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EXHIBIT 4.3
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of December 21, 2005, by and
among
VERASUN ENERGY CORPORATION, a South Dakota corporation (the
"Borrower"), FIRST
NATIONAL BANK OF OMAHA, a national banking association with
principal offices in
Omaha, Nebraska (the "Bank"), VERASUN AURORA CORPORATION, a South
Dakota
corporation ("Aurora"), VERASUN FORT DODGE, LLC, a Delaware limited
liability
company ("Fort Dodge"), and VERASUN CHARLES CITY, LLC, a Delaware
limited
liability company ("Charles City"). The parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms
have the following meanings (terms defined in the singular to have
the same
meaning when used in the plural and vice versa):
"Account(s)" means, as to the Borrower and each Restricted
Subsidiary, at
any relevant time, one or more Account(s), as defined in the UCC,
and any other
rights to receive payments for services rendered or Goods
provided.
"Additional Conditions Precedent" shall have the meaning given such
term in
Section 3.02 of this Agreement.
"Additional Subsidiary" means, as to the Borrower, (1) a
corporation, other
than Aurora, of which shares of stock having ordinary voting power
(other than
stock having such power only by reason of the happening of a
contingency) to
elect a majority of the board of directors or other managers of
such corporation
are at the time owned, or the management of which is otherwise
controlled,
directly or indirectly through one or more intermediaries, or both,
by the
Borrower; or (2) a limited liability company, other than a Current
Subsidiary,
of which the Borrower owns a greater than 50% membership interest,
has the
ability to elect the majority of the managers of the limited
liability company,
or the management of which is otherwise controlled, directly or
indirectly
through one or more intermediaries, or both, by the Borrower; or
(3) any
partnership or other entity of which the Borrower owns a greater
than 50%
interest or the management of which is controlled, directly or
indirectly
through one or more intermediaries, or both, by the Borrower.
"Adjustment Date" means, the first day of February, May, August
and
November of each year during the period in which any amounts are
due and owing
to the Bank pursuant to the transactions provided for in this
Agreement.
"Affiliate" means any Person, other than a Subsidiary, (1) which
directly
or indirectly controls, or is controlled by, or is under common
control with the
Borrower or a Subsidiary; (2) which directly or indirectly
beneficially owns or
holds ten percent (10%) or more of any interest of the Borrower or
any
Subsidiary; (3) ten percent (10%) or more of the voting stock of
which is
directly or indirectly beneficially owned or held by the Borrower
or a
Subsidiary; or (4) ten percent (10%) or more of any membership
interest or other
interest in any other entity of which is
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directly or indirectly beneficially owned or held by the Borrower
or a
Subsidiary. The term "control" means the possession, directly or
indirectly, of
the power to direct or cause the direction of the management and
policies of a
Person, whether through the ownership of voting securities, through
the
ownership of interests in a limited liability company, partnership
or other
entity, by contract, or otherwise.
"Agreement" means this Revolving Credit Agreement and all schedules
and
exhibits to this Agreement, in each case as amended, supplemented,
or modified
from time to time.
"Aurora" shall have the meaning given such term in the preamble
hereto.
"Authorized Person" means, an individual authorized to act on
behalf of the
Borrower or a Restricted Subsidiary, in accordance with its
Organizational
Documents or appropriate resolutions adopted in accordance
therewith.
"Bank" shall have the meaning given such term in the preamble
hereto.
"Bankruptcy Code" means Title 11 of the United States Code, as
now
constituted or hereafter amended.
"Borrower" shall have the meaning given such term in the preamble
hereto.
"Borrowing Base" means the lesser of:
(a) Thirty Million and No/100ths Dollars ($30,000,000.00); or
(b) The aggregate of (i) seventy-five percent (75%) of the
Borrower's
and each Restricted Subsidiary's Eligible Accounts, plus (ii)
seventy-five percent (75%) of Borrower's and each Restricted
Subsidiary's Inventory, at current value on the date reported,
determined in accordance with GAAP, less (iii) the face amount of
all
Letters of Credit issued by the Bank pursuant to the Letter of
Credit
Facility and all outstanding letters of credit issued by the Bank
on
behalf of a Restricted Subsidiary to be replaced pursuant to
Section
5.13, as to the date of such determination.
"Borrowing Base Certificate" means the fully completed and
executed
certificate, in the form of Exhibit "A" attached to this Agreement
and
incorporated herein by this reference, certified by the chief
financial officer
of the Borrower to be true and correct and delivered to, and
accepted by, the
Bank, which acceptance shall not be unreasonably withheld, at the
time (a) of
each borrowing under the terms and provisions of this Agreement
setting forth
the Borrowing Base and reflecting that the amount of the then
requested
borrowing, when added to the existing borrowings of the Borrower
hereunder and
the existing Letters of Credit, does not exceed the Borrowing Base,
and (b) as
provided in Section 5.09 (5) of this Agreement.
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"Business Day" means any day other than a Saturday, Sunday, or
other day on
which the Bank is authorized or required to close under the laws of
the State of
Nebraska or the United States.
"Charles City" shall have the meaning given such term in the
preamble
hereto.
"Closing Date" means the date on which this Agreement is executed
and
delivered by the Borrower, each Restricted Subsidiary, and the
Bank.
"Closing Fee" means the amount of Seventy Five Thousand Dollars
($75,000.00) to be paid by the Borrower to the Bank on the Closing
Date.
"Code" means the Internal Revenue Code of 1986, as amended from
time to
time, and the regulations and published interpretations
thereof.
"Collateral" means all property which is subject or is to be
subject to the
Lien granted by the Security Agreement, the Subsidiary Security
Agreements or
the Control Agreements.
"Commitment" means the Bank's obligation to make Loans to the
Borrower
pursuant to Section 2.01 in the amount referred to therein upon
compliance with
the terms and provisions of this Agreement.
"Commitment Letter" means the letter from the Bank to the Borrower
dated
November 28, 2005, attached hereto as Exhibit "B" and incorporated
herein by
this reference.
"Conditions Precedent" means the Initial Conditions Precedent
and
Additional Conditions Precedent.
"Control Agreements" mean the following, collectively: (1)
control
agreement of the Borrower in the form attached hereto as Exhibit
"C" and
incorporated herein by this reference and for the benefit of the
Bank granting
the Bank a perfected security interest in the Collateral described
in the
Security Agreement, (2) control agreement of Aurora in the form
attached hereto
as Exhibit "D" and incorporated herein by this reference and for
the benefit of
the Bank granting the Bank a perfected security interest in the
Collateral
described in the respective Subsidiary Security Agreement, (3)
control agreement
of Charles City in the form attached hereto as Exhibit "E" and
incorporated
herein by this reference and for the benefit of the Bank granting
the Bank a
perfected security interest in the Collateral described in the
respective
Subsidiary Security Agreement, (4) control agreement of Fort Dodge
in the form
attached hereto as Exhibit "F" and incorporated herein by this
reference and for
the benefit of the Bank granting the Bank a perfected security
interest in the
Collateral described in the respective Subsidiary Security
Agreement, and (5)
the additional control agreements delivered to the Bank by
additional Restricted
Subsidiaries.
"Current Subsidiary" means each of the Subsidiaries listed on
Exhibit "S".
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"Default" means any of the events specified in Section 7.01,
whether or not
any requirement for the giving of notice, the lapse of time, or
both, or any
other condition, has been satisfied.
"Eligible Account" means an Account of the Borrower or a
Restricted
Subsidiary, that conforms and continues to conform to the following
conditions:
A. The Account arose from a bona fide outright sale of Goods,
as
defined in the UCC, by the Borrower or any Restricted Subsidiary,
or from
services performed by the Borrower or any Restricted Subsidiary and
such
Goods have been shipped to the appropriate account debtors or
their
designees (or the sale has otherwise been consummated), or the
services
have
been performed for the appropriate Account debtors, or services
performed or invoices delivered in accordance with the terms and
provisions
of a
contract pursuant to which the Borrower or a Restricted Subsidiary,
as
the
case may be, is performing services or providing Goods which is due
and
payable not more than thirty (30) days from the date of the
invoice
therefor;
B. Neither the Borrower nor any Restricted Subsidiary has received
any
notice of the filing of a petition in bankruptcy or insolvency laws
by or
against, the Account debtor. Upon the receipt by the Borrower or
a
Restricted Subsidiary of any such notice, it will immediately give
the Bank
written advice thereof;
C. The Account debtor is not a Subsidiary or other Affiliate of
the
Borrower; and
D. After ten (10) days prior written notice to the Borrower, the
Bank
shall have the right to deem an account ineligible because of
reasonable
uncertainty about the credit worthiness of the account debtor or
because
the
Bank otherwise reasonably considers the collateral value thereof to
the
Bank
to be impaired or its ability to realize such value to be insecure.
In
the
event of any dispute, under the foregoing criteria, about whether
an
Account is or has ceased to be an Account, following ten (10) days
written
notice to the Borrower, the decision of the Bank shall control.
"Eurodollar Business Day" means a Business Day on which commercial
banks
are open for international business (including dealings in United
States dollar
deposits) in London, England.
"Event of Default" means any of the events specified in Section
7.01,
provided that any requirement for the giving of notice, the lapse
of time, or
both, or any other condition, has been satisfied.
"Fort Dodge" shall have the meaning given such term in the preamble
hereto.
"GAAP" means generally accepted accounting principles in the United
States.
"Goods" shall have the meaning given that term in the UCC.
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"Initial Conditions Precedent" shall have the meaning given such
term in
Section 3.01 of this Agreement.
"Interest Period" means, initially, the period commencing on the
date of
the Operating Note and ending on December 31, 2005 and the last day
of each
calendar quarter thereafter, provided that:
(a) subject to clauses (b) and (c) below, for any calendar month,
any
Interest Period which would otherwise end on a day which is not
a
Eurodollar Business Day shall be extended to the next
succeeding
Eurodollar Business Day unless such next succeeding Eurodollar
Business Day falls in the next succeeding calendar month, in
which
case such Interest Period shall end on the last Eurodollar
Business
Day occurring during the current calendar month;
(b) subject to clause (c) below, any Interest Period which begins
on
the last
Eurodollar Business Day of a calendar month (or a day for
which there is no numerically corresponding Eurodollar Business Day
in
the calendar month at the end of such Interest Period) shall end
on
the last Eurodollar Business Day of the last calendar month
occurring
during such Interest Period; and
(c) notwithstanding anything contained herein to the contrary,
no
Interest Period shall extend beyond the Maturity Date for the
Operating Note.
"Inventory" means at any time the Borrower's and each
Restricted
Subsidiary's Inventory, as defined in the UCC, that is and
continues to be (i)
in good and merchantable condition, (ii) held for sale or to be
furnished under
contracts for Goods or services to which the Borrower or any
Restricted
Subsidiary is a party, (iii) owned by the Borrower or a Restricted
Subsidiary,
free and clear of any Lien, other than the Lien of the Bank as
provided for
herein, and (iv) not subject to any conditional sale, consignment
or other
vendor's rights of ownership or revendication.
"Letter of Credit" means one or more letters of credit issued under
and
pursuant to the Letter of Credit Facility by execution and delivery
by the
Borrower of the Bank's standard form promissory note and continuing
letter of
credit agreement relating to each such letter of credit, pursuant
to the Bank's
customary policies and in accordance with the terms and provisions
of the Bank's
standardized documents, to be executed and delivered to the Bank at
the time of
issuance of each such Letter of Credit.
"Letter of Credit Facility" means the commitment of the Bank to
issue
Letters of Credit in the maximum amount of Ten Million and
No/100ths Dollars
($10,000,000.00) and taken into consideration in determining the
Borrowing Base.
"Letter of Credit Fee" means the fee payable by the Borrower to the
Bank,
within ten (10) days of the end of each calendar quarter following
the Closing
Date that a Letter of Credit has been provided by the Bank pursuant
to the
Letter of Credit Facility, equal to Two Hundred
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Twenty Five (225) basis points (2.25%) times the amount
outstanding, calculated
on a daily basis, of the Letters of Credit during such calendar
quarter.
"LIBOR" shall mean, for any day or period, the "London Interbank
Offered
Rate" for such day or period as quoted by the Bloomberg service or
such other
vendor as may be chosen by the Bank in its sole discretion.
"LIBOR Base Rate" shall
mean, with respect to the applicable Interest
Period, (a) the LIBOR Index Rate for such Interest Period, if such
rate is
available, or (b) if the LIBOR Index Rate cannot be determined, the
average
(rounded upward, if necessary, to the next higher one one-hundredth
(1/100) of
one percent (1%)) of the respective rates per annum of interest at
which
deposits in dollars are offered to the Bank in the London interbank
market by
two (2) Eurodollar dealers of recognized standing, selected by the
Bank in its
sole discretion, at such time on the date two (2) Eurodollar
Business Days
before the first day of such Interest Period as the Bank in its
sole discretion
elects, for delivery on the first day of the applicable Interest
Period for a
number of days comparable to the number of days in such Interest
Period and in
an amount approximately equal to the principal amount of the
Obligations then
outstanding.
"LIBOR Index Rate" shall mean, with respect to the applicable
Interest
Period, the rate per annum (rounded upwards, if necessary, to the
next higher
one one-hundredth (1/100) of one percent (1%)) for deposits in U.S.
Dollars for
a period equal to such Interest Period, which appears on the Bank's
information
vendor as of 9:00 a.m. (Omaha, Nebraska time) on the day two (2)
Eurodollar
Business Days before the first day of such Interest Period. The
term "the Bank's
information vendor" means the Bloomberg service or such other
internationally
recognized service for the purpose of displaying the British
Bankers'
Association Interest Settlement Rates for U.S. Dollar Deposits as
chosen by the
Bank in its sole discretion.
"LIBOR Rate" shall mean, with respect to any Interest Period, the
quotient
(rounded upwards, if necessary, to the next higher one
one-hundredth (1/100) of
one percent (1%)) of the (i) LIBOR Base Rate divided by (ii) one
(1.00) minus
the applicable LIBOR Reserve Percentage. The LIBOR Rate shall be
adjusted
automatically on and as of the effective date of any change in the
LIBOR Reserve
Percentage.
"LIBOR Reserve Percentage" shall mean for any day that
percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the
Board of Governors of the Federal Reserve System (or any
successor), for
determining the maximum reserve requirement for a member bank of
the Federal
Reserve System with respect to "Eurocurrency Liabilities" (or in
respect of any
other category of liabilities which includes deposits by reference
to which the
interest rate on LIBOR loans is determined or any category of
extensions of
credit or other assets which include loans by a non-United States
office of any
bank to United States residents). The LIBOR Rate shall be adjusted
automatically
on and as of the effective date of any change in the LIBOR Reserve
Percentage.
"Lien" means any mortgage, deed of trust, pledge, security
interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or
other), or preference, priority,
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or other security agreement or preferential arrangement, charge, or
encumbrance
of any kind or nature whatsoever (including, without limitation,
any conditional
sale or other title retention agreement, any financing lease
having
substantially the same economic effect as any of the foregoing, and
the filing
of any financing statement under the Uniform Commercial Code or
comparable law
of any jurisdiction to evidence any of the foregoing).
