EXHIBIT 10.6
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AMENDED AND RESTATED SECURED CREDIT AGREEMENT
AMONG
MINNESOTA CORN PROCESSORS, INC.,
LIQUID SUGARS, INC.
AND
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
Individually and as Agent
AND
U.S. BANCORP AG CREDIT, INC.
Dated as of November 4, 1998
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TABLE OF CONTENTS
MINNESOTA CORN PROCESSORS, INC.
LIQUID SUGARS, INC.
AMENDED AND RESTATED SECURED CREDIT AGREEMENT
PAGE
SECTION 1. THE CREDITS ................................................1
Section 1.1. The Revolving Credit .......................................1
Section 1.2. The Notes ..................................................3
Section 1.3. Interest Rates .............................................3
Section 1.4. Conversion and Continuation of Loans .......................4
Section 1.5. Manner of Borrowing and Rate Selection .....................4
Section 1.6. Capital Adequacy ...........................................6
Section 1.7. The Collateral .............................................6
Section 1.8. Absolute Obligations .......................................6
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS .........................7
Section 2.1. Fees .......................................................7
Section 2.2. Agent's Fee ................................................7
Section 2.3. Optional Prepayments .......................................8
Section 2.4. Mandatory Prepayments-Borrowing Base .......................8
Section 2.5. Terminations ...............................................8
SECTION 3. PLACE AND APPLICATION OF PAYMENTS ..........................9
SECTION 4. DEFINITIONS ................................................9
Section 4.1. Certain Terms Defined .......................................9
SECTION 5. REPRESENTATIONS AND WARRANTIES ............................19
Section 5.1. Organization and Qualification ............................19
Section 5.2. Financial Reports .........................................20
Section 5.3. Litigation; Tax Returns; Approvals ........................20
Section 5.4. Regulation U ..............................................20
Section 5.5. No Default ................................................20
Section 5.6. ERISA .....................................................20
Section 5.7. Security Interests ........................................21
Section 5.8. Subsidiaries ..............................................21
Section 5.9. Accurate Information ......................................21
Section 5.10. Enforceability ............................................21
Section 5.11. No Default Under Other Agreements .........................21
Section 5.12. Status Under Certain Laws .................................22
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Section 5.13. Compliance with Laws ......................................22
Section 5.14. Cooperative Status ........................................22
SECTION 6. CONDITIONS PRECEDENT ......................................22
Section 6.1. General ...................................................22
Section 6.2. Each Extension of Credit ..................................22
Section 6.3. Legal Matters .............................................23
Section 6.4. Documents .................................................23
SECTION 7. COVENANTS .................................................24
Section 7.1. Maintenance of Property ...................................24
Section 7.2. Taxes .....................................................24
Section 7.3. Maintenance of Insurance ..................................24
Section 7.4. Financial Reports .........................................24
Section 7.5. Inspection ................................................25
Section 7.6. Consolidation and Merger ..................................26
Section 7.7. Transactions with Affiliates ..............................26
Section 7.8. Minimum Net Working Capital ...............................26
Section 7.9. Minimum Total Member Equities .............................26
Section 7.10. Minimum Cash Flow .........................................26
Section 7.11. Leases ....................................................26
Section 7.12. Capital Expenditures ......................................27
Section 7.13. Restricted Payments .......................................27
Section 7.14. Liens .....................................................27
Section 7.15. Borrowings and Guaranties .................................28
Section 7.16. Investments, Loans, Advances and Acquisitions .............29
Section 7.17. Sale of Property ..........................................30
Section 7.18. Notice of Suit or Adverse Change in Business or Default ...30
Section 7.19. ERISA .....................................................30
Section 7.20. Supplemental Performance ..................................30
Section 7.21. Use of Proceeds ...........................................31
Section 7.22. Compliance with Laws, etc. ................................31
Section 7.23. Environmental Covenant ....................................31
Section 7.24. Hedging ...................................................31
Section 7.25. Subsidiaries ..............................................31
Section 7.26. Preservation of Cooperative Status ........................32
Section 7.27. Post-Closing Matters ......................................32
SECTION 8. EVENTS OF DEFAULT AND REMEDIES ............................32
Section 8.1. Definitions ...............................................32
Section 8.2. Remedies for Non-Bankruptcy Defaults ......................33
Section 8.3. Remedies for Bankruptcy Defaults ..........................34
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR
LOANS .....................................................34
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Section 9.1. Change of Law .............................................34
Section 9.2. Unavailability of Deposits or Inability to Ascertain the
Adjusted Eurodollar Rate ...............................34
Section 9.3. Taxes and Increased Costs .................................35
Section 9.4. Funding Indemnity .........................................36
Section 9.5. Lending Branch ............................................36
Section 9.6. Discretion of Bank as to Manner of Funding ................36
SECTION 10. THE AGENT .................................................37
Section 10.1. Appointment and Powers ....................................37
Section 10.2. Powers ....................................................37
Section 10.3. General Immunity ..........................................37
Section 10.4. No Responsibility for Loans, Recitals, etc. ...............37
Section 10.5. Right to Indemnity ........................................37
Section 10.6. Action Upon Instructions of Banks .........................37
Section 10.7. Employment of Agents and Counsel ..........................38
Section 10.8. Reliance on Documents; Counsel ............................38
Section 10.9. May Treat Payee as Owner ..................................38
Section 10.10. Agent's Reimbursement .....................................38
Section 10.11. Rights as a Lender ........................................38
Section 10.12. Bank Credit Decision ......................................38
Section 10.13. Resignation of Agent ......................................39
Section 10.14. Duration of Agency ........................................39
Section 10.15. Removal of Agent ..........................................39
Section 10.16. Successor Agent ...........................................39
SECTION 11. MISCELLANEOUS .............................................39
Section 11.1. Amendments and Waivers ....................................39
Section 11.2. Waiver of Rights ..........................................40
Section 11.3. Several Obligations........................................40
Section 11.4. Non-Business Day...........................................41
Section 11.5. Survival of Indemnities....................................41
Section 11.6. Documentary Taxes..........................................41
Section 11.7. Representations............................................41
Section 11.8. Notices ...................................................41
Section 11.9. Costs and Expenses ........................................41
Section 11.10. Counterparts ..............................................42
Section 11.11. Successors and Assigns; Governing Law; Entire Agreement ...43
Section 11.12. No Joint Venture .........................................43
Section 11.13. Severability .............................................43
Section 11.14. Table of Contents and Headings.............................43
Section 11.15. Sharing of Payments .......................................43
Section 11.16. Submission to Jurisdiction; Waiver of Jury Trial ..........44
Section 11.17. Participants and Note Assignees ...........................44
Section 11.18. Assignment of Commitments by Banks ........................44
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Section 11.19. Confidentiality ...........................................45
Exhibit A Secured Revolving Credit Note
Exhibit B Borrowing Base Certificate
Exhibit C Compliance Certificate
Exhibit D Form of Legal Opinion
Exhibit E Existing Agreements
Exhibit F Material Litigation
Exhibit G Letter Agreement Regarding Collateral
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MINNESOTA CORN PROCESSORS, INC.
LIQUID SUGARS, INC.
AMENDED AND RESTATED SECURED CREDIT AGREEMENT
▇▇▇▇▇▇ Trust and Savings Bank
Chicago, Illinois
U.S. Bancorp Ag Credit, Inc.
Denver, Colorado
Ladies and Gentlemen:
The undersigned, MINNESOTA CORN PROCESSORS, INC., a Minnesota
corporation (the "COMPANY"), refers to the Secured Credit Agreement dated as of
August 27, 1997, as amended and currently in effect among the Company and you
(such Secured Credit Agreement as so amended is referred to as the "CREDIT
AGREEMENT") pursuant to which you agreed to make a revolving credit (the
"REVOLVING CREDIT") available to the Company, all as more fully set forth
therein. Each of you is hereinafter referred to individually as "BANK" and
collectively as the "BANKS." ▇▇▇▇▇▇ Trust and Savings Bank in its individual
capacity is sometimes referred to herein as "▇▇▇▇▇▇", and in its capacity as
Agent for the Banks is hereinafter in such capacity called the "AGENT." The
Company requests you to (i) amend the Credit Agreement to add Liquid Sugars,
Inc., a California corporation ("LSI"; LSI and the Company being referred to
herein collectively as the "BORROWERS" and individually as a "BORROWER") as a
Borrower thereunder and (ii) make certain further amendments to the Credit
Agreement to, among other things, extend the Termination Date, to make certain
further amendments to the Credit Agreement and, for the sake of convenience and
clarity, to restate the Credit Agreement in its entirety as so amended.
Accordingly, upon your acceptance hereof in the space provided for that purpose
below and upon satisfaction of the conditions precedent to effectiveness
hereinafter set forth, Sections 1 through 11 of the Credit Agreement and all of
the Exhibits thereto shall be amended and as so amended shall be restated in
their entirety to read as follows:
SECTION 1. THE CREDITS.
SECTION 1.1. THE REVOLVING CREDIT. (a) Subject to all of the terms and
conditions hereof, the Banks agree, severally and not jointly, to extend a
Revolving Credit to the Borrowers which may be utilized by the Borrowers in the
form of loans (individually a "REVOLVING CREDIT LOAN" and collectively the
"REVOLVING CREDIT LOANS"). The aggregate principal amount of all Revolving
Credit Loans under the Revolving Credit at any time outstanding shall not exceed
the lesser of (i) the sum of the Banks' Revolving Credit Commitments (as
hereinafter defined) in effect from time to time during the term of this
Agreement or (ii) the Borrowing Base as determined on the basis of the most
recent Borrowing Base Certificate. The aggregate principal amount of Revolving
Credit Loans at any time outstanding to the Company shall not exceed the
Company Borrowing Base as determined on the basis of the most recent Borrowing
Base Certificate and the aggregate principal amount of Revolving Credit Loans at
any time outstanding to LSI shall not exceed the LSI Borrowing Base as
determined on the basis of the most recent Borrowing Base Certificate. The
Revolving Credit shall be available to the Borrowers, and may be availed of by
the Borrowers from time to time, be repaid (subject to the restrictions on
prepayment set forth herein) and used again, during the period from the date
hereof to and including August 27, 2000 (the "TERMINATION DATE").
(b) At any time not earlier than 90 days prior to, nor later than 60
days prior to, the date that is one year before the Termination Date then in
effect (the "ANNIVERSARY DATE"), the Company may request that the Banks extend
the then scheduled Termination Date to the date one year from such Termination
Date. If such request is made by the Company each Bank shall inform the Agent of
its willingness to extend the Termination Date no later than 20 days prior to
such Anniversary Date. Any Bank's failure to respond by such date shall indicate
its unwillingness to agree to such requested extension, and all Banks must
approve any requested extension. At any time more than 15 days before such
Anniversary Date the Banks may propose, by written notice to the Company, an
extension of this Agreement to such later date on such terms and conditions as
the Banks may then require. If the extension of this Agreement to such later
date is acceptable to the Company on the terms and conditions proposed by the
Banks, the Company shall notify the Banks of the Borrowers' acceptance of such
terms and conditions no later than the Anniversary Date, and such later date
will become the Termination Date hereunder and this Agreement shall otherwise be
amended in the manner described in the Banks' notice proposing the extension of
this Agreement upon the Agent's receipt of (i) an amendment to this Agreement
signed by the Borrowers and all of the Banks, (ii) resolutions of the each
Borrower's Board of Directors authorizing such extension and (iii) an opinion of
counsel to the Borrowers equivalent in form and substance to the form of opinion
attached hereto as Exhibit D and otherwise acceptable to the Banks.
(c) The respective maximum aggregate principal amounts of the Revolving
Credit at any one time outstanding and the percentage (the "COMMITMENT
PERCENTAGE") of the Revolving Credit available at any time which each Bank by
its acceptance hereof severally agrees to make available to the Borrowers are as
follows (collectively, the "REVOLVING CREDIT COMMITMENTS" and individually, a
"REVOLVING CREDIT COMMITMENT"):
▇▇▇▇▇▇ Trust and Savings Bank $25,000,000 50%
U.S. Bancorp Ag Credit, Inc. 25,000,000 50%
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Total $50,000,000 100%
(d) Loans under the Revolving Credit may be Eurodollar Loans or Domestic
Rate Loans. All Loans under the Revolving Credit shall be made ratably by the
Banks in accordance to their respective Commitment Percentages. Each Domestic
Rate Loan shall be in an amount not less than $500,000 or such greater amount
which is an integral multiple of $100,000 and each Eurodollar Loan shall be in
an amount not less than $1,000,000 or such greater amount which is an integral
multiple of $1,000,000.
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SECTION 1.2. THE NOTES. All Revolving Credit Loans made by each Bank
under its Revolving Credit Commitment shall be evidenced by a single Secured
Revolving Credit Note of the Borrowers, jointly and severally, substantially in
the form of Exhibit A hereto (individually, a "REVOLVING NOTE" and together, the
"REVOLVING NOTES") payable to the order of such Bank in the principal amount of
such Revolving Credit Commitment, but the aggregate principal amount of
indebtedness evidenced by such Revolving Note at any time shall be, and the same
is to be determined by, the aggregate principal amount of all Revolving Credit
Loans made by such Bank to the Borrowers pursuant hereto on or prior to the date
of determination less the aggregate amount of principal repayments on such
Revolving Credit Loans received by or on behalf of such Bank on or prior to such
date of determination. Each Revolving Note shall be dated as of the execution
date of this Agreement, shall be delivered concurrently herewith, and shall be
expressed to mature on the Termination Date and to bear interest as provided in
Section 1.3 hereof. Each Bank shall record on its books or records or on a
schedule to its Revolving Note the amount of each Revolving Credit Loan made by
it hereunder, whether each Revolving Credit Loan is a Domestic Rate Loan or
Eurodollar Loan, and, with respect to Eurodollar Loans, the interest rate and
Interest Period applicable thereto, and all payments of principal and interest
and the principal balance from time to time outstanding, provided that prior to
any transfer of such Revolving Note all such amounts may be recorded on a
schedule to such Revolving Note. The record thereof, whether shown on such books
or records or on the schedule to the Revolving Note, shall be PRIMA FACIE
evidence as to all such amounts; PROVIDED, HOWEVER, that the failure of any Bank
to record, or any mistake in recording, any of the foregoing shall not limit or
otherwise affect the joint and several obligation of the Borrowers to repay all
Revolving Credit Loans made hereunder together with accrued interest thereon.
Upon the request of any Bank, the Borrowers will furnish a new Revolving Note to
such Bank to replace its outstanding Revolving Note. Such Bank will cancel and
deliver to the Borrowers the outstanding Revolving Credit Note upon receipt of
the new Revolving Credit Note.
SECTION 1.3. INTEREST RATES. (a) DOMESTIC RATE. Each Domestic Rate Loan
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is made
until maturity (whether by acceleration, upon prepayment or otherwise) at a rate
per annum equal to the Domestic Rate from time to time in effect, payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on September 30, 1998 and at maturity (whether by
acceleration, upon prepayment or otherwise).
(b) EURODOLLAR RATE. Each Eurodollar Loan shall bear interest (computed
on the basis of a year of 360 days and actual days elapsed) on the unpaid
principal amount thereof from the date such Loan is made until the last day of
the Interest Period applicable thereto or, if earlier, until maturity (whether
by acceleration or otherwise) at a rate per annum equal to the sum of one and
one-eighth percent (1.125%) plus the Adjusted Eurodollar Rate, payable on the
last day of each Interest Period applicable thereto and at maturity (whether by
acceleration or otherwise) and, with respect to any Interest Period in excess of
three months, on the date occurring every three months after the date such
Eurodollar Loan is made, provided that if on the last day of the Interest Period
applicable to any Eurodollar Loan the applicable Borrower does not prepay such
Loan, such Loan shall become a Domestic Rate Loan as of the day immediately
following the last day of the Interest Period applicable thereto.
