Amended and Restated Note Purchase Agreement, dated July 6, 2012 by and among Aemetis Advanced Fuels Keyes, Inc., Keyes Facility Acquisition Corp., Aemetis, Inc., Third Eye Capital Corporation, as Administrative Agent, and the Noteholders who are a party thereto

 

A.

AEAFK, the Administrative Agent and certain Noteholders entered into a Note Purchase Agreement dated as of October 18, 2010, as amended by an Amendment No. 1 to Note Purchase Agreement dated as of March 10, 2011, as further amended by a Limited Waiver and Amendment No. 2 to Note Purchase Agreement dated as of June 20, 2011, as further amended by a Limited Waiver and Amendment No. 3 to Note Purchase Agreement dated as of August 31, 2011, as further amended by a Limited Waiver and Amendment No. 4 to Note Purchase Agreement dated as of November 8, 2011, as further amended by a Limited Waiver, Consent and Amendment No. 5 to Note Purchase Agreement dated as of January 31, 2012, as further amended by Amendment No. 6 to Note Purchase Agreement dated as of April 13, 2012 and as further amended by a Limited Waiver and Amendment No. 7 to Note Purchase Agreement dated as of May 15, 2012 (the “Original Note Purchase Agreement”) pursuant to which the Noteholders have acquired notes of AEAFK.

 

B.

Parent, AE Advanced Fuels, Inc., a corporation incorporated and existing under the laws of the State of Delaware and Cilion, Inc., a corporation incorporated and existing under the laws of the State of Delaware (“Cilion”) have entered into an Agreement and Plan of Merger dated as of July 6, 2012 (the “Merger Agreement”) pursuant to which Acquisition Corp. will merge with and into Cilion with Cilion continuing as the surviving corporation (the “Acquisition”) in accordance with the terms and conditions set forth therein, and by operation of law, Cilion shall assume the obligations of Acquisition Corp. hereunder and immediately following the Acquisition, Cilion will change its name to Aemetis Facility Keyes, Inc.

 

C.

Parent and AE Advanced Fuels, Inc. are obligated pursuant to the Merger Agreement to pay the merger consideration described therein to the former shareholders of Cilion and in connection therewith the Borrowers have requested that the Noteholders invest the aggregate sum of $15,000,000 in exchange for the Acquisition Notes (as defined below).

 

D.

The Borrowers have requested that the Noteholders invest up to an additional aggregate sum $18,000,000 in the Borrowers on a revolving basis in exchange for the Revolving Notes (as defined below).

 

E.

The Noteholders have agreed to cancel all future Revenue Participation (as defined in the fee letter dated October 18, 2010 from Agent to AEAFK and the Parent, as amended by the fee letter dated March 10, 2011), and exchange the accrued and unpaid Revenue Participation in the amount of $8,070,973.60 as of May 31, 2012 for the Revenue Participation Notes (as defined below).

 

F.

The parties hereto desire to amend and restate in its entirety the Original Note Purchase Agreement (without such amendment and restatement constituting a novation thereof) to set forth herein their mutual understandings and agreements pertaining to the transactions contemplated herein.

 

G.

The Borrowers are desirous of creating, issuing and selling certain additional Notes (as hereinafter defined), the issuance of which is provided for by this Agreement;

 

H.

The Borrowers, under the laws relating thereto, are duly authorized to create, issue and sell the Notes to be issued as herein provided to evidence indebtedness of the Borrowers existing on the date hereof or incurred by the Borrowers at any time hereafter in accordance with the terms of this Agreement;

 

I.

All necessary resolutions of the Directors (as hereinafter defined) of the Borrowers have been duly passed and other proceedings taken and conditions complied with to make the creation and issue of the Notes proposed to be issued hereunder and this Agreement and the execution thereof and hereof legal, valid and effective;

(a)  

there is consummated any amalgamation, consolidation, statutory arrangement (involving a business combination), merger of the Parent or similar transaction (i) in which the Parent is not the continuing or surviving corporation, or (ii) pursuant to which any Voting Shares of the Parent would be reclassified, changed or converted into or exchanged for cash, securities or other property, other than (in each case) an amalgamation, consolidation, statutory arrangement, merger of the Parent or similar transaction in which the holders of the Voting Shares of the Parent immediately prior to the amalgamation, consolidation, statutory arrangement, merger or similar transaction have, directly or indirectly, more than 50% of the Voting Shares of the continuing or surviving corporation immediately after such transaction;

(b)  

any Person or group of Persons shall succeed in having a sufficient number of its nominees elected to the Board such that such nominees, when added to any existing Director remaining on the Board after such election who was a nominee of or is an Affiliate or related Person of such Person or group of Persons, will constitute a majority of the Board; provided, however, that no Change of Control shall be deemed to occur in connection with the appointment of a nominee in the event of the death, retirement or removal of an existing Director;

(c)  

any “person or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Permitted Investors, shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 20% of the outstanding Voting Shares of Parent;

(d)  

the Parent shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of any Borrower or other direct or indirect Subsidiary of the Parent free and clear of all Liens (except Liens created by the Security Documents and Liens securing other obligations of the Obligors pursuant to the Financing Documents);

(e)  

any sale of all or substantially all of the assets of any of the Company Parties;

(f)  

the Chairman ceases to own, directly or indirectly, at least 10 million shares of the Capital Stock of the Parent;

(g)  

any sale of the Keyes Plant;

(h)  

Eric McAfee ceases to be the Chairman of the Parent or any Borrower or employed as the Chief Executive Officer of the Parent or any Borrower; or

(i)  

the execution by any Company Party or any Affiliateof any Company Party of any agreement, letter of intent, commitment, arrangement, or understanding with respect to any proposed transaction or event or series of transactions or events that, individually or in the aggregate, may reasonably be expected to result in any of the events in (a) through (h) above or the execution of any written agreement that, when fully performed by the parties thereto, would result in any of the events in (a) through (h) above.

(a)  

interest rate swap agreements, forward rate agreements, floor, cap or collar agreements, futures or options, insurance or other similar agreements or arrangements, or any combination thereof, entered into or guaranteed by the Person where the subject matter thereof is interest rates or the price, value or amount payable thereunder is dependent or based upon interest rates or fluctuations in interest rates in effect from time to time (but excluding non-speculative conventional floating rate indebtedness);

(b)  

currency swap agreements, cross-currency agreements, forward agreements, floor, cap or collar agreements, futures or options, insurance or other similar agreements or arrangements, or any combination thereof, entered into or guaranteed by the Person where the subject matter thereof is currency exchange rates or the price, value or amount payable thereunder is dependent or based upon currency exchange rates or fluctuations in currency exchange rates in effect from time to time; and

(c)  

any agreement for the making or taking of any commodity (including coal, natural gas, oil and electricity, but specifically excluding any agreements for the sale of coal to brokers or end-users), swap agreement, floor, cap or collar agreement or commodity future or option or other similar agreement or arrangement, or any combination thereof, entered into or guaranteed by the Person where the subject matter thereof is any commodity or the price, value or amount payable thereunder is dependent or based upon the price or fluctuations in the price of any commodity;

(a)  

all obligations of the Person for borrowed money, including debentures, notes or similar instruments and other financial instruments and obligations with respect to bankers' acceptances and contingent reimbursement obligation relating to letters of credit;

(b)  

all Financial Instrument Obligations of the Person;

(c)  

all Capital Lease Obligations and Purchase Money Obligations of the Person;

(d)  

all obligations to pay the deferred and unpaid purchase price of property or services other than for goods and services purchased in the ordinary course of business and paid for in accordance with customary practice and not represented by a note, bond, debenture or other evidence of indebtedness;

(e)  

all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person;

(f)  

all current liabilities of such Person represented by a note, bond, debenture or other evidence of indebtedness;

(g)  

all indebtedness of any other Person secured by a Lien on any assets of the Person;

(h)  

all obligations to repurchase, redeem or repay any securities of the Person prior to or concurrently with the Applicable Stated Maturity Date; and

(i)  

all Financial Assistance of the Person with respect to obligations of another Person if such obligations are of the type referred to in clauses (a) to (h).

(d)  

a material adverse effect on any of the Affairs of the Parent,any Borrower, the Company Parties taken as a whole, or the Consolidated Entities taken as a whole; or

(e)  

a material adverse effect on (i) the ability of any Borrower or any other Obligor to perform their obligations under any of the Financing Documents or (ii) the Administrative Agent’s, the Administrative Agent's or any Noteholder's ability to enforce rights and remedies pursuant to any Financing Document or collect any of the Indebtedness due to any Secured Partyor any Investor pursuant to any Financing Document.

(f)  

that is a bona fide sale at fair market value of inventory in the ordinary course of business for the purpose of carrying on the Business;

(g)  

of assets in exchange for other assets comparable or superior as to type, value and quality; or

(h)  

of assets (other than securities) which have no material economic value in the Business or business or are obsolete or worn out.

(a)  

unsecured Indebtedness that is (i) incurred in the ordinary course of business of the Company Parties (including open accounts extended by suppliers on normal trade terms in connection with purchases of goods and services which are not overdue for a period of more than 90 days or, if overdue for more than 90 days, as to which a dispute exists and adequate reserves in conformity with GAAP have been established on the books of the Company Parties)and (ii) in respect of performance, reclamation, surety or appeal bonds provided in the ordinary course of business or letters of credit issued in lieu of such bonds, but excluding (in each case), Indebtedness incurred through the borrowing of money in respect thereof;

(b)  

Indebtedness of the Company Parties to the Secured Partiesunder the Financing Documents;

(c)  

Indebtedness incurred by the Company Parties pursuant to Purchase Money Mortgages on terms satisfactory to the Administrative Agent, acting reasonably, up to an aggregate outstanding amount, at any time, of $500,000(or the equivalent amount in another currency) (excluding the Corn Oil Separation System Agreement dated November 16, 2011 between Solution Recovery Services, LLC, a Michigan limited liability company and AEAFK, in effect as of the date hereof);

(d)  

Indebtedness incurred by the Borrower or any Company Party pursuant to (i) the Corn Procurement and Working Capital Agreement, dated March 11, 2011 between AEAFK and J.D. Heiskell & Co.; (ii) the Heiskell Purchasing Agreement, dated March 11, 2011 by and between AEAFK and J.D. Heiskell & Co.; and (iii) the Security Agreement dated March 9, 2011 by and between AEAFK and J.D. Heiskell Holdings, LLC, in each case, as such agreements are in effect on the date hereof;

(e)  

Intercompany Indebtedness provided such Intercompany Indebtedness (x) is postponed and subordinated to the Note Indebtedness on such terms and pursuant to a promissory note or credit agreement in form and substance satisfactory to the Administrative Agent and (y) is evidenced by a promissory note or loan agreement containing postponement and subordination provisions in form and substance satisfactory to the Administrative Agent; and

(f)  

the Subordinated Debt set forth on Schedule 1.1(a).

(a)  

Liens for taxes, rates, assessments or governmental charges or levies which are not due or delinquent or the validity of which is being contested at the time by the Person in good faith by proper legal proceedings if adequate reserves with respect thereto are maintained on the books of the applicable Company Party in conformity with GAAP;

(b)  

Inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, warehousemen’s carriers and others in respect of construction, maintenance, repair or operation of assets of the Person, provided that (i) such Liens are related to obligations not due or delinquent and are not registered, recorded or filed against any assets of the Person or (ii) such Liens are being contested in good faith by appropriate proceedings, so long as (x) the Administrative Agent determines that such contest does not involve any risk of the sale, forfeiture or loss of any of the Collateral, (y) enforcement of the contested item shall be effectively stayed and (z) a bond or other security instrument has been posted or other adequate provision for payment thereof has been provided in such manner and amount as to assure the Administrative Agent in its discretion that any amounts determined to be due will be promptly paid in full when such contest is resolved; provided, further, that such Liens do not, in the opinion of the Administrative Agent, materially reduce the value of the assets of the Person or materially interfere with the use of such assets in the operation of the business of the Person;

(c)  

Easements, rights-of-way, servitudes, restrictions and similar rights in real property comprised in the assets of the Person or interests therein granted or reserved to other Persons, provided that such rights do not, in the opinion of the Administrative Agent, materially reduce the value of the assets of the Person or materially interfere with the use of such assets in the operation of the business of the Person;

(d)  

Liens securing appeal bonds and other similar Liens arising in the ordinary course of business in connection with court proceedings (including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit) or any other instruments serving a similar purpose;

(e)  

Liens arising out of a judgment or award that (i) does not constitute an Event of Default underSection 8.1(p)and (ii) is the subject to a good faith contest by the relevant Company Party by proper legal proceedings;

(f)  

Liens in favour of the Administrative Agent and the other Secured Partiescreated by the Security Documents or otherwise to secure the obligations of the Obligors pursuant to the Financing Documents;

(g)  

Liens existing on the date hereof and disclosed on Schedule 1.1(b) to the extent such Liens conforms to their description on Schedule 1.1(b) and including any extension, renewal or refinancing thereof provided the amount so secured does not exceed the original amount secured immediately prior to such extension, renewal or refinancing and scope of the security creating the Lien is not extended;

(h)  

Liens arising out of or in connection with (i) the Corn Procurement and Working Capital Agreement, dated March 11, 2011 between AEAFK and J.D. Heiskell & Co.; (ii) the Heiskell Purchasing Agreement, dated March 11, 2011 by and between AEAFK and J.D. Heiskell & Co.; (iii) the Security Agreement dated March 9, 2011 by and between AEAFK and J.D. Heiskell Holdings, LLC., (iv) the WDG Purchase and Sale Agreement dated March 23, 2011 between A.L. Gilbert Company, a California corporation, and AEAFK, (v) the Corn Oil Separation System Agreement dated November 16, 2011 between Solution Recovery Services, LLC, a Michigan limited liability company, and AEAFK, and (vi) the Revolving Line of Credit Agreement between Aemetis International, Inc. and Laird Q. Cagan; in each case, to the extent such Liens secure Indebtedness described in such agreements on the date of this Agreement;

(g)  

Permitted Encumbrances; and

(h)  

Purchase Money Mortgages securing obligations up to an aggregate outstanding amount, at any time, of $500,000 (or the equivalent amount in another currency).

