Document:

Exhibit 10.01

 

DEFAULT
WAIVER AND FIRST AMENDMENT

TO

LOAN AND
SECURITY AGREEMENT

 

This DEFAULT WAIVER AND FIRST
AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 22nd day
of February, 2006, by and between Silicon Valley Bank (“Bank”) and Versant
Corporation, a California corporation (“Borrower”) whose address is 6539
Dumbarton Circle, Fremont, CA  94555.

 

RECITALS

 

 A. Bank and Borrower
have entered into that certain Loan and Security Agreement dated as of June 16,
2005, by and between Bank and Borrower (as the same may from time to time be
amended, modified, supplemented or restated, the “Loan Agreement”). Bank has
extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

 B. Borrower is
currently in default of the Loan Agreement for failing to (1)  comply with the covenants set forth in
Section 6.2(a)(i) for the months ended November 30, 2005, December 31, 2005 and
January 31, 2006  and (2) Section 7.1 of
the Loan Agreement, (each of the defaults under (1) and (2), collectively, the “Existing
Defaults”).

 

C. Borrower has
requested that Bank waive its rights and remedies against Borrower, limited
specifically to the Existing Defaults. Although Bank is under no obligation to
do so, Bank is willing to not exercise its rights and remedies against Borrower
related to the specific Existing Defaults on the terms and conditions set forth
in this Amendment, so long as Borrower complies with the terms, covenants and
conditions set forth in this Amendment.

 

D. Borrower has
further requested that Bank amend the Loan Agreement to amend the monthly
financial statement reporting requirement. Bank has agreed to so amend certain
provisions of the Loan Agreement, but only to the extent, in accordance with
the terms, subject to the conditions and in reliance upon the representations
and warranties set forth below.

 

AGREEMENT

 

 NOW, THEREFORE, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

 

Definitions. Capitalized
terms used but not defined in this Amendment shall have the meanings given to
them in the Loan Agreement.

 

Waiver of Covenant Default.

 

Bank hereby waives Borrower’s existing default under the Loan Agreement
by virtue of Borrower’s failure to comply with Section 6.2(a)(i) for the months
ended November 30, 2005, December 31, 2005 and January 31, 2006.

 

 

Bank also
waives Borrower’s existing default under the Loan Agreement by virtue of
Borrower’s failure to comply with Section 7.1 by Borrower’s failure to obtain
Bank’s prior consent with respect to the sale of certain assets of the
WebSphere Business as defined in that certain Asset Purchase Agreement between
Versant Corporation and Sima Solutions dated February 1, 2006. Bank’s waiver of
Borrower’s compliance of these covenants shall apply only to the foregoing
period. Accordingly, hereinafter, Borrower shall be in compliance with these
covenants.

 

 Bank’s agreement to waive the above-described
defaults (1) in no way shall be deemed an agreement by the Bank to waive
Borrower’s compliance with the above-described covenants as of all other dates
and (2) shall not limit or impair the Bank’s right to demand strict performance
of these covenants as of all other dates and (3) shall not limit or impair the
Bank’s right to demand strict performance of all other covenants as of any
date.

 

Amendments to Loan Agreement.

 

Section 6.2 (Financial Statements, Reports, Certificates).

 

Section
6.2(a)(i) is hereby amended to read as follows:

 

 (i) at such times as outstanding Obligations
exist, as soon as available, but no later than thirty (30) days after the last
day of each month, a company prepared consolidated balance sheet and income
statement covering Borrower’s consolidated operations during the period
certified by a Responsible Officer and in a form acceptable to Bank.

 

Limitation
of Amendments.

 

The amendment set forth in Section 3, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.

 

This Amendment shall be construed in connection with
and as part of the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents, except as
herein amended, are hereby ratified and confirmed and shall remain in full
force and effect.

 

Representations and Warranties. To induce Bank
to enter into this Amendment, Borrower hereby represents and warrants to Bank
as follows:

 

Immediately after giving effect to this Amendment
(a) the representations and warranties contained in the Loan Documents are
true, accurate and complete in all material respects as of the date hereof
(except to the extent such representations and

 

 

warranties relate to an earlier date, in which case they are true and
correct as of such date), and (b) no Event of Default other than the Existing
Defaults has occurred and is continuing;

 

Borrower has the power and authority to execute and deliver
this Amendment and to perform its obligations under the Loan Agreement, as
amended by this Amendment;

 

The organizational documents of Borrower delivered
to Bank on the June 16, 2005 remain true, accurate and complete and have not
been amended, supplemented or restated and are and continue to be in full force
and effect;

 

The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, have been duly authorized by all
necessary action on the part of Borrower;

 

The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not and will not contravene (a) any
law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or
decree of any court or other governmental or public body or authority, or
subdivision thereof, binding on Borrower, or (d) the organizational documents
of Borrower;

 

The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or
authority, or subdivision thereof, binding on either Borrower, except as
already has been obtained or made; and

 

This Amendment has been duly executed and delivered
by Borrower and is the binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.

 

Prior Agreement. Except as
expressly provided for in this Amendment, the Loan Documents are hereby
ratified and reaffirmed and shall remain in full force and effect. This
Amendment is not a novation and the terms and conditions of this Amendment
shall be in addition to and supplemental to all terms and conditions set forth
in the Loan Documents. In the event of any conflict or inconsistency between
this Amendment and the terms of such documents, the terms of this Amendment
shall be controlling, but such document shall not otherwise be affected or the
rights therein impaired.

 

Release by Borrower.

 

FOR GOOD AND VALUABLE CONSIDERATION, Borrower
hereby

 

 

forever relieves, releases, and discharges Bank and its present or
former employees, officers, directors, agents, representatives, attorneys, and
each of them, from any and all claims, debts, liabilities, demands, obligations,
promises, acts, agreements, costs and expenses, actions and causes of action,
of every type, kind, nature, description or character whatsoever, whether known
or unknown, suspected or unsuspected, absolute or contingent, arising out of or
in any manner whatsoever connected with or related to facts, circumstances,
issues, controversies or claims existing or arising from the beginning of time
through and including the date of execution of this Amendment (collectively “Released Claims”). Without limiting the
foregoing, the Released Claims shall include any and all liabilities or claims
arising out of or in any manner whatsoever connected with or related to the
Loan Documents, the Recitals hereto, any instruments, agreements or documents
executed in connection with any of the foregoing or the origination,
negotiation, administration, servicing and/or enforcement of any of the
foregoing.

