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EXHIBIT 10.3    
  

CONSTRUCTION LOAN AGREEMENT  

    This Construction Loan AGREEMENT (the "AGREEMENT") is dated as of the 28th day of August 2001, and is by and between BADGER STATE ETHANOL,
LLC, a Wisconsin limited liability company ("BORROWER"), and FIRST NATIONAL BANK OF OMAHA ("BANK"), a national banking association established at Omaha, Nebraska. 

    WHEREAS,
the BORROWER has requested the BANK to lend to BORROWER up to the sum of Thirty Million Six Hundred Thousand ($30.600,000.00) Dollars (the "CONSTRUCTION LOAN"), for the
purpose of partially funding the cost of construction for an ethanol plant on the real estate described in Exhibit A (the "PROPERTY"). together with a Two Million ($2,000,000.00) Dollar
revolving line of credit ("REVOLVING LOAN"). 

    WHEREAS,
the BANK is willing to provide such credit facilities to BORROWER upon the terms and conditions herein set forth. 

SECTION 1  

 Definitions  

    1.1 "ASSIGNMENT
OF CONSTRUCTION CONTRACT" means the assignment of the agreement ("CONSTRUCTION CONTRACT") between the BORROWER and Fagen, Inc. (the "GENERAL
CONTRACTOR") for construction of the PROJECT in accordance with PLANS therein described, by which the BORROWER assigns, as additional security for repayment of the OBLIGATIONS, the
BORROWER's interest in the CONSTRUCTION CONTRACT in a form acceptable to the BANK in the exercise of its reasonable discretion. 

    1.2 "ASSIGNMENT
OF DESIGN CONTRACT means the assignment of the agreement ("DESIGN CONTRACT") between BORROWER and 1CM, Inc. (the "ENGINEERING COMPANY") for
design of the PROJECT and preparation of PLANS for same, by which the BORROWER assigns, as additional security for repayment of the OBLIGATIONS, the BORROWER's interest in the DESIGN CONTRACT in a
form acceptable to the BANK, in the exercise of its reasonable discretion. 

    1.3 "ASSIGNMENT
OF RENTS" means the assignment of rents and leases as to the PROPERTY between BORROWER as assignor, and the BANK, as assignee, as security for payment
of the CONSTRUCTION NOTE in a form acceptable to the BANK. 

    1.4 "BANKING
DAY" means a day on which the BANK is open for substantially all of its business. 

    1.5 "BORROWING
BASE" means the lesser of: 

    A.  $2.000.000.00
or 

    B.  The
aggregate of(i) 75% of BORROWER's inventory of corn, milo or other grains, and distiller's dried grain, all at current value on the date reported, plus
(ii) 75% of the amount of BORROWER's Accounts aged less than thirty days, excluding any Accounts deemed ineligible by BANK. 

    (B) To
repay to the BANK all amounts advanced by the BANK hereunder or otherwise on behalf of the BORROWER. including, but without limitation, advances for principal or
interest payments to prior secured parties. mortgagees, or licensers, or taxes, levies, insurance, rent, or 

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repairs to, or maintenance or storage of. any of the real or personal property securing BORROWER's payment and performance of this AGREEMENT; and 

    (C) To
reimburse the BANK, on demand, for the BANK's reasonable and necessary out of pocket expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment, modification, or enforcement of this AGREEMENT and the
LOAN DOCUMENTS required hereunder, including, without limitation, any proceeding brought or threatened. to enforce payment of any of the OBLIGATIONS referred to in the foregoing
sub-paragraphs (A) and (B). 

    1.25 PERMIT"
or "PERMITS" means any license or permit, and all licenses or permits, required under any environmental law or regulation required to construct and operate
the facility on the PROPERTY after completion of the PROJECT at its operational capacity, including without limitation the following: 

    (a) an
air emissions permit, which PERMIT will allow the BORROWER after COMPLETION DATE to operate the ethanol plant on the PROPERTY after construction of the PROJECT
at maximum capacity. 

    (b) All
permits required in connection with the construction and operation of all above ground storage tanks included in the PLANS for the ethanol plant. 

    (c) A
National Pollution Discharge Elimination System Construction Permit for any storm water that is discharged during construction and after construction of the
PROJECT. 

    1.26 "PLANS"
means the plans and specifications prepared by the ENGINEERING COMPANY for the PROJECT and identified to this AGREEMENT by the ENGINEERING COMPANY, the
BORROWER and the BANK. 

    1.27 "PROJECT
means the design and construction of an ethanol plant, together with all necessary and appropriate fixtures, equipment, attachments, and accessories, as
described in the PLANS, to be constructed on the PROPERTY. 

    1.28 "REVOLVING
NOTE" means that promissory note of BORROWER to BANK evidencing the revolving credit facility described in Section 2.7 of this AGREEMENT. its
renewals, modifications and extensions. 

    1.29 "SECURITY
AGREEMENT' means the SECURITY AGREEMENT between the BORROWER, as debtor, and the BANK, as secured party, creating a first security interest in all
BORROWER's assets, including general intangibles, securing the OBLIGATIONS. 

    1.30 "SUBCONTRACTOR"
means any person who contracts with the GENERAL CONTRACTOR or BORROWER to perform any work or supply any of the materials or equipment necessary to
complete the PROJECT. 

    1.31 "SUBORDINATED
DEBT" means INDEBTEDNESS of BORROWER to entities other than BANK that has been subordinated, in form acceptable to BANK, to the OBLIGATIONS. 

    1.32 "TERM
NOTE" means that promissory note of BORROWER to BANK which evidences permanent financing to pay the CONSTRUCTION NOTE as described in Section 2.5 of
this AGREEMENT, its renewals, modifications and extensions. 

    1.33 "WORKING
CAPITAL" means current assets (less investments in or other amounts due from any member, employee or any person or entity related to or affiliated with
the BORROWER and prepayments) less current liabilities (less any portion of such current liabilities that constitute debt that is expressly subordinated to the BANK in a writing acceptable to the
BANK, in the exercise of its reasonable discretion). 

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SECTION 2  

 Amount and Terms of the LOANS  

    2.1  CONSTRUCTION LOAN.  The BANK agrees, on the terms and subject to the conditions hereinafter set
forth, to make, from time to time during the period from the date of execution of this AGREEMENT to and including the CONSTRUCTION LOAN TERMINATION DATE disbursements to the BORROWER in an aggregate
principal amount not to exceed the amount of the CONSTRUCTION LOAN for the sole purpose of paying approved construction costs of the PROJECT. Approved construction costs are costs actually incurred in
connection with the construction of the PROJECT, which shall include but not be limited to costs of permits. licenses, labor, supplies, materials, services, equipment, insurance premiums, real estate
taxes and interest on disbursements, operating costs of the ethanol plant. 

    2.2  The CONSTRUCTION NOTE.  The obligation of the BORROWER to repay the CONSTRUCTION LOAN shall be
evidenced by the CONSTRUCTION NOTE. Notwithstanding any provisions of the CONSTRUCTION NOTE. interest shall be payable at the rate provided therein only on such portions of the CONSTRUCTION LOAN
proceeds as actually have been disbursed pursuant to this AGREEMENT. 

    2.3  Interest on the CONSTRUCTION NOTE.  Interest on the principal amount outstanding on the CONSTRUCTION
LOAN shall accrue. for the period through and including the COMPLETION DATE, at a rate (the "RATE") one hundred (100) basis points above the BASE RATE in effect from time to time until
maturity, and six per cent (6%) above the BASE RATE in effect from time to time after maturity, whether by acceleration or otherwise. For purposes hereof, BASE RATE shall mean the rate announced by
BANK from time to time and published monthly as its "National Base Rate". 

    Each
time the BASE RATE shall change, the RATE shall change contemporaneously with such change in the BASE RATE. Interest shall be calculated on the basis of a 360-day
year. counting the actual number of days elapsed. 

    2.4  Repayment of the CONSTRUCTION NOTE.  Interest only shall be payable quarterly on the CONSTRUCTION
NOTE. All outstanding principal and accrued but unpaid interest shall be payable on the LOAN TERMINATION DATE. 

    2.5  TERM LOAN.  On CONSTRUCTION COMPLETION DATE. the CONSTRUCTION LOAN shall be paid by a new term loan
("TERM LOAN"). evidenced by the TERM NOTE. Principal and interest shall be payable quarterly on the TERM NOTE in an amount sufficient, as determined by the BANK, to amortize the amount outstanding on
the CONSTRUCTION NOTE at the applicable interest rate over a ten (10) year period commencing from the COMPLETION DATE. The balance will be due and payable on LOAN TERMINATION DATE. 

    2.6  Interest on the TERM NOTE.  Interest on the principal amount outstanding on the TERM LOAN shall
accrue, for the period through and including its maturity, at a rate (the "RATE") one hundred (100) basis points above the BASE RATE in effect from time to time until maturity, and six per cent
(6%) above the BASE RATE in effect from time to time after maturity, whether by acceleration or otherwise. Not later than ninety (90) days following CONSTRUCTION COMPLETION DATE, BORROWER shall
accept a fixed rate interest option on no less than fifty (50%) per cent of the outstanding balance of the TERM NOTE. and enter into a matched funding contract acceptable to BANK (that is, an interest
rate swap agreement) with a term of no less than five years. In the event any of the TERM NOTE amount bears interest at such a fixed rate, any prepayment shall be applied first to the principal
accruing interest at a variable rate, and thereafter applied to principal accruing interest at the fixed rate. For purposes hereof, BASE RATE shall mean the rate announced by BANK from time to time as
its "National Base Rate". 

