MASTER
CREDIT AGREEMENT
dated as of February 14, 2007
between
NEDAK ETHANOL, LLC
as Borrower
and
FARM CREDIT SERVICES OF GRAND FORKS, FLCA
as Lender
TABLE OF CONTENTS
Page
ARTICLE I. GENERAL TERMS.......................................................1
Section 1.01 Definitions.................................................1
Section 1.02 Master Agreement/Supplements................................1
Section 1.03 Notes.......................................................2
Section 1.04 Default Interest............................................2
Section 1.05 Interest Generally; Maximum Rate............................2
Section 1.06 Payments Generally..........................................2
Section 1.07 Computations................................................3
Section 1.08 Prepayments.................................................3
Section 1.09 Advances and Paying Procedure...............................3
Section 1.10 Fees........................................................3
Section 1.11 Collateral..................................................3
Section 1.12 Priority....................................................3
Section 1.13 Debt Service Reserve Account................................3
ARTICLE II. CONDITIONS PRECEDENT...............................................4
Section 2.01 Conditions To Effectiveness.................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES....................................7
Section 3.01 Existence; Power............................................7
Section 3.02 Organizational Power; Authorization.........................7
Section 3.03 Governmental Approvals; No Conflicts........................7
Section 3.04 Financial Statements........................................8
Section 3.05 Litigation and Environmental Matters........................8
Section 3.06 Compliance with Laws and Agreements.........................8
Section 3.07 Investment Company Act, Etc.................................8
Section 3.08 Taxes.......................................................9
Section 3.09 Margin Regulations..........................................9
Section 3.10 ERISA.......................................................9
Section 3.11 Ownership of Property.......................................9
Section 3.12 Disclosure..................................................9
Section 3.13 Labor Relations............................................10
Section 3.14 Subsidiaries...............................................10
Section 3.15 Permits....................................................10
Section 3.16 Projections................................................10
Section 3.17 Material Contracts.........................................10
Section 3.18 Anti-Terrorism Laws........................................10
ARTICLE IV. AFFIRMATIVE COVENANTS.............................................11
Section 4.01 Financial Statements and Other Information.................11
Section 4.02 Notices of Material Events.................................12
Section 4.03 Existence; Conduct of Business.............................13
Section 4.04 Compliance with Laws, Etc..................................13
Section 4.05 Payment of Obligations.....................................13
Section 4.06 Books and Records..........................................13
Section 4.07 Visitation, Inspection, Audit, Etc.........................13
Section 4.08 Maintenance of Properties; Insurance.......................14
Section 4.09 Use of Proceeds............................................14
Section 4.10 Subsidiaries...............................................14
Section 4.11 Assignment of Material Contracts...........................14
Section 4.12 Compliance with Certain Laws...............................14
Section 4.13 Farm Products..............................................15
ARTICLE V. FINANCIAL COVENANTS................................................16
Section 5.01 Fixed Charge Coverage Ratio................................16
Section 5.02 Working Capital............................................16
Section 5.03 Tangible Net Worth.........................................16
Section 5.04 Capital Expenditures.......................................16
ARTICLE VI. NEGATIVE COVENANTS................................................17
Section 6.01 Indebtedness...............................................17
Section 6.02 Negative Pledge............................................17
Section 6.03 Fundamental Changes........................................18
Section 6.04 Investments, Loans, Etc....................................18
Section 6.05 Restricted Payments........................................18
Section 6.06 Sale of Assets.............................................19
Section 6.07 Transactions with Affiliates...............................19
Section 6.08 Restrictive Agreements.....................................19
Section 6.09 Sale and Leaseback Transactions............................19
Section 6.10 Hedging Agreements.........................................19
Section 6.11 Amendment to Material Documents............................19
Section 6.12 Accounting Changes.........................................20
Section 6.13 Deposit and Investment Accounts............................20
Section 6.14 Use of Proceeds............................................20
Section 6.15 Legal Status...............................................20
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES...................................20
Section 7.01 Events of Default..........................................20
Section 7.02 Remedies...................................................22
ARTICLE VIII. MISCELLANEOUS...................................................23
Section 8.01 Notices....................................................23
Section 8.02 Waiver; Amendments.........................................24
Section 8.03 Expenses; Indemnification..................................24
Section 8.04 Successors and Assigns.....................................25
Section 8.05 Governing Law; Jurisdiction; Consent to Service of Process.26
Section 8.06 WAIVER OF JURY TRIAL.......................................26
Section 8.07 Right of Setoff............................................27
Section 8.08 Counterparts; Integration..................................27
Section 8.09 Survival...................................................27
Section 8.10 Severability...............................................27
Section 8.11 Transferable Record........................................28
Section 8.12 Confidentiality............................................28
Section 8.13 Copies.....................................................28
Section 8.14 Notice of Claims Against Lender; Limitation of Certain
Damages....................................................28
Section 8.15 Lender's Rights to Participate in Additional Financing.....29
Attachment I - Definitions...................................................I-1
Exhibit 2.01(c)(6)....................................................2.01(c)(6)
Schedule 3.15 - Permits...................................................3.15-1
Schedule 3.17 - Material Contracts........................................3.17-1
Exhibit 3.19 - Borrower's Rights............................................3.19
Schedule 4.08 - Insurance Requirements .....................................4.08
Schedule 4.10 - List of Subsidiaries .......................................4.10
Schedule 6.01(b) Permitted Indebtedness..................................6.01(b)
Schedule 6.04 - Existing Investments .......................................6.04
Schedule 6.13 - Deposit and Investment Accounts.............................6.13
Exhibit A - Form of Certificate of Compliance..............................Exh A
Exhibit B - Form of Officer's Certificate ................................Exh B
MASTER CREDIT AGREEMENT
THIS MASTER CREDIT AGREEMENT is made and entered into as of February 14,
2007, by and between NEDAK ETHANOL, LLC, a Nebraska limited liability company,
("Borrower") and FARM CREDIT SERVICES OF GRAND FORKS, FLCA, a federal land
credit association organized under the Farm Credit Act of 1971, as amended
("Lender").
RECITALS:
A. Borrower has requested that Lender establish one or more construction,
revolving and term credit facilities in favor of Borrower; and
B. Subject to the terms and conditions of this Agreement, Lender is willing
to provide such financing to Borrower.
AGREEMENT:
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I.
GENERAL TERMS
Section 1.01 Definitions. Capitalized terms used herein have the meanings
set forth on Attachment I hereto.
Section 1.02 Master Agreement/Supplements. Additional terms of each of the
existing and future loans, credit facilities and other credit accommodations are
set forth in supplements ("Supplements") to this Master Credit Agreement
("Master Agreement"). The terms of this Master Agreement and the Supplements
supersede all prior agreements and arrangements between Borrower and Lender
related to the Loans and govern the relationship and agreements between Borrower
and Lender. In the event Borrower and Lender agree to additional loans, credit
facilities, and/or other credit accommodations from time to time in the future,
Borrower and Lender will enter into additional Supplements to this Master
Agreement. Each Supplement will set forth additional terms and conditions
specific to such loans and credit facilities, including without limitation, the
applicable:
(a) amount of the loan and/or credit facility;
(b) interest rate and rate options,
(c) fees, costs and expenses; and
(d) repayment terms.
In the event of any inconsistency between the terms set forth in the Master
Agreement and any Supplement, the terms of the applicable Supplement will
control to the extent provided in such Supplement. Unless otherwise provided in
a Supplement, each Supplement applies solely to the Loans described therein. The
Supplements, including all Supplements entered into as the date hereof and all
future Supplements (when they become effective) are hereby incorporated by
reference.
Section 1.03 Notes. Each Supplement may be accompanied by one or more Notes
made by Borrower.
Section 1.04 Default Interest. Upon the occurrence and during the
continuance of a Default or Event of Default or after acceleration, Borrower
will pay interest ("Default Interest") with respect to the Loans at the rate
otherwise applicable plus an additional two hundred basis points per annum
(2.00%). Default Interest is payable on demand. The Default Interest rate will
apply whether or not Lender has exercised its option to accelerate the maturity
of the Loans and declare the entire principal balance due and payable.
Section 1.05 Interest Generally; Maximum Rate. Lender's internal records of
applicable interest rates are determinative in the absence of manifest error. In
the event any Governmental Authority subjects Lender to any new or additional
charge, fee, withholding or tax of any kind with respect to any Loan, or changes
the method of taxation of any Loan, or changes the reserve, capital or deposit
requirements applicable to any Loan, Borrower will pay such additional amounts
as will compensate Lender for such cost (including opportunity cost) or lost
income resulting therefrom as reasonably determined by Lender. Notwithstanding
anything to the contrary herein or in any Supplement, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which may be treated as interest on such Loan under applicable law
(collectively, the "Charges") exceed the maximum lawful rate of interest (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by Lender, the rate of interest payable in respect of the Loans,
together with all Charges payable in respect thereof, will be limited to the
Maximum Rate; provided, such Charges may be applied by Lender and collected over
a longer period of time to avoid application of a rate that exceeds the Maximum
Rate. Any amount paid in excess of the Maximum Rate will be applied to principal
and other amounts outstanding in the order Lender deems appropriate.
Section 1.06 Payments Generally. All payments will be made to Lender at the
address set forth in Section 8.01 in U.S. Dollars and in immediately available
funds, without set-off, deduction, or counterclaim, not later than 11:00 A.M.
(Grand Forks, North Dakota time) on the date on which such payment is due (each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day). All payments may be applied by Lender
to principal, interest, fees and other amounts in any order which Lender elects
in its sole reasonable discretion; provided unscheduled payments received during
the continuance of an Event of Default will be applied first to fees and
reimbursable expenses of Lender and then ratably to the Loans based on their
respective outstanding principal balances. Whenever any payment is stated to be
due on a day that is not a Business Day, such payment will be due and payable on
the next succeeding Business Day, not later than 11:00 A.M., and such extension
of time will in such case be included in the computation of the payment of
interest and fees, as the case may be.
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Section 1.07 Computations. Computations of interest and fees (to the extent
computed on the basis of days elapsed) hereunder will be made on the basis of a
year of 365 days occurring in the period for which such interest or fees are
payable. All interest and fees will be considered earned when due.
Section 1.08 Prepayments.
(a) Subject to applicable fees and charges and such other terms and
conditions as set forth in any applicable Supplement, Borrower may prepay the
Loans, in whole or in part at any time and from time to time, by giving
irrevocable written notice (or telephonic notice promptly confirmed in writing)
to Lender not less than sixty days prior to any such prepayment; provided, that
the amount of any such prepayment may not be less than $500,000. Each such
notice will be irrevocable and will specify the proposed date of such prepayment
(which shall be any regularly scheduled monthly payment date) and the principal
amount to be prepaid. The amount specified in such notice will be due and
payable on the date designated in such notice, together with accrued interest on
the amount so prepaid and any prepayment fee or premium payable in connection
therewith.
(b) If Borrower issues any capital stock, any other equity interests, or
any debt securities, then no later than the Business Day following the date of
receipt of the proceeds thereof, Borrower must prepay the Loans in an amount
equal to all such proceeds, net of underwriting discounts and commissions and
other reasonable costs paid to non-Affiliates in connection therewith. Any
prepayment fee, premium or penalty under any applicable Supplement will be
applied in the event of such prepayment.
