Document:

Exhibit 10.30

 

 

 

 

 

 

 

 

SOUTH DAKOTA GRAIN FUELS, L.P.

 

AGREEMENT OF LIMITED PARTNERSHIP

 

August 27, 1991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE
UNITS OF LIMITED PARTNERSHIP INTERESTS ISSUED BY THIS PARTNERSHIP HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND
MAY NOT BE RESOLD UNLESS SUBSEQUENTLY REGISTERED UNDER SUCH ACTS OR AN
EXEMPTION FROM SUCH  REGISTRATION IS
AVAILABLE AND SUCH RESALE DOES NOT ADVERSELY AFFECT ANY EXEMPTION THAT WAS
AVAILABLE TO THE PARTNERSHIP.  ADDITIONAL
RESTRICTIONS ON TRANSFERABILITY ARE CONTAINED IN ARTICLE X OF THIS
AGREEMENT.

 

 

TABLE OF CONTENTS

	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Interpretation

  	
   

  	
  5

  	
   

  
	
  ARTICLE II

  	
   

  	
  FORMATION
  OF THE PARTNERSHIP

  	
   

  	
  5

  	
   

  
	
  2.1

  	
   

  	
  Formation

  	
   

  	
  5

  	
   

  
	
  2.2

  	
   

  	
  Name
  and Place of Business

  	
   

  	
  5

  	
   

  
	
  2.3

  	
   

  	
  Filings
  and Registrations

  	
   

  	
  6

  	
   

  
	
  2.4

  	
   

  	
  Term

  	
   

  	
  6

  	
   

  
	
  2.5

  	
   

  	
  Expenses
  of Organization

  	
   

  	
  6

  	
   

  
	
  ARTICLE III

  	
   

  	
  PURPOSE

  	
   

  	
  6

  	
   

  
	
  3.1

  	
   

  	
  Business
  Purpose

  	
   

  	
  6

  	
   

  
	
  3.2

  	
   

  	
  Powers

  	
   

  	
  6

  	
   

  
	
  ARTICLE IV

  	
   

  	
  CAPITAL
  CONTRIBUTIONS

  	
   

  	
  6

  	
   

  
	
  4.1

  	
   

  	
  General
  Partner

  	
   

  	
  6

  	
   

  
	
  4.2

  	
   

  	
  Limited
  Partners

  	
   

  	
  7

  	
   

  
	
  4.3

  	
   

  	
  Capital
  Accounts

  	
   

  	
  7

  	
   

  
	
  4.4

  	
   

  	
  Capital
  Withdrawal Rights, Interest and Priority

  	
   

  	
  8

  	
   

  
	
  4.5

  	
   

  	
  Loans
  by Partners

  	
   

  	
  8

  	
   

  
	
  4.6

  	
   

  	
  Additional
  Capital Contributions

  	
   

  	
  8

  	
   

  
	
  ARTICLE V

  	
   

  	
  COMPENSATION
  OF GENERAL PARTNER

  	
   

  	
  12

  	
   

  
	
  5.1

  	
   

  	
  Compensation
  for Services

  	
   

  	
  12

  	
   

  
	
  5.2

  	
   

  	
  Reimbursement
  for Expenses

  	
   

  	
  12

  	
   

  
	
  5.3

  	
   

  	
  Common
  Employees

  	
   

  	
  12

  	
   

  
	
  ARTICLE VI

  	
   

  	
  ALLOCATIONS
  AND DISTRIBUTIONS

  	
   

  	
  13

  	
   

  
	
  6.1

  	
   

  	
  Non-Liquidation
  Cash Distributions

  	
   

  	
  13

  	
   

  
	
  6.2

  	
   

  	
  Liquidation
  Distributions

  	
   

  	
  13

  	
   

  
	
  6.3

  	
   

  	
  Profits,
  Losses and Distributive Shares of Tax Items

  	
   

  	
  13

  	
   

  
	
  6.4

  	
   

  	
  Allocation
  of Income, Loss and Credits

  	
   

  	
  13

  	
   

  
	
  6.5

  	
   

  	
  Special
  Rules Regarding Allocation of Tax Items

  	
   

  	
  14

  	
   

  
	
  6.6

  	
   

  	
  Withholding
  of Distributions

  	
   

  	
  17

  	
   

  
	
  6.7

  	
   

  	
  No
  Priority

  	
   

  	
  17

  	
   

  
	
  6.8

  	
   

  	
  Tax
  Withholding

  	
   

  	
  17

  	
   

  
	
  ARTICLE VII

  	
   

  	
  MANAGEMENT
  AND CONTROL

  	
   

  	
  18

  	
   

  
	
  7.1

  	
   

  	
  Management
  of Partnership Business

  	
   

  	
  18

  	
   

  
	
  7.2

  	
   

  	
  Rights,
  Powers and Authority of General Partner

  	
   

  	
  18

  	
   

  
	
  7.3

  	
   

  	
  Reserves

  	
   

  	
  20

  	
   

  
	
  7.4

  	
   

  	
  Limitations
  on General Partner’s Authority

  	
   

  	
  20

  	
   

  
	
  7.5

  	
   

  	
  Other
  Businesses of Partners

  	
   

  	
  21

  	
   

  
	
  7.6

  	
   

  	
  Limitation
  on Liability of the General Partner; Indemnification

  	
   

  	
  22

  	
   

  
	
  7.7

  	
   

  	
  Partnership
  Assets to be Used First

  	
   

  	
  22

  	
   

  
	
  7.8

  	
   

  	
  No
  Preferential Transactions with Partners

  	
   

  	
  22

  	
   

  

 

 i
 

 

 

	
  ARTICLE VIII

  	
   

  	
  ACCOUNTING AND BANK ACCOUNTS

  	
   

  	
  23

  	
   

  
	
  8.1

  	
   

  	
  Books
  and Records

  	
   

  	
  23

  	
   

  
	
  8.2

  	
   

  	
  Taxable
  and Fiscal Year

  	
   

  	
  23

  	
   

  
	
  8.3

  	
   

  	
  Financial
  Reports

  	
   

  	
  23

  	
   

  
	
  8.4

  	
   

  	
  Tax
  Returns and Elections; Tax Matters Partner

  	
   

  	
  24

  	
   

  
	
  8.5

  	
   

  	
  Section 754
  Election

  	
   

  	
  24

  	
   

  
	
  8.6

  	
   

  	
  Bank
  Accounts

  	
   

  	
  24

  	
   

  
	
  ARTICLE IX

  	
   

  	
  LIMITED
  PARTNERS

  	
   

  	
  24

  	
   

  
	
  9.1

  	
   

  	
  Rights
  of Limited Partners

  	
   

  	
  24

  	
   

  
	
  9.2

  	
   

  	
  Limitation
  on Limited Partners’ Liability

  	
   

  	
  25

  	
   

  
	
  9.3

  	
   

  	
  Power
  of Attorney.

  	
   

  	
  25

  	
   

  
	
  9.4

  	
   

  	
  Changes
  in Addresses

  	
   

  	
  25

  	
   

  
	
  9.5

  	
   

  	
  General
  Partner as Limited Partner

  	
   

  	
  25

  	
   

  
	
  ARTICLE X

  	
   

  	
  TRANSFERS
  OF PARTNERSHIP INTERESTS BY LIMITED PARTNERS

  	
   

  	
  25

  	
   

  
	
  10.1

  	
   

  	
  General
  Restrictions

  	
   

  	
  25

  	
   

  
	
  10.2

  	
   

  	
  Permitted
  Transfers

  	
   

  	
  26

  	
   

  
	
  10.3

  	
   

  	
  Substitute
  Limited Partners

  	
   

  	
  26

  	
   

  
	
  10.4

  	
   

  	
  Effect
  of Bankruptcy, Death, Incompetency or Termination of a Limited Partner

  	
   

  	
  27

  	
   

  
	
  10.5

  	
   

  	
  Effect
  of Admission as a Substitute Limited Partner

  	
   

  	
  27

  	
   

  
	
  10.6

  	
   

  	
  Additional
  Limited Partners.

  	
   

  	
  27

  	
   

  
	
  10.7

  	
   

  	
  Withdrawal
  of a Limited Partner

  	
   

  	
  28

  	
   

  
	
  10.8

  	
   

  	
  Right
  of First Refusal

  	
   

  	
  28

  	
   

  
	
  ARTICLE XI

  	
   

  	
  CHANGES
  IN GENERAL PARTNER AND TRANSFERS OF ITS PARTNERSHIP INTEREST

  	
   

  	
  29

  	
   

  
	
  11.1

  	
   

  	
  Transfers
  of Partnership Interests

  	
   

  	
  29

  	
   

  
	
  11.2

  	
   

  	
  Withdrawal
  of a General Partner

  	
   

  	
  30

  	
   

  
	
  11.3

  	
   

  	
  Removal
  of a General Partner.

  	
   

  	
  30

  	
   

  
	
  11.4

  	
   

  	
  Effect
  of Withdrawal or Removal of a General Partner

  	
   

  	
  30

  	
   

  
	
  11.5

  	
   

  	
  Additional
  or Successor General Partners

  	
   

  	
  33

  	
   

  
	
  11.6

  	
   

  	
  Changes
  in General Partners

  	
   

  	
  33

  	
   

  
	
  ARTICLE XII

  	
   

  	
  DISSOLUTION
  AND TERMINATION

  	
   

  	
  34

  	
   

  
	
  12.1

  	
   

  	
  Events
  Causing Dissolution

  	
   

  	
  34

  	
   

  
	
  12.2

  	
   

  	
  Effect
  of Dissolution

  	
   

  	
  34

  	
   

  
	
  12.3

  	
   

  	
  Application
  of Proceeds

  	
   

  	
  34

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  35

  	
   

  
	
  13.1

  	
   

  	
  Meetings

  	
   

  	
  35

  	
   

  
	
  13.2

  	
   

  	
  Title
  to Assets

  	
   

  	
  35

  	
   

  
	
  13.3

  	
   

  	
  Nature
  of Interest in the Partnership

  	
   

  	
  35

  	
   

  
	
  13.4

  	
   

  	
  Notices

  	
   

  	
  35

  	
   

  
	
  13.5

  	
   

  	
  Creditors

  	
   

  	
  35

  	
   

  
	
  13.6

  	
   

  	
  Entire
  Agreement

  	
   

  	
  35

  	
   

  
	
  13.7

  	
   

  	
  Amendments

  	
   

  	
  35

  	
   

  
	
  13.8

  	
   

  	
  Merger
  or Consolidation

  	
   

  	
  37

  	
   

  

 

 ii
 

 

 

	
  13.9

  	
   

  	
  Dispute
  Resolution

  	
   

  	
  37

  	
   

  
	
  13.10

  	
   

  	
  Injunctive
  Relief

  	
   

  	
  38

  	
   

  
	
  13.11

  	
   

  	
  Representations

  	
   

  	
  38

  	
   

  
	
  13.12

  	
   

  	
  Governing
  Law

  	
   

  	
  38

  	
   

  
	
  13.13

  	
   

  	
  Severability

  	
   

  	
  39

  	
   

  
	
  13.14

  	
   

  	
  Binding
  Agreement

  	
   

  	
  39

  	
   

  
	
  13.15

  	
   

  	
  Counterparts

  	
   

  	
  39

  	
   

  

 

 iii

AGREEMENT OF LIMITED PARTNERSHIP

OF

SOUTH DAKOTA GRAIN FUELS, L.P.

THIS
AGREEMENT OF LIMITED PARTNERSHIP, made and entered into as of the 27th day of
August, 1991, by and among DAKOTA FUELS, INC., a Delaware corporation whose
business address is c/o Farmland Industries, Inc., 3315 North Oak Trafficway,
Kansas City, Missouri 64116, as the General Partner, and each of the persons
set forth from time to time on Schedule A attached hereto, as the Limited
Partners;

WITNESSETH:

WHEREAS,
the parties hereto desire to associate themselves together in a limited
partnership under the laws of the State of Delaware for the purpose of
constructing and operating an ethanol production facility pursuant to the terms
of this Agreement;

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual
agreements, covenants and undertakings herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1           Definitions.  As used herein, the following terms shall
have the following meanings unless the context otherwise specifies:

“Accountant” means the
firm of independent public accountants engaged by the Partnership from time to
time.

“Act” means the Delaware
Revised Uniform Limited Partnership Act, as amended from time to time.

“Adjusted Capital Account
Deficit” means, with respect to any Partner, the deficit balance, if any, in
such Partner’s Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments: (i) increased for any amounts such
Partner is unconditionally obligated to restore and the amount of such Partner’s
share of Partnership Minimum Gain and Partner Minimum Gain after taking into
account any changes during such year; and (ii) reduced by the items described
in Treasury Regulation § 1.704-l(b)(2)(ii)(d)(4), (5) and (6).

“Agreement” means this
Agreement of Limited Partnership of South Dakota Grain Fuels, L.P., as amended
from time to time.

“Available Cash” means
the aggregate amount of cash on hand or in bank, money market, or similar
accounts of the Partnership as of the end of each fiscal 

 

quarter from any source
(other than Capital Contributions and Liquidation Proceeds and which the
General Partner determines is available for distribution to the Partners after
taking into account any amount required or in its judgment appropriate to
maintain a reasonable amount of Reserves.

“Bankruptcy,” with
respect to any Person, means the entry of an order for relief against such
Person under the Federal Bankruptcy Code.

“Business” means the
business to be conducted by the Partnership in accordance with this Agreement.

“Capital Account” means
the separate account established and maintained for each Partner by the
Partnership pursuant to Section 4.3.

“Capital Contribution,”
with respect to a Partner, means the total amount of cash and the agreed upon
net value of property contributed by such Partner (or his predecessor in
interest) to the capital of the Partnership for his Partnership Interest (which
aggregate net amount is set forth opposite the name of such Partner on Schedule
A attached hereto).

“Certificate” means the
certificate of limited partnership of the Partnership duly filed in accordance
with the Act, as amended from time to time.

“Closing” means the
execution and delivery of the Construction Agreement, the Ground Lease and the
Storage Tank Lease.

“Code” means the Internal
Revenue Code of 1986, as amended from time to time, or corresponding provisions
of future laws.

“Construction Agreement”
means a Consulting and Construction Supervision Agreement to be entered into
between the Partnership and a consultant providing for the consultant to
supervise the construction and equipping of the Plant.

“Credits” means all
investment tax credits or other tax credits allowed by the Code with respect to
activities of the Partnership or the Partnership Properties.

“Dakota Fuels, Inc.”
means Dakota Fuels, Inc., a Delaware corporation, and its permitted successors
and assigns.

“Distributions” means any
distributions by the Partnership to the Partners of Available Cash, Liquidation
Proceeds or other amounts.

“Fair Value” of an asset
means its fair market value.

“Farmland” means Farmland
Industries, Inc., a Kansas cooperative corporation.

 2
 

 

“Financing Documents”
means the agreements, instruments and documents to be executed by the
Partnership to evidence and secure a loan(s) to the Partnership from a
financial institution(s) in the amount of $4.0 million to $6.0 million to
enable the Partnership to construct and equip the Plant and to provide working
capital.

“General Partner” means
the Person(s) who is general partner(s) of the Partnership from time to time in
such Person’s capacity as a general partner of the Partnership.  The initial General Partner is Dakota Fuels,
Inc.

“Ground Lease” means a
certain Ground Lease to be entered into between the Partnership and SDWG
providing for SDWG to lease the Site to the Partnership for period of 99 years.

“Income” and “Loss” mean,
respectively, for each fiscal year or other period, an amount equal to the
Partnership’s taxable income or loss for such year or period, determined in
accordance with Code Section 703(a), except that for this purpose (i) all
items of income, gain, deduction or loss required to be separately stated by
Code Section 703(a)(l) shall be included in taxable income or loss; (ii)
tax exempt income shall be added to taxable income or loss; (iii) any
expenditures described in Code Section 705(a)(2)(B) (or treated as Code
Section 70S(a)(2)(B) expenditures pursuant to Treasury Regulation § 1.704-l(b)(2)(iv)(i)and
not otherwise taken into account in computing taxable income or loss shall be
subtracted; and (iv) taxable income or loss shall be adjusted to reflect any
item of income or loss specifically allocated in Article VI.

“Limited Partners” means
those Persons executing this Agreement as limited partners and whose names are
set forth from time to time on Schedule A attached hereto, including any
Substitute Limited Partners, in each such Person’s capacity as a limited
partner of the Partnership.

“Limited Partner
Supermajority” means any group of Limited Partners holding an aggregate of 67%
or more of the Percentage Interests held by all Limited Partners.

“Liquidation Proceeds”
means all Partnership Properties at the time of liquidation of the Partnership
and all proceeds thereof.

“Nonrecourse Deduction”
shall have the same meaning as nonrecourse deductions set forth in Treasury
Regulation § 1.704-lT(b)(4)(iv)(b). 
Generally, the amount of Nonrecourse Deductions for a fiscal year equals
the excess, if any, of any increase, if any, in the amount of Partnership
Minimum Gain during that fiscal year over the aggregate amount of any
distributions during that fiscal year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Partnership Minimum Gain, determined
according to the provisions of Treasury Regulation § 1.704-lT(b)(4)(iv)(b).

 3
 

 

“Nonrecourse Liability’’
means a Partnership liability with respect to which no Partner bears the
economic risk of loss as determined under Treasury Regulation § 1.752-1(T).

“Partners” means the
General Partner and the Limited Partners.

“Partner Minimum Gain”
means an amount, with respect to each Partner Nonrecourse Debt, equal to the
Partnership Minimum Gain that would result if such Partner Nonrecourse Debt
were treated as a Nonrecourse Liability, determined in accordance with Treasury
Regulation § 1.704-l~(b)(4)(iv)(h).