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    Each time the BASE RATE shall change, the RATE shall change contemporaneously with such change in the BASE RATE. Interest shall be calculated on the basis of a 360-day
year, counting the actual number of days elapsed. 

    2.7  REVOLVING LOAN.  BANK agrees to lend $2,000,000.00 to BORROWER pursuant to this facility. BANK will
credit proceeds of this revolving loan ("REVOLVING LOAN") to BORROWER's deposit account with the BANK, bearing number        . 

    2.7.1    Subject
to the terms hereof, the BANK will lend the BORROWER, from time to time until the "LOAN TERMINATION DATE" such sums in integral multiples of $10,000.00
as the BORROWER may request by reasonable same day notice to the BANK, received by the BANK not later than 11:00 A.M. of such day. but which shall not exceed in the aggregate principal amount
at any one time outstanding, $2,000,000.00 (the "LOAN COMMITMENT'). The BORROWER may borrow, repay without penalty or premium and reborrow hereunder, from the date of this AGREEMENT until the LOAN
TERMINATION DATE. either the full amount of the LOAN COMMITMENT or any lesser sum which is $10,000.00 or an integral multiple thereof It is the intention of the parties that the outstanding balance of
the REVOLVING LOAN shall not exceed the BORROWING BASE, and if at any time said balance exceeds the BORROWING BASE. BORROWER shall forthwith pay BANK sufficient funds to reduce the balance of the
REVOLVING LOAN until it is in compliance with this requirement. 

    2.8  THE REVOLVING NOTE.  The LOAN COMMITMENT shall be evidenced by a REVOLVING NOTE having stated
maturity on the LOAN TERMINATION DATE, in the form attached hereto as Exhibit C. 

    2.9  INTEREST ON THE REVOLVING NOTE.  Interest on the principal balance of the REVOLVING LOAN from time
to time outstanding will be payable at a rate (the "RATE") equal to fifty (50) basis points higher than the BASE RATE in effect from time to time until maturity. and six per cent (6%) above the
BASE RATE in effect from time to time after maturity. whether by acceleration or otherwise. For purposes hereof, BASE RATE shall mean the rate announced by BANK from time to time as its "National Base
Rate". Each time the BASE RATE shall change, the RATE shall change contemporaneously with such change in the BASE RATE. Interest shall be calculated on the basis of a 360-day year,
counting the actual number of days elapsed. Interest on the REVOLVING LOAN shall be payable quarterly. 

    2.10  Payments.  All principal, interest and fees due under this AGREEMENT. the CONSTRUCTION NOTE, the
REVOLVING NOTE, the TERM NOTE and the LOAN DOCUMENTS shall be paid in immediately available funds as contracted in this AGREEMENT and no later than the payment due date set forth in the monthly
statement mailed to the BORROWER by the BANK. Should a payment
come due on a day other than a BANKING DAY, then the payment shall be made no later than the next BANKING DAY and interest shall continue to accrue during the extended period. 

    2.11  Fees.  At CLOSING, the BORROWER shall pay to the BANK an agency fee to be determined by the parties
at CLOSING, which fee BORROWER agrees and acknowledges has been earned by BANK as of the execution hereof as the result of BANK's efforts to acquire participating lenders. At CLOSING, the BORROWER
shall pay to the BANK a construction fee of $306,000.00, which fee BORROWER agrees and acknowledges has been earned by BANK. At LOAN COMPLETION DATE, BORROWER shall pay to the BANK a commitment fee of
$306,000.00, which fee BORROWER agrees and acknowledges has been earned by BANK. BORROWER agrees to pay BANK an unused commitment fee equal to 12.5 basis points of the average unused portion of the
REVOLVING LOAN, payable quarterly in arrears. 

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    2.12  Appraisal.  If the BANK is required by any government entity with regulatory authority over the
BANK the BANK may, at BORROWER's expense, order an appraisal of the PROPERTY. If such appraisal shows that the outstanding CONSTRUCTION LOAN amount at that time exceeds the value of the PROPERTY as
determined by the appraisal then the BORROWER shall. within thirty (30) days of notice by the BANK, pay the difference between the outstanding CONSTRUCTION LOAN amount and the appraised value
amount of the PROJECT and PROPERTY as determined by such appraisal, and no further advances shall be made on the CONSTRUCTION LOAN thereafter. 

    2.13  Incentive Pricing.  The interest rate applicable to the TERM LOAN and the REVOLVING LOAN are
subject to reduction after a date six months subsequent to CONSTRUCTION COMPLETION DATE, based on the business results of BORROWER. In the event that BORROWER maintains the following ratios, measured
monthly, the interest rates will be reduced accordingly: 

    If
INDEBTEDNESS to NET WORTH 

	is less than:
	 	Interest will be:

	1.25: 1.00	 	BASE RATE plus 75 basis points
	1.00: 1.00	 	BASE RATE plus 50 basis points
	0.75: 1.00	 	BASE RATE plus 25 basis points

SECTION 3  

 Disbursement Procedures  

    3.1  Submission of DRAW REQUESTS.  Whenever the BORROWER desires a disbursement under the CONSTRUCTION
LOAN, which shall be no more often than once a month, the BORROWER shall submit to the BANK a DRAW REQUEST, duly executed on behalf of the BORROWER setting forth the information requested therein.
Each DRAW REQUEST shall be delivered to the BANK at least five (5) days before the date the disbursement is desired. 

    3.2  Amount of DRAW REQUEST.  Each DRAW REQUEST shall be limited to amounts equal to (i) the total
of costs actually incurred and paid or owing by the BORROWER to the date of such DRAW REQUEST for work performed or materials incorporated in the PROJECT as described in the PLANS, plus
(ii) the cost of materials and equipment not incorporated in the PROJECT. but delivered to and suitably stored at the PROJECT site, plus
(iii) prepayments for equipment when prepayment is required by the manufacturer or supplier; less, (iv) prior disbursements for such costs and from the CONSTRUCTION LOAN or BORROWER's
WORKING CAPITAL for such costs. Notwithstanding anything herein to the contrary, no disbursements for materials stored at the PROJECT site will be made by the BANK unless the BORROWER shall advise the
BANK of its intention to store materials prior to their delivery, and provide suitable security for such storage. 

    3.3  Other Documents.  At the time of submission of each DRAW REQUEST, the BORROWER shall submit or cause
to be submitted to the BANK the following: 

    3.3.1.  A
written lien waiver from the GENERAL CONTRACTOR and each SUBCONTRACTOR for work done and materials supplied by it which were paid for pursuant to the next
preceding DRAW REQUEST with copies of all invoices supporting the DRAW REQUEST. 

    3.4  Cost Over Runs.  The BORROWER agrees that all cost over runs on the PROJECT shall be paid solely by
the BORROWER and that the BORROWER shall deliver additional funds to the BANK in accordance with Section 3.6 of this AGREEMENT to pay any cost over runs on the PROJECT. 

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    3.5  Making the Disbursements.  If on the date a DRAW REQUEST is received by BANK, the BORROWER has
performed all of its agreements and complied with all requirements therefore to be performed or complied with hereunder including satisfaction of all applicable conditions precedent contained in
Section 4 of this AGREEMENT and the BANK has received a current report from the INDEPENDENT INSPECTOR documenting compliance with the PLANS for those portions of the PROJECT indicated as
completed in the DRAW REQUEST and otherwise confirming the acceptability of the PROJECT work represented by the DRAW REQUEST; the BANK shall pay to the BORROWER the amount of the requested
disbursement. Each disbursement disbursed to the BORROWER under the CONSTRUCTION LOAN shall bear interest at the rate provided in the CONSTRUCTION NOTE evidencing the disbursement from the date such
disbursement is so disbursed to the BORROWER or deposited into BORROWER's account. 

    3.6  Deposit of Funds by the BORROWER.  If the BANK shall at any time in good faith determine that the
undisbursed amount of the CONSTRUCTION LOAN is less than the amount required to pay all costs and expenses of any kind which reasonably may be anticipated in connection with the completion of the
PROJECT after application of all funds received from the BORROWER's equity and shall thereupon send written notice thereof to the BORROWER specifying the amount required to be deposited by the
BORROWER with the BANK to provide sufficient funds to complete the PROJECT, the BORROWER agrees that it will, within fifteen (15) calendar days of receipt of any such notice, deposit with the
BANK, the amount of funds specified in the BANK's notice. The BORROWER agrees that any such funds deposited with the BANK may be disbursed before any further disbursement of CONSTRUCTION LOAN proceeds
from the BANK, to pay any and all costs and expenses of any kind in connection with completion of the PROJECT. 

    3.7  Disbursements Without Receipt of DRAW REQUEST.  Notwithstanding anything herein to the contrary, the
BANK shall have the irrevocable right at any time and from time to time to apply funds which it agrees to disburse hereunder to pay interest on the CONSTRUCTION NOTE as and when such interest becomes
due, and to pay any and all of the expenses of BANK. all without receipt of a DRAW REQUEST. 

    3.8  Miscellaneous Procedures.  BANK may establish additional procedures regarding disbursements as are
reasonable to assure the proceeds of the CONSTRUCTION LOAN are paid only to those persons and entities entitled to the same, and that the liens securing the OBLIGATIONS are in all cases first and
paramount liens on the PROPERTY. 

    3.9  Appointment of INDEPENDENT INSPECTOR.  No DRAW REQUEST shall be honored after commencement of
construction unless BORROWER has consented to the appointment of an INDEPENDENT INSPECTOR. 

