AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

 

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                                                                   EXHIBIT 10.16

 

                                                                  EXECUTION COPY

 

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                               AMENDED AND RESTATED

 

                         RECEIVABLES PURCHASE AGREEMENT

 

                           Dated as of March 31, 2004

 

                                  By and Among

 

                           LOL FARMLAND FEED SPV, LLC

                                   AS SELLER,

 

                         LAND O'LAKES FARMLAND FEED LLC

                              AS INITIAL SERVICER,

 

                           COBANK, ACB, AND THE OTHER

                          PURCHASERS FROM TIME TO TIME

                                  PARTY HERETO

 

                                       And

 

                                  COBANK, ACB,

                                AS ADMINISTRATOR

 

 

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                               TABLE OF CONTENTS

 

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ARTICLE I. PURCHASES AND REINVESTMENTS ...............................................   2

        SECTION 1.1 Agreement to Purchase; Limits on Purchasers'

                        Obligations ..................................................   2

        SECTION 1.2 Purchase Procedures; Assignment of Purchasers'

                        Interests ....................................................   2

SECTION 1.3 Reinvestments of Certain Collections; Payment of

                        Remaining Collections ........................................   3

SECTION 1.4 Receivable Interest ......................................................   4

SECTION 1.5 Voluntary Termination or Reduction of Facility

                        Limit ........................................................   5

ARTICLE II. COMPUTATIONAL RULES ......................................................   5

        SECTION 2.1 Computation of Capital ...........................................   5

        SECTION 2.2. Computation of Concentration Limit ..............................   6

        SECTION 2.3. Computation of Earned Discount ..................................   6

         SECTION 2.4 Estimates of Earned Discount Rate, Fees, Etc .....................   6

ARTICLE III. SETTLEMENTS .............................................................   7

        SECTION 3.1. Purchase and Settlement Procedures ..............................   7

        SECTION 3.2. Deemed Collections; Reduction of Capital, Etc ...................   9

        SECTION 3.3. Payments and Computations, Etc .................................. 11

ARTICLE IV. FEES AND YIELD PROTECTION ................................................ 11

        SECTION 4.1. Fees ............................................................ 11

        SECTION 4.2. Yield Protection ................................................ 12

        SECTION 4.3. Funding Losses .................................................. 14

        SECTION 4.4. Prepayments ..................................................... 14

ARTICLE V. CONDITIONS TO PURCHASES ................................................... 14

        SECTION 5.1. Conditions Precedent to Initial Purchase and Effectiveness....... 14

        SECTION 5.2. Conditions Precedent to All Purchases and

                        Reinvestments ................................................ 17

ARTICLE VI. REPRESENTATIONS AND WARRANTIES ........................................... 17

        SECTION 6.1. Representations and Warranties of Seller ........................ 17

        SECTION 6.2. Representations and Warranties of Servicer ...................... 20

ARTICLE VII. GENERAL COVENANTS ....................................................... 22

SECTION 7.1. Affirmative Covenants ................................................... 22

SECTION 7.2. Reporting Requirements .................................................. 25

SECTION 7.3. Negative Covenants ...................................................... 27

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        SECTION 7.4. Separate Existence .......................................     29

ARTICLE VIII. ADMINISTRATION AND COLLECTION ...................................     32

        SECTION 8.1. Designation of Servicer and Sub-Servicers ................     32

        SECTION 8.2. Duties of Servicer .......................................     33

        SECTION 8.3. Rights of Administrator ..................................     36

        SECTION 8.4. Responsibilities of Seller ...............................     37

        SECTION 8.5. Further Action Evidencing Purchases and

                        Reinvestments .........................................     37

        SECTION 8.6. Application of Collections ...............................     38

ARTICLE IX. SECURITY INTEREST .................................................     38

        SECTION 9.1. Grant of Security Interest ...............................     38

        SECTION 9.2. Further Assurances .......................................     39

        SECTION 9.3. Remedies .................................................     39

ARTICLE X. TERMINATION EVENTS .................................................     39

        SECTION 10.1. Termination Events ......................................     39

        SECTION 10.2. Remedies ................................................     42

ARTICLE XI. THE ADMINISTRATOR .................................................     42

        SECTION 11.1. Authorization ...........................................     42

        SECTION 11.2. Administrator's Reliance, Etc ...........................     43

        SECTION 11.3. CoBank and Affiliates ...................................     44

ARTICLE XII. ASSIGNMENT OF AND PARTICIPATIONS IN

PURCHASERS' INTERESTS .........................................................     44

        SECTION 12.1. Restrictions on Assignments; Impact on

                        Patronage .............................................     44

        SECTION 12.2. Rights of Assignee ......................................     45

ARTICLE XIII. INDEMNIFICATION .................................................     45

        SECTION 13.1. Indemnities .............................................     45

ARTICLE XIV. MISCELLANEOUS ....................................................     48

        SECTION 14.1. Amendments, Etc .........................................     48

        SECTION 14.2. Notices, Etc ............................................     48

        SECTION 14.3. No Waiver; Remedies .....................................     49

        SECTION 14.4. Binding Effect; Survival ................................     49

        SECTION 14.5. Costs, Expenses and Taxes ...............................     49

        SECTION 14.6. No Proceedings ..........................................     50

        SECTION 14.7. Confidentiality of Program Information ..................     50

        SECTION 14.8. Confidentiality of Originator Information ...............     52

        SECTION 14.9. Captions and Cross References ...........................     53

        SECTION 14.10. Integration ............................................     54

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        SECTION 14.11. Governing Law ..........................................     54

        SECTION 14.12. Waiver Of Jury Trial ...................................     54

        SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities ..........     54

        SECTION 14.14. Execution in Counterparts ..............................     55

        SECTION 14.15. No Recourse Against Other Parties ......................     55

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                                    APPENDIX

 

 

APPENDIX A                  Definitions

 

Schedule I                  Government Receivables (if any)

Schedule II                 Contract Standards (if any)

 

 

                                    SCHEDULES

 

Schedule 1                  Purchasers and Pro Rata Shares

Schedule 6.1(m)             List of Offices of Seller where Records Are Kept

Schedule 6.1(n)             List of Lockbox Banks

Schedule 7.1(g)             Initial Credit and Collection Policies

Schedule 14.2               Notice Addresses

 

 

                                     EXHIBITS

 

Exhibit 1.2(a)              Form of Purchase Notice

Exhibit 3.1(a)-l            Form of Servicer Report

Exhibit 5.1(f)              Form of Lockbox Agreement

Exhibit 7.2(a)              Form of Weekly Report

Exhibit 7.4                  Additional Corporate Separateness Assumptions,

                           Statements and Representations

 

 

 

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                              AMENDED AND RESTATED

                         RECEIVABLES PURCHASE AGREEMENT

 

                            Dated as of March 31, 2004

 

                                    PREAMBLE

 

         AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of March

31, 2004, (this "Agreement"), by and among LOL FARMLAND FEED SPV, LLC, a

Delaware limited liability company, as Seller ("Seller"), LAND O'LAKES FARMLAND

FEED LLC, a Delaware limited liability company ("Feed"), as initial Servicer

("Servicer"), COBANK, ACB, a federally chartered instrumentality of the United

States ("CoBank"), and any other Persons that may, from time to time, be party

hereto as Purchasers (each, a "Purchaser"), and CoBank as administrator for the

Purchasers (in such capacity, "Administrator"). Unless otherwise indicated,

capitalized terms used in this Agreement are defined in, and interpretive rules

that apply are contained in, Appendix A.

 

                                    RECITALS

 

         1. Seller is a limited-purpose, bankruptcy-remote Delaware limited

liability company formed by Feed, for the purpose of purchasing, and accepting

contributions of, Receivables and Related Rights (as defined in the Purchase and

Sale Agreement) originated by Feed and the other Originators in the ordinary

course of their respective businesses. Feed owns one hundred percent (100%) of

the outstanding equity of Seller.

 

         2. Seller, Feed, as "Servicer", CoBank, in its capacity as

administrator, and the various other purchasers from time to time party thereto,

are parties to the Receivables Purchase Agreement dated as of December 18, 2001

(as heretofore amended, supplemented or otherwise modified, the "Existing

Receivables Purchase Agreement").

 

         3. The parties hereto desire to amend and restate the Existing

Receivables Purchase Agreement on the terms and conditions set forth herein.

 

          4. Seller has, and expects to have, Pool Receivables in which Seller

intends to sell an undivided interest. Seller has requested that the Purchasers,

and each Purchaser has agreed that it shall, subject to and upon the terms and

conditions contained in this Agreement, engage in purchases of their respective

Pro Rata Shares of such undivided interest, referred to herein as the Receivable

Interest, from Seller from time to time during the term of this Agreement.

 

 

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         5. Seller and the Purchasers also desire that, subject to the terms and

conditions of this Agreement, certain of the daily Collections in respect of the

Receivable Interest be reinvested in Pool Receivables, which reinvestment shall

constitute part of the Receivable Interest.

 

         6. Feed has been requested, and is willing, to act as initial Servicer.

 

         7. CoBank has been requested, and is willing, to act as Administrator.

 

         NOW, THEREFORE, in consideration of the premises and the mutual

agreements herein contained, the parties hereto agree as follows:

 

                     ARTICLE I. PURCHASES AND REINVESTMENTS

 

         SECTION 1.1 AGREEMENT TO PURCHASE; LIMITS ON PURCHASERS' OBLIGATIONS.

Subject to and upon the terms and conditions of this Agreement, from time to

time prior to the Termination Date, (a) Seller may request that each Purchaser,

ratably in accordance with such Purchaser's Pro Rata Share, purchase from Seller

an undivided ownership interest in the Pool Assets specified in each applicable

Purchase Notice and (b) each Purchaser severally agrees to purchase its

respective Pro Rata Share of such undivided ownership interest in the Pool

Assets (each being a "Purchase"); provided that no Purchase shall be funded by

the Purchasers if, after giving effect thereto, either (y) the then Capital

would exceed an amount equal to $200,000,000, as such amount may be decreased

from time to time as provided in Section 1.5 (the "Facility Limit"), or (z) the

Receivable Interest would exceed 100% (the "Allocation Limit"); and provided

further that each Purchase made pursuant to this Section 1.1 shall require a

funding of Capital of at least $1,000,000.

