of a custodian,
shall be charged to Borrowers’ Account as a Revolving Advance maintained as a
Domestic Rate Loan and added to the Obligations.

 

4.5.          Ownership of Collateral.

 

(a)           With respect to the
Collateral, at the time the Collateral becomes subject to Agent’s security
interest: (i) each Borrower shall be the sole owner of and fully
authorized and able to sell, transfer, pledge and/or grant a first priority
security interest (subject to Permitted Encumbrances) in each and every item of
its respective Collateral (other than the Specified Equity Interests and
Excluded Personal Property) to Agent; and, except for Permitted Encumbrances
the Collateral shall be free and clear of all Liens and encumbrances
whatsoever; (ii) each document and agreement executed by each Borrower or
delivered to Agent or any Lender in connection with this Agreement shall be
true and correct in all material respects; (iii) all signatures and
endorsements of each Borrower that appear on such documents and agreements
shall be genuine and each Borrower shall have full capacity to execute same;
and (iv) each Borrower’s Inventory shall be located as set forth on
Schedule 4.5 and shall not be removed from such location(s) without the
prior written consent of Agent except with respect to the sale of Inventory in
the Ordinary Course of Business.

 

(b)           (i) There is no
location at which any Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule
4.5 hereto contains a correct and complete list, as of the Closing Date, of the
legal names and addresses of each warehouse at which Inventory of any Borrower
is stored;  none of the receipts received
by any Borrower from any warehouse states that the goods covered thereby are to
be delivered to bearer or to the order of a named Person or to a named Person
and such named Person’s assigns;  (iii) Schedule
4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each
place of business of each Borrower and (B) the chief executive office of
each Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and
complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by each Borrower, together with
the names and addresses of any landlords.

 

4.6.          Defense of Agent’s and
Lenders’ Interests.  Until (a) payment
and performance in full of all of the Obligations and (b) termination of
this Agreement, Agent’s interests in the Collateral shall continue in full
force and effect.  During such period no
Borrower shall, without Agent’s prior written consent, pledge, sell (except as
otherwise permitted hereunder), assign, transfer, create or suffer to exist a
Lien upon or encumber or allow or suffer to be encumbered in any way except for
Permitted Encumbrances, any part of the Collateral.  Each Borrower shall defend Agent’s interests
in the Collateral against any and all Persons whatsoever.  At any time 

 

48

 

following the occurrence and during the
continuation of an Event of Default and demand by Agent for payment of all
Obligations, Agent shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form contained,
including:  labels, stationery,
documents, instruments and advertising materials.  If Agent exercises this right to take
possession of the Collateral, Borrowers shall, upon demand, assemble it in the
best manner reasonably possible and make it available to Agent at a place
reasonably convenient to Agent.  In
addition, with respect to all Collateral, Agent and Lenders shall be entitled
to all of the rights and remedies set forth herein and further provided by the
Uniform Commercial Code or other Applicable Law.  At the request of Agent, each Borrower shall
instruct all suppliers, carriers, forwarders, warehousers or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver same to Agent and/or subject to Agent’s
order and if they shall come into any Borrower’s possession, they, and each of
them, shall be held by such Borrower in trust as Agent’s trustee, and such
Borrower will immediately deliver them to Agent in their original form together
with any necessary endorsement.

 

4.7.          Books and Records.  Each Borrower shall (a) keep proper
books of record and account in which full, true and correct entries will be
made of all dealings or transactions of or in relation to its business and
affairs; (b) set up on its books accruals with respect to all taxes,
assessments, charges, levies and claims; and (c) on a reasonably current
basis set up on its books, from its earnings, allowances against doubtful
Receivables, advances and investments and all other proper accruals (including
by reason of enumeration, accruals for premiums, if any, due on required
payments and accruals for depreciation, obsolescence, or amortization of
properties), which should be set aside from such earnings in connection with
its business.  All determinations
pursuant to this subsection shall be made in accordance with, or as required
by, GAAP consistently applied in the opinion of such independent public
accountant as shall then be regularly engaged by Borrowers.

 

4.8.          Financial Disclosure.  Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any
of such Borrower’s financial statements, trial balances or other accounting
records of any sort in the accountant’s or auditor’s possession, and to
disclose to Agent and each Lender any information such accountants may have
concerning such Borrower’s financial status and business operations.  Each Borrower hereby authorizes all
Governmental Bodies to furnish to Agent and each Lender copies of reports or
examinations relating to such Borrower, whether made by such Borrower or
otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or Governmental Bodies.

 

4.9.          Compliance with Laws.  Each Borrower shall comply in all material
respects with all Applicable Laws with respect to the Collateral or any part
thereof or to the operation of such Borrower’s business the non-compliance with
which could reasonably be expected to have a Material Adverse Effect.  Each Borrower may, however, contest or
dispute any Applicable Laws in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s Lien on or security
interest in the Collateral.

 

49

 

4.10.        Inspection of Premises.  At all reasonable times Agent and each Lender
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower’s books, records, audits,
correspondence and all other papers relating to the Collateral and the
operation of each Borrower’s business. 
Agent, any Lender and their agents may enter upon any premises of any
Borrower at any time during business hours and at any other reasonable time,
and from time to time, for the purpose of inspecting the Collateral and any and
all records pertaining thereto and the operation of such Borrower’s business.

 

4.11.        Insurance.  The assets and properties of each Borrower at
all times shall be maintained in accordance with the requirements of all
insurance carriers which provide insurance with respect to the assets and
properties of such Borrower so that such insurance shall remain in full force
and effect.  Each Borrower shall bear the
full risk of any loss of any nature whatsoever with respect to the
Collateral.  At each Borrower’s own cost
and expense in amounts and with carriers acceptable to Agent, each Borrower
shall: (a) keep all its insurable properties and properties in which such
Borrower has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Borrower’s including business interruption
insurance; (b) maintain a bond in such amounts as is customary in the case
of companies engaged in businesses similar to such Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured’s officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of
such assets; (c) maintain public and product liability insurance against
claims for personal injury, death or property damage suffered by others; (d) maintain
all such worker’s compensation or similar insurance as may be required under
the laws of any state or jurisdiction in which such Borrower is engaged in
business; (e) furnish Agent with (i) copies of all policies and
evidence of the maintenance of such policies by the renewal thereof at least
thirty (30) days before any expiration date, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Agent, naming Agent
as a co-insured and lender loss payee as its interests may appear with respect
to all insurance coverage referred to in clauses (a) and (c) above,
and providing (A) that all proceeds thereunder with respect to Collateral
shall be payable to Agent, (B) no such insurance shall be affected by any
act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days’ prior written notice is
given to Agent.  In the event of any loss
thereunder with respect to Collateral, the carriers named therein hereby are
directed by Agent and the applicable Borrower to make payment for such loss to
Agent and not to such Borrower and Agent jointly.  If any insurance losses are paid by check,
draft or other instrument payable to any Borrower and Agent jointly, Agent may
endorse such Borrower’s name thereon and do such other things as Agent may deem
advisable to reduce the same to cash. 
Agent is hereby authorized to adjust and compromise claims with respect
to Collateral under insurance coverage referred to in clauses (a), and (b) above.  All loss recoveries with respect to
Collateral received by Agent upon any such insurance may be applied to the
Obligations, in such order as Agent in its sole discretion shall
determine.  Any surplus shall be paid,
subject to the Intercreditor Agreement, by Agent to Borrowers or applied as may
be otherwise required by law.  Any
deficiency thereon shall be paid by Borrowers to Agent, on demand to the extent
that outstanding Advances exceed the Formula Amount.

 

50

 

4.12.        Failure to Pay Insurance.  If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of such
Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.

 

4.13.        Payment of Taxes.  Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes.  If any tax
by any Governmental Body is or may be imposed on or as a result of any
transaction between any Borrower and Agent or any Lender which Agent or any
Lender may be required to withhold or pay or if any taxes, assessments, or
other Charges remain unpaid after the date fixed for their payment, or if any
claim shall be made which, in Agent’s or any Lender’s opinion, is reasonably
likely to create a valid Lien on the Collateral, Agent may without notice to
Borrowers pay the taxes, assessments or other Charges and each Borrower hereby
indemnifies and holds Agent and each Lender harmless in respect thereof.  Agent will not pay any taxes, assessments or
Charges to the extent that any applicable Borrower has Properly Contested those
taxes, assessments or Charges.  The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan
and added to the Obligations and, until Borrowers shall furnish Agent with an
indemnity therefor (or supply Agent with evidence satisfactory to Agent that
due provision for the payment thereof has been made), Agent may hold without
interest any balance standing to Borrowers’ credit and Agent shall retain its
security interest in and Lien on any and all Collateral held by Agent.

 

4.14.        Payment of Leasehold
Obligations.  Each
Borrower shall at all times pay, when and as due, its rental obligations under
all leases under which it is a tenant, and shall otherwise comply, in all
material respects, with all other terms of such leases and keep them in full
force and effect and, at Agent’s request will provide evidence of having done
so.

 

4.15.        Receivables.

 

(a)           Nature of Receivables.  Each of the Receivables shall be a bona fide
and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be
deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of a Borrower, or work, labor or services
theretofore rendered by a Borrower as of the date each Receivable is
created.  Same shall be due and owing in
accordance with the applicable Borrower’s standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrowers to Agent.

 

(b)           Solvency of Customers.  Each Customer, to the best of each Borrower’s
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Borrower who are not solvent such
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.

 

51

 

(c)           Location of Borrowers.  Each Borrower’s chief executive office is
located at 120 North Parkway, P.O. Box 1800, Pekin, Illinois
61555-1800.  Until written notice is
given to Agent by Borrowing Agent of any other office at which any Borrower
keeps its records pertaining to Receivables, all such records shall be kept at
such executive office.

 

(d)           Collection of Receivables.  Borrowers shall instruct their Customers to
deliver all remittances upon Receivables to such lockbox account or Blocked
Account as Agent shall designate from time to time as contemplated by Section 4.15(h) or
as otherwise agreed to from time to time by Agent.  Notwithstanding the foregoing, to the extent
any Borrower directly receives any remittances upon Receivables, such Borrower
will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for
Agent’s account, collect as Agent’s property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower’s funds which are not also Collateral hereunder or use the same except
to pay Obligations.  Each Borrower shall
deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in
original form and within two (2) Business Days of the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness; provided that with respect to deminimus amounts of
cash received by Borrowers from time to time, Borrowers may deposit such
amounts into a deposit account of Borrowers’ maintained with Agent and have
such amounts transferred to the Blocked Account.

 

(e)           Notification of Assignment
of Receivables.  At any time
after the occurrence and during the continuation of an Event of Default, or if
Agent in its reasonable business judgment believes proceeds of Collateral are
being impaired or diverted, Agent shall have the right to send notice of the
assignment of, and Agent’s security interest in and Lien on, the Receivables to
any and all Customers or any third party holding or otherwise concerned with
any of the Collateral.  Thereafter, Agent
shall have the sole right to collect the Receivables, take possession of the
Collateral, or both.  Agent’s actual collection
expenses, including, but not limited to, stationery and postage, telephone and
telegraph, secretarial and clerical expenses and the salaries of any collection
personnel used for collection, may be charged to Borrowers’ Account and added
to the Obligations.

 

(f)            Power of Agent to Act on
Borrowers’ Behalf.  Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or any Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and each Borrower hereby waives
notice of presentment, protest and non-payment of any instrument so
endorsed.  Each Borrower hereby
constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i) at
any time: (A) to endorse such Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (B) to
sign such Borrower’s name on any invoice or bill of lading relating to any of
the Receivables, drafts against Customers, assignments and verifications of
Receivables; (C) to send verifications of Receivables to any Customer; (D) to
sign such Borrower’s name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent’s interest in the Collateral and to file same; and (E) to
receive, open and dispose of all mail addressed to any Borrower; and (ii) at
any time following the occurrence and during the continuation of a Default or
Event of Default; (F) to demand payment of the Receivables; (G) to
enforce payment of the Receivables by legal proceedings or otherwise; (H) to
exercise all of such Borrower’s rights and remedies with respect to the
collection of the 

 

52

 

Receivables and any other Collateral; (I) to
settle, adjust, compromise, extend or renew the Receivables; (J) to
settle, adjust or compromise any legal proceedings brought to collect
Receivables; (K) to prepare, file and sign such Borrower’s name on a proof
of claim in bankruptcy or similar document against any Customer; (L) to
prepare, file and sign such Borrower’s name on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with the Receivables;
and (M) to do all other acts and things necessary to carry out this
Agreement.  All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of judgment
or mistake of fact or of law, unless done maliciously or with gross (not mere)
negligence (as determined by a court of competent jurisdiction in a final
non-appealable judgment); this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid.  Agent shall have the right at any time
following the occurrence and during the continuation of an Event of Default to
change the address for delivery of mail addressed to any Borrower.

 

(g)           No Liability.  Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. 
Following the occurrence and during the continuation of an Event of
Default Agent may, without notice or consent from any Borrower, sue upon or
otherwise collect, extend the time of payment of, compromise or settle for
cash, credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor
thereof.  Agent is authorized and
empowered to accept following the occurrence and during the continuation of an
Event of Default the return of the goods represented by any of the Receivables,
without notice to or consent by any Borrower, all without discharging or in any
way affecting any Borrower’s liability hereunder.

 

(h)           Establishment of a Lockbox
Account, Dominion Account.  All
proceeds of Collateral shall be deposited by Borrowers into either (i) a
lockbox account, dominion account or such other “blocked account” (“Blocked
Accounts”) established at a bank or banks (each such bank, a “Blocked Account Bank”)
pursuant to an arrangement with such Blocked Account Bank as may be selected by
Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at the Agent for the deposit of such proceeds.  Each applicable Borrower, Agent and each
Blocked Account Bank shall enter into a deposit account control agreement in
form and substance reasonably satisfactory to Agent directing such Blocked
Account Bank, to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent. 
All funds deposited in such Blocked Accounts shall immediately become
the property of Agent (it being understood that if there are no outstanding cash
Advances and no Default or Event of Default has occurred and is continuing,
such proceeds will thereafter be forwarded to the Borrowers in accordance with
customary practices) and Borrowing Agent shall obtain the agreement by such
Blocked Account Bank to waive any offset rights against the funds so
deposited.  Neither Agent nor any Lender
assumes any responsibility for such blocked account arrangement, including any
claim of accord and satisfaction or release with respect to deposits accepted
by any Blocked Account Bank thereunder. 
All deposit accounts and investment accounts of each Borrower and its
Subsidiaries are set forth on Schedule 4.15(h).

 

53

 

(i)            Adjustments.  No Borrower will, without Agent’s consent,
compromise or adjust any material amount of the Receivables (or extend the time
for payment thereof) or accept any material returns of merchandise or grant any
additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of such Borrower.

 

4.16.        Inventory.  To the extent Inventory held for sale or
lease has been produced by any Borrower, it has been and will be produced by such
Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.

 

4.17.        [Intentionally omitted.]