SECTION 4  

 Conditions of Lending  

    4.1  Conditions Precedent to the Initial Disbursement.  The obligation of the BANK to make its initial
disbursement under the CONSTRUCTION LOAN is subject to the condition precedent that the BORROWER shall be in compliance with the conditions set forth in Section 4.2 of this AGREEMENT and to the
further condition precedent that the BANK shall have received on or before the CLOSING all of the following, each dated (unless otherwise indicated) such day, in form and substance satisfactory to the
BANK: 

    4.1.1  The
CONSTRUCTION NOTE. duly executed on behalf of the BORROWER. 

    4.1.2  The
MORTGAGE duly executed on behalf of the BORROWER. 

    4.1.3  The
ASSIGNMENT OF RENTS, duly executed on behalf of the BORROWER. 

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    4.1.4  The SECURITY AGREEMENT, duly executed on behalf of the BORROWER. 

    4.1.5  A
financing statement or statements sufficient when filed to perfect the security interests granted under the MORTGAGE, the ASSIGNMENT OF RENTS, the SECURITY
AGREEMENT, and the ASSIGNMENT OF CONSTRUCTION CONTRACT, to the extent such security interests are capable of being perfected by filing. 

    4.1.6  A
copy of the PLANS, certified by the ENGINEERING COMPANY and the BORROWER. 

    4.1.7  The
assignment of the DESIGN CONTRACT, duly executed by the BORROWER and consented to by the GENERAL CONTRACTOR and a copy of the DESIGN CONTRACT. 

    4.1.8  A
total project cost statement on the PROJECT duly executed by the BORROWER and the GENERAL CONTRACTOR, setting forth the anticipated total cost of the PROJECT'
s completion. 

    4.1.9  An ALTA (American Land Title Association) Survey of the PROPERTY, prepared at the BORROWER's expense, currently
certified by a licensed, registered surveyor and incorporating the legal description of the PROPERTY, showing the location of all points and lines referred to in the legal description, the location of
any existing improvements, the proposed location of the PROJECT (including parking) as being within the exterior boundaries of the PROPERTY and in compliance with all applicable building
set-back requirements, and the location of all utilities and the location of all easements and encroachments onto or from the PROPERTY that are visible on the PROPERTY. known to the
surveyor preparing the survey or of record, identifying easements of record by recording data, and currently certified by the surveyor that there are no such easements or encroachments upon the
PROPERTY except as shown on the survey. 

    4.1.10  An
as built appraisal based upon the PLANS to be performed by Natwich Associates Appraisal Services which shows
the as-completed value of the PROPERTY and PROJECT addressed to and otherwise acceptable to BANK. 

    4.1.11  A
title binder, issued by            (the "TITLE COMPANY") at BORROWER's expense, constituting a commitment by the TITLE COMPANY to issue a mortgagee's
title policy in favor of the BANK as mortgagee under the MORTGAGE, that will be free from all standard exceptions, including mechanics' liens and all other exceptions not previously approved by the
BANK and that will insure the MORTGAGE to be a valid first lien on the PROPERTY. 

    4.1.12  A
soil report on the PROPERTY certified by a registered engineer including structural design recommendations in form and substance satisfactory to the BANK. 

    4.1.13  A
Phase I Environmental Report of the PROPERTY in form and content satisfactory to the BANK. 

    4.1.14  A
Flood Hazard Determination Form for the PROPERTY, confirming whether or not the parcel is in a flood hazard area and whether or not flood insurance must be
obtained. 

    4.1.15  Copies
of all PERMITS from the applicable regulatory agencies from whom a permit or license is required. 

    4.1.16  Copies
of documents from the appropriate state, federal, city or county authority having jurisdiction over the PROPERTY and the PROJECT that provide to the
reasonable satisfaction of the BANK that the PROJECT when constructed in accordance with the PLANS will comply in all material respects with all applicable ordinances, zoning, subdivision, platting,
environmental and land use requirements, without special variance or exception, and such other evidence as the BANK shall reasonably request to establish that the PROJECT and the contemplated use
thereof are permitted by and comply with all applicable use or other restrictions 

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and requirements in prior conveyances, zoning ordinances, environmental laws and regulations, water shed district regulations and all other applicable laws or regulations, and governmental authorities
having jurisdiction over the PROJECT. BORROWER is not required to obtain advance confirmation from any governmental body that the PROJECT will comply with such ordinances, regulations and
requirements. 

    4.1.17  Copies
of the policy of property/casualty insurance and comprehensive general liability insurance and a certificate of the worker's compensation insurance
required under Section 6.3 of this AGREEMENT. with all such insurance in full force and effect and approved by the BANK, in the exercise of its reasonable discretion, and naming BANK as an
additional named insured, together with appropriate flood insurance, if the PROPERTY is in a flood hazard area. Notwithstanding the foregoing, BORROWER is not required to obtain worker's compensation
insurance until required by Wisconsin law. 

    4.1.18  A
signed opinion of counsel for the BORROWER, addressed to the BANK, opining that: 1) the BORROWER is duly organized and in good standing in the state of
Wisconsin; 2) the BORROWER is qualified in each state in which it does business and is legally required to be qualified; 3) the BORROWER has the power to execute and deliver the LOAN
DOCUMENTS and to borrow money and perform in accordance with the terms of the LOAN DOCUMENTS; 4) all actions and consents by BORROWER necessary to the validity of the LOAN DOCUMENTS have been
obtained; 5) the LOAN DOCUMENTS have been duly signed and are the valid and binding obligation of the BORROWER and enforceable in accordance with their terms; and 6) to the best of
counsel's knowledge, the LOAN DOCUMENTS and the transactions contemplated thereunder do not conflict with any provision of the operating agreement of BORROWER or any agreement binding upon the
BORROWER or its properties. 

    4.1.19  A
Certificate of Authority executed by such person or persons authorized by the BORROWER's organizational documents and/or agreements to do so. certifying the
incumbency and signatures of the managers or other persons authorized to execute the LOAN DOCUMENTS, and authorizing the execution of the LOAN DOCUMENTS and performance in accordance with their terms. 

    4.1.20  A
recently certified copy of the BORROWER's operating agreement, and any amendments, if applicable. 

    4.1.21  A
recently certified copy of the BORROWER's Articles of Organization and any amendments, if applicable. 

    4.1.22  A
certificate of good standing for the BORROWER from the office of the Wisconsin Secretary of State. 

    4.1.23  Proof
of injection of equity capital into BORROWER of no less than $18,000,000.00 by BORROWER'S members, and existence of SUBORDINATED DEBT of no less than
$5,600,000.00. 

    4.1.24  A
copy of the MARKETING CONTRACTS, together with an assignment in favor of BANK in form satisfactory to BANK. 

    4.1.25  The
ASSIGNMENT OF CONSTRUCTION CONTRACT. 

    4.1.26  Proof
of retention by BORROWER of a plant manager with previous experience managing an ethanol plant. 

    4.1.27  Proof
of the existence of a completion bond for the PROJECT, in form satisfactory to BANK, including BANK as an additional beneficiary. 

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    4.2  Conditions Precedent to All Disbursements.  The obligation of the BANK to make each disbursement
under the CONSTRUCTION LOAN (including the initial disbursement) shall be subject to the further conditions precedent that on the date of such disbursement: 

    4.2.1  The
representations and warranties contained in Section 5 of this AGREEMENT are correct on and as of the date of such disbursement as though made on and
as of such date, except to the extent that such representations and warranties relate solely to an earlier date. 

    4.2.2  No
event has occurred and is continuing, or would result from such disbursement, which constitutes an EVENT OF DEFAULT. 

    4.2.3  No
determination shall have been made by the BANK that the undisbursed amount of the CONSTRUCTION LOAN is less than the amount required to pay all costs and
expenses of any kind which reasonably may be anticipated in connection with the completion of the PROJECT; or, if such a determination has been made and notice thereof sent to the BORROWER in
accordance with this AGREEMENT, the BORROWER shall have deposited the necessary funds with the BANK in accordance with the Section 3.6 of this AGREEMENT. 

    4.2.4  The
disbursement requirements of Section 3 of this AGREEMENT have been satisfied. 

    4.2.5  If
required by the BANK, the BANK shall be furnished with a statement from the BORROWER and the GENERAL CONTRACTOR, in form and substance satisfactory to the
BANK, in the exercise of its reasonable discretion, setting forth the names, addresses and amounts due or to become due, as well as the amounts previously paid, to every SUBCONTRACTOR. 

    4.2.6  No
PERMIT necessary for the construction of the PROJECT shall have been revoked or the issuance thereof subjected to challenge before any court or other
governmental authority having or asserting jurisdiction as to the PROJECT. 

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    4.3  Conditions Precedent to the Final Disbursements.  The obligation of the BANK to make the final
disbursement shall be subject to the condition precedent that the BORROWER shall be in compliance with all conditions set forth in Sections 4.1 and 4.2 of this AGREEMENT and, further, that the
following conditions shall have been satisfied prior to the COMPLETION DATE: 

    4.3.1  The
PROJECT has been completed in accordance with the PLANS and the BANK shall have received a certificate of completion from the GENERAL CONTRACTOR, certifying
(i) work on the PROJECT has been completed in accordance with the PLANS and all labor, services, materials and supplies used in such work have been paid for and (ii) the completed
PROJECT conforms with all applicable zoning, land use planning. building and environmental laws and regulations of the governmental authorities having jurisdiction over the PROJECT. 

