CONTROL AGREEMENT
(Cash as Collateral)
This Control Agreement (the "Agreement") is dated as of ______________
2008, by and among AgCountry Farm Credit Services, FCA ("Secured Party"), NEDAK
Ethanol, LLC ("Pledgor"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Custodian").
WHEREAS, Custodian and Pledgor have entered into that certain Master Credit
Agreement dated as of February 14, 2007 (the "Master Credit Agreement"), that
certain First Supplement to Master Credit Agreement dated as of February 14,
2007 (the "First Supplement"), and that certain Second Supplement to Master
Credit Agreement dated as of February 14, 2007 ("Second Supplement")
(collectively, the Master Credit Agreement, First Supplement and Second
Supplement, as amended, replaced, restated, modified, or supplemented from time
to time, are referred to as the "Master Agreement") pursuant to which Lender has
extended certain credit facilities to Borrower under the terms and conditions
set forth in the Master Agreement;
WHEREAS, Secured Party and Pledgor will enter into a Third Supplement and
Forbearance to the Master Credit Agreement (as amended from time to time, the
"Third Supplement");
WHEREAS, as a condition to entering into the Third Supplement, the Parties
have agreed to enter into this Agreement;
WHEREAS, pursuant to a custodian contract between Custodian and Pledgor (as
amended, the "Custodian Agreement"), Custodian shall act as custodian for
Pledgor's assets and, as such Custodian, has established a custodial account in
the name of Pledgor, in which the Collateral (together with other assets of
Pledgor) will be held;
WHEREAS, Pledgor agrees to pledge U.S. Cash ("Collateral") to secure
Pledgor's obligations under the Master Agreement, including the Third
Supplement; and
WHEREAS, Secured Party, Pledgor and Custodian are entering into this
Agreement to provide for the control of the Collateral, but Secured Party will
not immediately establish the Collateral Account or formalize this contractual
relationship until the Secured Party directs Custodian to do so by written
correspondence from Secured Party to Custodian enclosing Custodian Agreement
which Custodian shall immediately execute and implement.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
it is agreed as follows:
1. Collateral Account. The Custodian shall hold such Collateral as financial
assets under Article 8 of the Uniform Commercial Code (the "UCC"), as in effect
from time to time in an account assigned by US Bank. The Custodian shall
identify and segregate in a separate deposit account (as defined in Section
9-102 of the UCC) any cash Collateral and hold it under the name "NEDAK Ethanol
for the benefit of AgCountry" (the "Collateral Account"). The Custodian agrees
not to change the name on the Collateral Account without the prior written
consent of Secured Party. The Custodian shall have no responsibility for
determining the adequacy of any
Collateral required hereunder or under the Master Agreement, nor will it assume
responsibility for any calculations related to any Collateral requirements under
the Master Agreement.
2. Account Control.
2.1 Security Interest. This Agreement is intended by Secured Party and
Pledgor to grant "control" of the Collateral Account to Secured Party for
purposes of perfection of Secured Party's security interest in such Collateral
pursuant to Article 8 and Article 9 of the UCC, and the Custodian hereby
acknowledges that it has been advised of Pledgor's grant to Secured Party of a
security interest in the Collateral Account. Notwithstanding the foregoing, the
Custodian makes no representation or warranty with respect to the creation or
enforceability of any security interest in the Collateral Account.
2.2 Joint Control by Secured Party and Pledgor. Unless and until the
Custodian receives written notice from Secured Party pursuant to Section 2.3
below instructing the Custodian that Secured Party is exercising its right to
exclusive control over the Collateral Account, which notice is substantially in
the form attached hereto as Exhibit A (a "Notice of Exclusive Control"), or if
all previous Notices of Exclusive Control have been revoked or rescinded in
writing by Secured Party: (i) the Custodian shall take actions with respect to
the Collateral in the Collateral Account upon the joint instructions of Secured
Party and Pledgor, and (ii) the Custodian shall have no responsibility or
liability to Secured Party or Pledgor for actions taken in accordance with such
joint instructions.