"Loan" or "Loans" shall have the meaning assigned to such term in
Section
2.01.
"Loan Documents" means, collectively, this Agreement, the Operating
Note,
the Security Agreement, the Control Agreement, Subsidiary
Guaranties, the
Subsidiary Security Agreements, each agreement entered into by the
Borrower
relating to the Letters of Credit, and any other instrument or
document executed
and delivered in connection with this Agreement.
"Maturity Date" means December 31, 2008.
"Minimum Tangible Net Worth" means, measured on a calendar
quarterly basis
beginning on December 31, 2005 and continuing thereafter as of the
last day of
each calendar quarter through the Maturity Date, combined Tangible
Net Worth of
the Borrower of One Hundred Five Million Dollars
($105,000,000.00).
"Minimum Working Capital" means, measured on a calendar quarterly
basis
beginning on December 31, 2005 and continuing thereafter as of the
last day of
each calendar quarter through the Maturity Date, combined Working
Capital of the
Borrower and the Restricted Subsidiaries of Fifteen Million
Dollars
($15,000,000.00).
"Obligation" or "Obligations" shall mean, collectively, (1) each of
the
obligations and covenants of Borrower and each of the Restricted
Subsidiaries
under this Agreement, any of the Loan Documents and all
modifications,
substitutions, extensions and renewals of each, whether absolute or
contingent,
liquidated or unliquidated, existing now or arising in the future
and (2) all
present and future indebtedness and obligations of Borrower to the
Bank whether
direct, indirect, absolute, or contingent and whether arising by
note, guaranty,
overdraft, or otherwise.
"Operating Note" means the operating note of the Borrower, in the
form
attached hereto as Exhibit "G" and incorporated herein by this
reference.
"Organizational Documents" means the articles of incorporation and
bylaws
of a corporation, the certificate or articles of formation and
operating
agreement of a limited liability company, or partnership agreement
of a
partnership, as applicable.
"Person" means an
individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust,
unincorporated
association, joint venture, governmental authority, or other entity
of whatever
nature.
"Principal Office" means the Bank's office at 1620 Dodge Street,
STOP 1050,
Omaha, Nebraska 68197.
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"Restricted Funds" means cash of the Borrower which is held in
escrow or in
trust for the benefit of a third party, including but not limited
to the funds
held in escrow from the sale of Senior Secured Notes relating to
the
construction of the ethanol facility for Charles City.
"Restricted Subsidiary" means, collectively, Aurora, Charles City
and Fort
Dodge and any other Subsidiary formed or acquired by Borrower or a
Subsidiary in
accordance with the terms and provisions hereof, which owns or
operates a
ethanol production facility and which executes and delivers to the
Bank a
Subsidiary Guaranty and Control Agreement pursuant to the terms and
provisions
of this Agreement.
"Security Agreement" means the Security Agreement, in the form
attached
hereto as Exhibit "H" and incorporated herein by this reference, to
be delivered
by the Borrower under the terms of this Agreement to secure the
Obligations.
"Senior Secured Notes" means the senior secured notes of the
Borrower due
December 15, 2012.
"Senior Note Documents" means the indenture relating to the Senior
Secured
Notes and the purchase agreement pursuant to which the Senior
Secured Notes are,
or are to be, sold by the Borrower to the initial purchasers
thereof.
"Subsidiary" means, as to the Borrower, each Current Subsidiary and
any
Additional Subsidiary formed or acquired in accordance herewith,
whether a
Restricted Subsidiary or an Unrestricted Subsidiary.
"Subsidiary Guaranties" means the following, collectively: (1)
the
unlimited and irrevocable guaranty of Aurora in the form attached
hereto as
Exhibit "I" and incorporated herein by this reference and secured
by the
Subsidiary Security Agreement of Aurora and the Control Agreement
of Aurora, (2)
the unlimited and irrevocable guaranty of Charles City in the form
attached
hereto as Exhibit "J" and incorporated herein by this reference and
secured by
the Subsidiary Security Agreement of Charles City and the Control
Agreement of
Charles City, (3) the unlimited guaranty of Fort Dodge in the form
attached
hereto as Exhibit "K" and incorporated herein by this reference and
secured by
the Subsidiary Security Agreement of Fort Dodge and the Control
Agreement of
Fort Dodge, and (4) the additional guaranties delivered to the Bank
by
additional Restricted Subsidiaries.
"Subsidiary Guarantors" means Aurora, Charles City, Fort Dodge, and
each of
the additional Restricted Subsidiaries.
"Subsidiary Security Agreements" means the following, collectively:
(1) the
security agreement by and between the Bank and Aurora in the form
attached
hereto as Exhibit "L" and incorporated herein by this reference,
(2) the
security agreement by and between the Bank and Charles City in the
form attached
hereto as Exhibit "M" and incorporated herein by this reference,
(3) the
security agreement by and between the Bank and Fort Dodge in the
form
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attached hereto as Exhibit "N" and incorporated herein by this
reference, and
(4) the security agreement by and between the Bank and each
additional
Restricted Subsidiary.
"Tangible Net Worth" means the consolidated total assets less
the
consolidated total liabilities of the Borrower less, without
duplication, the
following types of assets: (a) leasehold improvements; (b)
receivables or other
amounts (i) due from any shareholder, member, employee or other
Affiliate or
Subsidiary of the Borrower or (ii) which, in accordance with GAAP,
are
considered to be doubtful or uncollectible in the ordinary course
of business;
(c) investments, other than cash, cash equivalents or readily
marketable
securities; (d) goodwill, patents, copyrights, mailing lists, trade
names,
trademarks, servicing rights, organizational and franchise costs,
bond
underwriting costs and other like assets properly classified as
intangible; and
(e) treasury stock or treasury membership units or interests in the
Borrower..
"UCC" means the Uniform Commercial Code of the State of Nebraska,
as
amended from time to time.
"Unrestricted Subsidiary" means each Current Subsidiary (other
than
Restricted Subsidiaries) and each other Subsidiary formed or
acquired by
Borrower or a Subsidiary in accordance with the terms and
provisions hereof
which is not a Restricted Subsidiary and is designated at the time
of formation
or acquisition as an "Unrestricted Subsidiary".
"Unused Commitment Fee" means the fee payable by the Borrower to
the Bank
within ten (10) days of the end of each calendar quarter following
the Closing
Date, commencing on December 31, 2005, equal to twenty five (25)
basis points
(0.25%) times the amount of the unused portion of the Commitment,
on a daily
basis, during such calendar quarter. The amount of the Unused
Commitment Fee
shall vary, depending on the Working Capital of the Borrower and
the Restricted
Subsidiaries as of the end of each calendar quarter such that, (a)
if the
Working Capital of the Borrower and the Restricted Subsidiaries is
equal to or
greater than Fifteen Million Dollars ($15,000,000.00) but less than
Thirty
Million Dollars ($30,000,000.00) as of the end of such calendar
quarter, the
Unused Commitment Fee shall be twenty five (25) basis points
(0.25%) times the
amount of the unused portion of the Commitment, on a daily basis,
during such
calendar quarter, (b) if the Working Capital of the Borrower and
the Restricted
Subsidiaries is equal to or greater than Thirty Million Dollars
($30,000,000.00)
but less than Forty Million Dollars ($40,000,000.00) as of the end
of such
calendar quarter, the Unused Commitment Fee shall be twenty (20)
basis points
(0.20%) times the amount of the unused portion of the Commitment,
on a daily
basis, during such calendar quarter, and (c) if the Working Capital
of the
Borrower and the Restricted Subsidiaries is equal to or greater
than Forty
Million Dollars ($40,000,000.00), the Unused Commitment Fee shall
be fifteen
(15) basis points (0.15%) times the amount of the unused portion of
the
Commitment, on a daily basis, during such calendar quarter.
"Working Capital" means the consolidated current assets of the
Borrower and
the Restricted Subsidiaries, less (i) to the extent classified as a
current
asset, investments in, or loans to, a Subsidiary, employee or other
Affiliate of
the Borrower or any Restricted Subsidiary, (ii) current liabilities
of the
Borrower or any Restricted Subsidiary, and (iii) any Restricted
Funds.
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SECTION 1.02. ACCOUNTING TERMS. All accounting terms not
specifically
defined herein shall be construed in accordance with GAAP
consistent with those
applied in the preparation of the financial statements of the
Borrower pursuant
to the terms and provisions hereof, and all financial data
submitted pursuant to
this Agreement shall be prepared in accordance with such
principles.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. REVOLVING CREDIT. The Bank agrees on the terms and
conditions
hereinafter set forth, to make loans (the "Loans") to the Borrower
from time to
time during the period from the Closing Date of this Agreement up
to, but not
including, the Maturity Date in an aggregate principal amount not
to exceed at
any time outstanding Thirty Million and No/100ths Dollars
($30,000,000.00) upon
delivery by the Borrower to the Bank of a Borrowing Base
Certificate relating
thereto reasonably acceptable to the Bank pursuant to the terms and
provisions
of this Agreement (the "Commitment"). Each Loan which shall not
utilize the
Commitment in full shall be in an amount not less than One Hundred
Thousand and
No/100ths Dollars ($100,000.00). Within the limits of the
Commitment, the
Borrower may borrow, prepay and reborrow under this Section 2.01.
The Bank's
obligation to make Loans hereunder shall be subject to the
following
limitations: (i) the Bank will make Loans in an aggregate principal
amount not
to exceed the Borrowing Base, and (ii) the Bank will make Loans
provided the
Conditions Precedent are satisfied. It is the intention of the
parties that the
outstanding balance of the Operating Note shall not exceed the
Borrowing Base,
and if at any time said balance exceeds the Borrowing Base, the
Borrower shall
forthwith pay the Bank sufficient funds to reduce the balance of
the Operating
Note until it is in compliance with this requirement. Provided that
no Letters
of Credit are outstanding, the Borrower may elect to terminate the
Operating
Note and the Letter of Credit Facility at any time, without
penalty, upon
written notice to the Bank. In the event the Borrower so elects to
terminate the
Operating Note and the Letter of Credit Facility, the aggregate
principal amount
of the Operating Note outstanding, together with any accrued and
unpaid interest
thereon, shall be due and payable to the Bank on the date of such
election, if
not sooner paid and the Operating Note and the Letter of Credit
Facility shall
be deemed for all purposes terminated and the Bank shall have no
further or
additional obligation to loan funds to the Borrower or issue
Letters of Credit
pursuant to the terms and provisions of this Agreement.
SECTION 2.02. NOTICE AND MANNER OF BORROWING. Upon receipt by the
Bank of a
request for a Loan not later than 2:00 P.M. (Central Time) on the
date Borrower
is requesting such Loan, provided Borrower has upon fulfilled or
complied with
the applicable Conditions Precedent, the Bank will make such Loan
available to
the Borrower in immediately available funds by crediting the amount
thereof to
the Borrower's account with the Bank.
SECTION 2.03. INTEREST. The Borrower shall pay interest to the Bank
on the
outstanding and unpaid principal amount of the Operating Note in
accordance with
the terms and provisions thereof.
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SECTION 2.04. UNUSED COMMITMENT FEE. The Borrower shall pay the
Unused
Commitment Fee in arrears on a calendar quarter basis.
SECTION 2.05. LETTER OF CREDIT FEE. The Borrower shall pay the
Letter of
Credit Fee in arrears on a calendar quarter basis.
SECTION 2.06. CLOSING FEE. The Borrower shall pay the Closing Fee
to the
Bank, in immediately available funds, on the Closing Date.
SECTION 2.07. NOTE. All Loans made by the Bank under this Agreement
shall
be evidenced by, and repaid with interest in accordance with, the
Operating
Note. The Bank is hereby authorized by the Borrower to endorse on
the schedule
attached to the Operating Note or otherwise on the books and
records of the Bank
the amount of each Loan and of each payment of principal received
by the Bank on
account of the Loans, which endorsement shall, in the absence of
manifest error
or mutual agreement among the parties, be conclusive as to the
outstanding
balance of the Loans made by the Bank; provided, however, that the
failure to
make such notation with respect to any Loan or payment shall not
limit or
otherwise affect the obligations of the Borrower under this
Agreement or the
Operating Note.
SECTION 2.08. METHOD OF PAYMENT. The Borrower shall make each
payment under
this Agreement and under the Operating Note not later than 2:00
P.M. (Central
Time) on the date when due in lawful money of the United States to
the Bank at
its Principal Office in immediately available funds. The Borrower
hereby
authorizes the Bank, if and to the extent Bank receives telephonic
request from
an officer or Authorized Person to take such action, to charge from
time to time
against any account of the Borrower with the Bank any amount
requested. Whenever
any payment to be made under this Agreement or under the Operating
Note shall be
stated to be due on a day other than a Business Day, such payment
shall be made
on the next succeeding Business Day, and such extension of time
shall in such
case be included in the computation of the payment of interest.
SECTION 2.09. USE OF PROCEEDS. The proceeds of the Loans hereunder
shall be
used by the Borrower to finance the operational needs of Borrower
and the
Subsidiaries (including without limitation, funding of Accounts,
purchase and
maintenance of Inventory, and transaction costs and expenses
associated with
this Agreement and the transactions contemplated hereby) and
otherwise for
working capital and general company or corporate purposes of the
Borrower and
the Subsidiaries. Borrower will not, directly or indirectly, use
any part of
such proceeds for (a) any other purpose or purposes, including the
purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U of
the Board of Governors of the Federal Reserve System or to extend
credit to any
Person for the purpose of purchasing or carrying any such margin
stock, or for
any purpose which violates, or is inconsistent with, Regulation X
of such Board
of Governors.
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SECTION 2.10. LETTER OF CREDIT FACILITY.
(1) LETTERS OF CREDIT. On the terms and conditions hereinafter
set
forth, the Commitment may be used by Borrower, at its request, for
the issuance
of a Letter of Credit, on Borrower's account, pursuant to the
Bank's customary
policies and in accordance with the terms and provisions of the
Bank's
standardized documents, to be executed and delivered to the Bank at
the time of
issuance of each such Letter of Credit, in amounts outstanding at
no time
exceeding Ten Million and No/100ths Dollars ($10,000,000.00) in the
aggregate,
provided, however, in no event shall a Letter of Credit be issued
which together
with the then outstanding Loans exceeds the Commitment. The expiry
of each such
Letter of Credit shall be no later than the earlier of (a) sixty
(60) days prior
to the Maturity Date or (b) one (1) year from initial issuance
thereof. In the
event that the expiry of any Letter of Credit is later than either
(A) the date
the repayment of the Obligations is owed due to the acceleration
thereof by the
Bank or (B) the Maturity Date, the Bank may require such
outstanding Letter of
Credit to be one hundred and ten percent (110%) cash
collateralized. Upon the
termination of any such Letter of Credit and provided no Event of
Default then
exists and is continuing, the portion of such cash collateral
attributable to
the undrawn portion of such Letter of Credit shall be refunded to
Borrower.