 

In furtherance of this release, Borrower expressly
acknowledges and waives any and all rights under Section 1542 of the California
Civil Code, which provides as follows:

 

“A general release does not extend to claims which the creditor
does not know or expect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor.” (Emphasis added.)

 

By entering into this release, Borrower recognizes
that no facts or representations are ever absolutely certain and it may
hereafter discover facts in addition to or different from those which it
presently knows or believes to be true, but that it is the intention of
Borrower hereby to fully, finally and forever settle and release all matters,
disputes and differences, known or unknown, suspected or unsuspected;
accordingly, if Borrower should subsequently discover that any fact that it
relied upon in entering into this release was untrue, or that any understanding
of the facts was incorrect, Borrower shall not be entitled to set aside this
release by reason thereof, regardless of any claim of mistake of fact or law or
any other circumstances whatsoever. Borrower acknowledges that it is not
relying upon and has not relied upon any representation or statement made by
Bank with respect to the facts underlying this release or with regard to any of
such party’s rights or asserted rights.

 

This release may be pleaded as a full and complete
defense and/or as a cross-complaint or counterclaim against any action, suit,
or other proceeding that may be instituted, prosecuted or attempted in breach
of this release. Borrower acknowledges that the release contained herein
constitutes a material inducement to Bank to enter into this Amendment, and
that Bank would not have done so but for Bank’s expectation that such release
is valid and enforceable in all events.

 

Borrower hereby represents and warrants to Bank, and
Bank is relying thereon, as follows:

 

 

Except as expressly stated in this Amendment,
neither Bank nor any agent, employee or representative of Bank has made any
statement or representation to Borrower regarding any fact relied upon by
Borrower in entering into this Amendment.

 

Borrower has made such investigation of the facts
pertaining to this Amendment and all of the matters appertaining thereto, as it
deems necessary.

 

The terms of this Amendment are contractual and not
a mere recital.

 

This Amendment has been carefully read by Borrower,
the contents hereof are known and understood by Borrower, and this Amendment is
signed freely, and without duress, by Borrower.

 

Borrower represents and warrants that it is the sole
and lawful owner of all right, title and interest in and to every claim and
every other matter which it releases herein, and that it has not heretofore
assigned or transferred, or purported to assign or transfer, to any person,
firm or entity any claims or other matters herein released. Borrower shall
indemnify Bank, defend and hold it harmless from and against all claims based
upon or arising in connection with prior assignments or purported assignments
or transfers of any claims or matters released herein.

 

Counterparts. This Amendment
may be executed in any number of counterparts and all of such counterparts
taken together shall be deemed to constitute one and the same instrument.

 

Effectiveness. This
Amendment shall be deemed effective upon (a) the due execution and delivery to
Bank of this Amendment by each party hereto, (b) Borrower’s payment of an
amendment fee in an amount equal to $1,000.

 

Governing Law. This Amendment
and the rights and obligations of the parties hereto shall be governed by and construed
in accordance with the laws of the State of California.

 

 

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

 

 

	
   SILICON VALLEY BANK:

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  Versant
  Corporation

  
	
  By

  	
  By

  
	
   

  	
   

  
	
  /s/
  Heather E. Hamilton

  	
  /s/
  Jochen Witte

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Relationship
  Manager

  	
  Chief
  Executive OfficerExhibit 10.2

 

CREDIT AGREEMENT

 

BETWEEN

 

GOLDEN GRAIN ENERGY, LLC

 

AND

 

HOME FEDERAL SAVINGS BANK

 

January 30, 2006

 

 

CREDIT AGREEMENT

 

Dated
as of January 30, 2006

 

Golden Grain Energy, LLC, an
Iowa limited liability company (“Borrower”) and Home Federal Savings Bank (“Bank”),
agree as follows (the “Agreement”):

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.  Definitions. As used in this
Agreement the following terms shall have the following meanings (and such
meanings shall be equally applicable to singular and plural forms of the terms
defined):

 

(a)                                  “Affiliate” means (1) a
Person which owns or has the power to vote, directly or indirectly, 5% or more
of the equity units of Borrower, or (2) a Person in which Borrower owns or
has the power to vote, directly or indirectly, 5% or more of the equity units
of such Person.

 

(b)                                 “Business Day” means
any day other than a Saturday, Sunday or other day in which applicable law
authorizes or permits Bank to be closed.

 

(c)                                  “Change in Control”
means the occurrence of one or more of the following events: (1) any sale,
lease, exchange or other transfer (in a single transaction or a series of
related transactions) of all or substantially all of the assets of Borrower to
any Person or “group” (within the meaning of the Securities Exchange Act of
1934 and the rules of the Securities and Exchange Commission thereunder in
effect on the date hereof), (2) occupation of a majority of the seats
(other than vacant seats) on the board of directors or board of managers, as
the case may be, of Borrower by Persons who were neither (A) nominated
by the immediately previous board of directors or managers, as applicable, or (B) appointed
by managers or directors so nominated, or (3) any sale, lease, exchange or
other transfer (in a single transaction or a series of related
transactions) of a majority of any of Borrower’s voting stock or membership
units, as the case may be.

 

(d)                                 “Collateral” means all of the Borrower’s real property and personal
property wherever located.

 

(e)                                  “Debt” means (1) indebtedness for borrowed money or evidenced by
bonds, notes, debentures or similar instruments or for the deferred purchase
price of property or services, (2) obligations as lessee under leases, (3) obligations
in respect of deferred purchase price of property or services, (4) obligations
in respect of conditional sale or other title retention arrangements, (5) obligations,
contingent or otherwise, in respect of letters of credit, acceptances, or
similar arrangements, (6) obligations of any third party which are secured
by property of such Person, (7) obligations to redeem, purchase, retire or
otherwise acquire for value any capital interests of such Person, (8) off-balance-sheet
liabilities of such Person, (9) trade payables which are overdue by more
than 120 days except to the extent disputed in good faith pursuant to
appropriate proceedings and for which adequate reserves have been made, and (10) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of,

 

 

indebtedness
or obligations of others of the kinds referred to in clauses (1) through (9) above
except endorsements for collection, deposit or negotiation of instruments in
the ordinary course of business.

 

(f)                                    “Default” means any
condition or event that, with the giving of notice or lapse of time, or both,
would constitute an Event of Default.

