REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

Exhibit 10.1

 

i

 

ii

 

iii

 

iv

 

v

 

vi

 

vii

 

viii

 

ix

REVOLVING CREDIT, TERM LOAN

AND

SECURITY AGREEMENT

This Revolving Credit, Term Loan and Security Agreement is dated as of March 28, 2006 among FGDI, L.L.C., a limited liability company formed under the laws of the State of Delaware (“ Borrower ”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “ Lenders ” and individually a “ Lender ”) and CoBANK, ACB (“ CoBank ”), as agent for Lenders (CoBank, in such capacity, the “ Agent ”).

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower, Lenders and Agent hereby agree as follows:

I. DEFINITIONS.

1.1 Accounting Terms.

As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as applied in preparation of the audited financial statements of Borrower for the fiscal year ended August 31, 2005.

1.2 General Terms.

For purposes of this Agreement the following terms shall have the following meanings:

“ Accountants ” shall have the meaning set forth in Section 9.7 hereof.

“ Adjusted Working Capital ” shall mean Working Capital; provided, however, that (i) the amount of cash deposits pledged by Borrower to secure any Letter of Credit shall be excluded from the calculation of Current Assets, and (ii) the outstanding amount of the Term Advances shall be added to the calculation of Current Liabilities.

“ Advance Rates ” shall mean, collectively, the Eligible Accounts Advance Rate, Eligible Hedge Margin Net Liquidating Valuation Advance Rate, and Eligible Inventory Advance Rate.

“ Advances ” shall mean and include the Revolving Advances, Letters of Credit, and the Term Advances.

“ Affiliate ” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors of such

Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.

“ AFG Asset Management “ shall mean AFG Asset Management Limited.

“ AFG Asset Management Investment Facility Letter ” shall mean the Investment Facility Letter between Borrower and AFG Asset Management dated May 25, 2005.

“ AFG Trust Finance ” shall mean AFG Trust Finance Limited.

“ AFG Trust Finance Credit Facility Letter ” shall mean the Credit Facility Letter between Borrower and AFG Trust Finance dated as of May 25, 2005.

“ Agent ” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.

“ Agreement ” shall mean this Revolving Credit, Term Loan and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Anti-Terrorism Laws ” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).

“ Applicable Law ” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.

“ Authority ” shall have the meaning set forth in Section 4.19(d) .

“ Base Rate ” shall mean the base commercial lending rate of CoBank as publicly announced by CoBank on the first Business Day of each week, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by CoBank as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by CoBank to any particular class or category of customers of CoBank.

“ BBA ” shall mean the British Bankers Association.

“ Blocked Person ” shall have the meaning set forth in Section 5.22(b) hereof.

“ Borrower ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Person.

 

2

“ Borrower’s Account ” shall have the meaning set forth in Section 2.19 .

“ Borrowing Base Certificate ” shall mean a Non-Interim Borrowing Base Certificate, Interim Borrowing Base Certificate, or Pro-Forma Borrowing Base Certificate, as applicable. All of the Borrowing Base Certificates shall be substantially in the form of Exhibit 1.2 duly executed by the President or Chief Financial Officer of the Borrower and delivered to the Agent, appropriately completed, by which, among other things, such officer shall certify to Agent the Formula Amount and calculations thereof, the outstanding amounts of the Revolving Advances and Term Advances, and the Maximum Undrawn Amounts under the outstanding Letters of Credit as of the date of such certificate.

“ Business Day ” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in Greenwood Village, Colorado and, if the applicable Business Day relates to any LIBOR Rate Advances, such day must also be a day on which dealings in U.S. Dollar deposits are being carried out in the London interbank market and banks are open for business in New York, New York and London, England.

“ Capital Expenditures ” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures.

“ Capitalized Lease Obligation ” shall mean any Indebtedness of Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“ CCC ” shall mean the Commodities Credit Corporation.

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

“ Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of Borrower to a Person who is not an Original Owner or (b) any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower. For purposes of this definition, “ control of Borrower ” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Borrower or (y) to direct or cause the direction of the management and policies of Borrower by contract or otherwise.

“ Change of Ownership ” shall mean (a) 50% or more of the Equity Interests of Borrower or FCStone Group is no longer owned or controlled by a Person who is an Original Owner (including for the purposes of the calculation of percentage ownership, any Equity Interests into which any Equity Interests of Borrower or FCStone Group held by any of the Original Owners are convertible or for which any such Equity Interests of Borrower or FCStone Group or of any

 

3

other Person may be exchanged and any Equity Interests issuable to such Original Owners upon exercise of any warrants, options or similar rights which may at the time of calculation be held by such Original Owners), provided, however, that ordinary (and nonmaterial sales for control purposes) of the Equity Interests of FCStone Group to the general public in the ordinary course for the of business shall not constitute a “Change of Ownership”), or (b) any merger, consolidation or sale of substantially all of the property or assets of Borrower or FCStone Group, provided that the sale by FCStone Group of any Equity Interests of Borrower to any Person other than Agrex, Inc. or the sale by FCStone Group of any Equity Interests of Borrower that would result in Agrex, Inc. owning more than forty-nine percent (49%) of the Equity Interests of Borrower shall be deemed a sale of substantially all of FCStone Group’s assets.

“ Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, Borrower or any of its Affiliates.

“ Closing Date ” shall mean March 28, 2006 or such other date as may be agreed to by the parties hereto.

“ CoBank ” shall have the meaning set forth in the preamble to this Agreement and shall include all of its successors and assigns.

“ Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

“ Collateral ” shall mean all of Borrower’s present and future assets of any kind, including but not limited to:

 

(a)

all Accounts;

 

(b)

all As-extracted Collateral;

 

(c)

all cash;

 

(d)

all Chattel Paper including, but not limited to, all Electronic Chattel Paper and Tangible Chattel Paper;

(e) all Commercial Tort Claims including, but not limited to, those described in or otherwise pertaining to the subject of the following litigation: (i)  FGDI, L.L.C. v. Portland Systems, Inc., et al., Civil Action No. CV-05-3969, Circuit Court, Mobile County, Alabama; and (ii)  FGDI, L.L.C. v. M/V Lorelay , Civil Action No. 1:03-cv-00588-CG-B, United States District

 

4

Court for the Southern District of Alabama; and (iii) any appellate proceedings pertaining to any of the foregoing cases;

(f) all Deposit Accounts including, but not limited to, the following Deposit Accounts:

Account No. xxx-xxxxxxx maintained with Wells Fargo Bank Iowa, N.A.;

Account No. xxxxxxxxxx maintained with Frances Slocum Bank;

Account No. xxxxxxxx maintained with AmSouth Bank;

Account No. xxxxxxxx maintained with Fifth Third Bank;

Account No. xxxx-xxxxxxx maintained with Bank of Montreal;

Account No. xx-xxxx-xxx-x maintained with UMB Bank;

Account No. x-xxx-xxxxxxxxx maintained with Wachovia Bank, N.A.;

Account No. xxx-xxxxxxx maintained with Wells Fargo Bank Minnesota, N.A.;

Account No. xxx-xx-xx maintained with Royal Bank of Canada;

Account No. xxxxxxxxxx maintained with CoBank;

Account No. xxxxxxxxx maintained with CoBank;

Account No. xxxxxxxxx maintained with CoBank;

Account No. xxxxxxxxx maintained with CoBank;

Account No. xxxxxxxxx maintained with CoBank;

Account No. xxxxxxxxx maintained with CoBank; and

Account No. xxxxxxxxx maintained with CoBank;

(g) all Documents including, but not limited to, all bills of lading, bills of shipping, and warehouse receipts;

(h) all Equipment including, but not limited to, all machinery, tools, motor vehicles, office equipment, furniture, and furnishings;

(i) all Farm Products including, but not limited to, all livestock, poultry, crops, and the offspring and products thereof;

 

5

(j) all Fixtures;

(k) all General Intangibles including, but not limited to, all Payment Intangibles, reclamation rights and rights of stoppage in transit, patents, copyrights, trademarks, Software, other intellectual property, licenses, other governmental permits, and tax refunds;

(l) all Goods;

(m) all Instruments including, but not limited to, all Promissory Notes and all of Borrower’s participation certificates, equity interests, and patronage and other rights in CoBank and all Subsidiary Stock;

(n) all Inventory including, but not limited to, all raw materials, work-in-process, finished products, and bailed or consigned inventory;

(o) all Investment Property including, but not limited to, all securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts;

(p) all Letter of Credit Rights;

(q) all Supporting Obligations;

(r) all commodities accounts maintained with FCStone Trading including, but not limited to, Account Nos. xxxx xxxxx, xxxx xxxxx, xxxx xxxxx, xxxx xxxxx, and xxxx xxxxx;

(s) all commodities accounts maintained with FCStone, LLC including, but not limited to, Account Nos. xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxx, xxxx, xxxx, xxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxx, xxxxx, xxxxx, xxxxx, xxxxx, xxxx, xxxxx, xxxxx, xxxxx, xxxxx, and xxxxx;

(t) all real property, leases, easements, licenses, hereditaments, and other real property rights of any kind (including, but not limited to, the Real Property and Leasehold Interests);

(u) all water rights including, but not limited to, all water stock, well rights, and ditch rights;

(v) all accessions, accessories, additions, attachments, spare parts, amendments, extensions, modifications, replacements, and substitutions to and for any of the foregoing;

(w) all ledger sheets, ledger cards, files, correspondence, business papers, computers, computer software (owned by Borrower or in which it has an interest), computer programs, tapes, disks, and other books and records pertaining to any of the foregoing; and

 

6

(x) all cash and non-cash Proceeds (including, but not limited to, all insurance proceeds and eminent domain and condemnation proceeds) and products of any of the foregoing.

“ Commitment Percentage ” of any Lender shall mean the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) hereof.

“ Commitment Transfer Supplement ” shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.

“ Compliance Certificate ” shall mean a compliance certificate to be signed by the President or Chief Financial Officer of Borrower, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrower with respect to such Default or Event of Default and, such certificate shall have appended thereto calculations which set forth Borrower’s compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 .

“ Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, including any Consents required under all applicable federal, state or other Applicable Law.

“ Consigned Inventory ” shall mean Inventory of Borrower that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.

“ Contract Rate ” shall mean, as applicable, the Revolving Advances Rate or the Term Advances Rate.

“ Controlled Group ” shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under Section 414 of the Code.

“ Current Assets ” at a particular date, shall mean all cash, cash equivalents, accounts and inventory of Borrower and all other items which would, in conformity with GAAP, be included under current assets on a balance sheet of Borrower as at such date; provided, however, that such amounts shall not include (a) any amounts for any Indebtedness owing by an Affiliate of Borrower, unless such Indebtedness arose in connection with the sale of goods or rendition of services in the Ordinary Course of Business and would otherwise constitute current assets in conformity with GAAP, (b) any Equity Interests issued by an Affiliate of Borrower, or (c) the cash surrender value of any life insurance policy.

 

7

“ Current Liabilities ” at a particular date, shall mean all amounts which would, in conformity with GAAP, be included under current liabilities on a balance sheet of Borrower, as at such date, but in any event including the amounts of (a) all Indebtedness of Borrower payable on demand, or, at the option of the Person to whom such Indebtedness is owed, not more than twelve (12) months after such date, (b) any payments in respect of any Indebtedness of Borrower (whether installment, serial maturity, sinking fund payment or otherwise) required to be made not more than twelve (12) months after such date, (c) all reserves in respect of liabilities or Indebtedness payable on demand or, at the option of the Person to whom such Indebtedness is owed, not more than twelve (12) months after such date, the validity of which is not contested at such date, and (d) all accruals for federal or other taxes measured by income payable within a twelve (12) month period.

“ Customer ” shall mean and include the account debtor with respect to any Account and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with Borrower, pursuant to which Borrower is to deliver any personal property or perform any services.

“ Default ” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.

“ Default Rate ” shall have the meaning set forth in Section 3.1 hereof.

“ Defaulting Lender ” shall have the meaning set forth in Section 2.24(a) hereof.

“ Depository Accounts ” shall have the meaning set forth in Section 4.15(h) hereof.

“ Dollar ” and the sign “ $ ” shall mean lawful money of the United States of America.

“ Domestic Rate Advance ” shall mean any Advance that bears interest based upon the Base Rate.

“ Drawing Date ” shall have the meaning set forth in Section 2.9(b) hereof.

“ EBITDA ” shall mean for any period the sum of (i) net income (or loss) of Borrower for such period (excluding extraordinary gains and losses), plus (ii) all interest expense of Borrower for such period, plus (iii) all charges against income of Borrower for such period for federal, state and local taxes actually paid, plus (iv) depreciation expenses for such period, plus (v) amortization expenses for such period.

“ Eligible Accounts ” shall mean and include with respect to Borrower, each Account of Borrower arising in the Ordinary Course of Business and which Agent, in its sole credit judgment, shall deem to be an Eligible Account, based on such considerations as Agent may from time to time deem appropriate. An Account shall not be deemed eligible unless such

 

8

Account is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent. In addition, no Account shall be an Eligible Account if:

(a) it arises out of a sale made by Borrower to an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower;

(b) it is due or unpaid more than sixty (60) days after the relevant Settlement Date; provided, however, that solely with respect to a sale to a Customer outside of the continental United States of America that is guarantied by the CCC, it is due or unpaid one hundred twenty (120) days or more after the relevant Settlement Date;

(c) fifty percent (50%) or more of the Accounts from such Customer are not deemed Eligible Accounts hereunder. Such percentage may, in Agent’s sole discretion, be increased or decreased from time to time;

(d) any covenant, representation or warranty contained in this Agreement with respect to such Account has been breached;

(e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

(f) the sale is to a Customer outside the continental United States of America and Canada unless the sale is guarantied (i) 100% by a letter of credit in form and substance and from a financial institution acceptable to Agent in its sole discretion, (ii) at least 90% by an insurance policy in form and substance and from an insurance company acceptable to Agent in its sole discretion, or (iii) at least 65% by the CCC on terms and conditions acceptable to Agent in its sole discretion;

(g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;

(h) Agent believes, in its sole judgment, that collection of such Account is insecure or that such Account may not be paid by reason of the Customer’s financial inability to pay;

(i) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless Borrower assigns its right to payment of such

 

9

Account to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances;

(j) the goods giving rise to such Account have not been delivered to and accepted by the Customer or the services giving rise to such Account have not been performed by Borrower and accepted by the Customer or the Account otherwise does not represent a final sale; provided, however, that an Eligible Account may include an Account where: (i) the Borrower and Customer have agreed upon the quantity, quality, and purchase price for the wheat, corn, milo, soybeans, soybean oil, oats and barley to be delivered to the Customer (subject to ordinary course of business adjustments, if any, made at the time such goods actually are weighed and inspected by or on behalf of Customer), title to such goods has passed to the Customer, and Borrower’s accountants have agreed to treat such Account as an account (and not inventory or another type of asset) on its financial statements, (ii) the Borrower and the Customer have prepaid such portions of the purchase and resale prices for such goods as may be acceptable to Agent in its sole discretion; (iii) such goods are in transit directly from the supplier to a Customer via a common carrier and are insured for the full value thereof; (iv) the bill(s) of lading and insurance for such goods are in form and substance acceptable to Agent; (v) the original bill(s) of lading pertaining to such goods have been sent to the Customer and, upon its request, copies of such bill(s) of lading have been provided to Agent; (vi) such goods comply with all of the other requirements for Eligible Inventory besides their in-transit nature and the passage of title to the Customer; and (vii) Borrower has notified Agent of the special conditions pertaining to such Account at all times;

(k) the Accounts of the Customer exceed a credit limit determined by Agent, in its sole discretion, to the extent such Account exceeds such limit;

(l) the Account is subject to any offset, deduction, defense, dispute, or counterclaim, the Customer is also a creditor or supplier of Borrower or the Account is contingent in any respect or for any reason;

(m) Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;

(n) any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed;

(o) such Account is not payable to Borrower; or

(p) such Account is not otherwise satisfactory to Agent as determined in good faith by Agent in its sole discretion.

“ Eligible Accounts Advance Rate ” shall have the meaning set forth in the definition of “ Formula Amount ”.

 

10

“ Eligible Hedge Margin Accounts “ shall mean and include with respect to Borrower, each hedge margin account maintained in Borrower’s name with FCStone, LLC or FCStone Trading in the Ordinary Course of Business and which Agent, in its sole credit judgment, shall deem to be an Eligible Hedge Margin Account, based on such considerations as Agent may from time to time deem appropriate. A hedge margin account shall not be deemed an Eligible Hedge Margin Account unless such hedge margin account is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances). In addition, no hedge margin account shall be an Eligible Hedge Margin Account if:

(a) the hedge margin account involves any commodities besides wheat, corn, fertilizer, soybeans, oats, and barley;

(b) the hedge margin account involves any commodities exchange besides the Chicago Board of Trade, Minneapolis Grain Exchange and Kansas City Board of Trade;

(c) Borrower and FCStone, LLC or FCStone Trading, as applicable, have not executed and delivered to Agent control agreements with respect to such hedge margin account in form and substance acceptable to Agent in its sole discretion;

(d) any covenant, representation or warranty contained in this Agreement with respect to such hedge margin account has been breached;

(e) FCStone, LLC or FCStone Trading, as applicable, shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

(f) such hedge margin account is subject to any offset, deduction, defense, dispute, or counterclaim besides standard commissions, margin calls, and expenses payable to FCStone, LLC or FCStone Trading in the Ordinary Course of Business or the standard netting of the cumulative results from all of Borrower’s hedge margin accounts with FCStone, LLC or FCStone Trading in the Ordinary Course of Business; or

(g) such hedge margin account is not otherwise satisfactory to Agent as determined in good faith by Agent in its sole discretion.

“ Eligible Hedge Margin Net Liquidating Valuation “ shall mean the net amounts that would be payable to Borrower from the margin deposits maintained by Borrower in connection with the Eligible Hedge Margin Accounts upon the closure of such Eligible Hedge Margin Accounts on the date of calculation.

 

11

“ Eligible Hedge Margin Net Liquidating Valuation Advance Rate ” shall have the meaning set forth in the definition of “ Formula Amount ”.

“ Eligible Inventory ” shall mean and include Inventory belonging to Borrower and consisting of wheat, corn, milo, soybeans, soybean oil, oats, barley, and fertilizer valued at the net market value, determined on a last-in-first-out basis, which is not, in Agent’s opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole discretion, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent and no other Lien (other than a Permitted Encumbrance). In addition, Inventory shall not be Eligible Inventory if it (i) does not conform to all standards imposed by any Governmental Body which has regulatory authority over such goods or the use or sale thereof, (ii) is in transit to any of Borrower’s Customers, (iii) is in transit to Borrower unless title for such Inventory has passed to Borrower, such Inventory is being shipped directly to Borrower by common carrier and is insured for the full value thereof, the bill(s) of lading and insurance for such Inventory are in form and substance acceptable to Agent, the original bill(s) of lading pertaining to such goods have been sent to Borrower and, upon Agent’s request, copies of such bill(s) of lading have been provided to Agent, and Borrower has notified Agent of the special conditions pertaining to such Inventory at all times, (iv) is located outside of the continental United States of America or at a location that is not otherwise in compliance with this Agreement, (v) constitutes Consigned Inventory, (vi) is the subject of an Intellectual Property Claim, (vii) is subject to a License Agreement or other agreement that limits, conditions or restricts Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement, (viii) is situated at a location not owned or leased by Borrower unless Borrower possesses the original warehouse receipts and, upon Agent’s request, Agent has been provided with copies thereof, (ix) is situated at a location leased by Borrower unless the owner of such location has executed in favor of Agent a Lien Waiver Agreement, Agent has established an appropriate reserve for such Inventory, or Agent has waived such requirements in writing in its sole discretion, or (x) is not fully hedged on terms and conditions acceptable to Agent in its sole discretion.

“ Eligible Inventory Advance Rate ” shall have the meaning set forth in the definition of “ Formula Amount ”.

“ Environmental Complaint ” shall have the meaning set forth in Section  4.19(d) hereof.

“ Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

“ Equity Interests ” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “ equity security ” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

 

12

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.

“ Event of Default ” shall have the meaning set forth in Article X hereof.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

“ Executive Order No. 13224 ” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“ FCStone Group ” shall mean FCStone Group, Inc.

“ FCStone Trading ” shall mean FCStone Trading, LLC.

“ Financial Reporting Deadline ” shall mean initially thirty (30) days after the last day of March 2006 and each month thereafter; provided, however, that such deadline shall be reduced on a permanent basis by one (1) day for each successive month following March 2006 until the deadline is fifteen (15) days after the last day of each month.

“ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA minus non-cash patronage and non-cash income from Subsidiaries and joint ventures to (b) all principal payments owing on Long Term Debt during such period and all interest expense and income tax expenses during such period.

“ Foreign Subsidiary ” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.

“ Formula Amount ” shall mean the sum of:

(i) up to ninety percent (90%) of the Eligible Accounts arising from sales to Customers outside the continental United States of America that are at least 95% guarantied by insurance policies in form and substance and from insurance companies acceptable to Agent in its sole discretion; up to eighty-five percent (85%) of the Eligible Accounts arising from sales to Customers in the continental United States of America; up to eighty-five percent (85%) of the Eligible Accounts arising from sales to Customers outside the continental United States of America that are 100% guarantied by letters of credit in form and substance and from financial institutions acceptable to Agent in its sole discretion; up to eighty-five percent (85%) of the Eligible Accounts arising from sales to Customers outside the continental United States of America that are at least 90% but less than 95% guarantied by insurance policies in form and substance and from insurance companies acceptable to Agent in its sole discretion; up to seventy percent (70%) of the Eligible Accounts arising from other sales to Customers in Canada; and up to fifty percent (50%) of the Eligible Accounts arising from sales to Customers outside the

 

13

continental United States of America and Canada that are at least 65% guarantied by the CCC and are less than 120 days from the applicable Settlement Dates (collectively, “ Eligible Accounts Advance Rate ”); plus

(ii) up to ninety percent (90%) of the Eligible Hedge Margin Net Liquidating Valuation (“ Eligible Hedge Margin Net Liquidating Valuation Advance Rate ”); plus

(iii) up to the eighty percent (80%) of the net realizable value of Eligible Inventory consisting of wheat, corn, milo, soybeans, soybean oil, oats, and barley and up to fifty percent (50%) of the lesser of the cost (using the last-in, first-out method) or net realizable value of Eligible Inventory consisting of fertilizer (collectively, “ Eligible Inventory Advance Rate ”); plus or minus

(iv) eighty percent (80%) of the Open Contract Equity; minus

(v) all prepaid amounts from Borrower’s customers; minus

(vi) all of Borrower’s cash overdrafts; minus

(vii) all amounts payable to the producers of Borrower’s Inventory or goods giving rise to Borrower’s Accounts that are secured by the Collateral or any portion thereof; minus

(viii) all amounts payable to any warehouseman, carrier, or other bailee of Borrower’s Inventory or goods giving rise to Borrower’s Accounts that are secured by the Collateral or any portion thereof; minus

(ix) $1,500,000.00 until Borrower’s warehouse facility in Mobile, Alabama is fully operable in all respects; minus

(x) such other reserves as Agent in its discretion may deem proper and necessary from time to time.

“ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.

“ Good Faith ” or “ good faith ” shall mean honesty in fact in the conduct or transaction concerned and the test for the good faith of any Person shall be a subjective rather than an objective (or reasonableness) test of such Person’s state of mind.

“ Governmental Acts ” shall have the meaning set forth in Section 2.14 .

“ Governmental Body ” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.

“ Hazardous Discharge ” shall have the meaning set forth in Section 4.19(d) hereof.

 

14

“ Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

“ Hazardous Wastes ” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.

“ Indebtedness ” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred. Notwithstanding anything to the contrary contained in this Agreement, in calculating the financial covenants set forth herein, the term “ Indebtedness ” shall exclude all non-recourse indebtedness and amounts payable to AFG Asset Management under the AFG Asset Management Investment Facility Letter and to AFG Trust Finance under the AFG Trust Finance Credit Facility Letter .

“ Industrial Revenue Bonds ” shall mean those Variable Rate Demand Industrial Development Bonds (FGDI, LLC Project) Series 2002 in the original aggregate principal amount of $5,500,000.00 issued pursuant to a Trust Indenture between the Industrial Development Board of the City of Mobile, Alabama, as Issuer, and Wells Fargo Bank Northwest, National Association, as Trustee, dated as of December 1, 2002.

“ Intellectual Property ” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.

“ Intellectual Property Claim ” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that Borrower’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.

“ Interest Period ” shall mean the period provided for any LIBOR Rate Advance pursuant to Section 2.2(b) .

 

15

“ Interim Borrowing Base Certificate ” shall mean a Borrowing Base Certificate in which information on Borrower’s Total Accounts, Total Inventory and Advances is updated on an interim semi-monthly basis as of the fifteenth (15 ^th ) and last day of each month.

“ Investment Property ” shall mean and include all of Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.

“ Issuer ” shall mean any Person who issues a Letter of Credit and/or accepts a draft pursuant to the terms hereof.

“ Leasehold Interests ” shall mean all of Borrower’s right, title and interest in and to the premises set forth in Schedule 4.5 .

“ Lender ” and “ Lenders ” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.

“ Letter of Credit Fees ” shall have the meaning set forth in Section 3.2.

“ Letter of Credit Borrowing ” shall have the meaning set forth in Section 2.9(d).

“ Letters of Credit ” shall have the meaning set forth in Section 2.6 .

“ LIBOR ” shall mean for any LIBOR Rate Advance for the then current Interest Period relating thereto the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank offered rates for U.S. Dollars quoted by the BBA as set forth on Moneyline Telerate (or appropriate successor or, if BBA or its successor ceases to provide such quotes, a comparable replacement determined by Agent) display page 3750 (or such other display page on the Moneyline Telerate system as may replace display page 3750) two (2) Business Days prior to the first day of such Interest Period for an amount comparable to such LIBOR Rate Advance and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage. LIBOR may also be expressed by the following formula:

LIBOR Rate =Average of London interbank offered rates quoted by BBA as shown on

Moneyline Telerate Service display page 3750 or appropriate successor ÷

1.00 - Reserve Percentage.

LIBOR shall be adjusted with respect to any LIBOR Rate Advance that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of LIBOR as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

 

16

“ LIBOR Rate Advance ” shall mean an Advance at any time that bears interest based on LIBOR.

“ License Agreement ” shall mean any agreement between Borrower and a Licensor pursuant to which Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Inventory of Borrower or otherwise in connection with Borrower’s business operations.

“ Licensor ” shall mean any Person from whom Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with Borrower’s business operations.

“ Licensor/Agent Agreement ” shall mean an agreement between Agent and a Licensor, in form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of Borrower’s Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of Borrower’s default under any License Agreement with such Licensor.

“ Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.

“ Lien Waiver Agreement ” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Inventory.

“ Long Term Debt ” shall mean, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capitalized Lease Obligations, current maturities of long-term debt, revolving credit and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Indebtedness consisting of guaranties of Long Term Debt of other Persons.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business, properties or prospects of Borrower, (b) Borrower’s ability to duly and punctually pay or perform the Obligations in

 

17

accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents. Notwithstanding anything to the contrary contained herein, monetary damages (and not non-monetary consequences) arising from adverse litigation results shall not be deemed to have a Material Adverse Effect on Borrower, its business operations or assets if: (a) such monetary damages do not exceed $175,000.00 individually or $400,000.00 in the aggregate during any fiscal year; and (b) any judgment or other lien arising from such damages is paid or bonded over in accordance with the terms and conditions set forth in this Agreement and the Other Documents.

“ Maximum Face Amount ” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

“ Maximum Advances Amount ” shall mean $68,000,000.00 subject to any permanent reduction caused by a permanent reduction in the Maximum Revolving Advances Amount.

“ Maximum Revolving Advances Amount ” shall mean $68,000,000.00; provided however, that so long as no Event of Default has occurred and is continuing, Borrower shall be entitled to reduce such amount on a permanent basis by One Million Dollars ($1,000,000.00) or a multiple thereof on one (1) occasion during each calendar year by providing Agent with at least (3) Business Days’ prior written notice thereof. Such permanent reduction shall cause an equal permanent reduction in the Maximum Advances Amount.

“ Maximum Term Advances Amount ” shall mean $8,000,000.00.

“ Maximum Undrawn Amount ” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

“ Mortgage ” shall mean the mortgage on the Real Property, if any, securing the original principal amount of $68,000,000.00 together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements thereto and thereof.

“ Multiemployer Plan ” shall mean a “ multiemployer plan ” as defined in Sections 3(37) and 4001(a)(3) of ERISA.

“ Multiple Employer Plan ” shall mean a Plan which has two or more contributing sponsors (including the Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“ Net Worth ” at a particular date, shall mean (a) the aggregate amount of all assets of Borrower as may properly be classified as such in accordance with GAAP consistently applied and such other assets as are properly classified as “ intangible assets ”, less (b) the aggregate amount of all Indebtedness of Borrower.

 

18

“ Non-Interim Borrowing Base Certificate ” shall mean a Borrowing Base Certificate in which all information contained in the Borrowing Base Certificate is updated on an non-interim monthly basis as of the last day of each month.

“ Note ” shall mean, collectively, the Term Advances Note and the Revolving Advances Note.

“ Obligations ” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of Borrower’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of Borrower to Agent or Lenders to perform acts or refrain from taking any action.

“ Ordinary Course of Business ” shall mean the ordinary course of Borrower’s business as conducted on the Closing Date.

“ Original Owners ” shall mean, as to Borrower, FCStone Group and Agrex, Inc., and as to FC Stone Group, its existing shareholders as of the date of this Agreement.

“ Open Contract Equity ” shall mean the fair value of contracts for purchase and sale of commodities to which Borrower may contractually commit, marked to existing basis and freight conditions and futures prices as of the date of calculation.

“ Other Documents ” shall mean the Questionnaire, the Note, the Mortgage, and any and all other agreements, instruments and documents, including, control agreements, guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by Borrower and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.

 

19

“ Out-of-Formula Advances ” shall have the meaning set forth in Section 15.2(b) .

“ Parent ” of any Person shall mean a corporation or other entity owning, directly or indirectly, at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.

“ Participant ” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“ Participation Advance ” shall have the meaning set forth in Section 2.9(d).

“ Participation Commitment ” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder.

“ Payment Office ” shall mean initially CoBank, ACB, Department 167, Denver, Colorado 80291-0167; thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

“ Pension Benefit Plan ” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group, or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.

“ Permitted Encumbrances ” shall mean (a) Liens in favor of Agent for the benefit of Agent and Lenders, (b) Liens for taxes, assessments or other governmental charges not delinquent or being contested in good faith and by appropriate proceedings and with respect to which proper reserves have been taken by Borrower; provided that, the Lien shall have no effect on the priority of the Liens in favor of Agent or the value of the assets in which Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect, (c) Liens disclosed in the financial statements referred to in Section 5.5 , the existence of which Agent has consented to in writing, (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance, (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business, (f) Liens arising by virtue of the rendition, entry or issuance against Borrower or any Subsidiary, or any property of Borrower or any Subsidiary, of any judgment,

 

20

writ, order, or decree for so long as each such Lien (i) is in existence for less than 30 consecutive days after it first arises or is being Properly Contested and (ii) is at all times junior in priority to any Liens in favor of Agent, (g) mechanics’, workers’, materialmen’s, warehousemen’s, landlords’ or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being contested in good faith by Borrower (and which otherwise comply with the requirements for Lien Waivers, reserves, or other terms and conditions set forth in this Agreement), (h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (i) any such lien shall not encumber any other property of Borrower and (ii) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6, (i) Liens in favor of AFG Trust Finance on Chinese currency deposits held in Chinese bank accounts as required by the AFG Trust Finance Credit Facility Letter, and (j) Liens disclosed on Schedule 1.2 .

“ Permitted Repurchase Agreement ” shall mean a sale/repurchase agreement between Borrower and FCStone Financial, Inc under the Master Sale/Repurchase Agreement dated December 15, 2002 or a sale/ repurchase agreement between Borrower and FCStone Merchant Services under the Master Sale/Repurchase Agreement dated October 19, 2005 so long as the foregoing sale/repurchase agreements are subject to the terms and conditions set forth in the applicable Subordination Agreements.

“ Person ” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

“ Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of Borrower or any member of the Controlled Group or any such Plan to which Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees.

“ Pro Forma Balance Sheet ” shall have the meaning set forth in Section 5.5(a) hereof.

“ Pro-Forma Borrowing Base Certificate ” shall mean a Borrowing Base Certificate prepared by Borrower in which information on Borrower’s Total Accounts, Total Inventory and Advances is updated as the date of such Borrowing Base Certificate.

“ Pro Forma Financial Statements ” shall have the meaning set forth in Section 5.5(b) hereof.

“ Properly Contested ” shall mean, in the case of any Indebtedness of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (a) such Indebtedness is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted, (b) such Person has established appropriate reserves as shall be required in conformity with GAAP, (c) the non-payment of such Indebtedness will not have a

 

21

Material Adverse Effect and will not result in the forfeiture of any assets of such Person, (d) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute, (e) if such Indebtedness results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review, and (f) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.

“ Projections ” shall have the meaning set forth in Section 5.5(b) hereof.

“ Purchasing Lender ” shall have the meaning set forth in Section 15.3(c) hereof.

“ Questionnaire ” shall mean the Documentation Information Questionnaire and the responses thereto provided by Borrower and delivered to Agent.

“ RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.

“ Real Property ” shall mean all of Borrower’s right, title and interest in and to the owned and leased premises identified on Schedule 4.19 hereto.

“ Reconciliation Date ” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.

“ Reimbursement Obligation ” shall have the meaning set forth in Section 2.9(b) hereof.

“ Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.

“ Reportable Event ” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder.

“ Required Lenders ” shall mean Lenders holding at least fifty-one percent (51%) of the Advances and, if no Advances are outstanding, shall mean Lenders holding fifty-one percent (51%) of the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders.

“ Reserve Percentage ” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to LIBOR funding.

“ Revolving Advances ” shall mean Advances made pursuant to Section 2.1 hereof.

 

22

“ Revolving Advances Note ” shall mean the promissory note described in Section 2.1(b) hereof.

“ Revolving Advances Rate ” shall mean an interest rate per annum equal to (a) the sum of the Base Rate plus one-half percent (0.50%) with respect to Domestic Rate Advances and (b) the sum of LIBOR plus two and one-quarter percent (2.25%) with respect to LIBOR Rate Advances.

“ Revolving Advances Term ” shall mean from the date hereof through March 28, 2007 unless sooner terminated as herein provided.

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Settlement Date ” shall mean the date on which Inventory has been delivered to and accepted by a Customer and Borrower and such Customer have established a final amount for the Account arising from the sale of such Inventory.

“ Subordination Agreements ” shall mean collectively the subordination and intercreditor agreements with FCStone Financial, Inc. and FCStone Merchant Services, LLC which are in form and substance acceptable to Agent in its sole discretion.

“ Subsidiary ” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

“ Subsidiary Stock ” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by the Borrower (not to exceed 65% of the Equity Interests of any Foreign Subsidiary).

“ Tangible Net Worth ” shall mean, at a particular date, (a) the aggregate amount of all assets of Borrower as may be properly classified as such in accordance with GAAP consistently applied excluding such other assets as are properly classified as intangible assets under GAAP, less (b) the aggregate amount of all liabilities of Borrower.

“ Term ” shall have the meaning set forth in Section 13.1 hereof.

“ Term Advances ” shall mean the Advances made pursuant to Section 2.4 hereof.

“ Term Advances Note ” shall mean the promissory note described in Section 2.4(b) hereof.

“ Term Advances Rate ” shall mean an interest rate per annum equal to (a) the sum of the Base Rate plus one-half percent (0.50%) with respect to Domestic Rate Advances and (b) the sum of LIBOR plus two and one-quarter percent (2.25%) with respect to LIBOR Rate Advances.

“ Term Advances Term ” shall mean from the date hereof through March 28, 2008 unless sooner terminated as herein provided.

 

23

“ Termination Event ” shall mean (a) a Reportable Event with respect to any Plan or Multiemployer Plan, (b) the withdrawal of Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “ substantial employer ” as defined in Section 4001(a)(2) of ERISA, (c) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA, (d) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan, (e) any event or condition (i) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, or (f) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan.

“ Total Accounts ” shall mean the total gross amount of Borrower’s Accounts which Borrower is required to report on all the Borrowing Base Certificates.

“ Total Debt ” shall mean, in the case of Borrower, all Indebtedness less all indebtedness existing under the Industrial Revenue Bonds.

“ Total Inventory ” shall mean the total gross amount of Borrower’s Inventory which Borrower is required to report on all of the Borrowing Base Certificates.

“ Toxic Substance ” shall mean and include any material present on the Real Property or the Leasehold Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances, and includes, but is not limited to, asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

“ Trading with the Enemy Act ” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.

“ Transferee ” shall have the meaning set forth in Section 15.3(c) hereof.

“ Uniform Commercial Code ” shall have the meaning set forth in Section 1.3 hereof.

“ USA Patriot Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“ Working Capital ” at a particular date, shall mean the excess, if any, of Current Assets over Current Liabilities at such date.

1.3 Uniform Commercial Code Terms.

All terms used herein and defined in the Uniform Commercial Code as adopted in the State of Colorado from time to time (the “ Uniform Commercial Code ”) shall have the meaning

 

24

given therein unless otherwise defined herein. Without limiting the foregoing, the terms “ Accounts ”, “ As-extracted Collateral ”, “ Chattel Paper ”, “ Deposit Accounts ”, “ Documents ”, “ Electronic Chattel Paper ”, “ Equipment ”, “ Farm Products ”, “ Fixtures ”, “ General Intangibles ”, “ Goods ”, “ Instruments ”, “ Inventory ”, “ Investment Property ”, “ Letter of Credit Rights ”, “ Payment Intangibles ”, “ Proceeds ”, “ Promissory Notes ”, “ Software ”, “ Supporting Obligations ”, and “ Tangible Chattel Paper ” as and when used in the description of Collateral shall have the meanings given to such terms in the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

1.4 Certain Matters of Construction.

The terms “ herein ”, “ hereof ” and “ hereunder ” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in Denver, Colorado. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words “ including ” or “ include ” shall be used, such words shall be understood to mean “ including, without limitation ” or “ include, without limitation ”. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “ continue ” or be “ continuing ” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “ to the best of Borrower’s knowledge ” or words of similar import relating to the knowledge or the awareness of Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in reasonable performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants hereunder shall be given independent effect so that if a particular action or condition is not

 

25

permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

II. ADVANCES, PAYMENTS.

2.1 Revolving Advances.

(a) Subject to the terms and conditions set forth in this Agreement, including Section 2.1(c), each Lender, severally and not jointly, will make Revolving Advances to Borrower in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the sum of: (i) the lesser of the Maximum Revolving Advances Amount and the Formula Amount, minus (ii) all outstanding Term Advances, minus (iii) the Maximum Undrawn Amount of all outstanding Letters of Credit, and plus (iv) up to twenty percent (20%) of the difference between the Maximum Revolving Advances Amount minus the Formula Amount.

(b) Within the terms and conditions set forth herein, Borrower may borrow, repay and reborrow Revolving Advances during the Revolving Advances Term. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, “ Revolving Advances Note ”) substantially in the form attached hereto as Exhibit 2.1(b) .

(c) The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable discretion. Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict Revolving Advances requested by Borrower. The rights of Agent under this subsection are subject to the provisions of Section 15.2(b) .

2.2 Procedure for Revolving Advances Borrowing.

(a) Borrower may notify Agent prior to 10:00 a.m. (Denver time) on a Business Day of Borrower’s request to incur, on that day, a Revolving Advance hereunder. All Revolving Advances shall consist of Domestic Rate Advances unless Borrower complies with the requirements for obtaining and maintaining LIBOR Rate Advances set forth below. Revolving Advances shall be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by Borrower. Borrower shall furnish to Agent a duly completed and executed copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form (in the form of Exhibit 2.2(a) ) and Agent shall be entitled to rely on (and shall incur no liability to Borrower in acting on) any request or direction furnished in accordance with the terms thereof. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.

 

26

(b) Notwithstanding the provisions of subsection (a) above, in the event Borrower desires to obtain a LIBOR Rate Advance, Borrower shall give Agent written notice by no later than 10:00 a.m. (Denver time) on the day which is three (3) Business Days prior to the date such LIBOR Rate Advance is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be an integral multiple of $1,000,000.00, and (iii) the duration of the first “ Interest Period ” therefor. Interest Periods for LIBOR Rate Advances shall be for one, two, three, six, nine or twelve months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No LIBOR Rate Advance shall be made available to Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested LIBOR Rate Advance, including those which are converted from a Domestic Rate Advance under Section 2.2(e) , there shall not be outstanding more than ten (10) LIBOR Rate Advances, in the aggregate.

(c) Each Interest Period of a LIBOR Rate Advance shall commence on the date such LIBOR Rate Advance is made and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Revolving Advances Term.

(d) Borrower shall elect the initial Interest Period applicable to a LIBOR Rate Advance by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(e) , as the case may be. Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. (Denver time) on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such LIBOR Rate Advance. If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be deemed to have elected to convert to a Domestic Rate Advance subject to Section 2.2(e) hereinbelow.

(e) Provided that no Event of Default shall have occurred and be continuing, Borrower may, on the last Business Day of the then current Interest Period applicable to any outstanding LIBOR Rate Advance, or on any Business Day with respect to Domestic Rate Advances, convert any such Advance into an Advance of another type in the same aggregate principal amount provided that any conversion of a LIBOR Rate Advance shall be made only on the last Business Day of the then current Interest Period applicable to such LIBOR Rate Advance. If Borrower desires to convert an Advance, Borrower shall give Agent written notice by no later than 10:00 a.m. (Denver time) (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Advance to a LIBOR Rate Advance, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a LIBOR Rate

 

27

Advance to a Domestic Rate Advance, specifying, in each case, the date of such conversion, the Advances to be converted and if the conversion is from a Domestic Rate Advance to a LIBOR Rate Advance, the duration of the first Interest Period therefor.

(f) At its option and upon written notice given prior to 10:00 a.m. (Denver time) at least three (3) Business Days’ prior to the date of prepayment, Borrower may prepay the LIBOR Rate Advances in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such prepayment. Borrower shall specify the date of prepayment of Advances which are LIBOR Rate Advances and the amount of such prepayment. In the event that any prepayment of a LIBOR Rate Advance is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(g) hereof.

(g) Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by Borrower in the payment of the principal of or interest on any LIBOR Rate Advance or failure by Borrower to complete a borrowing of, a prepayment of or conversion of or to a LIBOR Rate Advance after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by Agent or Lenders in order to make or maintain its LIBOR Rate Advances hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.

(h) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (h), the term “ Lender ” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any LIBOR Rate Advances) to make or maintain its LIBOR Rate Advances, the obligation of Lenders to make LIBOR Rate Advances hereunder shall forthwith be cancelled and Borrower shall, if any affected LIBOR Rate Advances are then outstanding, promptly upon request from Agent, either pay all such affected LIBOR Rate Advances or convert such affected LIBOR Rate Advances into Domestic Rate Advances. If any such payment or conversion of any LIBOR Rate Advance is made on a day that is not the last day of the Interest Period applicable to such LIBOR Rate Advance, Borrower shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such LIBOR Rate Advance as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such LIBOR Rate Advance. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.

2.3 Disbursement of Revolving Advance Proceeds.

All Revolving Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrower to

 

28

Agent or Lenders, shall be charged to Borrower’s Account on Agent’s books. During the Term, Borrower may use the Revolving Advances by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrower or deemed to have been requested by Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to Borrower on the day so requested by way of credit to Borrower’s operating account at CoBank, or such other bank as Borrower may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.

2.4 Term Advances.

(a) Subject to the terms and conditions set forth in this Agreement, including Section 2.4(c) , each Lender, severally and not jointly, will make Term Advances to Borrower in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (i) the sum of the Maximum Term Advances Amount minus the Maximum Undrawn Amount of all outstanding Letters of Credit, or (ii) the Formula Amount minus the sum of all outstanding Revolving Advances and the Maximum Undrawn Amount of all outstanding Letters of Credit.

(b) Within the terms and conditions set forth herein, Borrower may borrow, repay and reborrow Term Advances. The term of the Term Advances is from the date hereof, up to and including March 28, 2008, or such date as Agent may, in its sole discretion, authorize in writing. The Term Advances shall be evidenced by one or more secured promissory notes (collectively, the “ Term Advances Note ”) in substantially the form attached hereto as Exhibit 2.4(b) .

(c). The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable discretion. Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict Term Advances requested by Borrower. The rights of Agent under this subsection are subject to the provisions of Section 15.2(b) .

2.5 Procedure for Term Advances Borrowing.

Term Advances shall be made automatically upon the payment of any unreimbursed draw under the Letters of Credit to reimburse Agent and/or Lenders for the monies paid to the beneficiaries of such Letters of Credit. All Term Advances shall consist of Domestic Rate Advances unless Borrower complies with the requirements for obtaining and maintaining LIBOR Rate Advances set forth in Section 2.1 with respect to Revolving Advances.

2.6 Letters of Credit.

Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby Letters of Credit (“ Letters of Credit ”) for the account of Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent

 

29

that the issuance thereof would then cause the sum of the outstanding Term Advances plus the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (a) the Maximum Term Advances Amount or (b) the Formula Amount minus the outstanding Revolving Credit Advances. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Advances consisting of Term Advances and shall bear interest at the applicable Term Advances Rate for Domestic Rate Advances. Letters of Credit that have not been drawn upon shall not bear interest.

2.7 Issuance of Letters of Credit.

(a) Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent, at the Payment Office, prior to 10:00 a.m. (Denver time) at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “ Letter of Credit Application ”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.

(b) Each Letter of Credit shall,