 

4.18.        Exculpation of Liability.  Nothing herein contained shall be construed
to constitute Agent or any Lender as any Borrower’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause
thereof.  Neither Agent nor any Lender,
whether by anything herein or in any assignment or otherwise, assume any of any
Borrower’s obligations under any contract or agreement assigned to Agent or
such Lender, and neither Agent nor any Lender shall be responsible in any way
for the performance by any Borrower of any of the terms and conditions thereof.

 

4.19.        Environmental Matters.

 

(a)           Borrowers shall ensure that
the Real Property and all operations and businesses conducted thereon remains
in material compliance with all Environmental Laws and they shall not place or
permit to be placed any Hazardous Substances on any Real Property except as in
material compliance with Applicable Law or permitted by appropriate
governmental authorities.

 

(b)           Borrowers shall establish
and maintain an environmental compliance system to assure and monitor continued
material compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.

 

(c)           Intentionally Omitted.

 

(d)           In the event any Borrower
obtains, gives or receives notice of any Release or threat of Release of a
reportable quantity of any Hazardous Substances at the Real Property under
CERCLA or of a release of a Hazardous Substance that could have a Material
Adverse Effect on any Lender (any such event being hereinafter referred to as a
“Hazardous Discharge”) or receives any notice of violation, request for
information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with
regard to any Hazardous Discharge or material violation of Environmental Laws
onto or regarding the Real Property or any Borrower’s interest therein (any of
the foregoing is referred to herein as an “Environmental Complaint”) from any
Person, including any state agency responsible in whole or in part for
environmental matters in the state in which the Real Property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the “Authority”), then Borrowing Agent shall, within ten (15)
Business Days, give written notice of same to Agent 

 

54

 

detailing facts and circumstances of which
any Borrower is aware giving rise to the Hazardous Discharge or Environmental
Complaint.  Such information is to be
provided to allow Agent to protect its security interest in and Lien on the
Collateral and is not intended to create nor shall it create any obligation
upon Agent or any Lender with respect thereto.

 

(e)           Borrowing Agent shall keep Agent
reasonably informed and current with respect to any Hazardous Discharge or
Environmental Complaint and provide Agent with copies of material
correspondence, documents and reports concerning the Hazardous Discharge or
Environmental Complaint..  Such
information is to be provided solely to allow Agent to protect Agent’s security
interest in and Lien on the Collateral.

 

(f)            Borrowers shall respond
promptly to any Hazardous Discharge or Environmental Complaint and take all
reasonably necessary action in order to safeguard the health of any Person and
to avoid subjecting the Collateral or Real Property to any Lien.  If any Borrower shall fail to respond
promptly to any Hazardous Discharge or Environmental Complaint or any Borrower
shall fail to comply with any of the requirements of any Environmental Laws
that could reasonably be expected to have a Material Adverse Effect on any Lender,
Agent on behalf of Lenders may, but without the obligation to do so, for the
sole purpose of protecting Agent’s interest in the Collateral:  (i) give such notices or (ii) enter
onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint.  All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights,
including any sums paid in connection with any judicial or administrative
investigation or proceedings, fines and penalties, together with interest thereon
from the date expended at the Default Rate for Domestic Rate Loans constituting
Revolving Advances shall be paid upon demand by Borrowers, and until paid shall
be added to and become a part of the Obligations secured by the Liens created
by the terms of this Agreement or any other agreement between Agent, any Lender
and any Borrower.

 

(g)           Promptly upon the written
request of Agent from time to time but no more frequently than once every two
years,, Borrowers shall provide Agent, at Borrowers’ expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent,
to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and an initial estimate of the potential costs in connection with
abatement, cleanup and removal of any Hazardous Substances found on, under, at
or within the Real Property in connection with a Hazardous Discharge.  Any report or investigation of such Hazardous
Discharge proposed and acceptable to an appropriate Authority that is charged
to oversee the clean-up of such Hazardous Discharge shall be acceptable to
Agent.  If such estimates, individually
or in the aggregate, exceed Five Hundred Thousand Dollars ($500,000), Agent
shall have the right to require Borrowers to post a bond, letter of credit or
other security reasonably satisfactory to Agent to secure payment of these
costs and expenses.

 

(h)           Borrowers shall defend and
indemnify Agent and Lenders and hold Agent, Lenders and their respective
employees, agents, directors and officers harmless from and against all loss,
liability, damage and expense, claims, costs, fines and penalties, including
attorney’s 

 

55

 

fees, suffered or incurred by Agent or
Lenders under or on account of any Environmental Laws, including the assertion
of any Lien thereunder, with respect to any Hazardous Discharge, the presence
of any Hazardous Substances affecting the Real Property, whether or not the
same originates or from the Real Property, including any loss of value of the
Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender.  Borrowers’ obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of
any Hazardous Substances.  Borrowers’
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.

 

(i)            For purposes of Section 4.19
and 5.7, all references to Real Property shall be deemed to include all of each
Borrower’s right, title and interest in and to its owned and leased premises.

 

4.20.        Financing Statements.  Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
effective financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office.

 

4.21.        Appraisals.  Agent may, in its discretion, exercised in a
commercially reasonable manner, at any time after the Closing Date but so long
as no Event of Default has occurred and is continuing, no more frequently than
one time per year, engage the services of an independent appraisal firm or
firms of reputable standing, satisfactory to Agent, for the purpose of
appraising the then current values of Borrowers’ assets. Absent the occurrence
and continuance of an Event of Default at such time, Agent shall consult with
Borrowers as to the identity of any such firm. 
In the event the value of Borrowers’ Inventory, as so determined
pursuant to such appraisal, is less than anticipated by Agent or Lenders, such
that the Revolving Advances against Eligible Inventory, are in fact in excess
of such Advances permitted hereunder, then, promptly upon Agent’s demand for
same, Borrowers shall make mandatory prepayments of the then outstanding
Revolving Advances made against such Eligible Inventory, so as to eliminate the
excess Advances.

 

V.            REPRESENTATIONS AND WARRANTIES.

 

Each Borrower represents and
warrants as follows:

 

5.1.          Authority.  Each Borrower has full power, authority and
legal right to enter into this Agreement and the Other Documents and to perform
all its respective Obligations hereunder and thereunder.  This Agreement and the Other Documents have
been duly executed and delivered by each Borrower, and this Agreement and the
Other Documents constitute the legal, valid and binding obligation of such
Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered at a proceeding
in equity or at law.  The execution,
delivery and performance of this Agreement and of the Other Documents (a) are
within such Borrower’s corporate or limited liability company powers, as
applicable, have been duly authorized by all 

 

56

 

necessary corporate or company action, as applicable,
are not in contravention of law or the terms of such Borrower’s by-laws,
certificate of incorporation, operating agreement or certificate of formation,
as applicable, or other applicable documents relating to such Borrower’s
formation or to the conduct of such Borrower’s business or of any material
agreement or undertaking to which such Borrower is a party or by which such
Borrower is bound, including the Indenture Loan Documentation, (b) will
not conflict with or violate any law or regulation, or any judgment, order or
decree of any Governmental Body, (c) will not require the Consent of any
Governmental Body or any other Person, except those Consents set forth on
Schedule 5.1 hereto, all of which will have been duly obtained, made or
compiled prior to the Closing Date and which are in full force and effect and (d) will
not conflict with, nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law, operating agreement or
other instrument to which such Borrower is a party or by which it or its
property is a party or by which it may be bound, including under the provisions
of the Indenture Loan Documentation.

 

5.2.          Formation and Qualification.

 

(a)           Each Borrower is duly
incorporated or formed, as applicable, and in good standing under the laws of
the state listed on Schedule 5.2(a) and is qualified to do business and is
in good standing in the states listed on Schedule 5.2(a) which constitute
all states in which qualification and good standing are necessary for such
Borrower to conduct its business and own its property and where the failure to
so qualify could reasonably be expected to have a Material Adverse Effect on
such Borrower.  Each Borrower has
delivered to Agent true and complete copies of its certificate of incorporation
and by-laws or certificate of formation and operating agreement, as applicable,
and will promptly notify Agent of any amendment or changes thereto.

 

(b)           The only Subsidiaries of
Holdings and each Borrower are listed on Schedule 5.2(b).

 

5.3.          Survival of Representations
and Warranties.  All
representations and warranties of such Borrower contained in this Agreement and
the Other Documents shall be true as of the Closing Date and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.

 

5.4.          Tax Returns.  Each Borrower’s federal tax identification
number is set forth on Schedule 5.4. 
Each Borrower has filed all federal, state and local tax returns and
other reports each is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are due and payable.  Federal income tax returns of each Borrower
have been examined and reported upon by the appropriate taxing authority or
closed by applicable statute and satisfied for all fiscal years prior to and including
the fiscal year ending December 31, 2008 and state and local income tax
returns of each Borrower have been examined and reported upon by the
appropriate taxing authority or closed by applicable statute and satisfied for
all fiscal years prior to and including the fiscal year ending December 31,
2004. The provision for taxes on the books of each Borrower is adequate for all
years not closed by applicable statutes, and for its current fiscal year, and
no Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.

 

57

 

5.5.          Financial Statements.

 

(a)           The pro forma balance sheet
of Borrowers on a Consolidated Basis (the “Pro Forma Balance Sheet”) furnished
to Agent on the Closing Date reflects the consummation of the transactions
contemplated by the Indenture Loan Documentation and under this Agreement
(collectively, the “Transactions”) and is accurate, complete and correct and
fairly reflects the financial condition of Borrowers on a Consolidated Basis as
of the Closing Date after giving effect to the Transactions, and has been
prepared in accordance with GAAP, consistently applied.  The Pro Forma Balance Sheet has been
certified as accurate, complete and correct in all material respects by the
President, Chief Accounting and Compliance Officer or Chief Financial Officer
of Borrowing Agent.  All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP,
except as may be disclosed in such financial statements.

 

(b)           The twelve-month cash flow
projections of Borrowers on a Consolidated Basis and their projected balance
sheets as of the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the
“Projections”) were prepared by the Chief Financial Officer of Holdings, are
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Borrowers’ judgment based on present
circumstances of the most likely set of conditions and course of action for the
projected period.  The Projections
together with the Pro Forma Balance Sheet, are referred to as the “Pro Forma
Financial Statements”.

 

(c)           The consolidated and
consolidating balance sheets of Borrowers, their Subsidiaries and such other
Persons described therein (including the accounts of all Subsidiaries for the
respective periods during which a subsidiary relationship existed) as of December 31,
2009, and the related statements of income, changes in stockholder’s equity,
and changes in cash flow for the period ended on such date, all accompanied by
reports thereon containing opinions without qualification by independent
certified public accountants, copies of which have been delivered to Agent,
have been prepared in accordance with GAAP, consistently applied (except for
changes in application in which such accountants concur) and present fairly the
financial position of Borrowers and their Subsidiaries at such date and the
results of their operations for such period. 
Since December 31, 2009 there has been no change in the condition,
financial or otherwise, of Borrowers or their Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Borrowers and their
Subsidiaries, except changes in the Ordinary Course of Business, none of which
individually or in the aggregate has had a Material Adverse Effect.

 

5.6.          Entity Names.  Except as set forth on Schedule 5.6, no
Borrower has been known by any other corporate name in the past five (5) years
and does not sell Inventory under any other name, nor has any Borrower been the
surviving corporation or company of a merger or consolidation or acquired all
or substantially all of the assets of any Person during the preceding five (5) years.

 

58

 

5.7.          O.S.H.A. and Environmental
Compliance.

 

(a)           Except as set forth in schedule
5.7, each Borrower has duly complied with, and its facilities, business,
assets, property, leaseholds, Real Property and Equipment are in compliance in
all material respects with, the provisions of the Federal Occupational Safety
and Health Act and applicable Environmental Laws; and there have been no
outstanding citations, notices or orders of non-compliance issued to any
Borrower or relating to its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations.

 

(b)           Each Borrower has been
issued all required federal, state and local licenses, certificates or permits
relating to all material Environmental Laws.

 

(c)           Other than as described on
Schedule 5.7, (i) there has not been any Hazardous Discharge on the Real
Property owned or leased by any Borrower; (ii) there are no underground
storage tanks or electrical equipment containing polychlorinated biphenyls on
the Real Property, including any premises leased by any Borrower; (iii) the
Real Property including any premises leased by any Borrower has never been used
as a treatment, storage or disposal facility of Hazardous Waste permitted under
RCRA; and (iv) no Hazardous Substances are present on the Real Property
including any premises leased by any Borrower, excepting such quantities as are
handled in accordance with all applicable material manufacturer’s instructions
and governmental regulations and in proper storage containers and as are
appropriate for the operation of the commercial business of any Borrower or of
its tenants.

 

5.8.          Solvency; No Litigation,
Violation, Indebtedness or Default; ERISA Compliance.

 

(a)           After giving effect to the
Transactions, each Borrower will be solvent, able to pay its debts as they
mature, will have capital sufficient to carry on its business and all
businesses in which it is about to engage, and (i) as of the Closing Date,
the fair present saleable value of its assets, calculated on a going concern
basis, is in excess of the amount of its liabilities and (ii) subsequent
to the Closing Date, the fair saleable value of its assets (calculated on a
going concern basis) will be in excess of the amount of its liabilities.

 

(b)           Except as disclosed in
Schedule 5.8(b), no Borrower has (i) any pending or threatened litigation,
arbitration, actions or proceedings which could reasonably be expected to have
a Material Adverse Effect, and (ii) any liabilities or indebtedness for
borrowed money other than the Obligations.

 

(c)           No Borrower is in violation
of any applicable statute, law, rule, regulation or ordinance in any respect
which could reasonably be expected to have a Material Adverse Effect, nor is
any Borrower in violation of any order of any court, Governmental Body or
arbitration board or tribunal.