Section 1.09 Advances and Paying Procedure. Lender is authorized and
directed to credit any of the Borrower's accounts with Lender (or to the account
Borrower designates in writing) for all Advances made hereunder, and Lender is
authorized to debit such account or any other account of Borrower with Lender
for the amount of any principal, interest, or other amount due hereunder on the
due date with respect thereto.
Section 1.10 Fees. Borrower agrees to pay to Lender the fees set forth in
the letter of Lender to Borrower dated August 7, 2006, relating to the
commitments made and the services rendered by Lender in connection with the
Loans (the "Fees"). Borrower agrees that the Fees were fully earned by Lender
upon execution by Borrower of Lender's conditional commitment letter dated
August 7, 2006.
Section 1.11 Collateral. Borrower hereby pledges, mortgages, transfers,
assigns, sets aside, and grants a security interest to Lender in the Collateral,
and the Obligations are secured by Lender's first priority Lien on such
Collateral.
Section 1.12 Priority. Except to the extent any Loan is specifically
subordinated to one or more other Loans, each Loan will be pari passu in all
respects.
Section 1.13 Debt Service Reserve Account. Borrower will maintain a balance
of not less than $2,400,000 in an account established with First Dakota National
Bank, Yankton, South Dakota (the "Debt Service Reserve Account") from and after
the full funding thereof pursuant to Section 10 of the Second Supplement, which
shall be subject to a Control Agreement acceptable
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to Lender in its sole discretion. Lender may draw upon the Debt Service Reserve
Account at any time if Borrower fails to make any required payment when due
under this Agreement. Subject to the provisions set forth in the Second
Supplement, Borrower may not make a Restricted Distribution or a Tax
Distribution if the Debt Service Reserve Account does not have a balance of at
least $2,400,000. Proceeds in such reserve account secure all Loans ratably.
ARTICLE II.
CONDITIONS PRECEDENT
Section 2.01 Conditions To Effectiveness. Lender will have no obligation
under this Agreement or any other Loan Document until each of the following
conditions is satisfied (or waived in accordance with Section 8.02):
(a) Lender has received all fees and other amounts due and payable on or
prior to the date hereof, including the fees and amounts for reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by
Borrower pursuant to this Agreement, under any other Loan Document, or any other
agreement with Lender.
(b) Borrower has delivered to Lender duly executed counterparts of the
following, each in form and substance acceptable to Lender in all respects:
(1) Each of the First Supplement and Second Supplement to this Master
Agreement, along with all Notes and other documents, instruments
and agreements required thereunder;
(2) all Control Agreements required under Section 6.13, if any;
(3) the Deed of Trust, fully notarized, together with evidence that
it has been recorded in all places to the extent necessary or
desirable, in the judgment of Lender, to create a valid and
enforceable first priority Lien (subject to Permitted
Encumbrances) on the fee simple estate (or leasehold or other
interest if agreeable to Lender) of the Real Estate, together
with UCC fixture financing statements, as applicable;
(4) the Security Agreement; and
(5) Collateral Assignments of all Material Contracts in existence as
of the Closing Date, together with copies of such Material
Contracts.
(c) Lender has received as of the Closing Date (or such other date
specified in this Section 2.01(c)) the following, each in form and substance
acceptable to Lender in all respects:
(1) a commitment by the Title Company to issue an ALTA mortgagee
title insurance policy assuring Lender that the Deed of Trust
creates a valid and enforceable encumbrance on the Real Estate,
free and clear of all defects and encumbrances except Permitted
Encumbrances and containing: (A) a comprehensive endorsement
(ALTA form 9); (B) a zoning endorsement
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(ALTA form 3.1) or, at Lender's sole discretion, zoning letters
from all applicable zoning authorities in form and substance
satisfactory to Lender in its sole discretion, in each case
specifying an ethanol production facility as a permitted use for
all of the parcels included in the Real Estate; (C) coverage
against mechanic and materialmen's liens, (D) an access
endorsement (ALTA form 17), (E) a contiguity endorsement (ALTA
form 19), (F) a tax parcel endorsement (ALTA Form 18), (G) survey
coverage, and (H) such additional coverages and endorsements as
the Lender may require;
(2) copies of favorable UCC, tax, judgment, bankruptcy and fixture
lien search reports (or other evidence of the same satisfactory
to Lender) in all necessary or appropriate jurisdictions and
under all legal and trade names of Borrower and all other parties
requested by Lender, indicating that there are no prior Liens on
any of the Collateral other than Permitted Encumbrances;
(3) duly executed landlord waivers and/or warehouseman, or bailee
agreements with respect to all inventory of Borrower located at
leased locations or other locations not owned by Borrower in fee
simple, if any, along with a certified copy of all leases of
Borrower, if any;
(4) certified copies of the articles of organization or other charter
documents of Borrower, together with certificates of good
standing or existence, as are available from the Secretary of
State (or other applicable Governmental Authority) of the
jurisdiction of organization of Borrower and each other
jurisdiction where Borrower is required to be qualified to do
business as a foreign entity;
(5) a certificate, dated as of the date hereof and signed by an
appropriate Responsible Officer, attaching and certifying copies
of the bylaws or similar documents, and appropriate resolutions
authorizing the execution, delivery and performance of the Loan
Documents and certifying the name, title and the signature of
each officer executing the Loan Documents;
(6) one or more favorable written opinions of counsel to Borrower,
addressed to Lender, addressing the matters set forth on Exhibit
2.01(c)(6); and
(7) certificates of insurance, in form and substance acceptable to
Lender, describing the types and amounts of insurance (property
and liability) carried by Borrower, in each case insuring Lender
as a first mortgagee under a standard mortgagee clause, and
naming Lender as lender loss payee or additional insured, as the
case may be, and which include a stipulation that coverages will
not be cancelled or diminished without at least 30 days' prior
written notice to Lender, together with a lender's loss payable
endorsement.
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(8) At the Required Completion Date, an assignment of the Borrower's
business interruption insurance policy, duly executed by Borrower
and pursuant to which the Borrower assigns to Lender all of the
Borrower's right, title and interest in and to its business
interruption insurance policy, and which assignment shall have
been consented to and certified in writing by the other
party(ies) to such insurance policy. In lieu of such assignment,
a certificate for such business interruption insurance naming
Lender as lender loss payee or additional insured, as its
interests appear.
(9) UCC-1 financing statements and other applicable documents under
the laws of applicable jurisdictions with respect to the
perfection of the Liens granted under the Security Agreement and
the Collateral Assignments.
(10) duly executed payoff letters, in form and substance satisfactory
to Lender, executed by each existing lender, if any, together
with (A) UCC-3 or other appropriate termination statements,
cancellations and releases releasing all Liens of existing
lenders, and (B) any other releases, terminations or other
documents required by Lender to evidence the payoff of loans and
other debt owed to existing lenders or creditors.
(11) certified copies of all material consents, approvals,
authorizations, licenses, permits, registrations, filings and
orders required or advisable to be made or obtained under any
requirement of law (including without limitation, one or more
zoning letters from appropriate zoning authorities with
jurisdiction over any aspect of the Project) or by any material
contractual obligation of Borrower, in connection with the
Project or operation of Borrower's business, including the
production of ethanol and by-products thereof, and such consents,
approvals, authorizations, registrations, filings and orders must
be in full force and effect and all applicable waiting periods
must have expired.
(12) copies of Borrower's internally prepared financial statements as
of the last day of the immediately preceding quarter.
(13) a certificate dated the Closing Date and signed by a Responsible
Officer, confirming notice to Borrower pursuant to section 326 of
the USA Patriot Act of 2001, 31 U.S.C. sec. 5318.
(14) the Consent and Wavier of Borrower's Rights.
(15) written confirmation from all utility providers as to the
availability of water, storm water and sanitary sewer, gas,
electric and other necessary utilities for the Project.
(16) On or prior to the first Advance to be made after Closing Date, a
management agreement in form and substance reasonably acceptable
to Lender with a management company acceptable to Lender.
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(17) As soon as practicable after the date hereof, Borrower will close
the TIF Transaction and apply the proceeds to pay Project Costs.
(d) The representations and warranties set forth in the Loan Documents are
true and correct in all material respects.
(e) All conditions precedent in the other Loan Documents have been
satisfied or waived in accordance with Section 8.02.
(f) No Default or Event of Default has occurred and is continuing.
(g) Borrower has purchased the minimum amount of voting stock of Lender as
set forth in Section 4.14.
(h) First Dakota National Bank, Yankton, South Dakota (together with any
replacement or additional financial institutions approved by Lender, the
"Depositary"), shall agree to serve as the banking institution to handle all
depositary relationships with Borrower for the benefit of Lender, and shall
enter into a Control Agreement with Lender on terms and conditions acceptable to
Lender in its sole discretion.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, as of the date hereof, the date
of each Supplement, and the date of each Advance (unless otherwise specified) as
follows:
Section 3.01 Existence; Power. Borrower (a) is duly organized, validly
existing and in good standing as a limited liability company under the laws of
the State of Nebraska, (b) has all requisite power and authority to carry on its
businesses as now conducted, and (c) is duly qualified to do business, and is in
good standing, in each jurisdiction where such qualification is required, except
where a failure to be so qualified could not reasonably be expected to result in
a Material Adverse Effect.
Section 3.02 Organizational Power; Authorization. The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party are
within its limited liability company powers and have been duly authorized by all
necessary board, manager, and if required, member action. This Agreement and the
other Loan Documents have been duly executed and delivered by Borrower, and
constitute valid and binding obligations of Borrower, enforceable against it in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity.
Section 3.03 Governmental Approvals; No Conflicts. The execution, delivery
and performance by Borrower of the Loan Documents (a) does not require any
consent or approval of, registration or filing with, or any action by, any
Governmental Authority, except those as have been obtained or made and are in
full force and effect or where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
7
Effect, (b) will not violate any applicable law or regulation or the charter,
articles of incorporation, bylaws, or other organization documents of Borrower
or any order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, material agreement or other material instrument
binding on Borrower or any of its assets or give rise to a right thereunder to
require any payment to be made by Borrower, and (d) will not result in the
creation or imposition of any Lien on any asset of Borrower except Liens created
under the Loan Documents.
Section 3.04 Financial Statements. Borrower has furnished to Lender copies
of Borrower's (a) audited financial statements (consistent with the requirements
of Section 4.01(a)) as of its most recent fiscal year end and (b) internally
prepared financial statements (consistent with the requirements of Section
4.01(b)) as of the last day of the most recent quarter. Such financial
statements fairly present the financial condition of Borrower as of such dates
and the results of operations for such periods in conformity with GAAP
consistently applied, subject in the case of interim financial statements, to
year-end audit adjustments and the absence of footnotes. Since the date of such
financial statements, there have been no changes with respect to Borrower which
have had or could reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect on the business, results of operations, financial
condition, assets, liabilities or prospects of Borrower.
Section 3.05 Litigation and Environmental Matters.
(a) No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending against or, to the knowledge of Borrower,
threatened against or affecting Borrower (1) as to which there is a reasonable
possibility of an adverse determination that could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect or (2)
which in any manner draws into question the validity or enforceability of this
Agreement or any other Loan Document.
(b) Borrower (1) has not failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (2) has not become subject to any Environmental
Liability, (3) has not received notice of any claim with respect to any
Environmental Liability, or (4) does not know of any basis for any Environmental
Liability.