(2) REIMBURSEMENT OBLIGATION OF BORROWER. If the Bank shall honor
any
draw request under, and make payment in respect of, any Letter of
Credit, (a)
Borrower shall reimburse the Bank for the amount of such payment by
the end of
the Business Day on which the Bank makes such payment and (b)
Borrower shall be
deemed to have immediately requested that a Loan be made to it in
the amount
equal to the amount of such payment (but solely to the extent
Borrower shall
have failed to directly reimburse the Bank for the amount of such
payment). To
the extent that such Loan shall cause the Borrower to exceed the
Borrowing Base,
Borrower shall forthwith pay the Bank sufficient funds to reduce
the balance of
the Operating Note.
(3) RISK
REGARDING LETTER OF CREDIT. The Bank shall not be responsible
in any way for (a) the performance of any beneficiary under any
Letter of Credit
of that beneficiary's obligations to the Borrower or (b) the form,
sufficiency,
correctness, genuineness, or authority of any person signing,
falsification or
the legal effect of any documents called for under any Letter of
Credit if (with
respect to the foregoing) such documents on their face appear to be
in order.
All directions, correspondence, and fund transfers relating to any
Letters of
Credit are at the sole risk of the Borrower. The obligations of the
Borrower to
reimburse the Bank regarding any Letter of Credit shall be
absolute,
unconditional and irrevocable and shall be performed, under all
circumstances
whatsoever, including the following: (x) any lack of validity or
enforceability
of, or any amendment or waiver of or any consent to departure from,
any Letter
of Credit or any related document thereto; (y) the existence of any
claim,
set-off, defense or other right which Borrower may have at any time
against the
beneficiary of any Letter of Credit; or (z) to the extent permitted
under
applicable law, any other circumstance or happening whatsoever,
whether or not
similar to any of the foregoing.
SECTION 2.11. CLOSING. The closing under this Agreement shall take
place at
the Principal Office of the Bank upon (a) execution of this
Agreement by the
Borrower, each of the Restricted Subsidiaries and the Bank and (b)
satisfaction
of each of the Initial Conditions Precedent.
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ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITION PRECEDENT TO LOANS. The obligation of the
Bank to
make initial Loans to the Borrower pursuant to the Commitment is
subject to the
conditions precedent that the Bank shall have received, or waived
in writing the
obligation to receive, on or before the Closing Date each of the
following, in
form and substance satisfactory to the Bank and its counsel
(collectively the
"Initial Conditions Precedent"):
(1) OPERATING NOTE. The Operating Note duly executed by the
Borrower;
(2) SECURITY AGREEMENT. The Security Agreement duly executed by
the
Borrower together with certified copies of Request for Copies or
Information
(Form UCC-11) identifying all of the financing statements on file
with respect
to the Borrower, indicating that no party claims an interest in any
of the
Collateral;
(3) CONTROL AGREEMENT.
The Control Agreement duly executed by the
Borrower;
(4) EVIDENCE OF ALL COMPANY ACTION BY THE BORROWER AND THE
RESTRICTED
SUBSIDIARIES. Certified (as of the Closing Date) copies of all
company action
taken by the Borrower and the Restricted Subsidiaries, including
resolutions of
the respective Boards of Directors, Members or Managers as
necessary,
authorizing the execution, delivery, and performance of the Loan
Documents to
which it is a party and each other document to be delivered
pursuant to this
Agreement;
(5) INCUMBENCY AND SIGNATURE CERTIFICATE OF THE BORROWER AND
THE
RESTRICTED SUBSIDIARIES. A certificate (dated as of the Closing
Date) of the
Secretary, or the manager, or such other officer (acceptable to the
Bank), as
the case may be, of the Borrower and of each of the Restricted
Subsidiaries
certifying the names and true signatures of the Authorized
Person(s) of the
Borrower and of each of the Restricted Subsidiaries, respectively,
authorized to
sign the Loan Documents to which it is a party and the other
documents to be
delivered by the Borrower and the Restricted Subsidiaries under
this Agreement;
(6) OPINION OF COUNSEL FOR THE BORROWER. A favorable opinion of
(a)
Stoel Rives, LLP, outside corporate counsel to the Borrower and the
Restricted
Subsidiaries, in the form attached hereto as Exhibit "O" and
incorporated herein
by this reference, and (b) Cadwell Sanford Deibert & Garry LLP,
South Dakota and
Nebraska counsel to the Borrower and the Restricted Subsidiaries,
in the form
attached hereto as Exhibit "P" and incorporated herein by this
reference;
(7) SUBSIDIARY GUARANTIES. The Subsidiary Guaranties duly executed
and
acknowledged by each of the Restricted Subsidiaries;
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(8) SUBSIDIARY SECURITY AGREEMENTS. The Subsidiary Security
Agreements
duly executed by each of the Restricted Subsidiaries together with
certified
copies of Request for Copies or Information (Form UCC-11)
identifying all of the
financing statements on file with respect to the Restricted
Subsidiary,
indicating that no party claims an interest in any of the
Collateral;
(9) SUBSIDIARY CONTROL AGREEMENT. The Control Agreement duly
executed
by each of the Restricted Subsidiaries;
(10) CLOSING FEE. Payment of the Closing Fee;
(11) PAYMENT OF OTHER OBLIGATIONS OF RESTRICTED SUBSIDIARIES TO
BANK.
On the Closing Date, the proceeds of the Senior Secured Notes of
the Borrower
shall have been utilized to pay-in-full, and payment thereof shall
have been
received by the Bank, of all existing obligations of Aurora and
Fort Dodge to
the Bank; and
(12) SECURED NOTE DOCUMENTS. On the Closing Date, the Bank shall
have
received a copy of the Senior Secured Notes and each of the Senior
Note
Documents, certified as true and correct by the chief financial
officer of the
Borrower.
SECTION 3.02. CONDITIONS PRECEDENT TO ADDITIONAL LOANS. The
obligation of
the Bank to make Loans to the Borrower pursuant to the Commitment
following the
Closing Date shall be subject to the further conditions precedent
that on the
date of such Loan (the "Additional Conditions Precedent"):
(1) The following statements shall be true and the Bank shall
have
received a certificate signed by an Authorized Person dated the
date of such
Loan, stating that:
(a) The Conditions Precedent contained in Section 3.01 of
this Agreement have been complied with by the Borrower and each
Restricted Subsidiary in all respects;
(b) The representations and warranties contained in (i)
Article IV of this Agreement, (ii) the Security Agreement of
the
Borrower, (iii) each of the Subsidiary Security Agreements, and
(iv) each of the Control Agreements, are true and correct on
and
as of the date of such Loan as though made on and as of such
date, instead of the Closing Date; and
(c) No Default or Event of Default has occurred and is
continuing, or would result from such Loan; and
(2) The Bank shall have received such other documents as the Bank
may
reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The
Borrower and each Restricted Subsidiary jointly represents and
warrants
to the Bank that:
SECTION 4.01. ORGANIZATION, GOOD STANDING, AND DUE QUALIFICATION.
The
Borrower and each Restricted Subsidiary is a corporation or limited
liability
company duly organized, validly existing, and in good standing
under the laws of
the State of its formation; has the power and authority to own its
assets and to
transact the business in which it is now engaged or proposed to be
engaged in;
and is duly qualified as a foreign corporation or limited liability
company, as
the case may be, and in good standing under the laws of each other
jurisdiction
in which such qualification is required, except where the failure
to be
qualified and in good standing would not have a material adverse
effect on
Borrower and the Restricted Subsidiaries taken as a whole.
SECTION 4.02. POWER AND AUTHORITY. The execution, delivery, and
performance
by the Borrower and each Restricted Subsidiary of the Loan
Documents to which
each is a party have been duly authorized by all necessary action
and do not and
will not (1) require any consent or approval of the shareholders of
Borrower or
the shareholder or members of any Restricted Subsidiary which has
not previously
been obtained; (2) contravene Borrower's or any Restricted
Subsidiary's
Organizational Documents; (3) violate any provision of any law,
rule, regulation
(including, without limitation, Regulations U and X of the Board of
Governors of
the Federal Reserve System), order, writ, judgment, injunction,
decree,
determination, or award presently in effect having applicability to
Borrower or
any Restricted Subsidiary; (4) result in a breach of or constitute
a default
under any indenture or loan or credit agreement or any other
material agreement,
lease, or instrument to which Borrower or any Restricted Subsidiary
is a party
or by which it or its properties may be bound or affected; or (5)
result in, or
require, the creation or imposition of any Lien, upon or with
respect to any of
the Collateral now owned or hereafter acquired by Borrower or any
Restricted
Subsidiary (except in favor of the Bank).
SECTION 4.03. LEGALLY
ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will
be, legal,
valid, and binding obligations of the Borrower and the Restricted
Subsidiaries,
as the case may be, and enforceable against the Borrower or the
Restricted
Subsidiaries, as the case may be, in accordance with their
respective terms,
except to the extent that such enforcement may be limited by
applicable
bankruptcy, insolvency, and other similar laws affecting creditors'
rights
generally.
SECTION 4.04. PROVIDED INFORMATION. No information, exhibit, or
report
furnished by the Borrower or any Restricted Subsidiary to the Bank
in connection
with the negotiation of this Agreement contained or contains any
material
misstatement of fact, or omitted or omits to state a material fact
or any fact
necessary to make the statement contained therein not materially
misleading.
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SECTION 4.05. OTHER AGREEMENTS. Neither the Borrower nor any
Restricted
Subsidiary is a party to any indenture, loan, or credit agreement,
or to any
lease or other agreement or instrument, or subject to any charter
or restriction
which could have a material adverse effect on the ability of the
Borrower or any
Restricted Subsidiary to carry out its obligations under the Loan
Documents to
which it is a party. Neither the Borrower nor any Restricted
Subsidiary is in
default in any material respect in the performance, observance, or
fulfillment
of any of the obligations, covenants, or conditions contained in
any agreement
or instrument material to its business to which it is a party.
SECTION 4.06. NO RESTRICTION ON DIVIDENDS OR DISTRIBUTIONS. None of
the
Restricted Subsidiaries is subject to any restriction, nor shall
the Borrower
cause or permit any restriction to exist, which limits the ability
of such
Restricted Subsidiary to pay dividends to the Borrower or otherwise
make
distributions to the Borrower, except as provided under applicable
law.
SECTION 4.07. LITIGATION OR PROCEEDINGS. There is no pending or, to
the
Borrower's or any Restricted Subsidiaries' knowledge, threatened
action or
proceeding against or affecting the Borrower or any of its
Restricted
Subsidiaries before any court, governmental agency, or arbitrator
which may, in
any one case or in the aggregate, materially adversely affect the
financial
condition, operations, properties, or business of the Borrower and
its
Restricted Subsidiaries, taken as a whole, or the ability of the
Borrower and
its Restricted Subsidiaries, taken as a whole, to perform their
obligations
under the Loan Documents to which it is a party.
SECTION 4.08. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The
Borrower
and its Subsidiaries have satisfied all final non-appealable
judgments and
neither the Borrower nor any Subsidiary is in default with respect
to any
judgment, writ, injunction, decree, rule, or regulation of any
court,
arbitrator, or federal, state, municipal, or other governmental
authority,
commission, board, bureau, agency or instrumentality, domestic or
foreign.
SECTION 4.09. OWNERSHIP AND LIENS. As of the date hereof, the
Borrower is
the owner of one hundred percent (100%) of the issued and
outstanding equity
interest (stock or membership interest) in each of the Subsidiaries
listed on
Exhibit "S." The Borrower and each Restricted Subsidiary have title
to, or valid
leasehold interests in, all of their respective properties and
assets, real and
personal (other than any properties or assets disposed of in the
ordinary course
of business), and none of the properties and assets owned by the
Borrower or any
Restricted Subsidiary and none of the Borrower's or any Restricted
Subsidiary's
leasehold interests are subject to any lien, mortgage, deed of
trust, pledge,
security interest, or other charge or encumbrance of any nature
except as such
as may be permitted, and only to the extent permitted, under this
Agreement and
the Senior Note Documents.
SECTION 4.10. SUBSIDIARIES. As of the date hereof, Borrower has
no
Subsidiaries other than the Current Subsidiaries. Set forth in
Exhibit "S" is a
complete and accurate list of the Subsidiaries of the Borrower,
showing the type
of entity and jurisdiction of formation of each and showing the
percentage of
the Borrower's ownership interest of each Subsidiary. All equity
ownership
interests of each Restricted Subsidiary have been validly issued,
are fully paid
and nonassessable, and are owned by the Borrower free and clear of
all Liens.
16
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SECTION 4.11. OPERATION OF BUSINESS. The Borrower and its
Restricted
Subsidiaries possess all material licenses, permits, franchises,
patents,
copyrights, trademarks, and trade names, or rights thereto, to
conduct their
respective businesses substantially as now conducted and as
presently proposed
to be conducted, and neither the Borrower nor any of its Restricted
Subsidiaries
is in violation in any material respect of any valid rights of
others with
respect to any of the foregoing; provided, however, that Charles
City has only
such licenses and permits as are required with respect to its
current stage of
development.
SECTION 4.12. REPRESENTATION AND WARRANTIES TO OTHERS. As of the
date
hereof, each of the representations and warranties of the Borrower
and each of
the Subsidiaries made in or relating to the Senior Secured Notes or
any of the
Senior Note Documents, are true and correct in all material
respects.
ARTICLE V
BORROWER'S AFFIRMATIVE COVENANTS
So
long as the Operating Note or any Letter of Credit shall remain
unpaid
or the Bank shall have any Commitment under this Agreement, the
Borrower will:
SECTION 5.01. MAINTENANCE OF EXISTENCE. Preserve and maintain, and
cause
each Restricted Subsidiary to preserve and maintain, its
corporate/organizational existence and good standing in the
jurisdiction of its
incorporation/organization, and qualify and remain qualified, and
cause each
Restricted Subsidiary to qualify and remain qualified, as a
foreign
corporation/limited liability company in each jurisdiction in which
such
qualification is required, except where the failure to be qualified
and in good
standing would not have a material adverse effect on Borrower and
the
Subsidiaries taken as a whole.
SECTION 5.02. MAINTENANCE OF RECORDS. Keep, and cause each
Restricted
Subsidiary to keep, adequate records and books of account, in which
complete
entries will be made in accordance with GAAP consistently applied,
reflecting
all financial transactions of the Borrower and its Restricted
Subsidiaries.
SECTION 5.03. MAINTENANCE OF PROPERTIES. Maintain, keep, and
preserve, and
cause each Restricted Subsidiary to maintain, keep, and preserve,
all of its
properties (tangible and intangible) necessary or useful in the
proper conduct
of its business in good working order and condition, ordinary wear
and tear
excepted and except for properties or assets disposed of or sold in
the ordinary
course of business or in accordance with the Senior Note
Documents.
SECTION 5.04. CONDUCT OF BUSINESS. Continue, and cause each
Restricted
Subsidiary to continue, to engage in a business of the same general
type as
conducted or planned to be conducted by it on the date of this
Agreement.
SECTION 5.05. MAINTENANCE OF INSURANCE. Maintain, and cause each
Restricted
Subsidiary to maintain, insurance with financially sound and
reputable insurance
companies or associations
17
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in such amounts and covering such risks as are usually carried by
companies
engaged in the same or a similar business and similarly situated,
which
insurance may provide for reasonable deductibility from coverage
thereof.