 

(d)           No Borrower nor any member
of the Controlled Group maintains or is required to contribute to any Pension
Benefit Plan or Multiemployer Plan other than those listed on Schedule 5.8(d) hereto.  (i) Each Borrower and each member of the
Controlled Group has met all applicable minimum funding requirements under Section 302
of ERISA and Section 412 of the Code in respect of each Plan, and each
Plan is in compliance with Sections 412, 430 and 436 of the Code and Sections
206(g), 302 and 303 of ERISA, taking into account waivers, variances and
extensions of amortization periods; (ii) each Plan which is intended to be
a qualified plan 

 

59

 

under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related
thereto has been determined to be exempt from federal income tax under Section 501(a) of
the Code; (iii) neither any Borrower nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than for the payment of premiums, and there are no premium payments which have
become due which are unpaid; (iv) no Plan subject to Title IV of ERISA has
been terminated by the plan administrator thereof nor by the PBGC, and there is
no occurrence which would cause the PBGC to institute proceedings under Title
IV of ERISA to terminate any such Plan; (v) neither any Borrower nor any
member of the Controlled Group has breached any of the material
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan; (vi) neither any Borrower nor any member of the Controlled Group
nor any fiduciary of any Plan, has engaged in a “prohibited transaction”
described in Section 406 of ERISA or Section 4975 of the Code nor
taken any action which would constitute or result in a Termination Event with
respect to any such Plan which is subject to ERISA; (vii) each Borrower
and each member of the Controlled Group has made all contributions required to
be made with respect to each Pension Benefit Plan and Multiemployer Plan; (viii) there
exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period has not been waived or which could reasonably be
expected to result in material liability to any Borrower or any member of the
Controlled Group; (ix) neither any Borrower nor any member of the
Controlled Group maintains or is required to contribute to any Plan which
provides health, accident or life insurance benefits to former employees, their
spouses or dependents, other than in accordance with Section 4980B of the
Code; (x) neither any Borrower nor any member of the Controlled Group has
an outstanding liability in respect of a complete or partial withdrawal, within
the meaning of Section 4203 or 4205 of ERISA, from any Multiemployer Plan
and there exists no fact which would reasonably be expected to result in any
such liability; and (xi) to the knowledge of the Borrower, no Plan fiduciary
(as defined in Section 3(21) of ERISA) has any liability for breach of
fiduciary duty or for any failure in connection with the administration or
investment of the assets of a Plan.

 

5.9.          Patents, Trademarks,
Copyrights and Licenses.  All
patents, patent applications, trademarks, trademark applications, service
marks, service mark applications, copyrights, copyright applications, design
rights, tradenames, assumed names, trade secrets and licenses owned or utilized
by any Borrower are set forth on Schedule 5.9, are valid and have been duly
registered or filed with all appropriate Governmental Bodies and constitute all
of the intellectual property rights which are necessary for the operation of
its business; there is no objection to or pending challenge to the validity of
any such patent, trademark, copyright, design rights, tradename, trade secret
or license and no Borrower is aware of any grounds for any challenge, except as
set forth in Schedule 5.9 hereto.  Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service mark, service mark application, service mark
license, design rights, copyright, copyright application and copyright license
owned or held by any Borrower and all trade secrets used by any Borrower
consist of original material or property developed by such Borrower or was
lawfully acquired by such Borrower from the proper and lawful owner
thereof.  Each of such items has been
maintained so as to preserve the value thereof from the date of creation or
acquisition thereof.

 

5.10.        Licenses and Permits.  Except as set forth in Schedule 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or 

 

60

 

permits required by any applicable federal,
state, provincial or local law, rule or regulation for the operation of
its business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to procure such licenses or permits
could reasonably be expected to have a Material Adverse Effect.

 

5.11.        Default of Indebtedness.  No Borrower is in default in the payment of
the principal of or interest on any Indebtedness for borrowed money or under
any instrument or agreement under or subject to which any Indebtedness has been
issued and no event has occurred under the provisions of any such instrument or
agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.

 

5.12.        No Default.  No Borrower is in default in the payment or
performance of any of its material contractual obligations and no Default has
occurred.

 

5.13.        No Burdensome Restrictions.  No Borrower is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect.  Each Borrower
has heretofore delivered to Agent true and complete copies of all material
contracts to which it is a party or to which it or any of its properties is
subject.  No Borrower has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.

 

5.14.        No Labor Disputes.  No Borrower is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Borrower’s
employees in existence, or, to the knowledge of any Borrower, threatened, and
no collective bargaining agreement is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.

 

5.15.        Margin Regulations.  No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect.  No part of the
proceeds of any Advance will be used for “purchasing” or “carrying” “margin
stock” as defined in Regulation U of such Board of Governors.

 

5.16.        Investment Company Act.  No Borrower is an “investment company”
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.

 

5.17.        Disclosure.  No representation or warranty made by any
Borrower in this Agreement, the Indenture Loan Documentation, or in any
financial statement, report, certificate or any other document furnished in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements
herein or therein not misleading.  There
is no fact known to any Borrower which such Borrower has not disclosed to Agent
in writing with respect to the transactions contemplated by the 

 

61

 

Indenture Loan Documentation or this
Agreement which could reasonably be expected to have a Material Adverse Effect.

 

5.18.        Delivery of Indenture Loan
Documentation.  Agent has
received complete copies of the Indenture Loan Documentation (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof.  None of such documents and agreements has
been amended or supplemented, nor have any of the provisions thereof been waived,
except pursuant to a written agreement or instrument which has heretofore been
delivered to Agent.

 

5.19.        Swaps.  No Borrower is a party to, nor will it be a
party to, any swap agreement whereby such Borrower has agreed or will agree to
swap interest rates or currencies unless same provides that damages upon
termination following an event of default thereunder are payable on an
unlimited “two-way basis” without regard to fault on the part of either party.

 

5.20.        Application of Certain Laws
and Regulations.  Neither any
Borrower nor any Affiliate of any Borrower is subject to any law, statute, rule or
regulation which regulates the incurrence of any Indebtedness, including laws,
statutes, rules or regulations relative to common or interstate carriers
or to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.

 

5.21.        Business and Property of
Borrowers.  Upon and
after the Closing Date, Borrowers do not propose to engage in any business
other than Permitted Businesses and activities necessary to conduct the
foregoing.  On the Closing Date, each
Borrower will own all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Borrower.

 

5.22.        Section 20 Subsidiaries.  Borrowers do not intend to use and shall not
use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for 30 days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.

 

5.23.        Anti-Terrorism Laws.

 

(a)           General.  Neither any Borrower nor any Affiliate of any
Borrower is in violation of any Anti-Terrorism Law or engages in or conspires
to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth
in any Anti-Terrorism Law.

 

(b)           Executive Order No. 13224.  Neither any Borrower nor any Affiliate of any
Borrower or their respective agents acting or benefiting in any capacity in
connection with the Advances or other transactions hereunder, is any of the
following (each a “Blocked Person”):

 

(i)            a Person that is listed in
the annex to, or is otherwise subject to the provisions of, the Executive Order
No. 13224;

 

62

 

(ii)                                  a Person owned
or controlled by, or acting for or on behalf of,  any Person that is listed in the annex to, or
is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(iii)                               a Person or
entity with which any Lender is prohibited from dealing or otherwise engaging
in any transaction by any Anti-Terrorism Law;

 

(iv)                              a Person or
entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

 

(v)                                 a Person or
entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control
at its official website or any replacement website or other replacement
official publication of such list, or

 

(vi)                              a Person or
entity who is affiliated or associated with a Person or entity listed above.

 

Neither any Borrower nor to
the knowledge of any Borrower, any of its agents acting in any capacity in
connection with the Advances or other transactions hereunder (i) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person, or (ii) deals in,
or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order No. 13224.

 

5.24.                        Trading with
the Enemy.  No Borrower
has engaged, nor does it intend to engage, in any business or activity
prohibited by the Trading with the Enemy Act.

 

5.25.                        Federal
Securities Laws.  Other than
Holdings, no Borrower or any of any Borrower’s Subsidiaries (i) is
required to file periodic reports under the Exchange Act, (ii) has any
securities registered under the Exchange Act or (iii) has filed a
registration statement that has not yet become effective under the Securities
Act.

 

5.26.                        Equity
Interests. The authorized and outstanding Equity Interests of
each Borrower is as set forth on Schedule 5.27 hereto.  All of the Equity Interests of each Borrower
has been duly and validly authorized and issued and is fully paid and
non-assessable and has been sold and delivered to the holders hereof in
compliance with, or under valid exemption from, all federal and state laws and
the rules and regulations of each Governmental Body governing the sale and
delivery of securities.  Except for the
rights and obligations set forth on Schedule 5.27, there are no subscriptions,
warrants, options, calls, commitments, rights or agreement by which any
Borrower or any of the shareholders of any Borrower is bound relating to the
issuance, transfer, voting or redemption of shares of its Equity Interests or
any pre-emptive rights held by any Person with respect to the Equity Interests
of Borrowers.  Except as set forth on
Schedule 5.27, Borrowers have not issued any securities convertible into or
exchangeable for shares of its Equity Interests or any options, warrants or
other rights to acquire such shares or securities convertible into or
exchangeable for such shares.

 

63

 

5.27.                        Delivery of
Plan of Reorganization, Confirmation Order and Related Documentation.  Agent has received complete copies of the
Plan of Reorganization and Confirmation Order (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof.  None of such documents and agreements has
been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent.

 

5.28.                        Effectiveness
of Plan of Reorganization. Prior to, or upon the simultaneous, closing
of the transactions contemplated under this Agreement, all of the effectiveness
conditions in the Plan of Reorganization shall have been satisfied and the Plan
of Reorganization shall have gone effective.

 

VI.                                 AFFIRMATIVE
COVENANTS.

 

Each Borrower shall, until
payment in full of the Obligations and termination of this Agreement:

 

6.1.                              Payment of Fees.  Pay to Agent on demand all reasonable and
customary fees and expenses which Agent incurs in connection with (a) the
forwarding of Advance proceeds and (b) the establishment and maintenance
of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).  Agent may, without making demand, charge
Borrowers’ Account for all such fees and expenses.

 

6.2.                              Conduct of
Business and Maintenance of Existence and Assets.  (a) Conduct continuously and operate
actively its business according to good business practices and maintain all of
its properties useful or necessary in its business in good working order and
condition (reasonable wear and tear excepted and except as may be disposed of
in accordance with the terms of this Agreement), including all licenses,
patents, copyrights, design rights, tradenames, trade secrets and trademarks
and take all actions necessary to enforce and protect the validity of any
intellectual property right or other right included in the Collateral; (b) keep
in full force and effect its existence and comply in all material respects with
the laws and regulations governing the conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse
Effect; and (c) make all such reports and pay all such franchise and other
taxes and license fees and do all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases, powers and franchises under
the laws of the United States or any political subdivision thereof where the
failure to do so could reasonably be expected to have a Material Adverse
Effect.

 

6.3.                              Violations.  Promptly notify Agent in writing of any
violation of any law, statute, regulation or ordinance of any Governmental
Body, or of any agency thereof, applicable to any Borrower which could
reasonably be expected to have a Material Adverse Effect.

 

6.4.                              Government
Receivables.  Take all
steps necessary to protect Agent’s interest in the Collateral under the Federal
Assignment of Claims Act, the Uniform Commercial Code and all other applicable
state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts 

 

64

 

between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.

 

6.5.                              Intentionally
Omitted.

 

6.6.                              Execution of
Supplemental Instruments.  Execute
and deliver to Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Agent may reasonably
request, in order that the full intent of this Agreement may be carried into
effect.

 

6.7.                              Payment of
Indebtedness.  Pay,
discharge or otherwise satisfy at or before maturity (subject, where
applicable, to specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities of whatever
nature, except when the failure to do so could not reasonably be expected to
have a Material Adverse Effect or when the amount or validity thereof is
currently being Properly Contested, subject at all times to any applicable
subordination arrangement in favor of Lenders.

 

6.8.                              Standards of
Financial Statements.  Cause all
financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12,
and 9.13 as to which GAAP is applicable to be complete and correct in all
material respects (subject, in the case of interim financial statements, to
normal year-end audit adjustments) and to be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as
the case may be, and disclosed therein).

 

6.9.                              Federal
Securities Laws.  Promptly
notify Agent if any Borrower (other than Holdings) or any Borrower’s
Subsidiaries (i) is required to file periodic reports under the Exchange
Act, (ii) registers any securities under the Exchange Act or (iii) files
a registration statement under the Securities Act.

 

6.10.                        Exercise of
Rights.  Enforce all of its rights
under the Plan of Reorganization.

 

6.11.                        Substantial Consummation of Plan of Reorganization.  Borrowers shall
diligently pursue and take all steps required under the Plan of
Reorganization for substantial consummation of same and otherwise
shall achieve substantial consummation of the Plan of Reorganization.

 

6.12.                        Post Closing
Conditions.  Deliver, or
cause to be delivered, to Agent:

 

(a)                                  Within 60 days
of the Closing Date, Lien Waiver Agreements, in form and substance reasonably
satisfactory to Agent, for each of the leased locations identified on Schedule
4.5, each executed by the owner of such property in favor of Agent, provided
however, that failure to obtain any such Lien Waiver Agreement shall not be
deemed an Event of Default hereunder, provided further that, Borrowers acknowledge
that Agent shall have the right to impose a reserve under the Formula Amount in
an amount not less than three months rent due under the lease for such
Collateral.

 

(b)                                 Within 60 days
of the Closing Date, bailee and/or terminal waiver agreements and information
access, each in form and substance reasonably satisfactory to Agent, 

 

65

 

for each of the entities and locations
identified on Schedule 6.12(b), each executed by the owner of such property in favor
of Agent, provided however, that failure to obtain any such agreements shall
not be deemed an Event of Default hereunder, provided further that, Borrowers
acknowledge that Agent shall cause all Inventory located with any such Person(s) to
be deemed ineligible and excluded from the Formula Amount.

 

(c)                                  Within 90 days
of the Closing Date, a letter agreement with the Indiana Port Commission, a
body corporate and politic existing under the laws of the State of Indiana (the
“Commission”), in form and substance reasonably satisfactory to Agent, pursuant
to which the Commission acknowledges that Agent, for the benefit of Lenders,
shall have a first priority security interest in all Receivables generated by
Borrowers at the Real Property subject to that certain Lease Agreement, dated October 31,
2006, as amended, between the Commission and Aventine Renewable Mt Vernon.

 

(d)                                 Within 30 days
of the Closing Date, a Securities Account Control Agreement, in form and
substance reasonably satisfactory to Agent, relating to Aventine Renewable Inc.’s
investment account at JPMorgan Securities, bearing account number 651157
executed by JPMorgan Securities in favor of Agent.

 

VII.                             NEGATIVE COVENANTS.

 

No Borrower shall, until
satisfaction in full of the Obligations and termination of this Agreement:

 

7.1.                              Merger,
Consolidation, Acquisition and Sale of Assets.

 

(a)                                  Enter into any
merger, consolidation or other reorganization with or into any other Person
(other than a Borrower) or acquire all or a substantial portion of the assets
or Equity Interests of any Person (other than a Borrower) or permit any other
Person (other than a Borrower) to consolidate with or merge with it.

 

(b)                                 Except as
expressly permitted by this Agreement, sell, lease, transfer or otherwise
dispose of any Collateral (other than dispositions of Inventory in the Ordinary
Course of Business) or any material portion of its other properties or assets.

 

7.2.                              Creation of
Liens.  Create or suffer to exist any
Lien or transfer upon or against any of its property or assets now owned or
hereafter acquired, except Permitted Encumbrances.

 

7.3.                              Guarantees.  Become liable upon the obligations or
liabilities of any Person by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3,
(b) the endorsement of checks in the Ordinary Course of Business, and (c) guarantees
with respect to Indebtedness otherwise permitted hereunder.