    4.3.2  The
BANK has received satisfactory evidence that all work requiring inspection by municipal or other governmental authorities having jurisdiction has been duly
inspected and approved by such authorities and by the rating or inspection organization, bureau, corporation or office having jurisdiction. 

    4.3.3  The
BANK shall have received a lien waiver from each SUBCONTRACTOR and the GENERAL CONTRACTOR for all work done and for all materials furnished by it for the
PROJECT. 

    4.3.4  The
BANK has received an itemized list from BORROWER of all equipment and fixtures which are at that time subject to BANK's security interest. 

    4.4  No Waiver.  The making of any disbursement under the CONSTRUCTION LOAN prior to fulfillment of any
condition thereto shall not be construed as a wavier of such condition, and the BANK reserves the right to require fulfillment of any and all such conditions prior to making any subsequent
disbursements under the CONSTRUCTION LOAN. 

SECTION 5  

 Representations and Warranties  

    To induce the BANK to enter into this AGREEMENT, the BORROWER makes the following representations and warranties and agrees that each DRAW REQUEST constitutes
a reaffirmation of these representations and warranties: 

    5.1  Existence and Power.  The BORROWER is a limited liability company duly formed and in good standing
under the laws of the State of Wisconsin. The BORROWER has accomplished all necessary actions required by a limited liability company under applicable law to own the PROPERTY and construct the
PROJECT, and to execute and deliver, and to perform all of its obligations under the LOAN DOCUMENTS. 

    5.2  Authorization of Borrowing; No Conflict as to Law or Other Agreements.  The execution, delivery and
performance by the BORROWER of the LOAN DOCUMENTS and the borrowings from time to time hereunder have been duly authorized by all necessary company actions of the BORROWER and do not and will not
(a) require any material consent or approval, or authorization, by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (b) violate, in
any material respect, any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect having applicability to the BORROWER, or violate any provision of the
operating agreement of the BORROWER, (c) result in a breach of or constitute a default beyond any applicable cure period under any indenture or loan or credit agreement or any other agreement.
lease or instrument to which the BORROWER is a party or by which it or its properties may be bound or affected, or (d) result in. or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any nature to 

10

 

or with any other creditor of the BORROWER, in the aggregate exceeding $100,000.00, upon or with respect to any of the properties now owned or hereafter acquired by the BORROWER. 

    5.3  Legal Agreements.  The LOAN DOCUMENTS constitute the legal, valid and binding obligations of the
BORROWER enforceable against the BORROWER in accordance with their respective terms. 

    5.4  License and Permits.  The BORROWER has all necessary PERMITS required for construction and operation
of the PROJECT except those which cannot be obtained until completion of the PROJECT. 

    5.5  Construction of the PROJECT.  The PROJECT will be constructed strictly in accordance with the PLANS;
will be constructed entirely on the PROPERTY; and will not encroach upon or overhang any easement or right-of-way on land not constituting part of the PROPERTY. The PROJECT,
both during construction and on COMPLETION DATE, and the contemplated use thereof, will not violate in any material respect, any applicable zoning or use statute, ordinance, building code, rule or
regulation, or any covenant or agreement of record. The BORROWER agrees that it will furnish from time to time such satisfactory evidence with respect thereto as may be required by the BANK. 

    5.6  Title to the PROPERTY.  The BORROWER has good and marketable fee simple title to the PROPERTY,
subject to the limitations described in 4.1.11. above. 

    5.7  Financial Condition.  The BORROWER has furnished to the BANK its compiled cash flow projection of
the BORROWER for the initial three years of operation, which were contained in BORROWER's business plan dated February 23,2001. This financial statement fairly presents the projected financial
condition of the BORROWER on the dates thereof, and was prepared in accordance with GAAP. There has been no material adverse change in the operations, properties or condition (financial or otherwise)
of the BORROWER since the date of the financial statement referred to above and no additional borrowings have been made by the BORROWER other than the borrowing contemplated hereby or approved by the
BANK. The above-referenced financial statement or any certificate or statement furnished to the BANK by or on behalf of the BORROWER in connection with the transactions contemplated hereby, and the
representations and warranties in this AGREEMENT, do not contain any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements contained therein
or herein not misleading. To the best of the knowledge of the BORROWER, there is no fact which materially adversely affects or in the future (so far as the BORROWER can now foresee) may materially
adversely affect the operation or prospects or condition (financial or other) of the BORROWER or its properties or assets, which has not been set forth herein or in a certificate or statement
furnished to the BANK by the BORROWER. 

    5.8  Litigation.  There are no actions, suits or proceedings pending or. to the knowledge of the
BORROWER. threatened against or affecting the BORROWER or the properties of the BORROWER before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to the BORROWER, would have a material adverse effect on the financial condition. properties, or operations of the BORROWER. 

    5.9  Taxes.  The BORROWER has paid or caused to be paid to the proper authorities when due all federal,
state and local taxes, including taxes on the PROPERTY, required to be paid or withheld by it. The BORROWER has filed all federal, state and local tax returns which to the knowledge of the BORROWER
are required to be filed, and the BORROWER has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such
taxes have become due. 

    5.10  No Default.  There is no event which is. or with notice or the lapse of time would be, an EVENT OF
DEFAULT under this AGREEMENT. 

11

 

    5.11  ERISA.  The BORROWER is in compliance in all material respects with the Employee Retirement Income
Security Act of 1974. as amended, and has received no notice to the contrary from the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental entity or notice of any claims or pending claims under ERISA. 

    5.12  Environmental Matters.  Except as set forth in the Phase I Environmental Report referenced in
Section 4.1 of this AGREEMENT: 1) the BORROWER is in compliance in all material respects with all health and environmental laws applicable to the BORROWER and its operations and knows of
no conditions or circumstances that could materially interfere with such compliance in the future; 2) the BORROWER has obtained all PERMITS, and approvals required by law for the operation of
its business; and 3) the BORROWER has not identified any "recognized environmental conditions." as that term is defined by the American Society for Testing and Materials in its standards for
environmental due diligence, which could subject the BORROWER to enforcement action if brought to the attention of appropriate governmental authorities. 

    5.13  Necessary Utilities, Etc.  BORROWER has made suitable arrangements so that the PROJECT has all
necessary electrical, gas, water, and sewer facilities in place for the proper construction and operation of its ethanol plant. BORROWER has made adequate provision for all storage facilities,
equipment and product supplies, including corn, as specified by its engineers for the maximum output and operation of the plant. 

SECTION 6  

 Additional Covenants of the BORROWER  

    6.1  Financial Information and Reporting.  Except as otherwise stated in this AGREEMENT, all financial
information provided to the BANK shall be compiled using GAAP consistently applied. During the time period that any amounts are outstanding under the CONSTRUCTION NOTE or this AGREEMENT or the LOAN
DOCUMENTS. unless the BANK shall otherwise agree in writing: 

    6.1.1  Annual
Financial Statements. BORROWER shall provide the BANK within 120 days of the BORROWER'S fiscal year end. the BORROWER's consolidated. annual
financial statements. The statements must be audited with an unqualified opinion by a certified public accountant acceptable to the BANK. and must be accompanied by a certificate of such accountants
stating whether. in conducting their audit, they have become aware of any event of default under this AGREEMENT, or of any event which would, after the lapse of time or the giving of notice, or both,
constitute an EVENT OF DEFAULT, specifying the nature and duration of the default. Such audit statement shall be accompanied by the accountants calculations of BORROWER's compliance with the covenants
contained in Section 6.2 of this AGREEMENT as of the said fiscal year end. 

    6.1.2  The
BORROWER will furnish to the BANK within 30 days after the end of each calendar month, consolidated financial statements of the BORROWER for such
period and year to date all in reasonable detail. Such financial statements shall be accompanied by a calculation of BORROWER's compliance with covenants contained in Section 6.2 of this
AGREEMENT, certified by a manager of BORROWER. 

    6.1.3  The
BORROWER will provide the BANK each quarter, a certificate in the form of Exhibit D that has been signed by a manager of BORROWER, which:
1) certifies that the statements required by section 6.1.1 and 6.1.2 have been accurately prepared in accordance with GAAP applied consistently; 2) certifies that the manager has
no knowledge of any EVENT OF DEFAULT under this AGREEMENT or the LOAN DOCUMENTS, or of any event which would, after the lapse of time or the giving of notice, or both, constitute an event of default
under this AGREEMENT or the LOAN DOCUMENTS. 

12

 

    6.1.4  BORROWER shall immediately notify BANK of the existence of any EVENT OF DEFAULT. 

    6.1.5  BORROWER
shall authorize all federal, state and municipal authorities to furnish reports of examinations, records and other information relating to the condition
and affairs of the BORROWER and its ethanol plant, and any information from reports, returns, files and records by such authorities regarding BORROWER upon request to the BANK. 

    6.1.6  The
BORROWER will give the BANK prompt written notice of any material violation as to any environmental matter by the BORROWER and. of the commencement of any
judicial or administrative proceeding relating to health, safety or environmental matters (i) in which an adverse determination or result could result in the revocation of or have a material
adverse effect on any PERMITS held by the BORROWER which are material to the operations of the BORROWER, and (ii) which will or threatens to impose a material liability on the BORROWER to any
person or party or which will require a material expenditure by the BORROWER to cure any alleged problem or violation. 