Every Note executed and delivered by the Borrowers hereunder shall be deemed to be outstanding until it shall be cancelled or delivered to the Borrowers for cancellation, or a new Note shall be issued in substitution therefore, provided that:

(a)  

where a new Note has been issued in substitution for a Note which has been mutilated, lost, stolen or destroyed, only the new Note shall be counted for the purpose of determining the aggregate principal amount of Notes outstanding;

(b)  

Notes which have been partially redeemed or purchased shall be deemed to be outstanding only to the extent of the unredeemed or unpurchased part of the principal amount thereof; and

(c)  

for the purpose of any provision of this Agreement entitling Holders to vote, sign consents, requests or other instruments or take other action under this Agreement, Notes owned, directly or indirectly, legally or equitably by Borrowers or any Affiliate or Subsidiary of the Borrowers shall be disregarded, except that:

(i)  

Notes so owned which have been pledged in good faith other than to the Borrowers or an Affiliate or Subsidiary of any Borrower shall not be so disregarded if the pledgee shall establish, to the satisfaction of the such Borrower, the pledgee's right to vote such Notes, sign consents, requisitions or other instruments or take such other actions in its discretion free from the control of any Borrower or any Affiliate or Subsidiary of such Borrower; and

(ii)  

Notes so owned shall not be disregarded if they are the only Notes outstanding.

This Agreement and the other Note Purchase Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Note Purchase Document (except, as to any other Note Purchase Document, as expressly set forth therein) and the transactions contemplated hereby and therebyshall be governed by, construed and enforced in accordance with the laws of the State of Delaware.

Each Borrower and the Parent irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Holder or any Related Party of the foregoing in any way relating to this Agreement or any other Note Purchase Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of Delaware sitting in the State of Delaware, and of the United States District Court sitting in the State of Delaware, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such  courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such Delaware State court or, to the fullest extent permitted by applicable law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Note Purchase Document shall affect any right that the Administrative Agent or any Holder may otherwise have to bring any action or proceeding relating to this Agreement or any other Note Purchase Document against the Borrowers, the Parent or any other Company Party or any of their respective properties in the courts of any jurisdiction.

All negotiations and agreements pertaining to the Financing shall be deemed to have been conducted and concluded in the Province of Ontario.

(a)  

all credit, collateral, business, financial, management, legal and other due diligence, including the following:

(i)  

a final use of proceeds of the Financing (which, once agreed by the Administrative Agent, shall be the Agreed Use of Proceeds) and pro forma consolidated balance sheet of the Parent after giving effect to the Acquisition and Financing;

(ii)  

satisfaction of the Administrative Agent that there is no material damage or destruction to any of the Collateral, nor any material depreciation in the value thereof, and that all Collateral is covered by insurance in sufficient form and substance naming the Administrative Agent as first loss payee and additional insured;

(iii)  

a final valuation report from Natwick Associates, in form and substance satisfactory to the Administrative Agent;

(iv)  

finalization of the definitive legal and tax structure in respect of the Financing in form and substance satisfactory to the Administrative Agent; and

(v)  

satisfaction of the Administrative Agent that there are no pending or threatened disputes that seeks to adjourn, delay, enjoin, prohibit or impose material limitations on any aspect of the Financing or that has had, or could have, a Material Adverse Effect;

(b)  

the Administrative Agent shall have received, in each case in form and substance satisfactory to it:

(vi)  

a certificate of a Senior Officer of each Borrower and each other Obligor attaching copies of its Organizational Documents and any stockholder agreement with respect to such Obligor, a list of its officers and directors with occupations of all directors, specimens of the signatures of those officers or directors who are executing the Note Purchase Documents on its behalf, copies of the corporate proceedings taken to authorize it to execute, delivery, and perform its obligations under the Note Purchase Documents and all related and security documentation, and other corporate and “know-your-client” information that Administrative Agent or the other Noteholders may require;

(vii)  

a certificate of status, compliance, good standing or equivalent for each Borrower and each other Obligor for its jurisdiction of incorporation and for each jurisdiction where it carries on business or where registrations or filings in relation to the Collateral have been effected;

(viii)  

all required director, shareholder, government and third-party consents, approvals and Authorizations necessary or required in connection with this Agreement, the Notes, the Security Documents and any other Note Purchase Documents;

(ix)  

all Note Purchase Documents (including the Blocked Account Agreements) duly executed and delivered by a Borrower, the other Obligors and the other parties thereto and, where applicable, in form suitable for filing or recording in all filing and recording offices that the Administrative Agent may deem necessary or desirable in order to create a valid first priority Lien, subject only to Permitted Liens, on the property described therein in favour of the Administrative Agent, for the benefit of the Secured Parties, and evidence that all filing, stamp, intangible, and recording taxes and fees have been paid;

(x)  

UCC, bankruptcy, litigation and other customary transaction searches shall have been received and be deemed satisfactory to the Administrative Agent, and confirmation satisfactory to the Administrative Agent of registration, recordation and filing, as applicable, of all Security Documents in all offices of public record as may be required to properly perfect the mortgages, charges and Liens created thereby, subject only to Permitted Liens;

(xi)  

releases, discharges, subordination agreements, waivers, confirmations, consents (including those required under any Material Contracts or from landlords, warehousemen, mechanics, materialmen, mortgagees and licensors) as may be required in the discretion of the Administrative Agent and to ensure that all Note Indebtednessis secured by first priority Liens, subject to Permitted Liens that by law rank in priority, on the Collateral with such exceptions as are permitted pursuant to this Agreement;

(xii)  

opinions (including title opinions, as applicable) from legal counsel for the Borrowers and the Parent, addressed to the Administrative Agent with respect to such matters as the Administrative Agent may reasonably request and in form and substance reasonably acceptable to the Administrative Agent;

(xiii)  

a certificate from a Senior Officer of the Borrowers and each other Obligor that all representations and warranties of the Borrowers and the other Obligors under the Security Documents and the other Note Purchase Documents to which such Obligor is a party are true and correct and as to such other matters as the Administrative Agent reasonably requires;

(xiv)  

certificates of insurance or policy endorsements, as applicable, evidencing that the Administrative Agent has been named as an additional insured and first-loss payee on all property insurance policies of the Company Parties;

(xv)  

certificates of insurance or policy endorsements, as applicable, evidencing that each of the Secured Parties has been named as additional insured on all liability insurance policies of the Company Parties;

(xvi)  

certificates representing the Capital Stock pledged by the Chairman and the other Obligors together with stock transfer powers duly executed in blank by the pledging Obligor, and each promissory note (if any) pledged to the Administrative Agent pursuant to the Security Documents endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof;

(xvii)  

payment of all fees and expenses contained in the Fee Letter, this Agreement, or any other Note Purchase Document.

(c)  

the Acquisition shall be consummated concurrently with the First Closing, and the Administrative Agent shall have received, in form and substance satisfactory to it, certified executed copies of definitive legal documentation in connection with the Acquisition, and other agreements related and integral to the completion of the Acquisition, and all conditions under such documentation shall have been satisfied without amendment or waiver;

(d)  

the other transactions contemplated by the Financing Documents shall be consummated concurrently with the First Closing;

(e)  

immediately following the Financing, no Company Party shall have any Indebtedness (other than Permitted Indebtedness);

(f)  

all costs, fees, expenses (including, without limitation, legal fees and expenses and the fees and expenses of appraisers, consultants and other advisors) and other compensation payable to the Secured Parties shall have been paid to the extent due;

(g)  

evidence satisfactory to the Administrative Agent that after giving effect to the transactions contemplated by this Agreement, the Parentis in pro forma compliance, on a consolidated basis, with all financial covenants required by this Agreement;

(h)  

the aggregate principal amount of Notes issued pursuant to this Agreement does not exceed $47,184,573.64 on the First Closing;

(i)  

evidence of the issuance of 15,000,000 shares of Common Stock to the Holders;

(j)  

a Phase I Environmental Site Assessment Report for the Keyes Plant, accompanied by corresponding reliance letters (to the extent such report does not permit reliance thereon by the Administrative Agent and the Noteholders), satisfactory to the Administrative Agent;

(k)  

the appointment by the Parent of McGladrey, LLP or one of its Affiliates as auditors;

(l)  

a fully-paid ALTA standard form of mortgagee policy of title insurance issued by First American Title Insurance Company, in favour of the Administrative Agent for the benefit of the Secured Parties, together with such endorsements as are requested by the Administrative Agent, in each case in form and substance satisfactory to the Administrative Agent, in an amount of not less than $50,184,573.64, that shall (A) insure the validity and priority of the Liens created under the the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of the date hereof by Cilion Acquisition Corp. to First American Title Insurance Company in favour of the Administrative Agent, and (B) contain a pending disbursement provision satisfactory to the Administrative Agent;

(m)  

continued subordination of any debt to the Chairman, Laird Cagan, other directors, or their respective Affiliates and relatives; and

(n)  

such other documents relating to the transactions contemplated by this Agreement and any other Note Purchase Documents as the Administrative Agent or its counsel or any other Noteholder may reasonably request.

The Notes have not been and will not be registered under the U.S. Securities Act or under any United States state securities laws. The Notes may not be offered or sold, directly or indirectly, in the United States or to a U.S. Person, unless the Notes are sold in a transaction that does not require registration under the U.S. Securities Act, and any applicable state laws and regulations governing the offer and sale of securities. Each Note originally issued in the United States, or to, or for the account or benefit of, a U.S. Person, and each Note issued in exchange therefor or in substitution thereof shall bear the following legends or such variations thereof as the Borrowers may prescribe from time to time:

(2)  

Upon receipt of such evidence of exemption (reasonably acceptable to Borrower) as referred to in this  Section 2.8(2), each Borrower shall use its reasonable best efforts to remove such legend within five Business Days of receipt of such declaration.

(3)  

Notwithstanding any other provisions of this Agreement, each Borrower and/or its transfer agent may impose additional reasonable requirements for the removal of legends from Notes in compliance with Rule 904 of Regulation S under the U.S. Securities Act.

(4)  

Notwithstanding any other provisions of this Agreement, in processing and registering transfers of Notes, no duty or responsibility whatsoever shall rest upon any Borrower to determine the compliance by any transferor or transferee with the terms of the legend above, or with the relevant securities laws or regulations, including, without limitation, Regulation S of the U.S. Securities Act, and such Borrower shall be entitled to assume that all transfers are legal and proper insofar as they relate to such aforementioned legend, laws and regulations.

Every Note, whether issued originally or in exchange for other previously issued Notes, shall bear interest from and including the later of (i) the Issue Date; and (ii) the last Interest Payment Date with respect to which interest shall have been paid or made available for payment on theNotes, to, but not including, the subsequent Interest Payment Date. Interest shall be paid monthly in arrears on the first Business Day of each month for interest accrued in the previous month.

Interest shall be computed on the basis of a year of 365 days for payments. For the purposes of this Agreement, whenever interest is computed on the basis of a year (a “Deemed Year”) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing such product by the number of days of the Deemed Year.

Wherever in this Agreement or the Notes there is mention, in any context, of the payment of interest, such mention shall be deemed to include the payment of interest on amounts in default to the extent that in such context such interest is, was or would be payable pursuant to this Agreement or such Notes and express mention of interest on amounts in default in any of the provisions hereof shall not be construed as excluding such interest in those provisions hereof where such express mention is not made.