“Partner Nonrecourse Debt”
shall have the same meaning as partner nonrecourse debt set forth in Treasury
Regulation § 1.704-lT(b)(4)(iv)(k)(4).

“Partner Nonrecourse
Deductions” shall have the same meaning as partner nonrecourse deductions set
forth in Treasury Regulation § 1.704-lT(b)(4)(iv)(h)(3).  Generally, the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a fiscal year equals
the excess, if any, of the net increase, if any, in the amount of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt during that fiscal
year over the aggregate amount of any distributions during that fiscal year to
the Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent distributions are from proceeds of such Partner Nonrecourse
Debt and are allocable to an increase in Partner Minimum Gain determined in accordance
with Treasury Regulations § 1.704-lT(b)(4)(iv)(h)(3)

“Partnership” means the
limited partnership subject to this Agreement.

“Partnership Interest”
refers to all of a Partner’s rights and interests in the Partnership as
provided in this Agreement or under the Act, including, without limitation, his
interest in the total capital, profits and losses of the Partnership.

“Partnership Minimum Gain”
shall have the same meaning as partnership minimum gain set forth in Treasury
Regulation § 1.704-lT(b)(4)(iv)(c).

“Partnership Properties”
means all properties and assets, both real, personal or mixed, or any interest
therein, acquired directly or indirectly by the Partnership, including, without
limitation, the Plant and the leasehold interest in the Site.

“Percentage Interest”,
with respect to a Partner, means the percentage set forth opposite such Partner’s
name on Schedule A attached hereto, as such percentage may be amended
from time to time in accordance with the terms of this Agreement.

“Person” means any individual,
partnership, corporation, cooperative, trust or other entity.

 4
 

 

“Plant” means the ethanol
production facility to be constructed, equipped, owned and operated by the
Partnership on the site.

“Power of Attorney” means
the power of attorney described and granted in Section 9.3.

“Prime Rate” means the “prime
rate” reported from time to time by The Wall Street Journal as the base
rate on corporate loans at large U.S. money center commercial banks.

“Reserves” means amounts
set aside from time to time by the General Partner pursuant to
Section 7.3.

“SDWG” means South Dakota
Wheat Growers Association, a South Dakota cooperative association.

“Site” means the real
property described on Schedule B attached hereto.

“Storage Tank Lease”
means a certain Grain Storage Tank Lease to be entered into between the
Partnership and SDWG providing for SDWG to lease two grain storage tanks to the
Partnership on a year to year basis.

“Substitute Limited
Partner” means a Person admitted to the Partnership as a Limited Partner
pursuant to Section 10.3.

“Transfer” means (i) when
used as a verb, to give, sell, exchange, assign, transfer, pledge, hypothecate,
bequeath, devise or otherwise dispose of or encumber, and (ii) when used as a
noun, the nouns corresponding to such verbs, in either case voluntarily or
involuntarily, by operation of law or otherwise.

“Treasury Regulations”
means the regulations promulgated by the Treasury Department with respect to
the Code, as such regulations are amended from time to time, or corresponding
provisions of future regulations.

1.2           Interpretation.  Words of the masculine gender shall be deemed
to include the feminine and neuter genders, and vice versa, where
applicable.  Words of the singular number
shall be deemed to include the plural number, and vice versa, where applicable.

ARTICLE II

FORMATION OF THE PARTNERSHIP

2.1           Formation.  The Partners hereby enter into and form the
Partnership for the limited purposes and scope herein set forth.  Except as otherwise provided in this
Agreement to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.

2.2           Name and Place of Business.  The business of the Partnership shall be
conducted under the name of “South Dakota Grain Fuels, L.P.” or such other name
as the General Partner 

 5
 

 

may hereafter
designate by written notice to the Limited Partners.  The principal place of business of the
Partnership shall be West Brown County 12, Aberdeen, South Dakota 57401, or
such other place as the General Partner may from time to time designate by
written notice to the Limited Partners. 
The registered office and the registered agent of the Partnership for
service of process, as required by the Act, shall be as designated from time to
time by the General Partner.

2.3           Filings and Registrations.  The General Partner shall cause the due
execution and filing.  with the Office of
Secretary of State of Delaware and such other proper authorities in each
jurisdiction where the Partnership conducts its business, of all appropriate
organizational documents, including, without limitation, the Certificate and
any fictitious name registrations, after the execution and delivery of this
Agreement and any amendments hereto.  The
General Partner may take any action it deems necessary or appropriate for the
Partnership to conduct or do business as a limited partnership in any state in
which the conduct of business by the Partnership may require such action,
provided that in any such event the Partnership shall at all times continue to
be a limited partnership formed under and governed by the provisions of the
Act.

2.4           Term.  The term of the Partnership shall continue
until December 31, 2011, unless sooner terminated in accordance with the
provisions of Article XI1 or as otherwise provided by law.

2.5           Expenses of Organization.  Each Limited Partner shall bear all expenses
incurred by it in connection with the negotiation and execution of this
Agreement, the formation of the Partnership and the acquisition of its
Partnership Interest.

ARTICLE III

PURPOSE

3.1           Business Purpose.  The business purpose of the Partnership shall
be to construct, equip, own, operate and maintain the Plant and the other
Partnership Properties acquired in accordance with this Agreement, to market
the output of the Partnership Properties and to conduct all other activities
conducive to the foregoing.  The
Partnership shall be a limited partnership among the Partners only for such
business purpose, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within such business purpose.

3.2           Powers.  Subject to any express limitations set forth
in this Agreement, the Partnership shall have the power and authority to take
and perform any and all acts and activities and to execute and deliver such
documents, instruments and agreements as may be considered by the General
Partner, in its sole discretion, to be necessary, appropriate or desirable to
accomplish or further the business purpose of the Partnership or to protect or
benefit the Partnership.

ARTICLE IV

CAPITAL CONTRIBUTIONS

4.1           General Partner.  At the Closing, the General Partner shall
make an initial cash Capital Contribution in the amount of $5,000.00.  The General Partner shall have the Percentage

 6
 

 

Interest set forth
opposite its name on Schedule A attached hereto, which initially shall be a 1%
Percentage Interest.

4.2           Limited Partners.

(a)           At the Closing, Farmland and SDWG
shall make the following initial cash Capital Contributions to the Partnership
in their capacities as Limited Partners:

	
  

  	
  Farmland

  	
  $242,550.00

  
	
   

  	
  SDWG

  	
  $252,450.00

  
	
   

  	
   

  	
  $495,000.00

  

 

Farmland and SDWG shall
have the Percentage Interests set forth opposite their respective names on Schedule
A attached hereto, which initially shall be as follows:

	
  

  	
  Farmland

  	
  48.51%

  
	
   

  	
  SDWG

  	
  50.49%

  
	
   

  	
   

  	
  99.00%

  

 

(b)           Except as set forth in
Section 4.6 below, no Limited Partner shall be required, obligated or entitled
to make any further contributions to the capital of the Partnership.

4.3           Capital Accounts.  A separate Capital Account shall be
maintained for each Partner.  Each
Partner’s Capital Account shall be (a) increased by (i) the amount of money
contributed by such Partner, (ii) the Fair Value of property contributed by
such Partner (net of liabilities secured by such contributed property that the
Partnership is considered to assume or take subject to under Code
Section 752), (iii) allocations to such Partner, pursuant to
Article VI, of Partnership income and gain (or items thereof), and (iv) to
the extent not already netted out under clause (b)(ii) below, the amount of any
Partnership liabilities assumed by the Partner or which are secured by any property
distributed to such Partner; and (b) decreased by (i) the amount of money
distributed to such Partner, (ii) the Fair Value of property distributed to
such Partner (net of liabilities secured by such distributed property that such
Partner is considered to assume or take subject to under Code
Section 752), (iii) allocations to such Partner, pursuant to
Article VI, of Partnership loss and deduction (or items thereof), and (iv)
to the extent not already netted out under clause (a)(ii) above, the amount of
any liabilities of the Partner assumed by the Partnership or which are secured
by any property contributed by such Partner to the Partnership.

In
the event any interest in the Partnership is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred interest.

In
the event of (x) an additional capital contribution by an existing or an
additional Partner of more than a de minimis amount or a distribution of
property which results in a shift in Percentage Interests, (y) the distribution
by the Partnership to a Partner of more than a de minimis amount of property
(other than money) or (2) the liquidation of the Partnership within 

 7
 

 

the meaning of
Treasury Regulation § 1.704-l(b)(2)(ii)(g), the book basis of the Partnership
property shall be adjusted to Fair Value and the Capital Accounts of all the
Partners shall be adjusted simultaneously to reflect the aggregate net
adjustment to book basis as if the Partnership recognized gain and loss equal
to the amount of such aggregate net adjustment; provided, however, that
adjustments resulting from clause (x) or (y) above shall be made only if the
General Partner reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners.

The
foregoing provisions of this Section 4.3 and the other provisions of this
Agreement relating to the maintenance of capital accounts are intended to
comply with Treasury Regulation § 1.704-l(b) and Treasury Regulation
§ 1.704-lT, and shall be interpreted and applied in a manner consistent
with such Treasury Regulations. 
Notwithstanding the provisions of Section 13.7 hereof, in the event
the General Partner determines that it is prudent or advisable to modify the
manner in which the Capital Accounts, or any increases or decreases thereto,
are computed in order to comply with such Treasury Regulations, the General
Partner may cause such modification to be made without the consent of the
Limited Partners, provided that it is not likely to have a material effect on
the amounts distributable to any Partner upon the dissolution of the
Partnership.  In addition, the General
Partner may amend this Agreement in order to comply with such Treasury
Regulations as provided in Section 6.5(j) below.

4.4           Capital Withdrawal Rights,
Interest and Priority.  Except as
expressly provided in this Agreement, no Partner shall be entitled to withdraw
or reduce such Partner’s Capital Account or to receive any distributions from
the Partnership, and no Partner shall be entitled to demand or receive property
other than cash in return for its Capital Contribution.  No Partner shall be entitled to receive or be
credited with any interest on such Partner’s Capital Contribution or the
balance in such Partner’s Capital Account at any time.  Except as may be otherwise expressly provided
herein, no Partner shall have any priority over any other Partner as to the
return of such Partner’s Capital Contribution or Capital Account balance.

4.5           Loans by Partners.  Loans by Partners to the Partnership shall
not constitute a contribution to the capital of the Partnership or be credited
to the Capital Account of the lending Partner or entitle such lending Partner
to any increase in its share of Income or Loss which the Partnership may
sustain.

4.6           Additional
Capital Contributions.

(a)
(i) In addition to the initial Capital Contributions described in
Sections 4.1 and 4.2 (a) above, after the Closing and in connection with
construction and equipping of the Plant, the Partners shall make the following
additional cash Capital Contributions whenever and in such installments as the
General Partner determines, in good faith, that such additional contributions
are appropriate or necessary for the Partnership:

	
   

  	
  General Partner

  	
  $    25,000.00

  
	
   

  	
  Farmland

  	
  $1,212,750.00

  
	
   

  	
  SDWG

  	
  $1,262,250.00

  
	
   

  	
   

  	
  $2,500,000.00

  

 

 8
 

 

Subject to the foregoing
dollar amounts, within 10 days following the issuance of each capital call,
each Partner shall contribute, in cash, to the capital of the Partnership an
amount (the “Required Contribution” ) equal to such Partner’s Percentage
Interest multiplied by the aggregate additional capital contribution to be made
by all Partners at that time under this Section 4.6(a)(i).

(ii)           The Partners recognize that the
Partnership may require additional capital from time to time in order to
accomplish the purpose and business for which it is formed.  The General Partner may, by written notice,
call for additional contributions to the capital of the Partnership to be made
by all Partners if the General Partner and a Limited Partner Supermajority
determine, in good faith, that such additional contributions are appropriate or
necessary for the Partnership.  Within 15
days following the issuance of such a call, each Partner shall contribute, in
cash, to the capital of the Partnership an amount (the “Required Contribution”)
equal to such Partner’s Percentage Interest multiplied by the aggregate
additional capital contribution to be made by all Partners.

(b)           If any Partner fails or refuses for
any reason to make in a timely manner any part or all of a Required
Contribution, such Partner shall be in default hereunder and shall be deemed to
be a “Defaulting Partner” and the following shall apply:  (i) The General Partner shall promptly give
written notice of the default to all Partners. 
Each of the non-defaulting Partners (“Non-Defaulting Partners”) shall
have the right, but not the obligation, for a period of 30 days after notice of
such default by a Defaulting Partner is given, to contribute to the Partnership
up to, but not in excess of, an amount equal to (A) the amount of the
Defaulting Partner’s Required Contribution not then paid multiplied by a
fraction the numerator of which is the Non-Defaulting Partner’s Percentage
Interest and the denominator of which is the sum of the Percentage Interests of
all Non-Defaulting Partners who desire to contribute to the Partnership any
portion of the Defaulting Partner’s Required Contribution not then paid or (B)
such greater amount of such Defaulting Partner’s Required Contribution not then
paid as shall be agreed upon by all of such Non-Defaulting Partners.

(ii)           Each Non-Defaulting Partner shall
elect whether to treat the sum of his Required Contribution and the amount
contributed by him with respect to a Defaulting Partner pursuant to
subSection (i) above (such sum being hereinafter referred to as the “Disproportionate
Contribution”) fully or partially as a loan to the Partnership or fully or
partially as a Capital Contribution. 
Such election shall be made in writing and shall be given to the other
Partners within 45 days after notice of the default by the Defaulting Partner
is given.  To the extent a Non-Defaulting
Partner fails to make such election within such period, he shall be 

 9
 

 

deemed to have elected to
treat his Disproportionate Contribution as a loan to the Partnership.

(A)          Each loan to the Partnership by a
Non-Defaulting Partner pursuant to this Section 4.6(b)(ii) shall
constitute an obligation of the Partnership to the Non-Defaulting Partner and
shall be evidenced by a promissory note made by the Partnership to the order of
the Non-Defaulting Partner in a principal amount equal to the Disproportionate
Contribution.  Such note shall bear interest
from and after the date of payment to the Partnership at a floating annual rate
equal to two percent (2%) over the Prime Rate in effect from time to time.  Interest shall be payable monthly.  The principal balance shall be payable prior
to any Distributions being made to the Partners and in all events within five
years.

(B)           Each Capital Contribution by a
Non-Defaulting Partner pursuant to this Section 4.6(b)(ii) shall be
credited to such Non-Defaulting Partner’s Capital Account as of the date of
payment to the Partnership.  Upon the
expiration of the 45-day election period, the Percentage Interests of each
Partner shall be adjusted in accordance with the provisions of
subSection (c) below, effective as of the date of the Defaulting Partner’s
default.

(iii)          The balance of any Required
Contribution of a Defaulting Partner not timely contributed by the Defaulting
Partner or by the Non-Defaulting Partners pursuant to subSection (b) above
(the “Unpaid Required Contribution”) shall constitute an obligation of such
Defaulting Partner to the Partnership and shall bear interest from the date of
such Defaulting Partner’s default at a floating annual rate equal to the lesser
of (i) two percent (2%) over the Prime Rate in effect from time to time, or
(ii) the maximum rate permitted by law. 
Interest shall be compounded monthly. 
The Partnership may, upon the decision of the Non-Defaulting Partners
holding a majority of the Percentage Interests held by all Non-Defaulting
Partners, institute suit in any court of competent jurisdiction to enforce such
obligation of the Defaulting Partner.  In
addition, the Partnership shall be entitled to recover in such suit all costs
and expenses, including, but not limited to, court costs and reasonable
attorneys’ fees, thereby incurred by the Partnership and any damages (except
incidental or consequential damages) 

 10
 

 

sustained by the
Partnership as a result of the default by the Defaulting Partner.

(iv)          By executing this Agreement, each
Partner shall be deemed to have granted to the Partnership a first and prior
lien and security interest upon such Partner’s Partnership Interest as security
for the payment of all Required Contributions of such Partner.  This Agreement shall be deemed to be a
security agreement with respect to such security interest and collateral and
each Partner shall promptly execute and deliver to the Partnership any
financing statements or other instruments that the General Partner, or any
other Partner, may request for purposes of perfecting or continuing such security
interest.  Upon the failure of a Partner
to execute and deliver such financing statements or other instruments, the
other Partners, and each of them, as attorney-in-fact for such Partner, may
execute and deliver such financing statements or other instruments for, in the
name and on behalf of such Partner.  With
respect to a Defaulting Partner, the Partnership, acting upon the decisions of
the Non-Defaulting Partners holding a majority of the Percentage Interests held
by all Non-Defaulting Partners, shall have all of the rights and remedies of a
secured party under the Delaware Uniform Commercial Code, including, without
limitation, and in addition to the rights under such law, the right to sell,
effective as of the first day of the fiscal quarter in which the default occurs
or such subsequent date as the Non-Defaulting Partners may so determine, by
public or private sale upon five days advance notice to the Defaulting Partner,
the Defaulting Partner’s Partnership Interest or any part thereof.  In addition, the Partnership shall have the
right to, and shall retain and set-off against the Unpaid Required Contribution
of a Defaulting Partner and any accrued interest thereon all amounts becoming
otherwise distributable or payable to such Defaulting Partner by the
Partnership.  Any amount so retained and
set-off by the Partnership shall be deemed to be a constructive cash
distribution to the Defaulting Partner and a constructive payment by him to the
Partnership.  Any payment, whether
constructive or actual, shall be applied first against any unpaid accrued
interest on the Defaulting Partner’s Unpaid Required Contribution and the
remainder shall be applied against his Unpaid Required Contribution.  Effective as of the date of the final and
full set-off against, or other payment of, the Defaulting Partner’s Unpaid
Required Contribution and accrued interest thereon, the full amount of such
Unpaid Required Contribution shall be credited to the Defaulting Partner’s
Capital Account and, if the Percentage Interests of the Partners were adjusted
pursuant to subsections (b)(ii)(B) above, the Percentage Interest of each 

 11
 

 

Partner shall be adjusted
again in accordance with the provisions of subsection (c) below.