Section 3.06 Compliance with Laws and Agreements. Borrower is in compliance
with all (a) applicable laws, rules, and regulations, (b) orders of any
Governmental Authority, and (c) all indentures, agreements or other instruments
binding upon it or its properties; except where non-compliance, either singly or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
Section 3.07 Investment Company Act, Etc. Borrower is not (a) an
"investment company," as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
2005, as amended, or (c) otherwise subject to any other regulatory scheme
limiting its ability to incur debt.
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Section 3.08 Taxes. Borrower and each other Person for whose taxes Borrower
could become liable have timely filed or caused to be filed all tax returns and
other filings that are required to be filed by any of them, and have paid all
taxes shown to be due and payable (or with respect to real estate taxes, have
paid all taxes prior to the time the same become delinquent) on such returns or
on any assessments made against it or its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority, except (a) to the extent the failure to do so would not have a
Material Adverse Effect or (b) where the same are currently being contested in
good faith by appropriate proceedings and for which Borrower has set aside
adequate reserves on its books in accordance with GAAP. The charges, accruals
and reserves on the books of Borrower in respect of such taxes are adequate, and
no tax liabilities that could be materially in excess of the amount so provided
are anticipated.
Section 3.09 Margin Regulations. None of the proceeds of the Loans have
been used, directly or indirectly, for "purchasing" or "carrying" any "margin
stock" with the respective meanings of each of such terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect, or for any purpose that violates the provisions of
Regulation U, T or X of the Board of Governors of the Federal Reserve System.
Section 3.10 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used under GAAP)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used under GAAP) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than $10,000
the fair market value of the assets of all such underfunded Plans.
Section 3.11 Ownership of Property. Except as scheduled in Schedule 3.11
which shall also provide the timeline for procuring control of such property,
Borrower has good title to or a valid leasehold interest in all of the real and
personal property material to operation of Borrower's businesses. Borrower owns,
or is licensed or otherwise has the right to use, all patents, trademarks,
service marks, tradenames, copyrights and other intellectual property material
to its business, and the use thereof by Borrower does not infringe on the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 3.12 Disclosure. Borrower has disclosed to Lender all agreements,
instruments, and corporate or other restrictions to which Borrower is subject,
and all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of Borrower pursuant to this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, not
misleading.
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Section 3.13 Labor Relations. There are no strikes, lockouts or other
material labor disputes or grievances against Borrower, or, to the knowledge of
Borrower, threatened against or affecting Borrower, and no significant unfair
labor practice, charges or grievances are pending against Borrower, or to the
knowledge of Borrower, threatened against Borrower before any Governmental
Authority. All payments due from Borrower pursuant to any collective bargaining
agreement have been paid or accrued as a liability except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
Section 3.14 Subsidiaries. Borrower has no Subsidiaries other than those
for which Borrower has complied with the requirements of Section 4.10 or
disclosed on Schedule 4.10.
Section 3.15 Permits. Schedule 3.15 sets forth all of the material
licenses, consents, approvals, authorizations and permits of Governmental
Authorities which Borrower will be required to obtain in connection with the
operation of Borrower's business, including but not limited to any of the
foregoing related to Environmental Laws, zoning and land-use laws (including any
requirement to obtain a special exception, if applicable), water use laws, waste
disposal laws, laws requiring construction permits, and occupancy certificates.
In addition, Schedule 3.15 provides for the timetable for when Borrower will
obtain such licenses, consents, approvals, authorizations and permits of
Governmental Authorities. Borrower has provided true and correct copies of such
licenses, consents, approvals, authorizations and permits to Lender.
Section 3.16 Projections. As of the Closing Date, the Projections fairly
present Borrower's reasonable forecast of the results of operations and changes
in cash flows for the periods covered thereby, based on the assumptions set
forth therein, which assumptions are reasonable based on historical experience
and presently known facts.
Section 3.17 Material Contracts. Schedule 3.17 sets forth a complete and
accurate listing of all Material Contracts in effect as of the date hereof or
required to be in effect to operate the Project, all of which shall be in effect
prior to Lender's requirement to make further Advances after the Closing Date,
except as otherwise provided in Schedule 3.17 which also provides the timetable
for when Borrower will obtain such Material Contracts. Material Contracts shall
include but not be limited to the Construction Agreement (and any material
subcontracts thereof, and separate construction contracts with other contractors
for improvements not covered by the Construction Agreement), management
agreements, supply and procurement agreements, sales and marketing agreements,
transportation agreements (including agreements for railroad services, rail car
leases, and the like), and utility agreements. There are no Material Contracts
other than those for which Borrower has complied or will comply upon execution
of such Material Contract with Section 4.11.
Section 3.18 Anti-Terrorism Laws. Neither Borrower nor any of its
Affiliates is in violation of (a) any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto, (b)
Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of
the United States (Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism)
or (c) the anti-money laundering provisions of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of
10
2001, Public Law 107-56 (October 26, 2001) amending the Bank Secrecy Act, 31
U.S.C. Section 5311 et seq.
Section 3.19 Borrower Rights.
Borrower has read and understands the "Borrower Rights" set forth on
Exhibit 3.19.
ARTICLE IV.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Commitment is in effect
or the principal of or interest on any Loan or any fee remains unpaid:
Section 4.01 Financial Statements and Other Information. Borrower will
deliver to Lender:
(a) as soon as available and in any event (1) within 120 days after the end
of each fiscal year of Borrower, a copy of the annual audited report for such
fiscal year for Borrower as of the end of such fiscal year and the related
consolidated balance sheets, statements of income, owners' equity and cash flows
(together with all footnotes thereto) of Borrower for such fiscal year, (2)
setting forth in comparative form (for all reports delivered after Borrower's
first fiscal year of plant operations) the figures for the previous fiscal year,
all in reasonable detail and reported on by a firm of independent public
accountants acceptable to Lender (without a "going concern" or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit), and a statement from such accountants to
the effect that such financial statements present fairly in all material
respects the financial condition and the results of operations of Borrower for
such fiscal year in accordance with GAAP, that the examination by such
accountants in connection with such financial statements has been made in
accordance with GAAP;
(b) as soon as available and in any event within 45 days after the end of
each quarter, an unaudited balance sheet of Borrower as of the end of such
quarter and the related unaudited statements of income, owner's equity and cash
flow of Borrower for such quarter and the then elapsed portion of such fiscal
year, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Borrower's previous
fiscal year; in either case all certified by an appropriate Responsible Officer
of Borrower as presenting fairly in all material respects the financial
condition and results of operations of Borrower in accordance with GAAP, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) within 45 days of the last day of each quarter, a certificate, in form
and substance satisfactory to Lender in all respects, of a Responsible Officer,
(1) certifying as to whether there exists a Default or Event of Default on the
date of such certificate, and if a Default or an Event of Default then exists,
specifying the details thereof and the action which Borrower has taken or
proposes to take with respect thereto, (2) setting forth in reasonable detail
calculations demonstrating compliance with Article V, (3) stating whether any
change in GAAP or the application thereof has occurred since the date of
Borrower's most recent previously delivered audited financial statements and, if
any change has occurred, specifying the effect of such
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change on the financial statements accompanying such certificate; and (4)
attaching a production report, certified as to accuracy, which sets forth
pertinent information in respect of the amount of ethanol produced and other
information as Lender may request from time to time;
(d) concurrently with the financial statements referred to in clause (a)
above, a certificate of the accounting firm that reported on such financial
statements stating whether it obtained any knowledge during the cause of its
examination of such financial statements of the occurrence of any Default or
Event of Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
(e) promptly after the same become available, copies of all periodic
reports distributed by Borrower to its members generally, or to any national
securities exchange, as applicable;
(f) concurrently with the delivery of the financial statements referred to
in clause (a) above, a copy of Borrower's pro forma budget and business plan for
the subsequent fiscal year for Borrower, containing a pro forma consolidated
balance sheet of Borrower as of the end of such subsequent fiscal year and the
related pro forma consolidated statements of income, owners' equity and cash
flows (together with all footnotes thereto) of Borrower for such subsequent
fiscal year;
(g) as soon as available and in any event within 10 days after the end of
the first month following Loan Conversion, for a period of one year, a
production report, certified as to accuracy, which sets forth pertinent
information in respect of the amount of ethanol produced and other information
as Lender may request from time to time; and
(h) promptly following any request therefor, such other information
regarding the results of operations, business affairs and financial condition of
Borrower as Lender may reasonably request.
Section 4.02 Notices of Material Events. Borrower will promptly furnish
written notice to Lender of the following, in each case accompanied by a written
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the knowledge of
Borrower, affecting Borrower which, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;
(c) the occurrence of any event or any other development by which Borrower
(1) fails to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(2) becomes subject to any Environmental Liability, (3) receives notice of any
claim with respect to any Environmental Liability, or (4) becomes aware of any
basis for any Environmental Liability and in each of the
12
preceding clauses, which individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;
(d) the occurrence of any ERISA Event that alone, or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;
(e) the incurrence of any Indebtedness, including Indebtedness permitted
under this Agreement; and
(f) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.
Section 4.03 Existence; Conduct of Business; Eligible Borrower. Borrower
will do all things necessary to preserve, renew and maintain in full force and
effect its legal existence and its rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business, and will continue to engage in the same business as
presently conducted or such other businesses that are reasonably related
thereto. Borrower shall maintain at all time its status as an entity eligible to
borrow from Lender and the Farm Credit System of lending institutions.
Section 4.04 Compliance with Laws, Etc. Borrower will comply with all laws,
rules, regulations and requirements of any Governmental Authority applicable to
it or its properties, except where the failure to do so, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. Borrower will in all respects conform to and comply with all
applicable covenants, conditions, restrictions and reservations, and with all
requirements of Governmental Authorities, including, without limitation, all
building codes and zoning, environmental, hazardous substance, energy and
pollution control laws, ordinances and regulations affecting Borrower's
business, and the Real Estate and the related improvements.
Section 4.05 Payment of Obligations. Borrower will pay and discharge all of
its obligations and liabilities (including without limitation all tax
liabilities and claims that could result in a statutory Lien) before the same
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) Borrower has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP, and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.06 Books and Records. Borrower will keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities to the extent necessary
to prepare the consolidated financial statements of Borrower in conformity with
GAAP.
Section 4.07 Visitation, Inspection, Audit, Etc.
(a) Borrower will permit any representative or agent of Lender to visit and
inspect its properties, to conduct audits of the Collateral, to examine its
books and records and to make copies and take extracts therefrom, and to discuss
its affairs, finances and accounts with any of its officers, employees and its
independent certified public accountants, all at such reasonable
13
times and as often as Lender, may reasonably request after reasonable prior
notice to Borrower; provided, if a Default or an Event of Default has occurred
and is continuing, no prior notice will be required. Borrower will bear all
expenses incurred by Lender in connection with any such visit, inspection,
audit, examination, or discussion.
(b) Borrower will deliver to Lender such appraisals of the Real Estate and
other fixed assets of Borrower as Lender may reasonably request at any time and
from time to time, such appraisals to be conducted by an appraiser, and to be
presented in form and substance, reasonably satisfactory to Lender, in each case
conducted at the expense of Borrower if the appraisal is delivered in connection
with a request by Borrower for an accommodation, waiver, or other credit action.