 

(g)                                 “EBITDA” for any
period means an amount equal to (1) net income for such period plus (2) to the extent deducted in
determining net income for such period, the sum of (A) interest expense, (B) income
tax expense, (C) depreciation and amortization and (D) all other
non-cash charges, in each case for such period. EBITDA will be determined on a
consolidated basis in accordance with GAAP. For purposes of computing EBITDA,
net income does not include extraordinary gains or any gains attributable to
the write-up of assets.

 

(h)                                 “Environmental Laws”
means all state, federal and local statutes, regulations, and ordinances
related to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq., the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499,
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., and other applicable state and federal laws, rules, or regulations
adopted pursuant to any of the foregoing.

 

(i)                                     “Event of Default”
means one of the events specified in Section 8.01.

 

(j)                                     “GAAP” means
generally accepted accounting principals in the United States of America applied
on a consistent basis.

 

(k)                                  “Hazardous Substances”
means materials that, because of their quantity, concentration or physical,
chemical or infectious characteristics, may cause or pose a present or
potential hazard to human health or the environment when improperly used,
treated, stored, disposed of, generated, manufactured, transported or otherwise
handled. The words “Hazardous Substances” are used in their very broadest sense
and include without limitation any and all hazardous or toxic substances,
materials or waste as defined by or listed under the Environmental Laws. The
term “Hazardous Substances” also includes, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos.

 

(l)                                     “Lien” means any
mortgage, deed of trust, pledge, security interest, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise), or preference,
priority, or other security agreement, or preferential arrangement, charge, or
encumbrance of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing
of any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction to evidence any of the foregoing.

 

(m)                               “Loan” means the term loan as defined in Section 2.01.

 

(n)                                 “Loan Documents” means this Agreement, the Note, the Mortgage, the
Security Agreement, the Pledge Agreement, the UCC financing statements filed in
connection with the Security Agreement and Pledge Agreement, and all other
documents to be executed and delivered in connection with this Agreement.

 

2

 

(o)                                 “Maturity Date” means
the earlier of February 1, 2007, and the date that amounts owing hereunder
are declared or automatically become due and payable pursuant to Section 8.01.

 

(p)                                 “Mortgage” means the
Mortgage and Security Agreement and Fixture Financing Statement and Assignment
of Leases and Rents of Borrower in favor of Bank, dated the date of this
Agreement, in form and substance acceptable to Bank, and delivered
pursuant to Section 3.01(c).

 

(q)                                 “Obligations” means
all amounts owed by Borrower to Bank pursuant to or in connection with this
Agreement or any other Loan Document, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to Bank incurred
pursuant to this Agreement or any other Loan Document), whether direct or
indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising hereunder or thereunder, together with all renewals, extensions,
modifications or refinancings thereof.

 

(r)                                    “Pledge Agreement”
means the Pledge Agreement between Borrower and Bank, dated the date of this
Agreement, and relating to the redemption of certain membership units of
Borrower.

 

(s)                                  “Person” means an
individual, corporation, partnership, joint venture, trust or unincorporated
organization or government or other agency or political subdivision thereof.

 

(t)                                    “Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to
be) an “employer” as defined in Section 3(5) of ERISA.

 

(u)                                 “Security Agreement”
means the Security Agreement between Borrower and Bank dated as of the date of
this Agreement, in form and substance acceptable to Bank, and whereby
Borrower pledges all of its personal property to Bank as security for
Obligations hereunder.

 

(v)                                 “Senior Credit
Agreement” means the Credit Agreement between Borrower and Bank dated January 16,
2004, as amended.

 

(w)                               “Subsidiary” means
with respect to any Person (the “parent”), any corporation, partnership, joint
venture, limited liability company, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation,
partnership, joint venture, limited liability company, association or other
entity (1) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power, or
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (2) that is,
as of such date, otherwise controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent. Unless otherwise indicated, all

 

3

 

references to “Subsidiary”
hereunder shall mean a Subsidiary of Borrower (including subsidiaries formed after
the date of this Agreement).

 

(x)                                   “UCC” means the Uniform Commercial
Code as in effect from time to time in the State of Minnesota.

 

SECTION 1.02.  Accounting and Other Terms. All accounting
terms not specifically defined in this Agreement shall be construed in
accordance with GAAP. Other terms defined herein shall have the meanings
ascribed to them herein.

 

ARTICLE II

 

AMOUNT AND TERMS OF THE LOAN

 

SECTION 2.01.  Loan. Bank agrees on the
terms and conditions of this Agreement, to make a single term loan to Borrower
on the date of this Agreement in the amount of $3,975,000 (the “Loan”). In
addition to any other authority to make loans, including protective advances,
Bank may, in its sole discretion, make additional loans to Borrower, make
additional credit facilities available to Borrower, or renew, extend, or
increase any loan or credit facility. Unless otherwise deemed appropriate by
Bank, no amendment to any mortgage or similar instrument will be required to
the extent the aggregate principal amount outstanding hereunder (including any
amount outstanding under any future loan or credit facility) does not exceed
$3,975,000.

 

SECTION 2.02.  Interest. Borrower will pay
interest to Bank on the outstanding and unpaid principal amount of the Loan at
a fixed rate equal to 7.95% per annum. Interest on Loan will be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Any
amount owed under this Agreement that is not paid when due (at maturity, by
acceleration, or otherwise) will bear interest thereafter until paid at a rate
which shall be 200 basis points (2.0%) above the rate which would otherwise be
applicable.

 

SECTION 2.03.  Note Payments. The Loan will be
further evidenced by and repaid with interest in accordance with Borrower’s
note in substantially the form of Exhibit 2.03 duly completed,
in the principal amount of $3,975,000, dated the date of this Agreement and
maturing on the Maturity Date (the “Note”). The Note will be repaid in 12 level
monthly installments of principal and interest based on a 12 month amortization
period beginning on February 1, 2006, with subsequent installments due on
the first day of each month thereafter. In addition, all unpaid principal and
interest on the Note is due and payable on the Maturity Date.

 

SECTION 2.04.  Method of Payment. Borrower will make
each payment under this Agreement and under the Note not later than 2:00 p.m.
(Minnesota time) on the date when due in lawful money of the United States to
Bank at Bank’s address as set forth in the Note in immediately available funds.
Borrower hereby authorizes Bank, if and to the extent payment is not made when
due under this Agreement or under the Note, to charge from time to time against
any account of Borrower with Bank any amount so due. Whenever any payment to be
made under this Agreement or under the Note is stated to be due on a day that
is not a Business Day, such payment will be made on the next succeeding
Business Day, and such extension of time will in such case be included in the
computation of the payment of interest.