(c)           Whenever the Percentage Interests of
the Partners are to be adjusted under subsection (b)(ii)(B) or
subsection (b)(iv) above, the Partners shall negotiate in good faith
concerning the appropriate adjustments to be made to their respective
Percentage Interests.  If, within 45
days, the Partners have not agreed upon such adjustments, the Partners shall
select a mutually acceptable investment banker or qualified consultant of
national or international reputation to determine the adjustments to be
made.  If the Partners cannot agree upon
such person, the Accountant shall select such person, but shall not select a
person previously objected to by one of the Partners.  The investment banker or consultant shall
determine the adjusted Percentage Interests by comparing (1) the Fair Value of
the Partnership (without the Capital Contributions at issue) and the then
relative pre-adjustment Percentage Interests of the Partners with (2) the
amount of the Capital Contributions at issue and the Partner(s) paying the same
to the Partnership.  For example, if the
Fair Value of the Partnership was $10,000,000 (before the Capital Contribution
at issue), the pre-adjustment Percentage Interests were Farmland - 48.51%, SDWG
- 50.49% and the General Partner - 1%, and Farmland was making a new Capital
Contribution of $10,000,000, the adjusted Percentage Interests would become
Farmland -74.255%, SDWG -25.245% and the General Partner - .5%.  The General Partner shall cause this
Agreement (specifically Schedule A) to be amended to reflect any adjustment in
the Percentage Interests of the Partners in accordance with this
Section 4.6(c).

ARTICLE V

COMPENSATION OF GENERAL PARTNER

5.1           Compensation for Services.  The General Partner shall not receive any
compensation from the Partnership for any services rendered by the General
Partner in connection with (i) the organization of the Partnership, (ii) the
production of the Partnership’s business plan and (iii) the management of the
Business of the Partnership.  The General
Partner shall be entitled to reasonable compensation for any other services it
may provide to or for the Partnership from time to time provided that the terms
of any engagement for such services are not less favorable to the Partnership
than those customarily charged for similar services in the relevant
geographical region.

5.2           Reimbursement for Expenses.  The General Partner shall be entitled to
payment by or reimbursement from the Partnership of all reasonable
out-of-pocket expenses incurred by the General Partner on behalf of the
Partnership; provided, however, the General Partner shall not be entitled to
payment by or reimbursement from the Partnership for any salaries, wages or
fringe benefits of the General Partner’s directors, officers, employees or
agents or for any overhead or similar expenses incurred by the General Partner
in maintaining any office separate from the Partnership.

5.3           Common Employees.  The provisions of Section 5.1 and 5.2
above shall not prohibit an officer, director, employee or agent of the General
Partner from also being an officer, 

 12
 

 

employee, agent or
contractor of the Partnership and receiving reasonable compensation from the
Partnership for services actually rendered to or for the Partnership.

ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

6.1           Non-Liquidation Cash Distributions.  The amount, if any, of Available Cash shall
be determined by the General Partner quarterly and shall be distributed, within
45 days following the end of each fiscal quarter, to the Partners in accordance
with their respective Percentage Interests as of the end of such quarter.

6.2           Liquidation Distributions.  Liquidation Proceeds shall be distributed in
the following order of priority:

(a)           To the payment of debts and
liabilities of the Partnership (including to Partners to the extent otherwise
permitted by law) and the expenses of liquidation; then

(b)           To the setting up of such reserves as
the Person required or authorized by law to wind up the Partnership’s affairs
may reasonably deem necessary or appropriate for any disputed, contingent or
unforeseen liabilities or obligations of the Partnership, provided that any
such reserves shall be paid over by such Person to an independent escrow agent,
to be held by such agent or its successor for such period as such Person shall
deem advisable for the purpose of applying such reserves to the payment of such
liabilities or obligations and, at the expiration of such period, the balance
of such reserves, if any, shall be distributed as hereinafter provided; and

(c)           The remainder to the Partners in
accordance with and to the extent of their respective Capital Account balances
after taking into account the allocation of all Income or Loss pursuant to this
Agreement for the fiscal year(s) in which the Partnership is liquidated.

6.3           Profits, Losses and Distributive
Shares of Tax Items.  The Partnership’s
net income or net loss, as the case may be, for each fiscal year of the
Partnership, as determined in accordance with such method of accounting as may
be adopted for the Partnership pursuant to Article VIII hereof, shall be
allocated to the Partners for both financial accounting and income tax purposes
as set forth in this Article VI, except as otherwise provided for herein
or unless all Partners agree otherwise.

6.4           Allocation of Income, Loss and
Credits.

(a)           Income or Loss (other than from
liquidation transactions) and Credits for each fiscal year shall be allocated
among the Partners in accordance with their respective Percentage
Interests.  To the extent there is a
change in the respective Percentage Interests of the Partners during the year,
Income, Loss and Credits shall be allocated among the pre-adjustment and
post-adjustment periods as provided in Section 6.5(k) below.

 

 13

 

(b)           Income from liquidation transactions
shall be allocated among the Partners in the following order of priority:

(i)            To those Partners, if any, with
negative Capital Account balances (determined prior to taking into account any
distributions pursuant to Section 6.2) in the ratio that such negative
balances bear to each other until all such Partners’ Capital Account balances
equal zero: then

(ii)           The remainder to the Partners in
accordance with their respective Percentage Interests.

(c)           Loss from liquidation transactions
shall be allocated among the Partners in the following order of priority:

(i)            To those Partners, if any, with
positive Capital Account balances (determined prior to taking into account any
distributions pursuant to Section 6.2) in the ratio that such positive
balances bear to each other until all such Partners’ Capital Account balances
equal zero; then

(ii)           The remainder to the Partners in
accordance with their respective Percentage Interests.

6.5           Special Rules Regarding Allocation
of Tax Items.  Notwithstanding the
foregoing provisions of Article VI, the following special rules shall
apply in allocating the net income or net loss of the Partnership:

(a)           Section 704(c) and Revaluation
Allocations.  In accordance with Code
Section 704(c) and the Treasury Regulations thereunder, income, gain, loss
and deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its Fair Value at the
time of contribution.  In the event of
the occurrence of any event described in clause (x), (y) or (z) of
Section 4.3 above (hereinafter referred to as a “Revaluation”), subsequent
allocations of income, gain, loss and deduction with respect to such property
shall take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its Fair Value
immediately after the adjustment in the same manner as under Code
Section 704(c) and the Treasury Regulations thereunder.  If as a result of a Revaluation, Partnership
Minimum Gain is reduced, the reduction of such Partnership Minimum Gain shall be
added back to the net decrease or increase in Partnership Minimum Gain
otherwise determined.  Any elections or
other decisions relating to such allocations shall be made by the General
Partner in a manner that reasonably reflects the purpose and intention of this
Agreement.  Allocations pursuant to this
Section 6.5(a) are solely for income tax purposes and 

 14
 

 

shall not affect, or in
any way be taken into account in computing, any Partner’s Capital Account or
share of income or loss, pursuant to any provision of this Agreement.

(b)           Minimum Gain Chargeback.  Notwithstanding any other provision of this
Article VI, if there is a net decrease in Partnership Minimum Gain during
a Partnership taxable year, each Partner shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) in proportion to,
and to the extent of, an amount equal to the greater of: (1) the portion of
such Partner’s share of the net decrease in Partnership Minimum Gain during
such year that is allocable to the disposition of Partnership property subject
to Nonrecourse Liabilities; or (2) if such Person would otherwise have an
Adjusted Capital Account Deficit at the end of such year, an amount sufficient
to eliminate such Partner’s Adjusted Capital Account Deficit.  The items to be allocated shall be determined
in accordance with Treasury Regulation § 1.704-lT(b)(4)(iv)(e).  For purposes of this Section 6.5(b)
only, each Partner’s Adjusted Capital Account Deficit shall be determined prior
to any other allocations pursuant to this Article VI with respect to such
fiscal year and without regard to any net decrease in Partner Minimum Gain
during such fiscal year.  The foregoing
provisions of this Section 6.5(b) are intended to comply with the Treasury
Regulation § 1.704-1T and shall be interpreted and applied in a manner
consistent with such regulation.

A Partner’s share of
Partnership Minimum Gain shall be, as of the relevant time, the excess of (u)
the sum of Nonrecourse Deductions allocated to such Partner and the aggregate
distributions to such Partner of Nonrecourse Liability proceeds allocable to an
increase in Partnership Minimum Gain, over (v) the sum of the Partner’s
aggregate share of the net decreases in Partnership Minimum Gain, including
decreases from Revaluations.  In
computing the above, amounts allocated or distributed to the Partner’s
predecessor in interest shall be taken into account.

(c)           Partner Minimum Gain Chargeback.  Notwithstanding any other provision of this
Article VI other than Section 6.5(b), if there is a net decrease in
Partner Minimum Gain during a Partnership taxable year, each Partner who has a
share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt
shall be allocated items of income and gain for such year (and, if necessary,
for subsequent years) in proportion to, and to the extent of, an amount equal
to the greater of: (1) the portion of such Partner’s share of the net decrease
in Partner Minimum Gain attributable to such Partner Nonrecourse Debt during
such year that is allocable to the disposition of Partnership property subject
to such Partner Nonrecourse Debt: or (2) if such Person would otherwise have an
Adjusted Capital Account Deficit at the end of such year, an amount sufficient
to eliminate such Partner’s Adjusted Capital Account Deficit.  The items to be allocated shall be determined
in accordance with Treasury Regulation § 1.704-lT(b)(4)(iv)(h)(4).  For purposes of this Section 6.5(c)
only, each Partner’s Adjusted Capital Account Deficit shall be determined prior
to any other allocations pursuant to this 

 15
 

 

Article VI with
respect to such fiscal year, other than allocations of Partnership Minimum Gain
pursuant to Section 6.5(b) hereof. 
The foregoing provisions of this Section 6.5(b) are intended to comply
with the Treasury Regulation § 1.704-1T and shall be interpreted and applied in
a manner consistent with such regulation.

(d)           Qualified Income Offset.  In the event any Partner unexpectedly
receives an adjustment, allocation or distribution described in Treasury
Regulation § 1.704.l(b)(2)(ii)(d)(4), (5) or (6), which causes or
increases such Partner’s Adjusted Capital Account Deficit, items of Partnership
income and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly
as possible, provided that an allocation under this Section 6.5(d) shall
be made if and only to the extent such Partner would have an Adjusted Capital
Account Deficit after all other allocations under this Article VI have
been made.

(e)           Nonrecourse Deductions.  Nonrecourse Deductions for any fiscal year or
other period shall be allocated to the Partners in proportion to their
Percentage Interests.

(f)            Partner Nonrecourse Deductions.  Any Partner Nonrecourse Deduction shall be
allocated to the Partner who bears the risk of loss with respect to the loan to
which such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulation § 1.704-lT(b)(4)(iv)(h).

(g)           Curative Allocations.  Any special allocations of items of income,
gain, deduction or loss pursuant to Sections 6.5(b), (c), (d), (e) and (f)
shall be taken into account in computing subsequent allocations of income and
gain pursuant to this Article VI, so that the net amount of any items so
allocated and all other items allocated to each Partner pursuant to this
Article VI shall, to the extent possible, be equal to the net amount that
would have been allocated to each such Partner pursuant to the provisions of
this Article VI if such adjustments, allocations or distributions had not
occurred.  No allocations pursuant to
Sections 6.5(b) and (c) shall be made prior to the Partnership taxable
year during which there is a net decrease in Partnership Minimum Gain or
Partner Minimum Gain, respectively, and in any such case then only to the
extent necessary to avoid the potential distortion.  In addition, allocations pursuant to this
Section 6.5(9) with respect to Nonrecourse Deductions in Section 6.5(e)
and Partner Nonrecourse Deductions in Section 6.5(f) shall be deferred to
the extent the Partners reasonably determine that such allocations are likely
to be offset by subsequent allocations of Partnership Minimum Gain or Partner
Minimum Gain, respectively.

(h)           Loss Allocation Limitation.  Notwithstanding the other provisions of this
Article VI, unless otherwise agreed to by the General Partner and a
Limited Partner Majority, no Limited Partner shall be allocated Loss in any
taxable year which would cause or increase all Adjusted Capital Account Deficit

 16
 

 

as of the end of such
taxable year.  All Loss in excess of the
limitation in LMs Section 6.5(h) shall be allocated to the General
Partner.

(i)            Share of Nonrecourse Liabilities.  Solely for purposes of determining a Partner’s
proportionate share of the “excess nonrecourse liabilities” of the Partnership
within the meaning of Treasury Regulation § 1.752-3(a)(3), each Partner’s
interest in Partnership profits is equal to his respective Percentage Interest.

(j)            Compliance with Treasury Regulations.  The foregoing provisions of this
Section 6.5 are intended to comply with Treasury Regulation §§ 1.704-l(b),
1.704-1T and 1.752-IT, and shall be interpreted and applied in a manner
consistent with such Treasury Regulations. 
In the event it is determined by the General Partner that it is prudent
or advisable to amend this Agreement in order comply with such Treasury
Regulations, the General Partner is empowered to amend or modify this Agreement
without the consent of the Limited Partners, notwithstanding any other
provision of this Agreement.

(k)           General Allocation Provisions.  Except as otherwise provided in this
Agreement, all items that are components of net income or net loss shall be
divided among the Partners in the same proportions as they share such net
income or net loss, as the case may be, for the year.  For purposes of determining the Income, Loss
or any other items for any period, Income, Loss or any such other items shall
be determined on a daily, monthly or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and the
Treasury Regulations thereunder.

6.6           Withholding of Distributions.  Notwithstanding any other provision of this
Agreement, the General Partner (or any person required or authorized by law to
wind up the Partnership’s affairs) may suspend, reduce or otherwise restrict
Distributions of Available Cash and Liquidation Proceeds when, in its sole
opinion, such action is in the best interests of the Partnership.

6.7           No Priority.  Except as may be otherwise expressly provided
herein, no Partner shall have priority over any other Partner as to Partnership
income, gain, loss, credits and deductions or distributions.

6.8           Tax Withholding.  Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under any federal, state or local
tax law, including, without limitation, withholding on any distribution to any
Partner.  For all purposes of this
Article VI, any amount withheld on any distribution and paid over to the
appropriate governmental body shall be treated as if such amount had in fact
been distributed to the Partner.

 

 17

 

ARTICLE VII

MANAGEMENT AND CONTROL

7.1           Management of Partnership Business.

(a)           Subject to the provisions of this
Agreement, the General Partner, acting through its board of directors, shall
have the exclusive right to manage, control and conduct, and shall be solely
responsible for the management, control and conduct of, the Partnership’s
Business and affairs and for compliance with all applicable laws, and shall
have all rights and powers generally conferred by law or necessary, advisable
or incidental in connection therewith. 
The Limited Partners hereby consent to the exercise by the General
Partner of the powers conferred on it by this Agreement.

(b)           Except as otherwise provided or
contemplated herein or by law, no Limited Partner (except one who may also be a
General Partner or a contractor, employee, officer or agent of the Partnership
or an employee, officer, director, stockholder or agent of the General Partner,
and then only in such capacity) shall participate or take part in the
management or control of the business of the Partnership or have any right or
authority to act for or bind the Partnership.

(c)           In the event the Board of Directors
of the General Partner is deadlocked or otherwise unable to make a decision
with respect to any alleged breach of, the exercise of any right or remedy
under, or similar dispute with respect to, any contract between the Partnership
and a Partner or an affiliate of a Partner (the “Interested Partner”), such as
the Ground Lease and the Storage Tank Lease, the right of the General Partner
to act for and direct the Partnership with respect to such breach, right,
remedy or dispute shall cease and the Partnership shall be directed and
represented, on such specific matter during the period of deadlock, by the
non-Interested Partners (acting through the decisions of those holding at least
a majority of the Percentage Interests held by the non-Interested Partners).