 

7.4.                              Investments.  Purchase or acquire obligations or Equity
Interests of, or any other interest in, any Person, except (a) obligations
issued or guaranteed by the United States of America or any agency thereof, (b) commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days
and 

 

66

 

repurchase agreements backed by United States
government securities of a commercial bank if (i) such bank has a combined
capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (d) U.S. money market funds that invest solely
in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) any other overnight investments purchased through PNC;  (f) any Investment by a Borrower in
another Borrower; (g) any investment made as a result of the receipt of
non-cash consideration from an Asset Sale (as defined in the Indenture) that
was made pursuant to and in compliance with Section 4.16 of the Indenture;
(h) any acquisition of assets or Equity Interests solely in exchange for
the issuance of Equity Interests of a Borrower; (i) any investments
received in compromise or resolution of (1) obligations of any Person or
Customer that were incurred in the Ordinary Course of Business of any Borrower,
including pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such Person; or (2) litigation,
arbitration or other disputes with Persons who are not Affiliates; (j) investments
represented by deposits and margin deposits and other cash or cash equivalents
or other investment property deposited to secure performance of Hedging
Obligations (or to secure letters of credit securing Hedging Obligations);
provided that (1) such deposits are made in a manner within the general
parameters customary in the industry and incurred in the Ordinary Course of
Business and (2) such Hedging Obligations are designed solely to protect
the related Borrower from fluctuations in interest rates, currencies or the
price of commodities; (k) to the extent permitted by Applicable Law, loans
or advances to employees in the Ordinary Course of Business for bona fide
business purposes and not to exceed $250,000 in the aggregate at any time
outstanding; (l) investments constituting repurchases or acquisitions of
the Notes (as defined in the Indenture) to the extent such repurchases are
permitted under Section 7.21 of this Agreement; (m) investments in
existence on the date hereof; (n) investments represented by guarantees
that are otherwise permitted under this Agreement; (o) endorsements for
collection or deposit in the Ordinary Course of Business by any Person of bank
drafts and similar negotiable instruments of any other Person received as
payment for Ordinary Course of Business trade receivables; (p) cash or
cash equivalents or other investment property deposited in the Ordinary Course
of Business to secure (or to secure letters of credit securing) the performance
of statutory obligations (including obligations under worker’s compensation, unemployment
insurance or similar legislation), surety or appeal bonds, leases, agreements
or other obligations under arrangements with utilities, insurance agreements,
construction agreements, performance bonds or other obligations of a like
nature incurred in the Ordinary Course of Business, in each case if (but only
if) such obligations are not for borrowed money (“ordinary course deposits”);
provided that the aggregate amount of such investments made pursuant to this
clause (p), when added to the aggregate outstanding amount of investments
constituting ordinary course deposits in existence on the date hereof and
permitted under clause (m) above, does not exceed $50,000,000 in the
aggregate at any time outstanding; and (q) Receivables (including pursuant
to extensions of trade credit) and prepaid expenses, in each case arising in
the Ordinary Course of Business; provided, however, that such Receivables or
prepaid expenses would be recorded as current assets of such Person in
accordance with GAAP;

 

provided,
however, that with respect to any investment, the Borrowers may, in their sole
discretion, allocate all or any portion of such investment to one or more of
the above clauses (a) through (q) so that all or a portion of such
investment would be permitted hereunder.

 

67

 

7.5.                              Loans.  Make advances, loans or extensions of credit
to any Person, including any parent, Subsidiary or Affiliate except with
respect to (a) the extension of commercial trade credit in connection with
the sale of Inventory in the Ordinary Course of Business, (b) intercompany
loans between Borrowers in the Ordinary Course of Business, (c) loans to
employees in the Ordinary Course of Business not to exceed the aggregate amount
of $250,000 at any time outstanding, and (d) Investments permitted under
this Agreement.

 

7.6.                              Capital
Expenditures.  Contract
for, purchase or make any expenditure or commitments for Unfunded Capital
Expenditures in an aggregate amount for all Borrowers in excess of: (a) $56,500,000
for the period from the Closing Date through December 31, 2010; (b) $20,000,000
for fiscal year ending December 31, 2011 and (c) $25,000,000 for
fiscal year ending December 31, 2012 and each fiscal year thereafter.

 

7.7.                              Distributions.  Pay or make any distribution on any Equity
Interest of Borrower or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any Equity Interest, or of any
options to purchase or acquire any such Equity Interest of any Borrower except
that any Borrower may make distributions to any other Borrower.

 

7.8.                              Indebtedness.  Create, incur, assume assume or suffer to
exist any Indebtedness (exclusive of trade debt) except in respect of:

 

(a)                                  Indebtedness to
Lenders;

 

(b)                                 Indebtedness incurred
for Capital Expenditures permitted under Section 7.6 hereof,

 

(c)                                  Indebtedness
due under the Indenture Loan Documentation;

 

(d)                                 the incurrence
by any Borrower of Indebtedness (including Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase money obligations) incurred
for the purpose of financing all or any part of the purchase price or cost of
design, development, construction, installation or improvement of property
(real or personal), plant or equipment used in a Permitted Business of such
Borrower (including through the direct acquisition of such assets or the
acquisition of Equity Interests of the Person owning such assets), in an
aggregate principal amount not to exceed $5,000,000 at any time outstanding;

 

(e)                                  the incurrence
by any Borrower of Indebtedness in exchange for, or the net proceeds of which
are used to extend, renew, refund, refinance, replace, defease or discharge,
Indebtedness (other than Intercompany Debt) that was permitted by this Section 7.8;

 

(f)                                    the incurrence
by any Borrower of Indebtedness to any other Borrower;

 

(g)                                 the incurrence
by any Borrower of Hedging Obligations in the Ordinary Course of Business;

 

(h)                                 the guarantee
by any Borrower of Indebtedness of any Borrower that was permitted to be
incurred by another provision of this Section 7.8;

 

68

 

(i)                                     the incurrence
by any Borrower of Indebtedness in respect of surety, performance, appeal or
similar bonds, completion guarantees or similar instruments issued in the
ordinary course and not supporting obligations for borrowed money, including in
respect of workers’ compensation claims and self-insurance obligations;

 

(j)                                     the incurrence
by any Borrower of Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds;
provided, however, that such Indebtedness is extinguished within five (5) Business
Days of incurrence;

 

(k)                                  Indebtedness
represented by the Aurora Kiewit Note issued on the Closing Date;

 

(l)                                     endorsement of
negotiable instruments for deposit or collection or similar transactions in the
Ordinary Course of Business;

 

(m)                               to the extent
constituting Indebtedness, indemnification obligations and other similar
obligations (including advancement of expenses) of any Borrower in favor of
directors, officers, employees, consultants or agents of such Borrower extended
in the Ordinary Course of Business in an aggregate principal amount not to
exceed $1,000,000 at any time outstanding;

 

(n)                                 Indebtedness
owing to insurance companies (or another Person engaged at the direction of any
Borrower and any such insurance company) to finance insurance premiums incurred
in the Ordinary Course of Business in an aggregate principal amount not to
exceed $2,000,000 at any time outstanding; and

 

(o)                                 additional
unsecured Indebtedness of any Borrower (in addition to the Indebtedness under
clauses (a) through (n) above) in an aggregate principal amount
outstanding at any time not to exceed $5,000,000.

 

For
purposes of determining compliance with this Section 7.8 in the event that
an item of proposed Indebtedness, disqualified stock or preferred stock meets
the criteria of more than one of the categories of Permitted Debt described in
clauses (a) through (o) above, the Borrowers will be permitted to
classify such item of Indebtedness or any portion thereof on the date of its
incurrence or issuance, and will only be required to include the amount and
type of such Indebtedness in one of the above clauses, although the Company may
divide and classify an item of Indebtedness, in one or more of the categories
of Indebtedness described in such clauses. 
The accrual of interest or dividends, the accretion of accreted value or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms will
not be deemed to be an incurrence of Indebtedness for purposes of this Section 7.8.  Notwithstanding any other provision of this Section 7.8,
the maximum amount of Indebtedness that any Borrower may incur pursuant to this
Section 7.8 shall not be deemed to be exceeded solely as a result of
fluctuations in exchange rates or currency values.

 

7.9.                              Nature of
Business. 
Substantially change the nature of the business in which it is presently
engaged, nor except as specifically permitted hereby purchase or invest,
directly or indirectly, in any assets or property other than in the Ordinary
Course of Business for assets or 

 

69

 

property which are useful in, necessary for
and are to be used in its business as presently conducted.

 

7.10.                        Transactions
with Affiliates.  Directly or
indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or otherwise enter into any transaction or deal with,
any Affiliate, except (a) transactions disclosed to the Agent, which are
in the Ordinary Course of Business, on an arm’s-length basis on terms and
conditions no less favorable than terms and conditions which would have been
obtainable from a Person other than an Affiliate, and (b) sales of
Inventory to SEACOR Capital Corporation or Seacor Energy, Inc..

 

7.11.                        Leases.  Enter as lessee into any lease arrangement
for real or personal property (unless capitalized and permitted under Section 7.6
hereof) if after giving effect thereto, aggregate annual rental payments for
all leased property would exceed $10,000,000 in any one fiscal year in the
aggregate for all Borrowers.

 

7.12.                        Subsidiaries.

 

(a)                                  Form any
Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as
a borrower and becomes jointly and severally liable for the obligations of
Borrowers hereunder, under the Note, and under any other agreement between any
Borrower and Lenders and (ii) Agent shall have received all documents,
including legal opinions, it may reasonably require to establish compliance
with each of the foregoing conditions.

 

(b)                                 Enter into any
partnership, joint venture or similar arrangement.

 

7.13.                        Fiscal Year and
Accounting Changes.  Change its
fiscal year from December 31 or make any material change (i) in
accounting treatment and reporting practices except as required by GAAP or (ii) in
tax reporting treatment except as required by law.

 

7.14.                        Pledge of
Credit.  Now or hereafter pledge Agent’s
or any Lender’s credit on any purchases or for any purpose whatsoever or use
any portion of any Advance in or for any business other than such Borrower’s
business as conducted on the date of this Agreement.

 

7.15.                        Amendment of
Articles of Incorporation, By-Laws, Certificate of Formation, Operating
Agreement.  Amend,
modify or waive any term or material provision of its Articles of Incorporation
or By-Laws or Certificate of Formation or Operating Agreement unless required
by law.

 

7.16.                        Compliance with
ERISA.  (i) (x) Maintain, or
permit any member of the Controlled Group to maintain, or (y) become
obligated to contribute, or permit any member of the Controlled Group to become
obligated to contribute, to any Pension Benefit Plan, other than those Pension
Benefit Plans disclosed on Schedule 5.8(d); (ii) engage, or permit any
member of the Controlled Group to engage, in any non-exempt “prohibited
transaction”, as that term is defined in Section 406 of ERISA or Section 4975
of the Code that could reasonably be expected to have a Material Adverse
Effect; (iii) terminate, or permit any member of the Controlled Group to
terminate, any Pension Benefit Plan where such event could result in any
material liability of any Borrower or any member of the Controlled Group or the
imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA; 

 

70

 

(iv) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8(d); (v) incur, or permit any member of
the Controlled Group to incur, any withdrawal liability to any Multiemployer
Plan; (vi) fail promptly to notify Agent of the occurrence of any
Termination Event; (vii) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the requirements of ERISA or the Code
or other Applicable Laws in respect of any Plan in a manner that could
reasonably be expected to have a Material Adverse Effect; (viii) fail to
meet, or permit any member of the Controlled Group to fail to meet, the minimum
funding requirements under Sections 206(g), 302 and 303 of ERISA and Sections
412, 430 and 436 of the Code, without regard to any waivers or variances, with
respect of any Pension Benefit Plan; or (ix) cause, or permit any member
of the Controlled Group to cause, a representation or warranty in Section 5.8(d) to
cease to be true and correct, in a manner that could reasonably be expected to
have a Material Adverse Effect.

 

7.17.                        Prepayment of
Indebtedness.  Except as
permitted in this Section 7.17 or pursuant to Section 7.21 hereof, at
any time, directly or indirectly, prepay any material Indebtedness (other than
to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Borrower prior to the stated maturity thereof; provided
however, that so long as (i) no Default or Event of Default has occurred
and is continuing hereunder, or would occur after giving effect to the making
of such payment and (ii) Borrowers demonstrate to the satisfaction of
Agent that after giving effect to making of such prepayment Borrowers will have
Undrawn Availability and unrestricted available cash of not less than
$65,000,000, Borrowers may prepay the Aurora West Kiewet Note.

 

7.18.                        Anti-Terrorism
Laws.  No Borrower shall, until
satisfaction in full of the Obligations and termination of this Agreement, nor
shall it permit any Affiliate or agent to:

 

(a)                                  Conduct any
business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person.

 

(b)                                 Deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.

 

(c)                                  Engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in the Executive Order No. 13224, the USA PATRIOT Act or any other
Anti-Terrorism Law.  Borrower shall
deliver to Lenders any certification or other evidence requested from time to
time by any Lender in its sole discretion, confirming Borrower’s compliance
with this Section.

 

7.19.                        Membership/Partnership
Interests.  Elect to
treat or permit any of its Subsidiaries to (x) treat its limited liability
company membership interests or partnership interests, as the case may be, as
securities as contemplated by the definition of “security” in Section 8-102(15)
and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate
its limited liability company membership interests or partnership interests, as
the case may be.

 

71

 

7.20.                        Trading with
the Enemy Act.  Engage in
any business or activity in violation of the Trading with the Enemy Act.

 

7.21.                        Indenture.  At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium payable in connection with
the repayment or redemption of the obligations under the Indenture except, in
each case, for regular scheduled payments of interest and, subject to the terms
of the Intercreditor Agreement, payments required pursuant to any repurchase
offer upon an “Asset Sale”, “Event of Loss” or “Repurchase Offer” (as defined
in and pursuant to Sections 4.16, 4.17 or 4.19 of the Indenture).

 

7.22.                        Other
Agreements.  Enter into
any material amendment, waiver or modification of the Indenture Loan
Documentation or any related agreements.

 

VIII.                         CONDITIONS PRECEDENT.

 

8.1.                              Conditions to
Initial Advances.  The
agreement of Lenders to make the initial Advances requested to be made on the
Closing Date is subject to the satisfaction, or waiver by Agent, immediately
prior to or concurrently with the making of such Advances, of the following
conditions precedent:

 

(a)                                  Note.  Agent shall have received the Note duly
executed and delivered by an authorized officer of each Borrower;

 

(b)                                 Filings,
Registrations and Recordings.  Each document (including any Uniform Commercial
Code financing statement) required by this Agreement, any related agreement or
under law or reasonably requested by the Agent to be filed, registered or
recorded in order to create, in favor of Agent, a perfected security interest
in or lien upon the Collateral other than Excluded Personal Property and Specified
Equity Interests shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested, and Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;

 

(c)                                  Leasehold
Agreements.  Agent shall
have received landlord, mortgagee or warehouseman agreements satisfactory to
Agent with respect to all premises leased by Borrowers at which Inventory and
books and records are located;

 

(d)                                 Pledge
Agreements and Other Documents.  Agent shall have received (i) the Pledge
Agreements, and (ii) the executed Other Documents, all in form and
substance satisfactory to Agent;

 

(e)                                  Indenture Loan
Documentation.  Agent shall
have received final executed copies of the Indenture Loan Documentation, and all
related agreements, documents and instruments as in effect on the Closing Date
all of which shall be satisfactory in form and substance to Agent and the
transactions contemplated by such documentation shall be consummated prior to
or simultaneously with the making of the initial Advance.