 

SECTION 2.05.  Use of Proceeds. Borrower will not,
directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U,

 

4

 

T or X of the Board of Governors of the Federal
Reserve System or to extend credit to any Person for the purpose of purchasing
or carrying any such margin stock.

 

SECTION 2.06.  Prepayment. Borrower may prepay the outstanding principal amount then owed on
the Loan without penalty. If Borrower issues any membership unit (including the
reissuance of any redeemed membership unit), any other equity interests, or any
debt security, Borrower shall immediately prepay the Obligations to the extent
of the proceeds of such issuance, net of underwriting discounts and reasonable
costs paid to non-Affiliates in connection therewith.

 

SECTION 2.07.  Origination Fee. Borrower will pay
to Bank on or before the date of this Agreement an origination fee in the
amount of $10,000.

 

SECTION 2.08.  Subordination.

 

(a)                                  Notwithstanding anything to the contrary in any of the Loan Documents,
payment of any and all of the Obligations hereunder and thereunder is
subordinate and subject in right and time of payment to the prior payment in
full in cash of all amounts owed to Bank pursuant to the terms of the Senior
Credit Agreement and documents related thereto.

 

(b)                                 If an Event of Default (as defined in the Senior Credit Agreement)
occurs under the Senior Credit Agreement, Bank will not demand, receive or
accept any payments from Borrower in respect of the Obligations until all of
the indebtedness owed by Borrower to Bank under the Senior Credit Agreement is
paid in full or the Event of Default has been cured or waived by Bank. Nothing
in this Section 2.08 is intended to or shall impair, as between
Borrower and Bank, the obligations of Borrower, which are absolute and
unconditional, to pay to Bank all obligations under, relating to or in respect
of the Obligations as and when the same become due and payable in accordance
with their terms.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

SECTION 3.01.  Conditions Precedent to the
Loan. The obligation of Bank to make the Loan to Borrower is subject to the
condition precedent that Bank receives on or before the day of such Loan each
of the following in form and substance satisfactory to Bank and its
counsel:

 

(a)                                  Note. The Note duly
executed by Borrower.

 

(b)                                 Title
Commitment. A title insurance policy issued in favor of Bank, which commits to
insure that no lien or encumbrance is prior to Bank’s security interest in all
of Borrower’s real property other than the security interest granted to Bank
under the Senior Credit Agreement.

 

(c)                                  Mortgage. The Mortgage, duly
executed, acknowledged, and delivered by Borrower.

 

(d)                                 Security
Agreement. The Security Agreement duly executed by Borrower, together with:  (1) acknowledgment copies of the
financing statements (UCC-1) duly filed under the Uniform Commercial Code
of all jurisdictions necessary or, in the opinion of Bank, desirable to perfect
the security interest created by the Security Agreement; and (2) certified
copies of requests for information (UCC-11) identifying all of the financing
statements on file with respect to Borrower in all jurisdictions referred to
under (1), including the financing statement filed by Bank against Borrower,
indicating that no party claims an interest in any of the Collateral.

 

5

 

(e)                                  Pledge
Agreement. The Pledge Agreement duly executed by the parties thereto, and the
certificates representing the membership units or shares pledged therein duly
endorsed in blank or with powers executed in blank authorizing the transfer of
such membership interests or shares.

 

(f)                                    Borrowing
Resolutions. Borrower’s limited liability company resolution to borrow and grant
security interests in the form prescribed by Bank and duly executed and
delivered by such officers of Borrower as Bank requests.

 

(g)                                 Intentionally
Omitted.

 

(h)                                 Release
of Existing Liens. Evidence acceptable to Bank of the payoff of existing Debt and release
or termination of all existing Liens, except Debt permitted pursuant to Section 6.02
and Liens permitted pursuant to Section 6.01.

 

(i)                                     Payment
of Fees, Costs and Expenses. Payment of all of Bank’s fees and out-of-pocket
costs and expenses related to documentation and negotiation of this Agreement
and the other Loan Documents, including fees and costs of Bank’s counsel.

 

(j)                                     Insurance
Certificates. Certificates of insurance indicating appropriate liability and
casualty insurance coverage (as set forth in Section 3.1 of the Mortgage)
and listing Bank as loss payee, mortgagee, and additional insured.

 

(k)                                  Other
Documents. Such other financial statements, projections, reports, certificates,
appraisals, and other documents as Bank requests.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and
warrants to Bank that:

 

SECTION 4.01.  Organization, Good Standing,
and Due Qualification. Borrower is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization; has the
power and authority to own its assets and to transact the business in which it
is now engaged or proposed to be engaged in; and is duly qualified as a foreign
entity and in good standing under the laws of each other jurisdiction in which
such qualification is required.

 

SECTION 4.02.  Power and Authority. The execution,
delivery, and performance by Borrower of the Loan Documents have been duly authorized
by all necessary action and do not and will not (a) require any consent or
approval of Borrower’s owners; (b) contravene Borrower’s organizational or
operational documents or agreements; (c) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination, or
award presently in effect having applicability to Borrower; (d) result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which Borrower is a
party or by which it or its properties may be bound or affected; (e) result
in, or require, the creation or imposition of any Lien, upon or with respect to
any of the properties now owned or hereafter acquired by Borrower; and (f) cause
Borrower to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award or any such indenture,
agreement, lease, or instrument.

 

6

 

SECTION 4.03.  Legally Enforceable Agreement. This Agreement and
each of the other Loan Documents are legal, valid, and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws affecting creditors’
rights generally.

 

SECTION 4.04.  Labor Disputes and Acts of God. Neither the
business nor the properties of Borrower are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance), materially and adversely affecting such business or
properties or the operation of Borrower.

 

SECTION 4.05.  Other Agreements. Borrower is not a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could have a material adverse effect on the ability of Borrower to carry
out its obligations under the Loan Documents to which it is a party. Borrower
is not in default in any respect in the performance, observance, or fulfillment
of any of the obligations, covenants, or conditions contained in any agreement
or instrument material to its business to which it is a party.

 

SECTION 4.06.  Litigation. There is no pending
or threatened action or proceeding against or affecting Borrower before any
court, governmental agency, or arbitrator, which may, in any one case or in the
aggregate, materially adversely affect the financial condition, operations,
properties, or business of Borrower or the ability of Borrower to perform its
obligations under the Loan Documents to which it is a party.