All payments of principal or interest under the Notes shall be made to the Administrative Agent for the benefit of the Noteholders by wire or other electronic transfer of immediately available funds.

All payments to the Administrative Agent and the Holders by the Borrowers and the Parent under any of the Note Purchase Documents shall be made free and clear of and without deduction or withholding for any and all taxes, levies, imposts, deductions, charges or withholdings and all related liabilities, excluding income taxes imposed on the net income of a Holder and franchise taxes imposed on the net income of a Holder, in each case by the jurisdiction under the laws of which such Holder is organized or qualified to do business or a jurisdiction or any political subdivision thereof in which the Holder engages in business activity other than activity arising solely from the Holder having executed this Agreement and having enjoyed its rights and performed its obligations under this Agreement or any Note Purchase Document or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being referred to as “Taxes”) imposed by the United States of America or any other relevant jurisdiction (or any political subdivision or taxing authority of it), unless such Taxes are required by applicable law to be deducted or withheld.  If any Borrower or the Parent shall be required by applicable law to deduct or withhold any such Taxes from or in respect of any amount payable under any of the Note Purchase Documents (i) the amount payable shall be increased (and for greater certainty, in the case of interest, the amount of interest shall be increased) as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to any additional amounts paid under this Section 2.18, the Administrative Agent and the Holders receive an amount equal to the amount they would have received if no such deduction or withholding had been made, (ii) the Borrowers and/or the Parent, as applicable, shall make such deductions or withholdings, and (iii) the Borrowers and/or the Parent shall pay when required the full amount deducted or withheld to the relevant Governmental Entity in accordance with applicable law.

Each of Borrowers and the Parent agrees to immediately pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, financial institutions duties, debits taxes or similar levies (all such taxes, charges, duties and levies being referred to as “Other Taxes”) which arise from any payment made by the Borrowers and/or the Parent, as applicable, under any of the Note Purchase Documents or from the execution, delivery, recordation, or registration of, or otherwise with respect to, any of the Note Purchase Documents.

The Borrowers and the Parent shall jointly and severally indemnify the Holders and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 2.18) payable or paid by the Holders or the Administrative Agent and any liability (including penalties, interest and expenses) arising from or with respect to such Taxes or Other Taxes, whether or not they were correctly or legally asserted.  Payment under this indemnification shall be made within 30 days from the date the Administrative Agent or the relevant Holder, as the case may be, makes written demand for it.  A certificate as to the amount of such Taxes or Other Taxes submitted to the Borrowers by the Administrative Agent or the relevant Holder shall be conclusive evidence, absent manifest error, of the amount due from the Borrowers and/or the Parent to the Administrative Agent or the Holders, as the case may be.

Upon the Administrative Agent’s request, each Borrower shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment of Taxes or Other Taxes made by the Borrowers or the Parent within 30 days after the date of any payment of Taxes or Other Taxes.

The provisions of this 2.18 shall survive the termination of the Agreement and the repayment of all Note Indebtedness.

A Noteholder may at any time and from time to time have a Note or any portion thereof transferred at the Registered and Records Office of each Borrower.

No transfer of a Note or any portion thereof shall be effective as against a Borrower unless:

(a)  

such transfer is made by the Holder or the executor, administrator or other legal representative of, or any attorney of, the Holder, duly appointed by an instrument received bysuch Borrower, acting reasonably;

(b)  

the form of transfer, in the form attached to the Note,together with the Note has been received by such Borrower; and

(c)  

such transfer is made in compliance with all Applicable Laws.

To the extent any portion of a Note (but not the entire principal amount of a Note) is transferred pursuant hereto, upon presentation of such Note, the Borrowers shall execute Notes representing the transferred portion and the balance not so transferred and the original Note shall thereupon be cancelled.  Notwithstanding any failure by the Borrowers to so execute such Notes, the transferee shall have all rights of a Noteholder with respect to the portion of any Note transferred to it in compliance with this Agreement and the transferor shall retain all rights of a Noteholder with respect to the balance of the Note not so transferred.

Upon becoming a Noteholder in accordance with the provisions of this Agreement, the transferee thereof shall be deemed to have acknowledged and agreed to be bound by this Agreement. Upon registration of such transferee as the holder of a Note, the transferor shall cease to have any further rights under this Agreement with respect to such Note to the extent so transferred.

The Holder of a Note shall be entitled to the principal and interest evidenced by such Note, less any amounts paid to the original or any previous Holder of the Note, but free from all other equities or rights of set-off or counterclaim between the Borrowers and the original or any intermediate Holder thereof (except any equities of which the Borrowers are required to take notice by law or by order of a court of competent jurisdiction). The receipt by any such Holder of any principal or interest shall be a good and sufficient discharge to the Borrowers for the amount so paid, and the Borrowers shall not be bound to inquire into the title of any such Holders.

The Borrowers may treat the Holder of a Note as the beneficial owner thereof without actual production of such Note for the purposes of any direction, consent, instrument or other document to be made, signed or given by the Holder of such Note.

Notwithstanding anything contained in this Agreement, or the certificate evidencing the Notes, each Borrower:

(a)  

shall only be obligated to register a transfer of a Note (or any portion thereof) imprinted with the legends specified in Section 2.8 if such Borrower has received, in addition to a properly completed and executed transfer form in the form included in such certificate, either (A) a properly completed and executed customary form of declaration (or as otherwise reasonably prescribed by such Borrower), or (B) a written opinion of counsel or other evidence satisfactory to such Borrower, acting reasonably, to the effect that the transfer of such Note is in compliance with applicable United States federal and state securities laws; and

(b)  

shall not be obligated to register any transfer of a Note (or any portion thereof) if it has reasonable grounds to believe that such transfer is otherwise not in accordance with Applicable Law.

From the date of this Agreement until July 31, 2012, the Borrowers shall redeem Existing Notes having an aggregate face value equal to 50% of Free Cash Flow for each month in such period.  Given the nature and timing of the information needed to calculate the Free Cash Flow, the Borrowers acknowledge that the Administrative Agent shall issue an invoice for each calendar month in such period and the Borrowers shall redeem such amount within five Business Days after its receipt of such invoice.

Commencing on August 1, 2012, on the last Business Day of each week, the Borrowers shall redeem Existing Notes in the amount of $50,000.  The aggregate amount of all such redemptions for each calendar month shall be referred to as the “Minimum Monthly Base Redemption Amount.”  The Borrowers shall also redeem Existing Notes in an amount equal to the positive difference between (A) the greater of (i) $0.05 per gallon of ethanol produced from the Keyes Plant and (ii) 50% of the Free Cash Flow of the Borrowers and (B) the Minimum Monthly Base Redemption Amount (such amount, the “Additional Monthly Base Redemption Amount”).  Given the nature and timing of the information needed to calculate the Additional Monthly Base Redemption Amount, the Borrowers acknowledge that the Administrative Agent shall issue an invoice for each calendar month that the Administrative Agent determines that the foregoing formula requires that an Additional Monthly Base Redemption Amount is due and the Borrowers shall pay such amount within five Business Days after its receipt of such invoice.

In addition, the Borrowers shall redeem Existing Notes in the amount of $300,000 on the final Business Day of each Fiscal Quarter commencing with the third Fiscal Quarter of 2012.

Partial Redemption.  Upon the occurrence of a Redemption Event, the Borrowers shall redeem that portion of the Notes equal to the net proceeds received by the Borrowers from such Redemption Event.  The Borrowers shall redeem the Notes in the following order of priority: (a) the Existing Notes, (b) the Acquisition Notes, (c) the Revenue Participation Notes, and (d) the Revolving Notes.  Notwithstanding anything to the contrary, in the event that any Company Party completes an equity offering of Capital Stock that results in gross proceeds of at least $50,000,000, the Borrowers shall redeem the Revenue Participation Notes for an amount equal to the sum of the then outstanding principal balance, plus all accrued and unpaid interest owing thereon. In addition, to the extent that any Company Party completes an equity offering of Capital Stock that results in gross proceeds of at least $50,000,000 and any Note Indebtedness remains outstanding, the Borrowers shall redeem the Notes in an amount equal to 100% of the monthly Free Cash Flow of the Borrowers; provided, however, the Borrowers shall be permitted to make Revolving Loan Requests in accordance with Section 2.4 hereof.

Full Redemption.  In addition to and not in limitation of the foregoing, on the earlier of: (a) the Applicable Stated Maturity Date; (b) a Change of Control or (c) the occurrence and continuation of an Event of Default upon acceleration by the Administrative Agent in accordance with Section 8.2, the Borrowers shall redeem the Notes for an amount equal to the sum of the then outstanding principal balance, plus all accrued and unpaid interest owing thereon,plus the Acquisition Notes Redemption Fee (if applicable),and pay in full all other obligations owing to Administrative Agent or any Noteholder under or in connection with this Agreement and the Notes, which amount shall be calculated on the date of redemption and be payable in cash on demand in immediately available funds on such date.

The Parent shall, and shall cause (i) each of the Company Parties (other than the Borrowers) and thematerial Affiliates of the Parent from time to time to, such materiality to be determined in the reasonable discretion of the Administrative Agent, execute and deliver to the Administrative Agent for the benefit of the Secured Parties (x) an unconditional guarantee of the Note Indebtedness of the Borrowers in form and substance satisfactory to the Administrative Agent, and (y) Security Documents which shall at all times constitute first ranking Liens on all Collateral of the Parent, such Company Party member or material Affiliate, as the case may be, subject only to Permitted Liens that by law rank in priority, and (ii) the Chairman to execute anddeliver to the Administrative Agent for the benefit of the Secured Parties an unconditional guarantee of the Note Indebtedness of the Borrowers, limited to $10,000,000 and supported by the Chairman’s Pledge Agreement, in each case, in form and substance satisfactory to the Administrative Agent.  Notwithstanding the foregoing, neither International Biofuels Ltd. nor Universal Biofuels Private Ltd. shall be required to grant security over its assets to the Administrative Agent for the benefit of the Secured Parties.

The Security Documents executed by the Obligors shall secure their Note Indebtedness, including their obligations under their respective Guarantees.

The Parent shall, and shall cause the other Obligors to, at the Borrower’s expense, register, file, record and give notice of (or cause to be registered, filed, recorded and given notice of) the Security Documents in all offices where such registration, filing, recording or giving notice is necessary for the perfection of the Lien constituted thereby and to ensure that such Lien is first ranking, subject only to Permitted Liens which rank by law in priority.

Within fifteen (15) Business Days of any amendments to the Register which either add or delete a Noteholder to the list of registered Noteholders or change the address for notice of a Noteholder, the Parent shall, and shall cause the other Company Parties to, at the Borrower’s expense,register, file, record and give notice of such addition or deletion of Noteholder or change of address as may be required to ensure that the registrations made or required to be made pursuant to this Section 5.3 properly reflect the Noteholders described in the Register from time to time, to the extent necessary or desirable to preserve the rights and remedies of the Administrative Agent and the other Secured Parties under the Security Documents.

(a)  

Annual Reporting.As soon as available and in any event within ninety (90) days after the end of each Fiscal Year, (i) an Annual Business Plan for the then current Fiscal Year and (ii) a consolidated balance sheet of the Parent as of the end of such Fiscal Year and the related consolidated statements of income, shareholders or stockholders' equity, and statements of cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported by such party in accordance with GAAP and audited, without “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by McGladrey, LLP or one of its Affiliates or another firm of independent public accountants acceptable to the Administrative Agent;

(b)  

Quarterly Reporting.As soon as available and in any event within forty five (45) days after the end of each of the Fiscal Quarters of each Fiscal Year, consolidated balance sheets of the Parent as of the end of such Fiscal Quarter, the related consolidated statement of income for such Fiscal Quarter and for the portion of such party's Fiscal Year ended at the end of such Fiscal Quarter and the related consolidated statement of cash flows for the portion of such Fiscal Year ended at the end of such Fiscal Quarter, each prepared in accordance with GAAP (except that such balance sheets and other financial statements may not contain all footnote disclosures required in accordance with GAAP and may be subject to normal year-end audit adjustments) setting forth in each case, a comparative form of the figures for (A) the corresponding quarter and the corresponding portion of such party's previous Fiscal Year and (B) the Parent’s projections for each such Fiscal Quarter;

(c)  

Monthly Reporting.As soon as available and in any event within fifteen (15) days after the end of each calendar month, consolidated balance sheet of the Borrowers as of the end of such calendar month, the related consolidated statement of income for such calendar month and for the portion of the Fiscal Year ended at the end of such calendar month and the related consolidated statement of cash flows for the portion of such Fiscal Year ended at the end of such calendar month, each prepared in accordance with GAAP (except that such balance sheets and other financial statements may not contain all footnote disclosures required in accordance with GAAP and may be subject to normal year-end audit adjustments) setting forth in each case, a comparative form of the figures for (A) the corresponding calendar month and the corresponding portion of such party's previous Fiscal Year and (B) the Borrowers’ projections for each such calendar month, together with a  management commentary, in each case, in form and substance satisfactory to the Administrative Agent;

(d)  

Compliance Certificate.Simultaneously with the delivery of each set of financial statements referred to in Section 6.1(a), Section 6.1(b) and Section 6.1(c), a Compliance Certificate, which shall include, with respect to the financial statements delivered pursuant to Section 6.1(a), confirmation that each Borrower has obtained or caused to be obtained, and continues to maintain in good standing, all licenses and certifications necessary or desirable in connection with the Keyes Facility and the business of the Borrowers;

(e)  

Weekly Reporting.  As soon as available and in any event by the first Business Day following each week until the Borrowers have demonstrated achievement of two consecutive Fiscal Quarters of positive Free Cash Flow pursuant to the financing statements delivered in accordance with Section 6.1, a weekly cash flow budget, variance analysis to budget and management commentary, in each case, in form and substance satisfactory to the Administrative Agent.

(f)  

Daily Reporting.  On a daily basis, production reports including revenues, payments, costs, cash receipts and operating metrics from all product sources, including account data on all products sold, in each case in form and substance satisfactory to the Administrative Agent.

(g)  

Budget Analysis.  On each June 1 and December 1, updates of monthly cash flow projections and Capital Expenditures budget, in form and substance satisfactory to the Administrative Agent;

(h)  

Blocked Account Reporting. Unless the Administrative Agent has electronic access to a Blocked Account, within five (5) Business Days after the end of each calendar month, a statement issued by the applicable Blocked Account Provider with respect to such Blocked Account, including the amount of cash and cash equivalents held in such Blocked Account;

(i)  

Shareholder Reports. Promptly upon the mailing or delivery thereof to the shareholders or stockholders of the Parent, copies of all financial statements, reports and any proxy statements so mailed;

(j)  

SEC Reports. Promptly upon the filing thereof, copies of all registration statements and reports on Forms 10-K, 10-Q, and 8-K (or their equivalent) which the Parent shall have filed with the United States Securities and Exchange Commission.

(k)  

Insurance Renewals.Promptly following the Parent's annual renewal of its insurance policies, a certificate of insurance coverage from the insurer in form and substance reasonably satisfactory to the Administrative Agent evidencing the insurance coverage required to be maintained pursuant to Section 6.3(m) and, if requested, will furnish the Administrative Agent copies of the applicable insurance policies referenced therein;

(l)  

Business Information.Promptly upon the Administrative Agent’s reasonable request, in respect of the  Company Parties, the Keyes Plant or any other assets (as applicable) (i) technical and engineering reports prepared by independent experts in connection with the Company Parties’ business, industry or assets, including the Keyes Plant; (ii)copies of material and selected contracts and authorizations; (iii)pipeline, backlog and sales summaries; (iv) productsales and operating income summaries segmented by customer and product or service offering; (v) organizational charts and compensation of all personnel; (vi) copies of reports sent to shareholders and directors; and (vii) such further schedules, documents, and information as the Administrative Agent may reasonably require.

(m)  

Notice of Litigation or Liens.  Give notice to the Administrative Agent immediately upon becoming aware of any Lien that is not a Permitted Lien or the commencement of any material action, litigation, proceeding, arbitration, investigation, grievance or dispute affecting any Company Party, the Keyes Plant, the other Properties or any Company Party’s Affairs;

(n)  

Notice of Default. Give notice to the Administrative Agent immediately upon becoming aware of any Default or Event of Default or any event or circumstance which would have a Material Adverse Effect;

(o)  

Notice of Termination.  Give notice to the Administrative Agent immediately upon becoming aware of the resignation or termination of any Director or any Senior Officer.

(p)  

Environmental Reporting.Promptly following a Senior Officer becoming aware of the receipt of same, any notice or other information received by any Company Party indicating (i) any potential, actual or alleged non-compliance with or violation of the requirements of any Environmental Law which could result in liability to any Company Party for fines, clean up or any other remediation obligations or any other liability in excess of $100,000 (to the extent not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage in writing thereof and a copy of such acknowledgment has been provided to the Administrative Agent) in the aggregate; (ii) any environmental matter imposing on any Company Party a duty to report to a Governmental Entity or to pay cleanup costs or to take remedial action under any Environmental Law which could result in liability to any Company Party for fines, clean-up and other remediation obligations or any other liability in excess of $100,000 (to the extent not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage in writing thereof and a copy of such acknowledgment has been provided to the Administrative Agent) in the aggregate; or (iii) the existence of any Lien arising under any Environmental Law securing any obligation to pay fines, clean up or other remediation costs or any other liability in excess of $100,000 in the aggregate. Without limiting the foregoing, each Company Party shall provide to the Administrative Agent promptly upon receipt of same by any Company Party copies of all environmental consultants' or engineers' reports received by any Company Party;and

(q)  

Other Information.From time to time such additional information regarding the financial position or business of any Company Party as the Administrative Agentmay reasonably request.

(a)  

Free Cash Flow. Commencing with the Fiscal Quarter ending December 31, 2012, the Parent shall maintain trailing Free Cash Flow, tested as at the last day of each Fiscal Quarter of not less than $1,500,000 per Fiscal Quarter;

(b)  

Keyes Plant Minimum Quarterly Production.  The Parent shall cause the Borrowers to maintain minimum quarterly production of ethanol at the Keyes Plant of not less than 14 million gallons per Fiscal Quarter;

(c)  

Ratios of Note Indebtedness to Keyes Plant Values. The Parent will not permit at any time the ratios of Note Indebtedness to (i) the Keyes Plant Market Value, to exceed seventy-five percent (75%), and (ii) the Keyes Plant Orderly Liquidation Value to exceed eighty-five percent (85%), in each case tested semi-annually as of the last day of the first Fiscal Quarter and as of the last day of the third Fiscal Quarter of each Fiscal Year; and

(d)  

Consolidated Unfunded Capital Expenditures. The Parent will not incur or permit to be incurred Consolidated Unfunded Capital Expenditures in excess of $50,000 in any Fiscal Quarter.

(a)  

Corporate Existence.  Except as otherwise permitted in this Agreement, preserve and maintain, and cause each of the other Company Parties to preserve and maintain, its corporate existence;

(b)  

Punctual Payment.The Borrowers shall duly and punctually pay or cause to be paid to every Noteholder or Administrative Agent, as the case may be, all fees and the principal of, and interest accrued on such Noteholder's Notes (including, in the case of default, interest at the Default Rate) on the dates, at the places, in the currency and in the manner mentioned herein and in the Notes;

(c)  

Books and Records. The Parent shall, and shall cause each of the other Company Parties to, keep or cause to be kept proper books of account and make or cause to be made therein true and complete entries of all of its dealings and transactions in relation to its business in accordance with GAAP, and at all reasonable times it shall furnish or cause to be furnished the Administrative Agent or to any Holder of Notes or its duly authorized agent or attorney such information relating to its operations as the Administrative Agent or such Holder of Notes may reasonably require and such books of account shall at all reasonable times be open for inspection by the Administrative Agent or the Noteholders or such agent or attorney in accordance with Section 6.3(o)below;

(d)  

Liens. Each Borrower shall, and shall cause each of the other Company Parties to, ensure that each of the Security Documents shall at all times constitute valid and perfected first-rankingLiens on all of the Collateral in favour of the Administrative Agent for the benefit of the Secured Parties, subject only to Permitted Liens which rank by law in priority;

(e)  

Compliance with Agreement. Each Borrower shall, and shall cause each of the other Company Parties to, duly and punctually perform and carry out all of the covenants and acts or things to be done by it as provided in this Agreement and all other Note Purchase Documents;

(f)  

Compliance with Laws, etc.  Comply, and cause each of the other Company Parties to comply, in all material respects, with the requirements of all Applicable Laws;

(g)  

Compliance with Contracts. Comply,and cause each of the other Company Parties to comply, with each of the contractual obligations (including those under Leases) owing by itto its customers, suppliers and other Persons if non-compliance could have a Material Adverse Effect; and comply, and cause each of the other Company Parties to comply, with each of its contractual obligations under theFinancing Documents, the Financial Instruments, the Note Purchase Documents and Leases;

(h)  

Credit Policy and Accounts Receivable.  Maintain, and cause each of the other Company Parties to maintain, at all times, written credit policies consistent with good business practices, adhere to such policies and collect accounts receivable in the ordinary course of business;

(i)  

Comply with Environmental Laws.  Shall, and shall cause each of the other Company Parties and their respective agents to (i) manage and operate the Properties in compliance with all Environmental Laws, (ii) maintain all Authorizations and make all registrations required under all Environmental Laws in relation to the Properties and remain in material compliance therewith, (iii) store, treat, transport, generate, otherwise handle and dispose of all Hazardous Materials owned, managed or controlled by the Company Parties in compliance with all Environmental Laws in all material respects, and (iv) comply with all recommendations contained in any environmental impact assessment in all material respects;

(j)  

Maintenance of Equipment and Properties. Maintain, and cause each of the other Company Parties to maintain, all property and assets, including all Equipment, Buildings and Fixtures and Properties, necessary to carry on its business.  From time to time, make and cause each of the other Company Parties to make all necessary repairs, renewals, replacements, additions and improvements to the Buildings and Fixtures and the Properties and their other properties and assets, including, without limitation, the Equipment, so that the Business and the other Company Parties’ respective businesses, as the case may be, may be conducted at all times in accordance with Applicable Law;

(k)  

Payment of Taxes and Claims. Pay or cause to be paid and cause each of the other Company Parties to pay or cause to be paid, when due, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its income, sales, capital or profit or any other property belonging to it or to the other Company Parties, and (ii) all claims which, if unpaid, might by law become a Lien upon the assets, except any such tax, assessment, charge, levy  or claim which is being contested in good faith and by proper proceedings and in respect of which a Borrower or the other Company Parties have established adequate reserves in accordance with GAAP or which are Permitted Liens;

(l)  

Auditors. Provide prior written notice of any change of McGladrey, LLP or one of its Affiliates as the auditor of the Parent and its Subsidiaries to the Administrative Agent, which change shall be subject to the consent of the Administrative Agent;

(m)  

Maintenance of Insurance. Maintain, in respect of each of the Company Parties, with financially sound and reputable insurers, insurance with respect to the properties and business of the Company Parties against loss, damage, risk, or liability of the kinds customarily insured against by persons carrying on a similar business.  The Parent will cause the Company Parties to comply with all of the terms and conditions of each of the insurance policies which it maintains pursuant to the Note Purchase Documents.  The Parent will ensure that each Person contracted by the Parent or any of the other Company Parties to perform construction or related services with respect to, or to provide Equipment with respect to, the Keyes Plant, the Properties and the Buildings and Fixtures maintains general liabilityon terms and in amounts reasonably satisfactory to the Administrative Agent and, with written notice from the Administrative Agent, such other insurance, including equipment, automotive, engineering, earthquake on terms and in amounts reasonably satisfactory to the Administrative Agent.  The Parent shall (i) notify the Administrative Agent whenever there is a loss with respect to any of the Collateral; (ii) within three (3) Business Days of a request from the Administrative Agent, provide the Administrative Agent with all information required to file claims under any relevant insurance policy; and (iii) assist the Administrative Agent with the filing of claims under any relevant insurance policy.  Notwithstanding any of the foregoing, no Company Party shall have any recourse against the Administrative Agent in the event that (i) the Administrative Agent shall fail to submit a valid claim under any relevant insurance policy or (ii) the insurer shall deny any claim under any relevant insurance policy;

(n)  

Key Man Insurance. Maintain key man life insurance policy on the life of the Chairman in an amount not less than $10,000,000, together with an executed assignment of such policy to the Administrative Agent acknowledged by the insurer and deliver evidence of the same to the Administrative Agent within 60 days of the First Closing Date;

(o)  

Rights of Inspection.  At any time during the Parent’s regular business hours,permit any employee, officer, agent or other representative of the Administrative Agent and the Noteholders at the expense of the Borrowers, to examine and make copies of any abstracts from the records and books of account of any Company Party and to discuss any of the Affairs of anyCompany Party with any of its directors, officers, employees, agents, representatives or auditors, it being understood that this Section 6.3(o)is not, and should not be construed as, a waiver of any attorney-client or similar privilege.  At any time and from time to time,upon five (5) days’ prior notice, permit any officer, agent or other representative of the Administrative Agent, at the expense of the Borrowers, to perform appraisals and conduct field examinations of the Collateral and discuss any of the Affairs of any Company Party with any of the personnel of the Parent and third party contractors.  Notwithstanding the foregoing, the Administrative Agent may conduct or cause to be conducted appraisals of the Keyes Plant at any time provided that, unless a Default or Event of Default has occurred and is continuing, the Borrowers will not be required to bear the expense of more than two (2) such appraisals during any calendar year;

