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EXHIBIT 10.14
NOTE AND LOAN AGREEMENT
Farm Credit
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Loan No. Date Amends Noted Dated Assn. Br. No. Repayment Plan
2473831 02/28/2002 716-00 PRINCIPAL AND INTEREST
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For value received, the undersigned ("Borrower", whether one or more)
jointly and severally, promise to pay to FARM CREDIT OF NESS CITY, FCLA
("Lender") at Lender's offices, or to its order, the principal sum of ONE
HUNDRED TWENTY THOUSAND AND NO/100 dollars ($120,000.00), with a beginning
interest rate at 5.00% per annum starting UPON DISBURSEMENT on the
unmatured principal, principal and interest payable as follows:
DUE IN 5 CONSECUTIVE ANNUAL INSTALLMENTS ON THE 1ST DAY OF EACH MARCH
AS FOLLOWS:
4 INSTALLMENTS OF PRINCIPAL AND INTEREST, IN THE AMOUNT OF
$27,716.98 EACH, THE FIRST DUE MARCH 1, 2003;
and a final installment consisting of all unpaid principal balance of the
indebtedness, and all accrued interest thereon shall be due and payable on
March 1, 2007,
PROVIDED, however, (1) if the period from the date of disbursement or
conversion of the principal sum to the date of the initial installment is
more or less than the regular installment period, the amount may be
increased or decreased, so as to reflect interest actually accruing for
that period, or (2) when any different rate of interest is established as
provided below, the amount of each subsequent installment shall be
increased or decreased to reflect the increase or decrease in the interest
rate, but the due date of the increased or decreased installment shall
remain as provided above, or (3) if any advance payment is made, it shall
not operate to reduce the dollar amount of the payments evidenced by this
Note and Loan Agreement, except as Lender may determine at its sole
option.
/ / If checked, this Note and Loan Agreement amends a note dated _____________
and supersedes it to the extent the terms and conditions are inconsistent
with this Note and Loan Agreement.
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INTEREST RATE AND PAYMENT CHANGES
DIFFERENTIAL VARIABLE RATE. The interest rate on this Note and Loan
Agreement shall be according to Lender's Differential Variable Interest
Rate policy. Lender has the right, from time to time, to establish
different rates of interest, either higher or lower than that stated
above. The new rates shall apply to the unmatured principal and shall
remain in effect until different rates are established by the Lender's
Board of Directors.
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PREPAYMENT
/ / REINVESTMENT FEE REQUIRED FOR PREPAYMENT. If checked, Borrower agrees to
pay a reinvestment fee as defined in the attached Prepayment Addendum.
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/X/ LATE PAYMENT PENALTY. If checked, Borrower agrees to pay a late payment
penalty of 2% ABOVE THE BILLING RATE ON INSTALLMENTS NOT PAID IN FULL
WITHIN 10 DAYS OF THE SCHEDULED PAYMENT DATE; AND CONTINUING UNTIL THE
LOAN IS BROUGHT CURRENT on all payments of: (1) principal and interest not
paid when due; and (2) other payments including insurance, taxes, etc. not
paid when due if Lender advances to make the payments.
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TYPE OF LOAN
/X/ Agricultural / / Rural Home Loan / / Other
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SECURITY. This Note and Loan Agreement is secured by a mortgage, deed of
trust or security agreement dated FEBRUARY 28, 2002 covering certain real
estate and/or personal property.
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/X/ SPECIAL CONDITIONS. If checked, in addition to the STANDARD CONDITIONS
Borrower agrees to the following special conditions: "BORROWER AGREES TO
SUBMIT TO THE LENDER AN ANNUAL VERIFIED BALANCE SHEET AND INCOME STATEMENT
ON OR BEFORE MARCH 1, 2003, AND ON EACH ANNIVERSARY DATE THEREAFTER.
FAILURE TO DO SO MAY RESULT IN A PENALTY OF .01 PERCENT OF THE OUTSTANDING
PRINCIPAL BALANCE OR $100.00, WHICHEVER IS GREATER, WHICH MAY BE ADDED TO
THE OUTSTANDING PRINCIPAL BALANCE."
ADDITIONAL PROVISIONS
THIS WRITTEN CREDIT AGREEMENT IS THE FINAL EXPRESSION OF THE AGREEMENT
BETWEEN BORROWER AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY
PRIOR OR CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN THE BORROWER AND
THE LENDER. THE PARTIES AFFIRM THAT NO UNWRITTEN ORAL CREDIT AGREEMENT
EXISTS BETWEEN THEM. I agree to the terms of the Note and acknowledge
receiving a copy.