 

SECTION 4.07.  No Defaults on Outstanding
Judgments or Orders. Borrower has satisfied all judgments against it,
and, Borrower is not in default with respect to any judgment, writ, injunction,
decree, rule, or regulation of any court, arbitrator, or federal, state,
municipal, or other governmental authority, commission, board, bureau, agency,
or instrumentality, domestic or foreign.

 

SECTION 4.08.  Ownership and Liens. Borrower has title
to, or valid leasehold interests in, all of its properties and assets, real and
personal, and none of the properties and assets owned by Borrower and none of
their leasehold interests is subject to any Lien, except such as may be
permitted pursuant to Section 6.01 of the Agreement.

 

SECTION 4.09.  Subsidiaries and Ownership of
Stock. Borrower has no Subsidiaries.

 

SECTION 4.10.  ERISA. Borrower is in
compliance with all applicable provisions of ERISA. Neither a Reportable Event
nor a Prohibited Transaction has occurred and is continuing with respect to any
Plan; no notice of intent to terminate a Plan has been filed nor has any Plan
been terminated; no circumstances exist which constitute grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administrate, a Plan, nor has the PBGC instituted any such
proceedings; Neither Borrower nor any ERISA Affiliate of Borrower has
completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; Borrower and each ERISA Affiliate has met its minimum
funding requirements under ERISA with respect to all of its Plans and the
present value of all vested benefits under each Plan exceeds the fair market
value of all Plan assets allocable to such benefits as determined on the most
recent valuation date of the Plan and in accordance with the provisions of
ERISA and the regulations thereunder for calculating the potential liability of
Borrower or any ERISA Affiliate to the PBGC or the Plan under Title IV of
ERISA; and neither Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA.

 

7

 

SECTION 4.11.  Operation of Business. Borrower possesses
all licenses, permits, franchises, patents, copyrights, trademarks, and trade
names, or right thereto, to conduct its business substantially as now conducted
and as presently proposed to be conducted, and Borrower is not in violation of
any valid rights of others with respect to any of the foregoing.

 

SECTION 4.12.  Taxes. Borrower has filed
all tax returns (federal, state, and local) required to be filed, and has paid
all taxes, assessments, and governmental charges and levies thereon to be due,
including interest and penalties.

 

SECTION 4.13.  Debt. Other than the
Senior Credit Agreement and related documents, Schedule 4.13 is a
complete and correct list of all credit agreements, indentures, purchase
agreements, guaranties, capital leases, and other investments, agreements, and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing) in respect of which Borrower is in any
manner directly or contingently obligated; and the maximum principal or face
amounts of the credit in question, which are outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature given or agreed
to be given as security therefor are correctly described or indicated in such
Schedule.

 

SECTION 4.14.  Assumed Business Names. Borrower does not use
and has not used an assumed name or “doing business as” name.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

So long any obligation is
owed by Borrower to Bank, Borrower will:

 

SECTION 5.01.  Maintenance of Existence. Preserve and
maintain its organizational existence and good standing in the jurisdiction of
its organization and qualify and remain qualified, as a foreign entity in each
jurisdiction in which such qualification is required.

 

SECTION 5.02.  Maintenance of Records. Keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP, reflecting all of its financial transactions for the related period.

 

SECTION 5.03.  Maintenance of Properties. Maintain, keep, and
preserve all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its business in good working order and condition,
ordinary wear and tear excepted.

 

SECTION 5.04.  Conduct of Business. Continue to engage
in an efficient and economical manner in a business of the same general type as
conducted by it on the date of this Agreement.

 

SECTION 5.05.  Maintenance of Insurance. Maintain insurance
with financially sound and reputable insurance companies or associations in
such amounts and covering such risks as are usually carried by companies
engaged in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage thereof. Each
insurance policy shall include an endorsement providing that coverage in favor
of Bank will not be impaired in any way by any act, omission, or default of
Borrower or any other Person, and shall include a stipulation that such policy may not
be cancelled or diminished without at least 30 days’ prior written notice to
Bank.

 

8

 

SECTION 5.06.  Compliance With Laws. Comply in all
respects with all applicable laws, rules, regulations, and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property.

 

SECTION 5.07.  Right of Inspection. At any reasonable
time and from time to time, permit Bank or any agent or representative thereof
to examine and make copies of and abstracts from its records and books of
account, and visit its properties, and to discuss its affairs, finances, and
accounts with any of its respective officers and directors and the its
independent accountants.

 

SECTION 5.08.  Reporting Requirements. Furnish to Bank:

 

(a)                                  Monthly
financial statements. As soon as available and in any event within 30 days
after the end of each month of each fiscal year, Borrower’s balance sheet as of
the end of such monthly period, Borrower’s statement of income and retained
earnings for the period commencing at the end of the previous fiscal year and
ending with the end of such monthly period, and Borrower’s statement of change
in financial position for the portion of the fiscal year ended with the last
day of such monthly period, all in reasonable detail and stating in comparative
form the figures for the corresponding date and period in the previous
fiscal year and all internally prepared in accordance with GAAP;

 

(b)                                 Annual
financial statements of Borrower. With respect to Borrower, as soon as
available and in any event within 120 days after the end of each fiscal year, a
balance sheet as of the end of such fiscal year, a statement of income and
retained earnings for such fiscal year, and a statement of change in financial position
for such fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP and audited by independent
accountants acceptable to Bank;

 

(c)                                  Management
letters. Promptly upon receipt thereof, copies of any reports submitted to
Borrower by independent certified public accountants in connection with
examination of its financial statements made by such accountants;

 

(d)                                 Compliance
Certificate. Within 30 days after the end of each month of each fiscal year, a
certificate of the chief financial officer of Borrower: (1) certifying
that to the best of his knowledge no Default or Event of Default has occurred,
or if a Default or Event of Default has occurred, a statement as to the nature
thereof and the action which is proposed to be taken with respect thereto; (2) certifying
that to the best of his knowledge that the representations and warranties set
forth in Article IV hereof and in the other Loan Documents are true
and correct as of the date of the certificate; and (3) setting forth any
other information required under Section 5.01(c) of the Senior Credit
Agreement;

 

(e)                                  Accountant’s
report.
Simultaneously with the delivery of the annual financial statements referred to
in Section 5.08(b), a certificate of the independent public
accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no knowledge
of any condition or event which constitutes a Default or Event of Default
(which certificate may be limited to the extent required by accounting rules or
guidelines), or if such accountants have obtained knowledge of any such
condition or event, specify in such certificate each such condition or event of
which they have knowledge and the nature and status thereof;