(p)  

Blocked Accounts. The Parent shall, and shall cause each Borrower and each other Company Party to the extent such Company Party is required to obtain Blocked Account Agreements required pursuant to Section 5.4, and each Blocked Account Provider, to cause all revenues of the Parent and the Borrowers and such other Company Party, and proceeds of Collateral of such Persons, to be deposited into accounts subject to one or more Blocked Account Agreements, to allow the Administrative Agent access to view all account activity via on-line and web access and, if such on-line and web access is unavailable, to mail the Administrative Agent at least once a month (or more times per month upon Administrative Agent's reasonable request) copies of all account statements and disbursement sums in such account;

(q)  

Conduct of Business. The Parent will continue, and will cause each of the other Company Parties to continue, to engage in the Business or a business substantially similar and/or related thereto;

(r)  

Maintenance of Property. The Parent will and will cause each other Company Party to, in all material respects, promptly: (i) pay and discharge, or make commercially reasonable efforts to cause to be paid and discharged, when due all royalties and expenses accruing under any agreement affecting or pertaining to its Properties, (ii) perform, or make reasonable and customary efforts to cause to be performed, the obligations of the Parent or other Company Party required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Properties, (iii) do all other things necessary to keep unimpaired, except for Permitted Liens, its rights with respect to its Properties and prevent any forfeiture thereof or a default thereunder,  except for dispositions permitted by this Agreement and except when the failure to do so does not or could not, individually or in the aggregate, have a Material Adverse Effect. The Parent will and will cause each other Company Party to operate its Properties or cause or make reasonable and customary efforts to cause such Properties to be operated in a careful and efficient manner, subject to ordinary wear and tear, materially in accordance with the practices of the industry in compliance with all applicable Material Agreements and in compliance with all Governmental Entities, except where the failure to do so does not, or could not, individually or in the aggregate, have a Material Adverse Effect;

(s)  

Title Due Diligence. The Parent shall, upon the request of the Administrative Agent, cause to be delivered to the Administrative Agent such title due diligence regarding title to the Collateral owned by the Company Parties and the perfection and priority of the Administrative Agent's liens therein, as and to the extent such Collateral are required to be mortgaged pursuant hereto, as are reasonably appropriate to determine the status thereof;

(t)  

Authorizations. The Parent shall, and shall cause each of the other Company Parties to, obtain and maintain in full force all Authorizations necessary for the ownership and operation of the Keyes Plant, the other Properties and the Business and perform and observe all covenants, conditions and restrictions contained in, or imposed on it by, any Authorization where failure to do would have a Material Adverse Effect;

(u)  

Provision of Staff. The Parent shall ensure that there are sufficient competent technical and management employees or contractors engaged in connection with the Keyes Plant to enable the achievement of the covenants hereunder.

(v)  

Material Adverse Effect.The Parent shall, and shall cause each of the other Company Parties to,promptly notify the Administrative Agent of any event or circumstance or any potential event or circumstance that would reasonably be expected to have a Material Adverse Effect on the Keyes Plant, the Business or the other Properties;

(w)  

Additional Properties. The Parent shall, and shall cause each of the other Company Parties to, promptly notify the Administrative Agent upon acquisition of any additional Properties;

(x)  

Business Outside Certain Jurisdictions. The Parent shall, and shall cause each of the other Company Parties to, at least 30 days prior to any of the following changes becoming effective, notify the Administrative Agent in writing of (i) any proposed change in the location of (w) any place of business of the Parent or any other Company Party, (x) the chief executive office or head office of any Borrower or any other Company Party, and (y) any place where tangible property of the Parent or any other Company Party is stored, and (ii) any proposed change in the name of the Parent or any other Company Party.  Promptly notify the Administrative Agent in writing upon becoming aware of any change in location of any account debtor of the Parent or any other Company Party to a jurisdiction outside of the United States of America;

(y)  

Perfection and Protection of Security. The Parent shall, and shall cause each of the other Company Parties to, at the request of the Administrative Agent, grant to the Administrative Agent, for the benefit of the Secured Parties, security interests, assignments, mortgages, charges and pledges in such property and undertaking of the Parent and the other Company Parties and other material Affiliates of the Parent that is not subject to a valid and perfected first ranking charge or security interest (subject only to Permitted Liens) in each relevant jurisdiction as determined by the Administrative Agent and deliver opinions in form and substance satisfactory to the Administrative Agent thereon with respect to such matters as the Administrative Agent may request.  The Parent shall also perform, execute and deliver, or cause to be performed, executed and delivered, all acts, agreements and other documents as may be reasonably requested by the Administrative Agent at any time to register, file, signify, publish, perfect, maintain, protect, and enforce the Security or grant a security interest on its property including, without limitation, (i) executing, recording and filing of the Security Documents and financing or continuation statements in connection therewith, in form and substance reasonably satisfactory to the Administrative Agent, (ii) delivering to the Administrative Agent the originals of all unit certificates, instruments, documents and chattel paper and all other Collateral of which the Administrative Agent reasonably determines the Administrative Agent should have physical possession in order to perfect and protect the Security, duly endorsed or assigned to the Administrative Agent, (iii) delivering to the Administrative Agent warehouse receipts covering any portion of the Collateral located in warehouses and for which warehouse receipts are listed, (iv) placing notations on its books of account to disclose the Security, (v) delivering to the Administrative Agent all letters of credit on which aCompany Party is named beneficiary, (vi) obtaining subordination agreements, acknowledgments or other documents from third parties in order to ensure that the Security constitutes first priority Liens on the Collateral (subject only to Permitted Liens that by law rank in priority), and (vii) taking such other steps as are deemed reasonably necessary by the Administrative Agent to maintain the Security and the first ranking priority thereof (subject only to Permitted Liens that by law rank in priority);

(z)  

 

(A) The board of directors of the Parent shall hold a meeting (which may be held by conference call) at least quarterly for the purpose of discussing the business and operations of such Person and its Subsidiaries, including the Borrowers.  The Parent shall notify the Administrative Agent of the date and time for each regular and special meeting of its board of directors or any committee thereof or of the adoption of any resolutions by written consent (describing in reasonable detail the nature and substance of such action) at the same time and in the same manner that notice is provided to the directors of the Parent and provide to the Administrative Agent any materials delivered to the directors of the Parent at the same time such materials are provided to such  directors.  The Administrative Agent shall be free to contact the directors of the Parent and discuss the pending actions to be taken.

 

(B) The Parent shall permit one authorized representative of the Administrative Agent to attend and participate in all meetings of such Person’s board of directors and any committee thereof, whether in person, by telephone or otherwise (such representative is sometimes referred to herein as the “Observer”).  The Parent shall provide the Observer with such notice and other information with respect to such meetings as are delivered to the directors of such Person.  If attendance in person by the Parent’s board of directors is required, the Parent shall pay such representative’s reasonable out-of-pocket expenses (including, without limitation, the cost of airfare, meals and lodging) in connection with the attendance at such meetings.

 

(C) The Holders and each Observer to whom observation rights are provided under Section 6.3(z)(B) above, acknowledge and agree that the Parent is a public company whose securities are registered with the SEC, and as such: (i) any information concerning the Parent and the other Borrowers obtained as a result of the exercise of such observation rights shall be deemed Information (as defined in Section 12.18); (ii) any Information concerning the Parent and the other Borrowers obtained as a result of the exercise of such observation rights may constitute material non-public information that the Parent is providing to the Holders and the Observer in reliance upon their agreements hereunder and the Parent’s reliance upon Rule 100(b)(2)(ii) of Regulation FD promulgated under the rules of the SEC; and (iii) the Holders and each Observer shall be subject to the same insider trading policies adopted by the Parent from time to time, as are applicable to the Parent’s board of directors, and to any restrictions, rules and regulations of the SEC regarding insider trading, or the use or dissemination of material non-public information, by members of a public company’s board of directors. Prior to acting as an Observer, the Holders shall cause each Observer to acknowledge and agree, in writing, to this Section 6.3(z)(C) and Section 12.18 (regarding confidentiality), and provide a copy of such written agreement to the Parent and the Borrowers; provided, however, that notwithstanding anything to the contrary herein, the Administrative Agent and the Holders may elect at any time upon written notice to the Parent and the Borrowers to suspend their rights under paragraphs (A) and (B) of this Section 6.3(z), and from and after the date that is 90 days after the date of such notice until the date of delivery of any subsequent written notice from the Administrative Agent to the Parent and the Borrowers that the Administrative Agent is reinstituting its rights under paragraphs (a) and (b) of this Section 6.3(z), neither the Administrative Agent nor any Observer shall be subject to the insider trading policies adopted by the Parent that are applicable to the Parent’s board of directors.

 

(D) Notwithstanding the foregoing, the Parent shall have the right to exclude the Observer from any portion of its board of director or committee meetings to the extent reasonably necessary to preserve its attorney-client privilege or attorney-client work product privilege as determined in good faith by the board of directors with advice from counsel or with respect to any discussions regarding the refinancing or restructuring of the Indebtedness owed to the Holders.

(aa)  

Further Assurances.  At its cost and expense, upon reasonable request of the Administrative Agent, execute and deliver or cause to be executed and delivered to the Administrative Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Administrative Agent to carry out more effectually the provisions and purposes of the Note Purchase Documents or confirm the truth and accuracy of the representations and warranties contained in the Note Purchase Documents.

(bb)  

Post-Closing.  Within 30 days following the First Closing Date and in each case, in form and substance reasonably satisfactory to the Administrative Agent, the Borrowers shall deliver to the Administrative Agent (i) a duly executed landlord waiver by the landlord party to the lease for the Leased Property located at 20400 Stevens Creek Boulevard, Suite 700, Cupertino, California, (ii) evidence of the dissolution of Sutton Ethanol, LLC, (iii) Blocked Account Control Agreements with respect to the deposit accounts of each Company Party and (iv) evidence of earthquake insurance with respect to the Cilion Plant (so long as the cost thereof is not cost prohibitive in the reasonable discretion of the Administrative Agent).

(a)  

Indebtedness.  Create, incur, assume or suffer to exist,or permit any of the other Company Parties to create, incur, assume or suffer to exist, any Indebtedness other than Permitted Indebtedness;

(b)  

Hedging. Enter into or allow to exist,or permit any of the other Company Parties to enter into or allow to exist, a Financial Instrument which is of a speculative nature or on a margined basis;

(c)  

Liens.  Create, incur, assume or suffer to exist, or permit any of the other Company Parties to create, incur, assume or suffer to exist, any Lien on any of their respective properties or assets, whether now owned or hereafter acquired, other than Permitted Liens.

(d)  

Mergers, Etc. Subject to the next following sentence, enter into, or permit any of the other Company Parties to enter into, any reorganization, consolidation, amalgamation, arrangement, winding-up, merger or other similar transaction.  Any Company Party and any other Company Party may enter into such transactions with each other if (i) at the time of such transaction and immediately after giving effect to the transaction, no event shall have occurred and be continuing which constitutes a Default or Event of Default, (ii) the surviving company shall be a company organized and existing under the laws of the United States of America or one of its states or districts, (iii) the continuing corporation assumes the obligations of eachCompany Party that is party to such transaction under the Note Purchase Documents and grants such additional security as may be reasonably required by the Administrative Agent, and (iv) the Secured Parties receive an opinion of counsel to the Company Parties reasonably acceptable to them;

(e)  

Disposal of Assets Generally.  Sell, exchange, lease, release or abandon or otherwise dispose of, or permit any other Company Party to sell, exchange, lease, release or abandon or otherwise dispose of, any assets or properties to any Person other than Permitted Asset Dispositions;

(f)  

Transactions with Related Parties.Directly or indirectly, enter into or allow any other Company Party to enter into, any agreement with, make any financial accommodation for, or otherwise enter into any transaction with, a Related Party except (i) in the ordinary course of, and pursuant to the reasonable requirements of, business and at prices and on terms not less favourable to the Parent or the other Company Party, as the case may be, than could be obtained in a comparable arm’s length transaction with another Person, (ii) a Company Party may pay reasonable compensation to officers, employees and consultants for actual services rendered to a Company Party in the ordinary course of business and (iii) a Company Party may pay directors’ fees to and reimburse actual out-of-pocket expenses incurred in connection with attending board of director meetings not to exceed in the aggregate for the Parent and the other Company Parties, with respect to all such items, $100,000 in any Fiscal Year.  Notwithstanding the foregoing, no Obligor may enter into a transaction with another Obligor without the prior written consent of the Administrative Agent;

(g)  