Section 4.08 Maintenance of Properties; Insurance. Borrower will (a) keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear expected, except where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, and (b) maintain with
financially sound and reputable insurance companies, insurance with respect to
its properties and business against loss or damage of the kinds and in the
amounts customarily carried by companies in the same or similar business
operating in the same of similar locations and under the same or similar
circumstances. See Exhibit 4.08 for additional details and a description of
Lender's insurance requirements.
Section 4.09 Use of Proceeds. No part of the proceeds of any Loan will be
used, directly or indirectly, for any purpose that would violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System or for speculative
purposes, including, without limitation, speculating in the commodities and/or
futures markets.
Section 4.10 Subsidiaries. Schedule 4.10 lists Subsidiaries of Borrower as
of the date hereof. Within 10 Business Days after Borrower acquires or forms any
Subsidiary, Borrower will notify Lender and will cause such Subsidiary to
execute a Guarantee of the Obligations, a joinder to the Security Agreement, and
a joinder to such other instruments, agreements, and documents as Lender
requires, each in form and substance satisfactory to Lender, and will cause such
Subsidiary to deliver simultaneously therewith similar documents applicable to
such Subsidiary required under Section 2.01 as requested by Lender.
Section 4.11 Assignment of Material Contracts. Borrower will notify Lender
of the existence of any Material Contract promptly upon entering into the same.
Borrower agrees to promptly execute and deliver to Lender such Collateral
Assignments and take such other actions as Lender requests in furtherance of
Borrower's collateral assignment of Borrower's rights under such Material
Contracts.
Section 4.12 Compliance with Certain Laws. Borrower will (a) ensure that no
Person that Controls Borrower is or will be listed on the Specially Designated
Nationals and Blocked Person List or other similar list maintained by the Office
of Foreign Assets Control ("OFAC"), the Department of Treasury or included in
any executive order or other similar list of such Persons published by a
Governmental Authority, (b) not use or permit the use of any proceeds of any
Loan to violate any of the foreign asset control regulations of OFAC or any
enabling statute,
14
executive order, or requirement of a Governmental Authority relating thereto,
and (c) comply with all applicable Bank Secrecy Act ("BSA") laws and
regulations, as amended.
Section 4.13 Farm Products. If Borrower acquires any Collateral which may
have constituted Farm Products in the possession of the seller or supplier
thereof, Borrower will, at its sole expense, use its best efforts to take such
steps to insure that all Liens (except the security interests granted to Lender)
in such acquired Collateral are terminated or released, including, without
limitation, in the case of such Farm Products produced in a state which has
established a Central Filing System (as defined in the Food Security Act),
registering with the Secretary of State of such state (or such other party or
office designed by such state) and otherwise take such reasonable actions
necessary, as prescribed by the Food Security Act, to purchase Farm Products
free of liens, security interest and encumbrances of any kind (except the
security interests granted to Lender); provided, however, that Borrower may
contest and need not obtain the release or termination of any lien, security
interest or encumbrance asserted by any creditor of any seller of such Farm
Products, so long as it contests the same by proper proceedings and maintain
appropriate accruals and reserves therefore in accordance with GAAP. Upon the
Lender's request, Borrower agrees to forward to Lender promptly after receipt
copies of all notices of Liens and master lists of effective financing
statements delivered to Borrower pursuant to the Food Security Act, which
notices and/or lists pertain to any of the Collateral. Upon Lender's request,
Borrower agrees to provide Lender with the names of Persons who supply Borrower
with such Farm Products and such other information as Lender may reasonably
request with respect to such Persons.
If any warehouse receipt or receipts in the nature of a warehouse
receipt is/are issued in respect of any portion of the Collateral, then Borrower
(a) will not permit such warehouse receipt or receipts in the nature thereof to
be "negotiable" as such term is used in Article 7 of the UCC and (b) will
deliver all such receipts to Lender (or a Person designated by Lender) within
five days of Lender's request and from time to time thereafter. If no Default or
Event of Default then exists, Lender agrees to deliver to Borrower any receipt
so held by Lender upon Borrower's request in connection with Borrower's sale or
other disposition of the underlying Collateral, if such disposition is in the
ordinary course of Borrower's business.
Section 4.14 Capital Investment in Lender.
Borrower agrees to purchase voting stock in Farm Credit Services of Grand
Forks, FLCA/ACA (currently a minimum of $1,000.00 worth of stock) as required
under the policy of Lender. Lender's policy may change from time to time. Lender
shall have a first lien on the stock for payment of any liability of the
Borrower to Lender. Said stock shall be owned as follows:
Owner Name: NEDAK Ethanol, LLC
Borrower authorizes and appoints the following to act on behalf of all
owners, to vote the said stock, and to accept, receive and receipt for any
dividends declared on such stock:
Board Chair, voter
15
Upon repayment of a loan, retirement of the stock shall occur only at the
discretion of Lender's board of directors, and then only if Lender meets capital
adequacy standards established under Section 4.3A of the Farm Credit Act. Should
Lender's capital become impaired, so the book value of the stock is less than
par value or face amount, the stock may be retired for an amount equal to book
value. Borrower shall be obligated to repay the full amount of any loan,
including the amount attributable to the purchase of stock, regardless of
whether Lender's capital is impaired.
Borrower further agrees that a security interest is hereby granted to
Lender in all such stock now owned and hereafter acquired, however designated or
classified, and all equity reserve and allocated surplus in Lender, its
successors and assigns, to secure the Loans.
ARTICLE V.
FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any Obligation remains unpaid
or any Commitment is in effect:
Section 5.01 Fixed Charge Coverage Ratio. Beginning on December 31, 2008,
and each fiscal year thereafter, Borrower will maintain a Fixed Charge Coverage
Ratio of not less than 1.25:1.00 prior to payment of any Restricted
Distributions (including Tax Distributions) and 1.00:1.00 after taking into
account Restricted Distributions (including Tax Distributions), which shall be
tested annually at fiscal year end.
Section 5.02 Working Capital. Borrower will maintain working capital of at
least (a) $5,000,000 on December 31, 2008, (b) $6,000,000 on December 31, 2009,
and all times thereafter. The amount of Lender's unfunded Revolving Commitment
Amount (as defined in the Second Supplement), as reduced to the Modified
Revolving Commitment Amount pursuant to Section 10 of the Second Supplement, if
any, less the amount required to be maintained in Borrower's Debt Service
Reserve Account will be considered working capital for purposes of the
determination of compliance with this covenant.
Section 5.03 Tangible Net Worth. Borrower's Tangible Net Worth will be, and
will not fall below, at any time, $41,000,000 by December 31, 2008, and at all
times thereafter.
Section 5.04 Capital Expenditures. Borrower will not make Capital
Expenditures in excess of $500,000 during any fiscal year period following the
Required Completion Date without Lender's prior written approval.
Section 5.05 Owner's Equity Ratio. Borrower must maintain an Owner's Equity
Ratio of at least 50% on December 31, 2008, and at all times thereafter.
Section 5.06 Current Ratio. Borrower will maintain on December 31, 2008 and
at all times thereafter, a ratio of current assets to current liabilities of not
less than 1.20:1.00. The amount of Lender's unfunded Revolving Commitment Amount
(as defined in the Second Supplement), as reduced to the Modified Revolving
Commitment Amount pursuant to Section 10 of the Second Supplement, if any, less
the amount required to be maintained in Borrower's
16
Debt Service Reserve Account will be considered working capital for purposes of
the determination of compliance with this covenant.
Compliance with the financial covenants set forth in this Article V will be
measured based on financial statements dated as of the close of business on the
last day of the immediately preceding quarter for the related period.
ARTICLE VI.
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as Lender has a Commitment
hereunder or the principal of or interest on any Loan or any fee remains unpaid:
Section 6.01 Indebtedness. Borrower will not create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness created pursuant to the Loan Documents;
(b) Indebtedness acceptable to Lender in its sole discretion and existing
on the date hereof and set forth on Schedule 6.01(b) and extensions and renewals
of any such Indebtedness that do not increase the outstanding principal amount
thereof (immediately prior to giving effect to such extension, renewal or
replacement) or shorten the maturity or the weighted average life thereof;
(c) Unsecured tax-increment financing in an amount of up to $7,000,000
("TIF Transaction") on terms and conditions acceptable to Lender in its sole
discretion;
(d) Indebtedness subordinate to the Obligations in an amount not to exceed
$500,000 on terms and conditions acceptable to Lender in its sole discretion,
provided such Indebtedness (i) is advanced prior to any disbursement of the
Loans by Lender, (ii) is unsecured, (iii) accrues interest at an annual interest
rate of 12% or less, (iv) does not require interest payments until the date
Substantial Completion occurs, (v) does not require principal payments until at
least one year from the date Substantial Completion occurs, (vi) requires
deferral of all payments during the continuance of a Default or Event of
Default, including but not limited to compliance with all covenants under this
Agreement, and (vii) is subject to an intercreditor agreement acceptable to
Lender in its sole discretion; and
(e) Indebtedness in an amount not to exceed $250,000 for the purpose of
obtaining one or more letters of credit in connection with supply and
transportation contracts related to the procurement of utilities; provided such
Indebtedness shall be on terms and conditions satisfactory to Lender in is sole
discretion and subordinate to Indebtedness created pursuant to the Loan
Documents under this Agreement, and (vii) is subject to an intercreditor
agreement acceptable to Lender in its sole discretion.
Section 6.02 Negative Pledge. Except Permitted Encumbrances, Borrower will
not create, incur, assume or suffer to exist any Lien on any of its assets or
property now owned or hereafter acquired.
17
Section 6.03 Fundamental Changes. Borrower will not, and will not permit
any Subsidiary to, engage in any business other than businesses of the type
conducted by Borrower on the date hereof and businesses reasonably related
thereto.
Section 6.04 Investments, Loans, Etc. Borrower will not purchase, hold or
acquire any common stock, evidence of indebtedness or other securities
(including any option, warrant, or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person (all of the foregoing being collectively called "Investments"), or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person that constitute a business unit, or create or
form any Subsidiary, except:
(a) Investments (other than Permitted Investments) existing on the date
hereof and set forth on Schedule 6.04;
(b) Permitted Investments in which Lender maintains a first priority,
perfected security interest therein; and
(c) loans or advances to employees, officers or directors of Borrower in
the ordinary course of business for travel, relocation and related expenses;
provided, however, that the aggregate amount of all such loans and advances does
not exceed $25,000 at any time.
Section 6.05 Restricted Payments. Other than dividends or distributions by
Borrower solely in units of any class of its membership interests, Borrower will
not pay, declare or make, or agree to pay, declare or make, directly or
indirectly, any dividend or distribution on any class of its membership
interests, or make any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption, retirement, defeasance or
other acquisition of, any membership interest, or any options, warrants, or
other rights to purchase any of the foregoing, whether now or hereafter
outstanding, or any payment in respect of Indebtedness subordinated to the
Obligations (each such dividend, distribution, set aside or payment, a
"Restricted Payment"), except, after commencement of the Construction and Term
Loan Amortization Period (as defined in the First Supplement), so long as no
Default or Event of Default has occurred and is then continuing or would result
from such payment:
(a) Borrower may distribute an amount of up to 65% of its Net Available
Cash.