 

72

 

(f)                                    Intercreditor
Agreement.  Agent shall
have entered into the Intercreditor Agreement;

 

(g)                                 Financial
Condition Certificates. 
Agent shall have received an executed Financial Condition Certificate in
the form of Exhibit 8.1(g).

 

(h)                                 Closing
Certificate.  Agent shall
have received a closing certificate signed by the Chief Financial Officer or
Chief Accounting and Compliance Officer of each Borrower dated as of the date
hereof, stating that (i) all representations and warranties set forth in
this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on
such date no Default or Event of Default has occurred or is continuing;

 

(i)                                     Borrowing Base.  Agent shall have received evidence from
Borrowers that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Borrowers on the Closing Date;

 

(j)                                     Blocked
Accounts.  Agent shall
have received duly executed agreements establishing the Blocked Accounts or
Depository Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral;

 

(k)                                  Proceedings of
Borrowers.  Agent shall
have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the members of each Borrower authorizing (i) the
execution, delivery and performance of this Agreement, the Note, any related
agreements, the Indenture Loan Documentation (collectively the “Documents”) and
(ii) the granting by each Borrower of the security interests in and liens
upon the Collateral in each case certified by the Secretary, or an Assistant
Secretary, or Manager of each Borrower as of the Closing Date; and, such
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate;

 

(l)                                     [Intentionally
omitted];

 

(m)                               Incumbency
Certificates of Borrowers. 
Agent shall have received a certificate of the Secretary or an Assistant
Secretary or the Manager of each Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of each Borrower executing this
Agreement, the Other Documents, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;

 

(n)                                 Certificates.  Agent shall have received a copy of the
Articles or Certificate of Incorporation or Formation, as applicable, of each
Borrower and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation or formation
together with copies of the By-Laws or Operating Agreement of each Borrower, as
applicable, and all agreements of each Borrower’s shareholders or members, as
applicable, certified as accurate and complete by the Secretary of each
Borrower;

 

73

 

(o)                                 Good Standing
Certificates.  Agent shall
have received good standing certificates for each Borrower dated not more than
thirty (30) days prior to the Closing Date, issued by the Secretary of State or
other appropriate official of each Borrower’s jurisdiction of incorporation or
formation, as applicable, and each jurisdiction where the conduct of each
Borrower’s business activities or the ownership of its properties necessitates
qualification;

 

(p)                                 Legal Opinion.  Agent shall have received the executed legal
opinions of Sidley Austin LLP and Kutack Rock LLP in form and substance
satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement, the Note, the Other Documents, the
Intercreditor Agreement and related agreements as Agent may reasonably require
and each Borrower hereby authorizes and directs such counsel to deliver such
opinions to Agent and Lenders;

 

(q)                                 No Litigation.  (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with this Agreement, the Other Documents, the
Indenture Loan Documentation or any of the transactions contemplated thereby
and which, in the reasonable opinion of Agent, is deemed material or (B) which
could, in the reasonable opinion of Agent, be expected to have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other
order of any nature materially adverse to any Borrower or the conduct of its
business or inconsistent with the due consummation of the Transactions shall
have been issued by any Governmental Body;

 

(r)                                    Collateral
Examination.  Agent shall
have completed Collateral examinations and received appraisals, the results of
which shall be satisfactory in form and substance to Lenders, of the
Receivables, Inventory and General Intangibles of each Borrower and all books
and records in connection therewith;

 

(s)                                  Fees.  Agent shall have received all fees payable to
Agent and Lenders on or prior to the Closing Date hereunder, including pursuant
to Article III hereof;

 

(t)                                    Financial
Statements.  Agent shall
have received a copy of (i) the Pro Forma Financial Statements, (ii) Borrowers’
most recent annual and interim management prepared financial statements and (iii) Borrowers’
annual projections for fiscal years 2010, 2011 and 2012, each of which shall be
satisfactory in all respects to Agent and Lenders;

 

(u)                                 Insurance.  Agent shall have received in form and
substance satisfactory to Agent, certified copies of Borrowers’ casualty
insurance policies, together with loss payable endorsements on Agent’s standard
form of loss payee endorsement naming Agent as loss payee, and certified copies
of Borrowers’ liability insurance policies, together with endorsements naming
Agent as a co-insured;

 

(v)                                 Payment
Instructions.  Agent shall
have received written instructions from Borrowing Agent directing the application
of proceeds of the initial Advances made pursuant to this Agreement;

 

(w)                               Consents.  Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other 

 

74

 

Documents; and, Agent shall have received
such Consents and waivers of such third parties as might assert claims with
respect to the Collateral, as Agent and its counsel shall deem necessary;

 

(x)                                   No Adverse
Material Change.  (i) since
December 31, 2009, there shall not have occurred any event, condition or
state of facts which could reasonably be expected to have a Material Adverse
Effect and (ii) no representations made or information supplied to Agent
or Lenders shall have been proven to be inaccurate or misleading in any
material respect;

 

(y)                                 Contract Review.  Agent shall have reviewed all material
contracts of Borrowers including leases, union contracts, labor contracts,
vendor supply contracts, license agreements and distributorship agreements and
such contracts and agreements shall be satisfactory in all respects to Agent;

 

(z)                                   Undrawn
Availability and Available Cash.  After giving effect to the initial Advances
hereunder, Borrowers shall have Undrawn Availability plus available
unrestricted cash of at least $65,000,000;

 

(aa)                            Compliance with
Laws.  Agent shall be reasonably
satisfied that each Borrower is in compliance with all pertinent federal,
state, local or territorial regulations, including those with respect to the
Federal Occupational Safety and Health Act, the Environmental Protection Act,
ERISA and the Trading with the Enemy Act;

 

(bb)                          Confirmation
Order and Plan of Reorganization. Agent shall have received
an executed copy of the Confirmation Order and Plan of Reorganization;

 

(cc)                            Effectiveness
of Plan of Reorganization. Agent shall have received evidence that the
Plan of Reorganization is, or will become upon the simultaneous closing of the
transactions contemplated under this Agreement, fully effective; and

 

(dd)                          Other.  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.

 

8.2.                              Conditions to
Each Advance.  The
agreement of Lenders to make any Advance requested to be made on any date
(including the initial Advance), is subject to the satisfaction of the
following conditions precedent as of the date such Advance is made:

 

(a)                                  Representations
and Warranties.  Each of the
representations and warranties made by any Borrower in or pursuant to this
Agreement, the Other Documents and any related agreements to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date;

 

(b)                                 No Default.  No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Agent,
in its sole discretion, may continue to make 

 

75

 

Advances notwithstanding the existence of an
Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and

 

(c)                                  Maximum
Advances.  In the case
of any type of Advance requested to be made, after giving effect thereto, the
aggregate amount of such type of Advance shall not exceed the maximum amount of
such type of Advance permitted under this Agreement.

 

Each request for an Advance
by any Borrower hereunder shall constitute a representation and warranty by
each Borrower as of the date of such Advance that the conditions contained in
this subsection shall have been satisfied.

 

IX.                                INFORMATION AS
TO BORROWERS.

 

Each
Borrower shall, or (except with respect to Section 9.11) shall cause
Borrowing Agent on its behalf to, until satisfaction in full of the Obligations
and the termination of this Agreement:

 

9.1.                              Disclosure of
Material Matters.  Immediately
upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectibility of any portion of the Collateral,
including any Borrower’s reclamation or repossession of, or the return to any
Borrower of, a material amount of goods or claims or disputes asserted by any
Customer or other obligor.

 

9.2.                              Schedules.  Deliver to Agent on or before: (a) the
twentieth (20th) day of each month as and for the prior month (i) accounts
receivable ageings inclusive of reconciliations to the general ledger, (ii) accounts
payable schedules inclusive of reconciliations to the general ledger, (iii) Inventory
reports (such report to include a lower of cost or market comparison where
applicable) and (iv) an inventory master workpaper in form agreed to by
Agent, which shall include Inventory files for Nebraska Energy in format
similar to the inventory master workpaper for Aventine Renewable Inc.’s
facility located in Pekin, Illinois; and (b) Wednesday of each week, a
Borrowing Base Certificate in form and substance satisfactory to Agent (which
shall be calculated as of the last day of the prior week and which shall not be
binding upon Agent or restrictive of Agent’s rights under this Agreement) and
cash balance statement setting forth Borrowers’ unrestricted cash balances. In
addition, each Borrower will deliver to Agent at such intervals as Agent may
require: (i) confirmatory assignment schedules; (ii) copies of
Customer’s invoices; (iii) evidence of shipment or delivery; and (iv) such
further schedules, documents and/or information regarding the Collateral as
Agent may require including trial balances and test verifications.  Agent shall have the right to confirm and
verify all Receivables by any manner and through any medium it considers advisable
and do whatever it may deem reasonably necessary to protect its interests
hereunder.  The items to be provided
under this Section are to be in form satisfactory to Agent and executed by
each Borrower and delivered to Agent from time to time solely for Agent’s
convenience in maintaining records of the Collateral, and any Borrower’s
failure to deliver any of such items to Agent shall not affect, terminate,
modify or otherwise limit Agent’s Lien with respect to the Collateral.

 

9.3.                              Intentionally
Omitted.

 

76

 

9.4.                              Litigation.  Promptly notify Agent in writing of any
claim, litigation, suit or administrative proceeding affecting any Borrower or
any Guarantor, whether or not the claim is covered by insurance, and of any
litigation, suit or administrative proceeding, which in any such case affects
the Agent’s rights in the Collateral or which could reasonably be expected to
have a Material Adverse Effect.

 

9.5.                              Material
Occurrences.  Promptly
notify Agent in writing upon the occurrence of: (a) any Event of Default
or Default; (b) any event of default under the Indenture Loan
Documentation; (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Indenture Loan
Documentation; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of any Borrower as of the date of such
statements; (e) any accumulated retirement plan funding deficiency which,
if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Borrower to a tax
imposed by Section 4971 of the Code; (f) each and every default by
any Borrower which might result in the acceleration of the maturity of any
material Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (g) any other development in the business or affairs of
any Borrower or any Guarantor, which could reasonably be expected to have a
Material Adverse Effect; in each case describing the nature thereof and the
action Borrowers propose to take with respect thereto.

 

9.6.                              Government
Receivables.  Notify
Agent immediately if any of its Receivables arise out of contracts between any
Borrower and the United States, any state, or any department, agency or
instrumentality of any of them.

 

9.7.                              Annual
Financial Statements.  Furnish
Agent within one hundred twenty (120) days after the end of each fiscal year of
Holdings, financial statements of Holdings on a consolidating and consolidated
basis including, but not limited to, statements of income and stockholders’
equity and cash flow from the beginning of the current fiscal year to the end
of such fiscal year and the balance sheet as at the end of such fiscal year,
all prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification by
an independent certified public accounting firm selected by Holdings and satisfactory
to Agent (the “Accountants”).  In
addition, the reports shall be accompanied by a Compliance Certificate.

 

9.8.                              Quarterly
Financial Statements.  Furnish
Agent within forty-five (45) days after the end of each fiscal quarter, an
unaudited balance sheet of Holdings on a consolidated and consolidating basis
and unaudited statements of income and stockholders’ equity and cash flow of
Holdings on a consolidated and consolidating basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring
year end adjustments that individually and in the aggregate are not material to
Borrowers’ business, taken as a whole. 
The reports shall be accompanied by a Compliance Certificate.

 

77

 

9.9.                              Monthly
Financial Statements.  Furnish
Agent and Lenders within thirty (30) days after the end of each month (other
than for the months of March, June and September which shall be
delivered in accordance with Section 9.8), an unaudited balance sheet of
Holdings on a consolidated and consolidating basis and unaudited statements of
income and stockholders’ equity and cash flow of Holdings on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to Borrowers’ business taken
as a whole.  The reports shall be
accompanied by a Compliance Certificate. In addition to the foregoing, the
monthly financial reporting shall include a monthly Capital Expenditure summary
to include total Capital Expenditures (to include a breakdown of Unfunded
Capital Expenditures and all other Capital Expenditures) together with
maintenance Capital Expenditures for the prior month.

 

9.10.                        Other Reports.  Furnish Agent as soon as available, but in
any event within ten (10) days after the issuance thereof, (i) with
copies of such financial statements, reports and returns as each Borrower shall
send to its stockholders or members and (ii) copies of all notices,
reports, financial statements and other materials sent pursuant to the
Indenture Loan Documentation.

 

9.11.                        Additional
Information.  Furnish
Agent with such additional information as Agent shall reasonably request in
order to enable Agent to determine whether the terms, covenants, provisions and
conditions of this Agreement and the Note have been complied with by Borrowers
including, without the necessity of any request by Agent, (a) copies of
all environmental audits and reviews, (b) at least thirty (30) days prior
thereto, notice of any Borrower’s opening of any new office or place of
business or any Borrower’s closing of any existing office or place of business,
and (c) promptly upon any Borrower’s learning thereof, notice of any labor
dispute to which any Borrower is likely to become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which any Borrower is a party or by which any Borrower
is bound.

 

9.12.                        Projected
Operating Budget.  Furnish
Agent no later than thirty (30) days following the beginning of each Borrower’s
fiscal years commencing with fiscal year 2011, a month by month projected
operating budget and cash flow of Borrowers on a consolidated and consolidating
basis for such fiscal year (including an income statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), such
projections to be accompanied by a certificate signed by the President, Chief
Executive Officer or Chief Financial Officer of each Borrower to the effect
that such projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial statements and
that such officer has no reason to question the reasonableness of any material
assumptions on which such projections were prepared.

 

9.13.                        Variances From
Operating Budget.   Furnish
Agent, concurrently with the delivery of the financial statements referred to
in Section 9.7 and each monthly report, a written report summarizing all
material variances from budgets submitted by Borrowers pursuant to Section 9.12
and a discussion and analysis by management with respect to such variances.

 

78

 

9.14.                        Notice of
Suits, Adverse Events. 
Furnish Agent with prompt written notice of (i) any lapse or other
termination of any Consent issued to any Borrower by any Governmental Body or
any other Person that is material to the operation of any Borrower’s business, (ii) any
refusal by any Governmental Body or any other Person to renew or extend any
such Consent; and (iii) copies of any periodic or special reports filed by
any Borrower or any Guarantor with any Governmental Body or Person, if such
reports indicate any material change in the business, operations, affairs or
condition of any Borrower or any Guarantor, or if copies thereof are requested
by Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate
to any Borrower or any Guarantor.