Change in Business.  Make any material change in the nature of the Business or permit any of the other Company Parties to make any material change in the nature of its business;

(h)  

Acquisitions.  Purchase or otherwise acquire,or permit any other Company Party to purchase or otherwise acquire, (in one or a series of related transactions) any part of the property (whether tangible or intangible) of any Person (or agree to do any of the foregoing at any future time) other than: (i) Capital Expenditures to the extent permitted under Section 6.2(d); (ii) purchases and other acquisitions of Inventory, materials, Equipment and intangible property in the ordinary course of business; (iii) investment in Cash Equivalents; (iv) leases of real property in the ordinary course of business; (v) Permitted Acquisitions; and (vi) reorganizations, amalgamations and other transactions permitted under Section 6.4(d);provided, in each case, that any such property acquired shall be subject to perfected or registered first ranking priority Lien (subject only to Permitted Liens that by law rank in priority) in favour of the Administrative Agent for the benefit of the Secured Parties free and clear of all Liens other than Permitted Liens;

(i)  

Capital.Other than Capital Stock of the Parent, issue, or permit any of the other Company Parties to issue, Capital Stock, or any options, warrants or securities convertible into Capital Stock, provided that any Capital Stock, option, warrants or securities issued to the Parent or any other Company Party must be pledged to the Administrative Agent pursuant to the Security Documents;

(j)  

Distributions. Declare, make or pay, or permit any Company Party to declare, make or pay, any Distributions;

(k)  

Financial Assistance.Give, or permit any of the other Company Parties to give, any Financial Assistance to any Person, except for (i) Intercompany Indebtedness permitted pursuant to Section 6.4(a), (ii) investments in Cash Equivalents, (iii) extensions of trade credit by a Borrower or any other Company Party in the ordinary course of the Business or its business, as the case may be, (iv) Financial Assistance which constitutes a Permitted Acquisition, (v) investments by a Company Party in another Company Party and (vi) such other Financial Assistance as the Administrative Agent may approve in writing in the exercise of its sole discretion.  Notwithstanding anything to the contrary, no Company Party shall provide any Financial Assistance to, or make any investments in, International Biofuels, Ltd., Universal Biofuels Private, Ltd. or Sutton Ethanol, LLC.

(l)  

Organizational Documents. Amend, or allow any of the other Company Parties to amend, any of their Organizational Documents;

(m)  

Fiscal Year. Change, or allow any of the other Company Parties to change, their Fiscal Year;

(n)  

Subsidiaries. Incorporate or acquire, or permit any of the other Company Parties to incorporate or acquire, any Subsidiaries or commence to carry on the Business otherwise than through a Borrower and its Subsidiaries, except for Permitted Acquisitions where, in each case, the Subsidiary (i) is a wholly-owned Subsidiary, and (ii) has executed and delivered to the Administrative Agent an unconditional and unlimited guarantee of all Note Indebtedness of the Borrowers together with perfected first-ranking Security over all of its property and assets and accompanied by opinions satisfactory to the Administrative Agent;

(o)  

Use of Proceeds. The Borrowers shall use the proceeds of the Notes only for the purposes described in Section 2.18 and shall not use such proceeds for any other purpose;

(p)  

Accounts.Open or maintain, or permit any of the other Company Parties required to obtain  Blocked Account Agreements pursuant to Section 5.4 to, open or maintain any securities account or deposit account except to the extent such securities account or deposit account is subject to a Blocked Account Agreement;

(q)  

ERISA. Except for the Parent’s 401(k) Plan, establish, maintain, contribute to or be required or allowed to contribute to, or permit any other Company Party to establish, maintain, contribute to or be required or allowed to contribute to, any Plan or Multiemployer Plan; or

(r)  

Material Contracts. Permit itself or permit any of the other Company Party to amend, vary, alter or terminate, consent to any assignment or transfer of, or waive or surrender any of its rights or entitlements under, any Material Contract.

(s)  

Negative Pledge Clauses.  Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Company Party to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, other than (i) this Agreement and the other Financing Documents and (ii) any agreements governing any Purchase Money Mortgages or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby).

(t)  

Clauses Restricting Subsidiary Distributions.  Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Company Party to (a) make Distributions in respect of any Capital Stock of such Company Party held by, or pay any Indebtedness owed to, Parent or any other Company Party, (b) make loans or advances to, or other investments in, the Parent or any Company Party or (c) transfer any of its assets to the Parent or any Company Party, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Note Purchase Documents and (ii) any restrictions with respect to a Company Party imposed pursuant to an agreement that has been entered into in connection with the sale, transfer or other disposition of all or substantially all of the Capital Stock or assets of such Company Party.

(u)  

Subordinated Debt.  Pay or otherwise redeem, exchange, purchase, retire or defease any Subordinated Debt, including any regularly scheduled payments of interest on the Subordinated Debt.

(v)  

Acquisition Fees.  Except for the payment of certain fees to UBS on the First Closing Date approved by the Administrative Agent, pay any other investment banking fees or expenses to UBS related to the Acquisition until such time that the Parent completes an private of public offering of its Capital Stock pursuant to a private or public offering that results in proceeds to the Parent of at least $5,000,000.

(a)  

Incorporation and Qualification.The Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Each other Company Party is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation as set forth inSchedule 7.1(a).  The Parent and each of the other Company Partiesis qualified, licensed or registered to carry on business under the laws applicable to it in all jurisdictions in which such qualification, licensing or registration is necessary or where failure to be so qualified would have a Material Adverse Effect;

(b)  

Corporate Power.  Each of the Company Parties has all requisite corporate power and authority to (i) own, lease and operate its properties and assets and to carry on its business as now being conducted by it in all material respects, and (ii) enter into and perform its obligations under the Financing Documents to which it is a party;

(c)  

Conflict With Other Instruments. The execution and delivery by each Company Party and the performance by it of its obligations under, and compliance with the terms, conditions and provisions of, the Financing Documents to which it is a party does not (i) conflict with or result in a breach of any of the terms or conditions of (A) its Organizational Documents or by-laws, (B) any Applicable Law, or (C) any contractual restriction binding on or affecting it or its properties, or (ii) result in, require or permit (A) the imposition of any Lien in, on or with respect to any of its assets or property (except in favour of the Administrative Agent for the benefit of the Secured Parties), (B) the acceleration of the maturity of any Indebtedness binding on or affecting any Company Party, or (C) any third party to terminate any Material Contract;

(d)  

Corporate Action, Governmental Approvals, etc.  The execution and delivery of each of the Financing Documents by each Company Party and the performance by each Company Party of its obligations under the Financing Documents to which each such Company Party is party have been duly authorized by all necessary corporate action including, without limitation, the obtaining of all necessary equityholder consents.  No Authorization, registration, qualification, designation, declaration or filing with any Governmental Entity or other Person, is or was necessary in connection with the execution, delivery and performance of obligations under the Financing Documents except as are in full force and effect, unamended, at the date of this Agreement;

(e)  

Execution and Binding Obligation.  This Agreement and the other Financing Documents have been or, upon execution, will be duly executed and delivered by each Company Party which is a party thereto and constitute legal, valid and binding obligations of such Company Party enforceable against it in accordance with their respective terms, subject only to any limitation under applicable laws relating to (i) bankruptcy, insolvency, arrangement or creditors’ rights generally, and (ii) the discretion that a court may exercise in the granting of equitable remedies;

(f)  

No Default or Event of Default.  No Default or Event of Default has occurred which has not been either remedied (or otherwise ceased to be continuing) to the satisfaction of the Administrative Agent, or expressly waived by the Administrative Agent on behalf of the Noteholders, in writing;

(g)  

All Authorizations Obtained and Registrations Made.  All Authorizations, filings and registrations necessary or of advantage to permit each Company Party to (i) create first priority perfected Liens (enforceable or opposable, as the case may be, against third parties and any trustee in bankruptcy) in the Collateral and the proceeds thereof (subject to Permitted Liens that rank by law in priority), (ii) consummate the transactions contemplated by the Financing Documents, (iii) own its undertaking, property and assets unless the failure to obtain or maintain such Authorization, filing or registration would not have a Material Adverse Effect, and (iv) carry on its business and to own and operate the Keyes Plant and the Properties unless the failure to obtain or maintain such Authorization, filing or registration would not have a Material Adverse Effect (including Authorizations, filings and registrations necessary or of advantage to permit the Borrowers to carry on the Business), have been obtained or effected and are in full force and effect.  Each Company Party is in compliance with the requirements of all such Authorizations, filings and registrations and there are no investigations or proceedings existing, pending or, to the Parent's knowledge, after due enquiry, threatened which could result in the revocation, cancellation, suspension or any adverse modification of any of such Authorizations, filings and registrations.  The Security Documents create fully perfected security interests in or liens on, as the case may be, all right, title and interest of each Company Party in and to the Collateral specified therein or intended to be charged thereby as security for the obligations specified therein in each case prior and superior in right to any other Lien (subject to Permitted Liens which rank by law in priority);

(h)  

Material Contracts.  Each of the Company Parties is in material compliance with all Material Contracts and none of the Company Parties, or to the best of the Parent’s knowledge, any other party to any Material Contracts has defaulted under any of the Material Contracts.  No event has occurred which, with the giving of notice, lapse of time or both, would constitute a default under, or in respect of, any Material Contract.  There is no material dispute regarding any Material Contract;

(i)   

Intellectual Property.  Each of the Company Parties possesses all Intellectual Property necessary for the conduct of their respective businesses, each of which is in good standing and in full force and effect, except where the failure to possess or maintain in good standing and in full force and effect such Intellectual Property, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Parent, none of the Company Parties is infringing or is alleged to be infringing on the rights of any Person with respect to any Intellectual Property;

(j)   

(k)  

Sufficiency of Assets.EachCompany Party has acquired all property, assets and rights and has obtained such other Authorizations and rights as are necessary or required in connection with the operation of the Business.  All property, assets and rights are sufficient in scope and substance for the Business and no part of the purchase price payable in connection with the acquisition of such property, assets and rights, remains unpaid;

(l)   

Ownership of Properties.  Other than as set out on Schedule 7.1(l), none of the Company Parties (i) owns or is bound by any agreement to own any real property, (ii) leases or is bound by any agreement to lease any real property, (iii) has leased any of its Owned Properties or subleased any of its Leased Properties, or (iv) owns or is bound by any agreement to own or leases or is bound by any agreement to lease, sell, encumber, dispose of or grant any right in respect of the Properties;

(m)  

Leases.  Each Lease is in full force and effect, there are no defaults thereunder and all amounts owing under it have been paid by the relevantCompany Party except to the extent that any such default or such non-payment would not have a Material Adverse Effect;

(n)  

Work Orders.  There are no issued and outstanding work mandates or permit requirements relating to the Keyes Plant, or to the knowledge of Parent, the other Properties from or required by any Governmental Entity, nor does any Company Party have notice of any possible impending or future work mandate or permit requirement which would have a Material Adverse Effect;

(o)  

Expropriation.  No part of any of the Properties or the Buildings and Fixtures has been taken or is the subject of an expropriation by any Governmental Entity, no written notice or proceeding in respect of an expropriation been given or commenced nor is the Parent or any Borrower aware of any intent or proposal to give any such notice or commence any proceedings;

(p)  

Encroachments.  Except for Permitted Liens, the Buildings and Fixtures are located entirely within the Properties and are in conformity with the laws, regulations, and requirements of all applicable Governmental Entities, except to the extent that such non-conformity would not have a Material Adverse Effect.  There are no encroachments upon any of the Properties which would have a Material Adverse Effect;

(q)  

Compliance with Laws.  Each of the Properties has been used, and each of the Company Partiesis, in compliance with all Applicable Laws, including, without limitation, having the necessary Authorizations to carry on the Business, except to the extent that such non-compliance would not have a Material Adverse Effect;

(r)  

No Default.None of the Company Parties is in violation of its Organizational Documents or any equityholders’ agreement applicable to it;

(s)  

No Material Adverse Agreements.None oftheCompany Parties is a party to any agreement or instrument or subject to any restriction (including any restriction set forth in its organizational documents, by-laws or any equityholders’ agreement applicable to it) which has or, to the best of its knowledge at the time of making this representation, in the future may have a Material Adverse Effect;

(t)  

Environmental Compliance.  Except as set forth in Schedule 7.1(t):

(i)  

none of the Properties (i) has ever been used by any Person as a waste disposal site or a landfill, or (ii) has ever had any asbestos, asbestos-containing materials, PCBs, radioactive substances or aboveground or underground storage systems, active or abandoned, located on, at or under it at the date of this Agreement;

(ii)  

to the best knowledge of the Parent and the Borrowers, no properties adjacent to any of the Properties are contaminated by any Hazardous Materials;

(iii)  

there are no Hazardous Materials located on, at or under the Properties; and

(iv)  

none of theCompany Parties has transported, removed or disposed of any waste to a location outside of the United States of America as at the date of this Agreement;

(u)  

ERISA.Except for the Parent’s 401(k) Plan, none of the Company Parties nor any ERISA Affiliate of any Company Party has or has ever maintained or contributed to (or has or has ever had an obligation to contribute to) any Plan or Multiemployer Plan;

(v)  

Labor Matters.None of theCompany Parties has any collective bargaining agreements.  There are no strikes or other labor disputes againstany of the Company Parties pending or, to the knowledge of the Parent and the Borrowers, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect.  Hours worked by and payments made to employees of the Company Parties have not been in violation of the Fair Labor Standards Act or any other Applicable Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect.  All payments due from the Company Parties on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the relevant Company Party;

(w)  

Tax Liability.  Each of the Company Parties has filed all tax and information returns which are required to be filed.  Each of the Company Parties has paid all taxes, interest and penalties shown to be due and payable on such returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Entity (other than any the amount or the validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Company Party).  Adequate provision for payment has been made for taxes not yet due.  No tax Lien has been filed, and, to the knowledge of the Parent and the Borrowers, no claim is being asserted, with respect to any such tax, fee or other charge. There are no tax disputes existing or pending involving any Company Party or the Business which could reasonably be expected to have a Material Adverse Effect;

(x)  

Corporate Structure.  At the date of this Agreement:

(i)  

the Company Parties and the equityholders of the Company Parties are set out in a corporate chart on Schedule 7.1(x);

(ii)  

none of the Company Parties is, directly or indirectly, a member of, or a partner or participant in, any partnership, joint venture or syndicate other than as disclosed on Schedule 7.1(x);

(y)  

Financial Statements.  The audited consolidated financial statements of the Parent, copies of each of which have been furnished to the Administrative Agent and the Noteholders, fairly present the consolidated financial position of the Parent at such dates and the consolidated results of the operations and changes in financial position of the Parent for such period, all in accordance with GAAP;

(z)  

Indebtedness.  No Company Party has any Indebtedness except as not prohibited under Section 6.4(a).  Except as set forth in Schedule 7.1(z), there exists no default or event of default under the provisions of (i) any instrument evidencing Indebtedness in excess of $50,000 or (ii) any instruments evidencing Indebtedness in excess of $50,000 in the aggregate, or of any agreement relating thereto;

(aa)  

No Litigation.  Except as set forth in Schedule 7.1(aa), there are no material actions, suits or proceedings (including arbitration proceedings) pending, taken or to the Parent’s and the Borrowers’ knowledge, threatened, before or by any Governmental Entity or any arbitrators or by or against any elected or appointed public official or private person in the United States of America or elsewhere, and, to the knowledge of the Parent and the Borrowers, no Applicable Law which affects any Company Party has been enacted, promulgated or applied which (i)  challenges, or to the knowledge of the Parent and the Borrowers, has been proposed which may challenge, the validity or propriety of the transactions contemplated under the Financing Documents or the documents, instruments and agreements executed or delivered in connection therewith or related thereto, or (ii) could be reasonably anticipated to have a Material Adverse Effect;

(bb)  

Schedule Disclosure.  At the date of this Agreement:

(i)  

Schedule 7.1(bb)(i) is a list of all jurisdictions (or registration districts within such jurisdictions) in which each Company Party (i) has its chief executive office, head office, registered office and chief place of business, (ii) carries on business, (iii) has any account debtors, or (iv) stores any tangible personal property (except for goods in transit in the ordinary course of business);

(ii)  

Schedule 7.1(bb)(ii) is a list of all Authorizations which are material to any Company Party and to the acquisition, ownership, construction or operation of the Properties and the Business;

(iii)  

Schedule 7.1(bb)(iii) is a list of all Intellectual Property that is material to any Company Party and the Business;

(v)  

Schedule 7.1(bb)(v)  contains a list of all Material Contracts; and

(vi)  

Schedule 7.1(bb)(vi)contains a list of all settlement agreements and related orders in connection with any mechanics and materialmen liens against or affecting the Keyes Plant;

(cc)  

Insolvency.  Other than as disclosed on Schedule 7.1(cc), no Company Party or any of its Subsidiaries nor the Chairman has: (i) not generally paid its debts as they become due;  (ii) admitted its inability to pay its debts generally;  (iii) made a general assignment for the benefit of creditors; (iv) instituted any proceedings, or had instituted any proceedings against it (x) seeking to adjudicate it a bankrupt or insolvent or (y) seeking liquidation, winding-up, reorganization, compromise, arrangement, adjustment, protection, relief or composition of it or of its debts under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors or other similar matters or (z) seeking the appointment of a receiver, manager, receiver and manager, trustee, custodian, monitor, or other similar official for it or for any substantial part of its undertaking, property or assets; or (v) taken any organizational or other action to authorize any of the actions set forth above in this Section 7.1(cc);

(dd)  

No Liabilities.  Except as disclosed in this Agreement or reflected or reserved against in the unaudited balance sheet dated as of March 31, 2012, the Parent has no liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise) except for current liabilities incurred in the ordinary course since March 31, 2012;

(ee)  

Transactions with Related Parties.  All transactions with Related Parties are in the ordinary course of and pursuant to reasonable requirements of, business and are at prices and on terms not less favourable to the Company Parties than could be obtained in a comparable arm’s length transaction with another Person and all such transactions are described on Schedule 7.1(ee);

(ff)  

Foreign Asset Control Laws.  No Company Party is a Person named on a list published by OFAC or is a Person with whom dealings are prohibited under any OFAC Regulations;

(gg)  

Federal Regulations.  No part of the proceeds of the sale of the Notes will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of Regulation U.  If requested by any Noteholder or the Administrative Agent, each Borrower will furnish to the Administrative Agent and each Noteholder a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U;

(hh)  

Investment Company Act; Other Regulations.  No Company Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  No Company Party is subject to regulation under any Applicable Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness;

(ii)  

Solvency.  Each Company Party, after giving effect to the Acquisition and the incurrence of all Indebtedness and other obligations being incurred in connection herewith and therewith will be Solvent; and

(jj)  

Disclosure.  All (i) forecasts and projections supplied to the Administrative Agent and the Noteholders were prepared in good faith, adequately disclosed all relevant assumptions and (ii) other written information supplied to the Administrative Agent and the Noteholders is true and accurate in all material respects.  There is no fact known to the Parent which could reasonably be expected to have a Material Adverse Effect and which has not been fully disclosed to the Administrative Agent and the Noteholders.  No event has occurred which could be reasonably anticipated to have a Material Adverse Effect since the date of most recent financial statements delivered pursuant to Section 6.1(a).

(kk)  

Private Offering by each Borrower.  No Borrower nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Noteholders, each of which has been offered the Notes at a private sale for investment.  No Borrower nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the U.S. Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

(a)  

Non-Payment. The Borrowers fail to pay when due and payable (whether at maturity or otherwise) the full amount of any interest, fees (including the Acquisition Notes Redemption Fee), principal, if any, payable on any Note (including any default in payment of any amounts payable upon the occurrence of any Change of Control or any Redemption Event) or any Obligor defaults on its payment obligation under its Guarantee; or

(b)  

Breach of Negative and Financial Covenants. Any Company Party defaults in observing or performing any covenant or condition contained in Section 6.2 or Section 6.4of this Agreement, if such default, if capable of being cured by such Company Party, remains uncured for a period of ten (10) days after notice by the Administrative Agent; or

(c)  

Breach of Auditor and Key Man Insurance Covenants. Any Company Party defaults in performing any covenant or condition contained in Section 6.3(l) or Section 6.3(n) of this Agreement; or

(d)  

Breach of Other Covenants. Any Company Partyor any other Obligor defaults in observing or performing any other covenant or condition of this Agreement or any otherNote Purchase Document on its part to be observed or performed and, with respect to such covenants or conditions which are capable of rectification, if such default, if capable of being cured by such Company Party, remains uncured for a period of ten (10) days after notice by the Administrative Agent; or

(e)  

Security Imperilled.  Any one or more of the Security Documents ceases to be in full force and effect or to constitute a valid and perfected first priority Lien (subject to Permitted Encumbrances that by law rank in priority)upon all the Collateral it purports to charge or encumber in favour of the Administrative Agent for the benefit of the Secured Parties and  such Lien is not remedied or cured by the relevant Obligor within ten (10) days of notice to the Parent by the Administrative Agent, or if the Administrative Agent, determines at any time the Administrative Agent’s Lien in the Collateral on such date is inadequate (determined by the Administrative Agent in its reasonable discretion) or unenforceable (determined by the Administrative Agent in its sole discretion) and such Lien is not remedied or cured by the relevant Obligor within ten (10) days of notice by the Administrative Agent to the Parent; or

(f)  

Insolvency Proceeding.The commencement by any Company Party or any other Obligor of any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or  seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; or the consent by any Company Party or any other Obligorto the institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, provincial or state law relating to bankruptcy, insolvency, reorganization or relief of debtors, or the consent by it to the filing of any such petition or to the appointment under any such law of a receiver, receiver-manager, liquidator, assignee, trustee, sequestrator (or other similar official) of suchCompany Party or other Obligor or of all or substantially all of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due; or

(g)  

Insolvency Order. The entry of a decree or order by a court having jurisdiction adjudging any Company Party or any other Obligor a bankrupt or insolvent or approving as properly filed an application or a petition seeking reorganization, arrangement or adjustment of or in respect of the Company Party or such other Obligor under any Applicable Law relating to bankruptcy, insolvency, reorganization or relief of debtors, or appointing under any such Applicable Law a receiver, receiver-manager, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company Partyor such other  Obligor or of all or substantially all of their respective property, or ordering pursuant to any such Applicable Law the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days; or

(h)  

Liquidation Proceeding. Proceedings are commenced for the winding-up, liquidation or dissolution of any Company Party or any other Obligor, unless the Company Partyor such other Obligor in good faith actively and diligently contests such proceedings, decree, order or approval, resulting in a dismissal or stay thereof within sixty (60) days of commencement; or

(i)  

Liquidation Resolution. A resolution is passed for the winding-up, dissolution or liquidation of any Company Party or other Obligor; or

(j)  

Cessation of Enforceability. This Agreement, any Note or any otherNote Purchase Document shall for any reason, or is claimed by the Parent, the any Borrower or any other Obligor to, cease in whole or in any part to be a legal, valid, binding and enforceable obligation of any Obligor; or

(k)  

Cross-Default.Any Company Party fails to pay the principal of, premium, if any, interest on, or any other amount owing in respect of any of its Indebtedness or any other obligation (i) pursuant to any Financing Document (other than the Note Purchase Documents) or (ii) any other Indebtedness or obligation which is outstanding in an aggregate principal amount exceeding $100,000, in each case, when such amount becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness or obligation; or any other event occurs or condition exists and continues after the applicable grace period, if any, specified in any agreement or instrument relating to any such Indebtedness or obligation referred to in clauses (i) or (ii) above, if its effect is to accelerate, or permit the acceleration of such Indebtedness or obligation; or any such Indebtedness or obligation shall be, or may be, declared to be due and payable prior to its stated maturity; or

(l)  

Misrepresentation. Any representation or warranty made by any Obligor in this Agreement or any other Note Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any other Note Purchase Document shall prove to be incorrect or misleading in any material respect as at the date on which it was made; or

(m)  

Material Adverse Effect. The occurrence of any event that could reasonably be expected to have a Material Adverse Effect, including any change in the business, operations or financial condition of the Parentor any other Company Party that has a Material Adverse Effect; or

(n)  

Destruction of Collateral. Any destruction or abandonment of any part of the Collateral that is not in the ordinary course of business and that has a Material Adverse Effect; or

(o)  

Environmental Liabilities. Any Company Party incurs any liabilities by, under or pursuant to Environmental Laws or which relate to the existence of Hazardous Materials on or about the Keyes Plant or the other Properties which will require expenditures (i) for any one occurrence, in excess of $100,000 or (ii) aggregating in any Fiscal Year on a consolidated basis $100,000; or

(p)  

Judgment. Except for the judgments outstanding as of the date hereof and described in the Schedules, a final judgment or decree for the payment of money in excess of $250,000 individually or $250,000 on a cumulative basis is rendered against any Company Party or any other Obligor by a court having jurisdiction and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 15 days from entry thereof;or

(q)  

Key Man. The Chairman shall be terminated or resign as an officer and employee of the Parent or shall die or be incapable of performing his usual responsibilities as an officer or employee by reason of illness, disease or other disability for 30 days or more; or

(r)  

Attachment.  There shall be commenced against any Company Party or any other Obligor any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 30 days from the entry thereof; or

(s)  

Change in Control. A Change in Control, without the consent of the Administrative Agent, shall occur.