7.2           Rights, Powers and Authority of
General Partner.  Except as otherwise
provided herein, the General Partner shall have and possess all the rights,
powers and authority of any general partner of a partnership without limited
partners formed under the laws of the State of Delaware.  In addition to any other rights, powers and authority
it may possess under law, the General Partner shall have, subject to the
provisions of Section 7.4 and any other limiting provision of this
Agreement, all specific rights, powers and authority required for or
appropriate to the management of the Partnership’s Business and affairs, which,
by way of illustration but not by way of limitation, shall include the
following rights, powers and authority to act for, in the name and on behalf of
the Partnership:

(a)           to enter into the Construction
Agreement, the Ground Lease and the Storage Tank Lease and to perform or cause
to be performed all of the Partnership’s obligations thereunder and to exercise
and enforce all rights and remedies of the Partnership thereunder;

 18
 

 

(b) to purchase, acquire,
own, hold, equip, operate, manage, maintain, develop, sell, convey, exchange,
or otherwise dispose of or deal with the Business or the Partnership’s interest
therein, the Partnership Properties, or any part thereof, upon such terms and
conditions and for such consideration as it may determine;

(c)           to borrow money for Partnership
purposes, to issue evidences of indebtedness therefor and, if security is
required therefor, to mortgage, encumber or subject to any other security
device all or any portion of the Partnership Properties and to prepay, in whole
or in part, refinance, increase, modify, consolidate or extend any loan,
mortgage or security device; to apply for and receive grants and low interest
bearing loans from South Dakota Corn Utilization Council and other
organizations;

(d)           to acquire and enter into any
contract of insurance that the General Partner reasonably deems necessary or
proper for the protection of the Partnership, for the conservation of the
Partnership Properties or for any purpose beneficial to the Partnership;

(e)           to bring or defend, pay, collect,
compromise, arbitrate, or otherwise adjust, claims or demands of or against the
Partnership;

(f)            to make such elections under the tax
laws of the United States, the State of Delaware, and other relevant
jurisdictions as to the treatment of items of Partnership income, gain, loss,
deduction, credit and other relevant matters, as it believes necessary or
desirable and to file any and all necessary reports, tax returns and records
with appropriate government and regulatory agencies;

(g)           to offer and sell limited partnership
interests in the Partnership and to admit Limited Partners to the Partnership
pursuant to Section 10.6 hereof;

(h)           to engage, retain or otherwise deal
with any Persons as employees, agents, accountants, attorneys, or in any other
capacity as the General Partner deems necessary or desirable;

(i)            to loan funds to the Partnership, in
the General Partner’s discretion, at such interest rates and with such other
terms not less favorable to the Partnership than would be available at nonaffiliated
lending institutions on comparable loans for the same purpose;

(j)            to designate and change from time to
time the address of the registered office and the name of the registered agent
for service of process on the Partnership in any state in which such
designations are required;

(k)           to temporarily invest any funds of
the Partnership in short-term, liquid investments where there is appropriate
safety of principal;

 19
 

 

(l)            to enter into any and all agreements
that it may deem appropriate in carrying out the purposes of the Partnership
and to perform or cause to be performed all of the Partnership’s obligations
under any such agreement, and to exercise any right of the Partnership under
any such agreement; and

(m)          to take any and all other actions and
execute, acknowledge, file, record, publish and deliver any and all instruments
which it may deem necessary or appropriate to carry out the purposes, conduct
the Business and exercise the powers of the Partnership.

7.3           Reserves.  The General Partner shall have the right to
establish, maintain and expend such reserves to provide for working capital,
for future maintenance, repair or replacement of the Partnership Properties,
for debt service, for future investments and for such other purposes as it may
deem necessary or advisable.

7.4           Limitations on General Partner’s
Authority.

(a)           The General Partner shall not take
any of the following actions unless such action has been approved or authorized
by a Limited Partner Supermajority:

(i)            the sale, exchange, lease, mortgage,
assignment, pledge or other transfer of, or granting of a security interest in,
any part of the Partnership Properties having a Fair Value of $250,000.00 or
more, other than the sale of inventory in the ordinary course of business;

(ii)           the incurrence of any major
borrowings, leases or other financing-related obligations in the amount of
$250,000.00 or more;

(iii)          any improvements or additions to the
capital assets of the Partnership in the amount of $250,000.00 or more;

(iv)          any act contrary to an earlier
decision of a Limited Partner Supermajority; or

(v)           any other act which by any other
provision of this Agreement is required to be approved or authorized by a
Limited Partner Supermajority.

(b)           The General Partner shall not take
any action required by any provision of this Agreement or by law to be approved
or authorized by all of the Partners unless such action has been so approved or
authorized by all of the Partners.

 20
 

 

(c)           The General Partner shall have a
fiduciary responsibility for the safekeeping and use of all funds and assets of
the Partnership.  No Partnership funds
shall be loaned or advanced to the General Partner.

(d)           The General Partner shall not acquire
any assets on behalf of the Partnership from any Partner unless (A) (i) such
assets are required by the Partnership for its Business and (ii) the
acquisition terms are not less favorable to the Partnership than would be
available from nonaffiliated third parties, (B) such assets are acquired
pursuant to the Ground Lease or the Storage Tank Lease or (C) unless the
transaction is approved by a Limited Partner Supermajority.

(e)           The General Partner shall not receive
any reimbursements, compensation, fees, or distributions from the Partnership,
except as provided or contemplated in this Agreement.

(f)            The General Partner shall not
require any prepayment charge or penalty on any loan it may make to the
Partnership.

(g)           The General Partner shall not cause
the Partnership to reacquire or redeem any Limited Partner Partnership
Interests, without the prior consent of a Limited Partner Supermajority or
except as may be required by law.

(h)           The General Partner shall not take
any action prohibited by, or in contravention of, this Agreement or the Act.

(i)            The General Partner shall not take
any action with respect to the Partnership in contravention of the General
Partner’s Certificate of Incorporation or Bylaws.

7.5           Other Businesses of Partners.

(a)           Any Partner may engage independently
or with others in other business ventures of every nature and description.  Nothing in this Agreement shall be deemed to
prohibit any Partner from dealing, or otherwise engaging in business, with
Persons transacting business with the Partnership, and receiving compensation
therefor based upon industry standards from any Person who has provided or may
in the future provide any services to, sell any property to or purchase any
property from the Partnership.

(b)           No Partner shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character which, if presented to the Partnership, could be
taken by the Partnership, and each Partner shall have the right to take for its
own account or with others or to recommend to others any such particular
investment opportunity.

(c)           Neither the Partnership nor any
Partner shall have any right by virtue of this Agreement or the partnership
relationship created hereby in or to such other ventures or activities of
another Partner, or to the income or proceeds 

 21
 

 

derived therefrom, and
the pursuit of such ventures, even if competitive with the business of the
Partnership, shall not be deemed wrongful or improper.

7.6           Limitation
on Liability of the General Partner; Indemnification.

(a)           To the extent permitted by law, the
General Partner and its officers, directors, employees and agents shall not be
liable, responsible or accountable in damages or otherwise to the Partnership
or any Limited Partner for any act, omission or error in judgment performed,
omitted or made by it or them in good faith and in a manner believed by it or
them to be within the scope of authority granted to the General Partner by this
Agreement and in the best interests of the Partnership, provided that such act,
omission or error in judgment does not constitute fraud, gross negligence,
willful misconduct or other breach of fiduciary duty.  The General Partner may consult with such
legal or other professional counsel as it may select.  Any action taken or omitted by it in good
faith reliance on, or in accordance with, the opinion or advice of such counsel
shall be full protection and justification to the General Partner with respect
to the actions taken or omitted.

(b)           To the extent permitted by law, the
Partnership shall indemnify and hold harmless the General Partner and its officers,
directors, employees and agents, in such capacities, from and against any loss,
expense, damage or injury suffered, sustained or incurred by it or them arising
out of any actual or threatened action, suit, proceeding or claim relating to
their activities on behalf of the Partnership, or in furtherance of the
interests of the Partnership, including, but not limited to, any judgment,
award, settlement, reasonable attorney’s fees and other costs or expenses
incurred in connection with the defense or settlement of any actual or
threatened action, suit, proceeding or claim and any payments made by the
General Partner pursuant to indemnification agreements no broader than this
Section 7.6; provided, however, that the acts, omissions or alleged
acts or omissions upon which such actual or threatened action, suit, proceeding
or claim is based were taken or omitted in good faith in a manner believed by
them to be in the best interests of the Partnership and did not constitute
fraud, gross negligence, willful misconduct or other breach of fiduciary duty
on the part of such indemnified party. 
The satisfaction of any foregoing indemnification obligation shall be
from, and limited to, Partnership Property, and no Limited Partner shall have
any personal liability with respect thereto.

7.7           Partnership Assets to be Used
First.  All Partnership obligations
and liabilities shall be satisfied first from Partnership Properties before the
General Partner or any other Person is responsible therefor, except as the
General Partner or other Person may otherwise agree.

7.8           No
Preferential Transactions with Partners. 
Except as and to the extent otherwise specifically provided or
contemplated herein, the Business of the Partnership shall be operated in all
respects as a business separate and distinct from the businesses of its
Partners and no Partner shall have any right to preferential treatment from the
Partnership over other Partners or third parties.  The Partnership shall have no obligation to
buy raw materials or other products or 

 22
 

 

services
from any Partner or its affiliates or to sell any production output or other
products or services to any Partner or its affiliates, but the Partnership may
do so on such terms and conditions as the General Partner determines to be in
the best interests of the Partnership and the Business.

ARTICLE VIII

ACCOUNTING AND BANK ACCOUNTS

8.1           Books
and Records.  At all times during the
existence of the Partnership, the General Partner shall maintain, or cause to
be maintained, full and true books of account, which shall reflect all
Partnership transactions and be appropriate and adequate for the Partnership’s
business.  Such books of account,
together with a copy of this Agreement and a copy of the Certificate, a current
list of the names and last known mailing address of each Partner and any other
records and reports required to be maintained under the Act, shall at all times
be maintained at the principal place of business of the Partnership.  The Partnership shall not be required to
deliver to any Limited Partner a copy of the Certificate or any amendment
thereto after the same has been duly filed, but the Partnership shall deliver
such a copy to any Limited Partner who requests a copy in writing.  Each Limited Partner and his designated
representatives (including, without limitation, attorneys and accountants)
shall have the right at any time to inspect and copy from such books of account
and other records of the Partnership in accordance with reasonable standards
established by the General Partner governing what information and documents are
to be furnished for inspection by the Limited Partners, at what time and
location, at whose expense and other matters relating to such inspections.

8.2           Taxable and Fiscal Year.  The Partnership’s taxable and fiscal year
shall end on December 31st of each year, unless a different year is required
pursuant to Code Section 706.

8.3           Financial Reports.

(a)           Within 45 days after the end of the
first six months of each fiscal year, the General Partner shall deliver to each
Limited Partner a report for such semi-annual period containing such
information, financial and otherwise, regarding the Partnership as the General
Partner deems appropriate.

(b)           Within 75 days after the end of each
fiscal year, the General Partner shall deliver to each Limited Partner:

(i)            a balance sheet as of the end of
such year and related financial statements for the year then ended, all of
which shall be examined and reported upon, with an opinion expressed by, the
Accountant; and

(ii)           other pertinent information regarding
the Partnership.

(c)           Within 75 days after the end of each
fiscal year, the General Partner shall deliver to each Limited Partner all
information with respect to the 

 23
 

 

Partnership necessary for
the Limited Partner’s Federal and state income tax returns.

8.4           Tax Returns and Elections; Tax
Matters Partner.  The General Partner
shall cause to be prepared and timely filed all Federal, state and local income
tax returns and other returns or statements required of the Partnership by applicable
law.  The Partnership shall claim all
deductions and make such elections for Federal or state income tax purposes
which the General Partner reasonably believes will produce the most favorable
tax results for the Partners.  The
General Partner is hereby designated as the Partnership’s “Tax Matters Partner,”
as defined in the Code, and in such capacity is hereby authorized and empowered
to act for and represent the Partnership and each of the Limited Partners
before the Internal Revenue Service in any audit or examination of any
Partnership tax return and before any court selected by the General Partner for
judicial review of any adjustment assessed by the Service.  The General Partner does hereby accept such
designation.  Each of the Limited
Partners does by execution of this Agreement consent to and agree to become
bound by all actions of the General Partner as “Tax Matters Partner,” including
any contest, settlement or other action or position which the General Partner
may deem proper under the circumstances. 
The General Partner and the Limited Partners specifically acknowledge,
without limiting the general applicability of this Section 8.4, that the
General Partner shall not be liable, responsible or accountable in damages or
otherwise to the Partnership or any Limited Partner with respect to any action
taken by it in its capacity as the Tax Matters Partner.  All out-of-pocket expenses incurred by the
General Partner in its capacity as the Tax Matters Partner shall be considered
expenses of the Partnership for which the General Partner shall be entitled to
full reimbursement.

8.5           Section 754 Election.  In the event a distribution of Partnership
Properties occurs which satisfies the provisions of Section 734 of the
Code or in the event a transfer of a Partnership Interest occurs which
satisfies the provisions of Section 743 of the Code, the Partnership
shall, if requested to do so by the distributee or transferee, elect, pursuant
to Section 754 of the Code, to adjust the basis of the Partnership Properties
to the extent allowed by such Section 734 or 743 and shall cause such
adjustments to be made and maintained. 
Any additional accounting expenses incurred by the Partnership in
connection with making or maintaining such basis adjustment shall be reimbursed
to the Partnership by the distributee of such assets or the transferee of such
Partnership Interest who benefits from the making and maintenance of such basis
adjustment.

8.6           Bank Accounts.  All funds of the Partnership shall be
deposited in the Partnership’s name in such bank, money market or similar
account(s) as may be designated by the General Partner and where there is
appropriate safety of principal. 
Withdrawals therefrom shall be made only by persons authorized to do so
by the General Partner.

ARTICLE IX

LIMITED PARTNERS

9.1           Rights of Limited Partners.  The Limited Partners shall have the powers
and shall be entitled to exercise the rights given to them by the terms of this
Agreement and by law, and the exercise of such rights shall not be deemed to
constitute participation or taking part in the management or control of the
business of the Partnership.

 24
 

 

9.2           Limitation on Limited Partners’
Liability.  No Limited Partner shall
be personally liable for the expenses, liabilities or obligations of the Partnership
or the General Partner.  The liability of
each Limited Partner shall be limited solely to the amount of such Limited
Partner’s Capital Contribution and its obligations under Section 4.6
above.  No provision of this Agreement
shall be construed to create an obligation of a Limited Partner to contribute
additional capital to the Partnership for the benefit of any third party.

9.3           Power of Attorney.

(a)           Each Limited Partner hereby
irrevocably constitutes and appoints the General Partner, as such Limited
Partner’s true and lawful attorney-in-fact with full power and authority to act
in such Limited Partner’s name, place and stead to make, execute, acknowledge,
deliver, swear to, file, record and publish: (i) any amendments to or
cancellations of the Certificate that may require the signature of such Limited
Partner, (ii) all fictitious name registration forms, (iii) any amendments to
this Agreement adopted in accordance with this Agreement, (iv) all
certificates, forms and other instruments necessary to qualify, continue or
terminate the qualification of the Partnership in any state where it may be
doing business, and (v) any other instrument which the General Partner deems to
be in the best interests of the Partnership to file and which is not inconsistent
with this Agreement.  The Power of
Attorney hereby granted by each Limited Partner is coupled with an interest, is
irrevocable, and shall survive the death, incapacity, dissolution, termination
or Bankruptcy of the Limited Partner or the transfer by the Limited Partner of
all or part of such Limited Partner’s Partnership Interest.  The Power of Attorney hereby granted is a
durable power of attorney.

(b)           Each Limited Partner shall deliver to
the General Partner, within five days of receipt of a request therefor from the
General Partner, such other and further powers of attorney or instruments as
the General Partner deems necessary or appropriate to carry out the intent and
purposes of subSection (a) above and the remainder of this Agreement.

9.4           Changes in Addresses.  Each Limited Partner shall promptly report to
the Partnership any changes in the address of the Limited Partner as previously
reported to the Partnership.  The General
Partner shall cause this Agreement (specifically Schedule A) to be duly amended
to reflect the address changes of the Limited Partners, if any.

9.5           General Partner as Limited Partner.  If the General Partner acquires or becomes a
transferee of all or a part of the Partnership Interest of a Limited Partner,
the General Partner, subject to the provisions of Article X, shall be
treated also as a Limited Partner to the extent of such Partnership Interest.

ARTICLE X

TRANSFERS OF PARTNERSHIP INTERESTS BY LIMITED PARTNERS

10.1         General Restrictions.  No Limited Partner shall Transfer all or any
part of such Limited Partner’s Partnership Interest, except as provided in this
Agreement.  Any purported 

 25
 

 

Transfer of a
Partnership Interest by a Limited Partner in violation of the terms of this
Agreement shall be null and void and of no effect.  A permitted Transfer shall be effective as of
the date specified in the instruments relating thereto that are delivered to
the General Partner.  Each Limited
Partner represents and warrants that such Limited Partner has acquired its
Partnership Interest for its own account for investment and not with a view to
the resale, fractionalization, division or distribution thereof.

10.2         Permitted Transfers.  A Limited Partner shall have the right to
Transfer (but not to substitute the transferee as a Substitute Limited Partner
in such Limited Partner’s place except in accordance with Section 10.3
below) all or any part of such Limited Partner’s Partnership Interest provided
that (i) the Transfer would not result in the “termination” of the Partnership
pursuant to Section 708 of the Code, (ii) the transferor has complied with
the provisions of Section 10.8 below, if applicable, (iii) the General
Partner has consented in writing to such Transfer and transferee, and (iv) if
required by the General Partner, the transferor or transferee has delivered to
the Partnership an unqualified opinion of counsel satisfactory to the
Partnership that neither the Transfer nor any offering in connection therewith
was required to be registered under either the Securities Act of 1933, as
amended, or any applicable state securities laws and that such Transfer does
not adversely affect any exemption from registration that was available to the
Partnership.  Any transferee desiring to
make a further Transfer shall be subject to all of the provisions of this
Article X to the same extent and in the same manner as any Limited Partner
desiring to make any Transfer.

10.3         Substitute Limited Partners.  No transferee (including, without limitation,
a transferee under Section 10.8 below) of all or any part of the
Partnership Interest of any Limited Partner shall become a Substitute Limited
Partner unless and until:

(a)           the transferor has stated such
intention in the instrument of assignment;

(b)           the transferee has executed an
instrument accepting and adopting the terms and provisions of this Agreement
and has provided such other instruments and such assurances as to the
enforceability of all such instruments as the General Partner may require;

(c)           the transferor or transferee has paid
all reasonable expenses of the Partnership in connection with the admission of
the transferee as a Substitute Limited Partner; and

(d)           the General Partner, in its sole and
absolute discretion, has consented in writing to such transferee becoming a
Substitute Limited Partner; provided however, if the transferor, directly or
indirectly, controls the Board of Directors of the General Partner by virtue of
(i) a majority of the Board being comprised of the transferor’s and its
affiliates’ designated representatives or (ii) the transferor and its
affiliates owning 40% or more of the outstanding stock of the General Partner,
the written consent required by this clause (d) shall be that of the holders of
50% or more of the Percentage Interests held by all Limited Partners other than
the transferor and its affiliates.