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(c) DEFAULT RATE. If any payment of principal or interest on any
Revolving Credit Loan is not made when due (including any payment due upon
acceleration), such Loan shall bear interest (computed on the basis of a year of
360 days and actual days elapsed) from the date such payment was due until paid
in full, payable on demand, at a rate per annum equal to:
(i) with respect to any Domestic Rate Loan, the sum of 2% plus
the Domestic Rate from time to time in effect; and
(ii) with respect to any Eurodollar Loan, the sum of 2% plus the
rate of interest in effect thereon at the time of such default until the
end of the Interest Period then applicable thereto, and, thereafter, at
a rate per annum equal to the sum of 2% plus the Domestic Rate from time
to time in effect.
SECTION 1.4. CONVERSION AND CONTINUATION OF LOANS. (a) Provided that no
Event of Default or Potential Default has occurred and is continuing, the
Borrowers shall have the right, subject to the other terms and conditions of
this Agreement, to continue in whole or in part (but, if in part, in the minimum
amount specified for Fixed Rate Loans in Section 1.1 hereof) any Fixed Rate Loan
from any current Interest Period into a subsequent Interest Period, provided
that the Company, on behalf of itself or LSI, shall give the Bank notice of the
continuation of any such Loan as provided in Section 1.5 hereof.
(b) In the event that the Company, on behalf of itself or LSI, fails to
give notice pursuant to Section 1.5 hereof of the continuation of any Fixed Rate
Loan or fails to specify the Interest Period applicable thereto, or an Event of
Default or Potential Default has occurred and is continuing at the time any such
Loan is to be continued hereunder, then such Loan shall be automatically
converted as (and the Company shall be deemed to have given notice requesting) a
Domestic Rate Loan, subject to Sections 1.5(b), 8.2 and 8.3 hereof, unless paid
in full on the last day of the then applicable Interest Period.
(c) Provided that no Event of Default or Potential Default has occurred
and is continuing, the Borrowers shall have the right, subject to the terms and
conditions of this Agreement, to convert Loans of one type (in whole or in part)
into Loans of another type from time to time provided that: (i) the Company, on
behalf of itself or LSI, shall give the Bank notice of each such conversion as
provided in Section 1.5 hereof, (ii) the principal amount of any Loan converted
hereunder shall be in an amount not less than the minimum amount specified for
the type of Loan in Section 1.1 hereof, (iii) after giving effect to any such
conversion in part, the principal amount of any Fixed Rate Loan then outstanding
shall not be less than the minimum amount specified for the type of Loan in
Section 1.1 hereof, (iv) any conversion of a Loan hereunder shall only be made
on a Business Day, and (v) any Fixed Rate Loan may be converted only on the last
day of the Interest Period then applicable thereto.
SECTION 1.5. MANNER OF BORROWING AND RATE SELECTION. (a) The Company, on
behalf of itself or LSI, shall give telephonic, telex or telecopy notice to the
Agent (which notice, if telephonic, shall be promptly confirmed in writing) no
later than (i) 1:30 p.m. (Chicago time) on the date the Banks are requested to
make each Domestic Rate Loan under the Revolving Credit or to convert a Domestic
Rate Loan to a Eurodollar Loan, and (ii) 1:00 p.m. (Chicago time) on
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the date at least three (3) Business Days prior to the date of each Eurodollar
Loan under the Revolving Credit of which the Banks are requested to make or
continue. Each such notice shall specify the date of the Loan requested (which
shall be a Business Day), the amount of such Loan, whether the Loan is to be
made available by means of a Domestic Rate Loan or Eurodollar Loan and, with
respect to Eurodollar Loans, the Interest Period applicable thereto; provided,
that in no event shall the principal amount of any requested Revolving Credit
Loan plus the aggregate principal amount of all Loans outstanding hereunder
exceed the amounts specified in Section 1.1 hereof. The Borrowers agree that the
Agent may rely on any such telephonic, telex or telecopy notice given by any
person who the Agent believes is authorized to give such notice without the
necessity of independent investigation and in the event any notice by such means
conflicts with the written confirmation, such notice shall govern if any Bank
has acted in reliance thereon. The Agent shall, on the day any such notice is
received by it, give prompt telephonic, telex or telecopy (if telephonic, to be
confirmed in writing within one Business Day) notice of the receipt of notice
from the Company hereunder to each of the Banks, and, if such notice requests
the Banks to make any Eurodollar Loans, the Agent shall confirm to the Company
by telephonic, telex or telecopy means, which confirmation shall be conclusive
and binding on the Company in the absence of manifest error, the Interest Period
and the interest rate applicable thereto promptly after such rate is determined
by the Agent.
(b) Subject to the provisions of Section 6 hereof, the proceeds of each
Revolving Credit Loan shall be made available to the relevant Borrower at the
principal office of the Agent in Chicago, Illinois, in immediately available
funds, on the date such Loan is requested to be made. Not later than 3:00 p.m.
(Chicago time), on the date specified for any Loan to be made hereunder, each
Bank shall make its portion of such Loan available to the relevant Borrower in
immediately available funds at the principal office of the Agent.
(c) Unless the Agent shall have been notified by a Bank prior to the
date of a Loan to be made by such Bank (which notice shall be effective upon
receipt) that such Bank does not intend to make the proceeds of such Loan
available to the Agent, the Agent may assume that such Bank has made such
proceeds available to the Agent on such date and the Agent may in reliance upon
such assumption (but shall not be required to) make available to the relevant
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank, the Agent shall be entitled to receive
such amount on demand from such Bank (or, if such Bank fails to pay such amount
forthwith upon such demand, to recover such amount, together with interest
thereon at the rate otherwise applicable thereto under Section 1.3 hereof, from
the relevant Borrower) together with interest thereon in respect of each day
during the period commencing on the date such amount was made available to the
relevant Borrower and ending on the date the Agent recovers such amount, at a
rate per annum equal to the effective rate charged to the Agent for overnight
Federal funds transactions with member banks of the Federal Reserve System for
each day, as determined by the Agent (or, in the case of a day which is not a
Business Day, then for the preceding Business Day) (the "FED FUNDS RATE").
Nothing in this Section 1.5(c) shall be deemed to permit any Bank to breach its
obligations to make Loans under the Revolving Credit or to limit any Borrower's
claims against any Bank for such breach.
SECTION 1.6. CAPITAL ADEQUACY. If, after the date hereof, any Bank or
the Agent shall have determined in good faith that the adoption of any
applicable law, rule or regulation
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regarding capital adequacy, or any change therein (including, without
limitation, any revision in the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; ▇▇ ▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) or of the Office of the Comptroller of the Currency (12
CFR Part 3, Appendix A), or in any other applicable capital rules heretofore
adopted and issued by any governmental authority), or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital, or on the capital
of any corporation controlling such Bank, in each case as a consequence of its
obligations hereunder, to a level below that which such Bank would have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within thirty (30) days after
demand by such Bank (with a copy to the Agent), the Borrowers shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
reduction.
SECTION 1.7. THE COLLATERAL. The Notes and the other obligations of the
Borrowers hereunder and under the other Loan Documents shall be secured by valid
and perfected first liens on the following property (the "COLLATERAL"): (a) the
inventory, accounts and certain other property of the Company, in each instance
whether now owned or existing or hereafter acquired or arising, granted to the
Agent for the benefit of the Banks pursuant to a Security Agreement Re: Accounts
Receivable and Inventory dated as of August 27, 1997 (as the same may be amended
from time to time, the "CURRENT ASSET SECURITY AGREEMENT"), (b) amounts and
contracts on deposit in accounts maintained by the Company with futures
commission merchants and certain other property of the Company, in each instance
whether now owned or existing or hereafter acquired, granted to the Agent for
the benefit of the Banks pursuant to various Security Agreements Re: Margin
Account (as the same may be amended from time to time, collectively the "MARGIN
ACCOUNT SECURITY AGREEMENTS"), (c) the inventory, accounts and certain other
property of LSI, in each instance whether now owned or existing or hereafter
acquired as arising, granted to the Agent for the benefit of the Banks pursuant
to a Security Agreement Re: Accounts Receivable and Inventory dated as of even
date herewith (as the same may be amended from time to time, the "LSI SECURITY
AGREEMENT"), and each Borrower agrees that it will from time to time at the
request of the Agent or the Required Banks execute and deliver such documents
and do such acts and things as the Agent or the Required Banks may reasonably
request in order to provide for or perfect such liens.
SECTION 1.8. ABSOLUTE OBLIGATIONS. Each Borrower acknowledges and agrees
that its joint and several liability on the Notes and on all obligations owed by
any Borrower or Borrowers under this Agreement is absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever by the Banks, and without limiting the generality of the foregoing,
each Borrower's joint and several liability on the Notes and under this
Agreement shall not be impaired by any acceptance by the Banks of any other
security for or guarantors upon the Notes or any obligations under this
Agreement or by any failure, neglect or omission on the Banks' part to resort to
any one or all of the Borrowers for payment of the Notes
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or the obligations under this Agreement or to realize upon or protect any
collateral security therefor. Each Borrower's joint and several liability on the
Notes and under this Agreement shall not in any manner be impaired or affected
by who receives or uses the proceeds of the loans evidenced by the Notes or for
what purposes such proceeds are used, and each Borrower waives notice of
borrowing requests issued by, and loans made to, other Borrowers. Such joint and
several liability of each Borrower shall also not be impaired or affected by
(and each Bank, without notice to anyone, is hereby authorized to make from time
to time) any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any collateral security for the Notes or the
obligations under this Agreement or of any guaranty thereof. In order to enforce
payment of the Notes and the Borrowers' obligations under this Agreement,
foreclose or otherwise realize on any collateral security therefor, and to
exercise the rights granted to the Agent hereunder and thereunder and under
applicable law, the Agent shall be under no obligation at any time to first
resort to any collateral security, property, liens or any other rights or
remedies whatsoever, and the Banks shall have the right to enforce the Notes and
the Borrowers' obligations under this Agreement irrespective of whether or not
other proceedings or steps are pending seeking resort to or realization upon or
from any of the foregoing. By its acceptance below, each Borrower hereby
expressly waives and surrenders any defense to its joint and several liability
on the Notes or under this Agreement based upon any of the foregoing. In
furtherance thereof, each Borrower agrees that wherever in this Agreement it is
provided that a Borrower is liable for a payment such obligation is the joint
and several obligation of each Borrower.
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS.
SECTION 2.1. FEES. For the period from the date hereof to and including
the Termination Date, or such earlier date on which the Revolving Credit is
terminated in whole pursuant to Section 2.5 hereof, the Borrowers, jointly and
severally, shall pay to the Agent for the account of the Banks a commitment fee
with respect to the Revolving Credit at the rate of one-eighth of one percent
(.125%) per annum (computed on the basis of a year of 360 days for the actual
number of days elapsed) of the average daily unused amount of the Banks'
Revolving Credit Commitments hereunder in effect from time to time, such fee to
be payable quarterly in arrears on the last day of each March, June, September
and December commencing on September 30, 1998 unless the Revolving Credit is
terminated in whole on an earlier date, in which event the fees for the final
period shall be paid on the date of such earlier termination in whole.
SECTION 2.2. AGENT'S FEE. The Borrowers, jointly and severally, shall
pay to and for the sole account of the Agent fees in an amount and payable at
such times as the Borrowers and the Agent may agree upon in writing. Such fee
payments shall be in addition to any fees and charges the Agent may be entitled
to receive under Section 10 hereunder or under the other Loan Documents.
SECTION 2.3. OPTIONAL PREPAYMENTS. (a) The Borrowers shall have the
privilege of prepaying without premium or penalty and in whole or in part (but
if in part, then in a minimum principal amount of $1,000,000 or such greater
amount which is an integral multiple of $500,000) any Domestic Rate Loan under
the Revolving Credit at any time upon prior telex or
-7-
telephonic notice to the Agent on or before 12:00 noon (Chicago time) on the
same Business Day.
(b) The Borrowers may prepay any Eurodollar Loan, upon telephonic notice
(which shall be promptly confirmed in writing by facsimile communication, telex
or telegraph) by no later than 11:00 a.m. (Chicago time) on the date of such
prepayment from the applicable Borrower to the Agent, such prepayment to be made
by the payment of the principal amount to be prepaid and accrued interest
thereon and any compensation required by Section 9.4 hereof, if applicable;
PROVIDED, HOWEVER, that any such prepayment shall be in a principal amount of no
less than $1,000,000 or such greater amount which is an integral multiple of
$1,000,000 and after giving effect to any such prepayment the outstanding
principal amount of any such Eurodollar Loan prepaid in part shall not be less
than $1,000,000 or such greater amount which is an integral multiple of
$1,000,000.
(c) Any amount prepaid under the Revolving Credit may, subject to the
terms and conditions of this Agreement, be borrowed, repaid and borrowed again.
SECTION 2.4. MANDATORY PREPAYMENTS-BORROWING BASE. The Borrowers shall
not permit the sum of the principal amount of all Loans at any time outstanding
to exceed the lesser of (i) the Banks' Revolving Credit Commitments or (ii) the
Borrowing Base as determined on the basis of the most recent Borrowing Base
Certificate. The Borrowers shall not permit the sum of the principal amount of
all Loans outstanding to the Company to exceed the Company Borrowing Base as
determined on the basis of the most recent Borrowing Base Certificate and the
Borrowers shall not permit the sum of the principal amount of all Loans
outstanding to LSI to exceed the LSI Borrowing Base as determined on the basis
of the most recent Borrowing Base Certificate. The Borrowers will make such
payments on any outstanding Loans which are necessary to cure any such excess
within one Business Day after the occurrence thereof without any notice or
demand from the Agent or any of the Banks, all of which are expressly waived by
the each Borrower and shall pay any amount due in connection with such
prepayment pursuant to Section 9.4 hereof. Any amount repaid under the Revolving
Credit may, subject to the terms and conditions of this Agreement, be borrowed,
repaid and borrowed again.
SECTION 2.5. TERMINATIONS. The Borrowers shall have the right at any
time upon 10 Business Days' prior notice to the Banks to terminate the Revolving
Credit in whole or in part, but if in part in a minimum amount of $5,000,000 or
any integral multiple thereof; PROVIDED, HOWEVER, that the Borrowers may not
terminate any portion of the Revolving Credit which remains available for
payment under any outstanding Revolving Credit Loans. Any termination will first
reduce ratably the Revolving Credit Commitments of each of the Banks.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
All payments of principal and interest made by the Borrowers in respect
of the Revolving Notes and all fees payable by the Borrowers hereunder, shall be
made to the Agent at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ and in immediately available funds, prior to 1:00 p.m. (Chicago time) on
the date of such payment. All such payments shall be made without setoff or
counterclaim and without reduction for, and free from, any and all present and
future
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levies, imposts, duties, fees, charges, deductions withholdings, restrictions or
conditions of any nature imposed by any government or any political subdivision
or taxing authority thereof. Any payments received after 1:00 p.m. (Chicago
time) (or after the time the Banks may otherwise direct) shall be deemed
received upon the following Business Day. The Agent shall remit to each Bank its
proportionate share of each payment of principal, interest and commitment fee
received by the Agent by 1:00 p.m. (Chicago time) on the same day of its receipt
and its proportionate share of each such payment received by the Agent after
1:00 p.m. (Chicago time) on the Business Day following its receipt by the Agent.
In the event the Agent does not remit any amount to any Bank when required by
the preceding sentence, the Agent shall pay to such Bank interest on such amount
until paid at a rate per annum equal to the Fed Funds Rate. Each Borrower hereby
authorizes the Agent to automatically debit its account with ▇▇▇▇▇▇ for any
principal, interest and fees when due under the Revolving Notes or this
Agreement and to transfer the amount so debited from such account to the Agent
for application as herein provided. All proceeds of Collateral shall be applied
in the manner specified in the Security Documents.