(1)  

(2)  

Notwithstanding anything contained in this Agreement, the Notes or any other Note Purchase Document to the contrary, if the principal amount and any accrued and unpaid interest on the Notes, together with the Acquisition Notes Redemption Fee, become due and payable in accordance with this  Section 8.2, then the Borrowers shall pay forthwith to Administrative Agent for the benefit of the Noteholders, on a pro rata basis, the principal of, and accrued and unpaid interest (including interest on amounts in default) on such Notes, together with the Acquisition Notes Redemption Fee and all other fees and expenses payable hereunder, together with subsequent interest thereon at the rate borne by the Notes from the date such amounts are due and payable in accordance with this Section 8.2 until payment is received by the Noteholders. Such payment when made shall be deemed to have been made in discharge of the Borrowers’ obligations hereunder.

(3)  

Except as expressly provided in Section 8.1 or 8.2, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrowers and the Parent.

(a)  

the Administrative Agent may proceed to enforce the rights of Administrative Agent and the Noteholders by any action, suit, remedy or proceeding authorized or permitted by any of the Note Purchase Documents or by Applicable Law or equity; and may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Administrative Agent and the Noteholders filed in any bankruptcy, insolvency, winding-up or other judicial proceedings relating to any Company Party;

(b)  

no such remedy for the enforcement of the rights of Administrative Agent or any of the Noteholders shall be exclusive of or dependent on any other such remedy but any one or more of such remedies may from time to time be exercised independently or in combination; and

(c)  

all rights of action hereunder or under any of the Security Documents or any other Note Purchase Document may be enforced by Administrative Agent or the Noteholders without the possession of any of the Notes or the production thereof on the trial or other proceedings relating thereto.

(1)  

(2)  

The Administrative Agent is not obliged to (i) take or refrain from taking any action or exercise or refrain from exercising any right or discretion under the Note Purchase Documents, or (ii) incur or subject itself to any cost in connection with the Note Purchase Documents, unless it is first specifically indemnified or furnished with security by the Noteholders, in form and substance satisfactory to it (which may include further agreements of indemnity or the deposit of funds).

(3)  

The Administrative Agent shall promptly deliver to each Noteholder any notices, reports or other communications contemplated in this Agreement which are intended for the benefit of the Noteholders. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Defalt unless and until notice describing such Default or Event of Default is given to the Administrative Agent in writing by the Borrowers, the Parent or a Noteholder.

(4)  

Neither the Administrative Agent nor its directors, officers, agents or employees shall be liable to the Noteholders for any action taken or omitted to be taken by it or them in connection with the Note Purchase Documents except for its or their own gross negligence or wilful misconduct as determined by a court of competent jurisdiction on a final and non-appealable basis.  Without limiting the generality of the foregoing, the Administrative Agent (i) may consult with legal counsel (including legal counsel for the Borrowers), independent accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in accordance with their advice, (ii) makes no warranty or representation to the Noteholders and shall not be responsible to the Noteholders for the form, substance, accuracy or completeness of any Note Purchase Document or any other documents or information made available to the Noteholders, (iii) has no duty to inspect the property or assets (including books and records) of the Borrowers or any other Person, (iv) has no duty to ascertain or inquire as to the existence of a Default or an Event of Default or the observance of any of the terms or conditions of the Note Purchase Documents, (v) is not responsible to the Noteholders for the execution, enforceability, genuineness, sufficiency or value of any of the Note Purchase Documents or for the validity, perfection or priority of any Lien created or purported to be created under the Security Documents, and (vi) shall incur no liability by acting upon any notice, certificate or other instrument believed by it to be genuine and signed or sent by the proper Person. In determining compliance with any condition hereunder to the purchase of any Note that by its terms must be fulfilled to the satisfaction of a Noteholder, the Administrative Agent may presume that such condition is satisfactory to such Noteholder unless the Administrative Agent shall have received notice to the contrary from such Noteholder prior to the purchase of such Note.

Third Eye Capital Corporation

Brookfield Place, TD Canada Trust Tower

161 Bay Street, Suite 3930

Toronto, ON M5J 2S1

(1)  

The Parent and theBorrowers shall pay (i) all expenses incurred by the AdministrativeAgent and the Noteholders, including the fees, charges and disbursements of counsel (including local counsel), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Note Purchase Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all expenses incurred by the Noteholders and the Administrative Agent, including the fees, charges and disbursements of counsel (including local counsel), in connection with the enforcement or protection of their rights in connection with this Agreement and the other Note Purchase Documents, including their rights under thisSection 12.5, or in connection with the Notes issued hereunder, including all such expenses incurred during any workout, restructuring or negotiations in respect of such Notes.

(2)  

The Parent and the Borrowers shall indemnify theAdministrative Agent (and any sub-agent thereof), each Noteholder, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Obligor arising out of, in connection with, or as a result of:

(a)  

the execution or delivery of this Agreement, any other Note Purchase Document or any agreement or instrument contemplated hereby or thereby, the performance or non-performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation or non-consummation of the transactions contemplated hereby or thereby;

(b)  

any Note or the use or proposed use of the proceeds therefrom;

(c)  

the presence of Hazardous Materials in, on, at, under or about, or the discharge or likely discharge of Hazardous Materials from, any of the properties comprised in the Collateral or any of the properties now or previously used or occupied by the Company Parties, any of theirrespective Subsidiaries or any of the other Obligors, or the breach by or non-compliance with any Environmental Law by any mortgagor, owner or lessee of such properties, or any liability imposed pursuant to Environmental Law or relating to the existence of Hazardous Materials on, under or about the properties comprised in the Collateral and related in any way to the Company Parties or any of theirrespective Subsidiaries; or

(d)  

any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by an Obligor and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee or (y) result from a claim brought by the Borrowers or any other Obligor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Note Purchase Document, if the Obligor has obtained a final and non-appealable judgment in its favour on such claim as determined by a court of competent jurisdiction.

(3)  

To the fullest extent permitted by Applicable Law, neither the Parent nor any of the other Company Parties shall assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for indirect, consequential, punitive, aggravated or exemplary damages (as opposed to direct damages) arising out of, in connection with, or as a result of, this Agreement, any other Note Purchase Document or any agreement or instrument contemplated hereby (or any breach thereof), the transactions contemplated hereby or thereby, any Notes or the use of the proceeds thereof.

(4)  

All amounts due under thisSection 12.5 shall be payable promptly after demand therefor.  A certificate of theAdministrative Agent or a Noteholder setting forth the amount or amounts owing to such Administrative Agent, Noteholder or a sub-agent or Related Party, as the case may be, as specified in this Section, including reasonable detail of the basis of calculation of the amount or amounts, and delivered to the Borrowers shall be conclusive absent manifest error.

(5)  

The provisions of thisSection 12.5 shall survive the termination of this Agreement and the redemption of all Notes.  To the extent required by law to give full effect to the rights of the Indemnitees under thisSection 12.5, the parties hereto agree and acknowledge that theAdministrative Agent and each Noteholder is acting as agent for its respective Related Parties and agrees to hold and enforce such rights on behalf of such Related Parties as they may direct.  Each of the Parent and the Borrowers acknowledges that neither its obligation to indemnify nor any actual indemnification by it of the Noteholders, the Administrative Agent or any other Indemnitee in respect of such Person’s losses for legal fees and expenses shall in any way affect the confidentiality or privilege relating to any information communicated by such Person to its counsel.

(1)  

it has been advised by counsel in the negotiation, execution and delivery of this Agreement and other Note Purchase Documents;

(2)  

neither Administrative Agent nor any Noteholder shall have any fiduciary relationship with or duty to the Parent or the Borrowers arising out of or in connection with this Agreement or any of the other Note Purchase Documents, and the relationship between Administrative Agent and Noteholders, on one hand, and the Parent or the Borrowers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(3)  

no joint venture is created hereby or by the other Note Purchase Documents or otherwise exists by virtue of the transactions contemplated hereby.

(1)  

This Agreement shall become effective when executed by the Parent, the Borrowers, the Administrative Agent and each Holder and after that time shall be binding upon and inure to the benefit of the Parent, the Borrowers, the Administrative Agent, and the Holders and their respective successors and permitted assigns.

(2)  

Neither the Parent nor any Borrower shall have the right to assign its rights or obligations under this Agreement or any interest in this Agreement without the prior consent of all the Holders, which consent may be arbitrarily withheld.

(3)  

A Holder may grant participations in all or any part of its interest in the Notes to one or more Persons (each a “Participant”).  The Holder granting a participation shall, unless otherwise expressly provided in this Agreement, act on behalf of all of its Participants in all dealings with the Borrowers in respect of the Notes and no Participant shall have any voting or consent rights with respect to any matter requiring the Holders’ consent.  A Holder may also with the prior written consent of the Administrative Agent assign or transfer all or any part of its interest in the Notes to a transferee in compliance with Article 3.

(4)  

Each Borrower shall assist the Administrative Agent and any Holder to transfer its Notes or to sell participations under this Section 12.9 in whatever manner reasonably necessary in order to enable or effect such transfer or participation including providing such certificates, acknowledgments and further assurances in respect of this Agreement and the Notes as such Holder may reasonably require in connection with transfer or any participation pursuant to this Section 12.9.

(5)  

Any Holder may at any time pledge or grant a security interest in all or a portion of its rights under this Agreement to secure obligations of such Holder provided that no such pledge or security shall release such Holder from any of its obligations hereunder or substitute any such pledge for such Holder as a party hereto.

(6)  

Any transfer or any grant of participation pursuant to this Section will not constitute a repayment by the Borrowers to the transferring or granting Holder of the Notes, nor a new purchase of Notes by the Holder,transferee or Participant, as the case may be, and the parties acknowledge that the Borrowers’ obligations with respect to any such Notes will continue and will not constitute new obligations.

(1)  

Such Person is acquiring the Notes and Bonus Shares (as defined in the Fee Letter) for its own account for investment purposes and not with a view toward, or for resale or transfer in connection with, the sale or distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), that would be in violation of the Securities Act or any securities or “blue sky” laws of any state of the United States or other applicable law, and has no contract, agreement, undertaking or arrangement, and has no intention to enter into any contract, agreement, undertaking or arrangement to pledge such Notes or Bonus Shares or any part thereof.

(2)  

Such Person has been advised by the Parent and Borrowers that (i) the Notes and Bonus Shares are being issued and sold by the Parent and Borrowers pursuant to an exemption from registration provided under Section 4(2) of the Securities Act and/or Regulation D under the Securities Act or pursuant to Regulation S under the Securities Act and neither the offer nor sale of any Notes or Bonus Shares has been registered under the Securities Act or any state or foreign securities or “blue sky” laws; (ii) the Bonus Shares are characterized as “restricted securities” under the Securities Act inasmuch as they are being acquired from the Parent and the Borrowers in a transaction not involving a public offering and that the undersigned must continue to bear the economic risk of the investment in the Notes and Bonus Shares unless subsequently registered under the Securities Act and all applicable state or foreign securities or “blue sky” laws or an exemption from such registration is available; (iii) it is not anticipated that there will be any public market for the Notes in the foreseeable future; (iv) when and if the Notes and Bonus Shares may be disposed of without registration in reliance on Rule 144 of the Securities Act (“Rule 144”), such disposition can be made only in limited amounts in accordance with the terms and conditions of such rule; (v) if the Rule 144 exemption is not available, public offer or sale of any Notes and Bonus Shares without registration will require the availability of another exemption under the Securities Act; (vi) a restrictive legend in a form satisfactory to the Parent and Borrowers shall be placed on the Notes and the certificates representing the Bonus Shares; and (vii) a notation shall be made in the appropriate records of the transfer agent for the Notes and Bonus Shares indicating that the Notes and Bonus Shares are subject to restrictions on transfer.

(3)  

Such Person is either (i) an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3), (4) or (7) of the Securities Act or (ii) a non-U.S. person within the meaning of Regulation S under the Securities Act (which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an estate or trust)) and is purchasing the Notes and Bonus Shares outside the United States in reliance upon Regulation S under the Securities Act and, in either case, has such knowledge, skill and experience in business, financial and investment matters so that it is capable of evaluating the merits, risks and consequences of an investment in the Notes and Bonus Shares and is able to bear the economic risk of loss of such investment, including the complete loss of such investment.

(4)  

Neither it nor its Affiliates or any Person acting on its or any of their behalf, has engaged, or will engage, in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the Financing.

(5)  

Such Person is not purchasing the Notes and Bonus Shares as a result of any advertisement, article, notice or other communication regarding the Notes and Bonus Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to such Purchaser's knowledge, any other general solicitation or general advertisement.

(6)  

Such Person is not a Person named on a list published by OFAC or is a Person with whom dealings are prohibited under any OFAC Regulations;