 

9.15.                        ERISA Notices
and Requests.  Furnish
Agent with prompt written notice in the event that (i) any Borrower or any
member of the Controlled Group knows or has reason to know that a Termination
Event has occurred, together with a written statement describing such
Termination Event and the action, if any, which such Borrower or any member of
the Controlled Group has taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower
or any member of the Controlled Group knows or has reason to know that a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred together with a written statement describing such
transaction and the action which such Borrower or any member of the Controlled
Group has taken, is taking or proposes to take with respect thereto, (iii) a
funding waiver request has been filed with respect to any Plan together with
all communications received by any Borrower or any member of the Controlled
Group with respect to such request, (iv) any increase in the benefits of
any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of
intention to terminate a Plan or to have a trustee appointed to administer a
Plan, together with copies of each such notice, (vi) any Borrower or any
member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Code, together
with copies of each such letter; (vii) any Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii) any Borrower
or any member of the Controlled Group shall fail to make a required installment
or any other required payment under Section 412 of the Code on or before
the due date for such installment or payment; or (ix) any Borrower or any
member of the Controlled Group knows that (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted
or will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.

 

9.16.                        Daily Inventory
Reporting. In the event that Borrowers’ available unrestricted
cash falls below $20,000,000 at any time, Borrowers shall deliver to Agent on a
daily basis a report setting forth Borrowers’ in-transit Inventory in form and
substance reasonably acceptable to Agent.

 

79

 

9.17.                        Background
Checks.  Promptly notify Agent in the
event that any Borrower hires or retains new key personnel, including, without
limitation, any executive officer, and Agent may at any time thereafter perform
background checks on such new key personnel.

 

9.18.                        Additional
Documents.  Execute and
deliver to Agent, upon request, such documents and agreements as Agent may,
from time to time, reasonably request to carry out the purposes, terms or
conditions of this Agreement.

 

X.                                    EVENTS OF
DEFAULT.

 

The occurrence of any one or
more of the following events shall constitute an “Event of Default”:

 

10.1.                        Nonpayment.  Failure by any Borrower to pay any principal
or interest on the Obligations when due, whether at maturity or by reason of
acceleration pursuant to the terms of this Agreement or by notice of intention
to prepay, or by required prepayment or failure to pay any other liabilities or
make any other payment, fee or charge provided for herein when due or in any
Other Document;

 

10.2.                        Breach of
Representation.  Any
representation or warranty made or deemed made by any Borrower or any Guarantor
in this Agreement, any Other Document or any related agreement or in any
certificate, document or financial or other statement furnished at any time in
connection herewith or therewith shall prove to have been misleading in any
material respect on the date when made or deemed to have been made;

 

10.3.                        Financial
Information.  Failure by
any Borrower to (i) furnish financial information when due or when
requested and such failure shall continue for five (5) consecutive days,
or (ii) permit the inspection of its books or records as and when required
under this Agreement;

 

10.4.                        Judicial
Actions.  Issuance of a notice of Lien,
levy, assessment, injunction or attachment against any Borrower’s Inventory or
Receivables, or against a material portion of any Borrower’s other property;

 

10.5.                        Noncompliance.  Except as otherwise provided for in Sections
10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Borrower or any
Guarantor or any Person to perform, keep or observe any term, provision,
condition, covenant herein contained, or contained in any Other Document or any
other agreement or arrangement, now or hereafter entered into between any
Borrower or any Guarantor or such Person, and Agent or any Lender, or (ii) failure
or neglect of any Borrower to perform, keep or observe any term, provision,
condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4
or 9.6 hereof which is not cured within fifteen (15) days from the occurrence
of such failure or neglect;

 

10.6.                        Judgments.  Any judgment or judgments are rendered
against any Borrower or any Guarantor for an aggregate amount in excess of
$1,000,000 or against all Borrowers or Guarantors for an aggregate amount in
excess of $1,000,000 and (i) enforcement proceedings shall have been
commenced by a creditor upon such judgment, (ii) there shall be any period
of thirty (30) consecutive days during which a stay of enforcement of such
judgment, by reason of a 

 

80

 

pending appeal or otherwise, shall not be in
effect, or (iii) any such judgment results in the creation of a Lien upon
any of the Collateral (other than a Permitted Encumbrance);

 

10.7.                        Bankruptcy.  Any Borrower, Subsidiary of any Borrower or
any Guarantor shall (i) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence
a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file
a petition seeking to take advantage of any other law providing for the relief
of debtors, (vi) acquiesce to, or fail to have dismissed, within sixty
(60) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any
of the foregoing;

 

10.8.                        Inability to
Pay.  Any Borrower or any Guarantor
shall admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business;

 

10.9.                        Intentionally
omitted;

 

10.10.                  Material Adverse Effect. The
occurrence of any Material Adverse Effect;

 

10.11.                  Lien Priority.  Any Lien created hereunder or provided for
hereby or under any related agreement for any reason ceases to be or is not a
valid and perfected Lien having a first priority interest (subject to Permitted
Encumbrances and excluding the Specified Equity Interests and Excluded Personal
Property);

 

10.12.                  Indenture Loan Default.  An event of default has occurred under the
Indenture Loan Documentation or the Intercreditor Agreement, which default
shall not have been waived or cured within any applicable grace period;

 

10.13.                  Cross Default.  A default of the obligations of any Borrower
under any other agreement to which it is a party shall occur which causes a
Material Adverse Effect which default is not waived or cured within any
applicable grace period;

 

10.14.                  Breach of Guaranty or Pledge
Agreements.  Termination
or breach of any Guaranty, any Guaranty Security Agreement, any Pledge
Agreement or similar agreement executed and delivered to Agent in connection
with the Obligations of any Borrower, or if any Guarantor attempts to
terminate, challenges the validity of, or its liability under, any such
Guaranty, Guaranty Security Agreement, Pledge Agreement or similar agreement;

 

10.15.                  Change of Ownership.  Any Change of Ownership shall occur;

 

10.16.                  Invalidity.  Any material provision of this Agreement or
any Other Document shall, for any reason, cease to be valid and binding on any
Borrower or any Guarantor, or any Borrower or any Guarantor shall so claim in
writing to Agent or any Lender;

 

10.17.                  Licenses.  (i) Any Governmental Body shall (a) revoke,
terminate, suspend or adversely modify any license, permit, patent trademark or
tradename of any Borrower or any 

 

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Guarantor, the continuation of which is
material to the continuation of any Borrower’s or Guarantor’s business, or (b) commence
proceedings to suspend, revoke, terminate or adversely modify any such license,
permit, trademark, tradename or patent and such proceedings shall not be
dismissed or discharged within sixty (60) days, or (c) schedule or conduct
a hearing on the renewal of any license, permit, trademark, tradename or patent
necessary for the continuation of any Borrower’s or any Guarantor’s business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower’s or any Guarantor’s
business shall be revoked or terminated and not replaced by a substitute
reasonably acceptable to Agent within thirty (30) days after the date of such
revocation or termination, and such revocation or termination and
non-replacement could reasonably be expected to have a Material Adverse Effect;

 

10.18.                  Seizures.  Any material portion of the Collateral shall
be seized or taken by a Governmental Body, or any Borrower or any Guarantor or
the title and rights of any Borrower, any Guarantor which is the owner of any
material portion of the Collateral shall have become the subject matter of
claim, litigation, suit or other proceeding which could reasonably be expected
to result in impairment or loss of the security provided by this Agreement or
the Other Documents;

 

10.19.                  Operations.  Other than voluntary shut downs in the
exercise of the business judgment of any Borrower, the operations of any
Borrower’s or any Guarantor’s manufacturing facilities are interrupted at any
time for more than five (5) consecutive days, unless such Borrower or
Guarantor shall (i) be entitled to receive for such period of
interruption, proceeds of business interruption insurance sufficient to assure
that its per diem cash needs during such period is at least equal to its
average per diem cash needs for the consecutive three month period immediately
preceding the initial date of interruption and (ii) receive such proceeds
in the amount described in clause (i) preceding not later than thirty (30)
days following the initial date of any such interruption; provided, however,
that notwithstanding the provisions of clauses (i) and (ii) of this
section, an Event of Default shall be deemed to have occurred if such Borrower
or Guarantor shall be receiving the proceeds of business interruption insurance
for a period of thirty (30) consecutive days; or

 

10.20.                  Pension Plans.  An event or condition specified in Sections
7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a
result of such event or condition, together with all other such events or
conditions, any Borrower or any member of the Controlled Group shall incur, or
in the opinion of Agent be reasonably likely to incur, a liability to a Plan or
the PBGC (or both) which could reasonably be expected to have a Material
Adverse Effect.

 

XI.                                LENDERS’ RIGHTS AND REMEDIES
AFTER DEFAULT.

 

11.1.                        Rights and
Remedies.

 

(a)                                  Upon the
occurrence of: (i) an Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and, and (ii) any
of the other Events of Default and at any time during the continuation thereof,
at the option of Required Lenders all 

 

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Obligations shall be immediately due and
payable and Lenders shall have the right to terminate this Agreement and to
terminate the obligation of Lenders to make Advances. Upon the occurrence and
during the continuation of any Event of Default, Agent shall have the right to
exercise any and all rights and remedies provided for herein, under the Other
Documents, under the Uniform Commercial Code and at law or equity generally,
including the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial process.  Agent may enter any of any Borrower’s
premises or other premises without legal process and without incurring
liability to any Borrower therefor, and Agent may thereupon, or at any time
thereafter, in its discretion without notice or demand, take the Collateral and
remove the same to such place as Agent may deem advisable and Agent may require
Borrowers to make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect.  Except as to that part
of the Collateral which is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market, Agent shall give
Borrowers reasonable notification of such sale or sales, it being agreed that
in all events written notice mailed to Borrowing Agent at least ten (10) days
prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may
bid for and become the purchaser, and Agent, any Lender or any other purchaser
at any such sale thereafter shall hold the Collateral sold absolutely free from
any claim or right of whatsoever kind, including any equity of redemption and
all such claims, rights and equities are hereby expressly waived and released
by each Borrower.  In connection with the
exercise of the foregoing remedies, including the sale of Inventory, Agent is
granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent
is granted permission to use all of each Borrower’s (a) trademarks, trade
styles, trade names, patents, patent applications, copyrights, service marks,
licenses, franchises and other proprietary rights which are used or useful in
connection with Inventory for the purpose of marketing, advertising for sale
and selling or otherwise disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods.  The cash proceeds realized from the sale of
any Collateral shall be applied to the Obligations in the order set forth in Section 11.5
hereof.  Noncash proceeds will only be
applied to the Obligations as they are converted into cash.  If any deficiency shall arise, Borrowers
shall remain liable to Agent and Lenders therefor.

 

(b)                                 To the extent
that Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Borrower acknowledges and agrees that it
is not commercially unreasonable for the Agent: (i) to fail to incur
expenses reasonably deemed significant by the Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition; (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of; (iii) to fail to exercise collection remedies against
Customers or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral; (iv) to exercise collection remedies
against Customers and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists; (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature; (vi) to
contact other 

 

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Persons, whether or not in the same business
as any Borrower, for expressions of interest in acquiring all or any portion of
such Collateral; (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature; (viii) to dispose of Collateral by utilizing internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets; (ix) to dispose of assets in wholesale
rather than retail markets; (x) to disclaim disposition warranties, such
as title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral; or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral.  Each Borrower acknowledges that the purpose
of this Section 11.1(b) is to provide non-exhaustive indications of
what actions or omissions by the Agent would not be commercially unreasonable
in the Agent’s exercise of remedies against the Collateral and that other
actions or omissions by the Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 11.1(b).  Without limitation upon the foregoing,
nothing contained in this Section 11.1(b) shall be construed to grant
any rights to any Borrower or to impose any duties on Agent that would not have
been granted or imposed by this Agreement or by Applicable Law in the absence
of this Section 11.1(b).

 

11.2.                        Agent’s
Discretion.  Agent shall
have the right in its sole discretion to determine which rights, Liens,
security interests or remedies Agent may at any time pursue, relinquish,
subordinate, or modify or to take any other action with respect thereto and
such determination will not in any way modify or affect any of Agent’s or
Lenders’ rights hereunder.

 

11.3.                        Setoff.  Subject to Section 14.12, in addition to
any other rights which Agent or any Lender may have under Applicable Law, upon
the occurrence and during the continuation of an Event of Default hereunder,
Agent and such Lender shall have a right, immediately and without notice of any
kind, to apply any Borrower’s property held by Agent and such Lender to reduce
the Obligations.

 

11.4.                        Rights and
Remedies not Exclusive.  The
enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any rights or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative.

 

11.5.                        Allocation of
Payments After Event of Default.  Notwithstanding any other provisions of this
Agreement to the contrary, after the occurrence and during the continuance of
an Event of Default, all amounts collected or received by the Agent on account
of the Obligations or any other amounts outstanding under any of the Other
Documents or in respect of the Collateral may, at Agent’s discretion, be paid
over or delivered as follows:

 

FIRST, to the payment of all
reasonable out-of-pocket costs and expenses (including reasonable attorneys’
fees) of the Agent in connection with enforcing its rights and the rights of
the Lenders under this Agreement and the Other Documents and any protective
advances made by the Agent with respect to the Collateral under or pursuant to
the terms of this Agreement;

 

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SECOND, to payment of any
fees owed to the Agent;

 

THIRD, to the payment of all
reasonable out-of-pocket costs and expenses (including reasonable attorneys’
fees) of each of the Lenders to the extent owing to such Lender pursuant to the
terms of this Agreement;

 

FOURTH, to the payment of
all of the Obligations consisting of accrued fees and interest;

 

FIFTH, to the payment of the
outstanding principal amount of the Obligations (including the payment or cash
collateralization of any outstanding Letters of Credit);

 

SIXTH, to all other
Obligations and other obligations which shall have become due and payable under
the Other Documents or otherwise and not repaid pursuant to clauses “FIRST”
through “FIFTH” above; and

 

SEVENTH, to the payment of
the surplus, if any, to whoever may be lawfully entitled to receive such
surplus.

 

In carrying out the
foregoing: (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; (ii) each
of the Lenders shall receive (so long as it is not a Defaulting Lender) an
amount equal to its pro rata share (based on the proportion that the then
outstanding Advances held by such Lender bears to the aggregate then
outstanding Advances) of amounts available to be applied pursuant to clauses “FOURTH”,
“FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts
available for distribution pursuant to clause “FIFTH” above are attributable to
the issued but undrawn amount of outstanding Letters of Credit, such amounts
shall be held by the Agent in a cash collateral account and applied (A) first,
to reimburse the Issuer from time to time for any drawings under such Letters
of Credit and (B) then, following the expiration of all Letters of Credit,
to all other obligations of the types described in clauses “FIFTH” and “SIXTH”
above in the manner provided in this Section 11.5.

 

XII.                            WAIVERS AND JUDICIAL
PROCEEDINGS.

 

12.1.                        Waiver of
Notice.  Each Borrower hereby waives
notice of non-payment of any of the Receivables, demand, presentment, protest
and notice thereof with respect to any and all instruments, notice of
acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.

 

12.2.                        Delay.  No delay or omission on Agent’s or any Lender’s
part in exercising any right, remedy or option shall operate as a waiver of
such or any other right, remedy or option or of any Default or Event of
Default.

 

12.3.                        Jury Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN 

 

85

 

CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

 

XIII.                        EFFECTIVE DATE AND
TERMINATION.

 

13.1.                        Term.  This Agreement, which shall inure to the
benefit of and shall be binding upon the respective successors and permitted
assigns of each Borrower, Agent and each Lender, shall become effective on the
date hereof and shall continue in full force and effect until March 14,
2013 (the “Term”) unless sooner terminated as herein provided.  Borrowers may terminate this Agreement at any
time upon sixty (60) days’ prior written notice upon payment in full of the
Obligations.  In the event the
Obligations are prepaid in full prior to the last day of the Term (the date of
such prepayment hereinafter referred to as the “Early Termination Date”),
Borrowers shall pay to Agent for the benefit of Lenders an early termination
fee in an amount equal to (x) 3.00% of the Maximum Loan Amount if the
Early Termination Date occurs on or after the Closing Date to and including the
date immediately preceding the first anniversary of the Closing Date, (y) 2.00%
of the Maximum Loan Amount if the Early Termination Date occurs on or after the
first anniversary of the Closing Date to and including the date immediately
preceding the second anniversary of the Closing Date, and (z) 1.00% of the
Maximum Loan Amount if the Early Termination Date occurs on or after the second
anniversary of the Closing Date to and including the date which is ninety (90)
days prior to the third anniversary of the Closing Date.

 

13.2.                        Termination.  The termination of the Agreement shall not
affect any Borrower’s, Agent’s or any Lender’s rights, or any of the
Obligations having their inception prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations
have been fully and indefeasibly paid, disposed of, concluded or
liquidated.  The security interests,
Liens and rights granted to Agent and Lenders hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrowers’
Account may from time to time be temporarily in a zero or credit position,
until all of the Obligations of each Borrower have been indefeasibly paid and
performed in full after the termination of this Agreement or each Borrower has
furnished Agent and Lenders with an indemnification satisfactory to Agent and
Lenders with respect thereto. 
Accordingly, each Borrower waives any rights which it may have under the
Uniform Commercial Code to demand the filing of termination statements with
respect to the Collateral, and Agent shall not be required to send such
termination statements to each Borrower, or to file them with any filing
office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations have been indefeasibly paid in
full in immediately available funds. All 

 

86

 

representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
all Obligations are indefeasibly paid and performed in full.

 

XIV.                        REGARDING AGENT.

 

14.1.                        Appointment.  Each Lender hereby designates PNC to act as
Agent for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4),
charges and collections (without giving effect to any collection days) received
pursuant to this Agreement, for the ratable benefit of Lenders.  Agent may perform any of its duties hereunder
by or through its agents or employees. 
As to any matters not expressly provided for by this Agreement
(including collection of the Note) Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding; provided, however, that Agent shall not be required to take any action
which exposes Agent to liability or which is contrary to this Agreement or the
Other Documents or Applicable Law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.

 

14.2.                        Nature of
Duties.  Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents.  Neither Agent nor any
of its officers, directors, employees or agents shall be (i) liable for
any action taken or omitted by them as such hereunder or in connection
herewith, unless caused by their gross (not mere) negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents
or in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
due execution, enforceability or sufficiency of this Agreement, or any of the
Other Documents or for any failure of any Borrower to perform its obligations
hereunder.  Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement
or any of the Other Documents, or to inspect the properties, books or records
of any Borrower.  The duties of Agent as
respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.

 

14.3.                        Lack of
Reliance on Agent and Resignation.  Independently and without reliance upon Agent
or any other Lender, each Lender has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of each
Borrower and each 

 

87

 

Guarantor in connection with the making and
the continuance of the Advances hereunder and the taking or not taking of any
action in connection herewith, and (ii) its own appraisal of the creditworthiness
of each Borrower and each Guarantor. 
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by any
Borrower pursuant to the terms hereof. 
Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of
the financial condition of any Borrower or any Guarantor, or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Note, the Other
Documents or the financial condition of any Borrower, or the existence of any
Event of Default or any Default.

 

Agent may resign on sixty
(60) days’ written notice to each of Lenders and Borrowing Agent and upon such
resignation, the Required Lenders will promptly designate a successor Agent reasonably
satisfactory to Borrowers.

 

Any such successor Agent
shall succeed to the rights, powers and duties of Agent, and the term “Agent”
shall mean such successor agent effective upon its appointment, and the former
Agent’s rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent.  After any Agent’s resignation as Agent, the
provisions of this Article XIV shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

 

14.4.                        Certain Rights
of Agent.  If Agent
shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other
Document, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the
Required Lenders; and Agent shall not incur liability to any Person by reason
of so refraining.  Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.

 

14.5.                        Reliance.  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, order
or other document or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care.

 

14.6.                        Notice of
Default.  Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder or under the Other Documents, unless Agent has received notice from a
Lender or Borrowing Agent referring to this Agreement or the Other Documents,
describing such Default or Event of Default and stating that such notice is a 

 

88

 

“notice of default”.  In the event that Agent receives such a
notice, Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.

 

14.7.                        Indemnification.  To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against Agent in performing its duties
hereunder, or in any way relating to or arising out of this Agreement or any
Other Document; provided that, Lenders shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere)
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment).

 

14.8.                        Agent in its
Individual Capacity.  With
respect to the obligation of Agent to lend under this Agreement, the Advances
made by it shall have the same rights and powers hereunder as any other Lender
and as if it were not performing the duties as Agent specified herein; and the
term “Lender” or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.

 

14.9.                        Delivery of
Documents.  To the
extent Agent receives financial statements required under Sections 9.7, 9.8,
9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to
the terms of this Agreement which any Borrower is not obligated to deliver to
each Lender, Agent will promptly furnish such documents and information to
Lenders.

 

14.10.                  Borrowers’ Undertaking to
Agent.  Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid.  Any payment made pursuant
to any such demand shall pro tanto satisfy the relevant Borrower’s obligations
to make payments for the account of Lenders or the relevant one or more of them
pursuant to this Agreement.

 

14.11.                  No Reliance on Agent’s
Customer Identification Program.  Each Lender acknowledges and agrees that
neither such Lender, nor any of its Affiliates, participants or assignees, may
rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder,
including the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the “CIP Regulations”), or any 

 

89

 

other Anti-Terrorism Law, including any
programs involving any of the following items relating to or in connection with
any Borrower, its Affiliates or its agents, this Agreement, the Other Documents
or the transactions hereunder or contemplated hereby: (1) any identity
verification procedures, (2) any record-keeping, (3) comparisons with
government lists, (4) customer notices or (5) other procedures
required under the CIP Regulations or such other laws.

 

14.12.                  Other Agreements.  Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Borrower or any deposit
accounts of any Borrower now or hereafter maintained with such Lender.  Anything in this Agreement to the contrary
notwithstanding, each of the Lenders further agrees that it shall not, unless
specifically requested to do so by Agent, take any action to protect or enforce
its rights arising out of this Agreement or the Other Documents, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Other Documents shall be taken in concert and at the
direction or with the consent of Agent or Required Lenders.

 

XV.                            BORROWING AGENCY.

 

15.1.                        Borrowing
Agency Provisions.

 

(a)                                  Each Borrower
hereby irrevocably designates Borrowing Agent to be its attorney and agent and
in such capacity to borrow, sign and endorse notes, and execute and deliver all
instruments, documents, writings and further assurances now or hereafter
required hereunder, on behalf of such Borrower or Borrowers, and hereby
authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.

 

(b)                                 The handling of
this credit facility as a co-borrowing facility with a borrowing agent in the
manner set forth in this Agreement is solely as an accommodation to Borrowers
and at their request.  Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof.  To induce Agent and Lenders to do so and in
consideration thereof, each Borrower hereby indemnifies Agent and each Lender
and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted
against Agent or any Lender by any Person arising from or incurred by reason of
the handling of the financing arrangements of Borrowers as provided herein,
reliance by Agent or any Lender on any request or instruction from Borrowing
Agent or any other action taken by Agent or any Lender with respect to this Section 15.1
except due to willful misconduct or gross (not mere) negligence by the
indemnified party (as determined by a court of competent jurisdiction in a final
and non-appealable judgment).

 

(c)                                  All Obligations
shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation
and liability on the part of each Borrower shall in no way be affected by any
extensions, renewals and forbearance granted to Agent or any Lender to any
Borrower, failure of Agent or any Lender to give any Borrower notice of
borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any
Collateral now or thereafter acquired from any Borrower, and such agreement by 

 

90

 

each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower’s
Obligations or the lack thereof.  Each
Borrower waives all suretyship defenses.

 

15.2.                        Waiver of Subrogation.  Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers’ property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.

 

XVI.                        MISCELLANEOUS.

 

16.1.                        Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois applied to
contracts to be performed wholly within the State of Illinois.  Any judicial proceeding brought by or against
any Borrower with respect to any of the Obligations, this Agreement, the Other
Documents or any related agreement may be brought in any court of competent
jurisdiction in the State of Illinois, United States of America, and, by
execution and delivery of this Agreement, each Borrower accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this
Agreement.  Each Borrower hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to Borrowing Agent at its address set forth in Section 16.6 and
service so made shall be deemed completed after the same shall have been
received by the Borrowing Agent, or, at the Agent’s option, by service upon Borrowing
Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the
purpose of accepting service within the State of Illinois.  Nothing herein shall affect the right to
serve process in any manner permitted by law or shall limit the right of Agent
or any Lender to bring proceedings against any Borrower in the courts of any
other jurisdiction.  Each Borrower waives
any objection to jurisdiction and venue of any action instituted hereunder in
any court of competent jurisdiction in the State of Illinois and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens.  Each Borrower waives the
right to remove any judicial proceeding brought against such Borrower in any
state court to any federal court.  Any
judicial proceeding by any Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the County of Cook, State of
Illinois.

 

16.2.                        Entire
Understanding.

 

(a)                                  This Agreement
and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof.  Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing, signed by each Borrower’s, Agent’s and
each 

 

91

 

Lender’s respective officers.  Neither this Agreement nor any portion or
provisions hereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged.  Each Borrower acknowledges that
it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.

 

(b)                                 The Required
Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from
time to time enter into written supplemental agreements to this Agreement or
the Other Documents executed by Borrowers, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or Borrowers thereunder or the conditions,
provisions or terms thereof or waiving any Event of Default thereunder, but
only to the extent specified in such written agreements; provided, however,
that no such supplemental agreement shall, without the consent of all Lenders:

 

(i)                                     increase the
Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount;

 

(ii)                                  extend the
maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders
pursuant to this Agreement;

 

(iii)                               alter the
definition of the term Required Lenders or alter, amend or modify this Section 16.2(b);

 

(iv)                              release any Collateral
during any calendar year (other than in accordance with the provisions of this
Agreement) having an aggregate value in excess of $1,000,000;

 

(v)                                 change the
rights and duties of Agent;

 

(vi)                              permit any
Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for
more than sixty (60) consecutive Business Days or exceed one hundred and ten
percent (110%) of the Formula Amount;

 

(vii)                           increase the
Advance Rates above the Advance Rates in effect on the Closing Date; or

 

(viii)                        release any
Guarantor.

 

Any such supplemental
agreement shall apply equally to each Lender and shall be binding upon
Borrowers, Lenders and Agent and all future holders of the Obligations.  In the case of any waiver, Borrowers, Agent
and Lenders shall be restored to their former positions and rights, and any
Event of Default waived shall be deemed to be cured and not continuing, but no
waiver of a specific Event of Default shall extend to any subsequent Event of
Default (whether 

 

92

 

or
not the subsequent Event of Default is the same as the Event of Default which
was waived), or impair any right consequent thereon.

 

In the event that Agent
requests the consent of a Lender pursuant to this Section 16.2 and such
Lender fails to respond or reply to Agent in writing within five (5) days
of delivery of such request, such Lender shall be deemed to have consented to
the matter that was the subject of the request. 
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such consent is denied, then PNC may, at its option,
require such Lender to assign its interest in the Advances to PNC or to another
Lender or to any other Person designated by the Agent (the “Designated Lender”),
for a price equal to (i) the then outstanding principal amount thereof
plus (ii) accrued and unpaid interest and fees due such Lender, which
interest and fees shall be paid when collected from Borrowers.  In the event PNC elects to require any Lender
to assign its interest to PNC or to the Designated Lender, PNC will so notify
such Lender in writing within forty five (45) days following such Lender’s
denial, and such Lender will assign its interest to PNC or the Designated
Lender no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or
the Designated Lender, as appropriate, and Agent.

 

Notwithstanding (a) the
existence of a Default or an Event of Default, (b) that any of the other
applicable conditions precedent set forth in Section 8.2 hereof have not
been satisfied or (c) any other provision of this Agreement, Agent may at
its discretion and without the consent of the Required Lenders, voluntarily
permit the outstanding Revolving Advances at any time to exceed the Formula
Amount by up to ten percent (10%) of the Formula Amount for up to sixty (60)
consecutive Business Days (the “Out-of-Formula Loans”).  If Agent is willing in its sole and absolute
discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall
be payable on demand and shall bear interest at the Default Rate for Revolving
Advances consisting of Domestic Rate Loans; provided that, if Lenders do make
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Section 2.1(a). 
For purposes of this paragraph, the discretion granted to Agent
hereunder shall not preclude involuntary overadvances that may result from time
to time due to the fact that the Formula Amount was unintentionally exceeded
for any reason, including, but not limited to, Collateral previously deemed to
be either “Eligible Receivables” or “Eligible Inventory”, as applicable,
becomes ineligible, collections of Receivables applied to reduce outstanding
Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral.  In the event Agent involuntarily permits the
outstanding Revolving Advances to exceed the Formula Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrowers decrease such
excess in as expeditious a manner as is practicable under the circumstances and
not inconsistent with the reason for such excess.  Revolving Advances made after Agent has
determined the existence of involuntary overadvances shall be deemed to be
involuntary overadvances and shall be decreased in accordance with the
preceding sentence.

 

In addition to (and not in
substitution of) the discretionary Revolving Advances permitted above in this Section 16.2,
the Agent is hereby authorized by Borrowers and the Lenders, from time to time
in the Agent’s sole discretion, (A) after the occurrence and during the
continuation of a Default or an Event of Default, or (B) at any time that
any of the other applicable conditions precedent set forth in Section 8.2
hereof have not been satisfied, to make Revolving Advances to Borrowers on
behalf of the Lenders which the Agent, in its reasonable business judgment,
deems 

 

93

 

necessary
or desirable (a) to preserve or protect the Collateral, or any portion
thereof, (b) to enhance the likelihood of, or maximize the amount of,
repayment of the Advances and other Obligations, or (c) to pay any other
amount chargeable to Borrowers pursuant to the terms of this Agreement;
provided, that at any time after giving effect to any such Revolving Advances
the outstanding Revolving Advances do not exceed one hundred and ten percent
(110%) of the Formula Amount.