(b) So long as Borrower achieves and maintains an Owner's Equity Ratio that
exceeds 75% (as reported on audited fiscal year end financial statements),
Borrower may distribute up to 100% of Net Available Cash; provided, the
limitations set forth above will be reinstated if Borrower's Owner's Equity
Ratio falls below 75% at any quarterly reporting period.
Distributions for any prior fiscal year must be declared by Borrower's
board of managers within 120 days of such fiscal year end or allowance hereunder
to declare and pay the distribution for such fiscal year will be deemed waived
by Borrower and disallowed.
Distributions in respect of Net Income for the prior year may not be paid
until after confirmation of Net Income in Borrower's financial statements
submitted pursuant to Section 5.01(a). In addition, notwithstanding the
foregoing, Borrower may (x) make payments on
18
subordinate Indebtedness to the extent such payments are allowed under an
intercreditor agreement between Lender and the other lender or creditor to which
such payments are made, and (y) may make Tax Distributions (which may only be
paid annually based on Borrower's audited financial statements or in multiple
quarterly installments, based on Borrower's good-faith and reasonable estimate
of income to be generated by its business in such year) to allow its members to
meet their tax obligations on such income in a timely manner to the extent no
Default or Event of Default will occur or is continuing after payment thereof.
Section 6.06 Sale of Assets. Borrower will not convey, sell, lease, assign,
transfer or otherwise dispose of, any of its assets, business or property,
whether now owned or hereafter acquired, to any Person except (a) the sale or
other disposition for fair market value of obsolete or worn out property or
other property not necessary for operations disposed of in the ordinary course
of business; and (b) the sale of inventory and Permitted Investments in the
ordinary course of business.
Section 6.07 Transactions with Affiliates. Borrower will not sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to Borrower
than could be obtained on an arm's-length basis from unrelated third parties in
comparable transactions, and (b) transactions solely between Borrower and any
wholly-owned Subsidiary of Borrower.
Section 6.08 Restrictive Agreements. Borrower will not directly or
indirectly, enter into, incur or permit to exist any agreement that prohibits,
restricts or imposes any condition upon the ability of Borrower to create, incur
or permit any Lien upon any of its assets or properties, whether now owned or
hereafter acquired, except restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted under this Agreement if such
restrictions and conditions apply only to the property or assets securing such
Indebtedness.
Section 6.09 Sale and Leaseback Transactions. Borrower will not enter into
any arrangement, directly or indirectly, whereby it sells or transfers any
property, real or personal, used or useful in its business, whether now owned or
hereinafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred.
Section 6.10 Hedging Agreements. Borrower will not enter into any Hedging
Agreement other than Hedging Agreements approved by Lender and entered into in
the ordinary course of business to hedge or mitigate risks to which Borrower is
exposed in the conduct of its business or the management of its liabilities.
Section 6.11 Amendment to Material Documents. Except to the extent as could
not reasonably be expected to result in a Material Adverse Effect, Borrower will
not amend, modify or waive any of its rights or any other terms or condition
under (a) its certificate or articles of organization, operating agreement,
bylaws or other organizational documents or (b) any Material Contract.
19
Section 6.12 Accounting Changes. Borrower will not make any significant
change in accounting treatment or reporting practices, except as required by
GAAP, or change its fiscal year.
Section 6.13 Deposit and Investment Accounts. Except as set forth on
Schedule 6.13 or except as otherwise consented to in writing by Lender (which
consent will be conditioned on, among other things, the Person who will maintain
the funds entering into a Control Agreement acceptable to Lender in all
respects) Borrower will not maintain, deposit or invest funds with any Person
other than Lender or Lender's approved depositary institution.
Section 6.14 Use of Proceeds. Borrower will not use the proceeds of any
Loan, directly or indirectly, for "purchasing" or "carrying" any "margin stock"
with the respective meanings of each of such terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect, or for any purpose that violates the provisions of
Regulation U, T or X of the Board of Governors of the Federal Reserve System.
Section 6.15 Legal Status; Eligible Borrower. Borrower will not (a) change
its jurisdiction of organization, or (b) take or permit any action that would
result in (i) Borrower's discontinuance as a limited liability company in good
standing under the jurisdiction of Borrower's organization, or (ii) Borrower
becoming ineligible to borrow from Lender or any Farm Credit System lending
institutions.
ARTICLE VII.
EVENTS OF DEFAULT AND REMEDIES
Section 7.01 Events of Default. The following will be considered events of
default (each an "Event of Default") hereunder:
(a) Borrower fails to pay any amount payable under this Agreement or any
other Loan Document when such amount becomes due;
(b) any representation or warranty made or deemed made by or on behalf of
Borrower in or in connection with this Agreement or any other Loan Document
(including the Schedules attached hereto and thereto) and any amendments or
modifications hereof or waivers hereunder, or in any certificate, report,
financial statement or other document submitted to Lender by Borrower or any
representative of Borrower pursuant to or in connection with this Agreement or
any other Loan Document proves to be materially incorrect when made or deemed
made or submitted;
(c) Borrower fails to observe or perform any covenant or agreement in (i)
Sections 4.01, 4.02, or 4.03, or Article V or VI, of this Agreement, or (ii) any
Material Contract beyond any applicable cure period, if any (including any
payment default under such Material Contracts);
(d) Borrower fails to observe or perform any covenant or agreement in this
Agreement (other than those referred to in clauses (a), (b), or (c) above) or in
any other Loan
20
Document, and such failure continues for 30 days after the earlier of the date
(1) Borrower becomes aware of such failure, or (2) written notice thereof is
given to Borrower by Lender; or any Event of Default otherwise occurs under any
Loan Document;
(e) Borrower or any guarantor of any portion of the Obligations, (whether
as primary obligor or as guarantor or other surety) fails to pay any principal
of or premium or interest on any Material Indebtedness that is outstanding, when
and as the same becomes due and payable (whether at 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
evidencing such Indebtedness; or any other event occurs or condition exists
under any agreement or instrument relating to such Indebtedness and continues
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or permit
the acceleration of, the maturity of such Indebtedness; or any such Indebtedness
is declared to be due and payable; or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased or
defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness
is required to be made, in each case prior to the stated maturity thereof;
(f) Borrower or any guarantor of any portion of the Obligations, (1)
commences a voluntary case or other proceeding or files any petition seeking
liquidation, reorganization or other relief under any federal, state or foreign
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a custodian, trustee, receiver, liquidator or other
similar official of it or any substantial part of its property, (2) consents to
the institution of, or fails to contest in a timely and appropriate manner, any
proceeding or petition described in clause (1) of this Section 7.01(f), (3)
applies for or consents to the appointment of a custodian, trustee, receiver,
liquidation or other similar official for Borrower or such guarantor or for a
substantial part of the assets of Borrower or such guarantor, (4) files an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (5) makes a general assignment for the benefit of creditors, or
(6) takes any action for the purpose of effecting any of the foregoing;
(g) an involuntary proceeding is commenced or an involuntary petition is
filed seeking (1) liquidation, reorganization or other relief in respect of
Borrower or any guarantor of any portion of the Obligations, or the debts, or
any substantial part of the assets of Borrower or such guarantor under any
federal, state or foreign bankruptcy, insolvency or other similar law now or
hereafter in effect or (2) the appointment of a custodian, trustee, receiver,
liquidator or other similar official for Borrower or any guarantor of any
portion of the Obligations, or for a substantial part of the assets of Borrower
or such guarantor, and in any such case, such proceeding or petition remains
undismissed for a period of 60 days or an order or decree approving or ordering
any of the foregoing is entered;
(h) Borrower or any guarantor of any portion of the Obligations becomes
unable to pay, admits in writing its inability to pay, or fails to pay, its
debts as they become due;
(i) an ERISA Event occurs with respect to Borrower or any guarantor of any
portion of the Obligations that, in the opinion of Lender, when taken together
with other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
21
(j) any judgment or order for the payment of money in excess of $100,000 in
the aggregate is rendered against Borrower or any guarantor of any portion of
the Obligations, and either (1) such judgment or order is final and enforcement
proceedings have been commenced by any creditor upon such judgment or order, or
(2) there is a period of 30 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, is not in
effect;
(k) any non-monetary judgment or order is rendered against Borrower or any
guarantor of any portion of the Obligations that could reasonably be expected to
result in a Material Adverse Effect, and there is a period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, is not in effect;
(l) a Change in Control occurs or exists;
(m) Borrower ceases to exist or any guarantor of any portion of the
Obligation dies or ceases to exist;
(n) Borrower or any guarantor of any portion of the Obligations becomes the
subject of any out-of-court settlement with its creditors for the payment of
money in excess of $100,000;
(o) any guarantor of any portion of the Obligations attempts to revoke such
Guarantee, or any such Guarantee becomes unenforceable in whole or in part for
any reason;
(p) an Event of Default occurs under any other agreement with (or
instrument in favor of) Lender that could reasonably be expected to result in a
Material Adverse Effect; or
(q) any other event occurs or exists which could reasonably be expected to
result in a Material Adverse Effect.
Section 7.02 Remedies. Upon the occurrence of an Event of Default (other
than an event described in clause (f), (g) or (h) of Section 7.01), and at any
time thereafter, Lender may take any one or more or all of the following
actions, at the same or different times:
(a) terminate the Commitments, whereupon the Commitments will terminate
immediately;
(b) declare the principal of and any accrued interest on the Loans, and all
other Obligations to be due and payable, whereupon the same will become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower;
(c) Setoff;
(d) take other steps to project or preserve Lender's interest in any
Collateral, including, without limitation, notifying account debtors to make
payments directly to Lender, advancing funds to protect any Collateral, and
insuring Collateral; and/or
22
(e) exercise all remedies provided for in any other Loan Document or as
otherwise provided by law.
If an Event of Default specified in either clause (f), (g) or (h) of
Section 7.01 occurs, all Commitments will automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon,
and all fees, and all other Obligations will automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by Borrower.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01 Notices.
Except in the case of notices and other communications expressly permitted
to be given by telephone, all notices and other communications to any party
herein to be effective will be in writing and delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
To Borrower: Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
NEDAK Ethanol, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Lender: Attention: ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Farm Credit Services of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
4200 IDS Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
23
Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties. All notices and
other communications delivered to Borrower will, when transmitted by overnight
delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or
if mailed, upon the third Business Day after the date deposited in the mail or
if delivered, upon delivery. Notices delivered to Lender will not be effective
until actually received at its address specified in this Section 8.01.
Any agreement of Lender to receive certain notices by telephone or
facsimile is solely for the convenience and at the request of Borrower. Lender
will be entitled to rely on the authority of any Person purporting to be a
Person authorized by Borrower to give such notice and Lender will not have any
liability to Borrower or any other Person as a result of any action taken or not
taken by Lender in reliance upon such telephonic or facsimile notice. The
obligation of Borrower to repay the Loans and all other Obligations hereunder
will not be affected in any way or to any extent by any failure of Lender to
receive written confirmation of any telephonic or facsimile notice or the
receipt by Lender of a confirmation which is at variance with the terms
understood by Lender to be contained in any such telephonic or facsimile notice.
Section 8.02 Waiver; Amendments.