SECTION 4. DEFINITIONS.
The terms hereinafter set forth when used herein shall have the
following meanings:
SECTION 4.1. CERTAIN TERMS DEFINED.
"ACCOUNT DEBTOR" shall mean the person who is obligated on a Receivable.
"ADJUSTED EURODOLLAR RATE" means a rate per annum determined pursuant to
the following formula:
Eurodollar Rate
-------------------------
Adjusted Eurodollar Rate = 100% - Reserve Percentage
"ADJUSTED TOTAL MEMBER EQUITIES" means, at any time, the remainder of
(a) Total Member Equities, determined at such time, MINUS
(b) the sum of (i) Post-Closing Consolidated Intangible Assets
and (ii) Restricted Investments, each determined at such time.
"AFFILIATE" shall mean any person, company or business entity under
common control or having shareholders owning at least ten percent (10%) of each
thereof, whether such common control be direct or indirect. All of each
Borrower's officers, shareholders, directors, joint ventures, Subsidiaries and
partners shall be deemed to be each Borrower's Affiliates for purposes of this
Agreement.
"AGENT" is defined in the first paragraph of this Agreement.
"AGREEMENT" shall mean this Amended and Restated Secured Credit
Agreement as supplemented and amended from time to time.
-9-
"BANK" and "BANKS" shall have the meanings specified in the first
paragraph of this Agreement.
"BORROWER" is defined in the introductory paragraph of this Agreement.
"BORROWERS" is defined in the introductory paragraph of this Agreement.
"BORROWING BASE" means, at any tune the same is to be determined, the
sum of the Company Borrowing Base and the LSI Borrowing Base.
"BORROWING BASE CERTIFICATE" shall mean the certificate in the form of
Exhibit B which is required to be delivered to the Banks in accordance with
Section 7.4(c) hereof.
"BUSINESS DAY" shall mean any day except Saturday or Sunday on which
banks are open for business in Chicago, Illinois, and Denver, Colorado and, with
respect to Eurodollar Loans, dealing in United States dollar deposits in London,
England and Nassau, Bahamas.
"CAPITALIZED LEASE" shall mean any lease or obligation for rentals which
is required to be capitalized on a balance sheet of either Borrower in
accordance with generally accepted accounting principles.
"CASH FLOW" shall mean, for any period, the sum of (a) the net income of
the Company and its Subsidiaries for such period, plus (b) all amounts properly
charged for depreciation of fixed assets and amortization of Intangible Assets
during such period, minus (c) all capital expenditures made during such period,
minus (d) the aggregate amount of payments required to be made by the Company
and its Subsidiaries, during such period in respect of principal of Debt
(whether at maturity, as a result of mandatory sinking fund redemption,
mandatory prepayment, acceleration or otherwise), minus (e) the aggregate amount
of all cash patronage distributions paid by the Company and its Subsidiaries
during such period, and minus (f) the aggregate amount paid by the Company and
its Subsidiaries to redeem shares of the Company's and any Subsidiary's stock
from its members during such period, all determined in a consolidated basis in
accordance with generally accepted accounting principles, consistently applied,
but without adjustment for any cash received by the Company and its Subsidiaries
from its members for the replenishment of net losses.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CHANGE IN LAW" shall have the meaning specified in Section 9.3 hereof.
"COLLATERAL" shall mean the collateral security provided to the Agent
for the benefit of the Banks pursuant to the Security Documents.
"COMPANY" shall have the meaning specified in the first paragraph of
this Agreement.
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"COMPANY BORROWING BASE", as determined on the basis of the information
contained in the most recent Borrowing Base Certificate or as determined by the
Agent upon an inspection of the Company's books and records, shall mean an
amount equal to:
(a) 85% of the amount of Eligible Receivables of the Company,
plus
(b) 85% of the Value of Eligible Grain Inventory of the Company,
plus
(c) 75% of the Value of Eligible By-Product Inventory of the
Company, PROVIDED that the amount included in the Borrowing Base at any
time with respect to Eligible By-Product Inventory of the Company
consisting of steep water may not exceed $1,000,000 at such time, plus
(d) 75% of the Value of Eligible Finished Goods Inventory of the
Company, plus
(e) 75% of the Value of Eligible Work-in-Process Inventory of
the Company, plus
(f) 90% of the Company's Eligible Broker Balances, minus
(g) the aggregate outstanding amount of the Company's Secured
Grower Payables.
"CONSOLIDATED NET EARNINGS" means, with respect to any period, the net
income (or loss) of the Company and the Subsidiaries for such period, as
determined on a consolidated basis in accordance with GAAP, provided that there
shall be excluded therefrom:
(a) the income or loss of any Person accrued prior to the date
it becomes a Subsidiary or is merged into or consolidated or
consolidated with the Company or a Subsidiary, and the income (or loss)
of any Person, substantially all of the assets of which have been
acquired in any manner, realized by such other Person prior to the date
of acquisition,
(b) the income or loss of any Person (other than the Company or
a Subsidiary) in which the Company or any Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Company or a Subsidiary in the form of cash dividends or
similar cash distributions,
(c) any net gain or loss during such period arising from the
sale, conversion, exchange or other disposition of capital assets,
(d) any gains or losses resulting from any write-up of any
assets,
-11-
(e) any gain arising from the acquisition of any security, or
the extinguishment, under GAAP, of any indebtedness, of the Company or
any Subsidiary and
(f) any income, gain or loss during such period in respect of
any hedging activities not undertaken in the ordinary course of business
of such Person or any extraordinary items or discontinued operations or
the disposition thereof.
"CONSOLIDATED TOTAL ASSETS" means, at any time, the total assets of the
Company and its Subsidiaries determined on a consolidated basis at such time in
accordance with GAAP.
"DEBT" of any Person shall mean as of any time the same is to be
determined, the aggregate of (a) all indebtedness, obligations and liabilities
with respect to borrowed money, (b) all guaranties, endorsements (other than any
liability arising out of the endorsement of items for deposit or collection in
the ordinary course of business) and other contingent obligations in respect of,
or any obligations to purchase or otherwise acquire, indebtedness of others, (c)
all reimbursement and other obligations with respect to letters of credit and
banker's acceptances, (d) the aggregate amount of rentals or other consideration
payable under all Capitalized Leases, (e) all indebtedness and liabilities
secured by any lien or any security interest on any Property or assets of such
person, whether or not the same would be classified as a liability on a balance
sheet, and (f) all indebtedness, obligations and liabilities representing the
deferred purchase price of Property (excluding trade payables arising in the
ordinary course of business), but excluding all general contingency reserves and
reserves for deferred income taxes and investment credit, and with respect to
Debt of the Company and its Subsidiaries, all computed and determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles
consistent with those used in the preparation of the audit report referred to in
Section 5.2 hereof.
"DOMESTIC RATE" means for any day the rate of interest announced by
▇▇▇▇▇▇ from time to time as its prime commercial rate in effect on such day,
with any change in the Domestic Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in said
prime commercial rate (the "▇▇▇▇▇▇ PRIME RATE"), provided that if the rate per
annum determined by adding 0.5% to the rate at which ▇▇▇▇▇▇ would offer to sell
federal funds in the interbank market on or about 10:00 a.m. (Chicago time) on
any day (the "ADJUSTED FED FUNDS RATE") shall be higher than the ▇▇▇▇▇▇ Prime
Rate on such day, the Domestic Rate for such day and for any succeeding day
which is not a Business Day shall be such Adjusted Fed Funds Rate. The
determination of the Adjusted Fed Funds Rate by ▇▇▇▇▇▇ shall be final and
conclusive provided ▇▇▇▇▇▇ has acted in good faith in connection therewith.
"DOMESTIC RATE LOAN" means a Revolving Credit Loan which bears interest
as provided in Section 1.3(a) hereof.
"ELIGIBLE BROKER BALANCES" shall mean as of any day the initial futures
margin on deposit in the Borrowers' margin accounts with clearing brokers on the
Chicago Board of Trade as of the end of that day, net of any unpaid fees,
commissions and all other amounts owed to those brokers, minus the negative
value of the Borrowers' open contracts held through those brokers and, which is
subject to a valid, first priority perfected security interest in favor of the
Agent for
-12-
the benefit of the Banks and which the Banks in their sole discretion deems
eligible for inclusion in the Borrowing Base.
"ELIGIBLE BY-PRODUCTS INVENTORY" shall mean Eligible Inventory
consisting of gluten meal, wet feed and germ and steep water.
"ELIGIBLE FINISHED GOODS INVENTORY" shall mean Eligible Inventory
consisting of starch, high fructose corn sweeteners, ethanol and corn syrup.
"ELIGIBLE GRAIN INVENTORY" shall mean Eligible Inventory of corn.
"ELIGIBLE INVENTORY" shall mean any Inventory of the Borrowers in which
the Agent has a perfected first priority security interest, which the Banks in
their reasonable judgment deem to be acceptable for inclusion in the Borrowing
Base, and which complies with each of the following requirements:
(a) It substantially conforms to such Borrower's advertised or
represented specifications, applicable government standards and
regulations and other quality standards and has not been determined by
the Banks to be unacceptable due to age, type, variety, quality,
quantity, or location;
(b) If it is covered by a negotiable warehouse receipt or other
negotiable document of title, such receipt or other document of title is
in the Agent's possession and has been endorsed in blank by such
Borrower;
(c) All warranties of such Borrower in the Loan Documents are
true and correct with respect thereto;
(d) It has been identified to the Agent in the manner prescribed
by the pursuant to the Security Agreement; and
(e) It is located at a location disclosed to and approved by the
Agent, and if requested by the Agent, any Person (other than such
Borrower) owning or controlling such location shall have waived all
right, title and interest in and to such Inventory in a manner
satisfactory to the Agent.
"ELIGIBLE RECEIVABLES" shall mean any Receivable of the Borrowers in
which the Agent has a first priority perfected security interest which the Banks
in their reasonable discretion deem to be acceptable for inclusion in the
Borrowing Base, and which complies with each of the following requirements:
(a) It arises out of (i) a bona fide sale of Inventory which has
been delivered to, or is in the process of being delivered to the
Account Debtor on said Receivable in the ordinary course of business on
ordinary trade terms or (ii) the storage, handling or conditioning of
Inventory by such Borrower;
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(b) All warranties of such Borrower in the Loan Documents are
true and correct with respect thereto;
(c) It has been identified to the Banks in the manner required
by the Banks;
(d) It is evidenced by an invoice dated not later than the day
after the date of shipment to the Account Debtor thereunder;
(e) It has not remained unpaid in whole or in part more than 90
days from and after its invoice date;
(f) It is net of any credit or allowance given by such Borrower
to such Account Debtor;
(g) It is not owing by an Account Debtor who (i) has become
insolvent, (ii) is the subject of any bankruptcy, arrangement,
reorganization proceedings or other proceedings for relief of debtors,
(iii) has admitted its inability to pay its debt generally or has
stopped paying its debts generally or (iv) is an Affiliate of such
Borrower.
(h) The Account Debtor is not principally located outside the
continental United States unless such Receivable is secured by an
irrevocable letter of credit issued by a commercial bank located in the
United States and which is acceptable to the Banks; and
(i) It is not owing by the United States of America or any
department, agency or instrumentality thereof unless the Banks shall
have received evidence satisfactory to the Banks of compliance with the
Assignment of Claims Act.
"ELIGIBLE WORK-IN-PROCESS INVENTORY" shall mean Eligible Inventory of
corn that is being processed.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, health and safety statutes and regulations, including without
limitation all statutes and regulations establishing quality criteria and
standards for air, water, land and toxic or hazardous wastes and substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EURODOLLAR LOAN" means a Revolving Credit Loan which bears interest as
provided in Section 1.3(b) hereof
"EURODOLLAR RATE" shall mean for each Interest Period applicable to a
Eurodollar Loan, (a) the LIBOR Index Rate for such Interest Period, if such rate
is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to nearest 1/100 of 1%) at which deposits in U.S. dollars in
-14-
immediately available funds are offered to the Agent at 11:00 a.m. (London,
England time) two (2) Business Days before the beginning of such Interest Period
by three (3) or more major banks in the interbank eurodollar market for a period
equal to such Interest Period and in an amount equal or comparable to the
principal amount of the Eurodollar Loan scheduled to be made by the Agent during
such Interest Period.
"EVENT OF DEFAULT" shall mean any event or condition identified as such
in Section 8.1 hereof.
"EXISTING AGREEMENTS" shall mean the agreements listed on Exhibit E
attached hereto.
"EXISTING LENDERS" shall mean the lenders under each of the Existing
Agreements.
"FED FUNDS RATE" shall have the meaning specified in Section 1.5(c)
hereof.
"FUNDED DEBT" of any Person shall mean all Debt of such Person having a
final maturity of more than one year from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), excluding, however, in any
computation of the amount of Funded Debt outstanding as of any date (a) all
amounts outstanding under the Revolving Credit, and (b) all payments in respect
of any Funded Debt that are required to be made within one year from such date
of determination of Funded Debt.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean generally accepted
accounting principles consistently applied and maintained throughout the period
indicated and consistent with the audited financial statements delivered to the
Banks pursuant to Section 7.4 except that inventory shall be computed as
described in the definition of Value. Whenever any accounting term is used
herein which is not otherwise defined, it shall be interpreted in accordance
with generally accepted accounting principles.
"▇▇▇▇▇▇" shall have the meaning specified in the first paragraph of this
Agreement.
"HEDGED POSITION" means all grain inventory, fixed price sales
contracts, fixed price corn purchase contracts and futures positions of the
Company relating to its annual grind.
"INTANGIBLE ASSETS" shall mean amortizable loan costs, business
acquisition costs, license agreements, trademarks, trade names, patents,
capitalized research and development, proprietary products (the results of past
research and development treated as long term assets and excluded from
Inventory), goodwill and all other assets which would be classified as
intangible assets (all determined in accordance with generally accepted
accounting principles consistently applied).
"INTEREST PERIOD" shall mean with respect to any Eurodollar Loan, the
period used for the computation of interest commencing on the date the relevant
Eurodollar Loan is made, continued or effected by conversion and concluding on
the date one, two, three or six months thereafter as selected by the Company on
behalf of itself or LSI in its notice as provided herein, PROVIDED that all of
the foregoing provisions relating to Interest Periods are subject to the
following:
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(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
Eurodollar Loan the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity
date of the Notes;
(iii) the interest rate to be applicable to each Eurodollar Loan
for each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the relevant Borrower will be unable to make a principal payment
scheduled to be made during such Interest Period without paying part of
a Eurodollar Loan on a date other than the last day of the Interest
Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"INVENTORY" shall mean all raw materials, work in process, finished
goods, and goods held for sale or lease or furnished or to be furnished under
contracts of service in which any Borrower now has or hereafter acquires any
right.
"LIBOR INDEX RATE" shall mean, for any Interest Period applicable to a
Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"LOAN" shall mean a Revolving Credit Loan and the term "LOANS" shall
mean any two or more Revolving Credit Loans collectively.
"LOAN DOCUMENTS" shall mean this Agreement and any and all exhibits
hereto, the Revolving Notes and the Security Documents.
"LSI" shall have the meaning assigned to such term in the introductory
paragraph hereof.
"LSI BORROWING BASE" as determined on the basis of the information
contained in the most recent Borrowing Base Certificate or as determined by the
Agent upon an inspection of LSI's books and records, shall mean an amount equal
to:
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(a) 85% of the amount of Eligible Receivables of LSI, plus
(b) 75% of Eligible Inventory.