2.3 Control by Secured Party.
(i) Upon receipt by the Custodian of a Notice of Exclusive Control,
the Custodian shall thereafter follow only the instructions of Secured
Party with respect to the Collateral Account and shall comply with any
entitlement order or instructions (within the meaning of Sections 8-102 and
9-106 of the UCC) received from Secured Party, without further consent of
Pledgor or any other person, and Custodian will not comply with entitlement
orders or instructions concerning the Collateral originated by Pledgor
without the prior written consent of Secured Party.
(ii) Secured Party represents and warrants to Pledgor that Secured
Party will only issue to the Custodian a Notice of Exclusive Control if
Secured Party has determined in good faith that an event or default or
other authorized event has occurred under the Master Agreement which
entitles Secured Party to exercise its rights as a secured party with
respect to the Collateral in the Collateral Account and Secured Party
determines in its sole discretion that exclusive control is necessary.
(iii) The Custodian shall have no responsibility or liability to
Pledgor for complying with a Notice of Exclusive Control or complying with
entitlement orders originated by Secured Party concerning the Collateral
Account. The Custodian shall have no duty to investigate or make any
determination to verify the existence of an event of default or compliance
by either Secured Party or Pledgor with applicable law or the Master
Agreement, and the Custodian shall be fully protected in complying with a
Notice
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of Exclusive Control whether or not Pledgor may allege that no such event
of default or other like event exists.
(iv) As between Secured Party and the Custodian, notwithstanding any
provision contained herein or in any other document or instrument to the
contrary, the Custodian shall not be liable for any action taken or omitted
to be taken at the instruction of Secured Party, or any action taken or
omitted to be taken under or in connection with this Agreement, except for
the Custodian's own gross negligence or willful misconduct in carrying out
such instructions.
3. Distributions. The Custodian shall, without further action by Pledgor or
Secured Party, credit to Pledgor's custodial account all interest, dividends and
other income received by the Custodian on the Collateral, unless the Custodian
has received a Notice of Exclusive Control and until such Notice of Exclusive
Control has been revoked or rescinded in writing by Secured Party.
4. Final Returns; Release of Security Interest.
4.1 Returns. If there are no transactions or obligations of Pledgor
outstanding under the Master Agreement, Pledgor may request Secured Party to
instruct Custodian to release all Collateral held in the Collateral Account.
Custodian will effect such release as soon as reasonably practicable after
receiving instructions from Secured Party and Pledgor.
4.2 Release of Security Interest. Secured Party agrees to notify the
Custodian promptly in writing when all obligations of Pledgor to Secured Party
under the Master Agreement have been fully paid and satisfied (and any
commitment of Secured Party to advance further amounts or credit thereunder has
been terminated) or Secured Party otherwise no longer claims any interest in the
Collateral in the Collateral Account, whichever is sooner; at which time the
Custodian shall have no further liabilities or responsibilities hereunder and
the Custodian's obligations under this Agreement shall terminate.
5. Duties and Services of Custodian.
(i) The Custodian agrees that, with respect to the Collateral in the
Deposit Account, it is acting as a "bank" as such term is used in Section
102(a)(29) of the UCC.
(ii) The Custodian shall have no duties, obligations, responsibilities
or liabilities with respect to the Collateral Account except as and to the
extent expressly set forth in this Agreement and the Custodian Agreement,
and no implied duties of any kind shall be read into this Agreement against
the Custodian including, without limitation, the duty to preserve, exercise
or enforce rights in the Collateral and the Collateral Account. The
Custodian shall not be liable or responsible for anything done or omitted
to be done solely by it in good faith and in the absence of gross
negligence and may rely and shall be protected in acting upon any notice,
instruction or other communication which it reasonably believes to be
genuine and authorized.