(a) No failure or delay by Lender in exercising any right or power
hereunder or any other Loan Document, and no course of dealing between Borrower
and Lender, will operate as a waiver, nor will any single or partial exercise of
any such right or power or any abandonment or discontinuance of steps to enforce
such right or power, preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or thereunder. The rights and
remedies of Lender hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies provided by law. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by Borrower therefrom will in any event be effective unless the same
is permitted by paragraph (b) of this Section, and then such waiver or consent
will be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of an
Advance will not be construed as a waiver of any Default or Event of Default,
regardless of whether Lender had notice or knowledge of such Default or Event of
Default at the time.
(b) No amendment or waiver of any provision of this Agreement or any other
Loan Document, nor consent to any departure by Borrower therefrom, will in any
event be effective unless the same is in writing and signed by Borrower and
Lender and then such waiver or consent will be effective only in the specific
instance and for the specific purpose for which given.
Section 8.03 Expenses; Indemnification.
(a) Borrower indemnifies Lender and each Participant against, and holds Lender
and each Participant harmless from, any and all costs, losses, liabilities,
claims, damages and related expenses, including the fees, charges and
disbursements of any engineers, consultants, agents and counsel for Lender
and/or any Participant, which are incurred by or asserted against Lender and/or
any Participant arising out of, in connection with or as a result of (1) the
execution,
24
delivery and documentation of the proposal letter dated June 7, 2006, the
conditional commitment letter dated August 7, 2006, the fee letter dated August
7, 2006, this Master Agreement, any Supplement, any other Loan Document, or any
other agreement or instrument contemplated hereby, the performance by the
parties hereto of their respective obligations hereunder or the consummation of
any of the transactions contemplated hereby or thereby, (2) any Advances or any
actual or proposed use of the proceeds therefrom, (3) any actual or alleged
presence or release of Hazardous Materials on or from any property owned by
Borrower or any Subsidiary, or any Environmental Liability related in any way to
Borrower or any Subsidiary, or (4) actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether Lender is a party
thereto, including attorneys' fees and all other costs and fees (i) incurred
before or after commencement of litigation or at trial, on appeal or in any
other proceeding, and (ii) incurred in any bankruptcy proceeding; provided, that
Borrower is not obligated to indemnify Lender or any Participant for any of the
foregoing arising out of Lender's or such Participant's gross negligence or
willful misconduct as determined by a court of competent jurisdiction in a final
and nonappealable judgment.
(b) Borrower will pay, and hold Lender and each Participant harmless from
and against, any and all Taxes with respect to this Agreement and any other Loan
Document, any Collateral described therein, or any payments due thereunder, and
will save Lender and each Participant harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
Taxes.
(c) To the extent permitted by applicable law, Borrower will not assert,
and Borrower hereby waives, any claim against Lender and/or any Participant, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to actual or direct damages) arising out of, in connection
with or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the transactions contemplated therein, any Advance or the
use of proceeds thereof.
(d) All amounts due under this Section 8.03 are due and payable promptly on
demand.
Section 8.04 Successors and Assigns.
(a) The provisions of this Agreement are binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or transfer any of its rights hereunder
without the prior written consent of Lender (and any attempted assignment or
transfer by Borrower without such consent will be considered null and void).
(b) Lender may at any time, without the consent of Borrower, assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement and the other Loan Documents, including all or a portion of any
Commitment and/or all or any portion of any Loan.
(c) Lender and each Participant may at any time, without the consent of
Borrower, sell participation interests to one or more Persons (a "Participant")
in all or a portion of Lender's
25
rights and obligations under this Agreement, including all or a portion of any
Commitment and/or all or any portion of any Loan. In the event Lender or any
Participant sells one or more participation interests, Lender's (and such
Participant's) obligations under this Agreement will remain unchanged, and
Borrower will continue to deal solely and directly with Lender in connection
with Lender's rights and obligations under this Agreement and the other Loan
Documents.
(d) Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement and the Notes without complying
with this Section. No such pledge or assignment will release Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for Lender
as a party hereto.
Section 8.05 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement and the other Loan Documents (except to the extent
otherwise provided therein) will be construed in accordance with and be governed
by the law (without giving effect to the conflict of law principles thereof) of
the State of North Dakota.
(b) Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the non-exclusive jurisdiction of the United States District
Court of the District of North Dakota, and of any state court of the State of
North Dakota located in Grand Forks County, in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document or the
transactions contemplated hereby or thereby, or for recognition or enforcement
of any judgment. Each of the parties irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such North Dakota state court or, to the extent permitted by
applicable law, such federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding will 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 any other Loan Document will
affect any right Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Borrower or its
properties in the courts of any jurisdiction.
(c) Borrower irrevocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding described in paragraph (b) of this Section and brought in any court
referred to in paragraph (b) of this Section. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
Section 8.06 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR
26
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
Section 8.07 Right of Setoff. As additional security for payment of the
Obligations, Borrower grants to Lender a security interest in, a lien on, and an
express contractual right, at any time or from time to time upon the occurrence
and during the continuance of a Default or Event of Default, without prior
notice to Borrower, any such notice being expressly waived by Borrower to the
extent permitted by applicable law, to set off and apply against all deposits
(general or special, time or demand, provisional or final) of Borrower at any
time held or other obligations at any time owing by Lender to or for the credit
or the account of Borrower against any and all Obligations held by Lender or
Depositary ("Setoff"), irrespective of whether Lender has made demand hereunder
and although such Obligations may be unmatured. Lender agrees to notify Borrower
after any Setoff and any application made by Lender; provided, that the failure
to give such notice will not affect the validity of such Setoff and application.
Lender's rights under this Section 8.07 are in addition to any rights now or
hereafter granted under applicable law and do not limit any such rights.
Section 8.08 Counterparts; Integration. This Agreement may be executed in
any number of separate counterparts (including by telecopy or other electronic
mail, or any other electronic means), and all of said counterparts taken
together will be deemed to constitute one and the same instrument. This
Agreement, the other Loan Documents, and any separate letter agreement(s)
relating to any fees payable to the Lender constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements and understandings, oral or written,
regarding such subject matters.
Section 8.09 Survival. All covenants, agreements, representations and
warranties made by Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement will be considered to
have been relied upon by Lender and will survive the execution and delivery of
this Agreement, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that Lender may have had notice or knowledge
of any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and will continue in full force and effect as long as the
principal of or any accrued interest on the Loans or any fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as any
Commitment is in effect. The provisions of Section 8.09 will survive and remain
in full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, and termination of the
Commitments, or this Agreement or any provision hereof. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement will survive the execution and
delivery of this Agreement and the other Loan Documents.
Section 8.10 Severability. Any provision of this Agreement or any other
Loan Document held to be illegal, invalid or unenforceable in any jurisdiction,
will, as to such
27
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction will not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 8.11 Transferable Record. This Agreement, the Notes and the other
Loan Documents, as amended, are "transferable records" as defined in applicable
law relating to electronic transactions. Therefore, Lender may, on behalf of
Borrower, create a microfilm, optical disk or electronic image of such Loan
Documents that are authoritative copies under applicable law. Lender may store
such authoritative copies in microfilm or electronic form and destroy the paper
original as part of its normal business practices. Lender, on its own behalf,
may control and transfer such authoritative copies as permitted by applicable
law.
Section 8.12 Confidentiality. Lender agrees to take normal and reasonable
precautions to maintain the confidentiality of any information designated in
writing as confidential and provided to it by Borrower or any Subsidiary, except
that such information may be disclosed (a) to any Affiliate, Participant or
advisor of Lender, including without limitation accountants, legal counsel and
other advisors, provided that Lender shall have taken reasonable steps to assure
that such Affiliates, participants, and advisors will maintain such information
in confidence to the same extent required of Lender hereunder, (b) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (c) to the extent requested by any regulatory agency or authority, (d)
to the extent that such information becomes publicly available, other than as a
result of a breach of this Section 8.12, or which becomes available to Lender on
a nonconfidential basis from a source other than Borrower, (e) in connection
with the exercise of any remedy hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, and (f)
subject to provisions substantially similar to this Section 8.12, to any actual
or prospective assignee or Participant, or (g) with the consent of Borrower. Any
Person required to maintain the confidentiality of any information as provided
for in this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the
confidentiality of such information as such Person would accord its own
confidential information.
Section 8.13 Copies. Borrower hereby acknowledges the receipt of a copy of
this Agreement and all other Loan Documents.
Section 8.14 Notice of Claims Against Lender; Limitation of Certain
Damages. In order to allow Lender to mitigate any damages to Borrower from
Lender's alleged breach of its duties under the Loan Documents or any other
duty, if any, to Borrower, the Borrower agrees to give Lender immediate written
notice of any claim or defense it has against Lender, whether in tort or
contract, relating to any action or inaction by Lender under any Loan Document,
or the transactions related thereto, or of any defense to payment of the
Obligations for any reason. The requirement of providing timely notice to Lender
represents the parties' agreed-upon standard of performance regarding claims
against Lender. Notwithstanding any claim that Borrower may have against Lender,
and regardless of any notice Borrower may have given Lender, Lender will not be
liable to Borrower for consequential, punitive and/or special damages.
28
Section 8.15 Lender's Rights to Participate in Additional Financing. If
Borrower elects to expand the Project, Borrower will provide reasonable notice
to Lender so that Lender will have the first right of refusal and opportunity to
consider providing additional debt for such expansion. Upon receipt of such
notice by Lender, the Lender shall within 60 days provide notice to Borrower of
its election to provide or decline to provide such additional debt. So long as
no Default or Event of Default exists or would result thereby, Borrower will be
permitted to use a portion of its retained earnings (as reflected on its then
current audited financial statement) to be agreed upon by Lender and Borrower at
the time, for equity purposes for such expansion. Further, such expansion may be
permitted in Lender's sole discretion so long as Borrower is in strict
compliance with all financial covenants in Article V hereunder, equity from
members of Borrower following expansion would be no less than on the Closing
Date hereunder, and following expansion all original applicable financial
covenants in Article V shall be maintained.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
NEDAK ETHANOL, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and General Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Board Chariman
LENDER:
FARM CREDIT SERVICES OF GRAND FORKS, FLCA
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[SIGNATURE PAGE TO MASTER CREDIT AGREEMENT]
30
ATTACHMENT I
DEFINITIONS
A. Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms used herein will be interpreted, all
accounting determinations hereunder will be made, and all financial statements
required to be delivered hereunder will be prepared, in accordance with GAAP as
in effect from time to time.
B. Terms Generally. The definitions of terms herein apply equally to
the singular and plural forms of the terms defined. The words "include,"
"includes" and "including" are herein deemed to be followed by the phrase
"without limitation." Unless the context requires otherwise (a) any definition
of or reference to any agreement, instrument or other document herein will be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person will
be construed to include such Person's successors and permitted assigns, (c) the
words "hereof," "herein" and "hereunder" and words of similar import will be
construed to refer to this Agreement as a whole and not to any particular
provision hereof, (d) all references to Articles, Sections, Exhibits and
Schedules will be construed to refer to Articles, Sections, Exhibits and
Schedules to this Agreement, and (e) all references to a specific time will be
construed to refer to the time in the city provided herein for Lender's receipt
of notices hereunder, unless otherwise indicated.
C. Supplements. Certain terms are defined specifically in one or more
Supplements. If there is an inconsistency between the terms hereof and a
Supplement, the definitions in the Supplement will control to the extent
provided therein.