    6.1.7  The
BORROWER will give immediate notice to the BANK of (i) any litigation or proceeding in which it is a party if an adverse decision therein would
require it to pay more than $100,000.00 or deliver assets the value of which exceeds such sum (whether or not the claim is considered to be covered by insurance); and (ii) the institution of
any other suit or proceeding involving it that might materially and adversely affect its operations, financial condition, property. or business prospects. 

    6.1.8  BORROWER
shall provide a monthly borrowing base certificate in form acceptable to BANK. calculating advance rates under the REVOLVING LOAN pursuant to the
BORROWING BASE. 

    6.1.9  BORROWER
shall cause delivery to BANK, within thirty days after their filing, copies of the federal tax returns of each individual who is then obligated under a
guaranty of the OBLIGATIONS. as well as annually deliver to BANK a signed personal financial statement from each of such guarantors. in form reasonably acceptable to BANK. 

    6.1.10  The
BORROWER will provide the BANK with such other information as it may reasonably request. 

    6.2  Financial Covenants.  At all times that any amounts are outstanding under the CONSTRUCTION NOTE. the
TERM NOTE, or this AGREEMENT or the LOAN DOCUMENTS, unless the BANK shall otherwise agree in writing, the BORROWER agrees to comply with the financial covenants described below, which shall be
calculated using GAAP consistently applied, except as they may be otherwise modified by the capitalized definitions: 

    6.2.1  The
BORROWER shall maintain a FIXED CHARGE COVERAGE RATIO, measured quarterly, of no less than 1.25:1.0, for all periods following COMPLETION DATE. 

    6.2.2  The
BORROWER shall maintain a NET WORTH of not less than (i) $20,000,000.00 at all times after COMPLETION DATE and (ii) $20,000,000.00 plus an
amount each fiscal year equal to the greater of (a) $250,000.00 or (b) the amount of undistributed earnings during the current fiscal year, at all times subsequent thereto. 

    6.2.3  The
BORROWER shall determine, at each fiscal year end, the amount of its EXCESS CASH FLOW for said fiscal year, and within one hundred twenty days following such
fiscal year end, pay twenty percent (20%) of such sum to BANK, to be applied to the principal amount of the CONSTRUCTION LOAN or the TERM LOAN, as applicable. Such annual payment shall not release
BORROWER from making any payment of principal or interest otherwise required by the CONSTRUCTION NOTE or TERM NOTE. 

13

 

    6.2.4  BORROWER shall maintain, at all times subsequent to COMPLETION DATE and measured at fiscal year end, minimum WORKING CAPITAL of $2,000,000.00. 

    6.3  Affirmative Covenants.  During the time period that any amounts are outstanding under the
CONSTRUCTION NOTE, TERM NOTE, REVOLVING NOTE, this AGREEMENT or the LOAN DOCUMENTS, unless the BANK shall otherwise agree in writing the BORROWER shall: 

    6.3.1  Diligently
proceed with construction of the PROJECT according to the PLANS and in accordance with all applicable laws and ordinances, and complete the PROJECT by
the COMPLETION DATE. 

    6.3.2  Use
the proceeds of each of the disbursements under the CONSTRUCTION LOAN solely for the purposes set forth in this AGREEMENT. 

    6.3.3  Use
its best efforts to require the GENERAL CONTRACTOR and each SUBCONTRACTOR to comply with all rules, regulations, ordinances and laws bearing on its conduct
of work on the PROJECT. 

    6.3.4  Provide
and maintain at all times during the process of building the PROJECT and, from time to time at the request of the BANK, furnish the BANK with proof of
payment of premiums on: 

     (i) Builders'
risk completed value form insurance insuring the PROJECT against fire, lightning and all other risks covered by the extended coverage endorsement then in
use in the State of Wisconsin to the full value of the PROJECT (subject to reasonable loss deductible provisions). The BANK's interest shall be protected by naming the BANK as additional named
insured; 

    (ii) Comprehensive
general liability insurance (including operations, contingent liability, operations of subcontractors, complete operations, removal of contaminated
soil and other environmental coverage and contractual liability insurance) with limits reasonably acceptable to BANK, 

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

    The
policies of insurance required pursuant to clauses (i) and (ii) above shall be in form and content satisfactory to the BANK and shall be placed with financially
sound and reputable insurers. The policy of insurance referred to in clause (i) above shall contain an agreement of the insurer to give not less than thirty (30) days' advance written
notice to the BANK in the event of cancellation of such policy or change affecting the coverage thereunder. Acceptance of insurance policies referred to in clauses (i) and (ii) above
shall not bar the BANK from requiring additional insurance which it reasonably deems necessary. 

    6.3.5  Purchase
and maintain hazard insurance (including fire, extended coverage vandalism and malicious mischief) on the PROPERTY and all assets in which BANK has a
security interest with limits acceptable to the BANK. BANK shall be named as additional named insured. 

    6.3.6  Maintain
accurate and complete books, accounts and records pertaining to the PROPERTY and the PROJECT and its ongoing and continuing operations in form and
substance satisfactory to the BANK. The BORROWER will permit the BANK~ acting by and through its officers and employees, to examine upon reasonable notice all books, records, contracts, plans,
drawings. PERMITS. bills and statements of account pertaining to the PROJECT and to inspect upon reasonable notice all books and records pertaining to its operations and to make extracts there from
and copies thereof. 

    6.3.7  Cause
to be paid to the proper authorities when due all federal, state and local taxes, including taxes on the PROPERTY, required to be paid or withheld by it
except those which the 

14

 

BORROWER is contesting in good faith and with respect to which adequate reserves have been set aside. 

    6.3.8  Allow
the BANK to conduct such inspections of the PROJECT and BORROWER's personal property subject to the BANK's security interest as the BANK may deem necessary
for the protection of the BANK's interest. Provided, however, such inspections shall occur during regular business hours, or such other time as the BORROWER and BANK may agree, and shall not
unreasonably interfere with BORROWER's business operations. Any such inspections shall be made and any certificates issued are solely for the benefit and protection of the BANK, and the BORROWER shall
not be entitled to rely thereon. 

    6.3.9  Make
all repairs, renewals or replacements necessary to keep its plant, properties and equipment in good working condition. 

    6.3.10  Comply
in all material respects with all laws applicable to its form of organization, business, and the ownership of its property. 

    6.3.11  Maintain
and preserve all PERMITS, licenses, rights, privileges, charters and franchises that it now owns. 

    6.3.12  Observe
and comply with all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous
materials or other environmental matters to the extent non-compliance could result in a material liability or otherwise have a material adverse effect on the BORROWER. 

    6.3.13  Maintain
all depository accounts (including those accounts containing BORROWER's equity capital) at BANK, other than local operating accounts approved by BANK. 

    6.3.14  Pay
to BANK, for application to the OBLIGATIONS, in addition to regularly scheduled payments of principal and interest, all state and federal incentive
payments, less any amounts not to exceed 40% of such incentive payments which may be used by BORROWER to make distributions to its members for tax liabilities of such members resulting from BORROWER's
operations. 

    6.4  Negative Covenants.  During the time period that any amounts are outstanding under the CONSTRUCTION
NOTE or this AGREEMENT or the LOAN DOCUMENTS. unless the BANK shall otherwise agree in writing the BORROWER shall not: 

    6.4.1  Permit
any security interest or mortgage or lien on the PROPERTY or PROJECT or other real or personal property BORROWER owns now or in the future, or assign any
interest that it may have in any assets or subordinate any rights that it may have in any assets now or in the future, except: (i) liens,
assignments, or subordinations in favor of the BANK; (ii) liens, assignments, or subordinations outstanding on the date of this AGREEMENT and disclosed in advance to the BANK in writing and
approved by the BANK; (iii) liens for taxes or assessments or other governmental charges not delinquent or which the BORROWER is contesting in good faith; (iv) liens which secure
purchase money indebtedness allowed under this AGREEMENT; (v) liens that are imposed by law for obligations for labor or materials not overdue for more than 120 days, such as mechanics',
materialmen's, carriers', landlords', and warehousemen's liens, or liens, pledges, or deposits under workers' compensation, unemployment insurance, Social Security, or similar legislation. 

    6.4.2  Agree
or consent to any changes in the PLANS, any changes in the terms and provisions of the DESIGN CONTRACT or any of the contracts specifically identified in
Section 4 of this AGREEMENT, or, following execution of this AGREEMENT, to any one change order in an amount exceeding $50,000.00. or all change orders when combined exceeding $1 00.000.00. 

15

 

    6.4.3  Incorporate in the PROJECT any materials, fixtures or property which are subject to the claims of any other person, whether pursuant to conditional sales
contract, security agreement, lease, mortgage. 

    6.4.4  Lease,
sell, transfer, convey, assign, or otherwise transfer all or any part of the interest of the BORROWER in the PROJECT or the PROPERTY. 

    6.4.5  Permit
or suffer any material change in its management personnel or management structure or any change, direct or indirect, in its capital ownership. 

    6.4.6  Permit
or suffer any change in its general plant manager without BANK's approval, which will not unreasonably be withheld. 

    6.4.7  Engage
in any line of business materially different from that presently engaged in by the BORROWER. 

    6.4.8  Change
its legal form of organization. 

    6.4.9  Make
any material changes in its accounting procedures for tax or other purposes. 

    6.4.10  Incur
any INDEBTEDNESS except: (1) debt arising under this or another agreement with the BANK; (ii) trade credit incurred in the ordinary course
of business; and (iii) indebtedness in existence on the date of this AGREEMENT and disclosed in advance to the BANK in writing. BORROWER shall not borrow other than pursuant to this AGREEMENT,
without permission of the BANK. 

    6.4.11  Consolidate,
or merge or pool or syndicate or otherwise combine with any other entity, or give any preferential treatment. make any advance, directly or
indirectly, by way of loan, gift, bonus, or otherwise. to any company directly or indirectly controlling or affiliated with or controlled by BORROWER, or any other company, or to any partner or
employee of BORROWER, or of any such company. 

    6.4.12  Make,
or commit to make. capital expenditures (including the total amount of any capital leases, but excluding BANK approved plant expansions) in an aggregate
amount exceeding $500,000.00 in any single fiscal year. 

    6.4.13  Make
or pay, without the written consent of BANK, which written consent will not be unreasonably withheld, in any fiscal year distributions to members of the
BORROWER in excess of 65% of the fiscal year's net income excluding state or federal incentive payments, or which would result in the BORROWER at the time of such distribution not being in compliance
with any of the covenants set forth in this AGREEMENT after payment of such distribution. Any such distributions shall be made only after receipt by BANK of BORROWER's internal financial statements
and compliance statement as required herein. 

    6.4.14  Assume,
guarantee, endorse or otherwise becoming contingently liable for any obligations of any other person. except for those guaranties outstanding at the
time of execution of this AGREEMENT and disclosed to the BANK in writing. 

    6.4.15  Make
sales to or purchases from any affiliate of the BORROWER or extend credit or make payments for services rendered by any affiliate of the BORROWER, except
under the MARKETING CONTRACT, unless such sales or purchases are made or such services are rendered in the ordinary course of business and on terms and conditions at least as favorable to the BORROWER
as the terms and conditions which would apply in a similar transaction with a person or party not an affiliate of the BORROWER. 

16

   SECTION 7  

 EVENTS OF DEFAULT, Rights and Remedies  

    7.1  EVENTS OF DEFAULT.  Each of the following shall be an EVENT OF DEFAULT and give the BANK the right
to exercise its remedies under this AGREEMENT: 

    7.1.1  The
BORROWER shall fail to pay when due any OBLIGATIONS or any other installment of principal or interest or fee payable to BANK. 

    7.1.2  The
BORROWER shall fall to observe or perform any other obligation to be observed or performed by it hereunder or under any of the LOAN
DOCUMENTS. 

    7.1.3  The
BORROWER shall fail to pay any INDEBTEDNESS due any third persons, and such failure shall continue beyond any applicable grace period. or the
BORROWER shall suffer to exist any other default under any agreement binding the BORROWER. 

    7.1.4  Any
financial statement, representation. warranty. or certificate made or furnished by or with respect to the BORROWER to the BANK in connection
with this AGREEMENT, or as an inducement to the BANK to enter into this AGREEMENT, or in any separate statement or document to be delivered to the BANK hereunder, shall be materially false, incorrect,
or incomplete when made. 

    7.1.5  The
BORROWER shall admit its inability to pay its debts as they mature or shall make an assignment for the benefit of itself or any of its
creditors. 

    7.1.6  Proceedings
in bankruptcy, or for reorganization of the BORROWER, or for the readjustment of debt under the Bankruptcy Code, as amended. or any
part thereof, or under any other laws, whether
state or federal, for the relief of debtors, now or hereafter existing, shall be commenced against or by the BORROWER and, except with respect to any such proceedings instituted by the BORROWER, shall
not be discharged within sixty (60) days of their commencement. 

    7.1.7  A
receiver or trustee shall be appointed for the BORROWER or for any substantial part of its respective assets, or any proceedings shall be
instituted for the dissolution or the full or partial liquidation of the BORROWER, and except with respect to any such appointments requested or instituted by the BORROWER, such receiver or trustee
shall not be discharged within sixty (60) days of his appointment, and except with respect to any such proceedings instituted by the BORROWER such proceedings shall not be discharged within
sixty (60) days of their commencement, or the BORROWER shall discontinue business or materially change the nature of its business, or the property securing the OBLIGATIONS becomes, in the
reasonable judgment of the BANK, insufficient in value to satisfy the OBLIGATlONS. or the BANK otherwise reasonably finds itself insecure as to the prompt and punctual payment and discharge of the
OBLIGATIONS. 

    7.1.8  The
BORROWER shall suffer final judgments for payment of money aggregating in excess of $100,000.00 which are not covered, without reservation,
by insurance or shall not discharge the same within a period of thirty (30) days unless, pending further proceedings. execution has not been commenced or, if commenced, has been effectively
stayed. 

    7.1.9  A
judgment creditor of the BORROWER shall obtain possession of any of BANK's collateral by any means, including (without implied limitation)
levy, distraint, replevin, or self-help. 

    7.1.10  The
construction of the PROJECT is abandoned or shall be unreasonably delayed or be discontinued for a period of fifteen (15) consecutive
calendar days, in each instance for reasons other than acts of God, fire, storm, strikes, blackouts, labor difficulties, riots, inability to obtain 

17

 

materials, equipment or labor, governmental restrictions or any similar cause over which the BORROWER is unable to exercise control. 

    7.1.11  The
BORROWER at any time prior to the completion of the PROJECT, shall delay construction or suffer construction to be delayed for any period of
time, for any reason whatsoever, so that the completion of the PROJECT cannot be accomplished, in the reasonable judgment of the BANK. by the COMPLETION DATE. 

    7.1.12  The
PROJECT is materially damaged or destroyed by fire or other casualty and the loss, in the reasonable judgment of the BANK, is not adequately
covered by insurance actually collected or in the process of collection. 

    7.1.13  Fagen, Inc.
shall cease to be the GENERAL CONTRACTOR and BORROWER has not replaced the GENERAL CONTRACTOR, within thirty (30) days
following the termination of the same to the satisfaction of BANK. which BANK approval shall not be unreasonably withheld. 

    7.1.14                                or
its permitted assignees shall cease to be the marketing agent of BORROWER as to sale of its products or 1CM. Inc.
shall cease to be the ENGINEERING COMPANY, and BORROWER has not within thirty (30) days following termination of either hired a replacement to the BANK' s satisfaction, which BANK approval will
not be unreasonably withheld. 

    7.2  Rights and Remedies.  Upon the occurrence of an EVENT OF DEFAULT and at any time thereafter, the
BANK may refrain from making any further disbursements hereunder (but the BANK may make disbursements after the occurrence of such an EVENT OF DEFAULT without thereby waiving its rights and remedies
hereunder), and upon the occurrence of an EVENT OF DEFAULT or at any time thereafter, the BANK may exercise any or all of the following rights and remedies: 

    7.2.1  The
BANK may declare the CONSTRUCTION LOAN to be terminated, whereupon the same shall forthwith terminate. 

    7.2.2  The
BANK may declare the entire unpaid principal amount of the CONSTRUCTION NOTE then outstanding, all interest accrued and unpaid thereon. and
all other amounts payable under this AGREEMENT to be forthwith due and payable. whereupon the CONSTRUCTION NOTE. all such accrued interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the BORROWER. 

    7.2.3  The
BANK may exercise and enforce its rights and remedies under any or all of the LOAN DOCUMENTS. 

    7.2.4  The
BANK may enter upon the PROPERTY, if allowed under applicable law, and take possession thereof, together with the PROJECT then in the course
of construction, and proceed either in its own name or in the name of the BORROWER, as the attorney-in-fact of the BORROWER (which authority is coupled with an interest and is
irrevocable by the BORROWER) to complete or cause to be completed the PROJECT, at the cost and expense of the BORROWER. If the BANK elects to complete or cause to be completed the PROJECT, it may do
so according to the PLANS or according to such changes. alterations or modifications in and to the PLANS as the BANK may deem reasonable and appropriate: and the BANK may enforce or cancel all
contracts let by the BORROWER relating
to construction of the project, and/or let other contracts which in the BANK's sole judgment may seem advisable; and the BORROWER shall forthwith turn over and duly assign to the BANK, as the BANK may
from time to time require. contracts not already assigned to the BANK relating to construction of the PROJECT, blueprints, shop drawings, bonds, building permits, bills and statements of accounts
pertaining to the PROJECT, whether paid or not, and any other instruments or records in the 

18

 

possession of the BORROWER pertaining to the PROJECT. The BORROWER shall be liable under this AGREEMENT to pay to the BANL on demand, any amount or amounts reasonably expended by the BANK inso
completing the PROJECT, together with any reasonable costs, charges, or expenses incident thereto or resulting there from, all of which shall be secured by the LOAN DOCUMENTS. In the event that a
proceeding is instituted against the BORROWER for recovery and reimbursement of any moneys expended by the BANK in connection with the completion of the PROJECT, a statement of such expenditures,
verified by the affidavit of an officer of the BANK, shall be prima facie evidence of the amounts so expended and of the propriety of the necessity for such expenditures; and the burden of proving to
the contrary shall be upon the BORROWER. The BANK shall have the right to apply any funds which it agrees to disburse hereunder to bring about the completion of the PROJECT and to pay the costs
thereof; and if such money so agreed to be disbursed is insufficient, in the sole judgment of the BANK, to complete the PROJECT, the BORROWER agrees to promptly deliver and pay to the BANK such sum or
sums of money as the BANK may from time to time demand for the purpose of completing the PROJECT or of paying any liability, charge or expense which may have been incurred or assumed by the BANK under
or in performance of this AGREEMENT, or for the purpose of completing the PROJECT. It is expressly understood and agreed that in no event shall the BANK be obligated, or liable in any way to complete
the PROJECT or to pay for the costs of construction thereof beyond the amount of the CONSTRUCTION LOAN. 

    7.2.5  The
BANK may exercise any other rights and remedies available to it by law or agreement. 

SECTION 8  

 Miscellaneous  

    8.1  Inspections.  The BORROWER and the GENERAL CONTRACTOR shall be responsible for making inspections of
the PROJECT during the course of construction and shall determine to their own satisfaction that the work done or materials supplied by the GENERAL CONTRACTOR or any SUBCONTRACTOR to whom payment is
to be made out of each disbursement has been properly done or supplied in accordance with the DESIGN CONTRACT. If any work done or materials supplied by the GENERAL CONTRACTOR or any SUBCONTRACTOR are
not satisfactory to the BORROWER and/or its GENERAL CONTRACTOR and the same is not remedied within fifteen
days of the discovery thereof, the BORROWER will immediately notify the BANK in writing of such fact. It is expressly understood and agreed that the BANK and any party designated by the BANK may
conduct such inspections of the PROJECT, subject to the limitations expressed in this AGREEMENT, as BANK may deem necessary for the protection of the BANK's interest, and that any inspections which
may be made of the PROJECT by the BANK will be made. solely for the benefit and protection of the BANK, and that the BORROWER will not rely thereon. 

    8.2  Indemnification by the BORROWER.  The BORROWER shall bear all loss, expense (including reasonable
attorneys' fees) and damage in connection with, and agrees to indemnify and hold harmless the BANK, its agents, servants and employees from, all claims, demands and judgments made or recovered against
the BANK, its agents, servants and employees, because of bodily injuries, including death at any time resulting there from, and/or because of damages to property (including loss of use) from any cause
whatsoever, arising out of, incidental to. or in connection with the construction of the PROJECT, whether or not due to any act of omission or commission, including negligence of the BORROWER or the
GENERAL CONTRACTOR or of his or their employees, servants or agents. The BORROWER's liability hereunder shall not be limited to the extent of insurance carried by or provided by the BORROWER or
subject to any exclusions from coverage in any insurance policy. The obligations of the BORROWER under this Section shall survive the payment of the CONSTRUCTION NOTE. 

19

 

    8.3  No Waiver; Cumulative Remedies.  No failure or delay on the part of the BANK in exercising any
right, power or remedy under the LOAN DOCUMENTS shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy under the LOAN DOCUMENTS. The remedies provided in the LOAN DOCUMENTS are cumulative and not exclusive of any remedies provided by law. 

    8.4  Amendments, Etc.  No amendment, modification, termination or waiver of any provision of any of the
LOAN DOCUMENTS or consent to any departure by the BORROWER there from shall be effective unless the same shall be in writing and signed by the BANK, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No notice to or demand on the BORROWER in any case shall entitle the BORROWER to any other or further notice or demand in
similar or other circumstances. 

    8.7  Addresses for Notices. Etc.  Except as otherwise expressly provided herein, all notices, requests,
demands and other communications provided for under the LOAN DOCUMENTS shall be in writing and mailed or delivered to the applicable party at its address indicated below: 

	 
	 	 

	If to the BORROWER:	 	BADGER STATE ETHANOL, LLC

312 9th Avenue SE

Watertown, Wisconsin 57201

Attention: Randall Frederick
	

If to the BANK:	
 	

First National Bank of Omaha

1620 Dodge St.

Omaha, NE 68197

Attention: Michael Doyle

or,
as to each party, at such other address as shall be designated by such party in a written notice to the other parry complying as to delivery with the terms of this Section. All such notices.
requests, demands and other communications shall, when mailed, be effective when deposited in the malls addressed as aforesaid, except that notices or requests to the BANK pursuant to any of the
provisions hereunder shall not be effective until received by the BANK. 

    8.8  Time of Essence.  Time is of the essence in the performance of this AGREEMENT. 

    8.9  Execution in Counterparts.  The LOAN DOCUMENTS may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed to be an original and all of which counterparts of each instrument or agreement, taken together, shall constitute but one and the same
instrument. 

    8.10  Binding Effect, Assignment.  The LOAN DOCUMENTS shall be binding upon and inure to the benefit of
the BORROWER and the BANK and their respective successors and assigns, except that the BORROWER shall not have the right to assign its rights thereunder or any interest therein without the prior
written consent of the BANK. 

    8.11  Governing Law.  The LOAN DOCUMENTS shall be governed by, and construed in accordance with, the laws
of the State of Nebraska except for the MORTGAGE and ASSIGNMENT OF RENTS which shall be governed by and construed in accordance with the laws of the Stale of Wisconsin. 

    8.12  Severability of Provisions.  Any provision of this AGREEMENT which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. 

20

 

    8.13  Headings.  Section headings in this AGREEMENT are included herein for convenience of reference only
and shall not constitute a part of this AGREEMENT for any other purpose. 

    8.14  Integration.  This AGREEMENT supersedes, replaces and terminates any prior oral offers,
negotiations. understandings or agreements and any commitment letters or similar writings relating to any of the matters contemplated herein. 

    8.15  Participations.  Notwithstanding any other provision of this AGREEMENT, the BORROWER understands
that the BANK may enter into participation agreements with other lenders whereby the BANK will allocate a certain percentage of the CONSTRUCTION LOAN to them. The BORROWER specifically permits and
authorizes the BANK to exchange financial information about the BORROWER with actual or potential participants. The BORROWER acknowledges that, for the convenience of all parties, this AGREEMENT is
being entered into with the BANK only and that its obligations under this AGREEMENT are undertaken for the benefit of, and as an inducement to, each of the Participating Lenders as well as the BANK,
and the BORROWER hereby grants to each of the Participating Lenders to the extent of its participation in the CONSTRUCTION LOAN, the right to set off deposit accounts maintained by the BORROWER with
such BANK. The BORROWER understands that the terms of such participation agreements with any of the participants will limit the BANK's rights to amend. waive or modify the terms and conditions of this
AGREEMENT without the express written consent of all or a designated percentage of such participants. 

    IN
WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed by their respective officers or managers thereunto duly authorized, as of the date first above
written. 

	Badger State Ethanol, LLC	 	First National Bank of Omaha
	

By:	

	
 	

By:	

	 	 	 	 	Michael Doyle, Vice-President
	

STATE OF            )	
 	

 	

 
	                               ) ss.	 	 	 
	COUNTY OF        )	 	 	 

    On
this      day of , 2001, before me, the undersigned, a Notary Public, personally appeared            ,
the            of Badger State Ethanol, LLC, on
behalf of said entity, who executed the foregoing instrument, and acknowledged that he executed the same as his voluntary act and deed. 

	 
	 	 

	 	 	
 Notary Public

21

   EXHIBIT A  

BADGER
STATE ETHANOL, LLC

Real Estate Description 

22

 
EXHIBIT B  

Construction
Note 

23

 
EXHIBIT C  

REVOLVING
NOTE 

24

 
EXHIBIT D  

BADGER
STATE ETHANOL, LLC 

CERTIFICATE OF COMPLIANCE

	TO:
	First
National Bank of Omaha

1620 Dodge Street Stop 1050

Omaha, Nebraska 68 197-1050

Attn: Michael Doyle 

    I
am a manager of BADGER STATE ETHANOL, LLC, (the "BORROWER") and under the terms of a CONSTRUCTION LOAN AGREEMENT (the "AGREEMENT') between the BANK and the BORROWER dated 2001,
certify that: 

    1.  The
attached financial statements of the BORROWER from            through (the "Statement Date") are true and correct and have been accurately prepared in
accordance with generally accepted accounting principles applied consistently with the BORROWER's most recent annual financial statement; and 

    2.  I
have read and am familiar with the AGREEMENT and have no knowledge of an existing EVENT OF DEFAULT under the AGREEMENT or of any event which would, after the
lapse of time or the giving of notice, or both, constitute an EVENT OF DEFAULT under the AGREEMENT. 

    The
calculations regarding each financial covenant, as of the Statement Date, and regardless of whether the BORROWER must be in compliance with each covenant as of the Statement Date,
are as follows: 

	COVENANT
 
	 	ACTUAL
	 	REQUIRED

	NET WORTH	 	$	 	 	$	 
	

DEBT TO NET WORTH RATIO	
 	
 	

1.0	
 	
 	

 
	

FIXED CHARGES COVERAGE RATIO	
 	
 	

:1.0	
 	
 	

1.25:1.0
	

WORKING CAPITAL	
 	
$	

 	
 	
$	

2,000,000.00
	

EXCESS CASH FLOW	
 	
$	

 	
 	
 	

 

	

 	
 	
BADGER STATE ETHANOL, LLC
	

 	
 	

By:	

 
	

 	
 	

 	

A Manager

25

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EXHIBIT 10.3Prepared by MERRILL CORPORATION

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Exhibit 10.22    
  

Execution Copy  

 
 

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT    
  

    This SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment"), dated as of August 3, 2001, is by and among PLACER CAPITAL CO., a
California corporation ("Placer"), CALIFORNIA COMMUNITY BANCSHARES, INC., a Delaware corporation ("CCB") (Placer and CCB may be referred to individually and without distinction as a "Borrower"
and collectively as the "Borrowers"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the "Bank"). 

 
 

RECITALS    
  

    WHEREAS, the Borrowers and the Bank entered into an Amended and Restated Credit Agreement dated as of July 28, 2000, as amended by that First Amendment
to Credit Agreement and Limited Waiver of Default dated as of June 19, 2001 (as amended, the "Credit Agreement"); and 

    WHEREAS,
the Borrowers and the Bank desire to make certain amendments to the Agreement; 

    NOW,
THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby agreed by and between
Placer, CCB and the Bank as follows: 

    Section 1.  Capitalized Terms.  All capitalized terms used herein but not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement, unless the context otherwise requires. 