 

         SECTION 1.2 PURCHASE PROCEDURES; ASSIGNMENT OF PURCHASERS' INTERESTS.

 

         (a) Notice of Purchase. Each Purchase from Seller shall be made by the

Purchasers upon notice from Seller to the Administrator received by the

Administrator not later than 2:00 P.M. (Denver, Colorado time) on the Business

Day next preceding the Business Day of such proposed Purchase (the "Purchase

Date"). Each such notice of a proposed Purchase shall be substantially in the

form of Exhibit 1.2(a) (each a "Purchase Notice"), and shall specify the desired

amount of, and Purchase Date for, such Purchase; provided, that Seller may give

only one (1) Purchase Notice during any 7-day period, and such Purchase Notice

must specify a Purchase amount of at least $1,000,000, or an integral multiple

of $100,000 in excess thereof.

 

 

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         (b) Funding of Purchases. On each Purchase Date, each Purchaser shall,

upon satisfaction of the applicable conditions set forth in Article V, fund such

Purchase by making the full amount of its Pro Rata Share of such Purchase

available to Administrator at Administrator's Office in immediately available

funds, after receipt by Administrator of such funds, Administrator will make

such funds immediately available to Seller at such office.

 

         (c) Sale of Receivable Interest. In consideration of the Capital funded

by Purchaser on each Purchase Date, Seller hereby sells, assigns and transfers

to Administrator, for the ratable benefit of the Purchasers, the Receivable

Interest.

 

         SECTION 1.3 REINVESTMENTS OF CERTAIN COLLECTIONS; PAYMENT OF REMAINING

COLLECTIONS.

 

         (a) On the close of business on each Business Day during the period

from date hereof until the Termination Date, Servicer shall, out of all

Collections received on such day:

 

                  (i) determine the portion of Collections attributable on such

         day to the Receivable Interest by multiplying (A) the amount of all

         Collections received on such day, times (B) the Receivable Interest;

 

                  (ii) out of the portion of Collections allocated to the

         Receivable Interest pursuant to clause (a)(i), (A) if a Termination

         Event shall have occurred and be continuing, set aside and deposit into

         the Administrator's Account in trust for the Purchasers or (B) in all

         other cases, otherwise provide that the Servicer will have available to

         it on the next Settlement Date or as required by Section 3.1(e), an

         amount equal to the sum of the estimated amount of Yield accrued and

         unpaid in respect of the Capital (based on rate information provided by

         the Administrator pursuant to Section 2.4), the accrued Fees, all other

         amounts due to the Purchasers, Administrator, the Affected Parties or

         the Indemnified Parties hereunder (other than the Capital) and the

         Purchasers' Share of the Servicer's Fee (in each case, accrued through

         such day) and not so previously set aside and deposited into the

         Administrator's Account or its availability on the next Settlement Date

         provided for;

 

                  (iii) apply the Collections allocated to the Receivable

         Interest pursuant to clause (a)(i), and not set aside or its

         availability provided for pursuant to clause (ii), to the purchase from

         Seller of ownership interests in Pool Assets (each such purchase being

         a "Reinvestment"); provided that (A) if the Excess Amount exceeds zero,

         then Servicer shall not reinvest, but shall set aside and deposit into

         the Administrator's Account for the benefit of the Purchasers, a

         portion of such Collections which, together with other

 

 

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         Collections previously set aside and then so held, shall equal the

         Excess Amount; and (B) if the conditions precedent to Reinvestment in

         Section 5.2 are not satisfied, then Servicer shall not reinvest any of

         such Collections;

 

                  (iv) pay to Seller (A) the portion of Collections not

         allocated to the Receivable Interest pursuant to clause (i), less the

         Seller's Share of the Servicer's Fee, (B) the amounts, if any, to be

         made available to the Servicer on the next Settlement Date pursuant to

         clause (ii)(B) and (C) the Collections applied to Reinvestment pursuant

         to clause (iii); and

 

                  (v) out of the portion of Collections not allocated to the

         Receivable Interest pursuant to clause (i), pay to the Servicer the

         Seller's Share of the Servicer's Fee accrued through such day.

 

         (b) Unreinvested and Undistributed Collections. Servicer shall set

aside and deposit into the Administrator's Account in trust for the benefit of

the Purchasers all Collections allocated to the Receivables Interest which

pursuant to clause (iii) of Section 1.3(a) may not be reinvested in Pool Assets.

If, prior to the date when such Collections are required to be paid to the

Administrator pursuant to Section 3.1, the amount of Collections set aside

pursuant to clause (iii) of Section 1.3(a) exceeds the Excess Amount, if any,

and the conditions precedent to Reinvestment set forth in Section 5.2 are

satisfied, then the Servicer shall apply such Collections (or, if less, a

portion of such Collections equal to the amount of such excess) to the making of

a Reinvestment.

 

         SECTION 1.4 RECEIVABLE INTEREST.

 

         (a) Components of Receivable Interest. On any date, the Receivable

Interest will represent the Purchasers' combined undivided percentage ownership

interest in (i) all then-outstanding Pool Receivables, (ii) all Related Security

and Related Rights with respect to such Pool Receivables, (iii) all of Seller's

right and claims under the Purchase and Sale Agreement, (iv) all Collections

with respect to, and other proceeds of, the foregoing as at such date, (v) all

lockboxes and lockbox or collection accounts into which Collections of Pool

Receivables are or may be deposited, and all investments therein, and (vi) all

books and records (including computer disks, tapes and software) evidencing or

relating to any of the foregoing, in each case, whether now owned by Seller or

hereafter acquired or arising, and wherever located (all of the foregoing,

collectively referred to as "Pool Assets").

 

         (b) Computation of Receivable Interest. On any date, the "Receivable

Interest" will be equal to a percentage, expressed as the following fraction:

 

 

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                                      -5-

   

                                      C + RR

                                     ------

                                      NPB

where:

 

         C       =     the then Capital;

 

         RR      =     the then Required Reserves; and

 

         NPB     =     the then Net Pool Balance;

 

provided, however, that during the period from and after the Termination Date

but prior to the Final Payout Date, the Receivable Interest will be one hundred

(100%), and that from and after the Final Payout Date the Receivable Interest

will be zero percent (0%).

 

         (c) Frequency of Computation. The Receivable Interest shall be computed

as of the Cut-Off Date immediately preceding each Settlement Period. In

addition, the Administrator may require Servicer to provide a report in such

form as may be designated by the Administrator for purposes of computing the

Receivable Interest as of any other date, and the Servicer agrees to do so

within two (2) Business Days after its receipt of the Administrator's request.

 

         SECTION 1.5 VOLUNTARY TERMINATION OR REDUCTION OF FACILITY LIMIT.

Seller may, upon at least thirty (30) days' prior written notice to the

Administrator or, at any time following Feed's receipt of a Successor Notice,

immediately upon written notice to the Administrator, terminate in whole or

reduce in part the unused portion of the Facility Limit; provided, that each

partial reduction at the Facility Limit shall be in an amount equal to

$1,000,000 or an integral multiple of $100,000 in excess thereof.

 

                         ARTICLE II. COMPUTATIONAL RULES

 

         SECTION 2.1 COMPUTATION OF CAPITAL. In making any determination of

Capital, the following rules shall apply:

 

         (a) Capital shall not be considered reduced by any allocation, setting

aside or distribution of any portion of Collections unless such Collections

shall have been actually delivered to the Administrator, for the benefit of the

Purchasers, pursuant hereto for application to the Capital; and

 

         (b) Capital shall not be considered reduced by any distribution of any

portion of Collections if at any time such distribution is rescinded or must

otherwise be returned for any reason.

 

 

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         SECTION 2.2. COMPUTATION OF CONCENTRATION LIMIT. Except as otherwise

consented to in writing in the sole reasonable discretion of the Administrator

and the Required Purchasers, in the case of any Obligor that is an Affiliate of

any other Obligor, the Concentration Limit and the aggregate Unpaid Balance of

Pool Receivables of such Obligors shall be calculated as if such Obligors were

one Obligor.

 

         SECTION 2.3. COMPUTATION OF EARNED DISCOUNT.

 

         (a) Yield shall accrue on the outstanding Capital on each day during

any Settlement Period at the applicable Yield Rate. On each Settlement Date, the

Seller shall pay from Collections in accordance with Section 3.1 to the

Administrator, for the account of the Purchasers in accordance with their

respective Pro Rata Shares, an amount equal to the accrued and unpaid Yield with

respect to the immediately preceding Settlement Period.

 

         (b) In making any determination of Yield, the following rules shall

apply:

 

                  (i) no provision of this Agreement shall require payment or

permit the collection of Yield in excess of the maximum permitted by Applicable

Law (it being agreed that, if the Yield would be in excess of such maximum but

for this provision, the amount of Yield shall be reduced to the greatest amount

that does not exceed such maximum); and

 

                  (ii) Yield for any period shall not be considered paid by any

distribution if at any time such distribution is rescinded or must otherwise be

returned for any reason.

 

         SECTION 2.4 ESTIMATES OF EARNED DISCOUNT RATE, FEES, ETC. For purposes

of determining the amounts required to be set aside by Servicer pursuant to

Section 1.3, the Administrator shall notify Servicer from time to time of the

Yield Rate applicable to the Capital as elected by Seller and the rates at which

Fees and other amounts are accruing hereunder. It is understood and agreed that

(i) the Yield Rate may change from time to time, (ii) certain rate information

provided by the Administrator to Servicer shall be based upon the

Administrator's good faith estimate, (iii) the amount of Yield actually accrued

with respect to the Capital during any Settlement Period may exceed, or be less

than, the amount set aside with respect thereto by Servicer, and (iv) the amount

of Fees or other payables accrued hereunder with respect to any Settlement

Period may exceed, or be less than, the amount set aside with respect thereto by

Servicer. Failure to set aside any amount so accrued shall not relieve Servicer

of its obligation to remit Collections to the Administrator with respect to such

accrued amount, as and to the extent provided in Section 3.1. In the event that

prior to the commencement of any Settlement Period the Administrator shall

determine that adequate and reasonable

 

 

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methods do not exist for ascertaining the LIBOR Rate, then the Yield Rate for

such Settlement Period shall be the Alternate Base Rate.

 

                            ARTICLE III. SETTLEMENTS

 

         SECTION 3.1. PURCHASE AND SETTLEMENT PROCEDURES. The parties hereto

will take the following actions with respect to each Purchase Date and each

Settlement Date:

 

         (a) Servicer Report. Except as provided in the next sentence with

respect to the initial Purchase hereunder, on or before the Business Day (each,

a "Reporting Date") preceding each Settlement Date, as the case may be, Servicer

shall deliver to the Administrator a report containing the information described

in Exhibit 3.1(a)-l (each, a "Servicer Report"). Notwithstanding the foregoing,

for administrative convenience in connection with the initial Purchase

hereunder, the initial Reporting Date shall be February 27, 2004, and the

initial Purchase Date shall occur on March 31, 2004 (the "Initial Purchase

Date").

 

         (b) Yield, Fees and Other Amounts Due. Five (5) Business Days after the

end of each Settlement Period, the Administrator shall notify Servicer of (i)

the amount of Yield that will have accrued in respect of the Capital as of the

Settlement Date relating to such Settlement Period and (ii) all Fees and other

amounts that will have accrued or otherwise have become payable (other than

Capital) by Seller under this Agreement on the next Settlement Date.

 

         (c) Settlement Date Procedures - Reinvestment Period. On each

Settlement Date prior to the Termination Date, Servicer shall distribute from

Collections set aside or applied (to the extent applied in violation of the

proviso to Section 1.3(a)(iii)) pursuant to Sections 1.3(a)(i) through (iii)

during the immediately preceding Settlement Period the following amounts in the

following order:

 

         (1) to the Administrator, for the account of the Purchasers in

         accordance with their respective Pro Rata Shares, an amount equal to

         the Yield accrued and unpaid during such Settlement Period, plus any

         previously accrued Yield not paid on a prior Settlement Date or

         pursuant to Section 3.1(e), which amount shall be distributed by the

         Administrator to the Purchasers for application to such Yield;

 

         (2) to the Administrator, an amount equal to the Fees accrued during

         such Settlement Period, plus any previously accrued amounts described

         in this clause (2) not paid on a prior Settlement Date or pursuant to

         Section 3.1(e), which amount shall be distributed by the Administrator

         to all Persons to whom payable;

 

 

<PAGE>

 

 

         (3) to the Servicer, an amount equal to the Purchasers' Share of the

         Servicer's Fee accrued during such Settlement Period, plus any

         previously accrued Purchasers' Share of the Servicer's Fee not paid on

         a prior Settlement Date or pursuant to Section 3.1(e);

 

         (4) to the Administrator, all other amounts (other than Capital) then

         due under this Agreement or the other Transaction Documents to the

         Administrator, the Purchasers, the Affected Parties or the Indemnified

         Parties; and

 

         (5) to the Administrator, for the account of the Purchasers in

         accordance with their respective Pro Rata Shares, an amount equal to

         the Excess Amount as of the Reporting Date, if any, which amount shall

         be distributed by the Administrator to the Purchasers for application

         to their respective Pro Rata Shares of the Capital.

 

On or as of any Purchase Date hereunder, the full amount of any such payments

and/or distributions required to be made on the next succeeding Settlement Date

(as computed by the Administrator in its reasonable judgment), shall, for

purposes of any computations required pursuant to Section 5.2(b) for determining

Seller's eligibility to effect any Purchase hereunder on such Purchase Date, be

given pro forma effect and be included in any such computations as if made prior

to the Purchase reflected in the applicable Purchase Notice.

 

         (d) Settlement Period Procedure - Termination Period. On each Business

Day during the Termination Period, Servicer shall, immediately upon receipt or

deemed receipt thereof, deposit in a Lockbox Account, all Collections received

or deemed received pursuant to Section 3.2 on such Business Day and all

Collections so received or deemed received during each Settlement Period during

the Termination Period shall be distributed by the Servicer or the Administrator

(to the extent that such funds are in its possession) on each Settlement Date in

the following amounts and in the following order:

 

         (1) to the Administrator, for the account of the Purchasers in

         accordance with their respective Pro Rata Shares, an amount equal to

         the Yield accrued during such Settlement Period, plus any previously

         accrued Yield not paid on a prior Settlement Date, which amount shall

         be distributed by the Administrator to the Purchasers for application

         to such Yield;

 

         (2) to the Administrator, an amount equal to the Fees accrued during

         such Settlement Period, plus any previously accrued Fees not paid on a

         prior Settlement Date which amount shall be distributed by Servicer to

         all Persons to whom payable;

 

 

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                                      -9-

 

         (3) to the Servicer, an amount equal to the Purchasers' Share of the

         Servicer's Fee accrued during such Settlement Period, plus any

          previously accrued Purchasers' Share of the Servicer's Fee not paid on

         a prior Settlement Date;

 

         (4) to the Administrator, for the account of the Purchasers in

         accordance with their respective Pro Rata Shares, an amount equal to

         the remaining Purchasers' Share of Collections, until the Capital is

         reduced to zero, which amount shall be distributed by the Administrator

         to the Purchasers for application to their respective Pro Rata Shares

         of the Capital;

 

         (5) to the Administrator, all other amounts (other than Capital) then

         due under this Agreement and the other Transaction Documents to the

         Administrator, the Purchasers, the Affected Parties or the Indemnified

         Parties; and

 

         (6) to the Seller, any remaining amounts.

 

         (e) Delayed Payment. If on any day prior to the Termination Date,

because Collections during the relevant Settlement Period were less than the

aggregate amounts payable, Servicer does not make any payment otherwise

required, the Servicer shall set aside and hold Collections in respect of the

Receivable Interest until sufficient amounts have been collected to pay the

shortfall and will on the next Business Day pay to the Administrator the amount

of such shortfall and no Reinvestment shall be permitted hereunder until such

amount payable has been paid in full.

 

         SECTION 3.2. DEEMED COLLECTIONS; REDUCTION OF CAPITAL, ETC.

 

         (a) Deemed Collections. If on any day (any of the events or

circumstances described in the succeeding clauses (i), (ii) or (iii) being

referred to herein as a "Deemed Collection"):

 

         (i) a Dilution occurs or the Unpaid Balance of any Pool Receivable is

         less than the amount included in calculating the Net Pool Balance for

         purposes of any Servicer Report for any other reason; or

 

         (ii) any of the representations or warranties of Seller set forth in

         Section 6.1(k) or (o) with respect to any Pool Receivable were not true

         when made with respect to any Pool Receivable, or any of the

         representations or warranties of Seller set forth in Section 6.1(k) or

         (o) are no longer true with respect to any Pool Receivable; or

 

 

<PAGE>

 

                                       -10-

 

 

         (iii) without duplication, Seller receives a Deemed Collection pursuant

         to the Purchase and Sale Agreement;

 

         then, on such day, Seller shall be deemed to have received a Collection

         of such Pool Receivable:

 

         (xi)      in the case of clause (a)(i) above, in the amount of such

                  Dilution or the difference between the actual Unpaid Balance

                  and the amount included in calculating such Net Pool Balance,

                   as applicable; and

 

         (xii)     in the case of clause (a)(ii) above, in the amount of the

                  Unpaid Balance of such Pool Receivable; and

 

         (xiii)    in the case of clause (a)(iii) above, in the amount of such

                   Deemed Collection.

 

In the event that Seller has paid to the Administrator, for the account of the

Purchasers, the Purchasers' Share of the Unpaid Balance of any Receivable

pursuant to this Section 3.2(a), the Seller shall acquire the Purchasers'

interest in such Receivable and all Related Rights with respect thereto, without

recourse, representation or warranty of any type or kind by the Purchaser.

 

         (b) Seller's Optional Reduction of Capital. Seller may at any time (but

not more than once in any seven (7)-day period) elect to reduce the Capital as

follows:

 

         (i) Seller shall give the Administrator at least two (2) Business Days'

         prior written notice of such reduction (including the amount of such

         proposed reduction and the proposed date on which such reduction will

         commence);

 

         (ii) on the proposed date of commencement of such reduction and on each

         day thereafter, Servicer shall refrain from reinvesting Collections

         pursuant to Section 1.3 until the amount thereof not so reinvested

         shall equal the desired amount of reduction, and

 

         (iii) Servicer shall deposit such Collections into the Administrator's

         Account in trust for the Purchasers, pending receipt by the

         Administrator of the full amount of such requested Capital reduction,

         whereupon such funds shall be applied to so reduce the Capital;

 

provided that,

 

                           (A) the amount of any such reduction shall be not

                   less than $1,000,000 or an integral multiple of $100,000 in

                  excess thereof, and

 

 

<PAGE>

 

                                      -11-

 

 

                  the Capital after giving effect to such reduction shall be not

                   less than $15,000,000 (unless Capital shall thereby be reduced

                  to zero); and

 

                           (B) Seller shall use reasonable efforts to attempt to

                  choose a reduction amount, and the date of commencement

                  thereof, so that such reduction shall commence and conclude in

                  the same Settlement Period.

 

         SECTION 3.3. PAYMENTS AND COMPUTATIONS, ETC.

 

         (a) Payments. All amounts to be paid or deposited by Seller or Servicer

to the Administrator or any other Person (other than to Seller or Servicer)

hereunder (other than amounts payable under Section 4.2) shall be paid or

deposited in accordance with the terms hereof no later than 2:00 P.M. (Denver,

Colorado time) on the day when due (with written notice of such payment or

deposit to be given to the Administrator by not later than 11:00 A.M. (Denver,

Colorado time) on such day) in lawful money of the United States of America in

immediately available funds to the Administrator at ABA# 307088754, account #

00019975; Attention: Feed (the "Administrator's Account"). Any and all payments

by or on account of Seller hereunder or under any other Transaction Document

shall be made free and clear of, and without deduction for, any taxes or other

charges of any type or kind; provided that if Seller shall be required to deduct

any taxes or other charges of any type or kind from such payments, then (i) the

sum payable shall be increased as necessary so that after making all required

deductions (including deductions applicable to additional sums payable under

this Section) the Administrator or Purchaser (as the case may be) receives an

amount equal to the sum it would have received had no such deductions been made,

(ii) Seller shall make such deductions and (iii) Seller shall pay the full

amount deducted to the relevant Governmental Authority in accordance with

Applicable Law.

 

         (b) Late Payments. Seller or Servicer, as applicable, shall, to the

extent permitted by law, pay to the Purchasers or the Administrator, as the case

may be, interest on all amounts not paid or deposited by it when such amount is

due hereunder at the Default Rate, payable on demand, provided, however, that

such interest shall not at any time exceed the maximum rate permitted by

Applicable Law.

 

         (c) Method of Computation. All computations of Yield, interest and any

fees payable hereunder shall be made on the basis of a year of 360 days for the

actual number of days (including the first day but excluding the last day)

elapsed.

 

                      ARTICLE IV. FEES AND YIELD PROTECTION

 

         SECTION 4.1. FEES. (a) Seller shall pay to the Administrator and the

Purchasers the Fees in the amounts and at the times set forth in the fee letter,

 

 

<PAGE>

 

                                      -12-

 

 

dated September 23, 2003, from the Administrator (as amended or supplemented

from time to time, the "Fee Letter").

 

         (b) During the period from and including the date hereof to the date on

which the Termination Period begins, a commitment fee (a "Commitment Fee") shall

be payable to the Administrator for the account of Purchasers in accordance with

their respective Pro Rata Shares, payable monthly in arrears on each Settlement

Date and computed at the rate of .375% per annum (37.5 basis points) on the

average amount of the difference between the Facility Limit and the amount of

Capital during each Settlement Period ending prior to the Settlement Date on

which the Commitment Fee is paid, commencing on the first such Settlement Date

to occur after the date hereof.

 

         SECTION 4.2. YIELD PROTECTION.

 

         (a) If (i) Regulation D or (ii) any Regulatory Change occurring after

the date hereof:

 

                           (A) shall subject an Affected Party or any of their

                  interests to any tax, duty or other charge with respect to any

                  Receivable Interest owned by or funded by it, or any

                  obligations or right to make Purchases or Reinvestments or to

                  provide funding therefor, or shall change the basis of

                  taxation of payments to the Affected Party of any Capital or

                  Yield owned by, owed to or funded in whole or in part by it or

                  any other amounts due under this Agreement in respect of the

                  Receivable Interest owned by or funded by it or its

                  obligations or rights, if any, to make Purchases or

                  Reinvestments or to provide funding therefor (except for

                  franchise taxes or changes in the rate of tax on the overall

                  net income of such Affected Party); or

 

                           (B) shall impose, modify or deem applicable any

                  reserve (including, without limitation, any reserve imposed by

                  the Federal Reserve Board, special deposit, compulsory loan or

                  similar requirement against assets of any Affected Party,

                  deposits or obligations with or for the account of any

                  Affected Party or with or for the account of any affiliate (or

                  entity deemed by the Federal Reserve Board to be an affiliate)

                  of any Affected Party, or credit extended by any Affected

                  Party, but excluding any reserve, special deposit or similar

                  requirement included in the determination of Yield; or

 

                           (C) shall change the amount of capital maintained or

                   required or requested or directed to be maintained by any

                  Affected Party; or

 

 

<PAGE>

 

                                      -13-

 

 

                           (D) shall impose any other condition affecting any

                  Receivable Interest owned or funded in whole or in part by any

                  Affected Party, or its obligations or rights, if any, to make

                  Purchases or Reinvestments or to provide funding therefor; or

 

                           (E) shall change the rate for, or the manner in which

                  the Federal Deposit Insurance Corporation (or a successor

                  thereto) assesses, deposit insurance premiums or similar

                  charges;

 

and the result of any of the foregoing is;

 

                  (x)       to increase the cost to or to impose a cost on an

                           Affected Party funding or making or maintaining any

                           Purchases or Reinvestments, any purchases,

                            reinvestments, or loans or other extensions of credit

                           under any Transaction Document, or any commitment of

                           such Affected Party with respect to any of the

                           foregoing;

 

                   (y)       to reduce the amount of any sum received or

                           receivable by an Affected Party under this Agreement,

                           or under any Transaction Document; or

 

                  (z)       to reduce the rate of return on the capital of an

                           Affected Party as a consequence of its obligations

                           hereunder or under any Transaction Document or

                           arising in connection herewith to a level below that

                           which such Affected Party could otherwise have

                           achieved;

 

then within thirty (30) days after demand by such Affected Party (which demand

shall be accompanied by a statement setting forth in reasonable detail the basis

for, calculation of, and amount of such additional costs or reduced amount

receivable; provided, however, that no Affected Party shall be required to

disclose any confidential or tax planning information in any such statement),

Seller shall pay directly to such Affected Party such additional amount or

amounts as such Affected Party reasonably determines will compensate such

Affected Party for such additional or increased cost or such reduction, but

without duplication of any other similar additional amounts due under any other

Transaction Document.

 

         (b) Each Affected Party will use reasonable efforts to notify Seller

and the Administrator as soon as practicable after knowledge of the occurrence

of any event of which it has knowledge which will entitle such Affected Party to

compensation pursuant to this Section 4.2; provided however, that no failure to

give or delay in giving such notification shall adversely affect the rights of

any Affected Party to such compensation and provided further, that no Affected

Party shall be entitled to

 

 

<PAGE>

 

 

                                      -14-

 

 

such compensation retroactively for a period of more than ninety (90) days prior

to the date of such notice.

 

         (c) In determining any amount provided for or referred to in this

Section 4.2, an Affected Party may use any reasonable averaging and attribution

methods that it shall deem applicable. Any Affected Party when making a claim

under this Section 4.2 shall submit to Seller a statement as to such increased

cost or reduced return (including a calculation thereof in reasonable detail),

which statement shall, in the absence of demonstrable error, be conclusive and

binding upon Seller.

 

         SECTION 4.3. FUNDING LOSSES. In the event that any Affected Party shall

incur any loss or expense (including any LIBOR Rate breakage costs or any other

loss or expense incurred by reason of the liquidation or reemployment of

deposits or other funds acquired by such Affected Party to make or maintain any

funding with respect to the Receivable Interest) as a result of (i) any

settlement with respect to any portion of Capital funded by such Affected Party

being made on any day other than the scheduled last business day of an

applicable Settlement Period with respect thereto, or (ii) any Purchase not

being made in accordance with a request therefor under Section 1.2, then,

immediately upon demand from the Administrator to Seller, Seller shall pay to

the Administrator for the account of such Affected Party, the amount of such

loss or expense. Such written notice (which shall include calculations in

reasonable detail) shall, in the absence of demonstrable error, be conclusive

and binding upon the Seller.

 

         SECTION 4.4. PREPAYMENTS. In the event the Seller desires to reduce the

amount of Capital outstanding on a date other than a Settlement Date other than

as provided in Section 3.2(b), the Seller may deliver the amount of such Capital

to the Administrator, and the Administrator agrees to invest the amount of such

Capital as directed by the Seller for the period between the date of such

prepayment and the next succeeding Settlement Date. On the next succeeding

Settlement Date, interest and other amounts, if any, earned on the amount of

Capital so invested at the direction of the Seller will be credited toward any

amounts due from the Seller on such next succeeding Settlement Date.

Notwithstanding the terms of this Section 4.4, the Seller shall remain liable

(on the next succeeding Settlement Date) for the amount, if any, by which the

Yield accruing on the outstanding Capital through the next succeeding Settlement

Date exceeds the amount, if any, of interest and other amounts earned upon

investment of such prepaid amounts by the Administrator (at the direction of the

Seller) as aforesaid.

 

                       ARTICLE V. CONDITIONS TO PURCHASES

 

         SECTION 5.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE AND

EFFECTIVENESS. Each of the initial Purchase hereunder and the effectiveness of

this Agreement is subject to the condition precedent that the Administrator

shall have

 

 

<PAGE>

 

                                      -15-

 

 

received, on or before the date of such Purchase, the following, each (unless

otherwise indicated) dated such date and in form and substance reasonably

satisfactory to the Administrator:

 

         (a) Good standing (and foreign qualification, as applicable)

certificates for each Originator and Seller issued by the Secretaries of State

of the jurisdictions of their incorporation or formation and their respective

principal places of business;

 

         (b) A certificate of the Secretaries of Feed and Seller in form and

substance reasonably satisfactory to the Administrator certifying (i) a copy of

the resolutions of its Board of Directors approving this Agreement and the other

Transaction Documents to be delivered by it hereunder and the transactions

contemplated hereby; (ii) the names and true signatures of the officers

authorized on its behalf to sign this Agreement and the other Transaction

Documents to be delivered by it hereunder (on which certificate the

Administrator and the Purchasers may conclusively rely until such time as the

Administrator shall receive from Feed or Seller, as the case may be, a revised

certificate meeting the requirements of this subsection (b)); (iii) a copy of

its by-laws, operating agreement or equivalent organizational document(s); and

(iv) all documents evidencing other necessary corporate action and governmental

approvals, if any, with respect to this Agreement and the other Transaction

Documents;

 

         (c) The Certificate of Formation of each of Seller and Feed, duly

certified by the Secretary of State of the jurisdiction of its formation, as of

a recent date reasonably acceptable to Administrator;

 

         (d) Acknowledgment copies or time-stamped receipt copies, of proper

financing statements (Form UCC-1) or amendments to existing UCC-1's (Form UCC-3)

filed in connection with the Existing Receivables Purchase Agreement, filed

prior to the date of the initial Purchase, naming (i) each of the Originators as

the debtor and seller of Receivables, Seller as the secured party and purchaser

and Administrator, for the benefit of the Purchasers, as the assignee, and (ii)

Seller as the debtor and seller of Receivables or an undivided interest therein

and Administrator, for the benefit of the Purchasers, as the secured party and

purchaser, or other, similar instruments or documents, as may be necessary or,

in the opinion of the Administrator, desirable under the UCC or any comparable

law of all appropriate jurisdictions to perfect Seller's and the Purchasers'

interests in the Pool Assets, all of which financing statements the

Administrator is hereby authorized to file;

 

         (e) A search report provided in writing to and approved by the

Administrator, which approval shall not be unreasonably withheld or delayed,

listing all effective financing statements that name any Originator or Seller as

debtor or assignor and that are filed in the jurisdictions in which filings were

made

 

 

<PAGE>

 

                                      -16-

 

 

pursuant to subsection (d) above and in such other jurisdictions that

Administrator shall reasonably request, together with copies of such financing

statements (none of which shall cover any Pool Assets, unless executed

termination statements and/or partial releases with respect thereto have been

delivered to the Administrator), and tax and judgment lien search reports from a

Person reasonably satisfactory to Servicer and the Administrator showing no

evidence of such liens filed against any Originator or Seller;

 

         (f) Duly executed copies of the Lockbox Agreements with the Lockbox

Banks in form and substance reasonably satisfactory to the Administrator;

 

         (g) Favorable opinions of (i) in-house counsel to each of Servicer and

Seller as to corporate authority and (ii) Faegre & Benson LLP, special counsel

to each of the Originators and Seller as to all other legal matters, in form and

substance reasonably satisfactory to the Administrator and its counsel;

 

         (h) Such powers of attorney as the Administrator shall reasonably

request to enable the Administrator to collect all amounts due under any and all

Pool Assets;

 

         (i) A pro forma Servicer Report, assuming a Cut-Off Date of February

27, 2004;

 

         (j) Reasonably satisfactory results of a review and audit, conducted by

CoBank, of the Originators' (as deemed necessary by the Administrator)

collection, operating and reporting systems, Credit and Collection Policy,

historical receivables data and accounts, including reasonably satisfactory

results of a review of the Originators' operating locations and reasonably

satisfactory review and approval of the Eligible Receivables in existence on the

date of the initial Purchase;

 

         (k) Evidence of payment by the Seller out of the proceeds of the

initial Purchase of all accrued and unpaid Fees (including those contemplated by

the Fee Letter), all of the costs and expenses of this transaction accrued or

received prior to the date hereof, including, without limitation, attorneys'

fees of the Administrator, plus such additional amounts of attorneys' fees as

shall constitute the Administrator's reasonable estimate of attorneys' fees

incurred or to be incurred by it through the closing proceedings, including any

such costs, fees and expenses payable in accordance with Section 14.5;

 

         (l) The Purchase and Sale Agreement, duly executed by the Originators

and Seller, and a copy of all documents required to be delivered thereunder; and

 

         (m) Such other documents, certificates or opinions as the Administrator

may reasonably request.

 

 

<PAGE>

 

                                      -17-

 

 

         SECTION 5.2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS.

Each Purchase (including the initial Purchase) and each Reinvestment hereunder,

shall be subject to the further conditions precedent that:

 

         (a) in the case of each Purchase, the Servicer shall have delivered to

the Administrator on or prior to such Purchase, in form and substance

satisfactory to the Administrator, a completed Servicer Report with respect to

the immediately preceding calendar month, dated within two (2) Business Days

prior to the date of such Purchase, together with such additional information as

may be reasonably requested by the Administrator;

 

         (b) on the date of such Purchase or Reinvestment the following

statements shall be true (and Seller by accepting the amount of such Purchase or

by receiving the proceeds of such Reinvestment shall be deemed to have certified

that):

 

         (i) each of the representations and warranties contained in Article VI

         (including, without limitation, all representations and warranties

         incorporated by reference herein and made a part hereof pursuant to

         Section 6.3(a)), are true and correct in all material respects as

         though made on and as of such date and shall be deemed to have been

         made on such date (except that any such representation or warranty,

         which, by its express terms, relates exclusively to an earlier date,

         shall be true and correct in all material respects as of such earlier

         date);

 

         (ii) no event has occurred and is continuing, or would result from such

         Purchase or Reinvestment, that constitutes a Termination Event or

         Unmatured Termination Event;

 

         (iii) after giving effect to each proposed Purchase or Reinvestment,

         Capital will not exceed the Facility Limit and the Receivable Interest

         will not exceed the Allocation Limit; and

 

         (iv) the Termination Date shall not have occurred.

 

                   ARTICLE VI. REPRESENTATIONS AND WARRANTIES

 

         SECTION 6.1. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller

represents and warrants as follows:

 

         (a) Organization and Good Standing. Seller has been duly organized and

is validly existing as a limited liability company in good standing under the

laws of the State of Delaware, with power and authority to own its properties

and to conduct its business as such properties are presently owned and such

business is

 

 

<PAGE>

 

                                      -18-

 

 

presently conducted, and had at all relevant times, and now has, all necessary

power, authority, and legal right to acquire and own the Pool Assets.

 

         (b) Due Qualification. Seller is duly qualified to do business as a

foreign limited liability company in good standing, and has obtained all

necessary licenses and approvals, in all other jurisdictions in which the

ownership or lease of property or the conduct of its business requires such

qualification, licenses or approvals, and except where the failure to so qualify

or have such licenses or approvals has not had, and could not reasonably be

expected to have, a Material Adverse Effect.

 

         (c) Power and Authority; Due Authorization. Seller (i) has all

necessary power, authority and legal right to (A) execute and deliver this

Agreement and the other Transaction Documents to which it is a party, (2) carry

out the terms of the Transaction Documents to which it is a party, and (C) sell

and assign the Receivable Interest on the terms and conditions herein provided

and (ii) has duly authorized by all necessary organizational action the

execution, delivery and performance of this Agreement and the other Transaction

Documents to which it is a party and the sale and assignment of the Receivable

Interest on the terms and conditions herein provided.

 

         (d) Valid Transfer; Binding Obligations. This Agreement constitutes a

valid transfer and assignment of the Receivable Interest to the Administrator,

for the benefit of Purchaser, enforceable against creditors of, and purchasers

from, Seller; and this Agreement constitutes, and each other Transaction

Document to be signed by Seller when duly executed and delivered will

constitute, a legal, valid and binding obligation of Seller enforceable in

accordance with its terms, except, in all cases, as enforceability may be

limited by bankruptcy, insolvency, reorganization or other similar laws

affecting the enforcement of creditors' rights generally and by general

principles of equity, regardless of whether such enforceability is considered in

a proceeding in equity or at law.

 

          (e) No Violation. The consummation by Seller of the transactions

contemplated by this Agreement and the other Transaction Documents to which it

is a party and the fulfillment of the terms hereof and thereof will not (i)

conflict with, result in any breach of any of the terms and provisions of, or

constitute (with or without notice or lapse of time or both) a default under,

the Seller's certificate of formation or limited liability company agreement or

any Contractual Obligation of Seller, (ii) result in the creation or imposition

of any Lien upon any of Seller's properties pursuant to the terms of any such

Contractual Obligation, other than this Agreement and the Purchase and Sale

Agreement, or (iii) violate any Applicable Law as then in effect.

 

         (f) No Proceedings. There is no litigation, proceeding or investigation

pending or, to the best of Seller's knowledge, threatened, before any

Governmental

 

 

<PAGE>

 

                                      -19-

 

 

Authority or arbitrator (i) asserting the invalidity of this Agreement or any

other Transaction Document to which Seller is a party, (ii) seeking to prevent

the sale and assignment of the Receivable Interest or the consummation of any of

the other transactions contemplated by this Agreement or any other Transaction

Document, or (iii) seeking any determination or ruling that could reasonably be

expected to have a Material Adverse Effect.

 

         (g) Bulk Sales Act. No transaction contemplated hereby requires

compliance with any bulk sales act or similar law.

 

         (h) Government Approvals. No Governmental Action is required for the

due execution, delivery and performance by Seller of this Agreement or any other

Transaction Document to which Seller is a party, except for the filing of the

UCC financing statements referred to in Article V, all of which, at the time

required in Article V, shall have been duly made and shall be in full force and

effect.

 

         (i) Financial Condition. Since the date of Seller's formation, there

has been no material adverse change in Seller's financial condition, business,

assets or operations.

 

         (j) Margin Regulations. The use of all funds obtained by Seller under

this Agreement will not conflict with or contravene any of Regulations T and X

promulgated by the Board of Governors of the Federal Reserve System from time to

time.

 

         (k) Quality of Title. Each Pool Asset is legally and beneficially owned

by Seller free and clear of any Lien (other than any Lien arising solely as the

result of any action taken by the Purchasers or the Administrator); when the

Purchasers make a Purchase or Reinvestment, the Administrator shall have

acquired, for the benefit of the Purchasers, a valid and enforceable perfected

first-priority undivided percentage ownership interest to the extent of the

Receivable Interest in each Pool Asset, free and clear of any Lien (other than

any Lien arising solely as the result of any action taken by the Purchasers or

the Administrator), enforceable against any creditor of, or purchaser from,

Seller or any Originator; and no financing statement or other instrument similar

in effect covering any Pool Asset is on file in any recording office except such

as may be filed (i) in favor of an Originator in accordance with the Contracts,

(ii) in favor of Seller in accordance with the Purchase and Sale Agreement, or

(iii) in favor of the Purchasers or the Administrator in accordance with this

Agreement or in connection with any Lien arising solely as the result of any

action taken by the Purchasers or the Administrator.

 

         (l) Accurate Reports. No Servicer Report, Weekly Report or other

information, exhibit, financial statement, document, book, record or report

 

 

<PAGE>

 

 

                                      -20-

 

 

furnished or to be furnished by or on behalf of Seller to the Administrator or

the Purchasers in connection with this Agreement or any Transaction Document was

or will be inaccurate in any material respect as of the date it was or will be

dated or (except as otherwise disclosed to the Administrator at such time) as of

the date so furnished, or contained or will contain any material misstatement of

fact or omitted or will omit to state a material fact or any fact necessary to

make the statements contained therein not materially misleading.

 

         (m) Offices. The principal place of business and chief executive office

of Seller are located at the address of Seller referred to in Section 14.2, and

the offices at which Seller keeps all its books, records and documents

evidencing or relating to Pool Receivables are located at the addresses

specified in Schedule 6.1(m) (or at such other locations, notified to the

Administrator in accordance with Section 7.1(f), in jurisdictions where all

action required by Section 8.5 has been taken and completed).

 

         (n) Lockbox Accounts. The names and addresses of all the Lockbox Banks,

together with the account numbers of the Lockbox Accounts of Seller at such

Lockbox Banks, are specified in Schedule 6.1(n) (or have been notified to the

Administrator in accordance with Section 7.3(d)).

 

         (o) Eligible Receivables. Each Receivable included in the Net Pool

Balance as an Eligible Receivable on the date of any Purchase, Reinvestment or

other calculation of Net Pool Balance shall be an Eligible Receivable on such

date.

 

         (p) Accounting Sale. The Seller has accounted for each sale of

undivided percentage ownership interests in Receivables in its books and

financial statements as sales, consistent with GAAP.

 

         (q) Credit and Collection Policies. The Seller has complied in all

material respects with the applicable Credit and Collection Policy with regard

to each Receivable.

 

         (r) Legal Name. The Seller's complete legal name is set forth in the

preamble to this Agreement, and the Seller does not use, and has not during the

last six (6) years used, any other corporate name, trade name, doing business

name or fictitious name.

 

 

         SECTION 6.2. REPRESENTATIONS AND WARRANTIES OF SERVICER. Servicer

hereby represents and warrants as follows:

 

         (a) Organization and Good Standing. Servicer has been duly organized

and is validly existing as a cooperative corporation in good standing under the

laws

 

 

<PAGE>

 

 

                                      -21-

 

 

of the State of its formation, with full power and authority to own its

properties and to conduct its business as such properties are presently owned

and such business is presently conducted.

 

         (b) Due Qualification. Servicer is duly qualified to do business as a

foreign cooperative corporation in good standing, and has obtained all necessary

licenses and approvals, in all jurisdictions in which the ownership or lease of

property or the conduct of its business requires such qualification, licenses or

approvals, except where the failure to so qualify or have such licenses or

approvals has not had, and could not reasonably be expected to have, a Material

Adverse Effect.

 

         (c) Power and Authority; Due Authorization. Servicer (i) has all

necessary power, authority and legal right to (A) execute and deliver this

Agreement and the other Transaction Documents to which it is a party and (B)

carry out the terms of the Transaction Documents to which it is a party and (ii)

has duly authorized by all necessary corporate action the execution, delivery

and performance of this Agreement and the other Transaction Documents to which

it is a party.

 

         (d) Binding Obligations. This Agreement constitutes, and each other

Transaction Document to be signed by Servicer when duly executed and delivered

will constitute, a legal, valid and binding obligation of Servicer, enforceable

against Servicer in accordance with its terms, except as enforceability may be

limited by bankruptcy, insolvency, reorganization or other similar laws

affecting the enforcement of creditors' rights generally and by general

principles of equity, regardless of whether such enforceability is considered in

a proceeding in equity or at law.

 

         (e) No Violation. The consummation of the transactions contemplated by

this Agreement and the other Transaction Documents to which Servicer is a party

and the fulfillment of the terms hereof and thereof will not (i) conflict with,

result in any breach of any of the terms and provisions of, or constitute (with

or without notice or lapse of time or both) a default under Servicer's charter,

by-laws or any other organizational document or any Contractual Obligation of

Servicer, (ii) result in the creation or imposition of any Lien upon any of

Servicer's properties pursuant to the terms of any such Contractual Obligation

(other than any Lien created pursuant to the Transaction Documents), or (iii)

violate any Applicable Law as then in effect.

 

         (f) No Proceedings. There is no litigation, proceeding or investigation

pending or, to the best of Servicer's knowledge, threatened, before any

Governmental Authority or arbitrator (i) asserting the invalidity of this

Agreement or any other Transaction Document to which Servicer is a party, (ii)

seeking to prevent the sale and assignment of the Receivable Interest or the

consummation of

 

 

<PAGE>

 

                                      -22-

 

 

any of the other transactions contemplated by this Agreement or any other

Transaction Document, or (iii) seeking any determination or ruling that could

reasonably be expected to have a Material Adverse Effect.

 

         (g) Government Approvals. No Governmental Action is required for the

due execution, delivery and performance by Servicer of this Agreement or any

other Transaction Document to which it is a party, other than the filing of the

UCC financing statements referred to in Article V, and all filings, if any,

necessary to comply with the Hart-Scott-Rodino Antitrust Act, all of which, at

the time required in Article V, shall have been duly made and shall be in full

force and effect.

 

         (h) Accurate Reports. No Servicer Report, no Weekly Report or other

information, exhibit, financial statement, document, book, record or report

furnished or to be furnished by or on behalf of Servicer to the Administrator or

the Purchasers in connection with this Agreement or any Transaction Document was

or will be inaccurate in any material respect as of the date it was or will be

dated or (except as otherwise disclosed to the Administrator at such time) as of

the date so furnished, or contained or will contain any material misstatement of

fact or omitted or will omit to state a material fact or any fact necessary to

make the statements contained therein not materially misleading.

 

 

                          ARTICLE VII. GENERAL COVENANTS

 

         SECTION 7.1. AFFIRMATIVE COVENANTS. From the date hereof until the

Final Payout Date:

 

         (a) Compliance with Laws, Etc. Each of Seller and Servicer will comply

in all material respects with all Applicable Laws, including those with respect

to the Pool Receivables and the related Contracts, except where noncompliance

could not reasonably be expected to have a Material Adverse Effect.

 

         (b) Preservation of Legal Existence. Each of Seller and Servicer will

preserve and maintain its legal existence, rights, franchises and privileges in

the jurisdiction of its formation, and qualify and remain qualified in good

standing as a foreign limited liability company, corporation, or other business

entity, as the case may be, in each jurisdiction where the failure to preserve

and maintain such existence, rights, franchises, privileges and qualification

could reasonably be expected to have a Material Adverse Effect.

 

         (c) Audits. (i) Each of Seller and Servicer will at any time and from

time to time during regular business hours, on at least five (5) Business Day's

prior notice unless a Termination Event shall have occurred and be continuing,

permit the Administrator or any of its agents or representatives, (A) to examine

and make

 

 

<PAGE>

 

 

                                      -23-

 

 

copies of and abstracts from all books, records and documents (including,

without limitation, computer tapes and disks) in its possession or under its

control relating to Pool Assets, (B) to visit its offices and properties for the

purpose of examining such materials described in clause (i)(A) above, and to

discuss matters relating to Pool Assets or its performance hereunder with any of

its officers or employees having knowledge of such matters, and (C) to verify

with officers and employees of Servicer, or directly with any Obligors (but only

with a representative of the Servicer present unless a Termination Event shall

have occurred and be continuing), the existence and amount of the Receivables;

and (ii) without limiting the provisions of clause (i) above, from time to time

on request of Administrator on at least five (5) Business Days prior notice,

unless a Termination Event shall have occurred and be continuing, permit

certified public accountants or other auditors acceptable to the Administrator

to conduct, at the expense of Seller or Servicer, as the case may be, a review

of its books and records with respect to the Pool Receivables; provided, however

that unless a Termination Event has occurred and is continuing, Seller and/or

Servicer shall not be obligated to pay for more than two (2) such audits in any

calendar year.

 

         (d) Keeping of Records and Books of Account. Each of Seller and

Servicer will maintain and implement administrative and operating procedures

(including, without limitation, an ability to recreate records evidencing Pool

Receivables in the event of the destruction of the originals thereof), and keep

and maintain all documents, books, records and other information reasonably

necessary or advisable for the collection of all Pool Assets (including, without

limitation, records adequate to permit the daily identification of each new Pool

Receivable and all Collections of and adjustments to each existing Pool

Receivable).

 

         (e) Performance and Compliance with Receivables and Contracts. Seller

will, at its expense, timely and fully perform and comply with (or cause an

Originator to perform and comply with pursuant to the Purchase and Sale

Agreement) all provisions, covenants and other promises required to be observed

by it under the Contracts related to the Pool Receivables and all other

agreements related to such Pool Receivables, except where failure to do so would

not materially and adversely affect the validity, enforceability or

collectibility of the related Pool Receivable.

 

         (f) Location of Records. Each of Seller and Servicer will keep its

principal place of business and chief executive office, and the offices where it

keeps its records concerning the Pool Receivables and all related Contracts and

all other agreements related to such Pool Receivables (and all original

documents relating thereto), at its addresses referred to in Section 14.2 or,

upon thirty (30) days' prior written notice to the Administrator, at such other

locations in jurisdictions where all action required by Section 8.5 shall have

been taken and completed.

 

 

<PAGE>

 

 

         (g) Credit and Collection Policies. Attached as Schedule 7.1(g) are the

Credit and Collection Policies for each of the Originators. Each of Seller and

Servicer, at its own expense, will at all times timely and fully perform and

comply in all material respects with, and Feed agrees to so perform and comply

with, each applicable Credit and Collection Policy in regard to each Pool

Receivable and the related Contracts.

 

         (h) Collections. Each of Seller and Servicer will (i) instruct (A) all

Obligors to cause all Collections (which, for the avoidance of doubt, shall

exclude any collections in respect of any Reconveyed Receivable, retail

receivable or other receivable of Seller, any Originator or any other Person not

included in the Receivable Pool) to be sent to either a Lockbox or Lockbox

Account that is the subject of a Lockbox Agreement, unless otherwise requested

by the Administrator pursuant to Section 8.3(c)(ii), in which case the Obligors

shall be instructed consistent with such request, and (B) each Lockbox Bank or

lockbox bank to deposit all such Collections directly into a Lockbox Account

that is the subject of a Lockbox Agreement. In the event that Seller or Servicer

receives Collections directly from any Obligor, Seller or Servicer, as the case

may be, shall deposit such Collections in the form received into either the

Collection Account or a Lockbox Account within two (2) Business Days after

receipt thereof or, on or after the Termination Date, immediately upon receipt.

 

         (i) Quality of Title. Each of Seller and Servicer will take all action

necessary or desirable to establish and maintain a valid and enforceable

perfected first-priority undivided percentage ownership interest in favor of the

Administrator, for the benefit of the Purchasers, to the extent of the

Receivable Interest in each Pool Asset, free and clear of any Lien (other than

any Lien arising solely as a result of any action taken by the Purchasers or the

Administrator), enforceable against any creditor of, or purchaser from, Seller

or any Originator.

 

         (j) Bank Equity Interests. (i) Each of Seller and Servicer agrees to

purchase such equity interests in CoBank ("Bank Equity Interests") as CoBank may

from time to time require in accordance with its bylaws and capital plans as

applicable to cooperative borrowers generally. In connection with the foregoing,

each of Seller and Servicer hereby acknowledges receipt, prior to the execution

of this Agreement, of the following with respect to CoBank:

 

         (A) the bylaws of CoBank;

 

         (B) a written description of the terms and conditions under which the

Bank Equity Interests are issued; and

 

         (C) the most recent annual report, and if more recent than the latest

annual report, the latest quarterly report.

 

 

<PAGE>

 

                                      -25-

 

 

 

         (ii) CoBank reserves the right to sell participations and to make

assignments of its rights and duties hereunder in accordance with the provisions

of Article XII on a non-patronage basis. For the avoidance of doubt, none of the

Purchasers (other than CoBank) will have the benefit of or any rights in any

Bank Equity Interests or proceeds thereof.

 

         SECTION 7.2. REPORTING REQUIREMENTS. From the date hereof until the

Final Payout Date:

 

         (a) Weekly Reports. Not later than Noon (Denver, Colorado time) on each

Tuesday (or, if such is not a Business Day, on the next succeeding Business

Day), Servicer will furnish to the Administrator a report (a "Weekly Report"),

duly certified by the principal financial officers of Seller and Servicer, with

respect to the immediately preceding week then ended in the form of, and

addressing the matters contained in, Exhibit 7.2(a) hereto;

 

         (b) Quarterly Financial Statements. As soon as available and, in any

event within forty-five (45) days after the end of each of the first three (3)

quarters of each fiscal year, Seller will furnish to the Administrator copies of

(i) its financial statements, consisting of at least a balance sheet as at the

close of such quarter and statements of earnings for such quarter and for the

period from the beginning of the fiscal year to the close of such quarter, in

each case in conformity with GAAP (except for footnote disclosures), duly

certified by the principal financial officer of Seller and (ii) if not otherwise

delivered to the Administrator pursuant to the Purchase and Sale Agreement, the

financial statements of LOL and its Subsidiaries prepared on a consolidated

basis, consisting of at least a balance sheet as at the close of such quarter

and statements of earnings for such quarter and for the period from the

beginning of the fiscal year to the close of such quarter, in each case in

conformity with GAAP (except for footnote disclosures) and fairly presenting the

consolidated financial position and results of operations of LOL and its

Subsidiaries for such month and period, duly certified by the principal

financial officer of LOL;

 

         (c) Annual Financial Statements. As soon as available and, in any event

within ninety (90) days after the end of each fiscal year, Seller will furnish

to the Administrator copies of (i) its financial statements, consisting of at

least a balance sheet of Seller for such year and statements of earnings and

cash flows, in each case in conformity with GAAP setting forth in each case in

comparative form corresponding figures from the preceding fiscal year, and (ii)

if not otherwise delivered to the Administrator pursuant to the Purchase and

Sale Agreement, the unqualified audited financial statements of LOL and its

Subsidiaries prepared on a consolidated basis, consisting of at least a balance

sheet of LOL and its Subsidiaries for such year and consolidated and

consolidating statements of earnings and cash flows, in each case in conformity

with GAAP, setting forth in each case in

 

 

<PAGE>

 

                                      -26-

 

 

comparative form corresponding consolidated figures from the preceding fiscal

year, with all such statements duly certified by independent certified public

accountants of recognized standing selected by LOL, together with copies of any

and all letters, from such accountants to LOL's Board of Directors or any

committee thereof;

 

         (d) Compliance Certificate. Together with each quarterly and annual

financial statement delivered in accordance with the preceding paragraphs, if

not otherwise delivered to the Administrator pursuant to the Purchase and Sale

Agreement, Seller will furnish to the Administrator the compliance certificate

to be delivered to it pursuant to Section 6.1(i)(iii) of the Purchase and Sale

Agreement.

 

         (e) Termination Events. Each of Seller and Servicer will furnish to the

Administrator, as soon as possible and in any event within two (2) Business Days

after an officer of Seller or Servicer obtains actual knowledge of the

occurrence of each Termination Event and each Unmatured Termination Event, a

written statement of the principal financial officer or principal accounting

officer of Seller or Servicer, as the case may be, setting forth details of such

event and the action that Seller or Servicer, as the case may be, proposes to

take with respect thereto;

 

         (f) Material Adverse Effect; Litigation. Each of Seller and Servicer

will furnish to the Administrator, as soon as possible and, in any event within

ten (10) Business Days after Seller's or Feed's actual knowledge thereof,

written notice of (i) the occurrence of any event or condition which could

reasonably be expected to have a Material Adverse Effect, (ii) without limiting

the foregoing clause (i), any litigation, investigation or proceeding which may

exist at any time which could be reasonably expected to have a Material Adverse

Effect and (iii) any material adverse development in previously disclosed

litigation;

 

         (g) Change in Credit and Collection Policies. Each of Seller and

Servicer will furnish to the Administrator, prior to its effective date, written

notice of any material change in any Credit and Collection Policy which changes

shall be reasonably acceptable to the Administrator;

 

         (h) Change in Name. Seller and Servicer will furnish to the

Administrator, at least thirty (30) days prior to any change in the Seller's or

Servicer's name, location or any other change requiring, or that might require,

the amendment of UCC financing statements, a notice setting forth such changes

and the effective date thereof; and

 

         (i) JP Morgan Credit Documents; Other Information. (A) To the extent

not delivered to the Administrator pursuant to any other provision of this

Agreement or of the Purchase and Sale Agreement, Seller will, at all times

during which LOL is acting as an Originator or in any other capacity hereunder

or under any Transaction Document, request pursuant to Section 6.1(i)(v) of the

Purchase

 

 

<PAGE>

 

                                      -27-

 

 

and Sale Agreement and deliver to the Administrator copies of all financial

information and reports delivered to the agent or the lenders under the JP

Morgan Credit Documents by or on behalf of LOL pursuant to any such JP Morgan

Credit Document.

 

         (B) Each of Seller and Servicer will, at all times until the Final

Payout Date, furnish to the Administrator such other information with respect to

the Receivables or the condition or operations, financial or otherwise, of the

Servicer or Seller or any Originator as the Administrator may from time to time

reasonably request.

 

         SECTION 7.3. NEGATIVE COVENANTS. From the date hereof until the Final

Payout Date:

 

         (a) Sales, Liens, Etc. Seller will not, except as otherwise provided

herein or in the Purchase and Sale Agreement, sell, assign (by operation of law

or otherwise) or otherwise dispose of, or create or suffer to exist any Lien

(except for statutory Liens on all Bank Equity Interests that Seller may now own

or hereafter acquire or be allocated in CoBank) upon or with respect to, any

Pool Asset or any interest therein. For the avoidance of doubt, Feed shall be

permitted to pledge its membership interests in Seller to secure Feed's

obligations in respect of the JP Morgan Credit Documents.

 

         (b) Extension or Amendment of Receivables. Neither Servicer nor Seller

will, except as otherwise expressly permitted in Section 8.2(c), extend, amend,

defer or otherwise modify, or permit Servicer to extend, amend or otherwise

modify, the terms of any Pool Receivable; or amend, modify or waive, or permit

Servicer to amend, modify or waive, any term or condition of any Contract

related to a Pool Receivable.

 

         (c) Change in Business or Credit and Collection Policies. Neither

Servicer nor Seller will make any change in the character of its business or in

any Credit and Collection Policy, which change could materially impair the

collectibility of any Pool Receivable or otherwise materially adversely affect

the interests or remedies of the Administrator or the Purchasers under this

Agreement or any other Transaction Document.

 

         (d) Change in Payment Instructions to Obligors. Neither Servicer nor

Seller will add or terminate any bank as a Lockbox Bank or a lockbox bank or any

Lockbox Account or lockbox account from those referenced on Schedule 6.1(n) or

make any change, or permit any Lockbox Bank or lockbox bank to make any change,

in its instructions to Obligors regarding payments to be made to Seller or

Servicer or payments to be made to any Lockbox, Lockbox Bank, lockbox or lockbox

bank, unless the Administrator shall have received notice of such addition,

 

 

<PAGE>

 

 

                                      -28-

 

 

termination or change and duly executed copies of Lockbox Agreements with each

new Lockbox Bank or with respect to each new Lockbox or Lockbox Account, as the

case may be, or given its prior written consent, not to be unreasonably

withheld, to such addition, termination or change.

 

         (e) Mergers, Acquisitions, Sales, etc. Without the prior written

consent of the Administrator and the Required Purchasers, neither the Seller nor

the Servicer will enter into any merger or consolidation with or acquire all or

substantially all of the capital stock or assets of any Person (whether in one

transaction or in a series of transactions), except that: (i) any Person (other

than the Seller or any Originator) may merge with and into the Servicer provided

that the Servicer is the surviving entity; or (ii) the Servicer may merge with

or acquire all of the capital stock of or all or substantially all of the assets

of any other Person provided that the Servicer is the surviving entity, provided

that, in each such case, prior to and immediately after giving effect thereto,

no Termination Event or Unmatured Termination Event shall exist.

 

          (f) Deposits to Special Accounts. Neither Servicer nor Seller will

deposit or otherwise credit, or cause or permit to be so deposited or credited,

to any Lockbox or Lockbox Account cash or cash proceeds (including, without

limitation, proceeds of any Reconveyed Receivable or other receivable of Seller,

any Originator or any other Person) other than Collections of Pool Receivables.

 

         (g) Other Businesses. Seller will not (i) engage in any business other

than the transactions contemplated by the Transaction Documents; (ii) incur any

indebtedness, obligation, liability or contingent obligation of any kind other

than pursuant to this Agreement or the Purchase and Sale Agreement (including

the SPV Purchaser Notes issued pursuant thereto); or (iii) form any new

Subsidiary or make any investments in any other Person (except for investments

in CoBank to the extent required by Section 7.1(k)).

 

         (h) Certificate of Formation; Purchase and Sale Agreement. Seller will

not amend, modify, terminate, revoke or waive any provision of its certificate

of formation, limited liability company agreement, any SPV Purchaser Note or the

Purchase and Sale Agreement.

 

         (i) Restricted Payments. Seller will not declare or make any dividend

or other distributions to any of its shareholders, redeem or purchase any of its

capital stock or make any loan or other payments to any of its shareholders or

Affiliates (other than (1) payments of the purchase price of Receivables and

payments under the SPV Purchaser Notes, each as set forth in the Purchase and

Sale Agreement, (2) the turn-over of Collections of Reconveyed Receivables to

Servicer as set forth in the Purchase and Sale Agreement, (3) payment of the

Servicer's Fee so long as Feed is the Servicer and (4) payment of reasonable

management fees and reimbursement of

 

 

<PAGE>

 

 

                                      -29-

 

 

reasonable expenses of Servicer incurred in connection with managing Seller, so

long as such fees and expenses are in an amount not in excess of those that

would be paid in a similar arms'-length transaction) unless, in each case, no

Termination Event or Unmatured Termination Event has occurred and is continuing

or would result therefrom.

 

         (j) Change of Name or Location. Seller will not change its name or the

location of its principal place of business or chief executive office or its

organizational structure, unless Seller has given the Administrator at least

thirty (30) days' prior notice thereof, and has taken all steps necessary or

advisable under the UCC to continue the perfection and priority of the

Administrator's and each Purchaser's interest in the Pool Assets.

 

 

         SECTION 7.4. SEPARATE EXISTENCE. Each of Seller and Servicer hereby

acknowledges and agrees that the Purchasers and the Administrator are entering

into the transactions contemplated by this Agreement and the other Transaction

Documents in reliance upon Seller's identity as a legal entity separate from

Feed and the other Originators. Therefore, from and after the date hereof, each

of Seller and Feed shall take all steps specifically required by this Agreement

or reasonably required by the Required Purchasers or the Administrator to

continue Seller's identity as a separate legal entity and to make it apparent to

third Persons that Seller is an entity with assets and liabilities distinct from

those of Feed and the other Originators and any other Person, and is not a

division of Feed, any other Originator or any other Person. Without in any way

limiting the generality of the foregoing and in addition to and consistent with

the other covenants set forth herein, Seller and Feed shall take such actions as

shall be required in order that:

 

                  (a) Seller will be a limited purpose limited liability company

whose primary activities are restricted in its certificate of formation to

purchasing or otherwise acquiring from Originators, owning, holding, granting

security interests, or selling interests, in Pool Assets, entering into

agreements for the selling and servicing of the Receivables Pool, and conducting

such other activities as it deems necessary or appropriate to carry out its

primary activities. Seller shall observe all company procedures required by it

certificate of organization, its limited liability company agreement and the

limited liability law of the State of Delaware. All distributions of Seller will

be paid and declared in accordance with the law of the State of Delaware;

 

                  (b) Seller shall not engage in any business or activity, or

incur any indebtedness or liability other than as expressly permitted by the

Transaction Documents;

 

 

<PAGE>

 

 

                                      -30-

 

 

                  (c) The business and affairs of Seller are and will be managed

by or under the direction of Seller's Board of Managers. Seller at all times

will ensure that the Board of Managers duly authorizes all company actions

requiring authorization by its Board of Managers. When necessary, Seller will

obtain proper authorization from Feed as its sole member for company action. The

officers and managers of Seller shall make decisions with respect to the

business and daily operations of Seller independent of and not dictated by Feed

or any other Originator. In addition, Seller shall ensure that its officers and

managers will adhere to all statutes, rules, by-laws or other obligations

regarding conflicts of interest and participation in decision-making by officers

and managers who may have a conflict of interest with respect to the subject

matter of the decision;

 

                  (d) Not fewer than one (1) member of Seller's Board of

Managers shall be an Independent Manager. The certificate of formation of Seller

shall provide that (i) Seller's Board of Managers shall not approve, nor take

any other action to cause the filing of, a voluntary bankruptcy petition or a

merger or dissolution with respect to Seller unless the Independent Manager

shall approve the taking of such action in writing prior to the taking of such

action and (ii) such provision cannot be amended without the prior written

consent of the Independent Manager;

 

                  (e) The Independent Manager shall not at any time serve as a

trustee in bankruptcy for Seller, Feed, any other Originator or any other

Affiliate thereof;

 

                   (f) Any employee, consultant or agent of Seller will be

compensated from Seller's funds for services provided to Seller. Seller will not

engage any agents other than its attorneys, auditors and other professionals,

and a Servicer as contemplated by this Agreement for the Receivables Pool, which

Servicer will be fully compensated for its services by payment of the Servicer's

Fee and a manager, which manager will be fully compensated from Seller's funds;

 

                  (g) Seller will not incur any material indirect or overhead

expenses for items shared with Feed (or any other Originator or Affiliate

thereof) which are not reflected in the Servicer's Fee. To the extent, if any,

that Seller (or any other Affiliate thereof) shares items of expenses not

reflected in the Servicer's Fee or the manager's fee, such as legal, auditing

and other professional services, such expenses will be allocated to the extent

practical on the basis of actual use or the value of services rendered, and

otherwise on a basis reasonably related to the actual use or the value of

services rendered, it being understood that Feed shall pay all expenses relating

to the preparation, negotiation, execution and delivery of the Transaction

Documents, including, without limitation, legal and other fees;

 

 

<PAGE>

 

                                      -31-

 

 

                  (h) Seller will pay fair market rent for any office space

shared with any Originator and a fair share of any overhead costs. Seller's

operating expenses will not be paid by Feed, any other Originator or any

Affiliate thereof. Seller shall pay from its own separate assets all material

liabilities incurred by it, including the wages and salaries of its officers and

all material administrative expenses. Seller will reimburse the applicable

Originator for its allocable portions of any shared expenses;

 

                  (i) Seller will have its own stationery and an address and

telephone number separate and distinct from the address and telephone number of

any of the Originators. Seller will continue to conduct its business solely in

its own name so as not to mislead others as to the identity of Seller. All oral

and written communications, including without limitation letters, invoices,

purchase orders, contracts, statements and applications, shall be made solely in

the name of Seller if related to Seller, or an Originator if related to such

Originator, and shall not be made in the name of Seller if related to an

Originator or the name of an Originator if related to Seller;

 

                   (j) Seller maintains and will maintain separate corporate

records, documents and books of accounting from those of Feed, any other

Originator or any other entity, and keeps and will keep correct and complete

books and records of account and minutes of the meetings and other proceedings

of its members and the Board of Managers;

 

                  (k) Seller will maintain separate financial statements from

the Originators. All financial statements of LOL, Feed or any Affiliate thereof

that are Consolidated to include Seller will contain appropriate footnotes or

will otherwise disclose that (A) the Receivables and Related Rights have been

sold (or contributed) to Seller pursuant to the Purchase and Sale Agreement, and

(B) Seller is a separate entity with creditors who have received security

interests in Seller's assets;

 

                  (l) Seller's assets will be maintained in a manner that

facilitates their identification and segregation from those of Feed, any other

Originator or any other Affiliate thereof;

 

                  (m) Seller will strictly observe corporate formalities in its

dealings with Feed, the other Originators or any Affiliates thereof, and funds

or other assets of Seller will not be commingled with those of Feed, any other

Originator or any Affiliate thereof. Seller shall not maintain joint bank

accounts or other depository accounts to which Feed, any other Originator or any

Affiliate thereof (other than Feed in its capacity as Servicer) has independent

access;

 

                   (n) Seller will maintain arms'-length relationships with Feed,

each other Originator and any Affiliate thereof. Any Person that renders or

otherwise

 

 

 

<PAGE>

 

                                      -32-

 

 

furnishes services to Seller will be compensated by Seller at market rates for

such services it renders or otherwise furnishes to Seller. Neither Seller nor

Feed will guaranty, assume any obligations of or will hold itself out to be

responsible for the debts of or the decisions or actions respecting the daily

business and affairs of (i) in the case of Seller, Feed or any other Originator

and (ii) in the case of Feed, Seller. Seller and Feed will immediately correct

any known misrepresentation with respect to the foregoing, and they will not

operate or purport to operate as an integrated single economic unit with respect

to each other or in their dealing with any other entity; and

 

                  (o) Seller (i) will act solely in its own name and through its

duly authorized officers or agents in the conduct of its businesses, (ii)