"NET WORKING CAPITAL" shall mean the excess for the Company and its
Subsidiaries of current assets over current liabilities, all as determined and
computed on a consolidated basis in accordance with Generally Accepted
Accounting Principles, but in any event including as current liabilities all
amounts outstanding under this Agreement.
"NET WORTH" shall mean the Total Assets minus the Total Liabilities of
the Company and its Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles, consistently applied.
"PERSON" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PLAN" shall mean any employee benefit plan covering any officers or
employees of the Borrowers, any benefits of which are, or are required to be,
guaranteed by the PBGC.
"POSITION REPORT" shall mean a summary of the Borrowers' Hedged
Position.
"POTENTIAL DEFAULT" shall mean any event or condition which, with the
lapse of time, or giving of notice, or both, would constitute an Event of
Default.
"PROPERTY" shall mean all assets and properties of any nature
whatsoever, whether real or personal, tangible or intangible, including without
limitation biotechnology products and techniques and intellectual property.
"RECEIVABLES" shall mean all accounts, contract rights, instruments,
documents, chattel paper and general intangibles in which any Borrower now has
or hereafter acquires any right.
"REQUIRED BANKS" shall mean any Bank or Banks which in the aggregate
hold 51% of the aggregate unpaid principal balance of the Loans or, if no Loans
are outstanding hereunder, any Bank or Banks in the aggregate having 51% of the
Revolving Credit Commitments.
"RESERVE PERCENTAGE" means the daily arithmetic average maximum rate at
which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed on member banks of the Federal Reserve System
during the applicable Interest Period by the Board of Governors of the Federal
Reserve System (or any successor) under Regulation D on "EUROCURRENCY
LIABILITIES" (as such term is defined in Regulation D), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be
-17-
deemed to be Eurocurrency liabilities as defined in Regulation D without benefit
or credit for any prorations, exemptions or offsets under Regulation D.
"REVOLVING CREDIT" shall have the meaning specified in the first
paragraph of this Agreement.
"REVOLVING CREDIT COMMITMENT" and "REVOLVING CREDIT COMMITMENTS" shall
have the meanings specified in Section 1.1(b) hereof.
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS" shall have the
meanings specified in Section 1.1(a) hereof.
"REVOLVING NOTE" or "REVOLVING NOTES" shall have the meanings specified
in Section 1.2 hereof.
"SECURED GROWER PAYABLES" shall mean (a) all amounts owed from time to
time by the Company to any Persons on account of the purchase price of
agricultural commodities if the Required Banks determine from time to time that
such Person is entitled to the benefit of any grower's lien, statutory trust or
similar security arrangements to secure the payment of any amounts owed to such
Person, and (b) all amounts owed from time to time by the Company to any Person
on account of deferred price or deferred pay obligations of the Company to such
Person with respect to grain purchased by the Company from such Person.
"SECURITY DOCUMENTS" means the Current Asset Security Agreement, the
Margin Account Security Agreements, the LSI Security Agreement and all other
mortgages, deeds of trust, security agreements, assignments, financing
statements and other documents as shall from time to time secure the Notes and
the other obligations of the Borrowers hereunder and under the other Loan
Documents.
"SENIOR SECURED NOTES" shall mean the Company's $25,000,000 7.57% Series
A Fixed Rate Senior Notes due September 1, 2007, $120,000,000 7.72% Series B
Fixed Rate Senior Notes due September 1, 2009, $45,000,000 7.83% Series C Fixed
Rate Senior Notes due September 1, 2012, and $100,000,000 Series D Variable Rate
Senior Notes due September 1, 2007.
"SET-OFF" shall have the meaning specified in Section 11.15 hereof.
"SUBSIDIARY" shall mean any corporation or other entity at least a
majority of the outstanding voting stock of which is at the time owned directly
or indirectly by the Company and/or its Subsidiaries.
"TELERATE PAGE 3750" shall mean the display designated as "PAGE 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"TERMINATION DATE" shall have the meaning set forth in Section 1.1(a)
hereof.
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"TOTAL ASSETS" shall mean at any date, the aggregate amount of assets of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied.
"TOTAL LIABILITIES" shall mean at any date, the aggregate amount of all
liabilities of the Company and its Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles, consistently
applied.
"TOTAL MEMBER EQUITIES" means, at any time, the remainder (if positive)
of
(a) Consolidated Total Assets MINUS
(b) the amount at which the liabilities (other than capital
stock, surplus and minority interests) of the Company and its
Subsidiaries would be shown on a consolidated balance sheet prepared in
accordance with GAAP for such Persons at such time.
"VALUE" shall mean as of any given date an amount equal to (a) with
respect to Eligible By-Products Inventory and Eligible Finished Goods Inventory,
the lower of cost or wholesale fair market value, (b) with respect to Eligible
Work-in-Process Inventory, the cost of the corn being processed, and (c) with
respect to Eligible Grain Inventory, the spot bid price of the Company in
Columbus, Nebraska and Marshall, Minnesota.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants to the Banks as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. Each Borrower is duly
organized and validly existing under the laws of the state of its incorporation,
has full and adequate corporate power to carry on its business as now conducted,
is duly licensed or qualified in all jurisdictions wherein the nature of its
activities requires such licensing or qualifying, has full right, power and
authority to enter into this Agreement and the other Loan Documents to which it
is a party, to make the borrowings herein provided for and encumber its assets
as collateral security therefor, to execute and issue the Revolving Notes in
evidence thereof, and to perform each and all of the matters and things herein
and therein provided for; and this Agreement does not, nor does the performance
or observance by any Borrower of any of the matters or things provided for in
this Agreement and the other Loan Documents, contravene any provision of law or
any charter or by-law provision or any covenant, indenture or agreement of or
judgment, order or decree applicable to or affecting such Borrower or any of its
Property.
SECTION 5.2. FINANCIAL REPORTS. The Company has heretofore delivered to
each Bank a copy of the annual audit report as of March 31, 1998 of the Company
and its Subsidiaries and a copy of the consolidated balance sheets and profit
and loss statements for the Company and its Subsidiaries for the quarter ending
June 30, 1998. Such financial statements have been prepared in accordance with
generally accepted accounting principles (except that such unaudited financial
statements may omit any footnotes), on a basis consistent, except as otherwise
noted therein, with that of the previous fiscal year or period and fairly
reflect the financial position of
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the Company and its Subsidiaries as of the dates thereof, and the results of its
operations for the periods covered thereby. The Company and its Subsidiaries
have no significant contingent liabilities (determined in accordance with
generally accepted accounting principles consistently applied) other than as
indicated on said financial statements and since said date of March 31, 1998,
there has been no material adverse change in the condition, financial or
otherwise, of the Company or any Subsidiary.
SECTION 5.3. LITIGATION; TAX RETURNS; APPROVALS. There is no litigation,
labor controversy or governmental proceeding pending or threatened against any
Borrower or any Subsidiary which if adversely determined would result in any
material adverse change in the financial condition, properties, business or
operations of such Borrower or any Subsidiary, except as disclosed on Exhibit F
attached hereto. All United States federal and state income tax returns for each
Borrower and its Subsidiaries required to be filed have been filed on a timely
basis, and all amounts required to be paid as shown by said returns have been
paid. There are no pending or threatened objections to or controversies in
respect of the United States federal and state income tax returns of any
Borrower or any Subsidiary for any fiscal year. No authorization, consent,
license, exemption or filing or registration with any court or governmental
department, agency or instrumentality, is or will be necessary to the valid
execution, delivery or performance by any Borrower of the Loan Documents.
SECTION 5.4. REGULATION U. Neither any Borrower nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System).
SECTION 5.5. NO DEFAULT. Each Borrower is in full compliance with all of
the terms and conditions of the Loan Documents, and no Potential Default or
Event of Default is existing under this Agreement.
SECTION 5.6. ERISA. The Borrowers and their Subsidiaries are in
compliance in all material respects with ERISA to the extent applicable to them
and neither any Borrower nor any Subsidiary has received any notice to the
contrary from the PBGC or any other governmental entity or agency. No steps have
been taken to terminate any Plan, and no contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under Section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect to
any Plan which might result in the incurrence by any Borrower or any Subsidiary
of any material liability, fine or penalty. Neither any Borrower nor any
Subsidiary has any liability with respect to any post-retirement benefit under a
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
SECTION 5.7. SECURITY INTERESTS. There are no security interests, liens
or encumbrances on any of the assets or Property of any Borrower except the
security interests, liens and charges which are now existing and are permitted
by Section 7.14 of this Agreement.
SECTION 5.8. SUBSIDIARIES. As of the date hereof, the Company's only
Subsidiary is Liquid Sugars, Inc., a California corporation. Such Subsidiary is
duly organized and validly existing under the laws of the state of its
incorporation, has full and adequate corporate power to
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carry on its business as now conducted and is duly licensed or qualified to do
business in all jurisdictions wherein the nature of its activities requires such
licensing or qualification. As of the date hereof, LSI has no Subsidiaries.
SECTION 5.9. ACCURATE INFORMATION. No information, exhibit or report
furnished by any Borrower to the Banks in connection with the negotiation or
performance of the Loan Documents contains any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made.
SECTION 5.10. ENFORCEABILITY. This Agreement, when executed and
delivered by each Borrower, will be a legal, valid and binding agreement of such
Borrower, enforceable against it in accordance with its terms, except as may be
limited by (i) bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws or judicial decisions for the relief of debtors
or the limitation of creditors' rights generally; and (ii) any equitable
principles relating to or limiting the rights of creditors generally or any
equitable remedy which may be granted to cure any defaults; and the Revolving
Notes, the other Loan Documents and any other instrument or agreement required
hereunder has been so authorized and, when executed and delivered, will be
similarly valid, binding and enforceable, except as may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws or judicial decisions for the relief of debtors or the limitation
of creditors' rights generally; and (ii) any equitable principles relating to or
limiting the rights of creditors generally or any equitable remedy which may be
granted to cure any defaults.
SECTION 5.11. NO DEFAULT UNDER OTHER AGREEMENTS. Neither any Borrower
nor any Subsidiary is in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which it is a party or
by which it or its Property is bound, which default might materially and
adversely affect the Collateral, the repayment of the indebtedness, obligations
and liabilities under the Loan Documents, any Bank's or the Agent's rights under
the Loan Documents or the Property, business, operations or condition (financial
or otherwise) of such Borrower or any Subsidiary.
SECTION 5.12. STATUS UNDER CERTAIN LAWS. Neither any Borrower nor any of
their Subsidiaries is an "INVESTMENT COMPANY" or a person directly or indirectly
controlled by or acting on behalf of an "INVESTMENT COMPANY" within the meaning
of the Investment Company Act of 1940, as amended, or a "HOLDING COMPANY," or a
"SUBSIDIARY COMPANY" of a "HOLDING COMPANY," or an "AFFILIATE" OF a "HOLDING
COMPANY" or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY," within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
SECTION 5.13. COMPLIANCE WITH LAWS. The Company, LSI and their
Subsidiaries each are in compliance with the requirements of all federal, state
and local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and Environmental Laws, non-compliance with which could have a material
adverse effect on the financial condition, Properties, business or operations of
the Company, LSI or any Subsidiary. Neither any Borrower nor any Subsidiary has
received notice to the effect that its
-21-
operations are not in compliance with any of the requirements of applicable
federal, state or local Environmental Laws, health and safety statutes and
regulations or are the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could have a material adverse effect on the financial condition,
Properties, business or operations of the Company, LSI or any Subsidiary.
SECTION 5.14. COOPERATIVE STATUS. The Company is a corporation operating
on a cooperative basis under Subchapter T of the Internal Revenue Code of 1986,
as amended.
SECTION 6. CONDITIONS PRECEDENT.
The obligation of the Banks to make any Loan pursuant hereto shall be
subject to the following conditions precedent:
SECTION 6.1. GENERAL. The Agent shall have received the notice of
borrowings and the Revolving Notes hereinabove provided for.
SECTION 6.2. EACH EXTENSION OF CREDIT. As of the time of the making of
each Loan hereunder (including the initial Loan):
(a) each of the representations and warranties set forth in
Section 5 hereof shall be and remain true and correct as of said time,
except that the representations and warranties made under Section 5.2
shall be deemed to refer to the most recent financial statements
furnished to the Banks pursuant to Section 7.4 hereof;
(b) the Borrowers shall be in full compliance with all of the
terms and conditions hereof, and no Potential Default or Event of
Default shall have occurred and be continuing;
(c) after giving effect to the requested extension of credit and
to each Revolving Credit Loan that has been made hereunder, the
aggregate principal amount of all Revolving Credit Loans then
outstanding shall not exceed the lesser of (i) the Banks' Revolving
Credit Commitments then in effect or (ii) the Borrowing Base as
determined on the basis of the most recent Borrowing Base Certificate or
as determined by the Agent upon an inspection of the Borrowers' books
and records;
(d) after giving effect to the requested extension of credit and
to each Revolving Credit Loan that has been made hereunder, the
aggregate principal amount of all Revolving Credit Loans then
outstanding to the Company shall not exceed the Company Borrowing Base
as determined on the basis of the most recent Borrowing Base Certificate
or as determined by the Agent upon an inspection of the Borrowers' books
and records; and
(e) after giving effect to the requested extension of credit and
to each Revolving Credit Loan that has been made hereunder, the
aggregate principal amount of
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all Revolving Credit Loans then outstanding to LSI shall not exceed
LSI's Borrowing Base as determined on the basis of the most recent
Borrowing Base Certificate or as determined by the Agent upon an
inspection of the Borrowers' books and records; and
and the request by the Company, on behalf of itself or LSI, for any Loan
pursuant hereto shall be and constitute a warranty to the foregoing effects.
SECTION 6.3. LEGAL MATTERS. Legal matters incident to the execution and
delivery of the Loan Documents shall be satisfactory to each of the Banks and
their legal counsel; and prior to the initial Loan hereunder, the Agent shall
have received the favorable written opinion of ▇▇▇▇▇▇▇, Rumble & ▇▇▇▇▇▇, counsel
for the Borrowers, substantially in the form of Exhibit D, in substance
satisfactory to each of the Banks and their respective legal counsel.
SECTION 6.4. DOCUMENTS. The Agent shall have received copies (executed
or certified, as may be appropriate) of all documents or proceedings taken in
connection with the execution and delivery of the Loan Documents to the extent
any Bank or its respective legal counsel requests.
SECTION 7. COVENANTS.
It is understood and agreed that so long as credit is in use or
available under this Agreement or any amount remains unpaid on any Note, except
to the extent compliance in any case or cases is waived in writing by the
Required Banks:
SECTION 7.1. MAINTENANCE OF PROPERTY. Each Borrower will, and will cause
each Subsidiary to, keep and maintain all of its Properties necessary or useful
in its business in good condition, and make all necessary renewals,
replacements, additions, betterments and improvements thereto; PROVIDED,
HOWEVER, that nothing in this Section shall prevent any Borrower or any
Subsidiary from discontinuing the operating and maintenance of any of its
Properties if such discontinuance is, in the judgment of such Borrower or such
Subsidiary, desirable in the conduct of its business and not disadvantageous in
any material respect to the Banks as holders of the Revolving Notes.
SECTION 7.2. TAXES. Each Borrower will, and will cause each Subsidiary
to, duly pay and discharge all taxes, rates, assessments, fees and governmental
charges upon or against such Borrower or any Subsidiary or against their
respective Properties in each case before the same becomes delinquent and before
penalties accrue thereon unless and to the extent that the same is being
contested in good faith and by appropriate proceedings and adequate reserves,
determined in accordance with generally accepted accounting principles
consistently applied, have been established with respect thereto.