SECTION 5.06. COMPLIANCE WITH LAWS. Comply, and cause each
Subsidiary to
comply, in all material respects with all applicable laws, rules,
regulations,
and orders relating to the operation of its business, except where
the failure
to comply would not have a material adverse effect on the Borrower
and the
Restricted Subsidiaries taken as a whole.
SECTION 5.07. RIGHT OF INSPECTION. At any reasonable time and from
time to
time, at the Borrower's sole cost and expense (provided that
Borrower shall only
be obligated to pay the cost and expense of an inspection by the
Bank as
provided hereunder twice per calendar year, unless a Default or an
Event of
Default exists at the time of such inspection), and upon a least
five (5) days
prior written notice, permit the Bank or any agent or
representative thereof to
examine and make copies of and abstracts from the records and books
of account
of, and visit the properties of, the Borrower and any Subsidiary,
and to discuss
the affairs, finances, and accounts of the Borrower and any
Subsidiary with any
of their respective officers, managers, and directors.
SECTION 5.08. FINANCIAL COVENANTS. As of the end of respective
each
calendar quarter, maintain Minimum Tangible Net Worth and Minimum
Working
Capital.
SECTION 5.09.
REPORTING REQUIREMENTS. Furnish to the Bank:
(1) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any
event within thirty (30) days after the end of each calendar
quarter following
the Closing Date, consolidated balance sheets of the Borrower and
its
Subsidiaries, including a consolidating schedule relating thereto,
as of the end
of such calendar quarter, consolidated statements of income and
shareholders'
equity of the Borrower and its Subsidiaries, including a
consolidating schedule
of each relating thereto, for the period commencing at the end of
the previous
fiscal year and ending with the end of such calendar quarter, all
in reasonable
detail and stating in comparative form the respective figures for
the
corresponding date and period in the previous fiscal year and all
prepared in
accordance with GAAP consistently applied, except for the absence
of financial
footnotes, and certified by the chief financial officer of the
Borrower;
(2) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event
within one hundred twenty (120) days after the end of each fiscal
year of the
Borrower, consolidated balance sheets of the Borrower and its
Subsidiaries,
including a consolidating schedule relating thereto, as of the end
of such
fiscal year and consolidated statements of income of the Borrower
and its
Subsidiaries, including a consolidating schedule relating thereto,
for such
fiscal year, and consolidated statements of shareholders' equity of
the Borrower
and its Subsidiaries, including a consolidating schedule relating
thereto, for
such fiscal year, all in reasonable detail and stating in
comparative form the
respective figures for the corresponding date and period in the
prior fiscal
year and all prepared in accordance with GAAP consistently applied
and
accompanied by an opinion thereon acceptable to the Bank by
independent
certified public accountants selected by the Borrower and
reasonably acceptable
to the Bank;
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(3) ANNUAL PROJECTED FINANCIAL STATEMENTS. As soon as available and
in
any event at least thirty (30) days prior to the end of each fiscal
year of the
Borrower, projected consolidated and consolidating financial
statement of the
Borrower and the Subsidiaries for the next succeeding fiscal year,
including
proposed capital projects and capital expenditures;
(4) QUARTERLY CONSOLIDATED AND CONSOLIDATING PRODUCTION REPORT.
As
soon as available and in any event within thirty (30) days after
the end of each
calendar quarter following the Closing Date, consolidated and
consolidating
production reports of the Borrower and its Restricted Subsidiaries,
in the form
attached hereto as Exhibit "T" and incorporated herein by this
reference, and
certified by an Authorized Person;
(5) BORROWING BASE CERTIFICATE. As soon as available and in any
event
within ten (10) days after the end of each month following the
Closing Date, a
Borrowing Base Certificate as of the end of such month, and
certified by an
Authorized Person;
(6) CERTIFICATE OF COMPLIANCE. Within thirty (30) days after the
end
of each of calendar quarter following the Closing Date, a
certificate of the
chief financial officer of the Borrower certifying that the
Borrower and each of
the Restricted Subsidiaries is in compliance with the terms and
provisions of
this Agreement, including the financial covenants contained herein,
and that to
the best of the chief financial officer's knowledge no Default or
Event of
Default has occurred and is continuing or, if a Default or Event of
Default has
occurred and is continuing, a statement as to the nature thereof
and the action
which is proposed to be taken with respect thereto;
(7) NOTICE OF LITIGATION. Promptly after the Borrower has been
served
with notice thereof, notice of all actions, suits, and proceedings
before any
court or governmental department, commission, board, bureau,
agency, or
instrumentality, domestic or foreign, affecting the Borrower or any
Subsidiary,
which, if determined adversely to the Borrower or such Subsidiary,
could have a
material adverse effect on the financial condition, properties, or
operations of
the Borrower or any Subsidiary taken as a whole;
(8) NOTICE OF DEFAULTS AND EVENTS OF DEFAULT. As soon as possible
and
in any event within five (5) days after Borrower's or any
Restricted
Subsidiary's management becoming aware of the occurrence of each
Default or
Event of Default, a written notice setting forth the details of
such Default or
Event of Default and the action which is proposed to be taken by
the Borrower
with respect thereto;
(9) PROXY STATEMENTS, ETC. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements, and
reports which
the Borrower or any Subsidiary sends to its stockholders, members,
or partners,
and copies of all regular, periodic, and special reports, and all
registration
statements which the Borrower or any Subsidiary files with the
Securities and
Exchange Commission or any governmental authority which may be
substituted
therefor, or with any national securities exchange; and
19
<PAGE>
(10) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or
any
Subsidiary as the Bank may from time to time reasonably
request.
SECTION 5.10. COMPLIANCE WITH LAW AND REGULATIONS. Be and remain,
and cause
each Subsidiary to be and remain, in compliance in all material
respects with
all law, regulations and rules relating to the operation of the
businesses of
the Borrower and its Subsidiaries; notify the Bank immediately of
any written
notice of any material violation thereof and the action which is
proposed to be
taken with respect thereto; permit the Bank to inspect all
books,
correspondence, and records pertaining thereto; and at the Bank's
request, and
at the Borrower's expense, provide a report of a qualified
consultant,
satisfactory in scope, form, and content to the Bank, and such
other and further
assurances reasonably satisfactory to the Bank that the condition
has been
corrected.
SECTION 5.11. COLLATERAL DEPOSIT ACCOUNTS. Cause all proceeds of
the
Collateral under the Security Agreement and Subsidiary Security
Agreements to be
deposited in, and only in, deposit accounts at the Bank or in
accounts which are
the subject of the respective Control Agreements.
SECTION 5.12. OTHER COVENANTS. Comply with, and cause each of
the
Subsidiaries to comply with, their respective covenants and
obligations under or
pursuant to the Senior Secured Notes or any of the Senior Note
Documents.
SECTION 5.13. REPLACEMENT OF EXISTING LETTERS OF CREDIT.
Immediately
following the Closing Date and in no event later than sixty (60)
days following
the Closing Date, cause each of the Restricted Subsidiaries to
replace each of
the letters of credit issued by the Bank for the benefit of such
Restricted
Subsidiary as of the date of this Agreement with a Letter of Credit
issued by
the Bank under the Letter of Credit Facility and return the
original of each
such existing letter of credit to the Bank.
ARTICLE VI
NEGATIVE COVENANTS
So
long as the Operating Note shall remain unpaid, any Letter of
Credits
issued pursuant to the Letter of Credit Facility are outstanding,
or the Bank
shall have any Commitment under this Agreement, the Borrower will
not, without
the prior written consent of the Bank in each instance:
SECTION 6.01. LIENS. Create, incur, assume, or suffer to exist, or
permit
any Restricted Subsidiary to create, incur, assume, or suffer to
exist, any Lien
upon or with respect to any of the Collateral, whether or not
subordinate to the
interest therein provided to the Bank.
SECTION 6.02. MERGERS, ETC. Wind up, liquidate or dissolve
itself,
reorganize, merge or consolidate with or into, or convey, sell,
assign,
transfer, lease, or otherwise dispose of (whether in one
transaction or in a
series of transactions) all or substantially all of its assets
(whether now
owned or hereafter acquired) to any Person, or acquire all or
substantially all
of the assets or the business of any Person, or permit any
Restricted Subsidiary
to do so.
20
<PAGE>
SECTION 6.03. COLLATERAL ACTION. Take any action, or allow any
Restricted
Subsidiary to take any action, which is intended to, or the
effective of which
may be to, restrict or negatively impact the Bank's security
interest in and to
the Collateral.
SECTION 6.04. DISTRIBUTIONS. Take any action or allow any
Restricted
Subsidiary to take any action which may have the effect of
restricting the
ability of the Restricted Subsidiary to pay dividends or otherwise
make
distributions to the Borrower.
SECTION 6.05. ADDITIONAL SUBSIDIARIES. Permit, or allow any
Subsidiary to
permit, any Additional Subsidiary to commence construction of or
operate an
ethanol production facility, unless the Borrower notifies the Bank
at least ten
(10) days prior to such construction or operation and causes such
Additional
Subsidiary to (a) become a Restricted Subsidiary and (b) execute
and deliver to
the Bank, the following immediately following such notification:
(1) a
Subsidiary Guaranty substantially consistent with the terms and
provisions of
the Exhibits hereto relating to Subsidiary Guaranties; (2) a
Subsidiary Security
Agreement substantially consistent with the terms and provisions of
the Exhibits
hereto relating to Subsidiary Security Agreements; (3) certified
copies of
Request for Copies or Information (Form UCC-11) identifying all of
the financing
statements on file with respect to the respective Additional
Subsidiary,
indicating that no party claims an interest in any of the
Collateral; (4) a
Control Agreement substantially consistent with the terms and
provisions of the
Exhibits hereto relating to a Control Agreement; (5) a certificate
of the
Secretary, manager, or managing partner (as applicable) of such
Additional
Subsidiary certifying the names and true signatures of the officers
or manager
of the Additional Subsidiary authorized to sign such Loan Documents
to which it
is a party; and (6) copies of the executed Organization Documents
certified by
the Secretary, manager, or managing partner (as applicable) of such
Additional
Subsidiary to be true and correct.
6.06. UNRESTRICTED SUBSIDIARIES. Cause or allow any Unrestricted
Subsidiary
to be in the business of the production of ethanol similar to a
Restricted
Subsidiary without electing to have such Subsidiary be deemed a
Restricted
Subsidiary and complying with the terms and provisions of Section
6.05 relating
thereto.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events
shall
occur:
(1) The Borrower should fail to pay the principal of, or interest
on,
the Note or other fees, costs or expenses relating to the
transactions provided
for in any of the Loan Documents within ten (10) days of the date
when such
amount is due and payable;
(2) Any representation or warranty made or deemed made by the
Borrower
in this Agreement, the Security Agreement or the Control Agreement,
or by a
Subsidiary Guarantor in this Agreement, any of the Subsidiary
Guaranties, any of
the Subsidiary Security Agreements, or any of the Subsidiary
Control Agreements
or which is contained in any certificate, document,
21
<PAGE>
opinion, or financial or other statement furnished at any time
under or in
connection with any Loan Document shall prove to have been
incorrect,
incomplete, or misleading in any material respect on or as of the
date made or
deemed made;
(3) The Borrower shall fail to perform or observe any term,
covenant,
or agreement made by the Borrower in this Agreement, the Security
Agreement, the
Control Agreement, or any other agreement or undertaking by the
Borrower
pursuant to or relating to the terms and provisions of this
Agreement, and such
failure continues for thirty (30) days after written notice to the
Borrower;
(4) A Subsidiary Guarantor shall fail to perform or observe any
term,
covenant, or agreement made by such Subsidiary Guarantor in this
Agreement, a
Subsidiary Guaranty, a Subsidiary Security Agreement, a Subsidiary
Control
Agreement or any other agreement or undertaking by a Subsidiary
Guarantor
pursuant to or relating to the terms and provisions of this
Agreement, and such
failure continues for thirty (30) days after written notice to the
Borrower;
(5) The Borrower or any of its Restricted Subsidiaries shall (a)
fail
to pay any indebtedness for borrowed money in excess of Two Hundred
Fifty
Thousand Dollars ($250,000.00)(other than the Operating Note) of
the Borrower or
such Restricted Subsidiary, as the case may be, when due (whether
by scheduled
maturity, required prepayment, acceleration, demand, or otherwise),
including
but not limited to the Senior Secured Notes, or (b) fail to perform
or observe
any term, covenant, or condition on its part to be performed or
observed under
any agreement or instrument, including but not limited to the
Senior Secured
Notes or any of the Senior Note Documents, relating to any such
indebtedness,
when required to be performed or observed, if the effect of such
failure to
perform or observe is to accelerate, or to permit the acceleration
of, after the
giving of notice or passage of time, or both, the maturity of such
indebtedness,
if such failure to perform or observe shall not have been waived by
the holder
of such indebtedness; or any such indebtedness shall be declared to
be due and
payable, or required to be prepaid (other than by a regularly
scheduled required
prepayment), prior to the stated maturity thereof;
(6) The Borrower or any of its Restricted Subsidiaries or any
Subsidiary Guarantor (a) shall generally not pay, or shall be
unable to pay, or
shall admit in writing its inability to pay its debts as such debts
become due;
or (b) shall make an assignment for the benefit of creditors, or
petition or
apply to any tribunal for the appointment of a custodian, receiver,
or trustee
for it or a substantial part of its assets; or (c) shall commence
any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of
debt,
dissolution, or liquidation law or statute of any jurisdiction,
whether now or
hereafter in effect; or (d) shall have had any such petition or
application
filed or any such proceeding commenced against it in which an order
for relief
is entered or an adjudication or appointment is made, and which
remains
undismissed for a period of sixty (60) days or more; or (e) shall
take any
action indicating its consent to, approval of, or acquiescence in
any such
petition, application, proceeding, or order for relief or the
appointment of a
custodian, receiver, or trustee for all or any substantial part of
its
properties; or (f) shall suffer any such custodianship,
receivership, or
trusteeship to continue undischarged for a period of sixty (60)
days or more;
22
<PAGE>
(7) One or more judgments, decrees, or orders for the payment of
money
in excess of Two Hundred Fifty Thousand and No/100ths Dollars
($250,000.00) in
the aggregate shall be rendered against the Borrower or any of its
Restricted
Subsidiaries and such judgments, decrees, or orders shall continue
unsatisfied
and in effect for a period of thirty (30) consecutive days without
being
vacated, discharged, satisfied, or stayed or bonded pending
appeal;
(8) The Security Agreement and each Subsidiary Security
Agreement
shall at any time after its execution and delivery and for any
reason cease (a)
to create a valid and perfected first priority security interest in
and to the
Collateral purported to be subject to such Security Agreement or
Subsidiary
Security Agreement; or (b) to be in full force and effect or shall
be declared
null and void, or the validity or enforceability thereof shall be
contested by
the Borrower or any Restricted Subsidiary, or the Borrower or any
Restricted
Subsidiary shall deny it has any further liability or obligation
under the
Security Agreement or any Subsidiary Security Agreement, or the
Borrower or
Restricted Subsidiary shall fail to perform any of its obligations
under the
Security Agreement or Subsidiary Security Agreement;
(9) The Control Agreement and each Subsidiary Control Agreement
shall
at any time after its execution and delivery and for any reason
cease (a) to
create a valid and perfected first priority security interest in
and to the
Collateral purported to be subject to such Control Agreement or
Subsidiary
Control Agreement; or (b) to be in full force and effect or shall
be declared
null and void, or the validity or enforceability thereof shall be
contested by
the Borrower or any Restricted Subsidiary, or the Borrower or any
Restricted
Subsidiary shall deny it has any further liability or obligation
under the
Control Agreement or any Subsidiary Control Agreement, or the
Borrower or
Restricted Subsidiary shall fail to perform any of its obligations
under the
Control Agreement or Subsidiary Control Agreement; or
(10) Any Guaranty shall at any time after its execution and
delivery
and for any reason cease to be in full force and effect or shall be
declared
null and void, or the validity or enforceability thereof shall be
contested by
any Subsidiary Guarantor or any Subsidiary Guarantor shall deny it
has any
further liability or obligation under, or shall fail to perform its
obligations
under, such Subsidiary Guarantor's Guaranty.