 

(f)                                    Notice
of litigation. Promptly upon the commencement thereof, notice of all actions, suits,
and proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting Borrower,
which, if determined adversely, could have a material adverse effect on the
financial condition, properties, or operations of Borrower;

 

9

 

(g)                                 Notice
of Defaults and Events of Default. As soon as possible and in any event within
three days after the occurrence of each Default or Event of Default, a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken with respect thereto;

 

(h)                                 ERISA
reports. Promptly after the filing or receiving thereof, copies of all reports,
including annual reports, and notices which Borrower files with or receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within three days
after Borrower knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC
or Borrower has instituted or will institute proceedings under Title IV of
ERISA to terminate any Plan, Borrower will deliver to Bank a certificate of its
chief financial officer setting forth details as to such Reportable Event or Prohibited
Transaction or Plan termination and the action Borrower proposes to take with
respect thereto;

 

(i)                                     Reports
to other creditors. Promptly after the furnishing thereof, copies of any statement or
report furnished to any other party pursuant to the terms of any indenture,
loan, or credit or similar agreement and not otherwise required to be furnished
to Bank pursuant to any other clause of this Section 5.08;

 

(j)                                     Proxy
statements, etc. Promptly after the sending or filing thereof, copies of all proxy statements,
financial statements, and reports which Borrower sends to its members, and
copies of all regular, periodic, and special reports, and all registration
statements which Borrower files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any
national securities exchange; and

 

(k)                                  General
information. Such other information respecting the condition or operations,
financial or otherwise, of Borrower as Bank may from time to time request.

 

SECTION 5.09.  Environmental Compliance and
Reports. Borrower will comply in all respects with all Environmental Laws; not
cause or permit to exist, as a result of an intentional or unintentional action
or omission on Borrower’s part or on the part of any third party, on
property owned and/or occupied by Borrower, any environmental activity where
damage may result to the environment, unless such environmental activity
is pursuant to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities. Borrower shall
furnish to Bank promptly and in any event with 30 days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower’s part in
connection with any environmental activity whether or not there is damage to
the environment and/or other natural resources.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

So long as any obligation is
owed by Borrower to Bank, Borrower will not:

 

SECTION 6.01.  Liens. Create, incur,
assume, or suffer to exist, any Lien upon or with respect to any of its
properties, now owned or hereafter acquired, except:

 

(a)                                  Liens in favor of
Bank;

 

10

 

(b)                                 Liens for taxes or
assessments or other government charges or levies if not yet due and payable
or, if due and payable, if they are being contested in good faith by
appropriate proceedings and for which appropriate reserves are maintained;

 

(c)                                  Liens imposed by law,
such as mechanics,’ materialmen’s, landlords,’ warehousemen’s, and carriers’
Liens, and other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;

 

(d)                                 Liens under workers’
compensation, unemployment insurance, social security, or similar legislation;

 

(e)                                  Liens, deposits, or
pledges to secure the performance of bids, tenders, contracts (other than
contracts for the payment of money), leases permitted under the terms of this
Agreement, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in the
ordinary course of business;

 

(f)                                    Judgment and other
similar Liens arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;

 

(g)                                 Easements,
rights-of-way, restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use, and enjoyment
by Borrower of the property or assets encumbered thereby in the normal course
of its business or materially impair the value of the property subject thereto;
or

 

(h)                                 Other Liens allowed
under the Senior Credit Agreement.

 

SECTION 6.02.  Debt. Create, incur,
assume, or suffer to exist, or permit any Subsidiary to create, incur, assume,
or suffer to exist, any Debt, except:

 

(a)                                  Debt under this
Agreement.

 

(b)                                 Debt of Borrower owed
to Bank pursuant to the terms of the Senior Credit Agreement.

 

(c)                                  Debt allowed under
the Senior Credit Agreement.

 

SECTION 6.03.  Mergers, Etc. Merge or consolidate
with, or sell, assign, lease, or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to any Person, or acquire
all or substantially all of the assets or the business of any Person.

 

SECTION 6.04.  Leases. Create, incur,
assume, or suffer to exist, any obligation as lessee for the rental or hire of
any real or personal property, except:  (1) capital
leases permitted by Section 6.01; (2) leases existing on the
date of this Agreement and any extensions or renewals thereof; and (3) leases
which do not in the aggregate require Borrower to make payments (including
taxes, insurance, maintenance, and similar expense) which, along with purchase
money Liens pursuant to Section 6.01(h) and capital
expenditures, in excess of $100,000 annually in the aggregate.

 

11

 

SECTION 6.05.  Sale and Leaseback. Sell, transfer, or
otherwise dispose of, any real or personal property to any Person and
thereafter directly or indirectly lease back the same or similar property.

 

SECTION 6.06.  Dividends. Declare or pay any
dividend or distribution in respect of capital stock or membership units, as
the case may be, which would exceed the amount allowed under the Senior
Credit Agreement; provided, no dividend or distribution may be paid
if after payment thereof a Default or Event of Default would result or
continue.

 

SECTION 6.07.  Sale of Assets. Sell, lease,
assign, transfer, or otherwise dispose of, any of its now owned or hereafter
acquired assets (including, without limitation, shares of stock, membership
units and indebtedness of Subsidiaries or other entities, receivables, and
leasehold interests), except: (a) for inventory disposed of in the
ordinary course of business; (b) the sale or other disposition of assets
no longer used or useful in the conduct of its business; and (c) as
otherwise allowed under the Senior Credit Agreement.

 

SECTION 6.08.  Investments. Except as allowed
under the Senior Credit Agreement, make any loan or advance to any Person, or
purchase or otherwise acquire any capital stock, assets, obligations, or other
securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person.

 

SECTION 6.09.  Guaranties, Etc. Except as allowed
under the Senior Credit Agreement, assume, guarantee, endorse, or otherwise be
or become directly or contingently responsible or liable (including, but not
limited to, an agreement to purchase any obligation, stock, assets, goods, or
services, or to supply or advance any funds, assets, goods, or services, or to
maintain or cause such Person to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any Person against loss) for
obligations of any Person, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.

 

SECTION 6.10.  Transactions With Affiliates. Except as allowed
under the Senior Credit Agreement, enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of Borrower’s business and upon
fair and reasonable terms no less favorable to Borrower than would be available
in a comparable arm’s-length transaction with a Person not an Affiliate.

 

SECTION 6.11.  Stock of Subsidiary, Etc. Except as allowed
under the Senior Credit Agreement, sell or otherwise dispose of any capital
interest (whether stock, membership interest, or otherwise) of any Subsidiary,
except in connection with a transaction permitted under Section 6.03,
or permit any Subsidiary to issue any additional shares of its capital stock,
or create or acquire any Subsidiary.

 

SECTION 6.12.  Material Contracts. Except as allowed
under the Senior Credit Agreement, permit any marketing contract, utility
contract, supply contract, input contract, risk management contract or other
agreement, contract or arrangement material to the efficient operation of
Borrower’s business to lapse, terminate or be in default.

 

SECTION 6.13.  Deposits. Except as allowed
under the Senior Credit Agreement, maintain any deposit securities or
investment account with any Person other than Bank.

 

12

 

SECTION 6.14.  Hazardous Substances. Except as allowed
under the Senior Credit Agreement, neither Borrower nor any other Person shall
use, generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; any such activity
shall be conducted in compliance with all applicable federal, state and local
laws, regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorize Bank and its agents to enter upon the
Collateral to make such inspections and tests as Bank may deem appropriate
to determine compliance of the Collateral with this Section 6.14. Any
inspections or tests made by Bank will be at Borrower’ expense and for Bank’s
purposes only and may not be construed to create any responsibility or
liability on the part of Bank to Borrower or to any other Person.

 

ARTICLE VII

 

FINANCIAL COVENANTS

 

So long as any obligation is
owed to Bank:

 

SECTION 7.01  Fixed Charge Coverage Ratio. Borrower will
maintain a Fixed Charge Coverage Ratio of not less than 1.15:1.0 at all times.

 

SECTION 7.02  Leverage Ratio.  Borrower will maintain a ratio of (a) net
worth to (b) total assets of not less than 0.4:1.0 at all times.

 

SECTION 7.03  Capital Expenditures. Borrower will not
make Capital Expenditures in excess of $500,000 during any fiscal year period
without Lender’s prior written approval.

 

SECTION 7.04  Current Ratio and Working
Capital. Borrower will maintain a ratio of current assets to current
liabilities of not less than 1.15:1.0 at all times, and working capital of at
least $1,500,000 at all times.

 

SECTION 7.05  Maximum Debt to Net Worth Ratio. Borrower will
maintain a ratio of debt to Net Worth of not more than 1.50:1.00 at all times.

 

SECTION 7.06  Minimum Debt Service Ratio. Borrower will
maintain a ratio of EBITDA to interest expense and scheduled principal payments
in respect of Debt of not less than 1.15:1.00 at all times.

 

Compliance with the financial covenants set forth in
this Article VII shall be determined based on financial statements dated
as of the close of business on the last day of the related period.

 

ARTICLE VIII

 

EVENTS OF DEFAULT

 

SECTION 8.01.  Events of Default. Occurrence of any
of the following events constitutes an “Event of Default” hereunder:

 

(a)                                  Any amount of
principal of, or interest on, the Note, or any other amount owing hereunder, is
not paid within 10 days of when due and payable; or

 

13

 

(b)                                 Any representation or
warranty made or deemed made in this Agreement or any other Loan Document, or
which is contained in any certificate, document, opinion, or financial or other
statement furnished to Bank, is false or misleading on or as of the date made;
or

 

(c)                                  Borrower fails to perform or
observe any other term or covenant of this Agreement or any other Loan Document
and such failure continues for a period of 30 days; or

 

(d)                                 Borrower or
Subsidiary (1) fails to pay any indebtedness for borrowed money (other
than in respect of the Note issued in connection with this Agreement) of
Borrower or such Subsidiary, as the case may be, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), or (2) fails to perform or
observe any term, covenant, or condition on its part to be performed or
observed under any agreement or instrument relating to any such indebtedness,
when required to be performed or observed, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration after the giving of
notice or passage of time, or both, of the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the
holder of such indebtedness; or any such indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or

 

(e)                                  Borrower or
Subsidiary (1) generally does not, or is unable to, or admits in writing
its inability to, pay its debts as such debts become due; or (2) makes an
assignment for the benefit of creditors, petitions or applies to any tribunal
for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (3) commences any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (4) has any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains un-dismissed for a period
of 60 days or more; or (5) by any act or omission indicates its consent
to, approval of or acquiescence in any such petition, application, or
proceeding, or order for relief, or the appointment of a custodian, receiver,
or trustee for all or any substantial part of its properties; or (6) suffers
any such custodianship, receivership, or trusteeship to continue un-discharged
for a period of 30 days or more; or

 

(f)                                    One or more
judgments, decrees, or orders for the payment of money in excess of $250,000 in
the aggregate shall be rendered against Borrower or Subsidiary, and such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of 30 consecutive days without being vacated, discharged, satisfied, or
stayed or bonded pending appeal; or

 

(g)                                 The Security
Agreement or the Mortgage at any time after execution and delivery and for any
reason ceases: (1) to create a valid and perfected first or second priority (except as otherwise permitted)
security interest in and to the property purported to be subject to such
Security Agreement or Mortgage or (2) to be in full force and effect or be
declared null and void, or the validity or enforceability thereof shall be
contested by Borrower, or Borrower shall deny it has any further liability or
obligation under the Security Agreement or Mortgage, or Borrower fails to perform any
of its obligations under the Security Agreement or Mortgage; or

 

(h)                                 Any of the following
events occur or exist with respect to Borrower or any ERISA Affiliate:  (1) any Prohibited Transaction involving
any Plan; (2) any Reportable Event with respect to any Plan; (3) the
filing under Section 4041 of ERISA of a notice of intent to terminate any
Plan or the termination of any Plan; (4) any event or circumstance that
might constitute grounds entitling the PBGC to institute proceedings under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;

 

14

 

(5) complete or partial withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization, insolvency,
or termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, could in the
opinion of Bank subject Borrower to any tax, penalty, or other liability to a
plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or may exceed $100,000; or

 

(i)                                     a Change in Control
occurs or exists with respect to Borrower; or

 

(j)            any event of default occurs under
the Senior Credit Agreement.