 

16.3.                        Successors and
Assigns; Participations; New Lenders.

 

(a)                                  This Agreement
shall be binding upon and inure to the benefit of Borrowers, Agent, each
Lender, all future holders of the Obligations and their respective successors
and assigns, except that no Borrower may assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of Agent
and each Lender.

 

(b)                                 Each Borrower
acknowledges that in the regular course of commercial banking business one or
more Lenders may at any time and from time to time sell participating interests
in the Advances to other financial institutions (each such transferee or
purchaser of a participating interest, a “Participant”).  Each Participant may exercise all rights of
payment (including rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Participant were the direct holder thereof provided that Borrowers shall not be
required to pay to any Participant more than the amount which it would have
been required to pay to Lender which granted an interest in its Advances or
other Obligations payable hereunder to such Participant had such Lender
retained such interest in the Advances hereunder or other Obligations payable
hereunder and in no event shall Borrowers be required to pay any such amount
arising from the same circumstances and with respect to the same Advances or
other Obligations payable hereunder to both such Lender and such
Participant.  Each Borrower hereby grants
to any Participant a continuing security interest in any deposits, moneys or
other property actually or constructively held by such Participant as security
for the Participant’s interest in the Advances.

 

(c)                                  Any Lender,
with the consent of Agent which shall not be unreasonably withheld or delayed,
may sell, assign or transfer all or any part of its rights and obligations
under or relating to Revolving Advances under this Agreement and the Other
Documents to one or more additional banks or financial institutions and one or
more additional banks or financial institutions may commit to make Advances
hereunder (each a “Purchasing Lender”), in minimum amounts of not less than
$3,000,000, pursuant to a Commitment Transfer Supplement, executed by a
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording.  Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose.  Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Lender and the resulting adjustment
of the Commitment Percentages arising from the purchase by such Purchasing

 

94

 

Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents.  Each Borrower hereby consents
to the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. 
Borrowers shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.

 

(d)                                 Any Lender,
with the consent of Agent which shall not be unreasonably withheld or delayed,
may directly or indirectly sell, assign or transfer all or any portion of its
rights and obligations under or relating to Revolving Advances under this
Agreement and the Other Documents to an entity, whether a corporation,
partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and (ii) is
administered, serviced or managed by the assigning Lender or an Affiliate of
such Lender (a “Purchasing CLO” and together with each Participant and
Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect
the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor
Lender, and Agent as appropriate and delivered to Agent for recording.  Upon such execution and delivery, from and
after the transfer effective date determined pursuant to such Modified
Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a
party hereto and, to the extent provided in such Modified Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder and (ii) the
transferor Lender thereunder shall, to the extent provided in such Modified
Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Modified Commitment Transfer Supplement creating a novation for
that purpose.  Such Modified Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing CLO.  Each Borrower hereby consents to the addition
of such Purchasing CLO.  Borrowers shall
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing.

 

(e)                                  Agent shall
maintain, as agent of each Borrower (solely for purposes of this Section 16.3(e))
at its address a copy of each Commitment Transfer Supplement and Modified
Commitment Transfer Supplement delivered to it and a register (the “Register”)
for the recordation of the names and addresses of each Lender and the
outstanding principal, accrued and unpaid interest and other fees due
hereunder.  The entries in the Register
shall be conclusive, in the absence of manifest error, and each Borrower, Agent
and Lenders may treat each Person whose name is recorded in the Register as the
owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for inspection
by Borrowing Agent or any Lender at any reasonable time and from time to time
upon reasonable prior notice.  Agent
shall receive a fee in the amount of $3,500 payable by the applicable
Purchasing Lender and/or Purchasing CLO upon the effective date of each
transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.

 

(f)                                    Each Borrower
authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession 

 

95

 

concerning such Borrower which has been
delivered to such Lender by or on behalf of such Borrower pursuant to this
Agreement or in connection with such Lender’s credit evaluation of such
Borrower.

 

16.4.                        Application of
Payments.  Agent shall
have the continuing and exclusive right to apply or reverse and re-apply any
payment and any and all proceeds of Collateral to any portion of the
Obligations.  To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, debtor in possession, receiver, custodian or any
other party under any bankruptcy law, common law or equitable cause, then, to
such extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.

 

16.5.                        Indemnity.  Each Borrower shall indemnify Agent, each
Lender and each of their respective officers, directors, Affiliates, attorneys,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent or any Lender in any claim, litigation, proceeding or
investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto, except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of the party being indemnified (as determined
by a court of competent jurisdiction in a final and non-appealable
judgment).  Without limiting the
generality of the foregoing, this indemnity shall extend to any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including fees and
disbursements of counsel) asserted against or incurred by any of the
indemnitees described above in this Section 16.5 by any Person under any
Environmental Laws or similar laws by reason of any Borrower’s or any other
Person’s failure to comply with laws applicable to solid or hazardous waste
materials, including Hazardous Substances and Hazardous Waste, or other Toxic
Substances.  Additionally, if any taxes
(excluding taxes imposed upon or measured by the net income of Agent and
Lenders, but including any intangibles taxes, stamp tax, recording tax or
franchise tax) shall be payable by Agent, Lenders or Borrowers on account of
the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the Other Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable Law
now or hereafter in effect, Borrowers will pay (or will promptly reimburse
Agent and Lenders for payment of) all such taxes, including interest and
penalties thereon, and will indemnify and hold the indemnitees described above
in this Section 16.5 harmless from and against all liability in connection
therewith.

 

16.6.                        Notice.  Any notice or request hereunder may be given
to Borrowing Agent or any Borrower or to Agent or any Lender at their
respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under this
Section.  Any notice, request, demand,
direction or other communication (for purposes of this Section 16.6 only,
a “Notice”) to be given to or made upon any party hereto 

 

96

 

under any provision of this Loan Agreement
shall be given or made by telephone or in writing (which includes by means of
electronic transmission (i.e., “e-mail”) or facsimile transmission or by
setting forth such Notice on a site on the World Wide Web (a “Website Posting”)
if Notice of such Website Posting (including the information necessary to
access such site) has previously been delivered to the applicable parties
hereto by another means set forth in this Section 16.6) in accordance with
this Section 16.6.  Any such Notice
must be delivered to the applicable parties hereto at the addresses and numbers
set forth under their respective names on Section 16.6 hereof or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 16.6.  Any Notice shall be effective:

 

(a)                                  In the case of
hand-delivery, when delivered;

 

(b)                                 If given by
mail, when actually received;

 

(c)                                  In the case of
a telephonic Notice, when a party is contacted by telephone, if delivery of
such telephonic Notice is confirmed no later than the next Business Day by hand
delivery, a facsimile or electronic transmission, a Website Posting or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);

 

(d)                                 In the case of
a facsimile transmission, when sent to the applicable party’s facsimile machine’s
telephone number, if the party sending such Notice receives confirmation of the
delivery thereof from its own facsimile machine;

 

(e)                                  In the case of
electronic transmission, when actually received;

 

(f)                                    In the case of
a Website Posting, upon delivery of a Notice of such posting (including the
information necessary to access such site) by another means set forth in this Section 16.6;
and

 

(g)                                 If given by any
other means (including by overnight courier), when actually received.

 

Any Lender giving a Notice
to Borrowing Agent or any Borrower shall concurrently send a copy thereof to
the Agent, and the Agent shall promptly notify the other Lenders of its receipt
of such Notice.

 

(A)                              If to Agent or
PNC at:

 

PNC Bank, National
Association

200 South Wacker Drive, Suite 600

Chicago, Illinois 60606

Attention: Sherry Winick

Telephone: (312) 454-2903

Facsimile: (312) 454-2919

 

with a copy to:

 

Blank Rome LLP

 

97

 

One Logan Square

130 N. 18th Street

Philadelphia, Pennsylvania 19103

Attention: Lawrence F. Flick, II,
Esquire

Telephone: (215) 569-5556

Facsimile: (215) 832-5556

 

(B)                                If to a Lender
other than Agent, as specified on the signature pages hereof

 

(C)                                If to Borrowing
Agent or any Borrower:

 

Aventine Renewable Energy
Holdings, Inc.

120 N. Parkway Drive, P.O. Box
1800

Pekin, IL 61555

Attention: Corporate
Controller and Corporate Counsel

Telephone: (309) 347-9200

Facsimile: (309) 347-8451

 

with a copy to:

 

Sidley Austin LLP

1 S. Dearborn St.

Chicago, IL 60603

Attention: Donald E. Bingham, Esq.

Telephone: (312) 853-7198

Facsimile: (312) 853-7036

 

16.7.                        Survival.  The obligations of Borrowers under Sections
2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7,
shall survive termination of this Agreement and the Other Documents and payment
in full of the Obligations.

 

16.8.                        Severability.  If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under Applicable Laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given effect so far as possible.

 

16.9.                        Expenses.  All costs and expenses including attorneys’
fees (which in the case of clauses (b) and (e) shall be reasonable
and which in each case below, includes including the allocated costs of in
house counsel) and disbursements incurred by Agent on its behalf or on behalf
of Lenders (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any of the Other Documents or any consents or waivers hereunder or
thereunder and all related agreements, documents and instruments, or (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Agent’s
security interest in or Lien on any of the Collateral, or maintaining,
preserving or enforcing any of Agent’s or any Lender’s rights hereunder or
under any of the Other Documents and under all 

 

98

 

related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent’s or any Lender’s transactions with any Borrower or any Guarantor or
any other lender or (e) in connection with any advice given to Agent or
any Lender with respect to its rights and obligations under this Agreement or
any of the Other Documents and all related agreements, documents and
instruments, may be charged to Borrowers’ Account and shall be part of the
Obligations.

 

16.10.                  Injunctive Relief.  Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.

 

16.11.                  Consequential Damages.  No party hereto, nor any agent or attorney
for any of them, shall be liable to any other party hereto (or any Affiliate of
any such Person) for indirect, punitive, exemplary or consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result
of any transaction contemplated under this Agreement or any Other Document.

 

16.12.                  Captions.  The captions at various places in this
Agreement are intended for convenience only and do not constitute and shall not
be interpreted as part of this Agreement.

 

16.13.                  Counterparts; Facsimile
Signatures.  This
Agreement may be executed in any number of and by different parties hereto on
separate counterparts, all of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
agreement.  Any signature delivered by a
party by facsimile or electronic transmission shall be deemed to be an original
signature hereto.

 

16.14.                  Construction.  The parties acknowledge that each party and
its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits thereto.

 

16.15.                  Confidentiality; Sharing
Information.   Agent,
each Lender and each Transferee shall hold all non-public information obtained
by Agent, such Lender or such Transferee pursuant to the requirements of this
Agreement in accordance with Agent’s, such Lender’s and such Transferee’s
customary procedures for handling confidential information of this nature;
provided, however, Agent, each Lender and each Transferee may disclose such
confidential information (a) to its examiners, Affiliates, outside
auditors, counsel and other professional advisors, (b) to Agent, any
Lender or to any prospective Transferees, and (c) as required or requested
by any Governmental Body or representative thereof or pursuant to legal
process; provided, further that (i) unless specifically prohibited by
Applicable Law, Agent, each Lender and each Transferee shall use its reasonable
best efforts prior to disclosure thereof, to notify the applicable Borrower of
the applicable request for disclosure of such non-public information (A) by
a Governmental Body or representative thereof (other than any such request in
connection 

 

99

 

with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant
to legal process and (ii) in no event shall Agent, any Lender or any
Transferee be obligated to return any materials furnished by any Borrower other
than those documents and instruments in possession of Agent or any Lender in
order to perfect its Lien on the Collateral once the Obligations have been paid
in full and this Agreement has been terminated. 
Each Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Borrower hereby authorizes each Lender to share any information
delivered to such Lender by such Borrower and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provisions of this Section 16.15 as if
it were a Lender hereunder.  Such
authorization shall survive the repayment of the other Obligations and the
termination of this Agreement.

 

16.16.                  Publicity.  Each Borrower and each Lender hereby
authorizes Agent to make appropriate announcements of the financial arrangement
entered into among Borrowers, Agent and Lenders, including announcements which
are commonly known as tombstones, in such publications and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.

 

16.17.                  Certifications From Banks
and Participants; USA PATRIOT Act.  Each Lender or assignee or participant of a
Lender that is not incorporated under the Laws of the United States of America
or a state thereof (and is not excepted from the certification requirement contained
in Section 313 of the USA PATRIOT Act and the applicable regulations
because it is both (i) an affiliate of a depository institution or foreign
bank that maintains a physical presence in the United States or foreign
country, and (ii) subject to supervision by a banking authority regulating
such affiliated depository institution or foreign bank) shall deliver to the
Agent the certification, or, if applicable, recertification, certifying that
such Lender is not a “shell” and certifying to other matters as required by Section 313
of the USA PATRIOT Act and the applicable regulations: (1) within 10 days
after the Closing Date, and (2) as such other times as are required under
the USA PATRIOT Act.

 

100

 

Each of the parties has
signed this Agreement as of the day and year first above written.

 

	
   

  	
  AVENTINE
  RENEWABLE ENERGY HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan

  
	
   

  	
  Name:

  	
  William
  J. Brennan

  
	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVENTINE
  RENEWABLE ENERGY — AURORA WEST, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan

  
	
   

  	
  Name:

  	
  William
  J. Brennan 

  
	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVENTINE
  RENEWABLE ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan

  
	
   

  	
  Name:

  	
  William
  J. Brennan 

  
	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  
	
   

  	
   

  
	
   

  	
  AVENTINE
  RENEWABLE ENERGY — MT. VERNON, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan

  
	
   

  	
  Name:

  	
  William
  J. Brennan

  
	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  
	
   

  	
   

  
	
   

  	
  AVENTINE
  POWER, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan

  
	
   

  	
  Name:

  	
  William
  J. Brennan 

  
	
   

  	
  Title:

  	
  Chief
  Accounting and Compliance Officer

  

 

1

 

	
   

  	
  NEBRASKA
  ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Brennan 

  
	
   

  	
  Name:

  	
  William
  J. Brennan 

  
	
   

  	
  Title:

  	
  Vice
  President — Finance

  
	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION, As Lender and as Agent

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  James E. Torkelson 

  
	
   

  	
  Name:

  	
  James
  E. Torkelson 

  
	
   

  	
  Title:

  	
  Senior
  Vice President 

  
	
   

  	
   

  
	
   

  	
  PNC
  Bank, National Association 

  
	
   

  	
  200
  South Wacker Street, Suite 600 

  
	
   

  	
  Chicago,
  Illinois 60606 

  
	
   

  	
   

  
	
   

  	
  Commitment
  Percentage: 100%

  

 

2

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