Exhibit 10.1

 

CoBANK, ACB

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT is executed and delivered by SOUTH DAKOTA SOYBEAN PROCESSORS, LLC (the “Debtor”), a South Dakota limited liability company, having its place of business (or chief executive office if more than one place of business) located at 100 Caspian Avenue, Volga, South Dakota 57071, and whose taxpayer identification number is 46-0462968, to CoBank, ACB (the “Secured Party”), a federally chartered instrumentality of the United States, whose mailing address is P.O. Box 5110, Denver, Colorado 80217.

 

SECTION 1.         GRANT OF SECURITY INTEREST. For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtor hereby grants to the Secured Party a security interest in all of the personal property of the Debtor, wherever located and whether now existing or hereafter acquired, together with all accessions and additions thereto, and all products and proceeds thereof, including:

 

accounts; inventory (including without limitation, returned or repossessed goods); chattel paper; electronic chattel paper; instruments; investment property (including, without limitation, certificated and uncertificated securities, security entitlements, securities accounts, commodity contracts, and commodity accounts); letters of credit; letter-of-credit rights; documents; equipment; farm products; fixtures; general intangibles (including, without limitation, payment intangibles, choses or things in action, litigation rights and resulting judgments, goodwill, patents, trademarks and other intellectual property, tax refunds, miscellaneous rights to payment, investments and other interests in entities not included in the definition of investment property (including, without limitation, all equities and patronage rights in all cooperatives and all interests in partnerships and joint ventures), margin accounts, computer programs, software, invoices, books, records and other information relating to or arising out of the Debtor’s business); and, to the extent not covered by the above, ail other personal property of the Debtor of every type and description, including, without limitation, supporting obligations, interests to claims in or under any policy of insurance, commercial tort claims, deposit accounts, money, and judgments (the “Collateral”).

 

Where applicable, all terms used herein shall have the same meaning as presently and as hereafter defined in the Uniform Commercial Code (the “UCC”).

 

SECTION 2.         THE OBLIGATIONS. The security interest granted hereunder shall secure the payment of all indebtedness and the performance of all obligations of the Debtor to the Secured Party of every type and description, whether now existing or hereafter arising, fixed or contingent, as primary obligor or as guarantor or surety, acquired directly or by assignment or otherwise, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, including, without limitation, all loans, advances and other extensions of credit, and all covenants, agreements, and provisions contained in all loan and other agreements between the parties (the “Obligations”).

 

SECTION 3.         REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor represents, warrants and covenants as follows:

 

A.            Title to Collateral. Except as permitted by any other written agreement between the parties and except for any security interest in favor of the Secured Party, the Debtor has clear title to all Collateral, free of all adverse claims, interests, liens, or encumbrances. Without the prior written

 

 

consent of the Secured Party, the Debtor shall not create or permit the existence of any adverse claims, interests, liens, or other encumbrances against any of the Collateral. The Debtor shall provide prompt written notice to the Secured Party of any future adverse claims, interests, liens, or encumbrances against all Collateral, and shall defend diligently the Debtor’s and the Secured Party’s interests in all Collateral.

 

B.            Validity of Security Agreement; Corporate Authority. This Security Agreement is the valid and binding obligation of the Debtor, enforceable in accordance with its terms. The Debtor has the corporate power to execute, deliver and carry out the terms and provisions of this Security Agreement and all related documents, and has taken all necessary corporate action to authorize the execution,, delivery and performance or this Security Agreement and all related documents.

 

C.            Location of the Debtor . The Debtor’s place of business (or chief executive office if more than one place of business) is located at the address shown above. The Debtor’s state of incorporation or formation is as shown above.

 

D.            Location of Collateral. All equipment and inventory are now at the location or locations specified on Schedule A attached hereto and made a part hereof. All farm products and fixtures are now at the location or locations specified on Schedule B attached hereto and made a part hereof.

 

E.             Name, Identity, and Corporate Structure. The Debtor’s exact legal name is as set forth above. Except as otherwise disclosed to the Secured Party in writing, the Debtor has not within the past ten years changed its name, identity or corporate structure through incorporation, merger, consolidation, joint venture or otherwise.

 

F.             Change in Name, State of Debtor’s Location, Location of Collateral, Etc. Without giving at least thirty days’ prior written notice to the Secured Party, the Debtor shall not change its name, identity or corporate structure, the location of its place of business (or chief executive office if more than one place of business), its state of incorporation or formation, or the location of the Collateral.

 

G.            Further Assurances. Upon the request of the Secured Party, the Debtor shall do all acts and things as the Secured Party may from time to time deem necessary or advisable to enable it to perfect, maintain, and continue the perfection and priority of the security interest of the Secured Party in the Collateral, or to facilitate the exercise by the Secured Party of any rights or remedies granted to the Secured Parry hereunder or provided by law. Without limiting the foregoing, the Debtor agrees to execute, in form and substance satisfactory to the Secured Party, such financing statements, amendments thereto, supplemental agreements, assignments, notices of assignments, and other instruments and documents as the Secured Party may from time to time request. In addition, in the event the Collateral or any part thereof consists of instruments, documents, chattel paper or money (whether or not proceeds of the Collateral), the Debtor shall, upon the request of the Secured Party, deliver possession thereof to the Secured Party (or to an agent of the Secured Party retained for that purpose), together with any appropriate endorsements and/or assignments. Where Collateral is in the possession of a third party, the Debtor will join with the Secured Party in notifying the third party of the Secured Party’s security interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of the Secured Party. The Debtor will cooperate with the Secured Party in obtaining control with respect to Collateral consisting of deposit accounts (that are not held by the Secured Party as depositary institution), investment property, letter-of-credit rights and electronic chattel paper. The Secured Party shall use reasonable care in the custody and preservation of such Collateral in its possession, but shall not be required to take any steps necessary to preserve rights against prior parties. All costs and expenses incurred by the Secured Party to establish, perfect, maintain, determine the priority of, or release the security interest granted hereunder (including the cost of all filings, recordings, and taxes thereon and the

 

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fees and expenses of any agent retained by Secured Party) shall become part of the Obligations secured hereby and be paid by the Debtor on demand.

 

H.            Insurance. The Debtor shall maintain such property and casualty insurance with such insurance companies in such amounts and covering such risks as are at all times satisfactory to the Secured Party. All such policies shall provide for loss payable clauses or endorsement in form and content acceptable to the Secured Party.  Upon the request of the Secured Party, all policies (or such other proof of compliance with this Section as may be satisfactory to the Secured Party) shall be delivered to the Secured Party. The Debtor shall pay all insurance premiums when due. In the event of loss, damage, or injury to any insured Collateral, the Secured Party shall have full power to collect any and all insurance proceeds due under any of such policies, and may, at its option, apply such proceeds to the payment of any of the Obligations secured hereby, or may apply such proceeds to the repair or replacement of such Collateral.

 

I.              Taxes, Levies, Etc. The Debtor has paid and shall continue to pay when due all taxes, levies, assessments, or other charges which may become an enforceable lien against the Collateral.

 

J.             Disposition and Use of Collateral by the Debtor. Without the prior written consent of the Secured Party and provided the Debtor is not in default hereunder, the Debtor shall not at any time sell, transfer, lease, abandon, or otherwise dispose of any Collateral except in the ordinary course of its business. The Debtor shall not use any of the Collateral in any manner which violates any statute, regulation, ordinance, rule, decree, order, or insurance policy.

 

K.            Receivables. The Debtor shall preserve, enforce, and collect all accounts, chattel paper, electronic chattel paper, instruments, documents and general intangibles, whether now owned or hereafter acquired or arising (the “Receivables”), in a diligent fashion and, upon the request of the Secured Party, the Debtor shall execute an agreement in form and substance satisfactory to the Secured Party by which the Debtor shall direct all account debtors and obligors on instruments to make payment to a lock box deposit account under the exclusive control of the Secured Party.

 

L.            Condition of Collateral. All tangible Collateral is now in good repair and condition and the Debtor shall at all times hereafter, at its own expense, maintain all such Collateral in good repair and condition.

 

M.           Condition of Books and Records. The Debtor has maintained and shall maintain complete, accurate and up-to-date books, records, accounts, and other information relating to all Collateral in such form and in such detail as may be satisfactory to the Secured Party, and shall allow the Secured Party or its representatives at any reasonable time to examine and copy such books, records, accounts, and other information.

 

N.            Right of Inspection.              At all reasonable times upon the request of the Secured Party, the Debtor shall allow the Secured Party or its representatives to visit any of the Debtor’s properties or locations so that the Secured Party or its representatives may confirm, inspect and appraise any of the Collateral.

 

SECTION 4.         DEFAULT. The breach of any of the Obligations secured hereby, and/or the breach of any representation, warranty, covenant, or agreement contained in this Security Agreement, shall constitute default hereunder.

 

SECTION 5.         RIGHTS AND REMEDIES. Upon the Debtor’s default, and at any time thereafter, the Secured Party may declare all Obligations to be immediately due and payable, and may

 

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exercise any and all rights and remedies of the Secured Party in the enforcement of its security interest under the UCC, this Security Agreement, or any other applicable law. Without limiting the foregoing:

 

A.            Disposition of Collateral. The Secured Party may sell, lease, or otherwise dispose of all or any part of the Collateral in its then present condition or following any commercially reasonable preparation or processing thereof, whether by public or private sale, or at any brokers’ board, in lots or in bulk, for cash, on credit or otherwise, with or without representations or warranties, and upon such other terms as may he acceptable to the Secured Party, and the Secured Party may purchase at any public sale. At any time when advance notice of sale is required, the Debtor agrees that ten days’ prior written notice shall be reasonable. In connection with the foregoing, the Secured Party may:

 

1.             require the Debtor to assemble the Collateral and all records pertaining thereto and make such Collateral and records available to the Secured Party at a place to be designated by the Secured Party which is reasonably convenient to both parties;

 

2.             enter the premises of the Debtor or premises under the Debtor’s control and take possession of the Collateral;

 

3.             without charge, use or occupy the premises of the Debtor or premises under the Debtor’s control, including, without limitation, warehouse and other storage facilities;

 

4.             without charge, use any patent, trademark, tradename, or other intellectual property or technical process used by the Debtor in connection with any of the Collateral; and

 

5.             rely conclusively upon the advice or instructions of any one or more brokers or other experts selected by the Secured Party to determine the method or manner of disposition of any of the Collateral and, in such event, any disposition of the Collateral by the Secured Party in accordance with such advice or instructions shall be deemed to be commercially reasonable.

 

B.            Collection of Receivables. The Secured Party may, but shall not be obligated to, take all actions reasonable or necessary to preserve, enforce or collect the Receivables, including, without limitation, the right to notify account debtors and obligors on instruments to make direct payment to the Secured Party, to permit any extension, compromise, or settlement of any of the Receivables for less than face value, or to sue on any Receivable, all without prior notice to the Debtor.

 

C.            Proceeds. The Secured Party may collect and apply all proceeds of the Collateral and may endorse the name of the Debtor in favor of the Secured Party on any and all checks, drafts, money orders, notes, acceptances, or other instruments of the same or a different nature, constituting, evidencing, or relating to the Collateral. The Secured Party may receive and open all mail addressed to the Debtor and remove therefrom any cash or non-cash items of payment constituting proceeds of the Collateral.

 

D.            Insurance Adjustments. The Secured Party may adjust, settle, and cancel any and all insurance covering any Collateral, endorse the name of the Debtor on any and all checks or drafts drawn by any insurer, whether representing payment for a loss or a return of unearned premium, and execute any and all proofs of claim and other documents or instruments of every kind required by any insurer in connection with any payment by such insurer.

 

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The net proceeds of any disposition of the Collateral may be applied by the Secured Party, after deducting its reasonable expenses incurred in such disposition, to the payment in whole or in part of the Obligations in such order as the Secured Party may elect. The enumeration of the foregoing rights and remedies is not intended to be exhaustive, and the exercise of any right and/or remedy shall not preclude the exercise of any other rights or remedies, all of which are cumulative and non-exclusive.

 

SECTION 6.         OTHER PROVISIONS.

 

A.            Amendment, Modification, and Waiver. Without the prior written consent of the Secured Party, no amendment, modification, or waiver of, or consent to any departure by the Debtor from any provision hereunder shall be effective. Any such amendment, modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given. No delay or failure by the Secured Party to exercise any remedy hereunder shall be deemed a waiver thereof or of any other remedy hereunder. A waiver on any one occasion shall not be construed as a bar to or waiver of any remedy on any subsequent occasion.

 

B.            Costs and Attorneys’ Fees. Except as prohibited by law, if at any time the Secured Party employs counsel in connection with the creation, perfection, preservation, or release of the Secured Party’s security interest in the Collateral or the enforcement of any of the Secured Party’s rights or remedies hereunder, all of the Secured Party’s reasonable attorneys’ fees arising from such services and all expenses, costs, or charges relating thereto shall become part of the Obligations secured hereby and be paid by the Debtor on demand.

 

C.            No Obligation to Make Loans. Nothing contained herein or in any financing statement or other document executed or filed in connection herewith shall be construed to obligate the Secured Party to make any loans or advances to the Debtor, whether pursuant to a commitment or otherwise.

 

D.            Revival of Obligations. To the extent the Debtor or any third party makes a payment or payments to the Secured Party, or the Secured Party enforces its security interest or exercises any right of setoff, and such payment or payments or the proceeds thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, and/or required to be repaid to a trustee, receiver, or any other party under any bankruptcy, insolvency or other law or in equity, then, to the extent of such recovery, the Obligations or any part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment or payments had not been made, or such enforcement or setoff had not occurred.

 

E.             Performance by the Secured Party. In the event the Debtor shall at any time fail to pay or perform punctually any of its duties hereunder, the Secured Party may, at its option and without notice to or demand upon the Debtor, without obligation and without waiving or diminishing any of its other rights or remedies hereunder, fully perform or discharge any of such duties. All costs and expenses incurred by the Secured Party in connection therewith, together with interest thereon at the Secured Party’s National Variable Rate plus four percent per annum, shall become part of the Obligations secured hereby and be paid by the Debtor upon demand.

 

F.             Indemnification, Etc. The Debtor hereby expressly indemnifies and holds the Secured Party harmless from any and all claims, causes of action, or other proceedings, and from any and all liability, loss, damage and expense of every nature, arising by reason of the Secured Party’s enforcement of its rights and remedies hereunder, or by reason of the Debtor’s failure to comply with any environmental or other law or regulation. As to any action taken by the Secured Party hereunder, the

 

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Secured Party shall not be liable for any error of judgment or mistake of fact or law, absent gross negligence or willful misconduct on its part.

 

G.            Power of Attorney. The Debtor hereby appoints the Secured Party or the Secured Party’s designee as its attorney-in-fact, which appointment is irrevocable, durable, and coupled with an interest, with full power of substitution, in its name of the Debtor or in the name of the Secured Party, to take any action which the Debtor is obligated to perform hereunder or which the Secured Party may deem necessary or advisable to accomplish the purposes of this Security Agreement. In taking any action in accordance with this Section, the Secured Party shall not be deemed to be the agent of the Debtor. The powers conferred upon the Secured Party in this Section are solely to protect its interest in the Collateral and shall not impose any duty upon the Secured Party to exercise any such powers.

 

H.            Continuing Effect. This Security Agreement, the Secured Party’s security interest in the Collateral, and all other documents or instruments contemplated hereby shall continue in full force and effect until all of the Obligations have been satisfied in full, the Secured Party has no commitment to make any further advances to the Debtor, and the Debtor has sent a valid written demand to the Secured Party for termination of this Security Agreement.

 

I.              Binding Effect. This Security Agreement shall be binding upon and inure to the benefit of the Debtor and the Secured Party and their respective successors and assigns.

 

J.             Security Agreement as Financing Statement and Authorization to File. A photographic copy or other reproduction of this Security Agreement may be used as a financing statement. In addition, the Debtor authorizes the Secured Party to prepare and file financing statements describing the Collateral, amendments thereto and continuation statements, and file any financing statement, amendment thereto or continuation statement electronically. In addition, the Debtor authorizes the Secured Party to file financing statements describing any agricultural liens or other statutory liens held by the Secured Party.

 

K.            Governing Law. Subject to any applicable federal law, this Security Agreement shall be construed in accordance with and governed by the laws of the State of Colorado, except to the extent that the UCC provides for the application of the law of another state.

 

L.            Notices. All notices, requests, demands, or other communications required or permitted hereunder shall be in writing and shall be deemed to have been given when sent by registered or certified mail, return receipt requested, addressed to the other party at the respective addresses given above, or to such other person or addresses as either party designates to the other in the manner herein prescribed.

 

M.           Severability. The determination that any term or provision of this Security Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other term or provision hereof.

 

IN WITNESS WHEREOF , the Debtor has executed this Security Agreement by its duly authorized officer as of the day and year shown below.

 

			DEBTOR:	SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
				a South Dakota limited liability company
				By:	/s/ Rodney Christianson
Date:	June 17, 2004			Title:	Chief Executive Officer

 

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SCHEDULE A

 

To Security Agreement Dated:  June 17, 2004

 

Executed By:

SOUTH DAKOTA SOYBEAN PROCESSORS, LLC (Name of Debtor)

 

Set forth below are the present locations (by county and state) of the Debtor’s inventory and equipment.

 

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SCHEDULE B

 

To Security Agreement Dated:  June 17, 2004

 

Executed By:

SOUTH DAKOTA SOYBEAN PROCESSORS, LLC (Name of Debtor)

 

Set forth below are the present locations (by county and state) of the Debtor’s fixtures and farm products.

 

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Exhibit 10.2

 

MLA No. B0511

 

MASTER LOAN AGREEMENT

 

THIS MASTER LOAN AGREEMENT is entered into as of June 17, 2004, between CoBANK ACB (“CoBank”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, Volga, South Dakota (the “Company”).

 

BACKGROUND

 

CoBank and the Company (by virtue of the Company having assumed all obligations of South Dakota Soybean Processors to CoBank) are parties to a Master Loan Agreement dated February 26, 2002 (the “Existing Agreement”).  Pursuant to the terms of the Existing Agreement, the parties entered into one or more Supplements thereto.  CoBank and the Company now desire to amend and restate the Existing Agreement and to apply such new agreement to the existing Supplements, as well as any new Supplements that may be issued thereunder.  For that reason and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), CoBank and the Company hereby agree that the Existing Agreement shall be amended and restated to read as follows:

 

SECTION 1.  Supplements .  In the event the Company desires to borrow from CoBank and CoBank is willing to lend to the Company, or in the event CoBank and the Company desire to consolidate any existing loans hereunder, the parties will enter into a Supplement to this agreement (a “Supplement”).  Each Supplement will set forth the amount of the loan, the purpose of the loan, the interest rate or rate options applicable to that loan, the repayment terms of the loan, and any other terms and conditions applicable to that particular loan.  Each loan will be governed by the terms and conditions contained in this agreement and in the Supplement relating to the loan.  As of the date hereof, the following Supplements are outstanding hereunder and shall be governed by the terms and conditions hereof: (1) the Statused Revolving Credit Supplement dated June 17, 2004 and numbered B051S01G; and (2) the Revolving Term Loan Supplement dated June 17, 2004 and numbered B051T05E.

 

SECTION 2.  Availability .  Loans will be made available on any day on which CoBank and the Federal Reserve Banks are open for business upon the telephonic or written request of the Company.  Requests for loans must be received no later than 12:00 Noon Company’s local time on the date the loan is desired.  Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company.  The Company shall furnish to CoBank a duly completed and executed copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form, and CoBank shall be entitled to rely on (and shall incur no liability to the Company in acting on) any request or direction furnished in accordance with the term thereof.

 

SECTION 3.  Repayment .  The Company’s obligation to repay each loan shall be evidenced by the promissory note set forth in the Supplement relating to that loan or by such replacement note as CoBank may require.  CoBank shall maintain a record of all loans, the interest accrued thereon, and all payments made with respect thereto, and such record shall,

 

 

absent proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans.  All payments shall be made by wire transfer of immediately available funds, by check, or by automated clearing house or other similar cash handling processes as specified by separate agreement between the Company and CoBank.  Wire transfers shall be made to ABA No. 307088754 for advice to and credit of CoBANK (or to such other account as CoBank may direct by notice).  The Company shall give CoBank telephonic notice no later than 12:00 noon Company’s local time of its intent to pay by wire and funds received after 3:00 p.m. Company’s local time shall be credited on the next business day.  Checks shall be mailed to CoBank, Department 167, Denver, Colorado 80291-0167 (or to such other place as CoBank may direct by notice).  Credit for payment by check will not be given until the latter of: (a) the day on which CoBank receives immediately available funds; or (b) the next business day after receipt of the check.

 

SECTION 4.  Security .  The Company’s obligations under this agreement, all Supplements (whenever executed), and all instruments and documents contemplated hereby or thereby, shall be secured by a statutory first lien on all equity which the Company may now own or hereafter acquire in CoBank and by a first lien (subject only to exceptions approved in writing by CoBank) pursuant to all security agreements, mortgages, and deeds of trust executed by the Company (including those executed by South Dakota Soybean Processors, whose obligations to CoBank have been assumed by the Company) in favor of CoBank, whether now existing or hereafter entered into.  As additional security for those obligations, the Company agrees to grant to CoBank, by means of such instruments and documents as CoBank shall require, a first lien on such of its other assets, whether now existing or hereafter acquired, as CoBank may from time to time require, including an Assignment of project Documents Agreement in form and substance satisfactory to CoBank.

 

SECTION 5.  Conditions Precedent .  CoBank’s obligation to extend credit under the initial Supplement hereto is subject to the receipt by CoBank of a duly executed copy of this agreement and all instruments and documents contemplated hereby.  CoBank’s obligation to extend credit under each Supplement is subject to the condition that CoBank receive, in form and substance satisfactory to CoBank: (a) a duly executed copy of the Supplement and all instruments and documents contemplated thereby; (b) such certified board resolutions, evidence of incumbency, and other evidence as CoBank may require that the Supplement, all instruments and documents executed in connection therewith, and (in the case of the initial Supplement hereto) this agreement and all instruments and documents executed in connection herewith, have been duly authorized and executed; (c) all fees and other charges provided for herein or in the Supplement; and (d) such evidence as CoBank may require that CoBank has, as of the date of the Supplement, a duly perfected first priority lien on all security for the Company’s obligations.  In addition, CoBank’s obligation to extend or to continue to extend credit under each Supplement is subject to the Company being in compliance with the terms of this agreement, the Supplements, and all security and other instruments and documents related hereto or thereto (collectively, at any time, the “Loan Documents”).

 

SECTION 6.  Representations and Warranties .  The execution by the Company of each Supplement shall constitute a representation and warranty to CoBank that: (a) each representation and warranty and all information set forth in any application or other document

 

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submitted in connection with, or to induce CoBank to enter into, such Supplement, is correct in all material respects as of the date of such Supplement; (b) the Loan Documents do not conflict with any other agreement to which the Company is a party or with any provision of the Company’s bylaws, articles of incorporation or other organizational documents; (c) the Company is in compliance with all of the terms of the Loan Documents (including, without limitation, Section 7(a) of this agreement on eligibility to borrow from CoBank); and (d) the Loan Documents create legal, binding, and enforceable obligations of the Company, except as enforceability may be limited by bankruptcy and similar laws affecting creditors’ rights generally.

 

SECTION 7.  Affirmative Covenants .  Unless CoBank otherwise consents in writing, while this agreement is in effect, the Company agrees to: (a) maintain its status as an entity eligible to borrow from CoBank and its existence and good standing in the jurisdiction of its incorporation or formation; (b) qualify and remain qualified to transact business wherever such qualification is required and obtain and maintain all licenses, certificates, permits, and like authorizations which are material to its businesses or required by law, rule, regulation, code, orders or the like (collectively, “Laws”); (c) comply in all material respects with all applicable Laws, including all environmental Laws and all Laws relating to any patron or member investment program that the Company may have; (d) cause all persons occupying or present on any property of the Company to comply in all material respects with all environmental laws; (e) maintain insurance with companies satisfactory to CoBank in such amounts and covering such risks as an customarily carried by companies engaged in the same or similar business and similarly situated, and make such increases in the amount or type of coverage as CoBank may request; (f) cause all policies covering any collateral provided for herein or in any Supplement to have loss payable clauses or endorsements in form and content acceptable to CoBank; (g) maintain its property in good working condition, ordinary wear and tear excepted; (h) keep books of account in accordance with generally accepted accounting principles (“GAAP”) consistently applied; (i) permit CoBank or its agents to inspect the Company’s properties, books, and records, and to discuss the Company’s affairs, finances, and accounts with its directors, employees, and independent certified public accountants; (j) purchase such equity in CoBank as CoBank may from time to time require in accordance with its bylaws (except that the maximum amount of equity which the Company may be required to purchase in connection with any loan may not exceed the amount permitted by the bylaws at the time the Supplement relating to that loan is entered into or such loan is renewed or refinanced by CoBank); (k) have an excess of current assets over current liabilities (both as determined in accordance with GAAP consistently applied) of not less than $5,000,000.00 at the end of each period for which financial statements are required to be furnished pursuant to Section 8 hereof through and including August 2004, and of not less than $6,000,000.00 at the end of each such period thereafter, except that in determining current assets, any amount available under the Revolving Term Loan Supplement hereto may be included, and except that in determining current liabilities, any outstanding principal balance under the Statused Revolving Credit Supplement hereto shall be included; (l) have at the end of each fiscal year of the Company a “Debt Service Coverage Quotient” (as defined below) of not less than 1.2 to 1; (m) pay or cause to be removed by the initiation of legal proceedings or otherwise, within sixty (60) days after notice from CoBank, any lien on the Improvements or Property subject to any security document unless said lien is covered by insurance or bond; and (n) comply with and keep in effect all permits and approvals obtained

 

 

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from any governmental bodies that relate to the lawful construction of the Improvements, as well as with all existing and future laws, regulations, orders and requirements of all governmental, judicial or legal authorities having jurisdiction over the Property or Improvements, and with all recorded restrictions affecting the Property. For purposes of subsection (1) above, “Debt Service Coverage Quotient” shall mean the following (all as calculated for the most current year end in accordance with GAAP consistently applied, except as otherwise specifically indicated): (i) net income (after taxes) plus depreciation and amortization, minus non-cash patronage income, minus cash patronage paid or scheduled to be paid, based on the most recent prior fiscal year, minus extraordinary gains (plus losses); divided by (ii) all principal payments due within one year on all long-term debt as of the prior fiscal year-end, but in no event including any current portion of the Statused Revolving Credit Supplement hereto.

 

SECTION 8.  Reporting Covenants.  Unless CoBank otherwise consents in writing, while this agreement is in effect, the Company agrees to furnish to CoBank:

 

(a)           Annual Financial Statements. Within 120 days after the end of each fiscal year of the Company occurring during the term hereof: (i) annual financial statements prepared in accordance with GAAP consistently applied and audited by independent certified public accountants selected by the Company and acceptable to CoBank; and (ii) a report of such accountants on such statements containing an opinion acceptable to CoBank.

 

(b)           Interim Financial Statements. Within 45 days after the end of each month (other than the last month in each fiscal year), a balance sheet, a statement of income for such month and for the period year to date, and such other monthly statements as CoBank may specifically request, all prepared in reasonable detail and in form and substance satisfactory to CoBank.

 

(c)           Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of a default or of any event which with the giving of notice and the passage of time would become a default hereunder.

 

(d)           Notice of Litigation, Environmental Matters, Etc. Promptly after becoming aware thereof:  (i) notice of the commencement of all actions, suits, or proceedings affecting the Company which, if determined adversely to the Company, could have a material adverse effect on the Company; and (ii) notice of the receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a condition that may require the Company to undertake or to contribute to a cleanup or other response under environmental Laws, or which seek penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such Laws, or which claim personal injury or property damage to any person as a result of environmental factors or conditions.

 

(e)           Bylaws and Articles. Promptly after any change in the Company’s bylaws or articles of incorporation (or like documents), copies of all such changes, certified by the Company’s Secretary.

 

(f)            Other Information. Such other information as CoBank may from time to time request.

 

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SECTION 9.  Negative Covenants.  Unless CoBank otherwise consents in writing, while this agreement is in effect, the Company will not: (a) create, assume or allow to exist any indebtedness or liability for borrowed money or for the deferred purchase price of property or services (including capitalized leases not otherwise permitted hereunder), except for indebtedness to CoBank, indebtedness under the Company’s member or patron investment program (provided such indebtedness is expressly stated to be subordinated to all indebtedness to CoBank), indebtedness to any local, state or federally sponsored developmental agencies in an aggregate principal amount not to exceed $1,000,000.00, but no extensions and refinancings thereof, miscellaneous indebtedness not to exceed $500,000.00 at any one time outstanding, indebtedness to Urethane Soy Systems Company’s shareholders in an aggregate principal amount not to exceed $2,673,000.00, but no extensions and refinancings thereof, accounts payable to trade creditors; and current operating liabilities (other than for borrowed money) incurred in the ordinary course of business; (b) grant, assume or allow to exist any security interest, mortgage, deed of trust or other consensual lien on any of its property, except liens in favor of CoBank, liens in existence on the date hereof in favor of any local, state or federally sponsored developmental agencies to secure indebtedness permitted hereunder, liens securing miscellaneous indebtedness permitted under subsection (a) above; and liens in existence on the date hereof in favor of Urethane Soy Systems Company’s shareholders to secure indebtedness permitted hereunder, (c) allow to exist any non-consensual or statutory liens that secure obligations that are past due or any judgment liens; unless said liens are subject to and covered by insurance or bonds or are being contested by the Company in legal proceedings or on appeal; (d) merge or consolidate with any other entity, or form or create any new subsidiary, or purchase all or a material part of the assets of any person or entity, or commence operations under any other name or organization; (e) sell, lease, or otherwise dispose of any assets, except in the ordinary course of business; (f) lend money or otherwise extend credit, except for trade credit extended in the ordinary course of business; (g) assume, guarantee, or otherwise become liable (directly or indirectly) for the debts of another; (h) engage in any business activities substantially different from the Company’s present business activities; (i) declare or pay any dividends or retire capital equities or other written notices of allocation, or make any other distribution or allocation of its earnings, surplus or assets to any holder of stock, allocated equities or other written notices of allocation, except that the Company may distribute earnings annually in the form of cash value-added payments and qualified written notices of allocation, so long as the Company is operating on a profitable basis and is in full compliance with all loan covenants, and such written notices constitute equity and not debt; (j) create, incur, assume, or permit to exist any obligation as lessee except (1) operating leases for the rental or hire of any real or personal property (excluding railroad cars) which do not in the aggregate require the Company to make scheduled payments to the lessors in any fiscal year of the Company occurring during the term hereof in excess of $350,000.00, (2) leases which should be capitalized in accordance with GAAP for the rental or hire of any real or personal property which do not in the aggregate require the Company to make scheduled payments to the lessors in any fiscal year of the company occurring during the term hereof in excess of $200,000.00, (3) leases for the rental or hire of up to 400 tanker and/or hopper railroad cars under terms and conditions acceptable to CoBank (4) other leases of railroad cars with original maturities of less than 18 months, at the Company’s discretion, and (3) leases of soybean oil storage tank space with aggregate annual payments not to exceed $400,000.00; or (1) purchase or install any materials, equipment, fixture,

 

 

5

 

or articles of personal property of the Company placed in the Improvements if such shall be covered under any security agreement or other agreement where the seller reserves or purports to reserve title or the right of removal or repossession, or the right to consider them personal property after their incorporation in the work of construction, unless authorized by CoBank in writing, except in support of financing permitted under Sections 9(a) and 9(j).

 

SECTION 10.  Events of Default.  The Company shall be in default hereunder if any of the following occur: (a) any payment required to be made hereunder or under any Supplement is not made when due; (b) any representation or warranty made or deemed made by the Company herein or in any other Loan Document shall prove to have been false or misleading in any material respect on the date made or deemed made; (c) the Company should fail to comply with Subsection (7)(a) through (7)(i) hereof or Subsections 8(a), (b), (e), and (f) hereof or any reporting covenant set forth in any Supplement hereto, and such breach continues for 15 days after written notice thereof shall have been given to the Company; (d) any other covenant or agreement set forth herein or in any other Loan Document is breached or the Company uses the proceeds of any loan for any unauthorized purpose; (e) the Company should breach or be in default under any other agreement between the Company and CoBank; (f) the Company should fail to pay when due any indebtedness to any other person or entity for borrowed money or any long-term obligation for the deferred purchase price of the property (including any capitalized lease), or any other event occurs which constitutes or would, with the giving of notice and/or the passage of time, constitute a default under any agreement relating to such indebtedness or obligation; (g) the Company becomes insolvent or does not pay its debts as they come due or suspends its business operations or a material part thereof or makes an assignment for the benefit of creditors or commences or has commenced against it any proceeding for the appointment of a receiver, trustee, or other custodian for it or any of its property or any proceeding under any bankruptcy, reorganization, dissolution, or similar law; and (h) any material adverse change occurs in the Company’s financial condition, results of operation, or ability to perform its obligations to CoBank under this agreement and the other Loan Documents.

 

SECTION 11.  Remedies.  Upon the occurrence of a default or of any event which with the giving of notice and the passage of time would become a default hereunder, CoBank shall have no obligation to continue to extend credit to the Company and may discontinue doing so at any time without prior notice. In addition, upon the occurrence of each and every default hereunder, CoBank may, upon notice to the Company: (a) terminate any commitment; (b) declare the unpaid principal of the loans, all accrued interest thereon, and all other amounts payable under this agreement and the other Loan Documents to be immediately due and payable (whereupon the same shall become immediately due and payable without presentment, demand, or further notice of any kind, all of which are hereby waived); (c) proceed to protect, exercise, and enforce such rights and remedies as may be provided by agreement or under Law; (d) apply all payments received by CoBank to the Company’s obligations in such order and manner as CoBank may elect; and (e) hold and/or set off and apply against the Company’s obligations to CoBank, the proceeds of any equity in CoBank, any cash collateral held by CoBank, or any balances held by CoBank for the Company’s account (whether or not such balances are then due). The Company acknowledges that each and every one of CoBank’s rights and remedies shall be cumulative and may be exercised from time to time, and no failure on the part of CoBank to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof, nor

 

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shall any single or partial exercise of any right or remedy preclude any other or future exercise thereof or the exercise of any other right or remedy.

 

In addition to the rights and remedies set forth above: (i) if the Company fails to purchase any equity in CoBank when required or fails to make any payment to CoBank when due, then at CoBank’s option in each instance, such payment shall bear interest from the date due to the date paid at 4% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan; and (ii) after the maturity of any loan (whether as a result of acceleration or otherwise), the unpaid principal balance of such loan (including without limitation, principal, interest, fees and expenses) shall automatically bear interest at 4% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan. All interest provided for herein shall be payable on demand and shall be calculated on the basis of a year consisting of 360 days.

 

SECTION 12.  Broken Funding Surcharge.  Notwithstanding any provision contained in any Supplement giving the Company the right to repay any loan prior to the date it would otherwise be due and payable, the Company agrees that in the event it repays any fixed rate balance prior to its scheduled due date or prior to the last day of the fixed rate period applicable thereto (whether such payment is made voluntarily, as a result of an acceleration, or otherwise), the Company will pay to CoBank a surcharge in an amount which would result in CoBank being made whole (on a present value basis) for the actual or imputed funding losses incurred by CoBank as a result thereof. Notwithstanding the foregoing, in the event any fixed rate balance is repaid as a result of the Company refinancing the loan with another lender or by other means, then in lieu of the foregoing, the Company shall pay to CoBank a surcharge in an amount sufficient (on a present value basis) to enable CoBank to maintain the yield it would have earned during the fixed rate period on the amount repaid. Such surcharges will be calculated in accordance with methodology established by CoBank (a copy of which will be made available to the Company upon request).

 

SECTION 13.  Other Types of Credit.  From time to time, CoBank may issue letters of credit or extend other types of credit to or for the account of the Company. In the event the parties desire to do so under the terms of this agreement, such extensions of credit may be set forth in any Supplement hereto and this agreement shall be applicable thereto.

 

SECTION 14.  Miscellaneous.   The Loan Documents are intended by the parties to be a complete and final expression of their agreement. No amendment, modification, or waiver of any provision nor any consent to any departure therefrom, shall be effective unless in writing and signed by CoBank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which granted. In the event this agreement is amended or restated, each such amendment and restatement shall be applicable to all Supplements hereto. This agreement shall continue in effect until all indebtedness or obligations of the Company shall have been paid, CoBank has no further commitment to extend credit to or for the account of the Company under any Supplement, and either party furnishes notice of termination to the other. Except to the extent governed by applicable federal law, this agreement and cash Supplement shall be governed by the haws of the State of Colorado, without reference to choice of law doctrine. Any provision of this agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent thereof

 

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without invalidating the remaining provisions hereof or thereof. The Loan Documents shall be binding upon and inure to the benefit of the Company and CoBank and their respective successors and assigns, except that the Company may not assign or transfer its rights or obligations under the Loan Documents without the prior written consent of CoBank.

 

SECTION 15.  Notices.  All notices provided for herein shall be in writing (including facsimile) and shall be mailed or delivered to the Following addresses or facsimile numbers or to such other address or facsimile number as either party may specify by notice to the other: (a) If to CoBank, to Attention: Credit Information Services, P.O. Box 5101, Denver, Colorado 80217, Fax No: (303) 224-6101; and (b) if to the Company, to Attention: President, 100 Caspain Ave., Volga, South Dakota 57071, Fax No: (605) 627-5869.

 

SECTION 16.  Taxes and Expenses.  To the extent allowed by law, the Company agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained by CoBank) incurred by CoBank in connection with the origination, administration, collection, and enforcement of this agreement and the other Loan Documents, including, without limitation, all costs and expenses incurred in perfecting, maintaining, determining the priority of; and releasing any security for the Company’s obligations hereunder or under any Supplement and any stamp, intangible, transfer, or similar tax payable in connection with this agreement or any other Loan Document.

 

SECTION 17.  Notice of Completion.  The Company irrevocably appoints CoBank as the Company’s agent to file of record any notice of completion, cessation of labor or any other notice that CoBank deems necessary to file to protect any of the interests of CoBank. CoBank,  however, shall have no duty to make such filing.

 

SECTION 18.  Signs and Publicity.  At CoBank’s request, the Company will allow CoBank to post signs on the Property at the construction site for the purpose of identifying CoBank as the “Construction Lender”. At the request of CoBank, the Company will use its best efforts to identify CoBank as the construction lender in publicity concerning the project.

 

SECTION 19.  Cooperation.   The Company will cooperate at all times with CoBank in bringing about the timely completion of the Improvements, and the Company will resolve all disputes arising during the work of construction in a manner which will allow work to proceed expeditiously.

 

IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly authorized officers as of the date shown above.

 

COBANK, ACB				SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
By:	/s/ Teresa L.			By:	/s/ Rodney Christianson
Title:		Assistant Corporate Secretary		Title:		Chief Executive Officer

 

8

Exhibit 10.3

 

REVOLVING TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated June 17, 2004 (the “MLA”), is entered into as of June 17, 2004 between CoBANK, ACB (“CoBank”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, VOLGA, SOUTH DAKOTA (the “Company”), and amends and restates the Supplement dated February 26, 2002 and numbered BO5IT05D executed by South Dakota Soybean Processors and assumed by the Company.

 

SECTION 1.  The Revolving Term Loan Commitment .  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company from the date hereof, up to and including March 20, 2011, in an aggregate principal amount not to exceed, at any one time outstanding, $18,400,000.00 less the amounts scheduled to be repaid during the period set forth below in Section 5 (the “Commitment”).  Within the limits of the Commitment, the Company may borrow, repay and reborrow.

 

The Company may, in its sole discretion, elect to permanently reduce the amount of the Commitment by giving CoBank ten days prior written notice.  Said election shall be made only if the Company is not in default at the time of the election and will remain in compliance with all financial covenants after such reduction.  Any such reduction shall be treated as an early, voluntary reduction of the Commitment amount pursuant to the repayment schedule set out in Section 5.

 

SECTION 2.  Purpose .  The purpose of the Commitment is to provide working capital to the Company and to finance the construction of a soybean refinery.

 

SECTION 3.  Term .  Intentionally Omitted.

 

SECTION 4.  Interest .  The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

 

(A)          Weekly Quoted Variable Rate .  At a rate per annum equal at all times to the rate of interest established by CoBank on the first Business day of each week.  The rate established by CoBank shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable to all balances subject to this option and information about the then current rate shall be made available upon telephonic request.

 

(B)          Quoted Fixed Rate .  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance.  Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to CoBank in its sole discretion in each instance.

 

The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof.  Notwithstanding the

 

 

foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loans.  In the event CoBank consents to one or more balances being fixed for a period or periods extending beyond the maturity date of the loans and the Commitment is not renewed, then each such balance shall be due and payable on the last day of its fixed rate period and the promissory note set forth below shall be deemed amended accordingly.  All elections provided for herein shall be made telephonically or it writing and must be received by 12:00 Noon Company’s local time.  Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following mouth.

 

SECTION 5.  Promissory Note .  The Company promises to repay on the dates set forth below, the outstanding principal, if any, that is in excess of the available Commitment, which shall be reduced in scheduled periodic increments of $1,300,000.00 as follows:

Payment Date		Reducing Commitment Amount*
September 20, 2004		$	17,100,000.00
March 20, 2005		$	15,800,000.00
September 20, 2005		$	14,500,000.00
March 20, 2006		$	13,200,000.00
September 20, 2006		$	11,900,000.00
March 20, 2007		$	10,600,000.00
September 20, 2007		$	9,300,000.00
March 20, 2008		$	8,000,000.00
September 20, 2008		$	6,700,000.00
March 20, 2009		$	5,400,000.00
September 20, 2009		$	4,100,000.00
March 20, 2010		$	2,800,000.00
September 20, 2010		$	1,500,000.00
March 20, 2011		0.00

 

If any installment due date is not a day on which CoBank is open for business, then such payment shall be made on the next day on which CoBank is open for business.  In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof.  This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

 

SECTION 6.  Prepayment .  Subject to the broken funding surcharge provision of the MLA, the Company may on one Business Day’s prior written notice prepay all or any portion of the loan(s).  During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify.  After the expiration of the term of the Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to principal

 

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installments in the inverse order of their maturity and to such balances, fixed or variable, as CoBank shall specify.

 

SECTION 7.  Commitment Fee .  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 1/2 of 1% per annum (calculated on a 360 day basis), payable monthly in arrears by the 20th day following each month.  Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.

 

IN WITNESS WHEREOF , the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

 

 

CoBANK, ACB				SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
By:	/s/ Teresa L.			By:	/s/ Rodney Christianson
Title:		Assistant Corporate Secretary		Title:	Chief Executive Officer

 

3

Exhibit 10.4

 

STATUSED REVOLVING CREDIT SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated June 17, 2004 (the “MLA”), is entered into as of June 17, 2004 between CoBANK, ACB (“CoBank”) and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, VOLGA, SOUTH DAKOTA (the “Company”), and amends and restates the Supplement dated February 26, 2002 and numbered BO51S01F executed by South Dakota Soybean Processors and assumed by the Company.

 

SECTION 1.                             The Revolving Credit Facility .  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed, at any one time outstanding, the lesser of $16,000,000.00 (the “Commitment”), or the “Borrowing Base” (as calculated pursuant to the Borrowing Base Report attached hereto as Exhibit A).  Within the limits of the Commitment, the Company may borrow, repay and reborrow.

 

SECTION 2.                             Purpose .  The purpose of the Commitment is to finance the inventory and receivables referred to in the Borrowing Base Report.

 

SECTION 3.                             Term .  The term of the Commitment shall be from the date hereof, up to and including March 3l, 2005, or such late date as CoBank may, in its sole discretion, authorize in writing.

 

SECTION 4.                             Interest.   The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

 

(A)                                Weekly Quoted Variable Rate .  At a rate per annum equal at all times to the rate of interest established by CoBank on the first Business Day of each week.  The rate established by CoBank shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable to all balances subject to this option and information about the then current rate shall be made available upon telephonic request.

 

(B)                                Quoted Fixed Rate .  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance.  Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to CoBank in its sole discretion in each instance.

 

The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loans.  In the event CoBank

 

 

consents to one or more balances being fixed for a period or periods extending beyond the maturity date of the loans and the Commitment is not renewed, then each such balance shall be due and payable on the last day of its fixed rate period and the promissory note set forth below shall be deemed amended accordingly.  All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 Noon Company’s local time.  Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month.

 

SECTION 5.                             Promissory Note .  The Company promises to repay the unpaid principal balance of the loans on the last day of the term of the Commitment.  In addition to the above, the Company promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth in Section 4 hereof.  This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

 

SECTION 6.                             Borrowing Base Reports, Etc .  The Company agrees to furnish a Borrowing Base Report to CoBank at such times or intervals as CoBank may from time to time request.  Until receipt of such a request, the Company agrees to furnish a Borrowing Base Report to CoBank within 45 days after each month end calculating the Borrowing Base as of the last day of the month for which the Report is being furnished.  However, if no balance is outstanding hereunder on the last day of such month, then no Report need be furnished.  Regardless of the frequency of the reporting, if at any time the amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately notify CoBank and repay so much of the loans as is necessary to reduce the amount outstanding under the Commitment to the limits of the Borrowing Base.

 

SECTION 7.                             Letters of Credit .  In addition to loans and if agreeable to CoBank in its sole discretion in each instance, the Company may utilize the Commitment to open irrevocable letters of credit for its account.  Each letter of credit shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder.  The rights and obligations of the parties with respect to each letter of credit will be governed by the Reimbursement Agreement attached hereto as Exhibit B (which rights and obligations shall be in addition to the rights and obligations of the parties hereunder and under the MLA).  Notwithstanding the foregoing or any other provision hereof, the maximum amount capable of being drawn under each letter of credit must be statused against the Borrowing Base in the same manner as if it were a loan, and in the event that (after repaying all loans) the maximum amount capable of being drawn under the letters of credit exceeds the Borrowing Base, then the Company shall immediately notify CoBank and pay to CoBank (to be held as cash collateral) an amount equal to such excess.

 

SECTION 8.                             Commitment Fee .  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 1/4 of 1% per annum (calculated on a 360 day basis), payable monthly in arrears by the 20th day following each month.  Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the

 

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Commitment.  For purposes of calculating the commitment fee only, the “Commitment” shall mean the dollar amount specified in Section 1 hereof, irrespective of the Borrowing Base.

 

SECTION 9.                             Amendment Fee .  In consideration of the amendment, the Company agrees to pay to CoBank on the execution hereof a fee in the amount of $2,500.00.

 

IN WITNESS WHEREOF , the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

 

 

CoBANK, ACB				SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
By:	/s/ Teresa L.			By:	/s/ Rodney Christianson
Title:		Assistant Corporate Secretary		Title:	Chief Executive Officer

 

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South Dakota Soybean Processors, LLC

BORROWING BASE REPORT

CoBank ACB

mm/dd/yy

 

 

Eligible Inventory		Quantity		Unit		Unit Value		Market Value		Advance Rate		Maximum Advance
Soybeans *				Bushels				0		90	%	0
Soybean Meal **				Tons				0		90	%	0
Soybean Oil				Pounds				0		90	%	0
SoyOyl **				Pounds				0		90	%	0
Refined Oil **				Pounds				0		90	%	0
Soybean Hulls **				Tons				0		90	%	0
								0				0

 

* Valued at Bid Price FOB Volga, SD

** Valued at Market FOB Volga, SD

 

								Amount
Trade Receivables				0-10 Days						90	%	0
				10-30 Days						50	%	0
				Over 30 days						0	%	0
								0				0
A. Maximum Advance Values of Inventory & Receivables												0
B. Less: Any Amount owed for the purchase of Soybeans										100	%	0
C. Borrowing Base												0
D. Outstanding Balance of Loan at mm/dd/yy												0
E. Excess / (Deficit)												0

 

Note: If a deficit exists, please remit amount to CoBank unless remitted since period ending date

 

Authorized Signature		Title		Date

 

 

Exhibit B

 

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

 

In consideration of CoBank issuing one or more letters of credit (each a “Credit”) for the Company’s account under the Supplement to which this agreement is attached (the “Supplement”), the Company agrees as follows:

 

1.                                        The Company will pay to CoBank in United States currency and in immediately available funds the amount of each draft drawn or instrument paid under a Credit.  In addition, the Company agrees to pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, as well as all customary charges associated with the issuance of a Credit.  If a Credit is payable in a foreign currency, the Company will pay to CoBank an amount in United States currency equivalent to CoBank’s selling rate of exchange for that currency.  In addition to the amounts set forth above, the Company shall pay to CoBank such amounts as CoBank shall determine arc necessary to compensate CoBank for any cost attributable to CoBank issuing or having outstanding any Credit resulting from the application of any taw or regulation concerning any reserve, assessment, capital adequacy or similar requirement relating to letters of credit, reimbursement agreements with respect thereto, or to similar liabilities or assets of banks, whether existing at the time of the issuance of a Credit or adopted thereafter.  Each payment hereunder shall be payable on demand at the place and manner set forth in the Master Loan Agreement between the parties (the “MLA’) and with interest from the date of demand to the date paid at CoBank’s National Variable Rate.  The Company hereby authorizes CoBank to create a loan under the Supplement bearing interest at the variable rate set forth therein for any sums owing hereunder.

 

2.                                        Neither CoBank nor any of its correspondents shall in any way be responsible for the performance by any beneficiary of its obligations to the Company nor for the form, sufficiency, correctness, genuineness, authority of the person signing, falsification or legal effect of any documents called for under a Credit if such documents on their face appear to be in order.  In addition, CoBank and its correspondents may receive and accept or pay as complying with the terms of a Credit any drafts, documents, or certificates, otherwise in order, signed by any person purporting to be an administrator, executor, trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, liquidator, receiver, or other legal representative of the party authorized under a Credit to draw or issue such instruments or other documents.

 

3.                                        In the event the Credit is a commercial Credit, then, is addition to the other provisions hereof, the Company: (i) agrees to obtain or cause to be in existence insurance on any merchandise described in the Credit against fire and other usual risks and against any additional risks which CoBank may request, and (ii) authorizes and empowers CoBank to collect the amount due under any such insurance and apply the same against any of the Company’s obligations to CoBank arising under the Credit or otherwise.  In addition, whether the Credit is a commercial or a standby Credit, the Company represents and warrants that any required import, export or foreign exchange licenses or other governmental approvals relevant to the Credit and the merchandise described therein have been obtained and that the transactions contemplated thereby are not prohibited under any law, rule, regulation, order or the like, including the Foreign Assets Control Regulations of the U.S. Department of Treasury.

 

4.                                        All directors and correspondence relating to a Credit are to be sent at the Company’s risk and CoBank does not assume any responsibility for any inaccuracy, interruption, error, or delay in transmission or delivery by post, telegraph, cable or other electronic means, or for any inaccuracy of translation.

 

5.                                        CoBank shall not be responsible for my act, error, neglect, default, omission, insolvency or failure in business of any of its correspondents, and any action taken or omitted by CoBank or its correspondents under or in connection with a Credit shall, if taken or omitted with honesty in fact, be binding on the Company and shall not put CoBank or its correspondents under any resulting liability to the Company.  In no event shall CoBank be liable for special, consequential or punitive damages.

 

6.                                        The Company will indemnify CoBank against and hold it harmless from all loss, damage, cost, and expense (including attorneys’ fees and expenses) arising out of (i) its issuance of or any other action taken by CoBank in connection with a Credit, other than loss or damage resulting from its gross negligence or willful misconduct, and (ii) claims or legal proceedings incident to the collection of amounts owed by the Company hereunder, or the enforcement of CoBank’s rights or the rights of others under a Credit, including, without limitation, legal

 

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proceedings relating to any court order, injunction or other process or decree restraining or seeking to restrain CoBank from paying any amount under a Credit.

 

7.                                        In the event (i) the Company fails to make any payment owing hereunder when the same shall become due and payable; (ii) any covenant or representation or warranty set forth herein is breached; (iii) the “Commitment” (as defined in the Supplement) expires prior to the expiration date of any Credit; or (iv) an “Event of Default” (as defined in the MLA) occurs under the MLA, then, in any such event, the amount of each Credit, together with any amounts payable by the Company in connection therewith, shall, at CoBank’s option, become immediately due and payable.  To the extent that any amount paid by the Company pursuant to this Section 7 shall not then be due under the terms of a Credit, such payment shall serve as security for the Company’s obligation to indemnify CoBank for any amounts subsequently disbursed by CoBank pursuant to a Credit.  Furthermore, upon the institution of any legal proceeding described is Section 6(ii) hereof, the Company will, on demand, assign and deliver to CoBank, as security for the Company’s obligation to indemnify CoBank, cash collateral in an amount satisfactory to CoBank.

 

8.                                        CoBank shall be fully protected in, and shall incur no liability to the Company for acting upon, any oral, telephonic, facsimile, cable or other electronic instructions which CoBank in good faith believes to have been given by any authorized person.  CoBank may, at its option, use any means of verifying any instructions received by it and may also, at its option, refuse to act on any oral, telephonic, facsimile, cable or other electronic instructions or any part thereof, without incurring any responsibility for any loss, liability or expenses arising out of such refusal.

 

9.                                        The Uniform Customs and Practice as most recently published by the International Chamber of Commerce (hereafter called the “UCP”) shall in all respects be deemed a part hereof as fully as if incorporated herein, and shall apply to the Credits.  To the extent the UCP is inconsistent with the governing law set forth in the MLA, the UCP shall control.

 

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