 26
 

 

The Limited
Partners hereby consent to any substitution made in accordance with the
provisions of this Section 10.3. 
Upon satisfaction of all of the foregoing conditions with respect to a
particular transferee, the General Partner shall cause this Agreement
(specifically Schedule A) to be duly amended to reflect the admission of
the transferee as a Substitute Limited Partner.

10.4         Effect of Bankruptcy, Death,
Incompetency or Termination of a Limited Partner.  The Bankruptcy, death, adjudication of
incompetency, dissolution or termination of the existence of a Limited Partner
shall not cause the termination or dissolution of the Partnership.  Upon any such occurrence, the trustee, executor,
administrator, guardian, conservator or similar legal representative of the
Limited Partner, in such capacity, shall be liable for all of the obligations
of the Limited Partner and have all of the rights of a Limited Partner for the
purpose of settling or managing the Limited Partner’s estate or property,
including the power to give a transferee the right to become a Substitute
Limited Partner subject to compliance with the conditions of Section 10.3.

10.5         Effect of Admission as a Substitute
Limited Partner.  Unless and until
admitted as a Substitute Limited Partner pursuant to Section 10.3, a
transferee of a Limited Partner Partnership Interest shall not be entitled to
exercise any rights of a limited partner in the Partnership, including the
right to vote, grant approvals or give consents with respect to such
Partnership Interest, the right to require any information or accounting of the
Partnership’s business or the right to inspect the Partnership’s books and
records, but such transferee shall only be entitled to receive, to the extent
of the Partnership Interest transferred to him, the Distributions to which the
transferor would be entitled.  A
transferee who has become a Substitute Limited Partner has, to the extent of
the Partnership Interest transferred to it, all the rights and powers of the
Person for whom he is substituted and is subject to the restrictions and
liabilities of a Limited Partner under this Agreement and the Act.  Upon admission of a transferee as a
Substitute Limited Partner, the transferor of the Partnership Interest so
acquired by the Substitute Limited Partner shall cease to be a limited partner
of the Partnership to the extent of such Partnership Interest.  A Person shall not cease to be a Limited
Partner upon assignment of all of such Limited Partner’s Partnership Interest
unless and until the transferee(s) becomes a Substitute Limited Partner.

10.6         Additional Limited Partners.

(a)           Subject to subSection (c) below,
the General Partner shall have the right and power from time to time after the
Closing to (i) establish one or more new classes of Limited Partner Partnership
Interests having such rights and obligations under this Agreement as the
General Partner in its discretion may determine, (ii) cause the Partnership to
issue and sell Partnership Interests of such new class or existing class of
Limited Partner Partnership Interests for such prices and on such other terms
and conditions as the General Partner in its discretion may determine and (iii)
admit the Persons purchasing such Partnership Interests as Limited Partners
within such new or existing class.

(b)           In establishing a new class of
Limited Partner Partnership Interests pursuant to this Section 10.6, the
General 

 27
 

 

Partner shall have the
right (subject to subSection (c) below) to amend this Agreement in such
manner as the General Partner in its discretion deems necessary or appropriate
to set out in full the relative rights and obligations of each class of
Partners (including, without limitation, with respect to distributions and
allocations) and to otherwise make conforming and other related amendments to
this Agreement.  Notwithstanding anything
to the contrary contained in this Agreement, the execution of any such
amendment by the General Partner shall be sufficient for such amendment to be
effective as to all Partners.

(c)           In exercising its powers under
subsections (a) and (b) above, the General Partner shall not be required to
reduce or dilute its Percentage Interest under this Agreement, but all
resulting changes in the Percentage Interests of the Limited Partner’s
Partnership Interests then outstanding shall be proportionate.

(d)           Each Person purchasing any Limited
Partner Partnership Interest pursuant to this Section 10.6 shall be deemed
admitted to the Partnership as a Limited Partner, within such new class if
applicable, and shall be subject to and bound by this Agreement.  No action or consent of any Limited Partner
shall be required for any action taken by the General Partner pursuant to this
Section 10.6, including the admission of a Limited Partner.  Each Person who is or may become a Limited
Partner hereby consents to any admission made in accordance with the provisions
of this Section 10.6.  The General
Partner shall cause this Agreement (specifically Schedule A) to be duly
amended to reflect the issuance of any Limited Partner Partnership Interests
and the admission of any additional Limited Partners.

10.7         Withdrawal of a Limited Partner.  No Limited Partner shall have the right or
power to withdraw, resign or retire from the Partnership prior to the
expiration of the term of the Partnership, as set forth in Section 2.4.

10.8         Right of First Refusal.  If at any time a Limited Partner (“Selling
Limited Partner”) desires to Transfer all or any part of its Limited Partner
partnership Interest (the “Subject Interest”) to a third party pursuant to a
bona fide offer (including a closing date within 120 days of the date of the
offer) to purchase for cash or cash and notes secured by the Subject Interest,
the following shall apply:

(a)           The Selling Limited Partner shall
submit to each other Partner(s) (collectively the “Other Partners”) a written
offer stating the Percentage Interest of the Subject Interest desired to be
sold or conveyed, the name of the proposed purchaser, the price and payment
terms and other terms and conditions of the third party offer (the “Offer”).

(b)           The Other Partners shall have 30 days
from the receipt of the Offer to accept the terms and conditions set forth in
the Offer by giving written notice thereof to the Selling Limited Partner.  Subject to subSection (c) below, each
Other Partner shall have the right to purchase a portion of the Subject
Interest equal to (i) a fraction the numerator of which is the Percentage
Interest of the Other Partner and the denominator of which is the sum of the
Percentage Interests 

 28
 

 

of all of the Other
Partners who desire to purchase part of the Subject Interest or (ii) such
greater portion as shall be agreed upon by all such Other Partners.

(c)           If the Other Partners agree to
purchase all (but not less than all) of the Subject Interest, then the Selling
Limited Partner and the Other Partners who are purchasing shall close the
purchase upon the terms and conditions of the Offer within 60 days after the
Offer is made (or if later the closing date set forth in the Offer).

(d)           If the Other Partners fail to agree
to purchase all of the Subject Interest within the time period set out above,
the Selling Limited Partner shall have the right, subject to compliance with
the provisions of Sections 10.2 and 10.3 above, to consummate the sale or
conveyance of all of the Subject Interest so long as (i) the purchaser is the
proposed purchaser named in the Offer, (ii) the price, payment and other terms
are at least as favorable to the Selling Partner as those set forth in the
Offer, (iii) the closing occurs on or before the date set forth in the Offer
and (iv) the proposed purchaser or an affiliate of the proposed purchaser also
acquires any ownership interest in the General Partner held by the Selling
Limited Partner.

(e)           Any purchaser desiring to make a
further sale or conveyance of any part of the Subject Interest shall be subject
to this Section 10.8.

ARTICLE XI

CHANGES IN GENERAL PARTNER

AND TRANSFERS OF ITS PARTNERSHIP INTEREST

11.1         Transfers of Partnership Interests.

(a)           No General Partner shall Transfer all
or any part of its Partnership Interest, except as provided in this
Agreement.  Any purported Transfer of a
Partnership Interest by a General Partner in violation of the terms of this
Agreement shall be null and void and of no effect.

(b)           A General Partner shall have the
right to Transfer (but not to substitute the transferee as a General Partner in
such General Partner’s stead) all or any part of such General Partner’s
Partnership Interest provided that (i) the Transfer would not result in the “termination”
of the Partnership pursuant to Section 708 of the Code, and (ii) the
remaining General Partners (if any) and a Limited Partner Supermajority have
consented in writing to such Transfer and transferee.  Any transferee desiring to make a further
Transfer shall be subject to all of the provisions of this Article XI to
the same extent and in the same manner as any General Partner desiring to make
any Transfer.  The Limited Partners
hereby consent to any Transfer made in accordance with the provisions of this
Section 11.1(b).

(c)           A Person shall not cease to be a
General Partner upon the assignment of all of such General Partner’s
Partnership Interest unless and until 

 29
 

 

the transferee(s) thereof
has been admitted to the Partnership as a successor general partner pursuant to
Section 11.5(a) below.  Upon such
admission, the successor general partner automatically shall be deemed to have
exercised a right to carry on the Partnership, and the Partnership shall not be
deemed to have dissolved and be required to wind up its affairs.

11.2         Withdrawal of a General Partner.  Except with the written approval of the other
General Partners (if any) and a Limited Partner Supermajority, no General
Partner shall have the right to withdraw, resign or retire from the
Partnership.

11.3         Removal
of a General Partner.

(a)           A Limited Partner Supermajority shall
have the right and power, to be exercised in writing, to remove a General
Partner as a general partner of the Partnership for “cause”.

(b)           For purposes of this
Section 11.3, “cause” shall mean the commission by a General Partner of:

(i)            an act of fraud, gross negligence,
willful misconduct or reckless disregard of duty with respect to the
Partnership; or

(ii)           a continuing material breach of the
General Partner’ s material duties and obligations under this Agreement.

11.4         Effect of Withdrawal or Removal of a
General Partner.  In the event of the
withdrawal or removal of a General Partner or any other “event of withdrawal of
a general partner” (as defined in subSection (g) below), the following
shall apply:

(a)           Except as provided in
Section 11.1(c) above or as otherwise approved by the specific written
consent of all Partners at the time, such General Partner shall immediately
cease to be a general partner of the Partnership (thereby terminating all
management powers, duties and responsibilities of such General Partner) and its
Partnership Interest shall be deemed to have been surrendered (except to the
extent it is to be purchased pursuant to subSection (d) below).

(b)           The remaining General Partners, if
any, shall have the right and power to continue the business of the Partnership
rather than allow the Partnership to be dissolved and its affairs wound
up.  Any exercise of such right by the
remaining General Partners shall be made in writing, within 60 days following
such event, and a copy thereof shall be given to each Limited Partner.  The remaining General Partners shall cause
this Agreement and the Certificate to be duly amended and filed to reflect any
such event or continuation as and when required by the Act.

(c)           (1)           If
the Partnership is dissolved as a result of such event and the business of the
Partnership is wound up and terminated pursuant to the 

 30
 

 

provisions of
Article XII, then such General Partner (the “Former General Partner”)
shall remain entitled to the Distributions and allocations that would otherwise
be made to it under the provisions of Articles VI and XII.

(2)           If the business of the Partnership is
continued by the remaining General Partners, if any, the Former General Partner
shall be entitled to receive from such remaining General Partners (and not from
the Partnership) the amount, in the manner and on the terms and conditions set
forth in subSection (d) below.

(3)           If the business of the Partnership is
continued by the Limited Partners pursuant to the provisions of
Section 11.5(b) below, the Former General Partner shall be entitled to
receive from the Partnership or the successor General Partner(s) (and not from
the Limited Partners) the amount, in the manner and on the terms and conditions
set forth in subSection (d) below.

(d)           Unless otherwise agreed upon by the
Former General Partner and the Person(s) specified in subSection (c)(2) or
(c)(3) above (the “Purchaser”), the amount payable to the Former General
Partner by the Purchaser shall be determined by the Accountant and shall be
equal to the amount, if any, that the Former General Partner would receive if
the non-liquid assets of the Partnership were sold for their Fair Value as of
the Valuation Date (as defined below), the Partnership was dissolved and the
proceeds from the deemed sale and all liquid assets of the Partnership as of
the Valuation Date were distributed to the Partners in accordance with the
provisions of Section 6.2(c) after compliance with Sections 6.2(a)
and (b) as of such date.  The “Valuation
Date” shall mean the date of the applicable “event of withdrawal of a general
partner”.  The Fair Value of any
non-liquid assets shall be determined by a qualified appraiser(s) selected by
the remaining General Partner, if any, or if none, by a Limited Partner
Majority.  The appraisal shall be
completed and delivered to the Accountant as soon as practicable following the
Valuation Date.

Within 15 days after the
Fair Value of the non-liquid assets is determined, the Accountant shall
determine the amount payable to the Former General Partner and shall give
written notice thereof to the Former General Partner, the remaining General
Partners, if any, the successor General Partner, if any, and the Limited
Partners.  Payment shall occur on such
date (the “Purchase Date”) as may be selected by the Purchaser, which date
shall be not more than 30 days following the date the notice is given by the
Accountant.  At the closing, the Former
General Partner shall execute and deliver to the Purchaser such deeds, bills of
sale, assignments and other instruments as shall reasonably be requested by the
Purchaser to effect the transfer to the Purchaser, as of the Valuation Date, of
all of the Former General Partner’s right, title and interest in the
Partnership and its assets.  Unless
otherwise agreed upon by the Purchaser and the Former General Partner, the
Purchaser shall pay the amount to the Former General Partner as follows:

 

 31

 

(i) A sum equal to 20% of
the amount, together with interest thereon from the Valuation Date (as
determined below), shall be paid in cash to the Former General Partner on the
Purchase Date,

(ii)           The balance of the amount shall be
evidenced by a promissory note, dated as of the Valuation Date, from the
Purchaser to the Former General Partner providing for principal to be payable
in 16 consecutive equal quarterly installments, commencing three months from
the Purchase Date, and for accrued interest from and after the Valuation Date
to be payable on each principal installment date.  The interest rate payable on the unpaid
balance of the promissory note shall be adjusted quarterly and for any given
quarterly period shall be an annual rate equal to the lesser of (A) the Prime
Rate in effect on the first banking day of such quarter or (ii) the maximum
rate permitted by law.  Such promissory
note shall be secured by the Partnership Interest acquired and shall be due and
payable in full upon the commencement of distributions upon the liquidation of
the Partnership or the sale or other disposition of, or the commencement of any
foreclosure action with respect to, all or substantially all of the Partnership
Properties.  The Purchaser shall have the
right to prepay such note, in whole or in part, from time to time, without
penalty.

The purchase price, if
payable by the Partnership, shall be deemed a payment with respect to
Partnership property under Section 736(b) of the Code to the extent of the
Former General Partner’s Capital Account balance and the remainder shall be
deemed a distributive share under Section 736(a) of the Code.  Should the purchase price be a negative
amount, the Former General Partner shall promptly pay the full amount thereof
to the Purchaser.

The Partnership shall pay
the fees and expenses of the Accountant and appraiser in connection with the
operation of the provisions of this Section but the cost thereby shall be
taken into account by the Accountant in determining the amount to be paid to the
Former General Partner.

(e)           In the event the Partnership suffers
damages as a result of or in connection with any withdrawal or removal of a
Former General Partner, the Partnership shall be entitled to receive from the
Purchaser, out of the amount otherwise due from the Purchaser to the Former
General Partner, such portion of such amount as shall be equal to such damages
or all of such amount if less than such damages.  The rights of the Partnership under this
subSection shall be in 

 32
 

 

addition to any other
rights and remedies it may have by law against the Former General Partner.

(f)            On the Purchase Date, the Purchaser
shall agree to indemnify and hold the Former General Partner harmless from and
against any and all loss, damage, liability or expense that the Former General
Partner may incur under any liability, debt or obligation of the Partnership
that was included by the Accountant as a Partnership liability, debt or
obligation in determining the amount payable to the Former General Partner by
the Purchaser.

(g)           For purposes of this
Section 11.4, the term “event of withdrawal of a general partner” shall
have the meaning set forth in the Act, except that the occurrence of an event
described in Section 17-404(a)(3) or (4) of the Act shall not cause the
affected General Partner to cease to be a general partner of the Partnership
unless and until a Limited Partner Supermajority agrees in writing that such
event shall cause the General Partner to cease to be a general partner.

11.5         Additional or Successor General Partners.

(a)           The General Partners, with the
written approval of a Limited Partner Supermajority, shall have the right and
power to admit to the Partnership from time to time one or more Persons as
general partners, whether as an additional general partner or as a successor
general partner.  If such admission is to
result in a reduction or dilution of the Percentage Interests of the Limited
Partners, the reduction or dilution must be proportionate among all Partners.

(b)           In the event the Partnership ceases
to have any general partners for any reason (other than upon the winding up and
termination of the Partnership), the Limited Partners shall have the right and
power to continue the business of the Partnership if, within 90 days after (but
effective as of) the date on which there ceases to be a general partner, all of
the Limited Partners determine in writing to so continue the Partnership and
select a successor general partner.

(c)           The Limited Partners hereby consent
to any admission made in accordance with the provisions of this
Section 11.5.  No Person shall be
deemed to be admitted as a General Partner unless and until he shall have
executed an instrument accepting and agreeing to be bound by all of the terms
of this Agreement and executed an amendment to the Certificate.  The General Partners shall cause this
Agreement and the Certificate to be duly amended and filed to reflect any such
admission.

11.6         Changes in General Partners.  The General Partners shall promptly cause
this Agreement (specifically Schedule A) and the Certificate to be duly amended
and filed to reflect any changes in the composition or addresses of the General
Partners.

 33
 

 

ARTICLE XII

DISSOLUTION AND TERMINATION

12.1         Events
Causing Dissolution.  The Partnership
shall be dissolved upon the first to occur of the following events:

(a)           the expiration of the term of the
Partnership, as set forth in Section 2.4 above;

(b)           any sale or other disposition by the
Partnership of all or substantially all of its interests in the non-liquid
Partnership Properties, unless the Partnership in connection with such
disposition acquires a promissory note or other evidence of indebtedness, in
which case the Partnership shall be dissolved following the payment of such
note or other evidence of indebtedness;

(c)           the written determination by the
General Partner that the Partnership should be dissolved;

(d)           the Bankruptcy of the Partnership;

(e)           the expiration of 90 days after the
withdrawal or removal of the last remaining General Partner, unless an election
and appointment has been made pursuant to Section 11.5(b); or

(f)            except as otherwise provided herein,
any other event causing a dissolution of the Partnership under the provisions
of the Act.