Then, and in any such event, the Bank may, by written notice to
the
Borrower, (1) declare its Commitment to make Loans to be
terminated, whereupon
the same shall forthwith terminate, (2) declare the Operating Note,
all interest
thereon, and all other amounts payable under this Agreement or the
Note to be
forthwith due and payable, whereupon the Operating Note, all such
interest, and
all such amounts shall become and be forthwith due and payable,
without
presentment, demand, protest, or further notice of any kind, all of
which are
hereby expressly waived by the Borrower, to the extent permitted by
applicable
law, and (3) take any and all action reasonably required by the
Bank to limit
and restrict the exposure of the Bank relating to any then
outstanding Letters
of Credit provided pursuant to the Letter of Credit Facility,
without
presentment, demand, protest, or further notice of any kind, all of
which are
hereby expressly waived by the Borrower, to the extent permitted by
applicable
law.
23
<PAGE>
Upon
the occurrence and during the continuance of any Event of Default,
the
Bank is hereby authorized at any time and from time to time,
without written
notice to the Borrower or any Subsidiary (any such notice being
expressly waived
by the Borrower), to set off and apply any and all deposits
(general or special,
time or demand, provisional or final) at any time held and other
indebtedness at
any time owing by the Bank to or for the credit or the account of
the Borrower
or any Subsidiary against any and all of the obligations of the
Borrower now or
hereafter existing under this Agreement or the Note or any other
Loan Document,
irrespective of whether or not the Bank shall have made any demand
under this
Agreement or the Note or such other Loan Document and although such
obligations
may be unmatured. The Bank agrees promptly to notify the Borrower
after any such
setoff and application, provided that the failure to give such
notice shall not
affect the validity of such setoff and application. The rights of
the Bank under
this Section 7.01 are in addition to other rights and remedies
(including,
without limitation, other rights of setoff) which the Bank may
have.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC. No amendment, modification,
termination, or
waiver of any provision of any Loan Document, nor consent to any
departure from
any provision of any of the Loan Documents, shall in any event be
effective
unless the same shall be in writing and signed by the Bank, and
then such waiver
or consent shall be effective only in the specific instance and for
the specific
purpose for which given.
SECTION 8.02. NOTICES, ETC. All notices and other communications
provided
for under this Agreement and under the other Loan Documents to
which the
Borrower is a party shall be in writing (including facsimile
transmissions) and
mailed or transmitted or delivered, if to the Borrower, at its
address at 100
22nd Ave., Brooking, South Dakota 57006, Attention: Bruce Jamerson,
and if to
the Bank, at its address at 1620 Dodge Street, STOP 1050, Omaha,
Nebraska 68197,
Attention: Natalie E. Mason; or, as to each party, at such other
address as
shall be designated by such party in a written notice to the other
party
complying as to delivery with the terms of this Section 8.02.
Except as
otherwise provided in this Agreement, all such notices and
communications shall
be effective when deposited in the mails, or sent, answerback
received,
respectively, addressed as aforesaid.
SECTION 8.03. NO WAIVER. No failure or delay on the part of the
Bank in
exercising any right, power, or remedy hereunder shall operate as a
waiver
thereof; nor shall any single or partial exercise of any such
right, power, or
remedy preclude any other or further exercise thereof or the
exercise of any
other right, power, or remedy hereunder. The rights and remedies
provided herein
are cumulative, and are not exclusive of any other rights, powers,
privileges,
or remedies, now or hereafter existing, at law or in equity or
otherwise.
SECTION 8.04. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon
and inure to the benefit of the Borrower, the Subsidiaries, and the
Bank and
their respective successors and assigns, except that neither the
Borrower nor
any of the Subsidiaries may assign or transfer any
24
<PAGE>
of its rights or obligations under this Agreement or any Loan
Document to which
it is a party without the prior written consent of the Bank.
SECTION 8.05. COSTS, EXPENSES, AND TAXES. The Borrower agrees to
pay on
demand all costs and expenses incurred by the Bank in connection
with the
preparation, execution, delivery, filing, and administration of the
Loan
Documents, and of any amendment, modification, or supplement to the
Loan
Documents, including, without limitation, the reasonable fees and
reasonable
out-of-pocket expenses of counsel for the Bank incurred in
connection with
advising the Bank as to its rights and responsibilities hereunder.
The Borrower
also agrees to pay all such costs and expenses, including court
costs, incurred
in connection with enforcement of the Loan Documents, or any
amendment,
modification, or supplement thereto, whether by negotiation, legal
proceedings,
or otherwise. In addition, the Borrower shall pay any and all stamp
and other
taxes and fees payable or determined to be payable in connection
with the
execution, delivery, filing, and recording of any of the Loan
Documents and the
other documents to be delivered under any such Loan Documents, and
agrees to
hold the Bank harmless from and against any and all liabilities
with respect to
or resulting from any delay in paying or omission to pay such taxes
and fees.
This provision shall survive termination of this Agreement.
SECTION 8.06. INTEGRATION. This Agreement and the Loan Documents
contain
the entire agreement among the parties relating to the subject
matter hereof and
supersede all oral statements and prior writings with respect
thereto.
SECTION 8.07. INDEMNITY. The Borrower and each of the
Restricted
Subsidiaries hereby agrees to defend, indemnify, and hold the Bank
harmless from
and against any and all claims, damages, judgments, penalties,
costs, and
expenses (including reasonable attorney fees and court costs now or
hereafter
arising from the aforesaid enforcement of this clause) arising
directly or
indirectly from the activities of the Borrower and its
Subsidiaries, or arising
directly from (i) the violation of any laws, regulations or rules
relating to
the operations of the business of the Borrower or the Subsidiaries,
or (ii) the
occurrence of any Default or Event of Default hereunder. This
indemnity shall
survive termination of this Agreement, except for any
indemnification obligation
which arises based upon the Bank's gross negligence, willful
misconduct or
violation of applicable law.
SECTION 8.08.
GOVERNING LAW. This Agreement, the Operating Note and the
remainder of the Loan Documents shall be governed by, and construed
in
accordance with, the laws of the State of Nebraska without giving
effect to any
choice or conflict of law provision or rule (whether of the State
of Nebraska or
any other jurisdiction) that would cause the application of the
laws of any
jurisdiction other than the State of Nebraska.
SECTION 8.09. SEVERABILITY OF PROVISIONS. Any provision of any
Loan
Document which is prohibited or unenforceable in any jurisdiction
shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions of
such Loan
Document or affecting the validity or enforceability of such
provision in any
other jurisdiction.
25
<PAGE>
SECTION 8.10. HEADINGS. Article and Section headings in the Loan
Documents
are included in such Loan Documents for the convenience of
reference only and
shall not constitute a part of the applicable Loan Documents for
any other
purpose.
SECTION 8.11. SUBMISSION TO JURISDICTION; VENUE. The Borrower, each
of the
Restricted Subsidiaries and each of the Subsidiary Guarantors
hereby submit to
the jurisdiction of any state or federal court sitting in Omaha,
Nebraska, in
any action or proceeding arising out of or relating to this
Agreement and agree
that all claims in respect of the action or proceeding may be heard
and
determined in any such court. The Borrower, each of the Restricted
Subsidiaries
and each of the Subsidiary Guarantors also agree not to bring any
action or
proceeding arising out of or relating to this Agreement in any
other court. The
Borrower, each of the Restricted Subsidiaries and each of the
Subsidiary
Guarantors waive any defense of inconvenient forum to the
maintenance of any
action or proceeding so brought and waive any bond, surety, or
other security
that might be required of the Bank. The Borrower, each of the
Restricted
Subsidiaries and each of the Subsidiary Guarantors agree that a
final judgment
in any action or proceeding so brought shall be conclusive and may
be enforced
by suit on the judgment or in any other manner provided by law or
at equity. The
Borrower, each of the Restricted Subsidiaries and each of the
Subsidiary
Guarantors hereby waive any rights they may have to transfer or
change the venue
of any suit, action or other proceeding brought against the
Borrower, any of the
Restricted Subsidiaries or any of the Subsidiary Guarantors by the
Bank in
accordance with this Section 8.11 or in connection with this
Agreement or any
other Loan Documents.
SECTION 8.12. JURY TRIAL WAIVER. THE BANK, EACH OF THE
RESTRICTED
SUBSIDIARIES, EACH OF THE SUBSIDIARY GUARANTORS AND THE BORROWER
HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM,
WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY
RELATED TO
THIS AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF THE BANK HAS
AUTHORITY TO
WAIVE, CONDITION, OR MODIFY THIS PROVISION.
SECTION 8.13. PARTICIPATIONS. Notwithstanding any other provision
of this
Agreement, the Borrower and each Restricted Subsidiary understands
that, while
the Bank does not have a current intention to sell participation
interests in
the Loans, the Bank reserves the right to enter into participation
agreements
with other lenders whereby the Bank will allocate a certain
percentage of the
Loans to such other lenders. The Borrower and each Restricted
Subsidiary
specifically permit and authorize the Bank to exchange financial
information
about the Borrower and the Restricted Subsidiaries with actual or
potential
participants. The Borrower and the Restricted Subsidiaries
acknowledge that, for
the convenience of all parties, this Agreement is being entered
into with the
Bank only and that, in the event the Bank sells one or more
participation
interests in the Loans, the Borrower's and each of the Restricted
Subsidiary's
obligations under this Agreement are undertaken for the benefit of,
and as an
inducement to, each of the participating lenders as well as the
Bank, and the
Borrower and each of the Restricted Subsidiaries hereby grants to
each of the
participating lenders to the extent of its participation in any
Loan the right
to set off deposit accounts maintained by the Borrower or the
Restricted
Subsidiaries with the Bank or such participating lenders. The
Borrower and the
Restricted
26
<PAGE>
Subsidiaries understand that the terms of such participation
agreements with any
of the participating lenders may limit the Bank's rights to amend,
waive or
modify the terms and conditions of this Agreement without the
express written
consent of all or a designated percentage of such participants.
SECTION 8.14. COUNTERPARTS. This Agreement, and each of the Loan
Documents,
may be executed in one or more counterparts, each of which shall be
deemed to be
an original, but which together shall constitute one and the same
instrument.
The signatures of all of the parties hereto need not appear on the
same
counterpart, and delivery of an executed counterpart signature page
by facsimile
is as effective as executing and delivering this Agreement, and
each of the Loan
Documents, in the presence of the other parties to this Agreement.
Any party
delivering an executed counterpart of this Agreement or any of the
Loan
Documents by facsimile shall also deliver a manually executed
counterpart of
this Agreement and such Loan Documents, but the failure to do so
shall not
affect the validity, enforceability or binding effect of this
Agreement or such
Loan Documents.
SECTION 8.15. CREDIT AGREEMENT. A CREDIT AGREEMENT MUST BE IN
WRITING TO BE
ENFORCEABLE UNDER NEBRASKA LAW. TO PROTECT THE PARTIES HERETO FROM
ANY
MISUNDERSTANDING OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE,
UNDERTAKING, OR
OFFER TO FORBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL
ACCOMMODATION
IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, OR ANY
AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY
OR ALL OF THE
TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN
CONNECTION WITH
THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN
WRITING TO BE
EFFECTIVE.
REMAINDER OF PAGE INTENTIONALLY BLANK
27
<PAGE>
IN
WITNESS WHEREOF, the parties have caused this Agreement to be
executed
by their respective officers thereunto duly authorized, as of the
date first
above written.
"Borrower"
VERASUN ENERGY CORPORATION,
a South Dakota corporation
By: /s/ Donald L. Endres
------------------------------------
Title: Chief Executive Officer
---------------------------------
"Bank"
First National Bank of Omaha,
a national banking association
By: /s/ Natalie E. Mason
------------------------------------
Title: Commercial Loan Officer
VERASUN AURORA CORPORATION,
a South Dakota
corporation
By: /s/ Bruce A. Jamerson
------------------------------------
Title: President and Chief Financial
Officer
---------------------------------
VERASUN FORT DODGE, LLC,
a Delaware limited liability company
By: /s/ Bruce A. Jamerson
------------------------------------
Title: President and Chief Financial
Officer
---------------------------------
VERASUN CHARLES CITY, LLC
a Delaware limited liability company
By: /s/ Bruce A. Jamerson
------------------------------------
Title: President and Chief Financial
Officer
---------------------------------
28
<PAGE>
EXHIBIT LIST
EXHIBIT "A" BORROWING BASE CERTIFICATE
EXHIBIT "B" COMMITMENT LETTER
EXHIBIT "C" BORROWER CONTROL AGREEMENT
EXHIBIT "D" AURORA CONTROL AGREEMENT
EXHIBIT "E" CHARLES CITY CONTROL AGREEMENT
EXHIBIT "F" FORT DODGE CONTROL AGREEMENT
EXHIBIT "G" OPERATING NOTE
EXHIBIT "H" SECURITY AGREEMENT
EXHIBIT "I" AURORA SUBSIDIARY GUARANTY
EXHIBIT "J" CHARLES CITY SUBSIDIARY GUARANTY
EXHIBIT "K" FORT DODGE SUBSIDIARY GUARANTY
EXHIBIT "L" AURORA SUBSIDIARY SECURITY AGREEMENT
EXHIBIT "M" CHARLES CITY SUBSIDIARY SECURITY AGREEMENT
EXHIBIT "N" FORT DODGE SUBSIDIARY SECURITY AGREEMENT
EXHIBIT "O" OPINION LETTER BORROWER'S CORPORATE COUNSEL
EXHIBIT "P" OPINION LETTER BORROWER'S
SOUTH DAKOTA AND NEBRASKA COUNSEL
EXHIBIT "Q" INTENTIONALLY OMITTED
EXHIBIT "R" INTENTIONALLY OMITTED
EXHIBIT "S" SUBSIDIARIES
EXHIBIT "T" FORM OF QUARTERLY PRODUCTION REPORT
29
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "A"
BORROWING BASE CERTIFICATE
[See Attached]
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "B"
COMMITMENT LETTER
[See Attached]
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "C"
BORROWER CONTROL AGREEMENT
[See Attached]
<PAGE>
EXHIBIT C
CONTROL AGREEMENT
REGARDING SECURITY INTEREST IN INVESTMENT PROPERTY
This
CONTROL AGREEMENT (this "Agreement"), made as of the 21st day
of
December, 2005, by and among First National Bank of Omaha, a
national banking
association with its principal offices in Omaha, Nebraska ("BANK"),
and VeraSun
Energy Corporation, a South Dakota corporation whose mailing
address is 100 22nd
Avenue, Brookings, South Dakota 57006 (the "CUSTOMER"), and First
National
Capital Markets, Inc., a Nebraska corporation whose mailing address
is 1620
Dodge St., Omaha, Nebraska 68197 (the "COMPANY").