WESTERN PLAINS ENERGY, LLC, A KANSAS LIMITED LIABILITY COMPANY
By: /S/ JEFF TORLUEMKE, CEO Lender FARM CREDIT OF NESS CITY, FLCA
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JEFF TORLUEMKE, CHIEF EXECUTIVE
OFFICER
By: /S/ RICHARD L. STERRETT, CFO
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RICHARD L. STERRETT, CHIEF (Lender must sign if Borrower or
FINANCIAL OFFICER security is in Kansas)
/S/ JEFF TORLUEMKE By /S/ DENNIS MCNINCH
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JEFF TORLUEMKE DENNIS MCNINCH, VICE PRESIDENT-LENDING
S/ RICHARD L. STERRETT
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RICHARD L. STERRETT
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STANDARD CONDITIONS
While this loan agreement is in effect Borrower will: (1) at Lender's request,
furnish information to Lender relating to Borrower's business and financial
affairs and permit Lender to examine Borrower's books and records; (2) maintain
all other loans with Lender in a current status; (3) allow Lender to inspect and
appraise Lender's collateral; (4) utilize loan proceeds as provided in the
PURPOSE section of this agreement; (5) promptly notify Lender of any potential
material adverse change in financial condition or any possible default under
this or any other loan agreement with this Lender or with any other lender; (6)
execute all other documents as Lender may lawfully require in connection with
this loan; (7) comply with all terms and conditions of all other documents
executed in connection with this loan; (8) at Lender's request, submit an annual
verified balance sheet and income statement as of Borrower's fiscal year end.
ADDITIONAL COLLATERAL. LENDER MAY REQUEST ADDITIONAL COLLATERAL FOR THIS LOAN
FROM TIME TO TIME IN ACCORDANCE WITH APPLICABLE FEDERAL LAW, INCLUDING, WITHOUT
LIMITATION, REQUESTS FOR A SECURITY INTEREST IN LENDER'S "INSTALLMENT FUND" AND
"RESERVE FUND" PROGRAMS. BORROWER AGREES TO DELIVER ADDITIONAL COLLATERAL AS
LENDER MAY, IN GOOD FAITH, REQUEST.
STOCK
Purchase, Lien and Conversion. Stock purchase and conversion shall be
according to the terms, conditions and designations outlined in
applicable federal law governing the Farm Credit System, regulations of
the Farm Credit Administration and Lender's bylaws. Borrower
acknowledges: (1) that the principal sum of this Note and Loan
Agreement includes any sums borrowed to purchase the maximum amount
of stock; (2) Lender has a first lien on Borrower's stock; and, (3)
that stock retirement will be in accordance with applicable law,
regulations and Lender's bylaws governing retirement.
Default. In the event of default on this loan, Borrower agrees that
Lender may retire stock, not to exceed par value or face amount, and
apply the proceeds to principal and/or interest according to applicable
law, regulations and Lender's bylaws in effect at the time of
retirement.
Risk. If book value of stock is ever less than par value or face amount
or if Lender's capital becomes impaired, stock may be subject to risk
of impairment and Lender may retire stock according to applicable
federal law, regulations and Lender's bylaws. This in no way affects
Borrower's obligation to repay its loan in full, including any amounts
borrowed to purchase stock.
DISCLOSURE CONSENT. By signing, Borrower agrees that Lender may disclose
financial information to any consumer reporting agency and/or other Farm Credit
System institutions. The association may verify all information Borrower
discloses; it may also check credit, financial, employment, and income records
of the Borrower, and if either a partnership or joint venture of its members,
and of each guarantor; the association may also answer inquires about its credit
experience with the Borrower.
DEFAULT. Borrower is in default of this Note and Loan Agreement under the
following circumstances: (1) Borrower fails to repay principal or interest as
set forth in this Note and Loan Agreement; (2) Borrower materially breaches any
term, condition or representation in any document in connection with this loan
or in connection with any other loan of this, or any other Lender; (3) if any of
Borrower's representations to this, or any other, lender in connection with any
loan prove to be materially false; (4) Lender determines, in its sole
discretion, that Borrower is unable to repay the indebtedness or Lender
otherwise deems itself insecure; (5) Borrower fails to use loan proceeds as set
forth in the PURPOSE section of this Note and Loan Agreement; (6) if, solely in
Lender's judgment, borrower has experienced a material adverse change in
financial condition; (7) death, dissolution, termination of existence,
insolvency, business failure, petition for or appointment of a receiver,
assignment for the benefit of creditors by, or commencement of any proceeding
under any bankruptcy or insolvency law by or against Borrower, or any guarantor,
endorser, or surety for Borrower.
Remedies. On default and acceleration, Lender may exercise all legal
rights and remedies including, but not limited to, right and remedies
stated in mortgages and security agreements. Exercise of any right or
remedy shall not exclude exercise of any other right or remedy. The
mortgage, deed of trust or security agreement provides that advances
made by Lender shall become a part of the debt evidenced by this Note,
and also states additional conditions under which the entire debt may
be accelerated and become immediately due and will be subject to
interest and default interest.
Default Interest and Acceleration. In the event of default the interest
rate shall be 2% above the then existing billing rate. On Borrower's
default, and at Lender's option, all unpaid principal, including
amounts advanced for taxes, insurance, etc., interest and default
interest, shall become immediately due and payable without notice or
demand by Lender. Lender may continue to charge interest, and default
interest, on the accelerated amount.
Waiver. Any delay or omission by Lender in exercising a right or remedy
shall not waive that right or remedy or any other right or remedy. Any
explicit waiver of default by Lender must be in writing and signed by
Lender. No waiver of default by Lender shall operate as a waiver of any
other default or of the same default on a future occasion.
LEGAL FEES. If this loan is placed in the hands of an attorney for collection or
to protect or enforce any of Lender's rights in bankruptcy or otherwise, Lender
may collect its attorney fees, court costs and other expenses as provided by
applicable law. If allowed by law, all of these expenditures by Lender shall be
secured by security for this loan and shall become principal under this loan.
These expenses shall be immediately payable and shall bear interest as provided
in the INTEREST RATE AND PAYMENT CHANGES paragraph of this Note and Loan
Agreement. Lender shall solely determine the propriety of paying these expenses
and Borrower shall have no action against Lender for payment under this
paragraph.
EVIDENCE. Lender's records shall be prima facie evidence of the balance owing
Lender and Borrower shall bear the burden of showing any fault or error.
WAIVER OF DEMAND. Borrower, and any endorser, surety or guarantor of this Note
and Loan Agreement, severally waive presentment for payment, demand, notice of
nonpayment, protest and notice of protest, and diligence in enforcing payment of
this Note.
RELEASE AND EXTENSION. Borrower, and any endorser, surety or guarantor of this
Note and Loan Agreement, severally agree that Lender may at any time, without
notice, release all or any part of the security for this Note and Loan Agreement
(including all or any part of the premises covered by the referenced mortgage or
deed of trust); grant extensions, deferments, renewals or reamortizations of any
part of the debt evidenced by this Note and Loan Agreement, and release from
personal liability any one or more of the parties who are or may become liable
for this debt; all without affecting the personal liability of any other party.
SAVINGS CLAUSE. If any provisions of this Note and Loan Agreement are found to
be invalid or unenforceable, they shall no longer be considered to be a part of
this Note and Loan Agreement. The remaining provisions shall be valid and
enforceable.
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AGENCY APPOINTMENT. Each Borrower appoints every other Borrower as his or her
agent for purposes of the obligations of this loan. Borrower acknowledges that
Lender may conduct transactions with any borrower as if it were conducting
transactions with all borrowers. This authority shall continue until Borrower
revokes or terminates it by giving written notice to Lender.
INCORPORATION BY REFERENCE. This Note and Loan Agreement includes all
amendments, supplements and modifications to it, and also incorporates by
reference the terms of all assignment, instruments, documents, other writings or
written agreements between Borrower and Lender, including without limitation,
applications, loan commitments, notes and security documents.
MERGER. This Note and Loan Agreement supersedes all prior oral negotiations,
representations, and promises which are merged into this writing. This Note and
Loan Agreement, and any amendments, modifications or extensions to it,
constitutes the entire agreement between Borrower and Lender.
BORROWER'S GUARANTEES. By signing, Borrower warrants that Borrower has legal
authority to enter into this transaction, that the terms and conditions of this
contract do not contravene the terms and conditions of any other contract(s) of
the Borrower, that Borrower's representations in connection with this loan are
true and accurate, and that Borrower is not involved in, or has any expectations
of involvement in, any legal action that might impair Borrower's financial
condition or ability to continue business.
CAPTIONS. Captions used in this Note and Loan Agreement are inserted only as a
matter of convenience and for reference, and in no way define, limit or describe
the scope or intent of any term or provisions.
APPLICABLE LAW. Enforcement of this Note and Loan Agreement and the mortgage,
deed of trust or security agreement shall be governed by federal laws to the
extent applicable, and shall otherwise be governed by the laws of the state in
which the mortgage real estate or personal property is located.
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FARM CREDIT SERVICES
Disbursement Statement
Borrower's Name WESTERN PLAINS ENERGY, LLC Loan Class 15 Assn. Br. No. 716-00
-------------------------- -- ------
Address PO BOX 340 Loan No. 2473831
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City, State, Zip QUINTER KS 67752 Seg Loan No.
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1. Loan amount $ 120,000.00
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2. Withheld to purchase 200 shares of association stock -$ 1,000.00
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3. Loan fee withheld Assn. $ FCB $ -$
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4. Amount withheld for refinance (Less stock credit, if used):
Loan No. Total Amount Due Less Stock Credit Net Amount Withheld
$ - $ = $
- -------- ------------- ------------- --------------------
$ - $ = $
- -------- ------------- ------------- --------------------
$ - $ = $
- -------- ------------- ------------- --------------------
5. Proceeds deficit (Collect from borrowers): - $
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6. Net loan proceeds + $
7. Association record of initial disbursements = $ 119,000.00
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Draft No. Payee/Purpose Amount
30155 WESTERN PLAINS ENERGY, LLC 119,000.00
A KANSAS LIMITED LIABILITY ----------
COMPANY/OPERATING EXPENSE
8. Amount of initial disbursements - $ 119,000.00
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9. Undisbursed loan proceeds: = $ 0.00
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10. Additional deposit by borrower in the amount of $ __________ payable to
_________________________ for ______________________ (purpose)
11. Interest rate at time of disbursement 5.00000%
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12. Date interest begins (loan close date) 03/05/2002
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13. I hereby authorize the FARM CREDIT OF NESS CITY, FLCA to disburse funds as
itemized above.
/S/ JEFF TORLUEMKE
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JEFF TORLUEMKE Borrower's Signature Borrower's Signature
/S/ RICHARD L. STERRETT
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RICHARD L. STERRETT Borrower's Signature Borrower's Signature
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Borrower's Signature Borrower's Signature
14. I certify that all closing requirements on the above loan have been met and
the proceeds have been disbursed to, and for the benefit of, the persons
entitled as shown above:
/S/ DENNIS MCNINCH
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DENNIS MCNINCH Association Signature
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ATTACHMENT TO MORTGAGE AND SECURITY AGREEMENT
LOAN NO. 2473831
WESTERN PLAINS ENERGY, INC.
A KANSAS LIMITED LIABILITY COMPANY
A TRACT OF LAND LOCATED IN THE SOUTH HALF (S/2) OF SECTION ONE (1), TOWNSHIP
ELEVEN (11) SOUTH, RANGE THIRTY-ONE (31) WEST OF THE SIXTH PRINCIPAL MERIDIAN,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID SECTION, THENCE, ON AN ASSUMED BEARING
OF N00(Degree)18'21"W, ALONG THE WEST LINE OF SAID SECTION, A DISTANCE OF ONE
THOUSAND EIGHT HUNDRED SEVENTY-FIVE AND FIFTY-FIVE HUNDREDTHS (1875.55) FEET TO
THE SOUTH RIGHT-OF-WAY BOUNDARY OF THE UNION PACIFIC RAILROAD, THENCE
N88(Degree)48'41"E, ALONG SAID RAILROAD RIGHT-OF-WAY, FOR A DISTANCE OF TWO
HUNDRED NINETY-NINE AND EIGHTY-THREE HUNDREDTHS (299.83) FEET, THENCE
EAST-NORTHEASTERLY, ALONG SAID RAILROAD RIGHT-OF-WAY, ON A CIRCULAR CURVE TO THE
LEFT (ARC ANGLE = 01(Degree)16'41" LT; RADIUS = 17304.17 FT.; LONG CHORD BEARING
= N88(Degree)11'07"E), FOR A DISTANCE OF THREE HUNDRED EIGHTY-FIVE AND
NINETY-NINE HUNDREDTHS (385.99) FEET THENCE N87(Degree)32'00"E, ALONG SAID
RIGHT-OF-WAY, FOR A DISTANCE OF TWO THOUSAND FOUR HUNDRED TWELVE AND
EIGHTY-THREE HUNDREDTHS (2412.83) FEET, THENCE S00(Degree)08'11"E FOR A DISTANCE
OF ONE THOUSAND NINE HUNDRED NINETY-SEVEN AND SEVENTY-FIVE HUNDREDTHS (1997.75)
FEET TO THE SOUTH LINE OF SAID SECTION, THENCE S89(Degree)59'55"W, ALONG THE
SOUTH LINE OF SAID SECTION, FOR A DISTANCE OF THREE THOUSAND NINETY AND NINETY
HUNDREDTHS (3090.90) FEET TO THE POINT OF BEGINNING CONTAINING 137.21 ACRES,
SAID TRACT BEING SUBJECT TO COUNTY ROAD RIGHT-OF-WAY ALONG ITS WEST AND SOUTH
BOUNDARIES.
"TOGETHER WITH ALL WATER RIGHTS AND ALL WELLS AND EQUIPMENT USED FOR THE
IRRIGATION OF SAID LAND INCLUDING, BUT NOT LIMITED TO WELL NO. 1, PERMIT NO.
14027, PRIORITY DATE NOVEMBER 6, 1967, AT A PUMPING RATE NOT TO EXCEED 475 GPM
TO IRRIGATE A MAXIMUM OF 147 ACRES; ALSO WELL NO. 2, PERMIT NO 14027, PRIORITY
DATE NOVEMBER 6, 1967, AT A PUMPING RATE NOT TO EXCEED 475 GPM TO IRRIGATE A
MAXIMUM OF 147 ACRES, AND A SECURITY INTEREST IN ALL WELLS, PUMPS, MOTORS,
EQUIPMENT, AND SPRINKLER SYSTEMS USED FOR IRRIGATION OF THE LAND DESCRIBED ABOVE
INCLUDING ALL FUTURE ADDITIONS TO, REPLACEMENT OF, OR SUBSTITUTIONS FOR."