12.2         Effect of Dissolution.  Except as otherwise provided in this Agreement,
upon the dissolution of the Partnership, the General Partner (or if there is no
remaining General Partner, a liquidating trustee appointed by a Limited Partner
Supermajority) shall proceed to wind up, liquidate and terminate the business
and affairs of the Partnership.  In
connection therewith, the General Partner or liquidating trustee shall have the
specific power and authority for, in the name and on behalf of the Partnership
to liquidate and reduce to cash (to the extent necessary or advisable) the assets
of the Partnership as promptly as is consistent with obtaining a fair value
therefor, to apply and distribute the proceeds of such liquidation and any
remaining assets in accordance with the provisions of Section 12.3 below,
and to do any and all acts and things authorized by, and in accordance with,
the Act and other applicable laws for the purpose of winding up and
liquidation.  Notwithstanding the
foregoing, no assets shall be distributed in kind to any Limited Partner
without the consent of such Limited Partner.

12.3         Application of Proceeds.  Upon the dissolution and liquidation of the
Partnership, the assets of the Partnership shall be applied and distributed in
the order of priority established in Section 6.2.

 34
 

 

ARTICLE XIII

MISCELLANEOUS

13.1         Meetings.  Meetings of the Partners may be called by the
General Partner at any time and shall be called by the General Partner upon the
written request of Limited Partners holding at least 40% of the Percentage
Interests held by all Limited Partners. 
Unless all Limited Partners either waive in writing notice of a meeting
or are represented at a meeting in person or by proxy, written notice of each
meeting, stating its place, day and hour of the meeting and the purpose(s)
thereof, shall be given to each Limited Partner not less than five nor more
than 30 days before the date of such meeting. 
No meetings of the Limited Partners or the General Partner shall be
required for a group of Limited Partners or the General Partner to take any
action or make any decision, and any written document executed by the requisite
number of Limited Partners or the General Partner shall constitute the act or
decision of the Limited Partners or the General Partner.  The General Partner shall have the right to
establish reasonable rules and procedures regarding the conduct of, and voting
of the Limited Partners at, meetings of the Limited Partners.

13.2         Title to Assets.  Title to the Partnership Properties shall be
held in the name of the Partnership.  No
Partner shall individually have any ownership interest or rights in the
Partnership Properties, except indirectly by virtue of such Partner’s ownership
of an interest in the Partnership.  No
Partner shall have any right to seek or obtain a partition of the Partnership
Properties, nor shall any Partner have the right to demand and receive any
specific assets of the Partnership upon the liquidation of or any distribution
from the Partnership.  The General
Partner shall execute and file such documents as may be necessary to reflect
the Partnership’s ownership of the Partnership Properties in such public
offices as may be required.

13.3         Nature of Interest in the
Partnership.  A Partner’s interest in
the Partnership shall be personal property for all purposes.

13.4         Notices.  Any formal notice, demand, request or other
communication required or permitted to be given by this Agreement shall be
sufficient if in writing and if hand delivered in person or by delivery service
or sent by mail to the addresses of the Partners as they appear on the records
of the Partnership.  All mailed notices
shall be deemed to be given two days after deposit in the mail, postage
prepaid.

13.5         Creditors.  None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditors of the Partnership;
provided, however, that nothing in this Agreement shall be intended to limit
the liability of the General Partner to third party creditors.

13.6         Entire Agreement.  This Agreement, together with the Ground
Lease, contains the entire agreement among the Partners, in such capacity,
relative to the formation, operation and continuation of the Partnership.

13.7         Amendments.

(a)           Except as otherwise provided herein,
this Agreement shall not be modified or amended in any manner other than by the
written agreement of the General Partner and a Limited Partner Supermajority.

 35
 

 

(b)           This Agreement (including Schedule A)
may be amended by the General Partner, without any execution of such amendment
by the Limited Partners, in order to reflect the occurrence of any of the
following events provided that all of the conditions, if any, contained in the
relevant Sections of this Agreement with respect to such event have been
satisfied:

(1)           a change in the name or address of
the Partnership (Section 2.2);

(2)           the modification of this Agreement to
comply with the relevant tax laws (Section 4.3; Section 6.5(j));

(3)           an adjustment of the Percentage
Interests of the Partners upon making a Capital Contribution
(Section 4.6(c));

(4)           a change in the address of a Limited
Partner (Section 9.4);

(5)           the establishment of a new class of
Limited Partner Partnership Interests or the admission of additional Limited
Partners (Section 10.6);

(6)           the admission of a Substitute Limited
Partner (Section 10.3);

(7)           the removal of a General Partner
(Section 11.3);

(8)           the continuation of the Partnership
by any remaining General Partner (Section 11.4);

(9)           the admission of an additional or
successor General Partner or the change in the address of a General Partner
(Section 11.5; Section 11.6); and

(10)         the merger or consolidation of the
Partnership (Section 13.8).

Anything in this
Agreement to the contrary notwithstanding, no amendment to this Agreement with
respect to the admission of any Partner shall be effective unless and until the
Person being admitted shall have executed, in person or by power of attorney,
an instrument wherein he shall have agreed to be bound by all of the terms and
conditions of this Agreement, as so amended, in the capacity specified therein.

(c)           Anything in this Section 13.7 to
the contrary notwithstanding, no amendment to this Agreement (except under
Section 13.8 below) may:

 36
 

 

(1)           add to, detract from or otherwise
modify the purposes of the Partnership as set forth in Section 3.1,
without the written consent of all Partners;

(2)           enlarge the obligations of any
Partner under this Agreement, or convert the Partnership Interest of any
Limited Partner into the Partnership Interest of a General Partner, or reduce
(other than as provided in Sections 4.6, 10.3, 10.6, 10.8 or 11.5) the
Partnership Interest or Percentage Interest of any Partner, or modify the
limited liability of any Limited Partner, without the written consent of such
Partner; or (3) amend Section 2.4, this Section 13.7, or any
provision of this Agreement requiring the consent of a Limited Partner
Supermajority, without the consent of all Partners.

(d)           All amendments to the Certificate
shall be executed and filed in accordance with the provisions of the Act.

13.8         Merger or Consolidation.  To the extent permitted by the Act, the
Partnership may merge or consolidate with or into another limited partnership
or entity in accordance with an agreement of merger or consolidation approved
by the General Partner and a Limited Partner Supermajority.  Pursuant to Section 17-211(g) of the
Act, such an agreement of merger or consolidation may (i) effect an amendment
to this Agreement or (ii) effect the adoption of a new partnership agreement if
the Partnership is the surviving or resulting limited partnership in the merger
or consolidation.

13.9         Dispute Resolution.  Except in the case where a party seeks
injunctive relief as set forth in Section 13.10 below, the Partners agree
that in the event of any controversy arising out of or relating to this
Agreement, or any breach hereof, the affected parties agree to submit the
dispute for resolution by “mini-trial,” unless such parties agree that such
procedure is inappropriate for the matter in controversy.  Such mini-trial shall %e conducted in
accordance with the Center For Public Resources (CPR) Mini-Trial Agreement
for Business Disputes before a panel consisting of an executive with full
decision-making authority from each affected party and a neutral advisor
selected jointly by the parties.  Limited
discovery shall be permitted as agreed by the parties.  The mini-trial shall be conducted in
Minneapolis, Minnesota at an agreed time, place and date.  Arguments may be presented by counsel or
others as each party deems appropriate. 
Each affected party shall have no more than three hours (which may be
extended by mutual agreement) to present exhibits, testimonies, summaries of
testimony and exhibits and argument.  No
recording of the proceeding shall be permitted. 
The executives may have present and consult with other advisors as
deemed appropriate.  Such proceeding
shall be confidential and unless a mutually agreeable settlement is reached, no
portion of the proceeding shall be used for any purpose in any subsequent
proceeding.  If a mutually agreeable
settlement is reached, the panel shall prepare or caused to be prepared a
written settlement agreement setting forth the terms and conditions of the
settlement which shall be executed by each affected party and shall be
enforceable by and binding upon each part . 
In the event a mutually agreeable settlement is not reached through use
of the mini-trial proceeding, any affected party may initiate arbitration 

 37
 

 

as provided in the
following paragraph.  The neutral advisor
shall be disqualified as a witness, consultant or expert in any subsequent proceeding.

In
the event the affected parties have agreed that the above mini-trial procedure
is not appropriate or if no mutually agreeable settlement is reached through
use of the mini-trial procedure, the dispute shall be submitted to binding
arbitration In accordance with the rules of the Uniform Arbitration Act.  Such arbitration shall be initiated by an
affected party by notifying the other party(ies) in writing an$ requesting a
panel of five arbitrators from the American Arbitration Association.  Alternate strikes shall be made to the panel
commencing with the party requesting the arbitration until one name
remains.  Such individual shall be the
arbitrator for the controversy.  The
party requesting the arbitration shall notify the arbitrator who shall hold a
hearing(s) within 60 days of the notice. 
Reasonable discovery, including depositions, shall be permitted.  Discovery issues shall be decided by the
arbitrator.  Post-hearing briefs shall be
permitted.  The arbitrator shall render a
decision within twenty 20 days after the conclusion of the hearing(s).  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  All fees for such arbitration will be divided
equally among the participating parties.

13.10       Injunctive Relief.  The Partners acknowledge that a remedy at law
for any breach or attempted breach of Articles X or XI above will be
inadequate, agree that specific performance and injunctive and other equitable
relief shall be available in a case of any such breach or attempted breach and
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief.

13.11       Representations.

(a)           Each Partner hereby represents to the
Partnership and each other Partner that (i) the Partner, if it is an entity, is
duly organized and validly existing under the laws of its state of formation,
(ii) the execution, delivery and performance of this Agreement has been duly
authorized by all necessary and appropriate action and (iii) this Agreement
constitutes a valid and binding obligation of the Partner, enforceable against
it in accordance with the terms hereof.

(b)           Each Partner agrees to indemnify and
hold harmless the Partnership and each of the other Partners from and against
any and all damage, loss, liability, cost and expense (including reasonable
attorneys’ fees) which any of them may incur as a result of any
misrepresentation by the Partner in this Agreement or any breach by the Partner
of its agreements and warranties contained in this Agreement.

13.12       Governing Law.  This Agreement and the rights and obligations
of the Partners hereunder shall be subject to, governed by and interpreted in
accordance with the Act and other applicable laws of the State of Delaware.

 38
 

 

13.13       Severability.  In the event any provision of this Agreement
is held to be illegal, invalid or unenforceable to any extent, the and
enforceability of the remainder of this e affected thereby and shall remain in full
force and effect and shall be enforced to the greatest extent permitted by law.

13.14       Binding Agreement.  Subject to the restrictions on the
disposition of Partnership Interests herein contained, the provisions of this
Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective heirs, personal and legal representatives, and
permitted successors permitted assigns. 
This Agreement may be assigned by a Partner only as part of a transfer
of its Partnership Interest as permitted y the terms of this Agreement.

13.15       Counterparts.  This Agreement and any amendments hereto may
be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which shall constitute one agreement that is binding
upon all the parties hereto, notwithstanding that all parties are not
signatories to the same counterpart.

 39

 

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

	
  

  	
  GENERAL PARTNER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  DAKOTA FUELS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James D. Atwood

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  James D. Atwood

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LIMITED PARTNERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  FARMLAND INDUSTRIES INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James D. Atwood

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  James D. Atwood

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  SOUTH DAKOTA WHEAT GROWERS ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Ed Bosanko

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Ed Bosanko

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Treasurer/General Mgr

  
							

 

 

SCHEDULE A

LIST OF PARTNERS

	
  Name and Address of 

  General Partner

  	
   

  	
  Capital 

  Contribution

  	
   

  	
  Percentage 

  Interest

  
	
  DAKOTA FUELS, INC.

  	
   

  	
  $30,000.00

  	
   

  	
  1%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c/o          Farmland
  Industries, Inc. 

  3315 North Oak Trafficway 

  Kansas City, Missouri 64116

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name and Address of 

  General Partner

  	
   

  	
  Capital 

  Contribution

  	
   

  	
  Percentage 

  Interest

  
	
  Farmland Industries, Inc. 

  3315 North Oak Trafficway 

  Kansas City, MO 64116

  	
   

  	
  $1,455,300.00

  	
   

  	
  48.51%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  South Dakota Wheat Growers Association 

  110 Sixth Avenue Southeast 

  P.O. Box 1460 

  Aberdeen, South Dakota 57401

  	
   

  	
  $1,514,700.00

  	
   

  	
  50.49%

  

 

Dated:  August 27, 1991

Approved:  DAKOTA FUELS, INC.

	
  

  	
  By:

  	
  /s/ Ed Bosanko

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

SCHEDULE B

LEGAL DESCRIPTION
OF SITE

All of Lots 11 through 16, both inclusive, Evelo’s
Subdivision of the Northeast Quarter of Section 21, Township 123 North, Range
64 West of the Fifth Principal Meridian, Brown County, South Dakota

 

AMENDED
SCHEDULE A

HEARTLAND GRAIN FUELS,
L.P.

f/k/a SOUTH DAKOTA GRAIN
FUELS, L.P.

AGREEMENT OF LIMITED
PARTNERSHIP

AMENDED SCHEDULE A

November 30, 2000

LIST OF PARTNERS

	
  Name and Address 

  of General Partner

  	
   

  	
  Capital 

  Contribution

  	
   

  	
  Percentage 

  Interest

  
	
  DAKOTA FUELS, INC.

  	
   

  	
  $54,236.13

  	
   

  	
  0.82%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c/o          Farmland
  Industries, Inc. 

  12200 North Ambassador Drive 

  Kansas City, Missouri 64163 

  P.O. Box 20111 

  Kansas City, Missouri 64195

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name and Address 

  of Limited Partner

  	
   

  	
  Capital 

  Contribution

  	
   

  	
  Percentage 

  Interest

  
	
  Farmland Industries, Inc. 

  12200 North Ambassador Drive 

  Kansas City, Missouri 64163 

  P.O. Box 20111 

  Kansas City, Missouri 64195

  	
   

  	
  $3,064,239.60

  	
   

  	
  46.28%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  South Dakota Wheat Growers Association 

  110 Sixth Avenue Southeast 

  P.O. Box 1460 

  Aberdeen, South Dakota 57401

  	
   

  	
  $3,171,162.13

  	
   

  	
  47.90%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Williams Ethanol Services, Inc. 

  a/k/a Williams Bio-Energy 

  1300 S. 2nd Street 

  Pekin, Illinois 61554

  	
   

  	
  $331,034.00

  	
   

  	
  5.0%

  

 

Dated: November 30, 2000

Approved:  DAKOTA FUELS, INC.

	
  

  	
  By: 

  	
  /s/ Donald Gales

  
	
   

  	
   

  	
  Name: 

  	
  Donald Gales

  
	
   

  	
   

  	
  Title: 

  	
  Chairman

  

 

 

ASSIGNMENT OF
LIMITED PARTNERSHIP INTEREST

THIS ASSIGNMENT OF
LIMITED PARTNERSHIP INTEREST (this “Assignment”), made and entered into this
30th day of November, 2000, by and between South Dakota Wheat Growers
Association (“Assignor”), and Williams Ethanol Services, Inc., a/k/a Williams
Bio-Energy (“Assignee”).

WITNESSETH:

WHEREAS, Assignor
is a limited partner in Heartland Grain Fuels, L.P., a Delaware limited
partnership (the “Partnership”), pursuant to that certain Agreement of Limited
Partnership, dated August 27, 1991, as amended (the “Partnership Agreement”);
and

WHEREAS, Assignor
desires to assign to Assignee a two and one-half percent (2.5%) limited
partnership interest (the “Assigned Interest”) in the Partnership and to have
the Assignee admitted as a Substitute Limited Partner in the Partnership to the
extent of such Assigned Interest; and

WHEREAS, Assignee
desires to accept assignment of the Assigned Interest from Assignor, to accept
the provisions of the Partnership Agreement and to become a Substitute Limited
Partner in the Partnership;

NOW, THEREFORE, in
consideration of the mutual covenants and conditions contained herein, the
parties hereto agree as follows:

1.             Assignment.  Assignor warrants that it has fully right to
assign and hereby assigns to Assignee the Assigned Interest, free and clear of
any liens, claims or encumbrances for the purchase price of $450,000 to be paid
in cash at the execution of this Agreement. 
Assignor hereby intends that Assignee shall become a Substitute Limited
Partner in the Partnership pursuant to Section 10.3 of the Partnership
Agreement to the extent of the Assigned Interest.

2.             Acceptance of Assignment.  Assignee does hereby accept assignment of the
Assigned Interest from Assignor and Assignee does hereby adopt the terms and
provisions of the Partnership Agreement.

3.             Conditions Precedent.  This Assignment shall be effective only upon
the approval of this Assignment by the General Partner of the Partnership
pursuant to Section 10.2 of the Partnership Agreement and upon the consent of
the General Partner and Limited Partners of the Partnership for Assignee to
become a Substitute Limited Partner of the Partnership pursuant to Section 10.3
of the Partnership Agreement.

4.             Expenses of Admission.  Assignor does hereby agree to pay any and all
expenses incurred by the Partnership in admitting Assignee as a Substitute
Limited Partner in the Partnership.

5.             Huron, South Dakota Plant.  To the extent that there are additional costs
associated with the Huron, South Dakota Ethanol Plant owned by the Partnership
to reach an operation level of a 10 million gallon per year capacity, the
Assignor and Farmland Industries, 

 

Inc.(“Farmland”) shall be
responsible for such costs and shall indemnify and hold Assignee harmless from
such costs until such time as the Huron plant has been certified to be at a
10 million gallon per year capacity. 
In order to determine when the plant is capable of operating at such
capacity, an independent third party chosen by Assignor, Assignee and Farmland
shall be employed to rate the capacity of the plant.  Upon achieving a rating of a minimum
10 million gallon capacity from such third party, the requirements
contained herein shall be deemed to have been met.