RECITALS
A.
CUSTOMER is indebted to BANK as the result of one or more
promissory
notes, or other evidence of indebtedness. Such indebtedness,
whether resulting
from a promissory note, guaranty, letter of credit, or any other
document or
cause, is herein called an "OBLIGATION."
B. For purposes of
this Agreement, all capitalized terms not otherwise
defined herein have the same meanings as defined in the Nebraska
Uniform
Commercial Code (the "UCC").
C.
CUSTOMER has provided BANK a security interest in the COLLATERAL
(as
defined below) and CUSTOMER desires to provide BANK with CONTROL
(as such term
is defined in Nebraska Uniform Commercial Code Section 8-106) over
the
COLLATERAL (as defined below).
Now,
therefore, the parties hereto agree as follows:
1.
The COMPANY represents and agrees that: (i) it has established and
is
maintaining on its books and records the Securities Account,
accounts number #
229000136 and 232000011, (said accounts, together with any
replacements thereof
or substitutions therefore, is herein the "ACCOUNT") and (ii) the
ACCOUNT is a
"securities account" (within the meaning of Section 8-501(a) of the
UCC) in
respect of which the COMPANY is a "securities intermediary" (within
the meaning
of Section 8-102(a)(14) of the UCC) and the BANK is the
"entitlement holder"
(within the meaning of Section 8-102(a)(7) of the UCC).
2.
The COMPANY hereby agrees that each item of property (whether cash,
a
security, an instrument or any other property whatsoever) credited
to the
ACCOUNT shall be treated as FINANCIAL ASSETS under Article 8 of the
UCC (the
ACCOUNT and the FINANCIAL ASSETS credited thereto shall be
hereafter referred to
as the "COLLATERAL").
3.
The COMPANY agrees that, if there is any conflict between this
Agreement
and any other agreement relating to the ACCOUNT, the provisions of
this
Agreement shall control.
4.
COMPANY agrees that it will comply with INSTRUCTIONS and
ENTITLEMENT
ORDERS originated by BANK as to the COLLATERAL, without further
consent of
CUSTOMER. Until otherwise instructed, CUSTOMER is to receive any
cash dividends
attributable to the COLLATERAL.
<PAGE>
5.
Notwithstanding the provisions of paragraph 4, above, CUSTOMER
possesses, along with the BANK, the right to originate INSTRUCTIONS
to COMPANY
as to substitutions for the COLLATERAL, until BANK provides written
notice to
COMPANY of any default (which is not cured or waived) by CUSTOMER
as to any
OBLIGATION, thereafter BANK alone shall have the right to originate
INSTRUCTIONS
to COMPANY as to the COLLATERAL. After COMPANY receives notice from
BANK that a
default has occurred, COMPANY agrees that it will no longer comply
with
ENTITLEMENT ORDERS originated by, or other directions or
INSTRUCTIONS received
from, CUSTOMER with respect to the ACCOUNT or cash, securities or
other property
credited thereto.
6.
COMPANY hereby agrees that any security interest, pledge,
right-of-setoff, mortgage, or other instrument now or hereinafter
evidencing or
securing any OBLIGATION owed by the CUSTOMER to COMPANY shall be
subordinated at
all times to the security interest, pledge, mortgage, or other
instrument
securing the OBLIGATIONS owed to BANK whether now existing or
hereinafter
arising (the "Subordinated Interest"). COMPANY shall not demand,
accept or
receive any payment by CUSTOMER for or on account of the
Subordinated Interest,
other than customary account or transaction fees incurred in the
ordinary course
of business, without BANK's prior written consent. If COMPANY
receives any
payment or COLLATERAL from CUSTOMER in violation of this Agreement,
then COMPANY
shall hold the same in trust for BANK's benefit and forthwith
deliver the same
to BANK in the form received duly endorsed in any manner BANK may
determine in
its sole discretion. The Subordinated Interest of COMPANY shall
continue until
such time as all of the OBLIGATIONS owed to the BANK are paid in
full
7.
This Agreement is deemed to have been executed in Nebraska and any
and
all matters arising under or related to this Agreement are and
shall be governed
by and subject to the laws of Nebraska, including the UCC. This
Agreement is
effective until terminated by a written notice executed by BANK
delivered to
COMPANY, or until the COLLATERAL is no longer registered to or
owned by
CUSTOMER.
8.
COMPANY represents that it has not and covenants that it will not
agree
to comply with any INSTRUCTIONS or ENTITLEMENT ORDERS with respect
to the
COLLATERAL other than as set forth herein.
REMAINDER OF PAGE INTENTIONALLY BLANK
Page 2 of 3
<PAGE>
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date
first set forth above.
BANK:
First National Bank of Omaha,
a national banking association
By:
---------------------------------
Natalie E. Mason,
Commercial
Loan Officer
CUSTOMER:
VeraSun Energy Corporation,
a South Dakota corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
COMPANY:
First National Capital Markets, Inc.,
a Nebraska corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 3 of 3
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "D"
AURORA CONTROL AGREEMENT
[See Attached]
<PAGE>
EXHIBIT D
CONTROL AGREEMENT
REGARDING SECURITY INTEREST IN INVESTMENT PROPERTY
This
CONTROL AGREEMENT (this "Agreement"), made as of the 21st day
of
December, 2005, by and among First National Bank of Omaha, a
national banking
association with its principal offices in Omaha, Nebraska ("BANK"),
and VeraSun
Aurora Corporation, a South Dakota corporation whose mailing
address is 100 22nd
Avenue, Brookings, South Dakota 57006 (the "CUSTOMER"), and First
National
Capital Markets, Inc., a Nebraska corporation whose mailing address
is 1620
Dodge St., Omaha, Nebraska 68197 (the "COMPANY").
RECITALS
A.
CUSTOMER has undertaken certain obligations to BANK as the result
of one
or more guaranties, security agreements, letters of credit or other
evidence of
indebtedness. Such indebtedness, whether resulting from such
guaranties,
security agreements, letters of credit, or any other document or
cause, is
herein called an "OBLIGATION."
B.
For purposes of this Agreement, all capitalized terms not
otherwise
defined herein have the same meanings as defined in the Nebraska
Uniform
Commercial Code (the "UCC").
C.
CUSTOMER has provided BANK a security interest in the COLLATERAL
(as
defined below) and CUSTOMER desires to provide BANK with CONTROL
(as such term
is defined in Nebraska Uniform Commercial Code Section 8-106) over
the
COLLATERAL (as defined below).
Now,
therefore, the parties hereto agree as follows:
1.
The COMPANY represents and agrees that: (i) it has established and
is
maintaining on its books and records the Securities Account,
account number #
186000344, (said account, together with any replacements thereof
or
substitutions therefore, is herein the "ACCOUNT") and (ii) the
ACCOUNT is a
"securities account" (within the meaning of Section 8-501(a) of the
UCC) in
respect of which the COMPANY is a "securities intermediary" (within
the meaning
of Section 8-102(a)(14) of the UCC) and the BANK is the
"entitlement holder"
(within the meaning of Section 8-102(a)(7) of the UCC).
2.
The COMPANY hereby agrees that each item of property (whether cash,
a
security, an instrument or any other property whatsoever) credited
to the
ACCOUNT shall be treated as FINANCIAL ASSETS under Article 8 of the
UCC (the
ACCOUNT and the FINANCIAL ASSETS credited thereto shall be
hereafter referred to
as the "COLLATERAL").
3.
The COMPANY agrees that, if there is any conflict between this
Agreement
and any other agreement relating to the ACCOUNT, the provisions of
this
Agreement shall control.
4.
COMPANY agrees that it will comply with INSTRUCTIONS and
ENTITLEMENT
ORDERS originated by BANK as to the COLLATERAL, without further
<PAGE>
consent of CUSTOMER. Until otherwise instructed, CUSTOMER is to
receive any cash
dividends attributable to the COLLATERAL.
5.
Notwithstanding the provisions of paragraph 4, above, CUSTOMER
possesses, along with the BANK, the right to originate INSTRUCTIONS
to COMPANY
as to substitutions for the COLLATERAL, until BANK provides written
notice to
COMPANY of any default (which is not cured or waived) by CUSTOMER
as to any
OBLIGATION, thereafter BANK alone shall have the right to originate
INSTRUCTIONS
to COMPANY as to the COLLATERAL. After COMPANY receives notice from
BANK that a
default has occurred, COMPANY agrees that it will no longer comply
with
ENTITLEMENT ORDERS originated by, or other directions or
INSTRUCTIONS received
from, CUSTOMER with respect to the ACCOUNT or cash, securities or
other property
credited thereto.
6.
COMPANY hereby agrees that any security interest, pledge,
right-of-setoff, mortgage, or other instrument now or hereinafter
evidencing or
securing any OBLIGATION owed by the CUSTOMER to COMPANY shall be
subordinated at
all times to the security interest, pledge, mortgage, or other
instrument
securing the OBLIGATIONS owed to BANK whether now existing or
hereinafter
arising (the "Subordinated Interest"). COMPANY shall not demand,
accept or
receive any payment by CUSTOMER for or on account of the
Subordinated Interest,
other than customary account or transaction fees incurred in the
ordinary course
of business, without BANK's prior written consent. If COMPANY
receives any
payment or COLLATERAL from CUSTOMER in violation of this Agreement,
then COMPANY
shall hold the same in trust for BANK's benefit and forthwith
deliver the same
to BANK in the form received duly endorsed in any manner BANK may
determine in
its sole discretion. The Subordinated Interest of COMPANY shall
continue until
such time as all of the OBLIGATIONS owed to the BANK are paid in
full
7.
This Agreement is deemed to have been executed in Nebraska and any
and
all matters arising under or related to this Agreement are and
shall be governed
by and subject to the laws of Nebraska, including the UCC. This
Agreement is
effective until terminated by a written notice executed by BANK
delivered to
COMPANY, or until the COLLATERAL is no longer registered to or
owned by
CUSTOMER.
8.
COMPANY represents that it has not and covenants that it will not
agree
to comply with any INSTRUCTIONS or ENTITLEMENT ORDERS with respect
to the
COLLATERAL other than as set forth herein.
REMAINDER OF PAGE INTENTIONALLY BLANK
Page 2 of 3
<PAGE>
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date
first set forth above.
BANK:
First National Bank of Omaha,
a national banking association
By:
---------------------------------
Natalie E.
Mason,
Commercial
Loan Officer
CUSTOMER:
VeraSun Aurora Corporation,
a South Dakota corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
COMPANY:
First National Capital Markets, Inc.,
a Nebraska corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 3 of
3
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "E"
CHARLES CITY CONTROL AGREEMENT
[See Attached]
<PAGE>
EXHIBIT E
CONTROL AGREEMENT
REGARDING SECURITY INTEREST IN INVESTMENT PROPERTY
This
CONTROL AGREEMENT (this "Agreement"), made as of the 21st day
of
December, 2005, by and among First National Bank of Omaha, a
national banking
association with its principal offices in Omaha, Nebraska ("BANK"),
and VeraSun
Charles City, LLC, a Delaware limited liability company whose
mailing address is
100 22nd Avenue, Brookings, South Dakota 57006 (the "CUSTOMER"),
and First
National Capital Markets, Inc., a Nebraska corporation whose
mailing address is
1620 Dodge St., Omaha, Nebraska 68197 (the "COMPANY").
RECITALS
A.
CUSTOMER has undertaken certain obligations to BANK as the result
of one
or more guaranties, security agreements, letters of credit or other
evidence of
indebtedness. Such indebtedness, whether resulting from such
guaranties,
security agreements, letters of credit, or any other document or
cause, is
herein called an "OBLIGATION."
B.
For purposes of this Agreement, all capitalized terms not
otherwise
defined herein have the same meanings as defined in the Nebraska
Uniform
Commercial Code (the "UCC").
C.
CUSTOMER has provided BANK a security interest in the COLLATERAL
(as
defined below) and CUSTOMER desires to provide BANK with CONTROL
(as such term
is defined in Nebraska Uniform Commercial Code Section 8-106) over
the
COLLATERAL (as defined below).
Now, therefore, the
parties hereto agree as follows:
1.
The COMPANY represents and agrees that: (i) it has established and
is
maintaining on its books and records the Securities Account,
account number (#
to be established as required and subject hereto), (said account,
together with
any replacements thereof or substitutions therefore, is herein the
"ACCOUNT")
and (ii) the ACCOUNT is a "securities account" (within the meaning
of Section
8-501(a) of the UCC) in respect of which the COMPANY is a
"securities
intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) and the
BANK is the "entitlement holder" (within the meaning of Section
8-102(a)(7) of
the UCC).
2.
The COMPANY hereby agrees that each item of property (whether cash,
a
security, an instrument or any other property whatsoever) credited
to the
ACCOUNT shall be treated as FINANCIAL ASSETS under Article 8 of the
UCC (the
ACCOUNT and the FINANCIAL ASSETS credited thereto shall be
hereafter referred to
as the "COLLATERAL").
3. The COMPANY agrees that,
if there is any conflict between this Agreement
and any other agreement relating to the ACCOUNT, the provisions of
this
Agreement shall control.
<PAGE>
4.
COMPANY agrees that it will comply with INSTRUCTIONS and
ENTITLEMENT
ORDERS originated by BANK as to the COLLATERAL, without further
consent of
CUSTOMER. Until otherwise instructed, CUSTOMER is to receive any
cash dividends
attributable to the COLLATERAL.
5.
Notwithstanding the provisions of paragraph 4, above, CUSTOMER
possesses, along with the BANK, the right to originate INSTRUCTIONS
to COMPANY
as to substitutions for the COLLATERAL, until BANK provides written
notice to
COMPANY of any default (which is not cured or waived) by CUSTOMER
as to any
OBLIGATION, thereafter BANK alone shall have the right to originate
INSTRUCTIONS
to COMPANY as to the COLLATERAL. After COMPANY receives notice from
BANK that a
default has occurred, COMPANY agrees that it will no longer comply
with
ENTITLEMENT ORDERS originated by, or other directions or
INSTRUCTIONS received
from, CUSTOMER with respect to the ACCOUNT or cash, securities or
other property
credited thereto.
6.
COMPANY hereby agrees that any security interest, pledge,
right-of-setoff, mortgage, or other instrument now or hereinafter
evidencing or
securing any OBLIGATION owed by the CUSTOMER to COMPANY shall be
subordinated at
all times to the security interest, pledge, mortgage, or other
instrument
securing the OBLIGATIONS owed to BANK whether now existing or
hereinafter
arising (the "Subordinated Interest"). COMPANY shall not demand,
accept or
receive any payment by CUSTOMER for or on account of the
Subordinated Interest,
other than customary account or transaction fees incurred in the
ordinary course
of business, without BANK's prior written consent. If COMPANY
receives any
payment or COLLATERAL from CUSTOMER in violation of this Agreement,
then COMPANY
shall hold the same in trust for BANK's benefit and forthwith
deliver the same
to BANK in the form received duly endorsed in any manner BANK may
determine in
its sole discretion. The Subordinated Interest of COMPANY shall
continue until
such time as all of the OBLIGATIONS owed to the BANK are paid in
full
7.