 

SECTION 8.02.  Remedies. Upon the occurrence
of an Event of Default, Bank may, by notice to Borrower, (A) declare its
obligation to make the Loan to be terminated, whereupon the same shall
forthwith terminate, (B) declare the Note, all interest thereon, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Note, all such 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 Borrower, (C) exercise
all remedies provided for in any other Loan Document or as otherwise provided
by law. Upon the occurrence of an Event of Default described in Section 8.01(e) above,
Bank’s obligation to make the Loan will automatically terminate, and the Note,
all interest thereon, and all other amounts payable under this Agreement will
be automatically due and payable, in each case without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly
waived by Borrower.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.  Amendments, Etc. No amendment,
modification, termination, or waiver of any provision of any Loan Document to which
Borrower is a party, shall in any event be effective unless the same shall be
in writing and signed by Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

 

SECTION 9.02.  Notices, Etc. All notices and other
communications provided for under this Agreement and under the other Loan
Documents to which Borrower is a party shall be in writing and mailed or
telegraphed or delivered, if to the Borrower, at its address at 1822 43rd
Street SW, Mason City, Iowa 50401, Attention: Walter Wendland, and if to Bank,
at its address at 1016 Civic Center Drive N.W., P.O. Box 6947, Rochester,
Minnesota 55903, Attention: Eric N. Oftedahl, or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other party complying as to delivery with the terms of this Section 9.02.
All such notices and communications shall, when mailed or telegraphed, be
effective when deposited in the mails, addressed as aforesaid, except that
notices to Bank pursuant to the provisions of Article II shall not
be effective until received by Bank.

 

SECTION 9.03.  No Waiver; Remedies. No failure on the part of
Bank to exercise, and no delay in exercising, any right, power, or remedy under
any Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.

 

SECTION 9.04.  Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of Borrower and Bank and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights under any Loan Document without the prior written
consent of Bank.

 

15

 

SECTION 9.05.  Costs, Expenses, and Taxes. Borrower agree to
pay on demand all costs and expenses in connection with the preparation,
execution, delivery, filing, recording, and administration of any of the Loan
Documents, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for Bank, and local counsel who may be retained by
said counsel, with respect thereto and with respect to advising Bank as its
rights and responsibilities under any of the Loan Documents, and all costs and
expenses, if any in connection with the enforcement of any of the Loan Documents.
In addition, Borrower agree to pay any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing, and recording of
any of the Loan Documents and the other documents to be delivered under any
such Loan Documents, and agree to save Bank harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.

 

SECTION 9.06.  Right of Setoff. Upon the occurrence
and during the continuance of any Default or Event of Default, Bank is hereby
authorized at any time and from time to time, without notice to Borrower (any
such notice being expressly waived by Borrower), to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by Bank to or for the credit
or the account of Borrower against any and all of the obligations of Borrower
now or hereafter existing under this Agreement or the Note or any other Loan
Document and although such obligations may be un-matured. Bank agrees
promptly to notify Borrower after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of Bank under this Section 9.06
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which Bank may have.

 

SECTION 9.07.  Governing Law. This Agreement and
the Note are governed by, and construed in accordance with, the laws of the
State of Minnesota.

 

SECTION 9.08.  Severability of Provisions. Any provision of
any Loan Document which is prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.

 

SECTION 9.09.  Headings. Article and Section headings
in the Loan Documents are included for the convenience of reference only and do
not constitute a part of the applicable Loan Documents for any other
purpose.

 

[Signature Page Follows]

 

16

 

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

 

 

	
  BORROWER:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
  GOLDEN GRAIN ENERGY, LLC

  	
   

  	
  HOME FEDERAL SAVINGS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Walter Wendland

  	
   

  	
  By:

  	
   

  	
  /s/ Eric N. Oftedahl

  
	
  Name:

  	
  Walter Wendland

  	
   

  	
  Name:

  	
  Eric N. Oftedahl

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  Vice President

  
							

 

[SIGNATURE PAGE FOR CREDIT
AGREEMENT]

 

 

Exhibit 2.03

 

THIS
NOTE AND THE PAYMENT OF ALL SUMS OWED HEREUNDER ARE SUBORDINATE AND SUBJECT IN
RIGHT AND TIME OF PAYMENT TO THE PRIOR PAYMENT IN FILL OF ALL AMOUNTS OWED TO
HOME FEDERAL SAVINGS BANK PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT BETWEEN
GOLDEN GRAIN ENERGY, LLC AND HOME FEDERAL SAVINGS BANK DATED JANUARY 16,
2004, AS AMENDED. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE
OFFICES OF HOME FEDERAL SAVINGS BANK

 

NOTE

 

	
  $3,975,000

  	
   

  	
  January     ,
  2006

  
	
   

  	
   

  	
  Rochester,
  Minnesota

  

 

FOR VALUE RECEIVED, the
undersigned, Golden Grain Energy, LLC, an Iowa limited liability company (“Borrower”),
DOES HEREBY PROMISE to pay to the order of Home Federal Savings Bank, (“Bank”),
at its main banking office or any branch office thereof, the principal sum of
Three Million Nine Hundred Seventy Five Thousand Dollars ($3,975,000) in lawful
money of the United States and in immediately available funds, at a fixed
interest rate equal to 7.95% per annum, in twelve level monthly installments of
principal and interest based on a twelve month amortization period beginning on
March 1, 2006, with subsequent installments due on the first day of each
month thereafter. All unpaid principal and interest on this Note is due and
payable on February 1, 2007. Interest on this Note will be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Any amount
of principal hereof which is not paid when due, whether at stated maturity, by
acceleration, or otherwise, shall bear interest from the date when due until
said principal amount is paid in full, payable on demand, at a rate per annum
equal at all times to 200 basis points (2.0%) above the rate otherwise charged
hereunder.

 

This Note is the Note
referred to in, and is entitled to the benefits of, the Credit Agreement, dated
as of January     , 2006, between Borrower and Bank
(the “Credit Agreement”). The Credit Agreement, among other things, provides
for acceleration of the maturity of this Note upon the happening of certain
stated events and also for prepayments of principal hereof prior to the
maturity of this Note upon the terms and conditions specified in the Credit
Agreement. This Note is secured by the Collateral described in the Credit
Agreement and other Loan Documents (as defined in the Credit Agreement).

 

This Note is governed by the
laws of the State of Minnesota, provided that, as to the maximum rate of
interest which may be charged or collected, if the laws applicable to Bank
permit it to charge or collect a higher rate than the laws of the State of
Minnesota, then such law applicable to Bank will apply to Bank under this Note.

 

GOLDEN GRAIN ENERGY, LLC

 

	
  By

  	
   

  	
   

  
	
  Name & Title: Walter Wendland,
  President

  

 

1

 

Schedule 4.13

 

State of Iowa an
aggregate of $400,000

 

1

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