6.             Working Capital.  Until such time as the Partnership has at
least $1,000,000 in net working capital, Assignor and Farmland shall hold
Assignee harmless from any and all calls for capital contribution made by the
Partnership, and Assignor and Farmland shall make such capital contributions
for each of Assignor’s and Farmland’s accounts.

IN WITNESS
WHEREOF, the parties hereto have executed this Assignment the day and year
first above written.

	
  

  	
  SOUTH DAKOTA
  WHEAT GROWERS ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Donald Gales

  
	
   

  	
   

  	
  Title: 

  	
  C.E.O. & Treas

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Assignor”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WILLIAMS ETHANOL
  SERVICES, INC.

  
	
   

  	
  a/k/a Williams
  Bio-Energy

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Ronald
  Miller

  
	
   

  	
   

  	
  Title: 

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Assignee”

  

 

 

CONSENT OF GENERAL
PARTNER

The undersigned,
being the general partner of Heartland Grain Fuels, L.P. (the “Partnership”),
does hereby consent to the foregoing Assignment of Limited Partnership Interest
pursuant to Section 10.2 of the Agreement of Limited Partnership and does
hereby consent to Williams Ethanol Services, Inc., a/k/a Williams Bio-Energy,
becoming a Substitute Limited Partner of the Partnership pursuant to Section
10.3 of the Agreement of Limited Partnership.

Dated: November 30, 2000

	
  

  	
  DAKOTA FUELS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Donald Gales

  
	
   

  	
   

  	
  Title: 

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  

 

CONSENT OF LIMITED
PARTNER

The undersigned,
being the sole non-assigning limited partner of Heartland Grain Fuels, L.P.
(the “Partnership”), pursuant to the Assignment of Limited Partnership Interest
between South Dakota Wheat Growers Association, as Assignor, and Williams
Ethanol Services, Inc., a/k/a Williams Bio-Energy, as Assignee, does hereby
consent to Williams Ethanol Services, Inc., a/k/a Williams Bio-Energy, becoming
a Substitute Limited Partner of the Partnership pursuant to Section 10.3 of the
Agreement of Limited Partnership.

	
  

  	
  FARMLAND
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Ken D.
  Thomas

  
	
   

  	
   

  	
  Title: 

  	
  Director Grain
  Processing

  
	
   

  	
   

  	
   

  	
   

  

 

ASSIGNMENT OF
LIMITED PARTNERSHIP INTEREST

THIS ASSIGNMENT OF
LIMITED PARTNERSHIP INTEREST (this “Assignment”), made and entered into this 30th day of November, 2000, by and between Farmland
Industries, Inc. (“Assignor”), and Williams Ethanol Services, Inc., a/k/a
Williams BioEnergy (“Assignee”).

WITNESSETH:

WHEREAS, Assignor
is a limited partner in Heartland Grain Fuels, L.P., a Delaware limited
partnership (the “Partnership”), pursuant to that certain Agreement of Limited
Partnership, dated August 27, 1991, as amended (the “Partnership Agreement”);
and

WHEREAS, Assignor
desires to assign to Assignee a two and one-half percent (2.5%) limited
partnership interest (the “Assigned Interest”) in the Partnership and to have
the Assignee admitted as a Substitute Limited Partner in the Partnership to the
extent of such Assigned Interest; and

WHEREAS, Assignee
desires to accept assignment of the Assigned Interest from Assignor, to accept
the provisions of the Partnership Agreement and to become a Substitute Limited
Partner in the Partnership;

NOW, THEREFORE, in
consideration of the mutual covenants and conditions contained herein, the
parties hereto agree as follows:

1.             Assignment.  Assignor warrants that it has full right to
assign and hereby assigns to Assignee the Assigned Interest, free and clear of
any liens, claims or encumbrances for the purchase price of $450,000 to be paid
in cash at the time of execution of this Agreement.  Assignor hereby intends that Assignee shall
become a Substitute Limited Partner in the Partnership pursuant to Section 10.3
of the Partnership Agreement to the extent of the Assigned Interest.

2.             Acceptance of Assignment.  Assignee does hereby accept assignment of the
Assigned Interest from Assignor and Assignee does hereby adopt the terms and
provisions of the Partnership Agreement.

3.             Conditions Precedent.  This Assignment shall be effective only upon
the approval of this Assignment by the General Partner of the Partnership
pursuant to Section 10.2 of the Partnership Agreement and upon the consent of
the General Partner and Limited Partners of the Partnership for Assignee to
become a Substitute Limited Partner of the Partnership pursuant to Section 10.3
of the Partnership Agreement.

4.             Expenses of Admission.  Assignor does hereby agree to pay any and all
expenses incurred by the Partnership in admitting Assignee as a Substitute
Limited Partner in the Partnership.

5.             Huron, South Dakota Plant.  To the extent that there are additional costs
associated with the Huron, South Dakota Ethanol Plant owned by the Partnership
to allow it to 

 

reach an operation level
of a 10 million gallon per year capacity, the Assignor and South Dakota
Wheat Growers Association (“SDWG”) shall be responsible for such costs and
shall indemnify and hold Assignee harmless from such costs until such time as
the Huron plant has been certified to be at a 10 million gallon per year
capacity.  In order to determine when the
plant is capable of operating at such capacity, an independent third party
chosen by Assignor, Assignee and SDWG shall be employed to rate the capacity of
the plant.  Upon achieving a rating of a
minimum 10 million gallon capacity from such third party, the requirements
contained herein shall be deemed to have been met.

6.             Working Capital.  Until such time as the Partnership has at
least $1,000,000 in net working capital, Assignor and SDWG shall hold Assignee
harmless from any and all calls for capital contribution made by the
Partnership, and Assignor and SDWG shall make such capital contributions for
each of Assignor’s and SDWG’s accounts.

IN WITNESS
WHEREOF, the parties hereto have executed this Assignment the day and year
first above written.

	
  

  	
  FARMLAND
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/  Ken D. Thomas

  
	
   

  	
   

  	
  Title: 

  	
  Director Grain
  Processing

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Assignor”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WILLIAMS ETHANOL
  SERVICES, INC.

  
	
   

  	
  a/k/a Williams
  Bio-Energy

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Ronald
  Miller

  
	
   

  	
   

  	
  Title: 

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Assignee”

  

 

 2
 

 

CONSENT OF GENERAL
PARTNER

The undersigned,
being the general partner of Heartland Grain Fuels, L.P. (the “Partnership”),
does hereby consent to the foregoing Assignment of Limited Partnership Interest
pursuant to Section 10.2 of the Agreement of Limited Partnership and does
hereby consent to Williams Ethanol Services, Inc., a/k/a Williams Bio-Energy,
becoming a Substitute Limited Partner of the Partnership pursuant to Section
10.3 of the Agreement of Limited Partnership.

Dated: November 30, 2000

	
  

  	
  DAKOTA FUELS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/  Donald Gales

  
	
   

  	
   

  	
  Title: 

  	
  Chairman

  

 

CONSENT OF LIMITED
PARTNER

The undersigned,
being the sole non-assigning limited partner of Heartland Grain Fuels, L.P.
(the “Partnership”), pursuant to the Assignment of Limited Partnership Interest
between Farmland Industries, Inc., as Assignor, and Williams Ethanol Services,
Inc., a/k/a Williams Bio-Energy, as Assignee, does hereby consent to Williams
Ethanol Services, Inc., a/k/a Williams Bio-Energy, becoming a Substitute
Limited Partner of the Partnership pursuant to Section 10.3 of the Agreement of
Limited Partnership.

	
  

  	
  SOUTH DAKOTA
  WHEAT GROWERS ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Donald Gales

  
	
   

  	
   

  	
  Title: 

  	
  C.E.O. &
  Treas

  

 

 3

 

PURCHASE AGREEMENT FOR STOCK AND

LIMITED PARTNERSHIP INTEREST

This Purchase
Agreement for Stock and Limited Partnership Interest (“Agreement”) is made and
entered into this 12th day of April, 2002, by and between Farmland Industries, Inc., a Kansas cooperative association,
(“Seller”) and Heartland Producers, LLC, a South
Dakota limited liability company (“Buyer”).

RECITALS

WHEREAS, Seller
owns 49% of the issued and outstanding common stock of Dakota Fuels, Inc., a
Delaware corporation (“Dakota Fuels”); and

WHEREAS, Dakota
Fuels owns a .82% interest in Heartland Grain Fuels, L.P., a Delaware limited
partnership (“Heartland Grain”), and is the sole General Partner of Heartland
Grain; and

WHEREAS, pursuant
to that certain Agreement of Limited Partnership dated August 27, 1991 by
and between Dakota Fuels and the limited partners set forth on Schedule A
to the Partnership Agreement, as amended, Seller was issued a 46.28% limited
partnership interest in Heartland Grain; and

WHEREAS, Seller
and Buyer executed that certain Option to Purchase Partnership Interest dated
April 3, 2002 whereby Seller granted Buyer an option to purchase all of
Seller’s shares of common stock in Dakota Fuels and Seller’s limited
partnership interest in Heartland Grain (collectively, “Seller’s Interest”);
and

WHEREAS, Buyer
desires to accept assignment of Seller’s Interest and to become a Substitute
Limited Partner in Heartland Grain;

NOW, THEREFORE, in
consideration of the mutual covenants and conditions contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged by each of the parties hereto, the parties agree as follows:

1.             Sale and Transfer of Shares and
Partnership Interest.  Subject to the
terms and conditions of this Agreement, Seller shall sell, transfer, assign and
deliver to Buyer, and Buyer agrees to purchase and accept, all of Seller’s
common stock in Dakota Fuels and all of Seller’s limited partnership interest
in Heartland Grain.

2.             Consideration.  Buyer will pay to Seller for Seller’s
Interest the sum of FIVE MILLION AND NO/100ths DOLLARS ($5,000,000.00) in full
on the Closing Date by wire transfer of funds (the “Purchase Price”).

3.             Closing.  Closing of the transaction shall occur on
April 12, 2002, or at such other time as mutually agreed by the parties (“Closing”).

4.             Documents to be Delivered at
Closing.  At Closing, Seller will
deliver to Buyer one (1) Dakota Fuels share certificate representing 490 shares
of common stock, duly endorsed 

 

for transfer to Buyer,
and an Assignment of Limited Partnership Interest assigning Seller’s limited
partnership interest in Heartland Grain.

5.             Representations and Warranties
by Seller.  Seller warrants and
represents to Buyer that:

a)              Seller is a
cooperative duly organized, validly existing and in good standing under the
laws of the state of Kansas;

b)             Seller has the full
right to sell, transfer and assign Seller’s Interest;

c)              Seller’s Interest
when transferred to Buyer will be free and clear of any liens or other
encumbrances, but is otherwise transferred “as is”, without additional warranty
other than those explicitly made herein; and

d)             Seller
has taken all corporate action required to authorize the execution and delivery
of this Agreement.

6.             Representations and Warranties
by Buyer.  Buyer warrants and
represents to Seller that:

a)              Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of South Dakota; and

b)             Buyer
has taken all corporate action required to authorize the execution and delivery
of this Agreement.

7.             Acceptance of Assignment.  Buyer does hereby accept assignment of Seller’s
Interest and agrees to become a Substitute Limited Partner in Heartland Grain
pursuant to Section 10.3 of the Partnership Agreement.  Buyer does hereby adopt the terms and
provisions of the Partnership Agreement as a limited partner of Heartland
Grain.

8.             Release.  Buyer hereby releases Seller from any and all
loss, cost, claims, damages, liabilities and causes of action arising from its
involvement with Dakota Fuels or Heartland Grain, this Agreement or the
transactions contemplated hereby.

9.             Governing Law.  This Agreement shall be construed in
accordance with and governed by the laws of Kansas.

10.           General.  The captions of paragraphs in this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.  This Agreement constitutes the entire
contract between the parties and may not be modified or amended except in writing
signed by both parties.  Neither party
may assign its rights under this Agreement without the prior written consent of
the other party.  All of the terms and
conditions of this Agreement shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

IN WITNESS
WHEREOF, the parties have executed this Agreement the day and year first above
written.

 

 

	
  SELLER:

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
  FARMLAND
  INDUSTRIES, INC.

  	
   

  	
  HEARTLAND PRODUCERS, LLC

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /s/ Tim R.
  Daugherty

  	
   

  	
  By 

  	
  /s/ Craig D Schaunaman

  
	
  Title: 

  	
  Vice President

  	
   

  	
  Title: 

  	
  President

  

 

 

 

ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST

THIS ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST is made as of the
12th day of April, 2002, by and between Farmland Industries, Inc., a Kansas cooperative corporation
(“Seller”), and Heartland Producers, LLC, a South
Dakota limited liability company (“Buyer”).

RECITALS

WHEREAS, Seller
and Buyer entered into that certain Purchase Agreement for Stock and Limited
Partnership Interest with respect to Seller’s ownership interests in Dakota
Fuels, Inc. and Heartland Grain Fuels, L.P. (the “Purchase Agreement”).

WHEREAS, in
connection with the Purchase Agreement, Seller agreed to sell, assign and
transfer to Buyer, and Buyer agreed to purchase and accept, all of Seller’s
limited partnership interest in Heartland Grain Fuels, L.P., a Delaware limited
partnership;

NOW, THEREFORE,
for good and valuable consideration, receipt of which is hereby acknowledged,
Seller does hereby transfer and assign good and marketable title, free and
clear of all liens, unto Buyer, its 46.28% limited partnership interest in
Heartland Grain Fuels, L.P.

IN
WITNESS WHEREOF, this document has been executed as of the 12th day of April, 2002.

FARMLAND INDUSTRIES, INC.

	
  By 

  	
  /s/ Tim R. Daugherty

  	
   

  
	
  Title: 

  	
  Vice President

  	
   

  

 

ACCEPTED,
this 12th day of April, 2002, by the undersigned who
hereby accepts assignment of the assigned interests.

	
  

  	
  HEARTLAND PRODUCERS, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Craig D. Schaunaman

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  

 

 

CONSENT OF GENERAL PARTNER

The undersigned,
being the general partner of Heartland Grain Fuels, L.P. (the “Partnership”),
does hereby consent to the foregoing Assignment of Limited Partnership Interest
pursuant to Section 10.2 of the Agreement of Limited Partnership dated August
27, 1991, as amended, and does hereby consent to Heartland Producers, LLC
becoming a Substitute Limited Partner of the Partnership pursuant to Section
10.3 of the Agreement of Limited Partnership.

Dated: April 12, 2002

	
  

  	
  DAKOTA FUELS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Donald
  Gales

  
	
   

  	
  Title:

  	
   Chairman

  

 

CONSENT OF LIMITED PARTNERS

The undersigned,
being the non-transferring limited partners of Heartland Grain Fuels, L.P. (the
“Partnership”), pursuant to the Assignment of Limited Partnership Interest between
Farmland Industries, Inc., and Heartland Producers, LLC, do hereby consent to
Heartland Producers, LLC becoming a Substitute Limited Partner of the
Partnership pursuant to Section 10.3 of the Agreement of Limited
Partnership.

	
  

  	
  SOUTH DAKOTA WHEAT GROWERS 

  
	
   

  	
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Donald Gales

  
	
   

  	
  Title:

  	
  C.E.O. & Treas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILLIAMS ETHANOL SERVICES, INC.,

  
	
   

  	
  a/k/a WILLIAMS BIO-ENERGY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Ronald Miller

  
	
   

  	
  Title:

  	
  President

  

 

 

OPTION TO
PURCHASE PARTNERSHIP INTEREST

This Option to
Purchase Partnership Interest (“Option Agreement), is made and entered into
this 3rd day of April, 2002, by and between Farmland
Industries, Inc., a Kansas cooperative association, (“Grantor’) and Heartland
Producers, LLC, a South Dakota limited liability company (“Grantee”).

RECITALS

WHEREAS, Grantor
is a stockholder of Dakota Fuels, Inc. (the “General Partner”), a Delaware
corporation.  Grantor owns 490 shares of
common stock, for a 49% ownership interest of the General Partner;

WHEREAS, the
General Partner is the sole General Partner of Heartland Grain Fuels, L.P. (the
“Limited Partnership”), a Delaware limited partnership, and holds a 0.82%
ownership interest in the limited Partnership;

WHEREAS, Grantor
is a limited partner of the Limited Partnership, pursuant to that Agreement of
Limited Partnership, dated August 27, 1991, (the “Partnership Agreement”) by
and between the General Partner, and the limited partners set forth on
Schedule A to the Partnership Agreement, as Amended November 30, 2000, to
include the following partners and their respective percentage interests in the
limited partnership:

	
  Dakota Fuels, Inc.

  	
  0.82% 

  
	
  Farmland Industries, Inc.

  	
  46.28% 

  
	
  South Dakota Wheat Growers Association 

  	
  47.90%

  
	
  Williams Ethanol
  Services, Inc. a/k/a 

  Williams Bio-Energy

  	
  5.00%

  

 

WHEREAS, Grantor
desires to grant to Grantee an option to purchase all of Grantor’s shares of
common stock in the General Partnership and all of Grantor’s limited
partnership interest in the Limited Partnership, in accordance with the
provisions of the Bylaws of the General Partnership adopted by the Board of
Directors on August 27, 1991, and the provisions of the Partnership Agreement.

NOW, THEREFORE, in
consideration of the mutual covenants and conditions contained herein, the
Grantor agrees as follows:

1.             Option to Purchase Shares and
Partnership Interest.   Grantor hereby grants to Grantee an option to
purchase all of Grantor’s shares of common stock in the General Partnership and
all of its limited partnership interest in the Limited Partnership, including
all real and personal property and all losses and profits for the total
purchase price of $5,000,000.00, to be paid at Closing in cash or cash
equivalent.