This Agreement is deemed to have been executed in Nebraska and any
and
all matters arising under or related to this Agreement are and
shall be governed
by and subject to the laws of Nebraska, including the UCC. This
Agreement is
effective until terminated by a written notice executed by BANK
delivered to
COMPANY, or until the COLLATERAL is no longer registered to or
owned by
CUSTOMER.
8.
COMPANY represents that it has not and covenants that it will not
agree
to comply with any INSTRUCTIONS or ENTITLEMENT ORDERS with respect
to the
COLLATERAL other than as set forth herein.
REMAINDER OF PAGE INTENTIONALLY BLANK
Page 2 of 3
<PAGE>
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date
first set forth above.
BANK:
First National Bank of Omaha,
a national banking association
By:
---------------------------------
Natalie E.
Mason,
Commercial
Loan Officer
CUSTOMER:
VeraSun Charles City, LLC,
a Delaware limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
COMPANY:
First National Capital Markets, Inc.,
a Nebraska corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Page 3 of 3
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "F"
FORT DODGE CONTROL AGREEMENT
[See Attached]
<PAGE>
EXHIBIT F
CONTROL AGREEMENT
REGARDING SECURITY INTEREST IN INVESTMENT PROPERTY
This
CONTROL AGREEMENT (this "Agreement"), made as of the 21st day
of
December, 2005, by and among First National Bank of Omaha, a
national banking
association with its principal offices in Omaha, Nebraska ("BANK"),
and VeraSun
Fort Dodge, LLC, a Delaware limited liability company whose mailing
address is
100 22nd Avenue, Brookings, South Dakota 57006 (the "CUSTOMER"),
and First
National Capital Markets, Inc., a Nebraska corporation whose
mailing address is
1620 Dodge St., Omaha, Nebraska 68197 (the "COMPANY").
RECITALS
A.
CUSTOMER has undertaken certain obligations to BANK as the result
of one
or more guaranties, security agreements, letters of credit or other
evidence of
indebtedness. Such indebtedness, whether resulting from such
guaranties,
security agreements, letters of credit, or any other document or
cause, is
herein called an "OBLIGATION."
B.
For purposes of this Agreement, all capitalized terms not
otherwise
defined herein have the same meanings as defined in the Nebraska
Uniform
Commercial Code (the "UCC").
C.
CUSTOMER has provided BANK a security interest in the COLLATERAL
(as
defined below) and CUSTOMER desires to provide BANK with CONTROL
(as such term
is defined in Nebraska Uniform Commercial Code Section 8-106) over
the
COLLATERAL (as defined below).
Now,
therefore, the parties hereto agree as follows:
1.
The COMPANY represents and agrees that: (i) it has established and
is
maintaining on its books and records the Securities Account,
accounts number #
229000032, 229000033 and 208000140, (said accounts, together with
any
replacements thereof or substitutions therefore, is herein the
"ACCOUNT") and
(ii) the ACCOUNT is a "securities account" (within the meaning of
Section
8-501(a) of the UCC) in respect of which the COMPANY is a
"securities
intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) and the
BANK is the "entitlement holder" (within the meaning of Section
8-102(a)(7) of
the UCC).
2.
The COMPANY hereby agrees that each item of property (whether cash,
a
security, an instrument or any other property whatsoever) credited
to the
ACCOUNT shall be treated as FINANCIAL ASSETS under Article 8 of the
UCC (the
ACCOUNT and the FINANCIAL ASSETS credited thereto shall be
hereafter referred to
as the "COLLATERAL").
3.
The COMPANY agrees that, if there is any conflict between this
Agreement
and any other agreement relating to the ACCOUNT, the provisions of
this
Agreement shall control.
<PAGE>
4.
COMPANY agrees that it will comply with INSTRUCTIONS and
ENTITLEMENT
ORDERS originated by BANK as to the COLLATERAL, without further
consent of
CUSTOMER. Until otherwise instructed, CUSTOMER is to receive any
cash dividends
attributable to the COLLATERAL.
5.
Notwithstanding the provisions of paragraph 4, above, CUSTOMER
possesses, along with the BANK, the right to originate INSTRUCTIONS
to COMPANY
as to substitutions for the COLLATERAL, until BANK provides written
notice to
COMPANY of any default (which is not cured or waived) by CUSTOMER
as to any
OBLIGATION, thereafter BANK alone shall have the right to originate
INSTRUCTIONS
to COMPANY as to the COLLATERAL. After COMPANY receives notice from
BANK that a
default has occurred, COMPANY agrees that it will no longer comply
with
ENTITLEMENT ORDERS originated by, or other directions or
INSTRUCTIONS received
from, CUSTOMER with respect to the ACCOUNT or cash, securities or
other property
credited thereto.
6.
COMPANY hereby agrees that any security interest, pledge,
right-of-setoff, mortgage, or other instrument now or hereinafter
evidencing or
securing any OBLIGATION owed by the CUSTOMER to COMPANY shall be
subordinated at
all times to the security interest, pledge, mortgage, or other
instrument
securing the OBLIGATIONS owed to BANK whether now existing or
hereinafter
arising (the "Subordinated Interest"). COMPANY shall not demand,
accept or
receive any payment by CUSTOMER for or on account of the
Subordinated Interest,
other than customary account or transaction fees incurred in the
ordinary course
of business, without BANK's prior written consent. If COMPANY
receives any
payment or COLLATERAL from CUSTOMER in violation of this Agreement,
then COMPANY
shall hold the same in trust for BANK's benefit and forthwith
deliver the same
to BANK in the form received duly endorsed in any manner BANK may
determine in
its sole discretion. The Subordinated Interest of COMPANY shall
continue until
such time as all of the OBLIGATIONS owed to the BANK are paid in
full
7.
This Agreement is deemed to have been executed in Nebraska and any
and
all matters arising under or related to this Agreement are and
shall be governed
by and subject to the laws of Nebraska, including the UCC. This
Agreement is
effective until terminated by a written notice executed by BANK
delivered to
COMPANY, or until the COLLATERAL is no longer registered to or
owned by
CUSTOMER.
8.
COMPANY represents that it has not and covenants that it will not
agree
to comply with any INSTRUCTIONS or ENTITLEMENT ORDERS with respect
to the
COLLATERAL other than as set forth herein.
REMAINDER OF PAGE INTENTIONALLY BLANK
Page 2 of 3
<PAGE>
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date
first set forth above.
BANK:
First National Bank of Omaha,
a national banking association
By:
------------------------------------------
Natalie E.
Mason, Commercial Loan Officer
CUSTOMER:
VeraSun Fort Dodge, LLC,
a Delaware limited liability company
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
COMPANY:
First National Capital Markets, Inc.,
a Nebraska corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Page 3 of 3
<PAGE>
REVOLVING
CREDIT AGREEMENT
EXHIBIT "G"
OPERATING NOTE
[See Attached]
<PAGE>
EXHIBIT G
OPERATING NOTE
$30,000,000.00
December 21, 2005
Omaha, Nebraska
1.
BORROWER'S PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned,
VERASUN
ENERGY CORPORATION, a South Dakota corporation (the "Borrower"),
HEREBY PROMISES
TO PAY to the order of FIRST NATIONAL BANK OF OMAHA, a national
banking
association (the "Bank"), at its principal office located at 1620
Dodge Street,
STOP 1050, Omaha, Nebraska 68197, in lawful money of the United
States and in
immediately available funds, the principal amount of Thirty Million
and
No/100ths Dollars ($30,000,000.00) or so much thereof as may be
advanced by the
Bank pursuant to the terms and provisions of the Credit Agreement,
as
hereinafter defined, between the Borrower and the Bank (the
"Principal Amount"),
plus accrued and unpaid Interest thereon at the rate or rates
described below,
on December 31, 2008 (the "Maturity Date").
2.
INTEREST.
(a) The Principal Amount and any other amounts due hereunder
shall
bear interest ("Interest") (computed on the basis of a year of 360
days for the
actual number of days elapsed) from the date of this Operating Note
at a rate
per annum equal to the three (3) month LIBOR Rate plus three
hundred (300) basis
points prior to acceleration or maturity. Any amount of principal
hereof which
is not paid when due, whether at stated maturity, by acceleration,
or otherwise,
shall bear interest from the date when due until said principal
amount is paid
in full, payable on demand, at a rate per annum equal at all times
to the three
(3) month LIBOR Rate plus six hundred (600) basis points ("Default
Rate of
Interest"). Any change in the interest rate resulting from a change
in the LIBOR
Reserve Percentage shall be adjusted automatically in accordance
with the terms
and provisions of this Operating Note.
(b) Assuming that this Operating Note does not mature, by
acceleration
or otherwise, the interest rate applicable to this Operating Note
is subject to
the following adjustments based upon the Borrower's Working Capital
as of the
last Eurodollar Business Day of the three (3) month period ending
at the end of
each calendar quarter during the term of this Operating Note prior
to the
Maturity Date, (each such three month period, an "Adjustment
Period"):
REMAINDER OF PAGE INTENTIONALLY BLANK
<PAGE>
<TABLE>
<CAPTION>
IF,
AS OF THE LAST EURODOLLAR
THEN THE INTEREST RATE APPLICABLE
BUSINESS
DAY OF ANY ADJUSTMENT
TO THIS OPERATING NOTE FOR THE
PERIOD, BORROWER'S WORKING CAPITAL IS: SUBSEQUENT ADJUSTMENT PERIOD
SHALL BE:
--------------------------------------
--------------------------------------
<S>
<C>
(i) less than $30,000,000.00, but
equal to three month LIBOR plus 300
greater than or equal to
basis points or 3.00%
$15,000,000.00
(ii) less than $40,000,000.00, but
equal to three month LIBOR plus 275
greater than or equal to
basis points or 2.75%
$30,000,000.00
(iii) greater than or equal to
equal to one month LIBOR plus 250 basis
$40,000,000.00
points or 2.50%
</TABLE>
The adjustment provided for above shall be made by the Bank on each
Adjustment
Date based upon the consolidated financial statements of the
Borrower provided
to the Bank in accordance with Section 5.09 of the Credit Agreement
for the
immediately preceding calendar quarter, and shall be effective as
of the first
day of the calendar quarter, including the Adjustment Date.
3.
PAYMENTS.
(a) Time and Amounts of Payments. All accrued and unpaid Interest
on
the
outstanding Principal Amount shall be due and payable quarterly on
a
calendar quarter basis on the last day of each calendar quarter,
commencing
December 31, 2005, and continuing thereafter through and including
the
calendar quarter in which the Maturity Date occurs, and on the
Maturity
Date. On the Maturity Date, the Principal Amount and all accrued
and unpaid
Interest shall be due and payable by the Borrower to the Bank;
(b) Business Day. If any payment is to be made on a day other than
a
Business Day, the maturity thereof shall be extended to the next
succeeding
Business Day, and the Interest shall be payable thereon at the rate
herein
specified during such extension;
(c) Principal Amount. The Principal Amount of the Operating Note,
if
not
sooner paid or declared to be due and payable in accordance with
the
terms of the Credit Agreement or this Operating Note, together with
all
accrued and unpaid Interest, shall be due and payable to the Bank
on the
Maturity Date;
(d) Other Charges. To the extent permitted by Governing Law (as
hereinafter defined), Borrower agrees to pay promptly upon demand
all out
of
pocket expenses, including reasonable attorneys' fees and
expenses,
actually incurred by
Bank in attempting to collect any amounts under this
Operating Note or in any manner related to the security provided
for
hereunder. All such expenses shall be and become part of the
Principal
Amount due hereunder.
4. CREDIT AGREEMENT.
This Operating Note is the Operating Note referred to
in the Revolving Credit Agreement of even date herewith, by and
among the
Borrower, the Bank, Aurora, Fort Dodge and Charles City, the terms
and
provisions of which are incorporated
2
<PAGE>
herein by this reference (the "Credit Agreement"). Capitalized
terms not
otherwise defined in this Operating Note which are defined in the
Credit
Agreement shall have the meanings ascribed thereto in the Credit
Agreement. In
the event of a conflict or inconsistency between the terms of this
Operating
Note and the Credit Agreement, the terms and provisions of the
Credit Agreement
shall govern. The Credit Agreement, among other things, contains
(i) enumerated
Events of Default, (ii) provisions for acceleration of the maturity
of this
Operating Note upon the happening of certain stated events, and
(iii) provisions
for prepayments of the Principal Amount of this Operating Note
prior to the
maturity of the Operating Note upon the terms and conditions
specified in the
Credit Agreement.
5.
EVENTS OF DEFAULT; REMEDIES. The occurrence of any Event of
Default
enumerated in the Credit Agreement or any of the other Loan
Documents shall
constitute an Event of Default under this Operating Note. As
provided in the
Credit Agreement, upon any such Event of Default, the Bank shall
have any and
all remedies provided in the Credit Agreement or any of the other
Loan
Documents, including but not limited to the right, but not the
obligation, to
accelerate the due date of this Operating Note and declare all
obligations set
forth herein immediately due and payable, and such other remedies
as are
provided by law.
6.
WAIVER BY BORROWER. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST
EXTENT PERMITTED BY GOVERNING LAW, PRESENTMENT FOR PAYMENT, NOTICE
OF
NONPAYMENT, NOTICE OF DISHONOR, PROTEST, NOTICE OF PROTEST, DEMAND,
NOTICE OF
EVERY KIND IN CONNECTION HEREWITH AND DILIGENCE IN ENFORCING
PAYMENT OR BRINGING
SUIT AGAINST ANY PARTY HERETO.
7.
ACKNOWLEDGEMENT OF RECEIPT OF COPY. Borrower acknowledges receipt
of a
copy of this Operating Note.
8.
MODIFICATION OR WAIVER REQUISITES. No modification of this
Operating
Note shall be effective unless in writing, signed by the Borrower
and the Bank.
No waiver of any right or power of Bank hereunder shall be
effective unless in
writing, signed by the Bank and delivered to Borrower. No prior or
subsequent
verbal communications not reduced to writing, executed by the
parties, and
declared to be an integral part hereof are or shall be binding upon
Borrower or
the Bank.
9.
NON-WAIVER BY BANK. The Bank's failure to exercise any right or
power
upon the occurrence of an Event of Default, or any delay by the
Bank in
exercising any such right or power, shall not constitute a waiver
of such right
or power, or of any other right or power in the event of any
subsequent
occurrence of an Event of Default, whether of the same or different
nature.
10.
SECURITY. The Obligations of the Borrower under this Operating Note
are
secured by (i) a Security Agreement of even date herewith from the
Borrower to
the Bank referred to in the Credit Agreement, reference to which is
hereby made
for a description of the collateral provided for under the Security
Agreement
and the rights of the Borrower and the Bank with respect to such
collateral,
(ii) a Control Agreement of even date herewith made by the
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<PAGE>
Borrower to the Bank (the "Control Agreement"), reference to which
is hereby
made for a description of the collateral provided for under the
Control
Agreement and the rights of the Borrower and the Bank with respect
to such
collateral, (iii) a Subsidiary Guaranty of even date herewith made
by Aurora to
the Bank (the "Aurora Guaranty"), guaranteeing the Borrower's full
and timely
performance of all of its covenants, undertakings and obligations
under the
provisions of the Loan Documents and the other agreements described
therein,
(iv) the Subsidiary Security Agreement of even date herewith made
by Aurora to
the Bank (the "Aurora Security Agreement"), reference to which is
hereby made
for a description of the collateral provided for under the Aurora
Security
Agreement and the rights of Aurora and the Bank with respect to
such collateral,
(v) a Control Agreement of even date herewith made by Aurora to the
Bank (the
"Aurora Control Agreement"), reference to which is hereby made for
a description
of the collateral provided for under the Aurora Control Agreement
and the rights
of Aurora and the Bank with respect to such collateral, (vi) a
Subsidiary
Guaranty of even date herewith made by Fort Dodge to the Bank (the
"Fort Dodge
Guaranty"), guaranteeing the Borrower's full and timely performance
of all of
its covenants, undertakings and obligations under the provisions of
the Loan
Documents and the other agreements described therein, (vii) the
Subsidiary
Security Agreement of even date herewith made by Fort Dodge to the
Bank (the
"Fort Dodge Security Agreement"), reference to which is hereby made
for a
description of the collateral provided for under the Fort Dodge
Security
Agreement and the rights of Fort Dodge and the Bank with respect to
such
collateral, (viii) a Control Agreement of even date herewith made
by Fort Dodge
to the Bank (the "Fort Dodge Control Agreement"), reference to
which is hereby
made for a description of the collateral provided for under the
Fort Dodge
Control Agreement and the rights of Fort Dodge and the Bank with
respect to such
collateral, (ix) a Subsidiary Guaranty of even date herewith made
by Charles
City to the Bank (the "Charles City Guaranty"), guaranteeing the
Borrower's full
and timely performance of all of its covenants, undertakings and
obligations
under the provisions of the Loan Documents and the other agreements
described
therein, (x) the Subsidiary Security Agreement of even date
herewith made by
Charles City to the Bank (the "Charles City Security Agreement"),
reference to
which is hereby made for a description of the collateral provided
for under the
Charles City Security Agreement and the rights of Charles City and
the Bank with
respect to such collateral, (xi) a Control Agreement of even date
herewith made
by Charles City to the Bank (the "Charles City Control Agreement"),
reference to
which is hereby made for a description of the collateral provided
for under the
Charles City Control Agreement and the rights of Charles City and
the Bank with
respect to such collateral, and (xii) such other similar types of
documents and
security described and referred to in the Credit Agreement, whether
or not
executed and delivered on the date hereof or to be executed and
delivered in the
future in accordance with the terms and provisions of the Credit
Agreement.
11.
GOVERNING LAW. This Operating Note is made under and governed by
the
laws of, and shall be deemed to have been executed in, the State of
Nebraska
without giving effect to choice of law principles (whether of the
State of
Nebraska or any other jurisdiction) that would cause the
application of the laws
of any jurisdiction other than the State of Nebraska (the
"Governing Law").
12.
COMMERCIAL NATURE OF LOAN. Borrower acknowledges that the
Obligations
evidenced by this Operating Note are for business purposes only and
are not an
extension of consumer or individual credit.
4
<PAGE>
13.
PROHIBITION AGAINST USURY. In no event, either before or after
the
occurrence of an Event of Default, shall the Interest due under
this Operating
Note exceed the maximum, lawful, non-usurious interest rate of the
State of
Nebraska or any other applicable law (the "Maximum Rate"). This
Operating Note
is hereby expressly limited so that in no event whatsoever, whether
by reason of
acceleration or otherwise, shall the amount paid, or agreed to be
paid to Bank
for the use, forbearance or detention of the sums advanced to
Borrower exceed
the Maximum Rate. If fulfillment of any provisions hereof, at the
time
performance of such provision shall be due, shall involve the
potential for
transcending the Maximum Rate, the obligation to be fulfilled shall
be reduced
to the Maximum Rate, and if from any such circumstance the Bank
shall ever
receive as Interest an amount which would exceed the Maximum Rate,
such excess
shall be applied to the reduction of the Principal Amount and not
the payment of
Interest, or if such excessive Interest exceeds the unpaid balance
of the
Principal Amount, such excess shall be refunded to Borrower. All
sums paid and
agreed to be paid to the Bank for use, forbearance or detention of
the
indebtedness of Borrower shall, to the extent permitted by
Governing Law, be
amortized, prorated, allocated, and spread through the whole term
of such
indebtedness so that the actual rate of Interest on account of such
indebtedness
is uniform throughout the term thereof.
14.
ASSIGNMENT. This Operating Note may be assigned, in whole or in
part,
by the Bank, and Borrower agrees not to assert against any such
assignee or
assignee's assigns, any defense, set-off, recoupment claim or
counterclaim which
Borrower has or may at any time have against the Bank for any
reason whatsoever,
except for payment of the Obligations. Borrower agrees that if
Borrower receives
written notice of an assignment from the Bank, Borrower will pay
all amounts
payable under this Operating Note to such assignee or as instructed
by the Bank.
Borrower also agrees to confirm in writing receipt of the notice of
assignment
as may be reasonably requested by the Bank or assignee. The
Borrower may not
assign any of its rights or obligations hereunder without the prior
written
consent of the Bank, which may be withheld in its sole
discretion.
15.
SEVERABILITY. In the event any one or more of the provisions
contained
in this Operating Note shall for any reason be held to be invalid,
illegal or
unenforceable in any respect under Governing Law, such invalidity,
illegality or
unenforceability, at the option of the Bank, shall not affect any
other
provision of this Operating Note, but this Operating Note shall be
construed as
if such invalid, illegal or unenforceable provision had never been
contained
herein.
16.
SUBMISSION TO JURISDICTION; VENUE. To induce the Bank to enter
into
this Operating Note, the Borrower irrevocably agrees that, subject
to the Bank's
sole and absolute election, all suits, actions or other proceedings
in any way,
manner or respect, arising out of or from or related to this
Operating Note,
shall be subject to litigation in any state or federal court
sitting in
Nebraska. The Borrower hereby consents and submits to the
jurisdiction of any
local, state, or federal court located in Omaha, Nebraska. The
Borrower hereby
waives any rights it may have to transfer or change the venue of
any suit,
action or other proceeding brought against the Borrower by the Bank
in
accordance with this Section 16 or in connection with this
Operating Note.
5
<PAGE>
17.
WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER HEREBY WAIVE TRIAL
BY
JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN
CONTRACT OR
TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO
THIS
OPERATING NOTE. NO OFFICER OR EMPLOYEE OF THE BANK HAS AUTHORITY TO
WAIVE,
CONDITION, OR MODIFY THIS PROVISION.
18.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to
the
Bank's sale or transfer, at any time, of one or more participation
interests in
this Operating Note, the Credit Agreement, the Loan Documents or
any documents
referred to in the Credit Agreement to one or more purchasers (each
a
"Participant"), whether related or unrelated to the Bank. The Bank
may provide
to any Participant or any prospective Participant, any information
or knowledge
the Bank may have regarding the Borrower or any matter relating to
the subject
matter of the Credit Agreement, and the Borrower hereby waives any
rights to
privacy it may have with respect to such matters. The Borrower
additionally
waives any and all notices of sale of participation interests, as
well as all
notices of any repurchase of such participation interests. Borrower
also agrees
that any Participant will be considered as the absolute owner of
such interest
in this Operating Note, the Credit Agreement, the Loan Documents or
any
documents referred to in the Credit Agreement and will have all the
rights
granted under the participation agreement(s) governing the sale of
such
participation interest. The Borrower further waives all rights of
offset or
counterclaim that it may now have or hereafter acquire against the
Bank or any
Participant, and unconditionally agrees that either the Bank or any
Participant
may enforce Borrower's obligation under this Operating Note, the
Credit
Agreement, the Loan Documents or any documents referred to in the
Credit
Agreement irrespective of the failure or insolvency of any holder
of any
Participant interest. The Borrower further agrees that any
Participant may
enforce its interests irrespective of any personal claims or
defenses that
Borrower may have against the Bank.
19.
CREDIT AGREEMENT. A CREDIT AGREEMENT MUST BE IN WRITING TO BE
ENFORCEABLE UNDER NEBRASKA LAW. TO PROTECT THE PARTIES HERETO FROM
ANY
MISUNDERSTANDING OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE,
UNDERTAKING, OR
OFFER TO FORBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL
ACCOMMODATION
IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, OR ANY
AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY
OR ALL OF THE
TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN
CONNECTION WITH
THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN
WRITING TO BE
EFFECTIVE.
6
<PAGE>
IN
WITNESS WHEREOF, the Borrower has caused this Operating Note to
be
executed and delivered to the Bank as of the day and year first
written above.
"Borrower"
VERASUN ENERGY CORPORATION,
a South Dakota corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
7
<PAGE>
REVOLVING CREDIT AGREEMENT
EXHIBIT "H"
SECURITY AGREEMENT
[See Attached]
<PAGE>
EXHIBIT H
SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this "Agreement") is made as of the 21st day
of
December, 2005, by VERASUN ENERGY CORPORATION, a South Dakota
corporation
("Borrower"), whose mailing address is 100 22nd Avenue, Brookings,
South Dakota
57006, in favor of FIRST NATIONAL BANK OF OMAHA, a national banking
association
("Bank"), whose mailing address is 1620 Dodge Street, STOP 1050,
Omaha, Nebraska
68197, its successors and assigns.
RECITALS
WHEREAS, Borrower and Bank have entered into a Revolving Credit
Agreement
of even date herewith (as amended, restated, or otherwise modified
from time to
time, the "Credit Agreement"), pursuant to which Borrower has
undertaken certain
covenants and has executed and delivered to Bank an Operating Note
of even date
herewith by the Borrower payable to the order of the Bank in the
total principal
amount of Thirty Million Dollars ($30,000,000.00) the proceeds of
which may be
drawn upon by the Borrower, for the purposes provided for in the
Credit
Agreement, in accordance with and subject to the terms and
restrictions
contained in the Credit Agreement (the "Note"); and
WHEREAS, Bank has agreed to provide a Letter of Credit Facility,
as
provided in the Credit Agreement, for the benefit of Borrower,
whereby Bank, at
Borrower's request and subject to compliance with the terms and
provisions of
the Credit Agreement, will issue one or more Letters of Credit in
an aggregate
principal amount outstanding not to exceed Ten Million and
No/100ths Dollars
($10,000,000.00), on behalf of Borrower or its Subsidiaries in
accordance with
and subject to the terms and provisions of the Credit Agreement;
and
WHEREAS, Section 2.09 of the Credit Agreement provides that the
purposes of
the Credit Agreement include providing the Borrower and the
Subsidiaries with
access to (a) operating funds and (b) Letters of Credit for
operating purposes;
and
WHEREAS, Bank has, at the previous request of Borrower or
certain
Restricted Subsidiaries, issued letters of credit for the benefit
of certain
third-party creditors of the Borrower and certain Restricted
Subsidiaries on or
prior to the date hereof (the "Prior Letters of Credit"); and
WHEREAS, under the Credit Agreement, it is a condition precedent to
(i)
Bank's making of Loans to the Borrower, and (ii) Bank's issuance of
one or more
Letters of Credit on behalf of Borrower pursuant to the Credit
Agreement, that
Borrower execute and deliver to Bank this Agreement; and
WHEREAS, Borrower has agreed to grant a Security Interest (as
hereinafter
defined) in the Collateral (as hereinafter defined) to Bank to
secure the
Obligations (as hereinafter defined) in accordance with the terms
and conditions
set forth herein.
<PAGE>
NOW,
THEREFORE, in consideration of the premises set forth above, and
other
good and valuable consideration, the receipt and adequacy of which
are hereby
acknowledged, and intending to be legally bound, Borrower
represents, warrants,
covenants, and agrees with Bank as follows:
1.
Definitions:
(a) For purposes of this Agreement, "Receivables" shall mean any
right
to payment for goods sold or leased or for services rendered,
whether or not
such right is evidenced by an Instrument or Chattel Paper and
whether or not it
has been earned by performance (including, without limitation, any
Account).
(b) All capitalized terms used in this Agreement, including its
preamble and recitals, and not otherwise defined herein, shall have
the meaning
ascribed to them in the Credit Agreement.
(c) Unless otherwise defined herein or in the Credit Agreement, or
the
context otherwise requires, and whether or not capitalized, terms
for which
meanings are provided in the Uniform Commercial Code, as in effect
from time to
time in the State of Nebraska, are used in this Agreement with such
meaning.
2.
Security Interest: Borrower hereby BARGAINS, SELLS, GRANTS,
CONVEYS,
TRANSFERS, PLEDGES, HYPOTHECATES, and ASSIGNS to Bank a first
priority security
interest (the "Security Interest") in any and all (a) Receivables,
(b)
Inventory, (c) any cash Proceeds (including cash insurance proceeds
thereof),
rents and profits of or in respect of any and all of the foregoing
items listed
in 2 (a) or 2 (b) above, and (d) the Deposit Account and Securities
Account
(including, but not limited to, Borrower's accounts # 110193438 and
110118219 at
the Bank, Borrower's accounts # 229000136 and 232000011 at First
National
Capital Markets, Inc., and such Deposit Accounts and Securities
Accounts the
Borrower may establish from time to time) into which the cash
Proceeds of the
items listed in 2 (a), 2 (b) or 2 (c) above are deposited, owned by
Borrower or
in which Borrower has an interest; together with all increases,
replacements,
refurbishment, improvements, additions and substitutions therefor,
all
after-acquired property with respect thereto, and all products,
present and
future accessions and cash and noncash proceeds of the categories
described
above, including contract rights, therefrom (collectively, the
"Collateral"), to
secure the complete and timely payment, performance or discharge of
(i) each of
the obligations and covenants of Borrower under this Agreement, the
Credit
Agreement, the Note, the Control Agreement, the Letters of Credit,
the Prior
Letters of Credit, and all modifications, substitutions, extensions
and renewals
of each, whether absolute or contingent, liquidated or
unliquidated, existing
now or arising in the future and (ii) all present and future
indebtedness and
obligations of Borrower to Bank whether direct, indirect, absolute,
or
contingent and whether arising by promissory note, letter of
credit, guaranty,
overdraft, or otherwise (individually, an "Obligation" and
collectively, the
"Obligations"). The Security Interest shall be effective with
respect to each
item of Collateral for so long as any Obligation remains
outstanding, regardless
of whether Borrower becomes the owner of such Collateral prior to
or
contemporaneously with or subsequent to the incurring of such
Obligation.
3.
Continued Attachment and Perfection: Further to insure the
attachment,
perfection,
2
<PAGE>
and first priority of, and the ability of Bank to enforce, the
Security Interest
in the Collateral, Borrower agrees to take any other action
reasonably requested
by Bank to insure the attachment, perfection and first priority of,
and the