<Page>
WESTERN PLAINS ENERGY, LLC,
MORTGAGE AND SECURITY AGREEMENT
(With Future Advance Clause)
Farm Credit
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Loan No. 2473831
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DATE:
THIS MORTGAGE is made on this 28TH day of FEBRUARY, 2002.
PARTIES:
The parties to this mortgage are:
WESTERN PLAINS ENERGY, LLC, A KANSAS LIMITED LIABILITY COMPANY
hereafter called MORTGAGOR, whether one or more, and FARM CREDIT OF NESS CITY,
FLCA, 114 W MAIN, PO BOX 457, NESS CITY, KS 67560-0457, hereafter called the
MORTGAGEE.
PROPERTY MORTGAGED.
MORTGAGOR, in consideration of money loaned, as described in this
instrument, by the MORTGAGEE, does by this instrument mortgage to the MORTGAGEE
all of the following real estate situated in the County of GOVE and State of
KANSAS described as follows:
SEE ATTACHMENT
STATE OF KANSAS, GOVE COUNTY SS
Filed for record this 1 day of April A.D.
2002 at 8:00 o'clock A.M. and duly
recorded in Book 138 of - Page 947-951
Cristy S. Tuttle Register of Deeds
Fee $14.00
Corrine Christensen
Containing 137 acres, more or less.
Subject to existing easements, rights of way, and mineral interests or mineral
leases owned by third parties under valid reservations or conveyances now of
record; but including the following property, whether or not owned by MORTGAGOR
on the date of this mortgage or acquired by MORTGAGOR after the date of this
mortgage, or whether now or hereafter located on or appurtenant to the real
estate described above:
All improvements of any kind and character; all equipment and fixtures;
all easements, rights of way and reversionary rights; all privileges,
hereditaments and appurtenances; all water, irrigation and drainage
rights; and all abstracts or other evidence of title;
all of which shall be considered a part of the property securing the repayment
of the loan described in this instrument.
AMOUNT AND TERMS.
The MORTGAGOR has made a promissory note payable to the order of
MORTGAGEE. The promissory note is dated FEBRUARY 28, 2002. The mortgage secures
to the MORTGAGEE the payment of $120,000.00 of the original principal sum and is
payable with interest as shown in the promissory note and if not sooner paid,
shall be due and payable in full on MARCH 1, 2007 subject to extensions thereof.
The promissory note states the interest rates on the principal sum, and may also
provide for future changes in the interest rate. The principal sum consists of
the original principal sum and substitutions and renewals thereof, and may
consist of additional principal advances not to exceed $0.00, as evidenced by
the MORTGAGOR's notes and bearing interest as provided in said notes. The
mortgage secures the repayment of the principal sum with interest, and any
additional indebtedness arising under the terms and conditions of this mortgage.
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PROMISES BY MORTGAGOR.
MORTGAGOR promises as follows:
1. TITLE. To be the owner of fee simple title to the real estate described
above, and to be the owner of unconditional title to all other property which
secures repayment of this mortgage; to have a good right to mortgage said
property; that all property is free and clear of all liens and encumbrances; and
to guarantee and defend title to all property which is the subject of this
mortgage against the lawful claims or demands of all persons not parties to this
agreement, except: (attach schedule, if applicable).
2. USE OF LOAN PROCEEDS. To use the proceeds from the loan secured by this
mortgage solely for the purposes stated by MORTGAGOR in MORTGAGOR's loan
application.
3. PAYMENT. To pay when due all payments as set out in the note secured by this
mortgage.
4. TAXES AND ASSESSMENTS. To pay when due all taxes and assessments lawfully
levied or assessed against the property mortgaged by this instrument, and also
to pay all lawful claims, liens, judgments or encumbrances which may be or
become prior to this mortgage.
5. INSURANCE AND ITS PROCEEDS. To insure the buildings and improvements now on,
or which may be placed on, the real estate described above, and to keep such
buildings and improvements insured against such hazards and in such amounts as
the MORTGAGEE may require. The policy of insurance shall contain a loss-payable
clause in favor of the MORTGAGEE, as its interest may appear. If there is a
loss, and if the payments on the note secured by this mortgage are current and
if there is no violation of the terms of this mortgage by MORTGAGOR, any sums
received by the MORTGAGEE for loss under the policy may be used to pay for
reconstruction of the destroyed buildings or improvements; if not so applied, or
if there is a violation of the terms of this mortgage by MORTGAGOR, then, at the
MORTGAGEE'S option, any sums received by the MORTGAGEE may be applied in payment
of matured debt, or as extra payments on unmatured debt in the manner provided
for in the promissory note secured by this mortgage.
6. COMPLIANCE WITH LAWS; REPAIR, WASTE, REMOVAL. To comply with all laws,
ordinances, regulations, covenants, conditions and restrictions which affect the
security; to keep the security in good condition and repair at all times; not to
commit or permit waste of, or nuisance on, the security, nor to permit
unreasonable depreciation of the physical condition or value of the security
through erosion, insufficient water supply, inadequate or improper drainage or
irrigation, or any other cause; or, unless written consent of the MORTGAGEE is
first obtained, not to cut or remove, or permit the cutting or removal of,
growing timber, except for domestic purposes; nor to remove or permit removal of
any improvements, except for appropriate replacement.
7. REIMBURSEMENT OF COSTS AND EXPENSES TO MORTGAGEE. To promptly reimburse the
MORTGAGEE for all costs and expenses which the MORTGAGEE may incur in any suit
to foreclose this mortgage, or in any suit in which the MORTGAGEE may be obliged
to defend or protect its lien under bankruptcy laws or other laws, or any of the
other rights it may have under this mortgage, including all abstract fees, all
court costs, a reasonable attorney's fee where allowed by law, and all other
expenses. Any expenses so incurred by the MORTGAGEE shall be secured by this
mortgage, may be included in any decree of foreclosure, and may be added as
advances to the loan balance when paid, as provided in the section labeled
"ADVANCES" below.
8. LIFE AND/OR DISABILITY INSURANCE; APPLICATION OF PROCEEDS. To obtain and
maintain life and/or disability insurance in such amount as the MORTGAGEE may
require in its loan commitment or in any later loan servicing agreement between
MORTGAGOR and MORTGAGEE. The insurance policy will provide that all insurance
proceeds are to be fully payable to the MORTGAGEE. All such proceeds shall be
applied, first, to the payment of any matured indebtedness due the MORTGAGEE,
and, secondly, toward payment of the unmatured principal amount due the
MORTGAGEE. Any insurance proceeds remaining after full satisfaction of the
MORTGAGEE'S debt shall be forwarded to such person as MORTGAGOR may have
designated in the insurance policy, or, if a person is not designated, to
MORTGAGOR or to MORTGAGOR'S successors in interest, and the MORTGAGEE shall be
held harmless in, and incur no liability for so doing.
ENVIRONMENTAL REPRESENTATIONS, WARRANTIES, COVENANTS, AND INDEMNITIES
With respect to the property, Mortgagor has complied, is in compliance,
and will at all times comply in all respects with all applicable laws (whether
statutory, common law or otherwise), rules, regulations, orders, permits,
licenses, ordinances, judgments, or decrees of all governmental authorities
(whether federal, state, local or otherwise), including, without limitation, all
laws regarding public health or welfare, environmental protection, water and air
pollution, composition of product, underground storage tanks, toxic substances,
hazardous wastes,
<Page>
hazardous substances, hazardous materials, waste or used oil, asbestos,
occupational health and safety, nuisances, trespass, and negligence.
1. RIGHT OF INSPECTION. The Mortgagor hereby grants, and will cause any tenants
to grant to Mortgagee, its agents, attorneys, employees, consultants,
contractors, successors and assigns, an irrevocable license and authorization,
upon reasonable notice, to enter upon and inspect the Property and facilities
thereon, and perform such tests, including without limitation, subsurface
testing, soils and groundwater testing, and other tests which may physically
invade the Property thereon, as the Mortgagee, in its sole discretion,
determines is necessary to protect its security interest, provided however, that
under no circumstances shall the Mortgagee be obligated to perform such
inspections or tests.
2. INDEMNITY. Mortgagor agrees to indemnify and hold Mortgagee, its directors,
employees, agents, and its successors and assigns, harmless from and against any
and all claims, losses, damages, liabilities, fines, penalties, charges,
judgments, administrative orders, remedial action requirements, enforcement
actions of any kind, and all costs and expenses incurred in connection therewith
(including, but not limited to, attorney's fees and expenses, including all
attorneys fees and expenses incurred by Mortgagee in enforcing this indemnity),
arising directly or indirectly, in whole or in part, out of any failure of
Mortgagor to comply with the environmental representations, warranties and
covenants contained herein.
3. CONTINUATION OF REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITIES.
Mortgagor's representations, warranties, covenants and indemnities contained
herein shall survive the occurrence of any event whatsoever, including without
limitation, the satisfaction of the promissory note secured hereby, the
reconveyance or foreclosure of this mortgage, the acceptance by Mortgagee of a
deed in lieu of foreclosure, or any transfer or abandonment of the property.
ASSIGNMENT OF MINERAL INCOME AND DAMAGES.