2.             Exercise of Option.  Expiration Date.   Grantee may
exercise this option by delivering written notice to Grantor.  This Option shall expire on April 12, 2002.

 

 

 

3.             Purchase Agreement.  Closing.   In the event the option is
exercised, Grantor and Grantee shall negotiate and duly execute a written
purchase agreement reflecting the full terms governing Grantee’s purchase of
Grantor’s shares of common stock in the General Partnership and Grantor’s
limited partnership interest in the limited Partnership.  The purchase agreement shall contain all
representations and warranties customary in an agreement for the purchase of a
substantial ownership interest in a corporation a limited partnership.  Closing for the sale shall take place on
April 12, 2002, or such other time as agreed by both parties.

4.             Closing Obligations.   At
the Closing, Grantor will deliver to Grantee (1) Share Certificate #2 duly
endorsed for transfer to Grantee, which will transfer to Grantee Grantor’s
ownership interest in the General Partnership; and (2) an Assignment of
Limited Partnership Interest transferring Grantor’s limited partnership
interest in the Limited Partnership. 
Upon the acceptance of the Transfer of Limited Partnership Interest,
Grantee shall assume Grantor’s rights and obligations as a limited general
partner of the Limited Partnership free and clear of all liens and
encumbrances.  Grantee, among other
things, shall assume Grantor’s capital account in the Limited Partnership and
shall be entitled to receive any distributions to partners made by the Limited
Partnership subsequent to the date of this Option Agreement, even if such
distributions are made from earnings or profits earned prior to the
Closing.  At the Closing, Grantor agrees
to transfer to Grantee, at no cost to Grantee, any distributions made to
Grantor by the Limited Partnership subsequent to the date of this Option
Agreement and before the Closing.  Income
or losses of the Limited Partnership, whatever the case may be, from the fiscal
year ending July 31, 2002, shall be allocated to Grantor and Grantee in
proportion to the number of days of the fiscal year ending July 31, 2002,
which Grantor and Grantee respectively owned the limited partnership interest
subject to this Option Agreement.

This Option to
Purchase Partnership Interest supersedes and replaces the earlier option signed
by the parties and dated January 21, 2002, which earlier option is revoked and
rescinded.

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement the day and year first
above written.

	
  FARMLAND INDUSTRIES, INC.

  	
   

  	
  HEARTLAND PRODUCERS, LLC 

  
	
  “Grantor”

  	
   

  	
  “Grantee”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   /s/ Tim R. Daugherty

  	
   

  	
  By

  	
  /s/ Craig D Schaunaman

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  President

  

 

 

 

CONSENT

Heartland
Producers LLC of Aberdeen South Dakota agrees to comply with the terms and
conditions expressed in this correspondence (letter from Harvey Oliver dated
February 27, 2002) as well as the policies expressed in policy number
GP-22 of Northern Electric Cooperative Inc.’s policies, a copy of which has
been provided to me.

Dated this 28th day of February, 2002.

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Heartland Producers LLC 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Craig D Schaunaman

  	
   

  
	
   

  	
   

  	
  Its

  	
  President

  	
   

  
						

 

HAO:lg

Pc: Dennis Hagny

Enclosure

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS
AGREEMENT

BETWEEN

FARMLAND
INDUSTRIES, INC.

AND

SOUTH
DAKOTA WHEAT GROWERS ASSOCIATION

DATED AS
OF

AUGUST
27, 1991

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS
AGREEMENT

THIS
AGREEMENT is made and entered into the 27th day of August, 1991, between
FARMLAND INDUSTRIES, INC., a
Kansas cooperative corporation (“Farmland”), and SOUTH DAKOTA
WHEAT GROWERS ASSOCIATION, a South Dakota cooperative association (“SDWG”).

WITNESSETH:

WHEREAS, Farmland
and SDWG desire to establish a limited partnership created under the laws of
the State of Delaware with the name of “South Dakota Grain Fuels, L.P.” (the “Partnership”)
to construct, equip, own and operate an ethanol production facility in
Aberdeen, South Dakota; and

WHEREAS, the
general partner of the Partnership is to be a corporation recently formed under
the laws of the State of Delaware with the name “Dakota Fuels, Inc.” (the “General
Partner”), which corporation is to be owned 49% by Farmland and 51% by SDWG;
and

WHEREAS, the
parties desire to enter into this Agreement for the purpose of completing the
organization of the General Partner and for causing the Partnership to be
created and capitalized and to set forth certain restrictions on
transferability of shares of the General Partner’s capital stock;

NOW, THEREFORE,
the parties hereto agree as follows:

ARTICLE I

ORGANIZATION OF THE GENERAL PARTNER

Section 1.1.            Initial Capitalization of the
General Partner.   Farmland will purchase 490 shares of Common Stock of
the General Partner for an aggregate purchase price of $14,700.00 and SDWG will
purchase 510 shares of Common Stock of the General Partner for an aggregate
purchase price of $15,300.00.

Section 1.2.  Directors of the General Partner.   So
long as this Agreement remains in effect, the parties agree that the size of
the Board of Directors of the General Partner shall always be an even number
and that the parties shall cast their collective votes in the election of
directors of the General Partner so as to elect to the Board of Directors an
equal number of persons designated by each of Farmland and SDWG.  In the event of the removal or resignation of
a Director or any other vacancy in a Director position, the party which
previously designed such former Director shall have the right to designate his
or her successor.

Section 1.3.  Officers of the General Partner.   The
officers of the General Partner shall include, without limitation, a chairman
of the board, a president, a vice president-general manager, a secretary and
one or more assistant secretaries.  The
office of chairman of the board and the office of president shall alternate
between a director nominated by Farmland and SDWG, respectively, on an annual
basis.

 

 

 

ARTICLE II

FORMATION OF THE PARTNERSHIP

Section 2.1.   Partnership
Agreement.   The initial Agreement of Limited Partnership of the
Partnership (the “Partnership Agreement”) shall be in a form and content
approved by the Board of Directors of the General Partner.

Section 2.2.   Formation
of the Partnership.   Farmland and SDWA shall, and Farmland and SDWA
shall cause the General Partner to, execute and deliver the Partnership
Agreement as soon as possible after incorporation of the General Partner.

Section 2.3.   Capitalization
of the Partnership.   Farmland and SDWG shall, and Farmland and SDWA
shall cause the General Partner to, make their respective capital contributions
to the Partnership at the “Closing”, as set forth in Sections 4.1 and 4.2 of
the Partnership Agreement.

ARTICLE
III

RESTRICTIONS ON TRANSFER OF SHARES

Section 3.1.   No
Dispositions.   Unless previously agreed to by the other party in
writing, neither Farmland nor SDWG (collectively the “Shareholders”), may
Transfer (as defined in the Partnership Agreement) voluntarily or
involuntarily, by operation of law or otherwise, all or any part of any shares
of capital stock (the “Shares”) of the General Partner acquired pursuant hereto
or hereafter acquired by such Shareholder, except as provided in this
Agreement.  Any purported Transfer of
Shares in violation of the terms of this Agreement shall be null and void and of
no effect.

Section 3.2.   Right
of First Refusal.   A Shareholder (the “Selling Shareholder”) may
Transfer all, but not less than all, of its Shares (the “Subject Shares”) to a
third party pursuant to a bona fide offer (including a closing date within 120
days of the date of the offer) to purchase for cash or cash and notes secured
by the transferred Shares, upon the following conditions:

(a)           The
Selling Shareholder shall submit to the other Shareholder (“Other Shareholder”)
a written offer describing the Shares, the name of the proposed purchaser, the
price and payment terms and other terms and conditions of the third party offer
(the “Offer”).

(b)           The
Other Shareholder shall have 30 days from the receipt of the Offer to accept
the terms and conditions set forth in the Offer by giving written notice
thereof to the Selling Shareholder.  If
the Other Shareholder agrees in a timely manner to purchase all of the Shares,
then the Selling Shareholder and the Other Shareholder shall close the purchase
upon the terms and conditions of the Offer within 60 days after the Offer is
made (or, if later, the closing date set forth in the Offer).

(c)           If
the Other Shareholder fails to accept the Offer in a timely manner, the Selling
Shareholder shall have the right to consummate the proposed sale of the Shares
so long as (i) the purchaser is the proposed purchaser named in the Offer,
(ii) the price, 

 

 

payment and other terms are at least as favorable to
the Selling Shareholder as those set forth in the Offer, (iii) the closing
occurs on or before the date set forth in the Offer, (iv) the purchaser
signs an instrument, in form and substance reasonably satisfactory to the Other
Shareholder, agreeing to be bound by all the terms and conditions of this
Agreement, and (v) the purchaser acquires, in accordance with the
Partnership Agreement, all partnership interests in the Partnership owned by
the Selling Shareholder.

Section 3.3.   Inadequate
Relief.   Farmland and SDWG acknowledge that a remedy at law for any
breach or attempted breach of this Article III will be inadequate, agree that
specific performance and injunctive and other equitable relief shall be
available in a case of any such breach or attempted breach and further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief.

Section 3.4.   Legend
on the Share Certificates.   The following legend shall be written,
printed or stamped on all certificates representing Shares held or owned by
Farmland or SDWG:

TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED

BY THE TERMS AND CONDITIONS OF A SHAREHOLDERS AGREEMENT DATED

AUGUST 27, 1991, BETWEEN FARMLAND INDUSTRIES, INC. AND SOUTH DAKOTA

WHEAT GROWERS ASSOCIATION.  A COPY OF
SUCH AGREEMENT IS ON FILE AT

THE EXECUTIVE OFFICE OF THE COMPANY.

ARTICLE
IV

MISCELLANEOUS

Section 4.1.   Governing
Law.   This Agreement shall be governed and interpreted in accordance
with the laws of the State of Delaware, without reference to the conflict of
laws rules of such State.

Section 4.2.   Binding
Effect.   This Agreement shall be binding upon and inure to the benefit
of the parties hereto, but may not be assigned by any party without the prior
written consent of the other parties.

Section 4.3.   Termination.   This
Agreement shall terminate automatically upon final liquidation of the
Partnership in accordance with Article XII of the Partnership Agreement, the
merger or consolidation of the General Partner with another corporation
(provided the General Partner is not the surviving corporation of such a
merger), and provided further that the surviving corporation is not an
affiliate of Farmland or SDWG.

Section 4.4.   Partial
Invalidity.   If any term or provision contained in this Agreement is
or is hereafter found to be invalid or unenforceable under any law, this
Agreement shall be deemed to be modified accordingly and the remaining terms
and provisions of this Agreement shall not be affected thereby and shall
continue in full force and effect.

 

 

 

Section 4.5.   Notices.   All
formal notices, consents, and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given when delivered in
person or by delivery service or when mailed, certified or registered mail,
return receipt requested, to:

If to SDWG:

South Dakota Wheat Growers Association 

110 South Sixth Avenue Southeast 

Aberdeen, South Dakota 57401

Attention: Edward Bosanko

If to Farmland:

Farmland Industries, Inc. 

3315 North Oak Trafficway 

P.O. Box 7305

Kansas City, Missouri 64116 

Attention: James D. Atwood

Section
4.6.   Dispute Resolution.

(a)           Except
in the case where a party seeks injunctive relief as set forth in Section 3.3
hereof, the parties agree in the event of any alleged breach hereof, to submit
the dispute for resolution by “mini-trial,” unless the parties agree that such
procedure is inappropriate for the matter in controversy.  Such mini-trial shall be conducted in
accordance with the Center For Public Resources (CPR) Mini-Trial
Agreement  for Business Disputes
before a panel consisting of an executive with full decision-making authority
from each party and a neutral advisor selected jointly by the parties.  Limited discovery shall be permitted as
agreed by the parties.  The mini-trial
shall be conducted in Minneapolis, Minnesota at an agreed time, place and
date.  Arguments may be presented by
counsel or others as each party deems appropriate.  Each party shall have no more than three
hours (which may be extended by mutual agreement) to present exhibits,
testimonies, summaries of testimony and exhibits and argument.  No recording of the proceeding shall be
permitted.  The executives may have
present and consult with other advisors as deemed appropriate.  Such proceeding shall be confidential and
unless a mutually agreeable settlement is reached, no portion of the proceeding
shall be used for any purpose in any subsequent proceeding.  If a mutually agreeable settlement is
reached, the panel shall prepare or caused to be prepared a written settlement
agreement setting forth the terms and conditions of the settlement which shall
be executed by each party and shall be enforceable by and binding upon each
party.  In the event a mutually agreeable
settlement is not reached through use of the mini-trial proceeding, either
party may initiate arbitration as provided in subsection (b) below.  The neutral advisor shall be disqualified as
a witness, consultant or expert in any subsequent proceeding.

 

 

 

(b)           In
the event the parties have agreed that the mini-trial procedure is not
appropriate or if no mutually agreeable settlement is reached through use of
the mini-trial procedure, the dispute shall be submitted to binding arbitration
in accordance with the rules of the Uniform Arbitration Act.  Such arbitration shall be initiated by either
party by notifying the other party in writing and requesting a panel of five
arbitrators from the American Arbitration Association.  Alternate strikes shall be made to the panel
commencing with the party requesting the arbitration until one name
remains.  Such individual shall be the
arbitrator for the controversy.  The party
requesting the arbitration shall notify the arbitrator who shall hold a hearing(s)
within 60 days of the notice.  Reasonable
discovery, including depositions, shall be permitted.  Discovery issues shall be decided by the
arbitrator.  Post-hearing briefs shall be
permitted.  The arbitrator shall render a
decision within twenty 20 days after the conclusion of the hearing(s).  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  All fees for such arbitration will be divided
equally among the participating parties.

Section 4.7.   Amendment.   This
Agreement may only be amended by an instrument in writing signed by all of the
parties hereto.

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first above written.

	
  

  	
   

  	
  FARMLAND INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ James Atwood

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOUTH DAKOTA WHEAT GROWERS

  
	
   

  	
   

  	
  ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Ed Boasanko

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Treasurer/General MgrExhibit
10.31

AMENDMENT
TO THE AGREEMENT

OF

LIMITED PARTNERSHIP

OF

HEARTLAND GRAIN FUELS, L.P.

This Amendment to
the Agreement of Limited Partnership of Heartland Grain Fuels, L.P. (the “Partnership”)
is made and entered into as of November 8, 2006, by and among Heartland
Producers, LLC (“HP”), HGF Acquisition, LLC (“Acquisition Sub”) and Dakota
Fuels, Inc. (“DF”).

WITNESSETH

WHEREAS, the
original partners of the Partnership entered into the Limited Partnership
Agreement of South Dakota Grain Fuels, L.P., dated as of August 27, 1991 (the “Agreement”);

WHEREAS, the
Partnership changed its name from South Dakota Grain Fuels, L.P. to Heartland
Grain Fuels, L.P.;

WHEREAS, pursuant
to the Partnership Interest and Stock Purchase Agreement by and among Advanced
BioEnergy, LLC (“ABE”), Acquisition Sub, Heartland Grain Fuels, LP (“HGF”), HP,
South Dakota Wheat Growers Association (“SDWG”) and DF dated as of November 7,
2006 (the “PISP Agreement”) and the Partnership Interest Purchase Agreement by
and among ABE, Acquisition Sub, Aventine Renewable Energy Holdings, Inc. (“Aventine”),
HGF, HP, SDWG and DF dated as of November 7, 2006 (the “Aventine Agreement”),
Acquisition Sub acquired all of SDWG’s limited partnership interest in the
Partnership and all of Aventine’s limited partnership interest in the
Partnership in exchange for cash and a limited liability company interest in
ABE;

WHEREAS, pursuant
to the terms of the PISP Agreement, Acquisition Sub purchased all of SDWG’s
stock in DF;

WHEREAS, pursuant
to the terms of the PISP Agreement, if the HP members approve, HP will exchange
all of its limited partnership interest in the Partnership in exchange for cash
and a limited liability company interest in ABE and HP will sell all of its
stock in DF to Acquisition Sub;

WHEREAS, the
Partners desire to amend the terms of the Agreement, if the HP members approve
the exchange and HP does exchange its Partnership limited partnership interest
and its DF stock, in the respects set forth herein and such Agreement, as
amended, shall constitute the Agreement.

NOW, THEREFORE, in
consideration of the premises and mutual agreements contained herein, the
parties hereto do hereby amend the Agreement as follows:

 

 

 

1.             Amendment to
Section 6.4 regarding Allocation of Income, Loss and Credits.   Notwithstanding
Article VI of the Agreement, if HP exchanges its interest in the Partnership
pursuant to the terms of the PISP Agreement, the Partnership shall allocate to
HP an amount of Income or Loss and Credits which would have been allocated to
HP if HP would have been a Member of ABE from the First Closing Date to the
Second Closing Date, including any and all interim periods during such periods.

2.             Distributions.   Notwithstanding
Section 6.1 of the Agreement, if HP exchanges its interest in the Partnership
pursuant to the terms of the PISP Agreement, the Partnership shall distribute
to HP an amount of cash equal to the amount of cash that would have been
distributed to HP if HP would have been a Member of ABE from the First Closing
Date to the Second Closing Date.

3.             Continued
Force and Effect.   Except as amended herein, all provisions of
the Agreement shall remain and continue in full force and effect.

4.             Counterparts.   This
Amendment may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall constitute an
agreement, notwithstanding that all parties are not signatories to the same
counterpart.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the date first written above.

	
  

  	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Dakota Fuels, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rory Troske

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rory Troske

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIMITED PARTNERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Heartland Producers, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Craig Schaunaman

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Craig Schaunaman

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  HGF Acquisition, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Revis Stephenson III

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

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