D. Defined Terms. In addition to the other terms defined in the
Agreement, the following terms have the meanings herein specified.
"Advance" means an advance of Loan funds by Lender to or for the benefit of
Borrower.
"Affiliate" means, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, such Person.
"Agreement" means, collectively, the Master Agreement and each of the
Supplements in effect from time to time.
"Borrower" means NEDAK Ethanol, LLC, a Nebraska limited liability company.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the city of Grand Forks, North Dakota, are authorized
or required by law to close.
I-1
"Capital Expenditures" means, for any period, without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of
Borrower that are (or would be) set forth on a consolidated statement of cash
flows of Borrower for such period prepared in accordance with GAAP and (b)
Capital Lease Obligations incurred by Borrower during such period.
"Capital Lease Obligations" of any Person means the capitalized amount,
determined in accordance with GAAP, of all obligations of such Person to pay
rent or other amounts under any lease (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP.
"Cash Flow Sweep" means the Special Principal Payments required under
Section 9(d) of the First Supplement.
"Change in Control" means the occurrence of one or more of the following
events: (a) any sale, lease, exchange or other transfer (in a single transaction
or a series of related transactions) of all or substantially all of the assets
of Borrower or any guarantor of any portion of the Obligations to any Person or
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder in effect on the date
hereof), (b) acquisition of Control of the Borrower or any guarantor of any
portion of the Obligations by any Person who does not Control the Borrower or
such guarantor on the date of this Agreement, or (c) occupation of a majority of
the seats on the board of directors of Borrower or any guarantor of any portion
of the Obligations by Persons who were neither (1) nominated by the immediately
previous board of directors or (2) appointed by directors so nominated.
"Charges" has the meaning set forth in Section 1.06.
"Closing Date" means February 14, 2007, and with respect to each
Supplement, the date specified in such supplement if a different closing date is
specified.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time.
"Collateral" means all of Borrower's tangible and intangible property, real
and personal, including without limitation, all casualty insurance proceeds and
condemnation awards.
"Collateral Assignment" means each collateral assignment by Borrower in
favor of Lender of a Material Contract, including all such collateral
assignments made prior to the date hereof and all of those made hereafter.
"Commitment" means any commitment by Lender to advance funds to Borrower as
set forth in this Agreement or any Supplement to this Agreement.
"Consent and Waiver of Borrower's Rights" means the consent and waiver in
the form attached hereto as Exhibit 2.01(c)(14).
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"Control" means the power, directly or indirectly, either to (a) vote 10%
or more of securities having ordinary voting power for the election of directors
(or persons performing similar functions) of a Person or (b) direct or cause the
direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. The terms
"Controls," "Controlling," "Controlled by," and "under common Control with" have
meanings correlative thereto.
"Control Agreements" means the agreements requested by Lender, if any, to
perfect Lender's security interest in Deposit Accounts and Investment Accounts,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Deed of Trust" means the Deed of Trust, Security Agreement, Assignment of
Leases and Rents and Fixture Financing Statement between Borrower and Lender
dated the date hereof, as further amended, restated, revised or otherwise
modified from time to time hereafter.
"Default" means any condition or event that, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"Default Interest" has the meaning set forth in Section 1.04.
"Deposit Accounts" means all demand, time, savings, passbook or similar
depository accounts of Borrower with any Person, including Borrower's operating,
payroll, and other bank or depository accounts.
"Depositary" has the meaning set forth in Section 2.01(h).
"EBITDA" for any period means an amount equal to (a) Net Income plus (b) to
the extent deducted in determining Net Income, the sum of (i) Interest Expense,
(ii) income taxes, (iii) depreciation and amortization, and (iv) all other
non-cash charges.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or to
health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental investigation and
remediation, costs of administrative oversight, fines, related attorneys' fees,
natural resource damages, penalties or indemnities), directly or indirectly
resulting from or based upon (a) any actual or alleged violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) any actual or alleged
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials, or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated), which, together with Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for the purposes of Section
302 of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event," as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by Borrower or the ERISA Affiliate from the PBGC or a plan
administrator appointed by the PBGC of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
"Event of Default" has the meaning set forth in Section 7.01.
"Farm Products" has the meaning ascribed thereto in the UCC.
"First Supplement" means the First Supplement to the Master Credit
Agreement (Construction and Term Loan Facility) between Borrower and Lender
dated the date hereof, as amended, restated, supplemented, or otherwise modified
from time to time.
"Fixed Charges" for any period means the consolidated sum of (a) interest
expense, (b) scheduled principal payments made on Total Debt, (c) Tax
Distributions paid, (d) Restricted Payments declared or otherwise allocated, and
(e) the lesser of $500,000 of maintenance Capital Expenditures or actual
maintenance Capital Expenditures.
"Fixed Charge Coverage Ratio" means for any period of four consecutive
quarters, the ratio of (a) EBITDA to (b) Fixed Charges.
"Food Security Act" means the Food Security Act of 1985, 7 U.S.C. ss. 1631,
as amended, and the regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States applied on a consistent basis.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising
I-4
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
"Guarantee" of or by any Person, including without limitation any
Governmental Authority providing a guarantee of any portion of the Obligations,
(the "guarantor") means any obligation, contingent or otherwise, of the
guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly and including any obligation, direct
or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (d)
as an account party in respect of any letter of credit or letter of guarantee
issued in support of such Indebtedness or obligation. The term "Guarantee" does
not include endorsements for collection or deposits in the ordinary course of
business. The amount of any Guarantee is deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, commodity agreements and other similar agreements or
arrangements designed to protect against fluctuations in interest rates,
currency values or commodity values, in each case to which Borrower is a party.
"Indebtedness" of any Person means, without duplication (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person in respect of the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business;
provided, that for purposes of Section 7.01(e), trade payables overdue by more
than 120 days are included in this definition except to the extent that any of
such trade payables are being disputed in good faith and by appropriate
measures), (d) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(e) all Capital Lease Obligations of such Person, (f) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (g) all Guarantees of such Person,
(h) all Indebtedness of a third party secured by any Lien on property owned by
such Person, whether or not such Indebtedness has been assumed by
I-5
such Person, (i) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any common stock,
membership unit or other capital interest of such Person, (j) Off-Balance Sheet
Liabilities, and (k) all capital interests of such person (such as preferred
units) which call for a fixed or formulaic amount to be paid to the holder
thereof or that have a maturity date. The Indebtedness of any Person includes
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, except to the extent that the terms of such
Indebtedness provide that such Person is not liable therefor.
"Inventory" has the meaning ascribed thereto in the UCC, and shall include,
without limitation, grain, grain sorghum, corn, soybeans, wheat, ethanol, dried
distiller's grains and solubles, and other goods, held by Debtor for sale or for
processing and sale.
"Investment Accounts" means all securities or investment accounts of
Borrower with brokerage firms and other Persons.
"Investments" has the meaning set forth in Section 6.04.
"Lender" means Farm Credit Services of Grand Forks, FLCA, a federal land
credit association organized under the Farm Credit Act of 1971, as amended, and
its successors and assigns.
"Lien" means any mortgage, pledge, security interest, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement,
or other arrangement having the practical effect of the foregoing or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any capital lease having the same economic effect as any
of the foregoing).
"Loan" means a loan commitment or credit and facilities made under this
Agreement as more fully described in a Supplement.
"Loan Documents" means collectively this Master Agreement, the Supplements,
the Deed of Trust, the Security Agreement, the Notes, the Collateral
Assignments, all other Loan Documents, all UCC financing statements filed by
Lender in connection with perfection of Lender's security interest in the
Collateral, and any Control Agreements, draw requests, and any and all other
instruments, agreements, documents and writings executed pursuant to any of the
foregoing which have been delivered in fulfillment of a condition precedent to
effectiveness or to Lender's obligations under any of the foregoing, or which
have otherwise been executed by Borrower and delivered to Lender in connection
with the Obligations or the Collateral.
"Master Agreement" means solely this Master Credit Agreement, not including
the Supplements, as amended, restated, or otherwise modified (other than by
Supplements entered into pursuant to Section 1.02) from time to time.
"Material Adverse Effect" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singularly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not
I-6
related, a material adverse change in, or a material adverse effect on, (a) the
business, results of operations, financial condition, assets, or liabilities, of
Borrower, (b) the ability of Borrower to perform any of its obligations under
the Loan Documents, (c) the rights and remedies of Lender under any of the Loan
Documents or (d) the legality, validity or enforceability of any of the Loan
Documents.
"Material Contract" means an agreement to which Borrower is or hereafter
becomes a party which is material to the operation of Borrower's business.
"Material Indebtedness" means Indebtedness (other than the Loans) or
obligations in respect of one or more Hedging Agreements in an aggregate
principal amount of $100,000 or more. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations in respect to any
Hedging Agreement at any time is the maximum aggregate amount (giving effect to
any netting agreements) that Borrower would be required to pay if such Hedging
Agreement were terminated at such time.
"Maximum Rate" has the meaning set forth in Section 1.06.
"Multiemployer Plan" has the meaning set forth in Section 4001(a)(3) of
ERISA.
"Net Available Cash" means Borrower's Net Income after taking into
consideration the payment of each of the following items: (a) all interest, fees
and scheduled debt payments on the Loans, (b) scheduled debt service permitted
to be paid on any subordinated debt authorized by Lender, (c) replenishment of
any draws taken from the Debt Service Reserve Account such that such account has
a minimum balance of $2,400,000 (unless the requirement to fund such Debt
Service Reserve Account has been terminated pursuant to the terms of the Second
Supplement), (d) payment of Capital Expenditures, (e) Tax Distributions to
Borrower's members, (f) the payment of all USDA Bio Energy program payments and
other payments and benefits received by Borrower in respect of incentives
provided by the State of Nebraska or any other Governmental Authority as
required under Section 9(c) of the First Supplement, (g) the Cash Flow Sweep
payment required under Section 9(d) of the First Supplement, and (h) the payment
of the Nebraska Tax Rebate as required under Section 10 of the Second
Supplement.
"Net Income" means net income (or loss) determined on a consolidated basis
in accordance with GAAP, but excluding (a) extraordinary gains or losses, (b)
gains attributable to write-up of assets, (c) any equity interest in unremitted
earnings of any Person that is not a Subsidiary, and (d) income (or loss) of any
Person which accrued prior to the date such Person becomes a Subsidiary or is
merged into or consolidated with Borrower or any Subsidiary on the date such
Person's assets are acquired by the Borrower or a Subsidiary. Net Income shall
include USDA Bio Energy program payments and other payments and benefits
received by Borrower in respect of incentives provided by the State of Nebraska
or any other Governmental Authority.
"Notes" means, collectively, all notes of Borrower in favor of Lender
issued pursuant to a Supplement.
"Obligations" means all amounts owed by Borrower to Lender pursuant to or
in connection with this Agreement or any other Loan Document, and any other
obligation of
I-7
Borrower to Lender of any nature whatsoever, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, prepayment premiums, expenses, indemnification and
reimbursement payments, costs and expenses (including all fees and expenses of
counsel to Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder,
together with all renewals, extensions, modifications or refinancings thereof.
"Off-Balance Sheet Liabilities" of any Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any liability of such Person under any sale
and leaseback transactions which do not create a liability on the balance sheet
of such Person, (c) any liability of such Person under any so-called "synthetic"
lease transaction, or (d) any obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person.
"Participant" has the meaning set forth in Section 8.04(c).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA, and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes not yet due (or with respect to real
estate taxes, not yet delinquent) or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanic, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained in accordance with GAAP;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
(e) judgment and attachment liens not giving rise to an Event of Default or
Liens created by or existing from any litigation or legal proceeding that are
currently being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with GAAP;
I-8
(f) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or materially interfere with the ordinary
conduct of business of Borrower and its Subsidiaries taken as a whole; and
(g) Liens in favor of Lender.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States), in each case maturing within one year from the
date of acquisition thereof;
(b) commercial paper having the highest rating, at the time of acquisition
thereof, of S&P or ▇▇▇▇▇'▇ and in either case maturing within six months from
the date of acquisition thereof;
(c) certificates of deposit, bankers' acceptances and time deposits
maturing within 180 days of the date of acquisition thereof issued or guaranteed
by or placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States of America or any state thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above;
(e) mutual funds investing solely in any one or more of the Permitted
Investments described in clauses (a) through (d) above; and
(f) Hedging Agreements entered into in the ordinary course of business
solely to hedge or mitigate risks to which Borrower is exposed in the conduct of
its business or management of its liabilities.
"Person" means any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
Governmental Authority.
"Projections" means Borrower's forecasted (a) balance sheets; (b) profit
and loss statements; and (c) cash flow statements; all prepared on a
consolidated basis and otherwise consistent with the historical financial
statements of Borrower, together with appropriate supporting details and a
statement of underlying assumptions which are believed by Borrower to be
reasonable and fair in light of the current condition and past performance of
Borrower and to reflect a reasonable estimate of the projected balance sheets,
results of operations, cash flows and other information presented therein for
five (5) years following the Closing Date.
I-9
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Real Estate" means all real property owned or leased by Borrower that is
intended as collateral for any Loan.
"Release" means any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.
"Responsible Officer" means Borrower's general manager or chief financial
officer, or such other duly authorized Person as may be designated in writing
with the prior written consent of Lender.
"Second Supplement" means the Second Supplement to the Master Credit
Agreement (Revolving Facility) between Borrower and Lender dated the date
hereof, as amended, restated, supplemented, or otherwise modified from time to
time.
"Security Agreement" means the Security Agreement between Lender and
Borrower dated as of the date hereof, as amended, restated, supplemented or
otherwise modified from time to time.
"Servicing Fee" means the servicing fee to be paid to Lender by each
Participant in the amount of 25 basis points of the total participation interest
of each such Participant in the Loan.
"Setoff" has the meaning set forth in Section 8.07.
"Subsidiary" means, with respect to any Person (the "parent"), any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, partnership, joint venture, limited liability company,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (b) that is, as of
such date, otherwise Controlled (as set forth in clause (b) of the definition
thereof), by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Unless otherwise indicated,
all references to "Subsidiary" hereunder mean a Subsidiary of Borrower
(including Subsidiaries formed after the Closing Date).
"Supplements" has the meaning set forth in Section 1.02.
"Tangible Net Worth" means, as of any date (a) the total assets of Borrower
that should be reflected on Borrower's consolidated balance sheet as of such
date prepared in accordance
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with GAAP, after eliminating all amounts properly attributable to minority
interests, if any, in the stock and surplus of Subsidiaries, less (b) the sum of
(i) Total Debt as of such date, (ii) the amount of appraisal surplus or any
write-up in the book value of any assets resulting from a revaluation thereof or
any write-up in excess of the cost of such assets acquired reflected on the
consolidated balance sheet of Borrower as of such date prepared in accordance
with GAAP, and (iii) the net book amount of all assets of Borrower that should
be classified as intangible assets (including investments in other entities) on
a consolidated balance sheet of Borrower as of such date prepared in accordance
with GAAP.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority
arising from payment hereunder or from the execution, delivery, or enforcement
of, any Loan Document, including, without limitation, all present or future
stamp or documentary taxes or any other excise or property taxes. "Taxes" does
not include taxes based on (or determined solely by) Lender's net income.
"Tax Distributions" means, for any taxable year for which Borrower is
treated under the Code as a partnership for income tax purposes or otherwise
disregarded under the Code for income tax purposes, dividends and/or
distributions paid by the Borrower to its members from time to time in an amount
not to exceed the product of (i) the taxable income of Borrower (determined
without regard to any adjustments under Section 743(b) of the Code of any member
of Borrower) multiplied by (ii) forty percent (40%).
"TIF Transaction" has the meaning set forth in Section 6.01(c) of the
Master Agreement.
"Total Debt" means all Indebtedness that should be reflected on Borrower's
consolidated balance sheet prepared in accordance with GAAP.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as in
effect from time to time in the State of North Dakota.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
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EXHIBIT 2.01(c)(6)
OPINION REQUIREMENTS
1. Borrower (a) is a limited liability company duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization, (b) has the power and authority and the legal right to own and
operate its property and to conduct its business.
2. Borrower has the power and authority to execute, deliver and perform the
Loan Documents to which it is a party and has taken all necessary organizational
action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party.
3. No consent, approval or authorization of, or registration or filing
with, any Person (including, without limitation, any Governmental Authority) is
required in connection with the execution, delivery or performance by Borrower
of the Loan Documents.
4. Borrower has duly executed and delivered the Loan Documents to which it
is a party, and the Loan Documents constitute, legal, valid and binding
obligations of Borrower enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
5. The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party will not (a) violate the articles of
organization or the operating agreement of Borrower, (b) violate any law
applicable to Borrower, (c) insofar as known to us, violate any determination of
an arbitrator or a court or other Governmental Authority applicable to Borrower,
(d) insofar as known to us, cause a breach or default under any contractual
obligation of Borrower, or (e) result in the creation or imposition of any Lien
on any of the property or revenues of Borrower.
6. To the best of our knowledge, no litigation, investigation or proceeding
of or before any Governmental Authority are pending or threatened by or against
Borrower, or against any of its properties or revenues, existing or future (a)
with respect to any Loan Document or any of the transactions contemplated
thereby, or (b) which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect.
7. The rates of interest and the fees provided for in the Credit Agreement
and the description thereof provided in the Credit Agreement and the Notes do
not violate any laws of the State of Nebraska relating to interest and usury,
and will not violate any such law by virtue of any fluctuations in any base,
prime, index or equivalent rate or rates on which interest charges may be based
under such agreements.
8. Under the laws of the State of Nebraska, the Loan Documents will be
governed by the internal laws of the State of North Dakota, including all such
laws relating to interest and usury.
9. To the extent Borrower has rights in the "Collateral" described in the
Security Agreement and Collateral Assignments, the provisions of the Security
Agreement and the
Collateral Assignments are sufficient to grant to Lender, a security interest in
all right, title and interest of the Borrower in those items and types of
Collateral in which a security interest may be created under Article 8 or
Article 9 of the UCC. To the extent that the Borrower has rights in the
"Collateral" described in the Security Agreement and the Collateral Assignments
and to the extent that such Collateral consists of types of items of property in
which a security interest may be perfected by the filing of financing statements
in the State of Nebraska, such security interests have been perfected by the
filing of the Financing Statements in the offices of the Nebraska Secretary of
State and the Fixture Financing Statements in the office of the Recorder in ▇▇▇▇
County, Nebraska.
10. The Deed of Trust, upon due recordation in the office of the Recorder
in ▇▇▇▇ County, Nebraska, will constitute in favor of Lender, a valid and
continuing lien on the property described therein as security for the
Obligations and will be enforceable in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
and other similar laws, and equity principles of general application, relating
to or affecting the enforcement of creditors' rights generally.
11. Borrower has obtained all permits, licenses, approvals, and
authorizations required by all Governmental Authorities for construction,
ownership, and operation of the Collateral.
EXHIBIT 2.01(c)(14)
CONSENT AND WAIVER OF BORROWER RIGHTS
(Attach Form)
CONSENT AND WAIVER
Reference is made to the Master Credit Agreement dated as of
_____________, 2007 (the "Credit Agreement"), by and between NEDAK Ethanol,
LLC, a Nebraska limited liability company ("Borrower") and Farm Credit
Services of Grand Forks, FLCA. Terms defined in the Credit Agreement are
used herein with the same meanings.
The Borrower does hereby consent to the sale or participation of the
Loans to one or more Participants pursuant to Section 2.01(c)(14) of the
Credit Agreement and waives the Borrower Rights, a copy of which are set
forth on Exhibit A attached hereto.
This Consent and Waiver is being delivered pursuant to Farm Credit
Administration Regulations, Section 617.7015 (69 FR 10908, March 9, 2004).
IN WITNESS WHEREOF, I have hereunto signed my name this _____ day of
______________, 2007.
NEDAK Ethanol, LLC
By: ____________________________
Name: __________________________
Title: _________________________
By: ____________________________
Name: __________________________
Title: _________________________
Section 3.15
Schedule 3.17
Material Contracts
EXHIBIT 3.19
BORROWER RIGHTS
1. At loan closing, Borrower shall receive copies of Loan Documents signed by
Borrower. Upon request thereafter Borrower is entitled to copies of
documents signed or delivered by Borrower, copies of Lender's, or the
Lender's parent association's, charter and by laws, as applicable, and
copies of Lender's appraisals of the collateral.
2. If the Loans have an adjustable or variable interest rate, Borrower will be
notified in writing of any change in interest rate. The notice will be
given not later than any deadline date required by regulations promulgated
by the Farm Credit Administration.
3. If Borrower's Loans are in a differential interest rate program, Borrower
may request that Lender review the Loans to verify that the proper interest
rate category has been assigned, and also to explain in writing to Borrower
the basis for the interest rate charged and how the credit status of the
Borrower may be improved to receive a lower interest rate on the Loans.
4. If Lender places Borrower's Loans in nonaccrual status and such action
results in an adverse action being taken against Borrower (such as
revocation of any undisbursed loan commitment), the Lender shall notify
Borrower in writing of such change in status and the reasons therefore. If
Borrower was not delinquent in any payments under the Loans at the time and
Borrower's request to have the Loans reinstated to accrual status is
denied, Borrower may obtain a review of such denial before the Lender's
credit review committee.
5. Lender may not commence foreclosure or other legal action against any
collateral securing the Loans unless at least 45 days before such
commencement Lender has provided Borrower with a copy of Lender's
restructuring policy and forms on which Borrower may submit a request for
restructuring. If Borrower's request for restructuring is denied, Borrower
may appeal the denial to Lender's credit review committee, and may also
obtain an independent appraisal of any collateral (at Borrower's expense)
for consideration by the credit review committee.
If Lender acquires agricultural real estate by enforcement of Lender's
lien, when Lender elects to sell or lease the acquired property, Borrower shall
have a right of first refusal on the property. Lender shall notify Borrower in
writing and Borrower may purchase or lease the property, as appropriate, at the
appraised fair market value or fair rental value, or if the property is sold by
public offering, at the price of the highest qualified bid.
Schedule 4.08
Insurance Requirements
Schedule 4.10
List of Subsidiaries
Schedule 6.01(b)
Permitted Indebtedness
Schedule 6.04
Existing Investments
Schedule 6.13
Deposit and Investment Accounts