    Section 2.  Amendments to Credit Agreement.

	(a)
	The
definition of "Eurodollar Rate" contained in Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as follows: 

"Eurodollar Rate":  With respect to any date of determination, the average offered rate for one month deposits in United States dollars,
which rate appears on Telerate page 3750 as of 11:00 a.m., London time (or such other time as of which such rate appears) on such date of determination, or the rate for such deposits determined
by the Agent at such time based on such other published service of general application as shall be selected by the Bank for such purpose, provided that
in lieu of determining the rate in the foregoing manner, at the option of the Bank, the Bank may determine the rate based on rates at which one month deposits in United States dollars are offered to
the Bank in the interbank Eurodollar market at such time in an amount approximately equal to the aggregate principal amount of the Advances to which such rate is to apply. "Telerate page 3750" means
the display designated as such on the Telerate reporting system operated by Telerate System Incorporated (or such other page as may replace such page 3750 for the purpose of displaying London
interbank offered rates of major banks for U.S. Dollar deposits). 

	(b)
	Section 1.1
of the Credit Agreement is hereby amended by adding the definitions of "Prime Rate" and
"Prime Rate Advance" in the correct alphabetical order to read as follows: 

"Prime Rate": The rate of interest from time to time publicly announced by the Bank as its "prime rate." The Bank may lend to its customers at rates
that are at, above or below the Prime Rate. For purposes of determining any interest rate hereunder or under any other Loan 

S–1

 

Document which is based on the Prime Rate, such interest rate shall change as and when the Prime Rate shall change. 

"Prime Rate Advance": An Advance with respect to which the interest rate is determined by reference to the Prime Rate. 

	(c)
	The
definition of "Revolving Commitment Ending Date" contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to read as follows: 

    "Revolving Commitment Ending Date": August 11, 2002, but as such date may be extended pursuant to Section 2.13. 

	(d)
	The
last sentence of Section 2.5 of the Credit Agreement is deleted in its entirety and the following is substituted in lieu thereof: 

If
the Borrower shall fail to notify the Bank of the continuation of any Eurodollar Rate Advances within the time required by this Section, at the option of the Bank, such Advances shall, on the last
day of the Interest Period applicable thereto (A) automatically be continued as Eurodollar Rate Advances of the same type and the same Interest Period or (B) automatically be converted
to Prime Rate Advances. 

	(e)
	Except
for references to such terms specifically so amended by this Amendment, all remaining references to the term "Reference Rate" or "Reference Rate Advance" contained in the
Credit Agreement are hereby amended to be references to the term "Prime Rate" or "Prime Rate Advance", as applicable. 

    Section 3.  Conditions to Effectiveness of Amendment.  This Amendment shall become effective upon
delivery to the Bank of, and compliance by the Borrowers with, each of the following: 

	(a)
	The
Bank shall have received this Amendment dated the date of the delivery thereof, and duly executed by the Borrowers.

	(b)
	The
Bank shall have received a copy of the resolutions of the Board of Directors of each of Placer and CCB authorizing the execution, delivery and performance of this Amendment and
the other documents executed by the Borrowers in connection with this Amendment (collectively, the "Amendment Documents"), certified as true and accurate by its respective Secretary or Assistant
Secretary, along with a certification by such Secretary or Assistant Secretary (i) certifying that there has been no amendment to the Articles of Incorporation or Bylaws of Placer and CCB,
respectively, since the same were delivered to the Bank with a certificate of its respective Secretary dated July 28, 2000;
and (ii) identifying the officers executing the Amendment Documents and certifying as to their incumbency. 

    Section 4.  Representations, Warranties, Authority, No Adverse Claim.

	(a)
	Reassertion of Representations and Warranties, No Default. The Borrowers hereby represent that on and as of the date hereof and after
giving effect to this Amendment (a) all of the representations and warranties contained in Article IV of the Credit Agreement are true, correct and complete in all respects as of the
date hereof as though made on and as of such date, except for changes permitted by the terms of the Credit Agreement, and (b) there will exist no Default or Event of Default under the Credit
Agreement as amended by this Amendment on such date which has not been waived.

	(b)
	Authority, No Conflict, No Consent Required.  The Borrowers represent and warrant that they have the power and legal
right and authority to enter into the Amendment Documents and have duly authorized as appropriate the execution and delivery of the Amendment Documents and other agreements and documents executed and
delivered by the Borrowers in connection herewith or therewith by proper corporate action, and none of the Amendment Documents 

S–2

 

nor
the agreements contained herein or therein contravene or constitute a default under any agreement, instrument or indenture to which any Borrower is a party or a signatory or a provision of any
Borrower's Organizational Documents or any other agreement or requirement of law, or result in the imposition of any Lien on any of its property under any agreement binding on or applicable to any
Borrower or any of their property except, if any, in favor of the Bank. The Borrowers represent and warrant that no consent, approval or authorization of or registration or declaration with any
Person, including but not limited to any governmental authority, is required in connection with the execution and delivery by any Borrower of the Amendment Documents or other agreements and documents
executed and delivered by each Borrower in connection therewith or the performance of obligations of each Borrower therein described, except for those which any Borrower has obtained or provided and
as to which such Borrower has delivered certified copies of documents evidencing each such action to the Bank. 

	(c)
	No Adverse Claim.  Each Borrower hereby warrants, acknowledges and agrees that no events have taken place and no
circumstances exist at the date hereof which would give such Borrower a basis to assert a defense, offset or counterclaim to any claim of the Bank with respect to such Borrower's obligations under the
Credit Agreement, as amended by this Amendment. 

    Section 5.  Affirmation of Credit Agreement and Security Documents.  The Bank and the Borrowers
each acknowledge and affirm that the Credit Agreement, as hereby amended, is hereby ratified and confirmed in all respects and all terms, conditions and provisions of the Credit Agreement, except as
amended by this Amendment, shall remain unmodified and in full force and effect. All references in any document or instrument to the Credit Agreement are hereby amended and shall refer to the Credit
Agreement as amended by this Amendment. The Borrowers confirm to the Bank that the Obligations are and continue to be secured by the security interest granted by Placer in favor of the Bank under the
Security Documents, and all of the terms, conditions, provisions, agreements, requirements, promises, obligations, duties, covenants and representations of Placer under such documents and any and all
other documents and agreements entered into with respect to the obligations under the Credit Agreement are incorporated herein by reference and are hereby ratified and affirmed in all respects by
Placer. 

    Section 6.  Merger and Integration, Superseding Effect.  This Amendment, from and after the date
hereof, embodies the entire agreement and understanding between the parties hereto and supersedes and has merged into this Amendment all prior oral and written agreements on the same subjects by and
between the parties hereto with the effect that this Amendment shall control with respect to the specific subjects hereof and thereof. 

    Section 7.  Severability.  Whenever possible, each provision of this Amendment and the other
Amendment Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective, valid and
enforceable under the applicable law of any jurisdiction, but, if any provision of this Amendment, the other Amendment Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited, invalid or unenforceable under the applicable law, such provision shall be ineffective in such jurisdiction only to the extent
of such prohibition, invalidity or unenforceability, without invalidating or rendering unenforceable the remainder of such provision or the remaining provisions of this Amendment, the other Amendment
Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto in such jurisdiction, or affecting the effectiveness, validity or
enforceability of such provision in any other jurisdiction. 

S–3

 

    Section 8.  Successors.  The Amendment Documents shall be binding upon the Borrowers and the Bank
and their respective successors and assigns, and shall inure to the benefit of the Borrowers and the Bank and their respective successors and assigns. 

    Section 9.  Legal Expenses.  As provided in Section 8.2 of the Credit Agreement, the
Borrowers agree to reimburse the Bank, upon execution of this Amendment, for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses of
Dorsey & Whitney LLP, counsel for the Bank) incurred in connection with the Credit Agreement, including in connection with the negotiation, preparation and execution of the Amendment Documents
and all other documents negotiated, prepared and executed in connection with the Amendment Documents, and in enforcing the obligations of each Borrower under the Amendment Documents, and to pay and
save the Bank harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or delivery of the Amendment Documents, which obligations of the Borrowers shall survive any termination of the Credit
Agreement. 

    Section 10.  Headings.  The headings of various sections of this Amendment have been inserted for
reference only and shall not be deemed to be a part of this Amendment. 

    Section 11.  Counterparts.  The Amendment Documents may be executed in several counterparts as
deemed necessary or convenient, each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and the same document, and either party to
the Amendment Documents may execute any such agreement by executing a counterpart of such agreement. 

    Section 12.  Governing Law.  THE AMENDMENT DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES. 

[The
remainder of this page is intentionally left blank.] 

S–4

 

    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date above written. 

	 	 	PLACER CAPITAL CO.
	

 	
 	

By:	

/s/ J. THOMAS BYRON   
 J. Thomas Byron
	 	 	Its:	Secretary
	

 	
 	

CALIFORNIA COMMUNITY BANCSHARES, INC.
	

 	
 	

By:	

/s/ ANAT BIRD   
 Anat Bird
	 	 	Its:	President and Chief Executive Officer
	

 	
 	

U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

By:	

/s/ AL HIGHAM   
 Al Higham
	 	 	Its:	Vice President

S–5

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Exhibit 10.22

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

RECITALS

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