To provide for payment of the debt secured by this mortgage, MORTGAGOR
hereby assigns to the MORTGAGEE all sums of money which are now due or hereafter
may become due to MORTGAGOR for claims, injury or damage to the security from
any cause, and also all sums which are now due or hereafter may become due to
MORTGAGOR as rents, royalties, bonuses or delay rentals under any oil, gas or
other mineral lease now existing, or hereafter entered into by MORTGAGOR on the
real estate described above. To assign payment of these sums to the MORTGAGEE,
MORTGAGOR agrees to execute and deliver to the MORTGAGEE any further instruments
which the MORTGAGEE may require, at the MORTGAGEE'S option, sums paid to it by
virtue of this assignment may be released by the MORTGAGEE to MORTGAGOR, and
release of any such sums shall not prevent the MORTGAGEE from receiving payment
of any other sums under this assignment. If not released by the MORTGAGEE to
MORTGAGOR, such sums may be applied to pay any matured debt owing to the
MORTGAGEE, or, if no matured debt exists, such sums may be applied as advance
payment of principal, according to the provisions of the promissory note
described above. Release of this mortgage of record shall automatically
terminate the MORTGAGEE'S right to receive any further sums under this
assignment.
WATER RIGHTS.
The MORTGAGOR shall abide by all the statutes, rules, and regulations
of any and all state and local authorities having jurisdiction over the use and
distribution of water or water resources, and further covenants and agrees not
to transfer, sell or assign or relinquish the water rights now held or hereafter
acquired covering the above described property without the written consent of
the MORTGAGEE.
ADVANCES.
In the event MORTGAGOR does not pay when due any costs incurred for
abstracting, surveys, title curative work and recording fees which are to be
paid by MORTGAGOR as provided for in the application or commitment for this
loan, or in the event MORTGAGOR does not pay when due any taxes, or lawful
liens, judgments, assessments or other charges which MORTGAGOR promises by the
terms of this mortgage to pay, or in the event MORTGAGOR does not maintain
insurance as provided for in this mortgage, the MORTGAGEE may make such payments
or provide such insurance, and each payment which the MORTGAGEE makes on any of
these items shall become a part of the debt secured by this mortgage and be
added onto MORTGAGOR'S loan; however, any sum so paid by the MORTGAGEE shall
immediately be payable by MORTGAGOR and shall bear interest from the date the
MORTGAGEE advances such sums until the date MORTGAGOR pays them, as provided for
in the promissory note described above. The MORTGAGEE shall be the sole judge of
the legality, necessity or propriety of making any such payment of providing any
such insurance, and shall be held harmless in, and incur no liability for so
doing.
<Page>
SECURITY AGREEMENT.
In the absence of a separate security agreement entered into by
MORTGAGOR and MORTGAGEE, this mortgage shall constitute and shall be a security
agreement pursuant to the Uniform Commercial Code with respect to any goods,
fixtures, equipment, appliances or articles of personal property specified above
or described in a separate schedule attached hereto (hereinafter collectively
referred to in this paragraph as "personal property") which are a part of the
Property and which, under applicable law, are or may be subject to a security
interest pursuant to the Uniform Commercial Code, and MORTGAGOR hereby grants
MORTGAGEE a security interest in said personal property. MORTGAGOR agrees to
execute and deliver from time to time financing statements covering said
personal property in such form as MORTGAGEE may require to perfect its security
interest therein. Upon MORTGAGOR'S breach of any covenant or agreement contained
in this mortgage, including but not limited to MORTGAGOR'S covenants to pay when
due all sums secured by the mortgage. MORTGAGEE shall have all the remedies of a
secured party under the Uniform Commercial Code and, at MORTGAGEE'S option, may
also invoke the remedies provided in this mortgage with respect to the personal
property secured hereby.
BREACH OF PROMISES IN THIS AGREEMENT; ACCELERATION OF DEBT.
In the event MORTGAGOR does not comply with any of the promises
contained in this mortgage, or does not do any of the acts which MORTGAGOR
agrees to do under the terms of this mortgage, or in the event MORTGAGOR makes
an assignment for the benefit of his creditors, or if a petition for or
appointment of a receiver or trustee to take charge of the MORTGAGOR'S property
occurs, or if any proceedings are commenced which might result in loss or
reduction of the uses and enjoyment of the security for this loan, or if at any
time the MORTGAGEE shall deem itself insecure, then the MORTGAGEE may declare a
default and the debt secured by this mortgage shall immediately become fully due
and payable and bear interest as provided for in the promissory note described
above and this mortgage shall become immediately subject to foreclosure. The
MORTGAGEE may, however, at its sole option and without notice, waive such
acceleration, but no waiver shall prevent the MORTGAGEE from again accelerating
the debt based on a later breach of the promises contained in this mortgage.
CHANGE OF OWNERSHIP.
In the event of a change of ownership of the property securing this
loan, the MORTGAGEE may declare a default and the debt secured by this mortgage
shall become immediately due and payable and bear interest as provided for in
the promissory note described above and this mortgage shall become immediately
subject to foreclosure unless the MORTGAGEE has given its written consent before
such change, or unless the change was the direct result of the death of
MORTGAGOR. "Change of Ownership" means a voluntary or involuntary transfer of
title to the security, or any part of it or interest in it, and includes any
change in the entity structure, control, operation or ownership which would make
MORTGAGOR ineligible to borrow from the MORTGAGEE. Regardless of whether a
change of ownership appears as a matter of public record, the MORTGAGEE will
have 60 days from the date of receiving a written notice of change of ownership
to accelerate the debt and if the MORTGAGEE does not do so within this 60 days
its right to accelerate the debt shall expire.
RIGHT TO ENTER UNOCCUPIED PREMISES IN TIME OF EMERGENCY AND MAKE REPAIRS;
ADVANCES FOR REPAIR.
If this mortgage is subject to foreclosure, and if the property
mortgaged herein reasonably appears unoccupied to the MORTGAGEE, and if the
MORTGAGEE determines that an emergency exists, the MORTGAGEE may go on the
property for the sole purpose of repairing, preserving or protecting its
security without becoming a mortgagee-in-possession. Any advances made for these
purposes shall become a part of the debt secured by this mortgage, and shall
become immediately due and payable in the same way as other advances are dealt
with, above. The MORTGAGEE shall be held harmless in, and incur no liability for
doing the things provided for in this paragraph, and shall be the sole judge of
the necessity or propriety of so doing.
CONDEMNATION OR CONVEYANCE IN LIEU OF CONDEMNATION.
The proceeds of any award, compensation or claim for damages, direct or
consequential, in connection with any condemnation or other taking of the
property mortgaged herein, or any part of it, or for a conveyance in lieu of
condemnation, are hereby assigned and shall be paid to the MORTGAGEE. Any money
so received may, at the option of the MORTGAGEE, be applied, in part or in
total, on the debt secured by this mortgage, whether due or not, and any money
not so applied will be returned to MORTGAGOR.
FORECLOSURE: ENTITLEMENT TO ABSTRACTS, RECEIVERSHIP, RENTS AND PROFITS.
In the event this mortgage is foreclosed, the MORTGAGEE shall be
entitled to all abstracts and other evidences of title, to have a receiver
appointed by the Court to take possession of the security to collect rents and
profits, and all amounts so collected shall be applied, under the direction of
the Court, to the expenses of the receivership, and to payment of any judgment
rendered or any amount secured by this mortgage.
<Page>
MORTGAGEE'S RIGHTS IN LOAN SERVICING.
The MORTGAGEE shall have the right, at any time and without notice, to
release all or any part of the security, to grant extensions, deferrals,
renewals or reamortizations of all or any part of the debt secured by this
mortgage, and to release from personal liability any party now or hereafter
personally liable for repayment of the debt secured by this mortgage, all
without affecting the provisions or priority of this mortgage or the security
which remains or the personal liability of any party not specifically released
from personal liability.
WAIVER OF ELECTION, STAY, VALUATION AND HOMESTEAD, OF REDEMPTION RIGHTS WHERE
ALLOWED BY LAW, AND OF THE BENEFIT OF ALL APPRAISEMENT LAWS.
MORTGAGOR, by signing this mortgage, waives notice of election to
declare the debt due, and also waives the benefit of all stay, valuation and
homestead laws. Where permitted by law, MORTGAGOR also waives all rights of
redemption as to any corporation or partnership which may succeed to MORTGAGOR'S
interest in the security, and, if MORTGAGOR is a corporation or partnership,
waives its own rights of redemption. MORTGAGOR also waives, where permitted by
law, the benefit of all appraisement laws at the option of the MORTGAGEE, which
option is to be exercised no later than at the time of judgment in
foreclosure.
THE PROMISES AND AGREEMENTS CONTAINED IN THIS MORTGAGE SHALL BE BINDING ON THE
HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS AND ASSIGNS OF ALL PARTIES TO THIS
MORTGAGE.
WESTERN PLAINS ENERGY, LLC, A Kansas Limited Liability Company
By: /s/ JEFF TORLUEMKE, CEO
-------------------------------------------- --------------------------------
JEFF TORLUEMKE, CHIEF EXECUTIVE OFFICER
By: /s/ RICHARD L. STERRETT, CFO
-------------------------------------------- --------------------------------
RICHARD L. STERRETT, CHIEF FINANCIAL OFFICER
/s/ JEFF TORLUEMKE
- ----------------------------------------------- --------------------------------
JEFF TORLUEMKE
/s/ RICHARD L. STERRETT
- ----------------------------------------------- --------------------------------
RICHARD L. STERRETT
- --------------------------------------------------------------------------------
ACKNOWLEDGMENT
STATE OF KANSAS )
) SS.
COUNTY OF GOVE )
This instrument was acknowledged before me this 1ST day of MARCH, 2002,
by Jeff Torluemke, Chief Executive Officer of Western Plains Energy, LLC, A
Kansas Limited Liability Company, on behalf of the Company; Richard L. Sterrett,
Chief Financial Officer of Western Plains Energy, LLC, a Kansas Limited
Liability Company, on behalf of the Company.
/S/ DENNIS MCNINCH
----------------------------------------------------
DENNIS MCNINCH Notary Public
My commission (appointment) expires: August 21st, 2005
----------------------------------