(iii) As between Pledgor and the Custodian, except for the rights of
control in favor of Secured Party agreed to herein, nothing herein shall be
deemed to modify, limit,
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restrict, amend or supercede the terms of the Custodian Agreement, and
Custodian shall be and remain entitled to all of the rights, indemnities,
powers, and protections in its favor under the Custodian Agreement, which
shall apply fully to the Custodian's actions and omissions hereunder.
Instructions under this Agreement from Pledgor's authorized representative
given in accordance with the terms of the Custodian Agreement shall also
constitute Proper Instructions under the Custodian Agreement.
(iv) Secured Party agrees to provide to Custodian, on Exhibit B
attached hereto, the names and signatures of authorized parties who may
give instructions or entitlement orders concerning the Collateral Account.
(v) Custodian agrees to provide to Secured Party daily statements, via
facsimile or electronic mail, of the Collateral pledged by Secured Party
held in the account.
6. Force Majeure. The Custodian shall not be liable for delays, errors or losses
occurring by reason of circumstances beyond its control, including, without
limitation, acts of God, market disorder, terrorism, insurrection, war, riots,
failure of transportation or equipment, or failure of vendors, communication or
power supply. In no event shall the Custodian be liable to any person for
consequential or special damages, even if the Custodian has been advised of the
possibility or likelihood of such damages.
7. Compliance with Legal Process and Judicial Orders. The Custodian shall have
no responsibility or liability to Secured Party or Pledgor or to any other
person or entity for acting in accordance with any judicial or arbitral process,
order, writ, judgment, decree or claim of lien relating to the Collateral
Account subject to this Agreement notwithstanding that such order or process is
subsequently modified, vacated or otherwise determined to have been without
legal force or effect.
8. Custodian Representations. The Custodian agrees and confirms, as of the date
hereof, and at all times until the termination of this Agreement, that it has
not entered into, and until the termination of this Agreement will not enter
into, any agreement (other than the Custodian Agreement) with any other person
or entity relating to the Collateral or the Collateral Account under which it
has agreed to comply with entitlement orders (as defined in Section 8-102 of the
UCC) of such other person or entity.
9. Access To Reports. Upon any pledge, release, or substitution of Collateral in
the Collateral Account, Custodian shall notify Secured Party within one business
day of such change. The Custodian will provide to Secured Party a copy of a
statement of the Collateral Account within five (5) business days of the end of
the calendar month; provided, however that the Custodian's failure to forward a
copy of such statement to Secured Party shall not give rise to any liability
hereunder.
10. Interpleader. Notwithstanding any provision contained in this Agreement to
the contrary, in the event of any dispute concerning this Agreement or the
disposition of any of the Collateral or the Collateral Account, the Custodian
shall have the absolute right, at its election, to (a) refrain from taking any
action (other than to hold the Collateral in accordance with the
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Custodian Agreement) until directed by written instructions signed by Pledgor
and Secured Party or by final order of a court of competent jurisdiction; or (b)
in the event of litigation between Pledgor and Secured Party, deliver all of the
Collateral in the Collateral Account to the clerk of any court in which such
litigation is pending, or file suit in interpleader and deliver the Collateral
in the Collateral Account to the court in which the action is commenced, and
obtain an order from the court requiring the parties to interplead and litigate
in such court their claims and rights among themselves, whereupon the Custodian
shall thereby be relieved from any further liability respecting the Collateral
and the Collateral Account.
11. Fees and Expenses of Custodian.
11.1 Reimbursement For Costs. In addition to the terms of the Custodian
Agreement, Pledgor hereby agrees to pay and reimburse the Custodian for any
advances, fees, costs, expenses (including, without limitation, reasonable
attorney's fees and costs) and disbursements that may be paid or incurred by the
Custodian in connection with this Agreement or the arrangement contemplated
hereby, including any that may be incurred in performing its duties or
responsibilities pursuant to the terms of this Agreement.