SECTION 7.3. MAINTENANCE OF INSURANCE. Each Borrower will, and will
cause each Subsidiary to, maintain insurance with insurers recognized as
financially sound and reputable by prudent business persons in such forms and
amounts and against such risks as is usually carried by companies engaged in
similar business and owning similar properties in the same general areas in
which such Borrower and such Subsidiary operate, and in any event shall maintain
insurance with respect to the Collateral as required by the Security Documents.
The Agent shall
-23-
be named as lender's loss payee under any insurance policies which relate to the
Collateral. Each Borrower shall, at the Agent's request, provide copies to the
Agent of all insurance policies and other materials related thereto maintained
by such Borrower and its Subsidiaries.
SECTION 7.4. FINANCIAL REPORTS. The Company will, and will cause each
Subsidiary to, maintain a system of accounting in accordance with sound
accounting practice and will furnish promptly to the Banks and their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as may from time to time
be requested and, without any request, will furnish each Bank:
(a) as soon as available, and in any event within 45 days after
the close of each of the first three quarterly fiscal periods occurring
during each fiscal year of the Company, (i) a copy of consolidated
balance sheets and profit and loss statements for the Company and its
Subsidiaries (for such quarterly period and the year to date) for such
period of the Company and for the corresponding periods of the preceding
fiscal year, all in reasonable detail, prepared by the Company and
certified by the chief financial officer of the Company, and (ii) a copy
of consolidated balance sheets and profit and loss statements for the
Company and its Subsidiaries (for such quarterly period and the year to
date) for such period of the Company and for the corresponding periods
of the preceding fiscal year, prepared in accordance with Generally
Accepted Accounting Principles, all in reasonable detail, prepared by
the Company and certified by the president and general manager or the
chief financial officer of the Company;
(b) as soon as available, and in any event within 90 days after
the close of each fiscal year of the Company, (i) a copy of the audit
report for such year and accompanying financial statements including
consolidated balance sheets, reconciliations of change in stockholders'
equity, profit and loss statements and statements of cash flows for the
Company and its Subsidiaries showing in comparative form the figures for
the previous fiscal year of the Company, all in reasonable detail,
accompanied by the unqualified opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLC or other
independent public accountants of nationally recognized standing
selected by the Company and satisfactory to each Bank, and (ii) a copy
of consolidated balance sheets, reconciliations of change in
stockholders' equity, profit and loss statements and statements with
cash flow for the Company and its Subsidiaries showing in comparative
form the figures for the fiscal year of the Company, prepared in
accordance with Generally Accepted Accounting Principles, all in
reasonable detail, prepared by the Company and certified by the
president and general manager or the chief financial officer of the
Company;
(c) within 15 Business Days after the last day of each month, a
Borrowing Base Certificate in the form of Exhibit B hereto, setting
forth a computation of the Borrowing Base as of the last day of the
period covered thereby, certified as correct by the Company's chief
financial officer, and certifying that the signer thereof has reexamined
the terms and provisions of the Loan Documents and that to the best of
his knowledge and belief, no Potential Default or Event of Default has
occurred or, if any such Potential Default or Event of Default has
occurred, setting forth the description of
-24-
such Potential Default or Event of Default and specifying the action, if
any, taken by the Company to remedy the same;
(d) within 15 days after the last day of every month, a Position
Report with respect to the Company's Hedged Position, and
(e) together with the financial statements delivered pursuant to
subsections (a) and (b) above, a Compliance Certificate in the form of
Exhibit C attached hereto, prepared and signed by the president and
general manager or the chief financial officer of the Company.
SECTION 7.5. INSPECTION. Each Borrower shall, and shall cause each
Subsidiary to, permit the Banks, by their representatives and agents, to inspect
any of the Properties, corporate books and financial records of such Borrower
and each Subsidiary, to examine and make copies of the books of accounts and
other financial records of such Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of such Borrower and its Subsidiaries with, and
to be advised as to the same by, its officers at such times and intervals as the
Banks may request. The Borrowers shall pay to the Banks from time to time upon
demand an amount sufficient to compensate the Banks for their fees, charges and
expenses in connection with such field audits of the Collateral.
SECTION 7.6. CONSOLIDATION AND MERGER. Each Borrower will not, and will
not permit any Subsidiary to, consolidate with or merge into any Person, or
permit any other Person to merge into it, or acquire (in a transaction analogous
in purpose or effect to a consolidation or merger) all or substantially all of
the Property or capital stock of any other Person.
SECTION 7.7. TRANSACTIONS WITH AFFILIATES. Each Borrower will not, and
will not permit any Subsidiary to, enter into any transaction, including without
limitation the purchase, sale, lease or exchange of any Property, or the
rendering of any service, with any Affiliate of such Borrower except in the
ordinary course of and pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to such Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of such
Borrower.
SECTION 7.8. MINIMUM NET WORKING CAPITAL. The Company will maintain Net
Working Capital in an amount not less than $25,000,000 at all times.
SECTION 7.9. MINIMUM TOTAL MEMBER EQUITIES. The Company will not, as of
the end of any fiscal quarter of the Company, permit Adjusted Total Member
Equities to be less than the Minimum Equity Amount at such time.
As used herein, "MINIMUM EQUITY AMOUNT" means at any time, the
sum of
(a) $270,000,000, plus
-25-
(b) an aggregate amount equal to 20% of Consolidated Net
Earnings (but only if a positive number) for each completed fiscal year
of the Company.
SECTION 7.10. MINIMUM CASH FLOW. The Company will maintain Cash Flow in
an amount not less than $0 on March 31, 1999.
SECTION 7.11. LEASES. Each Borrower will not, and will not permit any
Subsidiary to, be a party to any rental agreement or lease as lessee of real or
personal property which is not a Capitalized Lease if the aggregate of rentals
payable during any fiscal year of the Company under all such rental agreements
or leases would exceed $16,000,000.
SECTION 7.12. CAPITAL EXPENDITURES. Each Borrower will not, and will not
permit any Subsidiary to, expend or become obligated for capital expenditures
(as defined and classified in accordance with generally accepted accounting
principles consistently applied but in any event including the liability of the
Borrowers in respect of Capitalized Leases) in any fiscal year in an aggregate
amount in excess of $18,000,000.
SECTION 7.13. RESTRICTED PAYMENTS. Each Borrower will not (a) declare or
pay any dividends on any class of stock, (b) directly or indirectly purchase,
redeem or otherwise acquire or retire any of its capital stock, (c) make any
distribution of any kind or character with respect to its capital stock, or (d)
pay patronage or additional value payments to its members (collectively,
"RESTRICTED PAYMENTS"), except for (i) Restricted Payments made when no
Potential Default or Event of Default has occurred and is continuing, and (ii)
the payment of patronage distributions in an aggregate amount not to exceed 20%
of the Company's net income for any fiscal year at any time that an Event of
Default or Potential Default has occurred and is continuing.
SECTION 7.14. LIENS. Each Borrower will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon or be subjected to any lien, charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof), on any of its Properties of any kind or character at any
time owned by such Borrower or any Subsidiary other than:
(a) liens, pledges or deposits for worker's compensation,
unemployment insurance, old age benefits or social security obligations,
taxes, assessments, statutory obligations or other similar charges, good
faith deposits made in connection with tenders, contracts or leases to
which any Borrower or any Subsidiary is a party or other deposits
required to be made in the ordinary course of business, provided in each
case the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate proceedings and adequate reserves
have been provided therefor in accordance with generally accepted
accounting principles and that the obligation is not for borrowed money,
customer advances, trade payables, or obligations to agricultural
producers;
(b) the pledge of assets for the purpose of securing an appeal
or stay or discharge in the course of any legal proceedings, provided
that any such appeal, stay or discharge is made in good faith and by
appropriate proceedings and the applicable Borrower has established
adequate reserves therefor in accordance with Generally
-26-
Accepted Accounting Principles and that the aggregate amount of
liabilities of the applicable Borrower or any Subsidiary so secured by a
pledge of property permitted under this subsection (b) including
interest and penalties thereon, if any, shall not be in excess of
$100,000 at any one time outstanding;
(c) liens, pledges, mortgages, security interests, or other
charges granted to the Agent to secure the Revolving Notes and other
amounts payable under the Loan Documents;
(d) liens, pledges, mortgages, security interests or other
charges existing on the date hereof and disclosed in financial
statements referred to in Section 5.2 hereof, except any liens, pledges,
mortgages, security interests or other charges securing indebtedness
owed to the Existing Lenders;
(e) liens, pledges, mortgages, security interests and other
encumbrances on Property other than the Collateral which secure only
indebtedness incurred to finance the acquisition of such Property (but
only to the extent of the fair market value of such Property);
(f) liens for property taxes and assessments or governmental
charges or levies which are not yet due and payable;
(g) liens incidental to the conduct of business or the ownership
of Properties and assets (including warehousemen's liens, grower liens
and attorneys' liens and statutory landlords' liens) or other liens of
like general nature incurred in the ordinary course of business and not
in connection with the borrowing of money, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings and for which adequate
reserves, determined in accordance with Generally Accepted Accounting
Principles, have been established and provided further that the
aggregate amount of all obligations secured by all such liens does not
exceed $100,000;
(h) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of
each Borrower and its Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in
the operation of the business of such Borrower and its Subsidiaries; and
(i) mortgages, liens and security interests on the Company's
real estate, plant and equipment in Marshall, Minnesota and Columbus,
Nebraska, securing the Company's Senior Secured Notes.
SECTION 7.15. BORROWINGS AND GUARANTIES. Each Borrower will not, and
will not permit any Subsidiary to, issue, incur, assume, create or have
outstanding any indebtedness for
-27-
borrowed money (including as such all indebtedness representing the deferred
purchase price of Property and all indebtedness, obligations and liabilities
relating to bankers acceptances and letters of credit) or customer advances, nor
be or remain liable, whether as endorser, surety, guarantor or otherwise, for or
in respect of any liability or indebtedness of any other Person, other than:
(a) indebtedness of the Borrowers arising under or pursuant to
this Agreement or the other Loan Documents;
(b) the liability of the Borrowers and their Subsidiaries
arising out of the endorsement for deposit or collection of commercial
paper received in the ordinary course of business;
(c) indebtedness of the Borrowers and their Subsidiaries
existing on the date hereof and disclosed to the Banks in the financial
statements referred to in Section 5.2 hereof, other than indebtedness
under the Existing Agreements;
(d) trade payables of the Borrowers and their Subsidiaries
arising in the ordinary course of the Borrowers' and their Subsidiaries'
business;
(e) indebtedness not otherwise permitted by this Section 7.15
which is incurred to finance the acquisition of Property, but only to
the extent of the fair market value of such Property, provided that the
aggregate principal amount of all such indebtedness outstanding does not
exceed $1,000,000;
(f) indebtedness of LSI (including any indebtedness of LSI
hereunder) in an aggregate principal amount not to exceed $15,000,000
outstanding at any time;
(g) the Company's indebtedness evidenced by the Senior Secured
Notes; and
(h) additional indebtedness for borrowed money, provided such
indebtedness is unsecured.
SECTION 7.16. INVESTMENTS, LOANS, ADVANCES AND ACQUISITIONS. Each
Borrower will not, and will not permit any Subsidiary to, make or retain any
investment (whether through the purchase of stock, obligations, capital
contributions or otherwise) in or make any loan or advance to, any other Person,
or acquire substantially as an entirety the Property or business of any other
Person, other than:
(a) investments in certificates of deposit having a maturity of
two years or less issued by any Bank and which are held by the Bank
issuing the same;
(b) investments in commercial paper rated P1 by ▇▇▇▇▇'▇
Investors Services, Inc. or Al by Standard & Poor's maturing within 270
days of the date of issuance thereof,
(c) investments shown on the financial statements referred to in
Section 5.2;
-28-
(d) investments in stock of the St. ▇▇▇▇ Bank for Cooperatives;
(e) investments in an aggregate amount not to exceed $2,000,000
in the capital stock of Ice Ban Inc.; and
(f) repurchase, reverse repurchase agreements and security
lending arrangements collateralized by marketable obligations issued by
the United States of America for which the full faith and credit of the
United States of America has been pledged.
SECTION 7.17. SALE OF PROPERTY. Each Borrower will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
(whether in one transaction or in a series of related transactions) all or a
material part of its Property to any other Person; PROVIDED, HOWEVER, that so
long as no Event of Default or Potential Default has occurred and is continuing
or would result after giving effect thereto, each Borrower may make:
(a) sales of its Inventory in the ordinary course of business;
and
(b) sales or leases of its surplus, obsolete or worn-out
machinery and equipment.
For purposes of this Section, "MATERIAL PART" shall mean 5% or more of
the book value all of the Property of the Company and its Subsidiaries.
SECTION 7.18. NOTICE OF SUIT OR ADVERSE CHANGE IN BUSINESS OR DEFAULT.
Each Borrower shall, as soon as possible, and in any event within 5 days after
such Borrower learns of the following, give written notice to the Agent of (a)
any material proceeding(s) being instituted or threatened to be instituted by or
against any Borrower or any Subsidiary in any federal, state, local or foreign
court or before any commission or other regulatory body (federal, state, local
or foreign), (b) any material adverse change in the business, Property or
condition, financial or otherwise (including, without limitation, any material
loss or depreciation in the value of the Collateral) of any Borrower or any
Subsidiary, and (c) the occurrence of any Potential Default or Event of Default.
SECTION 7.19. ERISA. Each Borrower will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed is likely to result in the
imposition of a lien against any of its Property and will promptly notify the
Agent of (a) the occurrence of any reportable event (as defined in ERISA) which
might result in the termination by the PBGC of any Plan, (b) receipt of any
notice from PBGC of its intention to seek termination of any such Plan or
appointment of a trustee therefor, and (c) its intention to terminate or
withdraw from any Plan. Each Borrower will not, and will not permit any
Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall be
in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to PBGC resulting from such termination or
withdrawal.
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SECTION 7.20. SUPPLEMENTAL PERFORMANCE. Each Borrower will, and will
cause each Subsidiary to, at any time and from time to time upon request of any
Bank take or cause to be taken any action and execute, acknowledge, deliver or
record any further documents, security agreements or other instruments which
such Bank in its discretion deems necessary to carry out the purposes of the
Loan Documents.
SECTION 7.21. USE OF PROCEEDS. Each Borrower shall use the proceeds of
each Loan and other extensions of credit hereunder only for seasonal working
capital purposes of the Borrowers, and no part of the proceeds of any Loan or
other extension of credit hereunder will be used to purchase or carry any margin
stock or to extend credit to others for such a purpose.
SECTION 7.22. COMPLIANCE WITH LAWS, ETC. Each Borrower will, and will
cause each Subsidiary to, comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include (without
limitation) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation except where the failure to be so
qualified would not have a material adverse effect on the condition, financial
or otherwise, of such Borrower or such Subsidiary.
SECTION 7.23. ENVIRONMENTAL COVENANT. Each Borrower will, and will cause
each Subsidiary to,
(a) use and operate all of its facilities and Properties in
compliance with all Environmental Laws where the failure to do so could
have a material adverse effect on the condition, financial or otherwise,
of any Borrower or any Subsidiary, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all hazardous materials in material compliance
with all applicable Environmental Laws;
(b) immediately notify the Agent and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
condition of its facilities and Property or compliance with
Environmental Laws where any liability of any Borrower or any Subsidiary
resulting from the event or condition specified therein could reasonably
be expected to have a material adverse effect on the financial
condition, operations, assets, business or Properties of any Borrower or
any Subsidiary, and shall promptly cure and have dismissed, to the
satisfaction of the Banks, any actions and proceedings relating to
compliance with Environmental Laws; and
(c) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section 7.23.
SECTION 7.24. HEDGING. The Company will at all times, have a Hedged
Position in an amount not greater than 30,000,000 bushels of corn.
SECTION 7.25. SUBSIDIARIES. Each Borrower will not, and will not permit
any Subsidiary to, create or acquire, directly or indirectly, any Subsidiary.
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SECTION 7.26. PRESERVATION OF COOPERATIVE STATUS. The Company will
preserve, renew and keep in full force and effect its corporate existence and
maintain its status as a corporation operating on a cooperative basis under
Subchapter T of the Internal Revenue Code of 1986, as amended.
SECTION 7.27. POST-CLOSING MATTERS. Not later than sixty (60) days
following the effective date of this Agreement, each Borrower shall deliver to
the Agent (in sufficient original counterparts for each of the Banks) a fully
executed Landlord's Waiver or Warehouse Agreement, as applicable, for each
Permitted Collateral location (as defined in the Security Agreement) which is
not owned by a Borrower.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
SECTION 8.1. DEFINITIONS. Any one or more of the following shall
constitute an Event of Default:
(a) Default in the payment when due of any principal of or
interest on any Revolving Note, whether at the stated maturity thereof
or as required by Section 2.4 hereof or at any other time provided in
this Agreement or of any fee or other amount payable by any Borrower
pursuant to this Agreement;
(b) Default in the observance or performance of any covenant set
forth in Sections 7.4, 7.5, 7.6, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14,
7.15, 7.16, 7.17, 7.18, 7.21, 7.24, 7.25 or 7.26, inclusive, hereof, or
of any provision of any Security Document requiring the maintenance of
insurance on the Collateral subject thereto or dealing with the use or
remittance of proceeds of such Collateral; or
(c) Default in the observance or performance of any other
covenant, condition, agreement or provision hereof or any of the other
Loan Documents and such default shall continue for 30 days after written
notice thereof to the Company by any Bank;
(d) Default shall occur under any evidence of indebtedness
issued or assumed or guaranteed by any Borrower, or under any mortgage,
agreement or other similar instrument under which the same may be issued
or secured and such default shall continue for a period of time
sufficient to permit the acceleration of maturity of any indebtedness
evidenced thereby or outstanding or secured thereunder;
(e) Any representation or warranty made by any Borrower herein
or in any Loan Document or in any statement or certificate furnished by
it pursuant hereto or thereto, proves untrue in any material respect as
of the date made or deemed made pursuant to the terms hereof;
(f) Any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $1,000,000 shall be entered or filed
against any Borrower or against any of its Property or
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assets and remain unstayed and undischarged for a period of 45 days from
the date of its entry;
(g) Any reportable event (as defined in ERISA) which constitutes
grounds for the termination of any Plan or for the appointment by the
appropriate United States District Court of a trustee to administer or
liquidate any such Plan, shall have occurred and be continuing thirty
(30) days after written notice to such effect shall have been given to
the Company by the Bank; or any such Plan shall be terminated; or a
trustee shall be appointed by the appropriate United States District
Court to administer any such Plan; or the Pension Benefit Guaranty
Corporation shall institute proceedings to administer or terminate any
such Plan;
(h) Any Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the Bankruptcy Code
of 1978, as amended, (ii) admit in writing its inability to pay, or not
pay, its debts generally as they become due or suspend payment of its
obligations, (iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, conservator, liquidator or similar
official for it or any substantial part of its property, (v) file a
petition seeking relief or institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy Code of
1978, as amended, to adjudicate it insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, marshalling of
assets, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, or (vi) fail to
contest in good faith any appointment or proceeding described in Section
8.1(i) hereof; or
(i) A custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for any Borrower or any Subsidiary
or any substantial part of its respective Property, or a proceeding
described in Section 8.1(h)(v) shall be instituted against any Borrower
or any Subsidiary and such appointment continues undischarged or any
such proceeding continues undismissed or unstayed for a period of 60
days.
SECTION 8.2. REMEDIES FOR NON-BANKRUPTCY DEFAULTS. When any Event of
Default, other than an Event of Default described in subsections (h) and (i) of
Section 8.1 hereof, has occurred and is continuing, the Agent, if directed by
the Required Banks, shall give notice to the Company and take any or all of the
following actions: (a) terminate the remaining Revolving Credit Commitments
hereunder on the date (which may be the date thereof) stated in such notice, (b)
declare the principal of and the accrued interest on the Revolving Notes to be
forthwith due and payable and thereupon the Revolving Notes including both
principal and interest, shall be and become immediately due and payable without
further demand, presentment, protest or notice of any kind, and (c) proceed to
foreclose against any Collateral under the Security Documents, take any action
or exercise any remedy under any of the Loan Documents or exercise any other
action, right, power or remedy permitted by law. Any Bank may exercise the right
of set off with regard to any deposit accounts or other accounts maintained by
any Borrower with any of the Banks, subject to Section 11.15 hereof.
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SECTION 8.3. REMEDIES FOR BANKRUPTCY DEFAULTS. When any Event of Default
described in subsections (h) or (i) of Section 8.1 hereof has occurred and is
continuing, then the Revolving Notes shall immediately become due and payable
without presentment, demand, protest or notice of any kind, the obligation of
the Banks to extend further credit pursuant to any of the terms hereof shall
immediately terminate and the Agent may, if directed by the Required Banks,
proceed to foreclose against any Collateral under the Security Documents, take
any action or exercise any remedy under any of the Loan Documents or exercise
any other action, right, power or remedy permitted by law. Any Bank may exercise
the right of set off with regard to any deposit accounts or other accounts
maintained by any Borrower with any of the Banks, subject to Section 11. 15
hereof
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR LOANS.
SECTION 9.1. CHANGE OF LAW. Notwithstanding any other provisions of this
Agreement or any Revolving Note, if at any time after the date hereof with
respect to Eurodollar Loans, any Bank shall determine in good faith that any
change in applicable law or regulation or in the interpretation thereof makes it
unlawful for such Bank to make or continue to maintain any Eurodollar Loan or to
give effect to its obligations as contemplated hereby, such Bank shall promptly
give notice thereof to the Borrowers to such effect, and such Bank's obligation
to make or relend any such affected Eurodollar Loans under this Agreement shall
terminate until it is no longer unlawful for such Bank to make or maintain such
affected Loan. The Borrowers shall prepay the outstanding principal amount of
any such affected Eurodollar Loan made to it, together with all interest accrued
thereon and all other amounts due and payable to the Banks under Section 9.4 of
this Agreement, on the earlier of the last day of the Interest Period applicable
thereto and the first day on which it is illegal for such Bank to have such
Loans outstanding; PROVIDED, HOWEVER, the affected Borrower may then elect to
borrow the principal amount of such affected Loan by means of another type of
Revolving Credit Loan available hereunder, subject to all of the terms and
conditions of this Agreement.
SECTION 9.2. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN THE
ADJUSTED EURODOLLAR RATE. Notwithstanding any other provision of this Agreement
or any Revolving Note to the contrary, if prior to the commencement of any
Interest Period any Bank shall determine (i) that deposits in the amount of any
Eurodollar Loan scheduled to be outstanding are not available to it in the
relevant market or (ii) by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the Adjusted
Eurodollar Rate, then the Agent shall promptly give telephonic or telex notice
thereof to the Borrowers and the Banks (such notice to be confirmed in writing),
and the obligation of the Banks to make any such Eurodollar Loan in such amount
and for such Interest Period shall terminate until deposits in such amount and
for the Interest Period selected by the affected Borrower shall again be readily
available in the relevant market and adequate and reasonable means exist for
ascertaining the Adjusted Eurodollar Rate. Upon the giving of such notice, the
affected Borrower may elect to either (i) pay or prepay, as the case may be,
such affected Loan or (ii) reborrow such affected Loan as another type of
Revolving Credit Loan available hereunder, subject to all terms and conditions
of this Agreement.
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SECTION 9.3. TAXES AND INCREASED COSTS. With respect to any outstanding
Eurodollar Loans, if any Bank shall determine in good faith that any change in
any applicable law, treaty, regulation or guideline (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or any new law, treaty, regulation or guideline, or any interpretation
of any of the foregoing by any governmental authority charged with the
administration thereof or any central bank or other fiscal, monetary or other
authority having jurisdiction over such Bank or its lending branch or the
Eurodollar Loans contemplated by this Agreement (whether or not having the force
of law) ("CHANGE IN LAW") shall:
(a) impose, modify or deem applicable any reserve, special
deposit or similar requirements against assets held by, or deposits in
or for the account of, or Loans by, or any other acquisition of funds or
disbursements by, such Bank (other than reserves included in the
determination of the Adjusted Eurodollar Rate);
(b) subject such Bank, any Eurodollar Loan, or any Revolving
Note to any tax (including, without limitation, any United States
interest equalization tax or similar tax however named applicable to the
acquisition or holding of debt obligations and any interest or penalties
with respect thereto), duty, charge, stamp tax, fee deduction or
withholding in respect of this Agreement, any Eurodollar Loan, or any
Revolving Note except such taxes as may be measured by the overall net
income of such Bank or its lending branch and imposed by the
jurisdiction, or any political subdivision or taxing authority thereof,
in which such Bank's principal executive office or its lending branch is
located or in which the Bank has nexus;
(c) change the basis of taxation of payments of principal and
interest due from any Borrower to such Bank hereunder or under any
Revolving Note (other than by a change in taxation of the overall net
income of such Bank); or
(d) impose on such Bank any penalty with respect to the
foregoing or any other condition regarding this Agreement, its
disbursement, any Eurodollar Loan, or any Revolving Note;
and such Bank shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to such Bank of making or maintaining any Eurodollar Loan hereunder or to
reduce the amount of principal or interest received by such Bank, then the
Borrowers shall pay to such Bank from time to time as specified by such Bank
such additional amounts as such Bank shall determine are sufficient to
compensate and indemnify it for such increased cost or reduced amount. If any
Bank makes such a claim for compensation, it shall provide to the Borrowers a
certificate setting forth such increased cost or reduced amount as a result of
any event mentioned herein specifying such Change in Law, and such certificate
shall be conclusive and binding on the Borrowers as to the amount thereof except
in the case of manifest error. Upon the imposition of any such cost, the
Borrowers may prepay any affected Loan, subject to the provisions of Sections
2.3 and 9.4 hereof.
SECTION 9.4. FUNDING INDEMNITY. (a) In the event any Bank shall incur
any loss, cost, expense or premium (including, without limitation, any loss of
profit and any loss, cost, expense
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or premium incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such Bank to fund or maintain any Eurodollar Loan or the
relending or reinvesting of such deposits or amounts paid such Bank) as a result
of:
(i) any payment or prepayment of a Eurodollar Loan on a date
other than the last day of the then applicable Interest Period;
(ii) any failure by any Borrower to borrow any Eurodollar Loan
on the date specified in the notice given pursuant to Section 1.5
hereof; or
(iii) the occurrence of any Event of Default;
then, upon the demand of such Bank, the relevant Borrower shall pay to such Bank
such amount as will reimburse such Bank for such loss, cost or expense.
(b) If any Bank makes a claim for compensation under this Section 9.4,
it shall provide to the relevant Borrower a certificate setting forth the amount
of such loss, cost or expense in reasonable detail and such certificate shall be
conclusive and binding on the Borrowers as to the amount thereof except in the
case of manifest error.
SECTION 9.5. LENDING BRANCH. Each Bank may, at its option, elect to
make, fund or maintain its Eurodollar Loans hereunder at the branch or office
specified opposite its signature on the signature page hereof or such other of
its branches or offices as such Bank may from time to time elect, subject to the
provisions of Section 1.5(b) hereof.
SECTION 9.6. DISCRETION OF BANK AS TO MANNER OF FUNDING. Notwithstanding
any provision of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood however, that for the purposes of this Agreement
all determinations hereunder shall be made as if the Banks had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits in the relevant interbank market having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Adjusted Eurodollar Rate for such Interest Period.
SECTION 10. THE AGENT.
SECTION 10.1. APPOINTMENT AND POWERS. ▇▇▇▇▇▇ Trust and Savings Bank is
hereby appointed by the Banks as Agent under the Loan Documents, including but
not limited to the Security Documents, wherein the Agent shall hold a security
interest for the benefit of the Banks, solely as the Agent of the Banks, and
each of the Banks irrevocably authorizes the Agent to act as the Agent of such
Bank. The Agent agrees to act as such upon the express conditions contained in
this Agreement.
SECTION 10.2. POWERS. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms of the Loan
Documents, together with such powers as are incidental thereto. The Agent shall
have no implied duties to the Banks, nor any
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obligation to the Banks to take any action under the Loan Documents except any
action specifically provided by the Loan Documents to be taken by the Agent.
SECTION 10.3. GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Banks or any
Bank for any action taken or omitted to be taken by it or them under the Loan
Documents or in connection therewith except for its or their own gross
negligence or willful misconduct.
SECTION 10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. The Agent
shall not (i) be responsible to the Banks for any recitals, reports, statements,
warranties or representations contained in the Loan Documents or furnished
pursuant thereto, (ii) be responsible for any Loans hereunder, (iii) be bound to
ascertain or inquire as to the performance or observance of any of the terms of
the Loan Documents, or (iv) determine or verify the existence, eligibility or
value of any Collateral, or the correctness of any Borrowing Base Certificate.
In addition, neither the Agent nor its counsel shall be responsible to the Banks
for the enforceability or validity of any of the Loan Documents.
SECTION 10.5. RIGHT TO INDEMNITY. The Banks hereby indemnify the Agent
for any actions taken in accordance with this Section 10, and the Agent shall be
fully justified in failing or refusing to take any action hereunder, unless it
shall first be indemnified to its satisfaction by the Banks pro rata against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, other than any liability which may arise out
of Agent's gross negligence or willful misconduct.
SECTION 10.6. ACTION UPON INSTRUCTIONS OF BANKS. The Agent agrees, upon
the written request of the Required Banks, to take any action of the type
specified in the Loan Documents as being within the Agent's rights, duties,
powers or discretion. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder in accordance with written instructions
signed by the Required Banks, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks and on all
holders of the Revolving Notes. In the absence of a request by the Required
Banks, the Agent shall have authority, in its sole discretion, to take or not to
take any action contemplated by the Loan Documents, unless the Loan Documents
specifically require the consent of all of the Banks.
SECTION 10.7. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute
any of its duties as Agent hereunder by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Banks, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it in good faith
and with reasonable care. The Agent shall be entitled to advice and opinion of
legal counsel concerning all matters pertaining to the duties of the agency
hereby created.
SECTION 10.8. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be
entitled to rely upon any Revolving Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of legal counsel
selected by the Agent.
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SECTION 10.9. MAY TREAT PAYEE AS OWNER. The Agent may deem and treat the
payee of any Revolving Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person, firm or
corporation who at the time of making such request or giving such authority or
consent is the holder of any such Revolving Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Revolving Note or of
any Revolving Note issued in exchange therefor.
SECTION 10.10. AGENT'S REIMBURSEMENT. Each Bank agrees to reimburse the
Agent pro rata in accordance with its pro rata share of the Revolving Credit
Commitments for any reasonable out-of-pocket expenses (including fees and
charges for field audits) not reimbursed by the Borrowers (a) for which the
Agent is entitled to reimbursement by the Borrowers under the Loan Documents and
(b) for any other reasonable expenses incurred by the Agent on behalf of the
Banks, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents.
SECTION 10.11. RIGHTS AS A LENDER. With respect to its commitment, Loans
made by it and the Revolving Notes issued to it, the Agent shall have the same
rights and powers hereunder as any Bank and may exercise the same as though it
were not the Agent, and the term "BANK" or "BANKS" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent may
accept deposits from, lend money to, and generally engage in any kind of banking
or trust business with the Borrowers as if it were not the Agent.
SECTION 10.12. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 5.2 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Loan Documents. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents.
SECTION 10.13. RESIGNATION OF AGENT. Subject to the appointment of a
successor Agent, the Agent may resign as Agent for the Banks under this
Agreement and the other Loan Documents at any time by sixty days' notice in
writing to the Banks and the Borrowers. Such resignation shall take effect upon
appointment of such successor. The Banks shall have the right to appoint a
successor Agent who shall be entitled to all of the rights of, and vested with
the same powers as, the original Agent under the Loan Documents. In the event a
successor Agent shall not have been appointed within the sixty day period
following the giving of notice by the Agent, the Agent may appoint its own
successor. Resignation by the Agent shall not affect or impair the rights of the
Agent under Sections 10.5 and 10.10 hereof with respect to all matters preceding
such resignation.
SECTION 10.14. DURATION OF AGENCY. The agency established by Section
10.1 hereof shall continue, and Sections 10.1 through and including this Section
10.14 shall remain in full force and effect, until the Revolving Notes and all
other amounts due hereunder and thereunder shall
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have been paid in full and the Banks' commitments, to extend credit to or for
the benefit of the Borrowers shall have terminated or expired.
SECTION 10.15. REMOVAL OF AGENT. Subject to the appointment of a
successor Agent, the Banks, with the consent of the Borrowers (which consent
will not be unreasonably withheld), may remove the Agent for the Banks under
this Agreement at any time by thirty days' notice in writing to the Agent. Such
removal shall take effect upon appointment of such successor. The Banks shall
have the right to appoint a successor Agent who shall be entitled to all of the
rights of, and vested with the same powers as, the original Agent under the Loan
Documents. In the event a successor Agent shall not have been appointed within
the thirty day period following the giving of notice to the Agent, the Agent may
appoint its own successor. The removal of the Agent shall not affect or impair
the rights of the Agent under Sections 10.5 and 10.10 hereof with respect to all
matters preceding such removal.
SECTION 10.16. SUCCESSOR AGENT. Any successor Agent must be a national
banking association, a bank chartered under federal law or in any State of the
United States or a branch of any foreign bank which is licensed to do business
under the laws of any state or the United States and approved by the Borrowers
(which approval will not be unreasonably withheld).
SECTION 11. MISCELLANEOUS.
SECTION 11.1. AMENDMENTS AND WAIVERS. Any term, covenant, agreement or
condition of this Agreement may be amended only by a written amendment executed
by the Borrowers, the Required Banks and, if the rights or duties of the Agent
are affected thereby, the Agent, or compliance therewith only may be waived
(either generally or in a particular instance and either retroactively or
prospectively), if the Borrowers shall have obtained the consent in writing of
the Required Banks and, if the rights or duties of the Agent are affected
thereby, the Agent, PROVIDED, HOWEVER, that without the consent in writing of
the holders of all outstanding Revolving Notes, or all Banks if no Revolving
Notes are outstanding, no such amendment or waiver shall (a) change the amount
or postpone the date of payment of any scheduled payment or required prepayment
of principal of the Revolving Notes or reduce the rate or extend the time of
payment of interest on the Revolving Notes, or reduce the amount of principal
thereof, or modify any of the provisions of the Revolving Notes with respect to
the payment or prepayment thereof, (b) give to any Revolving Note any preference
over any other Notes, (c) amend the definition of Required Banks, (d) alter,
modify or amend the provisions of this Section 11.1, (e) change the amount or
term of any of the Banks' Revolving Credit Commitments or the fee required under
Section 2.1 hereof, (f) alter, modify or amend the provisions of Section 6 of
this Agreement, (g) alter, modify or amend any Bank's right hereunder to consent
to any action, make any request or give any notice, (h) change the advance rates
under the Borrowing Base or (i) release any Collateral under the Security
Documents, unless such release is permitted or contemplated by the Loan
Documents. Any such amendment or waiver shall apply equally to all Banks and the
holders of the Revolving Notes and shall be binding upon them, upon each future
holder of any Revolving Note and upon the Borrowers, whether or not such
Revolving Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation not expressly
amended or waived.
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SECTION 11.2. WAIVER OF RIGHTS. No delay or failure on the part of the
Agent or any Bank or on the part of the holder or holders of any Revolving Note
in the exercise of any power or right shall operate as a waiver thereof, nor as
an acquiescence in any Potential Default or Event of Default, nor shall any
single or partial exercise of any power or right preclude any other or further
exercise thereof, or the exercise of any other power or right, and the rights
and remedies hereunder of the Agent, the Banks and of the holder or holders of
any Revolving Notes are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
SECTION 11.3. SEVERAL OBLIGATIONS. The commitments of each of the Banks
hereunder shaH be the several obligations of each Bank and the failure on the
part of any one or more of the Banks to perform hereunder shall not affect the
obligation of the other Banks hereunder, provided that nothing herein contained
shall relieve any Bank from any liability for its failure to so perform. In the
event that any one or more of the Banks shall fail to perform its commitment
hereunder, all payments thereafter received by the Agent on the principal of
Loans and hereunder, whether from any Collateral or otherwise, shall be
distributed by the Agent to the Banks making such additional Loans ratably as
among them in accordance with the principal amount of additional Loans made by
them until such additional Loans shall have been fully paid and satisfied, and
all payments on account of interest shall be applied as among all the Banks
ratably in accordance with the amount of interest owing to each of the Banks as
of the date of the receipt of such interest payment.
SECTION 11.4. NON-BUSINESS DAY. (a) If any payment of principal or
interest on any Domestic Rate Loan shall fall due on a day which is not a
Business Day, interest at the rate such Loan bears for the period prior to
maturity shall continue to accrue on such principal from the stated due date
thereof to and including the next succeeding Business Day on which the same is
payable.
(b) If any payment of principal or interest on any Eurodollar Loan shall
fall due on a day which is not a Business Day, the payment date thereof shall be
extended to the next date which is a Business Day and the Interest Period for
such Loan shall be accordingly extended, unless as a result thereof any payment
date would fall in the next calendax month, in which case such payment date
shall be the next preceding Business Day.
SECTION 11.5. SURVIVAL OF INDEMNITIES. All indemnities and all
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield to the Banks with respect to Eurodollar Loans, including, but
not limited to, Sections 9.3 and 9.4 hereof, shall survive the termination of
this Agreement and the payment of the Revolving Notes.
SECTION 11.6. DOCUMENTARY TAXES. Although the Borrowers are of the
opinion that no documentary or similar taxes are payable in respect to this
Agreement or the Revolving Notes, each Borrower jointly and severally agrees
that it will pay such taxes, including interest and penalties, in the event any
such taxes are assessed irrespective of when such assessment is made and whether
or not any credit is then in use or available hereunder.
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SECTION 11.7. REPRESENTATIONS. All representations and warranties made
herein or in certificates given pursuant hereto shall survive the execution and
delivery of this Agreement and of the Revolving Notes, and shall continue in
full force and effect with respect to the date as of which they were made and as
reaffirmed on the date of each borrowing and as long as any credit is in use or
available hereunder.
SECTION 11.8. NOTICES. Unless otherwise expressly provided herein, all
communications provided for herein shall be in writing or by telex and shall be
deemed to have been given or made when served personally, when an answer back is
received in the case of notice by telex or 2 days after the date when deposited
in the United States mail (registered, if to any Borrower) addressed if to any
Borrower to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Mr. L.
▇▇▇ ▇▇▇▇▇▇▇▇; if to the Agent or ▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Agribusiness Division; and if to any of the Banks, at
the address for each Bank set forth under its signature hereon; or at such other
address as shall be designated by any party hereto in a written notice to each
other party pursuant to this Section 11.8.
SECTION 11.9. COSTS AND EXPENSES. (a) Each Borrower jointly and
severally agrees to pay on demand all costs and expenses of the Agent and each
Bank in connection with the negotiation, preparation, execution and delivery of
this Agreement, the Revolving Notes and the other instruments and documents to
be delivered hereunder or in connection with the transactions contemplated
hereby, including the fees and expenses of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel
to the Agent; all costs and expenses of the Agent and the reasonable costs and
expenses of each Bank (including in each case attorneys' fees and expenses)
incurred in connection with any consents or waivers hereunder or amendments
hereto, and all costs and expenses (including attorneys' fees and expenses), if
any, incurred by the Agent, the Banks or any other holders of a Revolving Note
in connection with the enforcement of this Agreement or the Revolving Notes and
the other instruments and documents to be delivered hereunder. Each Borrower
jointly and severally agrees to indemnify and save harmless the Banks and the
Agent from any and all liabilities, losses, costs and expenses incurred by the
Banks or the Agent in connection with any action, suit or proceeding brought
against the Agent or any Bank by any Person which arises out of the transactions
contemplated or financed hereby or by the other Loan Documents, or out of any
action or inaction by the Agent or any Bank hereunder or thereunder, except for
such thereof as is caused by the gross negligence or willful misconduct of the
party indemnified.
(b) Without limiting the generality of the foregoing, the Borrowers
jointly and severally unconditionally agree to forever indemnify, defend and
hold harmless, the Agent and each Bank, and covenants not to ▇▇▇ for any claim
for contribution against, the Agent or any Bank for any damages, costs, loss or
expense, including without limitation, response, remedial or removal costs,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by any
Borrower or any Affiliate or otherwise occurring on or with respect to their
respective Property, (ii) the operation or violation of any Environmental Law,
whether federal, state, or local, and any regulations promulgated thereunder, by
any Borrower or any Affiliate or otherwise occurring on or with respect to their
respective Property, (iii) any claim for personal injury or property damage in
connection with any Borrower or any Affiliate or otherwise occurring on or with
respect to their respective Property, and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by any
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Borrower made herein or in any loan agreement, promissory note, mortgage, deed
of trust, security agreement or any other instrument or document evidencing or
securing any indebtedness, obligations or liabilities of any Borrower owing to
the Agent or any Bank or setting forth terms and conditions applicable thereto
or otherwise relating thereto, except for damages arising from the Agent's or
such Bank's willful misconduct or gross negligence. This indemnification shall
survive the payment and satisfaction of all indebtedness, obligations and
liabilities of the Borrowers owing to the Agent and the Banks and the
termination of this Agreement, and shall remain in force beyond the expiration
of any applicable statute of limitations and payment or satisfaction in full of
any single claim under this indemnification. This indemnification shall be
binding upon the successors and assigns of each Borrower and shall inure to the
benefit of Agent and the Banks and their respective directors, officers,
employees, agents, and collateral trustees, and their successors and assigns.
(c) The provisions of this Section shall survive payment of the Notes
and the termination of the Banks' Revolving Credit Commitments hereunder.
SECTION 11.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and all such counterparts taken together shall be deemed
to constitute one and the same instrument. One or more of the Banks may execute
a separate counterpart of this Agreement which has also been executed by the
Borrowers, and this Agreement shall become effective as and when all of the
Banks have executed this Agreement or a counterpart thereof and lodged the same
with the Agent.
SECTION 11.11. SUCCESSORS AND ASSIGNS; GOVERNING LAW; ENTIRE AGREEMENT.
This Agreement shall be binding upon each of the Borrowers and the Banks and
their respective successors and assigns, and shall inure to the benefit of each
of the Borrowers and the Banks and the benefit of their respective successors
and assigns, including any subsequent holder of any Revolving Note. This
Agreement and the rights and duties of the parties hereto shall be construed and
determined in accordance with the laws of the State of Illinois, except conflict
of laws principles. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and any prior agreements,
whether written or oral, with respect thereto are superseded hereby. The
Borrowers may not assign any of their respective rights or obligations hereunder
without the written consent of all of the Banks.
SECTION 11.12. NO JOINT VENTURE. Nothing contained in this Agreement
shall be deemed to create a partnership or joint venture among the parties
hereto.
SECTION 11.13. SEVERABILITY. In the event that any term or provision
hereof is determined to be unenforceable or illegal, it shall deemed severed
here from to the extent of the illegality and/or unenforceability and all other
provisions hereof shall remain in full force and effect.
SECTION 11.14. TABLE OF CONTENTS AND HEADINGS. The table of contents and
section headings in this Agreement are for reference only and shall not affect
the construction of any provision hereof
-41-
SECTION 11.15. SHARING OF PAYMENTS. Each Bank agrees with each other
Bank that if such Bank shall receive and retain any payment, whether by set-off
or application of deposit balances or otherwise ("SET-OFF'), on any Loan or
other amount outstanding under this Agreement in excess of its ratable share of
payments on all Loans and other amounts then outstanding to the Banks, then such
Bank shall purchase for cash at face value, but without recourse, ratably from
each of the other Banks such amount of the Loans held by each such other Bank
(or interest therein) as shall be necessary to cause such Bank to share such
excess payment ratably with all the other Banks; PROVIDED, HOWEVER, that if any
such purchase is made by any Bank, and if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases from the
other Banks shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. Each Bank's
ratable share of any such Set-Off shall be determined by the proportion that the
aggregate principal amount of Loans then due and payable to such Bank bears to
the total aggregate principal amount of Loans then due and payable to all the
Banks.
SECTION 11.16. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. Each
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. Each Borrower irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. EACH BORROWER, THE AGENT, AND EACH BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
SECTION 11.17. PARTICIPANTS AND NOTE ASSIGNEES. Each Bank shall have the
right, with the written consent of the Borrowers (which consent will not be
unreasonably withheld and which consent will not be required if an Event of
Default shall have occurred and be continuing) and the Agent, at its own cost to
grant participations (to be evidenced by one or more agreements or certificates
of participation) in the Loans made, and Revolving Credit Commitment held, by
such Bank at any time and from time to time, and to assign its rights under such
Loans or the Revolving Notes evidencing such Loans to one or more other Persons;
PROVIDED THAT (a) no such participation or assignment shall relieve any Bank of
any of its obligations under this Agreement, (b) no such assignee or participant
shall have any rights under this Agreement except as provided in this Section
11.17, (c) the Agent shall have no obligation or responsibility to such
participant or assignee, and (d) no such participant or assignee shall be a
competitor of any Borrower; EXCEPT THAT nothing herein is intended to affect the
rights of an assignee of a Note to enforce the Note assigned. Any party to which
such a participation or assignment has been granted shall have the benefits of
Section 1.6 and Section 9.4, but shall not be entitled to receive any greater
payment under either such Section than the Bank granting such participation or
assignment would have been entitled to receive in connection with the rights
transferred. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the obligations of the Company hereunder,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision
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of this Agreement; PROVIDED that such participation agreement may provide that
such Bank will not agree to any modification, amendment or waiver of this
Agreement that would (A) increase any Revolving Credit Commitment of such Bank
if such increase would also increase the participant's obligations, (B) forgive
any amount of or postpone the date for payment of any principal of or interest
on any Loan or of any fee payable hereunder in which such participant has an
interest or (C) reduce the stated rate at which interest or fees in which such
participant has an interest accrue hereunder.
SECTION 11.18. ASSIGNMENT OF COMMITMENTS BY BANKS. Each Bank shall have
the right at any time, with the written consent of the Borrowers (which consent
will not be unreasonably withheld and which consent will not be required if an
Event of Default shall have occurred and be continuing) and the Agent to assign
all or any part of its Revolving Credit Commitment to one or more other Persons;
PROVIDED THAT (a) each such assignment shall be of a constant, and not a
varying, percentage of all such rights and obligations, (b) unless both parties
to the assignment are Banks immediately prior to giving effect to the
assignment, the amount of the Revolving Credit Commitment of the assigning Bank
being assigned pursuant to each such assignment (determined as of the date of
the assignment and acceptance with respect to such assignment) shall not be less
than $5,000,000 (or if less, the entire amount of such Bank's Revolving Credit
Commitment, or $1,000,000 if such assignment is from one Bank to another Bank or
to an Affiliate of the assigning Bank) and shall be an integral multiple of
$1,000,000, (c) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording, an assignment and acceptance,
together with any Revolving Notes subject to such assignment, (d) neither the
consent of the Borrowers nor of the Agent shall be required for any Bank to
assign all or part of its Revolving Credit Commitment to any affiliate of the
assigning Bank or to any Bank, (e) the assigning Bank shall have a Revolving
Credit Commitment of at least $10,000,000 after giving effect to such assignment
unless such assignment is of all of such assigning Bank's Revolving Credit
Commitment, and (f) no such assignment shall be made to any Person known by the
assignor to be a competitor of any Borrower. Upon any such assignment, its
notification to the Agent and the payment of a $2,500 recordation fee to the
Agent, the assignee shall become a Bank hereunder, all Loans and the Revolving
Credit Commitment it thereby holds shall be governed by all the terms and
conditions hereof, and the Bank granting such assignment shall have its
Revolving Credit Commitment, and its obligations and rights in connection
therewith, reduced by the amount of such assignment.
SECTION 11.19. CONFIDENTIALITY. Each Bank will keep confidential any
non-public information concerning any Borrower and its Subsidiaries furnished by
a Borrower (which is designated by such Borrower as confidential at the time
such information is furnished to such Bank) or obtained by such Bank through its
inspections and audits pursuant to Section 7.5 hereof and known by such Bank to
be confidential, except that any Bank may disclose such information (a) to
regulatory authorities having jurisdiction, (b) pursuant to subpoena or other
legal process, (c) to such Bank's counsel and auditors in connection with
matters concerning this Agreement, (d) to such Bank's consultants in connection
with negotiations concerning this Agreement or the other Loan Documents and (e)
to prospective participants in the credit extended hereunder and participants in
the credit extended hereunder, provided that any Persons described in clauses
(d) and (e) shall be bound to comply with the terms of this Section 11.19. In
the situations described above (except where any Borrower is a party), the
relevant Bank shall notify the Company as
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promptly as practicable of the receipt of a request for such disclosure and
furnish it with a copy of such subpoena or other legal process (to the extent
such Bank is legally permitted to do so). The provisions of this Section shall
survive the payment of the Notes and the termination of this Agreement.
Exhibits A, B, C, D, E, F and G to the Credit Agreement shall each be
amended, and as so amended shall be restated in their entirety to read as set
forth in Exhibits A, B, C, D, E, F and G hereto, respectively.
Each Borrower agrees to execute and deliver to each Bank a Secured
Revolving Credit Note in the form attached to this Amended and Restated Secured
Credit Agreement as Exhibit A, each such note to be in the principal amount of
each Bank's respective maximum commitment set forth in Section 1.1 of the Credit
Agreement as amended and restated hereby. From and after the date on which the
conditions precedent to the effectiveness hereof set forth below are satisfied,
each such note shall evidence the Borrowers' joint and several indebtedness to
the holder thereof under the Credit Agreement, as amended and restated hereby,
and all references in the Loan Documents (including without limitation the
Security Documents) to the Revolving Notes or any Revolving Note shall refer to
the notes or note delivered pursuant hereto. Upon the satisfaction of said
conditions precedent, each Bank shall cancel and deliver to the Company any
Revolving Note then held by it.
The amendments reflected in the above and foregoing Amended and Restated
Secured Revolving Credit Agreement shall not become effective unless and until
the following conditions precedent have been satisfied:
(a) the Agent shall have received the following for the account of the
Banks (each to be properly executed and completed) and the same shall have been
approved as to form and substance by the Agent:
(i) the Revolving Notes;
(ii) a fully executed Security Agreement Re: Accounts Receivable
and Inventory satisfactory in form and substance to the Banks from LSI
granting to the Agent a security interest in its present and future
Inventory and Receivables and certain other property described therein
to secure its obligations hereunder;
(iii) appropriate forms of financing statements to perfect the
security interest of the Agent provided for by the Security Documents;
(iv) evidence of insurance required by Section 7.3 hereof and by
the Security Documents showing the Agent as lender's loss payee
thereunder;
(v) pay-off letters satisfactory in form and substance to the
Banks from the Existing Lenders;
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(vi) a bailee agreement from Liquid Sugars, Inc. satisfactory in
form and substance to the Banks;
(vii) evidence satisfactory to the Banks that the Agent's
security interests in the Collateral have been perfected and that the
Collateral is not subject to any other security interests;
(viii) a good standing certificate or certificate of existence
for each Borrower dated as of the date no earlier than August 15, 1998
from the office of the secretary of state of its state of incorporation
and each state in which it is qualified to do business as a foreign
corporation;
(ix) copies of the Articles of Incorporation, and all amendments
thereto, of each Borrower certified by the office of the secretary of
state of its state of incorporation as of the date no earlier than
August 15, 1998;
(x) copies of the By-Laws, and all amendments thereto, of each
Borrower, certified as true, correct and complete on the date hereof by
the secretary or assistant secretary of such Borrower;
(xi) copies, certified by the Secretary or Assistant Secretary
of each Borrower, of resolutions regarding the transactions contemplated
by this Agreement, duly adopted by the Board of Directors of such
Borrower, and satisfactory in form and substance to all of the Banks;
(xii) an incumbency signature certificate for each Borrower
satisfactory in form and substance to all of the Banks; and
(xiii) an amendment to the Current Asset Security Agreement in
form and substance to the Banks.
Each Borrower jointly and severally agrees to pay all costs and expenses
incurred by the Agent and the Banks in connection with the preparation,
execution and delivery of this Amended and Restated Secured Credit Agreement and
the documents and transactions contemplated hereby including the fees and
expenses of Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ with respect to the foregoing. No
reference to this Amended and Restated Secured Credit Agreement need be made in
the Current Asset Security Agreement or the Margin Account Security Agreements
(collectively the "ORIGINAL SECURITY AGREEMENTS") from the Company to the Agent,
or any note, mortgage, instrument or other documents making reference to the
Credit Agreement, any reference to the Credit Agreement in any of such to be
deemed to be a reference to the Credit Agreement as amended and restated hereby.
This Amended and Restated Secured Credit Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
of which when so executed shall be deemed an original, but all of which to
constitute but one and the same instrument. This Amended and Restated Secured
Credit Agreement shall be construed in accordance with, and governed by, the
internal laws of Illinois.
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The Company has heretofore executed and delivered to the Agent the
Original Security Agreements. The Company hereby agrees that notwithstanding the
execution and delivery of this Agreement, the Original Security Agreements shall
be and remain in full force and effect and that any rights and remedies of the
Agent and the Banks thereunder, obligations of the Company thereunder and any
liens or security interests created or provided for thereunder shall be and
remain in full force and effect and shall not be affected, impaired or
discharged thereby and shall secure all of its indebtedness, obligations and
liabilities to the Agent and the Banks under the Credit Agreement as amended and
restated hereby. Nothing herein contained shall in any manner affect or impair
the priority of the liens and security interests created and provided for by the
Original Security Agreements as to the indebtedness which would be secured
thereby prior to giving effect to this Amendment. Without limiting the
foregoing, the Company acknowledges and agrees that all of the Borrowers'
indebtedness, obligations and liabilities to the Agent and the Banks pursuant to
the Credit Agreement as amended and restated hereby, including without
limitation, all principal of and interest on the Revolving Notes (as defined in
the Credit Agreement as amended and restated hereby), whether presently existing
or hereafter arising, shall constitute "Obligations" as defined in the Security
Agreement and shall be secured by, and entitled to all of the benefits of, the
liens and security interest created and provided for under the Security
Agreement. In furtherance of the foregoing, the Company hereby grants to the
Agent for the benefit of the Banks, and hereby agrees that the Agent for the
benefit of the Banks shall continue to have a continuing security interest in,
all and singular of the Company's receivables, general intangibles, hedging
accounts, inventory, books and records, documents, accessions and additions to
all of the foregoing and all products and proceeds of each of the foregoing, and
all proceeds or collection of any of the foregoing and all of the other
collateral described or referred to in the granting clauses of the Original
Security Agreements, each and all of which granting clauses are hereby
incorporated by reference herein in their entirety. The foregoing grant shall be
in addition to and supplemental of and not in substitution for the grant by the
Company under the Original Security Agreements, and shall not affect or impair
the lien or priority of the Original Security Agreements in the collateral
subject thereto or the indebtedness secured thereby.
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of November 4, 1998.
MINNESOTA CORN PROCESSORS, INC.
By /s/ illegible
-------------------------------------
Its President
---------------------------------
LIQUID SUGARS, INC.
By /s/ illegible
-------------------------------------
Its President
---------------------------------
Accepted and Agreed to as of the day and year last above written.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
individually and as Agent
By /s/ illegible
-------------------------------------
Its Vice President
---------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agribusiness Division
U.S. BANCORP AG CREDIT, INC.
By /s/ illegible
-------------------------------------
Its Vice President
---------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-47-
EXHIBIT A
MINNESOTA CORN PROCESSORS, INC.
LIQUID SUGARS, INC.
SECURED REVOLVING CREDIT NOTE
________, ________
FOR VALUE RECEIVED, each of the undersigned, MINNESOTA CORN PROCESSORS,
INC., a Minnesota corporation (the "COMPANY") and Liquid Sugars, Inc., a
California corporation, ("LSI"; LSI and the Company being referred to herein
collectively as the "BORROWERS" and individually as a "BORROWER"), jointly and
severally promise to pay to the order of ________________ (the "LENDER") on the
Termination Date (as defined in the Credit Agreement hereinafter described), at
the principal office of ▇▇▇▇▇▇ Trust and Savings Bank in Chicago, Illinois, the
principal sum of Twenty Five Million Dollars ($25,000,000) or, if less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrowers under the Revolving Credit provided for under the Credit
Agreement hereinafter mentioned and remaining unpaid on the Termination Date,
together with interest on the principal amount of each Revolving Credit Loan
from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates specified in said Credit Agreement.
The Lender shall record on its books or records or on the schedule to
this Note which is a part hereof the principal amount of each Revolving Credit
Loan made under the Revolving Credit, all payments of principal and interest and
the principal balances from time to time outstanding; PROVIDED that prior to the
transfer of this Note all such amounts shall be recorded on the schedule
attached to this Note. The record thereof, whether shown on such books or
records or on the schedule to this Note, shall be PRIMA FACIE evidence as to all
such amounts; PROVIDED, HOWEVER, that the failure of the Lender to record, or
any mistake in recording, any of the foregoing shall not limit or otherwise
affect the obligation of the undersigned to repay all Revolving Credit Loans
made under the Revolving Credit, together with accrued interest thereon.
This Note is one of the Revolving Notes referred to in and issued under
that certain Amended and Restated Secured Credit Agreement dated as of August
__, 1998, among the Borrowers, ▇▇▇▇▇▇ Trust and Savings Bank, as Agent, and the
banks named therein, as amended from time to time (the "CREDIT AGREEMENT"), and
this Note and the holder hereof are entitled to all of the benefits and security
provided for thereby or referred to therein, including without limitation the
collateral security provided pursuant to the Security Documents (as defined in
the Credit Agreement), to which Credit Agreement and Security Documents
reference is hereby made for a statement thereof All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as such
terms have in said Credit Agreement.
Prepayments may be made on any Revolving Credit Loan evidenced hereby
and this Note (and the Revolving Credit Loans evidenced hereby) may be declared
due prior to the expressed maturity thereof, all in the events, on the terms and
in the manner as provided for in said Credit Agreement and the Security
Documents.
Each of the undersigned acknowledges and agrees that its joint and
several liability on the Note and on all obligations owed by any of the
undersigned under this Note is absolute and unconditional and shall not in any
manner be affected or impaired by any of acts or omissions whatsoever by the
Lender, and without limiting the generality of the foregoing, each of the
undersigned's joint and several liability on this Note shall not be impaired by
any acceptance by the Lender of any other security for or guarantors upon this
Note or any obligations under the Credit Agreement or by any failure, neglect or
omission on the Lender's part to resort to any one or all of the undersigned for
payment of this Note or the obligations under the Credit Agreement or to realize
upon or protect any collateral security therefor. Each of the undersigned's
joint and several liability on this Note shall not in any manner be impaired or
affected by who receives or uses the proceeds of the loans evidenced by this
Note or for what purposes such proceeds are used, and each of the undersigned
waives notice of borrowing requests issued by, and loans made to, the Borrowers.
Such joint and several liability of each of the undersigned shall also not be
impaired or affected by (and each Lender, without notice to anyone, is hereby
authorized to make from time to time) any sale, pledge, surrender, compromise,
settlement, release, renewal, extension, indulgence, alteration, substitution,
exchange, change in, modification or disposition of any collateral security for
this Note or the obligations under the Credit Agreement or of any guaranty
thereof. In order to enforce payment of this Note and the undersigneds'
obligations under the Credit Agreement, foreclose or otherwise realize on any
collateral security therefor, and to exercise the rights granted to the Lender
thereunder and under applicable law, the Lender .shall be under no obligation at
any time to first resort for payment to the Borrower or to any guaranty or to
resort to any collateral security, property, liens or any other rights or
remedies whatsoever, and the Lender shall have the right to enforce this Note
and the each Borrower's obligations under the Credit Agreement irrespective of
whether or not other proceedings or steps are pending seeking resort to or
realization upon or from any of the foregoing. By its acceptance below, each of
the undersigned hereby expressly waives and surrenders any defense to its joint
and several liability on this Note or under the Credit Agreement based upon any
of the foregoing.
Each of the undersigned hereby waives any and all rights of subrogation,
reimbursement, contribution and indemnity whatsoever with respect to every other
one of the undersigned and shall have no right of recourse to or with respect to
any assets or property of any of the undersigned or to any collateral owned by
any of the undersigned for the indebtedness of any of the undersigned evidenced
hereby regardless of whether said indebtedness shall have been paid in full.
None of the undersigned shall have any right of subrogation, reimbursement,
contribution or indemnity whatsoever and no right of recourse to or with respect
to any assets or property of any guarantor or guarantors or to any collateral
not owned by the Borrowers for the indebtedness evidenced hereby unless and
until all of said indebtedness shall have been paid in full.
The undersigned hereby waive presentment for payment and demand.
-2-
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
MINNESOTA CORN PROCESSORS, INC.
By
-------------------------------------
Its
---------------------------------
LIQUID SUGARS, INC.
By
-------------------------------------
Its
---------------------------------
-3-
SCHEDULE 1
TO COMPLIANCE CERTIFICATE
MINNESOTA CORN PROCESSORS, INC.
LIQUID SUGARS, INC.
Compliance Calculations for Secured
Credit Agreement Dated as of August 27, 1997
Calculations as of ______________, 19__
Section 7.8 Net Working Capital
(a) Current Assets $_________
(b) Current Liabilities $_________
(c) Working Capital Revolver Outstandings $_________
(a)-(b)-(c) ________*
*Required to be no less than $25,000,000.
Compliance..............Yes _________ No ________
Section 7.9 Adjusted Total Member Equities
(a) Total Member Equities $_________
(b) Less: Post Closing Intangible Assets and Restricted
Investments $_________
(c) Adjusted Total Member Equities (a)-(b) $_________
(d) Consolidated Net Earnings (Only Positive) $_________
(e) Applicable % 20%
(f) 20% of Consolidated Net Earnings (d)x(e) $_________
(g) Plus: $270,000,000 $_________
(h) Compliance Requirement (f)+(g) $_________
Compliance..............Yes _________ No ________
Section 7.10 Cash Flow
(a) Net Income $_________
(b) Depreciation $_________
(c) Capital Expenditures $_________
(d) Current Maturities of Long-Term Debt $_________
(e) Cash Patronage $_________
(d) Redeemed Shares $_________
(g) Cash Flow ((a) + (b) - (c) - (d) - (e) - (f)) $________*
*Required to be no less than $_________ during this
compliance period.
Compliance..............Yes _________ No ________