11.2 Advances. It is hereby expressly acknowledged and agreed by the
parties that the Custodian (including its agents) shall not be obligated to
advance cash or investments to, for or on behalf of Pledgor in the Collateral
Account, provided, however, that if the Custodian does advance cash or
investments to the Collateral Account for any purpose for the benefit of
Pledgor, any property at any time held pursuant to this Agreement and the
Custodian Agreement shall be security therefore and, should Pledgor fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of Collateral in the Collateral Account to the
extent necessary to obtain reimbursement.
12. Notices. Any notice, instruction or other instrument required to be given
hereunder, or requests and demands to or upon the respective parties hereto,
shall be in writing and may be sent by hand, or by facsimile transmission,
telex, or delivery by any recognized delivery service, prepaid or, for
termination of this Agreement only, by certified or registered mail, and
addressed as follows, or to such other address as any party may hereafter notify
the other respective parties hereto in writing:
If to Secured Party, then:
AgCountry Farm Credit Services, FCA
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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If to Pledgor, then:
NEDAK Ethanol, LLC
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Custodian, then:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
NEDAK Ethanol, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
13. Amendment. No amendment or modification of this Agreement will be effective
unless it is in writing and signed by each of the parties hereto.
14. Termination. This Agreement shall continue in effect until five (5) business
days following notice by Secured Party to the Custodian in writing that this
Agreement is to be terminated. Upon the fifth business day after such notice,
Secured Party shall have no further right to originate entitlement orders
concerning the Collateral Account and Pledgor shall be entitled to originate
entitlement orders concerning the Collateral for any purpose and without
limitation except as may be provided in the Custodian Agreement. This Agreement
may also be terminated by the Custodian, Secured Party or Pledgor, and shall
terminate in the event of the termination of the Custodian Agreement, following
thirty (30) days prior written notice to the other parties hereto. Upon
termination of this Agreement by any party, all Collateral in the Collateral
Account that has not been released by Secured Party shall be transferred, within
30 days of such termination, to a successor custodian designated in writing by
Pledgor and acceptable to Secured Party. In the event no successor is agreed
upon, the Custodian shall be entitled to petition a court of competent
jurisdiction to appoint a successor custodian and shall be indemnified by
Pledgor for any costs and expenses (including, without limitation, attorneys'
fees) relating thereto.
15. Severability. In the event any provision of this Agreement is held illegal,
void or unenforceable, the remainder of this Agreement shall remain in effect
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of North Dakota, without giving effect to the conflict
of law provisions thereof.
17. Headings. Any headings appearing on this Agreement are for convenience only
and shall not affect the interpretation of any of the terms of this Agreement.
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18. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, and all such counterparts taken
together shall constitute one and the same Agreement.
19. Recitals are Contractual. The recitals are contractual and binding on the
Parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers or duly authorized representatives as of the date
first above written.
AGCOUNTRY FARM CREDIT SERVICES
By:
-----------------------------------------
Name:
Title:
NEDAK ETHANOL, LLC
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Pres. & Gen. Mngr.
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President & Gen. Mngr.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Custodian
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Exhibit A
NOTICE OF EXCLUSIVE CONTROL
We hereby instruct you pursuant to the terms of that certain Control
Agreement dated as of _______________, 2008 (as from time to time amended and
supplemented, the "Control Agreement") among the undersigned, _______________
(together with its successors and assigns, "Pledgor") and you, as Custodian,
that you (i) shall not follow any instructions or entitlement orders of Pledgor
with respect to the Collateral or the Collateral Account held by you for
Pledgor, and (ii) unless and until otherwise expressly instructed by the
undersigned, shall exclusively follow the entitlement orders and instructions of
the undersigned with respect to the Collateral a the Collateral Account.
Very truly yours,
By: By:
------------------------------ -----------------------------------
Authorized Signatory Authorized Signatory
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Exhibit B
AUTHORIZED PERSONS
with respect to Collateral Control Agreement dated _______________ 2008
_______________ BANK is directed to accept and act upon instructions
received from any one of the following persons at _______________:
Name Telephone/Fax Number Signature
Authorized by: ____________________, as authorized agent of
_________________________________________
Name:
Title: